Chapter 1: Introducing Internet Marketing

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Mass Customization: (Prosumer): Levi's example.

  • Extent of Product:

    • Subset – e.g. Pay as you go, pay per view.

    • Bundling – EasyJet offers car hire, hotels booking, packages, and more in addition to its main flight services.

  • Marketers must ensure they are favorably represented on the portal intermediaries, where product will be compared with others in terms of core features, extended, and price.

    Extra: Examples


    • A Life Insurance company suggesting its customer to sign up for Car/Health insurance.

    • A Wholesale mobile retailer suggesting a customer to choose a network/carrier after one purchases a mobile.

    Extended Product Options:


    • Add-on services

    • Endorsements

    • Awards

    • Testimonies

    • Customer lists

    • Customer comments

    • Warranties

    • Guarantees

    • Money back offers

    • Customer service (people, process and physical evidence)

    • Incorporating tools to help users during their use of the product.

    • Information – extranets

    Conducting Marketing Research Online

    • Online Focus Group

    • Online Survey

    • Customer feedback or forums, possibly on independent sites

    • Web blogs

    • Secondary data: (Articles, papers, news)

    Types of Marketing Research:

    1. Exploratory Research

    2. Descriptive Research

    3. Causal Research

    Marketing Research Definition:
    Marketing Research is the systematic and objective process of identification, collection, analysis, dissemination, and use of information for the purpose of improving decision making related to the identification and solution of problems and opportunities in marketing.

    Focus Group Definition:
    Focus Groups are small groups of people brought together and guided by a moderator through and unstructured, spontaneous discussion for the purpose of gaining information relevant to the research problem. Focus groups are used when the organization needs to gain information and seek solutions from unstructured and spontaneous issues.


    • A brand is described as:

    'an identifiable product or service augmented in such a way that the buyer or user perceives relevant unique added values which match their needs most closely. Furthermore, its success results from being able to sustain these added values in the face of competition'.

    • So, Add-Value to influence perception, and sustainability of value to create experience.

    Brands Online
    "On the World Wide Web, the brand is the experience and the experience is the brand".
    To build successful online brands, organizations should consider how their proposition can build on these possible brand promises:

    • The promise of convenience – making a purchase experience more convenient that the real word, or for rivals.

    • The promise of achievement – to assist consumers in achieving their goals, for example supporting online investors in their decision or decision or supporting business people in their day-to-day work.

    • The promise of fun and adventure – this is clearly more relevant for B2C services.

    • The promise of self-expression and recognition – provided by personalization services such as Yahoo! Geocities where consumers can build their own Web Site.

    • The promise of belonging – provided by online communities.

    Plus trust and reassurance

    Success factors for brand sites

    • For some product (Drinks, household cleaning products) which we cannot sell online, is important to have online presence (Brand Site) in order to build experience and brand image successfully through:

    1. Apply advertisements on publisher sites.

    2. Brand Messages in paid search sites (Directions & Search engines).

    3. Sponsorship of tools or sections of publisher sites.

    4. Effective PR through editorial in publisher web.

    Success factors for brand sites:

    • For some product (Drink, household cleaning products) which we cannot sell online, is important to have online presence (Brand site) in order to build experience and brand image successful through:


    Price Implications

    • The internet allows for users of differential pricing: (different prices' model for same product based on customers, markets, or buying situation). E.g. iPhone use geographical pricing policy.

    • Increase Price transparency caused by aggregators and cyber-mediaries who increase customer knowledge through price comparison.

    • While the Internet allows cost reduction, but is important to:

    1. Understand the potential impact of price reduction on (Sales, Market Share, Competition, Products image, Demand)

    2. Justify the price reduction to avoid conflict with offline prices.

    A company needs to review the price transparency toward aggregators:

    • Aggregators (Comparison search engines) show the price without spot other features.

    • What companies should do to avoid the misleading information caused by aggregators?

      1. Educate markets about the limitations in aggregators (Incomplete coverage, limited information).

      2. Highlight other brand's features to reduce emphasizes on cost as differentiator (fulfillment choice, quality, customer service).

      3. Buy space in different sites to link customers to your site for this information above mentioned.

    B2B Reverse auctions Vs. B2C forward auctions

    • Use B2B reverse auctions to reduce price.

    • Use B2C forward auction to increase profit.

    • Auctions and other methods as well help to identify price floor and price ceiling.

    • Use B2C forward auction helps to identify price sensitivity.

    Alternative Pricing Policies

    • Different types of prices may be possible online:

      • Discounts

      • Guarantees & Warranties

      • Basic price

      • Add-ons & extra products / services

      • Refund Policy

      • Order cancellation terms

    Navigation Advantages for Place

    • Reach: This is the potential audience of the e-commerce site. Reach can be increased by moving from a single site to representation with a large number of different intermediaries.

    • Richness: This is the depth or details of information which is both collected about the customer and provided to the customer. This is related to the product element of the mix.

    • Affiliation: This refers to whose interest the selling organization represents – consumers or suppliers. This particularly applies to retailers. It suggests that customers will favor retailers who provide them with the richest information on comparing competitive products.

    New Channel Structures:
    Place concept online related to (sales promotion partnership).

    Since distance is removed by the Internet technology, products have three choices:

    1. Disintermediation

    2. Reintermediation

    3. Countermediation

    Channel Conflicts

    • While disintermediation provides opportunity of direct sales, more control, and more profit, it can threaten distribution by conflict with other channels.

    • Channel conflicts dependent on:

    1. A communication channel only.

    2. A distribution channel to intermediaries.

    3. A direct sales channel to customers.

    4. Any combination of the above.


    Virtual Organizations: What Are They?

    Virtual Organizations: Alternatives?

    • Promotion unfortunately has a range of meanings. It can be used to describe the marketing communications aspect of the marketing mix or, more narrowly, as in sales promotion. In its very broad sense it includes the personal methods of communications, such as face to face or telephone selling, as well as the impersonal ones such as advertising. When we use a range of different types of promotion – direct mail, exhibitions, publicity, etc we describe as the promotional mix.

    Promotion Mix

    Communication Tool

    Online Implementation


    Interactive display ads, PPC search advertising, banners.

    Personal Selling

    Site merchandising, virtual sales staff, chat, affiliate marketing.

    Sales Promotion

    Online loyalty programs, club marketing programs, rewards, coupons, online incentives, discount.


    Online editorial, blogs, feeds, virtual campaigns, e-newsletters, links to social networks


    Sponsoring online events, sites, or services

    Direct Marketing

    E-newsletters, opt-in e-mail, e-lists


    Virtual visits, e-exhibition


    Promotional ad serving on retail sites, e-alerts, personalized recommendations.


    Real packaging is displayed online, virtual tours

    Word of Mouth

    Links, e-mail a friend, viral, affiliate marketing

    Using Promotion to Vary the Mix
    1. Reviewing new ways of applying each of the elements of the communications mix such as advertising, sales promotions, PR and direct marketing.
    2. Assessing how the Internet can be used at different stages of the buying process.
    3. Using promotional tools to assist in different stages of customer relationship management from customer acquisition to retention.
    In a web context this includes gaining initial visitors to the site and gaining repeat visits through these types of communications techniques:

    • reminders in traditional media campaigns why a site is worth visiting, such as online offers and competitions;

    • direct e-mail reminders of site proposition – new offers;

    • Frequently updated content including promotional offers or information that helps your customer do their job or reminds them to visit.

    ICT for Acquisition & Retention
    In a web context this includes gaining visitors to the site and gaining repeat visits through these types of communication techniques:

    • Reminders in traditional Media campaigns why a site is wroth visiting, such as online offers.

    • Direct e-mail reminders of site proposition- new offers.

    • Frequently updated content including promotional offers or information that helps your customer do their job.

    People, Process, & Physical Evidence

    • Are important elements of the services' marketing mix, & e-marketing mix.

    • 3 P's are related to assess the effectiveness of WebQual & e-ServQual.

    • Physical evidence playing role in expressing the experience (tangibilization) that reflect the quality level.

    Options for replacing people

    • Auto-responders

    • E-mail notification

    • Call-back facility

    • Frequently Asked Questions (FAQ)

    • On-site search engines

    • Virtual assistants

    Stages & Methods of Managing Inbound Contacts

    • Make contact point clear

    • Use FAQ to reduce enquiries

    • Use drop down lists to categorize queries

    • Use auto responder

    • Give alternative information source


    End of Chapter 5

    Chapter 6: Relationship Marketing using the Internet

    Elements of CRM

    The Four Key Stages of Customer Relationship

    Differences between relational and transactional marketing

    Transactional paradigm

    Relational paradigm

    Market segment

    Individual customer

    Transaction duration



    Lifetime value

    Market share

    Most valued customers and customer share

    Mass market broadcast

    Dialogue and tailored communications

    Passive consumers

    Empowered clients

    CRM Applications:

    1. Sales Force Automation

    2. Customer Service Management

    3. Managing the sales process

    4. Campaign management

    5. Analysis & Decision making contribution

    CRM Data:

    • Personal and Prolife Data

    • Contact details

    • Preferences

    • Transaction Data

    • Sales History

    • Communication Data

    • Campaign History

    • Research / Feedback / Support Queries

    • Contact reports (B2B)

    Categorizing Customers: According to Value

    Categorizing Customers: According to Value (Important)
    Most Valuable Customers (MVC):

    • Are small portion of the total customers, contributing to the valuable profitability, normally purchasing more or accepting the higher-value product.

    • Objectives: Focus on their loyalty.

    • Strategy: focus on retention more than extension.

    • Action: Use continuity-selling programs & focus on differentiating them by value.

    Most Growable Customers (MGC):

    • Show potential to become valuable, their lifetime value is lower than valuables, but they are profitable in general.
      General (lot. generalis - umumiy, bosh) - qurolli kuchlardagi harbiy unvon (daraja). Dastlab, 16-a.da Fransiyada joriy qilingan. Rossiyada 17-a.ning 2-yarmidan maʼlum. Oʻzbekiston qurolli kuchlarida G.

    • Objectives: Focus on their continuity of adoption.

    • Strategy: Focus on extension.

    • Action: Use cross-selling & focus on up-selling by recommendation, personalize e-mails and web offers.

    Below Zero Customers (BZC):

    • Are unprofitable, those who have purchased once or never, providing very low lifetime value.

    • Objectives: Convert them into growables or minimize the investment on them.

    • Strategy: Focus on selection.

    • Action: use cross-selling & lower-cost by selling service online

    E-CRM Benefits

    • Customer Development

    • Managing e-mail list quality

    • Implementing e-mail marketing

    • Data Mining

    • Personalization and customization

    • Customer service quality and multi-channel experience.

    The four classic marketing activities of customer relationship management:

    Select  Acquire  Retain  Extend 


    A model for assessing & achieving e-marketing activities Selection, Extension, Acquisition, and Recognition.

    • Identification – can the customer be recognized for different channel contacts?

    • Individualization – Can communications and products be tailored?

    • Interaction – Are communications two-way?

    • Integration – Is there a 360 degree view of the customer?

    • Integrity – Is the relationship built on trust?

    Permission Marketing

    • Customer agrees (Opt-in) to be involved in organization's marketing activities – usually as a result of an incentive.

    Four words of permission marketing characterization:

    • Anticipated: Offer the prospect an incentive to volunteer.

    • Relevant: Using the attention offered by prospect to show him your product, and reinforce the incentive to ensure that prospect maintain the permission.

    • Personal: Offer additional incentives to get and increases his permission.

    • Timely: Use the permission to convert prospect into valuable customer.

    Permission Marketing

    Key Concepts:

    • Not interruption marketing or paused marketing

    • Not SPAM

    • Requires Opt-in incentives (online to e-mail)

    • Don't make Opt-out too easy!

    • Learning about the customer (watch, but don't ask interruptive questions)

    • Initial and continued relationship is based on incentives

    Options for Mass Customization and Personalization using the Internet

    Approaches to Implementing e-CRM

    • Stage 1: Attract new & existing customers to site.

      • Extend your appearance online through: Search Engines, Portals, Banners, Links

    • Stage 2: Give incentives and capture information.

      • Incentivise visitors to action: lead generation offer & sales generation offer based on web quality & credibility.

      • Capture information to maintain relationship: convert un-profited visitors to profiled potentials)

    Matrix of customer touch points for collecting and updating customer-mail contact and other profile information

    Approaches to implementing e-CRM (CONT.)

    • Stage 3: Maintain dialogue using online communication to encourage site visit repetition:

      • Email, Display specific information on the website, Use push technology such as RSS feeds, loyalty programs, news about products, prices, and new features, personal reminders, customer support, etc…

    The extent to which different types of segmentation variables tend to be predictive of response

    Approaches to implementing e-CRM (CONT.)

    • Stage 4: Maintain dialogue using offline communications to encourage site visits:

      • Use direct mail, phone calls, & personal face to face contact to encourage and inform potentials about your e-activities.

      • Educate them about the benefits they can get through their e-visit.

      • Give incentives & focus on sales promotion (discounts, coupons, awards, trials…)

    The Elements of the IDIC framework

    Techniques for managing customer activities & life time value LTV

    • A part of CRM strategy is to define measures which indicate activity level (purchases, frequency of use product, order, online services, web access…

    • The aim of using theses measures is to:

      • Increase number of new users weekly, monthly…

      • Increase number of active users & decrease numbers of inactive users

      • Decrease percentage of dormant users.

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    Chapter 1: Introducing Internet Marketing

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