CHAPTER 4 THE INTERNET AND THE MARKETING MIX NUR AQILAH BINTI ZAINUDIN 2014416824 BM240 3B
LEARNING OBJECTIVES
• Apply the elements of the marketing mix in an online context
• Evaluate the opportunities that the Internet makes available for varying the marketing mix
• Assess the opportunities for online brand-building
INTRODUCTION
• Show how the well-established strategic framework of marketing mix can be applied by marketers to inform their digital marketing strategy.
• It explores this key issue of digital marketing strategy in more detail.
• As well as the marketing mix, online branding is another major topic.
What is Marketing Mix?
Widely refered to4P’s of Product, Price, Place and
Promotion by Jerome McCarthy (1960)
Extended to 7P’s which include people, processes and physical evidence by Booms and Bitner,
(1981)
8th P online is the partnerships
The 4Ps and 4Cs
Product
Price
Promotion
Place
Cost
Communications with company
Customer needs andwants
Customer convenience
PRODUCT
Product Variable=========
Element of marketing mix that involve
researching customer needs and develop
appropriate product
Extended Product=========
Additional features and benefits beyond the
core product
Core Product=========
The fundamental features of product that
meet users needs
OPTIONS FOR VARYING THE CORE PRODUCT
Can I offer additional information or transaction services to existing customer
Can I address the need of new customer segments by repackaging current info by
new business propositions
Use ability to attract customer to generate new sources revenue or sales.
Will my current business be significant harmed by other company.
OPTIONS FOR OFFERING DIGITAL PRODUCTS
• Traditional publisher revenue model
• Different period at different price point
* Fee for single download/ viewing session at higher
relative price than the subscription
* Different channels/content can be offered as individual
product/ group at reduce price
• No direct price set yet• Revenue source through
adverts on site
Subscription
Ad supported contentBundling
Pay-per-view
OPTIONS FOR CHANGING THE EXTENDED PRODUCT
endorsements awards testimonies
Customerlists
Customercomment warranty guarantee Money
back
Customer service
Incorporating tools to help user during their use of
product
CONDUCTING RESEARCH ONLINE
Online focus group=========Compare
customers experience of product use
Online questionnaire
survey=======
Focus on site visitor experience,
can include question
Customer feedback / forums======
Comment post to site
Web Analytics=========
Response data from e-mail
The internet provides a platforms which enable new product to be developed more rapidly as it is
possible to test new ideas, concept or explore different
product through online market research.
= The law of the few = The stickiness factors= The power of context
VELOCITY OF NEW PRODUCT DEVELOPMENT
VELOCITY OF NEW PRODUCT DIFFUSION
BRANDS
Branding=========
Process of creating and evolving
successful brand
Brand=========Sum of the
characteristic of product/service perceive by user
Characteristic of successful brand=================
1. Brand is dependent on customer perception
2. Perception influence by added-value characteristic
3. Added-value need to be sustainable
Brand experience=========
Frequency and depth of interactions with a
brand can enhance through internet
Brand equity=========
Asset/liabilities linked to a brand name and symbol
that add to a service
SUCCESS FACTOR FOR BRAND SITES (METHOD ENCOURAGE VISITOR TO RETURN)
Create a compelling, interactive experience including rich media which reflects the brand
Consider how the site will influence the sales cycle by encouraging trial
Developing an exchange programmed on website to begin conversation with most valuable customer
segment
Brand identity========
Totality of brand association including
name and symbol that must be communicated
Brand names for online brand
===========* Should be simple.
Distinctive, meaningful and compatible with
product
Rules for naming online brand
===========• Law of the common
name• Law of proper name
PRICE
Price variable======
Element of marketing mix that involve defining
product price and pricing models
Pricing models======
Form of payment such as outright purchase,
rental, volume purchase
INCREASED PRICE TRANSPARENCY
Price Transparency=============
Customer knowledge about pricing increases due to increases availability of
pricing information
Differential pricing============
price different for different types of customer, market
and buying situation.
Price elasticity of demand ============
Measure of CB based on economic theory
DOWNWARD PRESSURE ON PRICE
Precision ============
each product has a price indifference band where
varying price has little or no impact on sales.
Adaptability ============
respond more quickly on demand of marketplace with
online pricing
segmentation ============
pricing differently for different groups of customers
RANGE OF OPTION FOR SETTING PRICING
Competition-based
pricing
Cost-pluspricing
Market-Orientedpricing
Target profit
pricing
NEW PRICING APPROCHES
DYNAMIC PRICING = price can be updated in real time according to the type of
customer or current market conditions.
SHIPPING FEES = dramatic effect both on conversion rates
and ability according to research completed by Lewis et
al. (2006)
ALTERNATIVE PRICING STRUCTURE OR POLICIES
Pricing options which could be varied online
include ==============
Basic priceDiscounts
Add-ons and extra products and services
Guarantees and warranties
Refund policiesOrder cancellation
terms
Online retailer should ask following question when reviewing pricing online
============================1. How many competitors are there at a point
in time?2. What is the position in PLC
3. What is the price sensitivity or elasticity of a product?
4. Are we stuck in the middle?
PLACEPLACE OF PURCHASE
Seller-controlled sites are those that are the
main site of the supplier company which are e-commerce enabled.
Seller-oriented sites are controlled by third
parties, but are representing the seller rather than providing a
full range of options
C. Neutral sites are independent evaluator
intermediaries that enable price and
product comparison and will result in the
purchase being fulfilled on the target site.
Seller-oriented sites are controlled by third
parties on behalf of the seller.
Seller-controlled sites usually involve either procurement
posting on buyer-company sites or those of intermediaries that have been set up in such a way that it is the buyer who initiates
the market making.
NEW CHANNEL STRUCTURES
Disintermediation = digital marketers should ask themselves the questions.
Reintermediation = the new intermediaries created through
reintermediation.
Countermediation = the strategic options to make better use of online
intermediaries.
CHANNEL CONFLICT
Different forms of channel the internet can take==================
1. A communication channel only
2. A distribution channel to intermediaries
3. Direct sales channel to customers
4. Any combination of above
Strategic option when existing reseller arrangement
in place=====================
1. No internet sales2. Internet sales by reseller
only3. Internet sales by
manufacture only4. Internet sales by all
VIRTUAL ORGANIZATIONS
Features of virtual organizations==============
1. Processes transcend theboundaries of a single form and
are not controlled by a single organizational hierarchy.
2. Production processes areflexible, with different parties
involved at different times.3. Parties involved in the
production of a single product are often geographically dispersed.
4. Given this dispersion, co-ordination is heavily dependent
on telecommunications and data networks.
DIFFERENT STRUCTURE FOR VIRTUAL ORGANIZATION
CO-alliance model=======
Effort and risk share equally by partners
Star alliance model=========
Effort and risk centered on 1 organization that
sub-contract other virtual partner
Value alliance model=========
Partnership where all element contribute across supply chain
Market alliance model===========
Similar to value alliance, but more
likely to serve differ marketplace
PROMOTION
How marketing
communications are used
to inform customers and
other stakeholder about
organization and product Elements of promotional mix ====================
1. Advertising2. Selling
3. Sales promotion4. Public promotion
5. Sponsorship6. Direct mail7. Exhibitions
8. Merchandising9. Packaging
10. Word-of-mouth
PEOPLE
PEOPLE variable
=====
Element of
marketing mix that
involves the
delivery of service
to customer during
interactions with
customer
Stages in managingInbound e-mail
PROCESS
REFERS to the method and procedure
companies use to achieve all marketing
function
Customer contact strategy
Customer- preferred channel
Company- preferred channel
PHYSICAL EVIDENCE
Physical evidence variable=========
Elements of the marketing mix that involves the tangible expression it is
purchased and used.
SUMMARY
• Evaluating the opportunities provided by internet for varying the marketing mix is a useful framework for assessing current and future digital marketing strategy
• Product. The product that will be sold which is a core product through the medium of web or new information based
• Price. Internet leads to the price transparency and commoditization.• Place. Place of purchase and channel structure on internet• Promotion. The medium uses to promote the product in a web• People, process and physical evidence.