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Strategies for building a customer base on theInternet:
symbiotic marketing
ANDY LOCKETTNottingham University Business School, Jubilee
Campus, Wollaton Road, Nottingham
NG8 1BB, UK
IAN BLACKMANFieba, Korns House, 6 8 Colne Road, Twickenham TW1
4JR, UK
The advent of the Internet is leading a re-evaluation of
existing business practice as
the m ethods em ployed in a non-vir tual world m ay not necessar
ily be as effective in a
virtual environm ent. The present paper exam ines the different
strateg ic options facing
organiz ations as they attem pt to build a custom er base on the
Internet. The traditional
s ite-centr ic approach of directing traf c to a central
Internet s ite suffers from the
problem s of the increasing costs and decreasing effectiveness
of Internet adver tis ing.
An alternative strategy is the sym biotic approach which is
based on the concept of
mutuality. A strategy of symbiotic m arketing involves one
organization providing
functionality for another organization s Internet site. In
exchange for the provision of
functionality for another Internet s ite the provider bene ts
from a increased m arket
coverage and reach. Although the strategy of sym biotic
marketing may initia lly appear
counter-intuitive, the following paper highlights the potentia l
advantages for a company
pursuing such a strategy. The case demonstrates such a strategy
exits as a low cost method
of developing a custom er base on the Internet. Finally, the
potentia l scope of symbiotic
m arketing is discussed.
KEYWORDS: Marketing strategy; Internet; customer bases;
symbiotic marketing
INTRODUCTION
The impact of the introduction of the Internet on business
practice has received disproportion-
ately little attention in the literature when compared to its
perceived importance. In particular,
the strategic implications of the introduction of the new medium
do not appear to be fully
appreciated. Although the Internet may appear to provide
numerous potential advantages to
marketers in terms of reducing costs and time horizons and
increasing an organizations reach,
it is important to view the potential of the new medium in a
greater strategic context. For
example, it appears that the costs of embracing a new channel of
distribution in conjunction
with existing channels may actually lead to an overall increase
in an organizations cost base.
However, the lack of empirical support for a link between
spending on information technology
(IT) and increases in productivity should not be taken as the de
nitive answer on the matter.
JOURNAL OF STRATEGIC MARKETING 9 4768 (2001)
Journal of Strategic Marketing ISSN 0965 254X print/ISSN 1466
4488 online 2001 Taylor & Francis
Ltdhttp://www.tandf.co.uk/journals
DOI: 10.1080/09652540010011475
http://www.tandf.co.uk/journals
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Rather, it appears as though government-aggregated statistics
used to examine shifts in produc-
tivity overlook the potential impact of IT in terms of
increasing quality, variety, timeliness and
levels of customer service (Brynjolfsson and Hitt, 1996).
Corporations launching Internet-based services are making a
considerable effort to under-
stand how best to use the bene ts of the Internet when
transferring their product or service to
the new medium. However, merely transferring content to the
Internet is not suf cient to
guarantee a viable Internet-based product/service. This becomes
an even greater problem for
companies that are purely Internet based as they do not have
customers via non-virtual
distribution channels. A necessary condition of success is the
attraction of customers and
the assembly of a customer base. Watson and Zinkhan (1997)
argued that one of the six
key questions of an electronic commerce strategy is that of how
does an organization develop
a web site that attracts customers? However, phrasing the
question in such a way appears to
suggest that a companys website is the only important factor in
in uencing the size of a
companys customer base. The following paper argues that it is
not only the companys web-
site that in uences the size of its customer base, it is also
the way in which it uses and distributes
the content of its own website on the sites of other companies
that may be important.
The dominant approach to building a customer base on the
Internet has been to imitate
existing strategies employed in a non-virtual environment.
However, the most cost-effective
means of attracting existing and new customers to the newly
developed Internet-based service
may not necessarily appear to be initially intuitive. The
present paper outlines the different
methodological approaches to attracting customers to an Internet
service, including both
traditional perspectives (site-centric models) and the novel
approach of symbiotic marketing.
The approach of marketing through symbiosis is one that has been
borrowed from the biol-
ogy literature and refers to the harmonious living together of
dissimilar organisms in a
mutually bene cial relationship (Adler, 1966). The issues
arising from the different approaches
will be discussed with reference to case data gathered on an
Internet-based organization.
The paper concludes by arguing that a corporations approach to
Internet-based promo-
tion should be primarily determined by the structure of their
existing market(s) and position(s)
within it.
MARKETING AND THE INTERNET
The impact of the introduction of IT on business has been both
dramatic and well-documented.
However, the introduction of the Internet is considered to have
potentially far greater con-
sequences for business than just those of increasing spend on IT
and the resulting changes
of increasing technical sophistication (Dutta et al., 1998).
Examples of the innovative applications
of IT to business are the virtual organization (Handy, 1995;
Scott Morton, 1995; Lockett and
Holland, 1996) and Internet-based marketing (Bianco, 1997;
Loebbecke and Jelassi, 1997). There
are an increasing number of marketing success stories of
organizations which have embraced the
Internet as a medium of business. For example, see the cases of
Dell (http://www.dell.com/)
(Magretta, 1998; Naud and Holland, 1998), Schwab
(http://www.schwab.com/) (Naud andHolland, 1998), Netscape (Yof e
and Cusumano, 1999) and American Express (http://
www.americanexpress.com/) (Berry, 1994).
In addition to changes to existing marketing practice, the
introduction of the Internet is
arguably heralding the development of a new era of marketing
theory (Dutta et al., 1998; Naudand Holland, 1998). Existing
research has highlighted the impact of the Internet on speci c
marketing activities such as marketing research (Quelch and
Klein, 1996; Lockett et al., 1999)
48 LOCKETT AND BLACKMAN
http://www.americanexpress.com/http://www.dell.com/http://www.schwab.com/http://www.americanexpress.com/
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and new product development (Lockett et al., 1998). Furthermore,
Buttler and Peppard (1998)
highlighted the Internet s importance in facilitating dyadic
information ows between supplier
and customer and that the inverse relationship between the
richness and reach of information no
longer holds. As a result the Internet has the potential to
encourage simultaneous two-way ow
of information between large numbers of customers and
suppliers.
One of the biggest implications for marketing theory and
practice is the shift from a non-
virtual market-place to a market-space, the implication of which
is that industry players do
not have to have a physical presence as with traditional
industries (Rayport and Sviokla, 1995).
This market-space is conceptualized by the ICDT (information
space, communication space,
distribution space and transactional space) model which
comprises four different virtual business
spaces, which are new spaces of opportunities for businesses:
virtual information space (VIS),
virtual communication space (VCS), virtual transaction space
(VTS) and virtual distribution
space (VDS) (Angehrn, 1997). However, in order to capture the
opportunities provided by
each of these spaces it is necessary that rms have a website.
The dominant theme in much
of the electronic commerce literature is that the introduction
of the Internet presents great
opportunities for smaller companies to enter markets that were
previously characterized by high
barriers to entry, such as the traditional requirement for a
physical presence in retail markets.
The problem is that the creation of a website does little more
than establish contact, it does not
in itself create interest (Angehrn, 1997).
The above perspective views the advent of the Internet as
reducing such barriers to entry
and, therefore, when coupled with the potential accessibility of
information in reducing
customers search costs, will lead to new market entrants,
increasing price competition and
the development of electronic markets (see Malone et al., 1987,
1989; Daniel and Klimis,
1998). However, this perspective has been challenged by
empirical studies of both the imple-
mentation of electronic data interchange (EDI) (Holland et al.,
1992) and, more recently,
of Internet market structures and what drives the differences in
traf c across sites (Ennew et al.,
2000). The study by Ennew et al. (2000) found that traf c across
the top sites in a range of
market sectors was highly skewed, with nearly all traf c being
concentrated on only a small
number of sites. This nding provides evidence for challenging
the orthodoxy that the intro-
duction of the Internet will lead to the development of
electronic markets. Although
companies are able to establish web sites, Angehrns (1997)
statement that the creation of an
Internet site establishes contact with customers may be
challenged as the existence of a web-
site does not mean that the site will be visited by a meaningful
number of people. Therefore,
the authors feel that the opportunities of the new market-space
are even more dif cult for
companies to capitalize on as the creation of a website does not
necessarily equate to making
contact with customers and potential customers. In reality many
websites have very small traf c
with over 90% of Internet traf c owing through less than 10% of
the most popular sites
(Ennew et al., 2000).
Therefore, if websites exist in a market-space that is so vast
that their existence is not a
suf cient condition for gaining traf c and the development of a
viable Internet venture
requires customers, the building of a customer base becomes a
key component of any com-
panys marketing strategy towards the Internet. In addition, the
development of a customer base
facilitates other stages in the marketing process such as market
research and new product/service
development/testing of the development (Lockett et al., 1998,
1999). Therefore, the develop-
ment of an Internet customer base is a strategic priority for
all Internet companies. The next
section proceeds to outline the range of different methodologies
that companies may employ
in attempting to build a customer base on the Internet.
BUILDING A CUSTOMER BASE ON THE INTERNET 49
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STRATEGIES FOR BUILDING A CUSTOMER BASE ON THE INTERNET
In addition to the potential advantages that may be associated
with the introduction of
electronic commerce (e-commerce), the introduction of the
Internet has led to a re-examination
of the economics of business transactions. The new medium has
the potential to reduce the
average costs associated with a transaction as a signi cant
portion of the costs of maintaining and
developing an Internet service are xed. However, variable costs
traditionally include those
involved in attracting customers to an Internet site and usually
vary in direct relation to the
number of potential customers attracted.
There appears to be two distinct methodological approaches to
building a customer base on
the Internet.
(1) The site-centric model involves a range of techniques that
can be used to attract
customers to a central site offering a particular product or
service. This strategy involves
a signi cant investment being incurred in the building of a
Internet-enabled product
or service, advertising the service to attract a user base and
then using feedback to adapt
the site to speci c target market(s) needs. This is the dominant
method for building
a customer base on the Internet, a strategy that has been
pursued by the vast majority
of companies, for example, Ebay (http://www.ebay.com/), and
Yahoo (http://
www.yahoo.com/).
(2) The second model is best described as the symbiotic
marketing model and is unique to the
Internet. With symbiotic marketing the processing required for a
service is centralized but
other sites are encouraged to incorporate the input and output
of the service within their
own site. The service is effectively taken to the site the
customer wants to use rather than
the customer having to go to the service provider s central
site. The most high pro le
company to employ a symbiotic strategy is the book and CD
retailer Amazon (http://
www.amazon.com/). Amazon encourages third party Internet sites
to become associates
and to provide Amazon services on their websites through a
number of different arrange-
ments. Companies can either link directly to the Amazon home
page, link to an Amazon
associates search box or link to individual products. A large
number of different Internet
sites have joined the Amazon associates programme for which the
associate receives a 5%
referral fee for each item purchased. An example of an Amazon
associate is America
Online Inc. (http://www.aol.com/). Approximately 200 000
websites have enrolled on
the Amazon associates programme (http://www.amazon.com/).
Examples include Excite
Inc. (http://www.excite.com/), Microsoft
(http://www.microsoft.com/) and Netscape
Communications Corporation (http://www.netscape.com). The
symbiotic strategy has
the advantage that, by delivering content to third party web
sites, Amazon is able to raise
its pro le on the Internet, therefore attracting more customers.
(Information regarding
links into any web site may be obtained from the altavista
search engine (http://
www.atavista.com/), both in terms of the number of links and to
which sites a particular
web site is linked).
Although the two approaches have been presented as polar
opposites this is not to say that a
company cannot pursue a hybrid of the two models. For example,
although Amazon pursues
a symbiotic strategy through its associates programme, it still
advertises heavily. The current
section now continues to outline the different methodological
approaches to building a
customer base on the Internet and examines the different
substrategies involved in the different
approaches.
50 LOCKETT AND BLACKMAN
http://www.ebay.com/http://www.amazon.com/http://www.altavista.com/http://www.ebay.com/http://www.yahoo.com/http://www.amazon.com/http://www.aol.com/http://www.amazon.com/http://www.excite.com/http://www.microsoft.com/http://www.netscape.comhttp://www.altavista.com/
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The site-centr ic m odel
The site-centric model has clear parallels with traditional
forms of retailing where customers are
attracted to a particular institutions brand in order to meet
their broad requirements. The organ-
ization invests in building a high degree of content on the
companys own Internet site and
seeks to protect the content it has developed, as it perceives
it to be a valuable resource of the
rm. (The notion of a rm-speci c resource dates back to the
seminal text of Penrose (1959)
and, more recently, Wernefelt (1984) who viewed a resource as
anything that can be considered
to be a strength or weakness of the rm.) In being naturally
protective of its own services the
strategy becomes one of attracting and retaining customers
within the central site. However, in
order to do this it is usually necessary for the organization to
develop strong brand recognition.
This strategy towards the Internet is one that large marketing
and advertising rms are familiar
with from a non-virtual context.
The site-centric approach may be viewed as an umbrella strategy
that encompasses a range of
different, non-mutually exclusive techniques. The common theme
running through all of the
techniques is the need to concentrate on attracting customers to
the companys own speci c
Internet site (see Fig. 1). The range of different site-centric
approaches is outlined below.
Portal sites
A portal Internet site is either the rst site a user sees when
logging on to the Internet or
a central site (search engine) used to identify other sites. The
log-in screen is often pre-set by the
Internet service provider (ISP) of access to the Internet (e.g.
AOL) or the provider of the soft-
ware browser (e.g. Netscape and Microsoft). A second category of
portal sites is the search
engines used to nd appropriate sites (e.g. Yahoo, Excite and
Infoseek).
FIGURE 1. The site-centric model: attracting customers to a
central site.
BUILDING A CUSTOMER BASE ON THE INTERNET 51
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Both the portal forms, i.e. ISPs and search engines, have been
attempting to enhance their
Internet presence by offering an increasing range of
complementary services. A number of
portal sites have begun to offer complementary e-mail services
as a means of attracting
customers to their site, for example Yahoo (Yahoo Mail) and
Microsoft (Hotmail). (Microsoft
acquired the existing Hotmail service for approximately US$400
million. This may be viewed as
a payment for acquiring the functionality and brand name;
however, it was anticipated that the
existing customer base of Hotmail was the most attractive
resource possessed by the company.)
In addition, the larger search sites such as Yahoo have been
successful in simplifying the search
process by suggesting sites that have been reviewed by their own
staff in addition to providing a
listing of the sites identi ed. The portal sites have an
advantage in recognizing the key interests
of the users of their sites. By using this information the sites
are able to provide value-added
services to meet the identi ed customer needs or, in cooperation
with content providers
on a co-branded basis, to retain the customers within their own
site. An example of this strategy
is the development of Excite s personal nance site by Intuit and
the Financial Times (http://
www.quicken.excite.com/).
However, the strategy of developing a portal site has become
increasingly dif cult to follow,
particularly in the form of a search engine portal. Evidence of
this is the attempt by Northern
Lights (http://www.northernlight.com/) to become one of the main
search engine portals by
offering an improved search engine platform. Although the search
engine platform was initially
acknowledged to be an improvement on the competition, to date
Northern Lights has yet to
build a customer base to challenge the top ve search engines.
Therefore, it appears as though
the cost to the largest portal sites of matching a short-term
technological advantage is sig-
ni cantly less than the cost to the new entrants of building a
recognizable brand and signi cant
user base.
In the UK, a number of companies (e.g. the food retailer Tesco
(http://www.tesco.com/),
the building society Nationwide (http://www.nationwide.com/) and
the electronics retailer
Dixons (http://www.freeserve.com/) have attempted to build their
own ISP portal sites through
providing free Internet access to their own customers. The
approach appears to be one of cross-
selling to an established customer base while reducing the
likelihood for the customers viewing
the products/services of a competitor.
Purchase links to a portal site
In addition to developing their own portal sites, companies are
able to purchase prominent links
in existing key portal sites. AOL has been particularly active
and successful in selling links
on its information pages. An example is the willingness of three
online discount stock brokers to
pay US$75 million to be the sole brokers linked to AOL personal
nance site for 3 years. The
cost of acquiring a key position on a portal site appears to be
growing with Citigroup agreeing
to pay Netscape US$40 million to provide the personal nance
content for the Netscape
Personal Finance site. The option of purchasing links will
continue to become increasingly
expensive as Internet traf c increases and demand for such links
grows.
Purchase advertising
The strategy of advertising on the Internet is somewhat similar
to that of acquiring a portal link
because of the ability to link an advertisement directly to the
advertisers own site. Where the
customer can purchase the product/service from the Internet site
a direct and instantaneous
52 LOCKETT AND BLACKMAN
http://www.quicken.excite.com/http://www.quicken.excite.com/http://www.northernlight.com/http://www.tesco.com/http://www.nationwide.com/http://www.freeserve.com/
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link is provided between the advertisement and the point of
purchase. However, the rate of
people clicking on advertisements appears to be declining with
an average of approximately
one click-through per 200 views stated as the norm in industry
newsletters. In addition to the
ineffective nature of Internet advertisements, the high prices
charged for advertisement
space does not make the economic model for Internet advertising
compelling (Lockett et al.,
2000). (For a comprehensive discussion of advertising on the
Internet see Novak and Hoffman
(1996).)
The large portal sites have exploited key advantages in selling
targeted advertisements, in
particular the following.
(1) Keywords can be used to select an appropriate banner
advertisement.
(2) Advertisements can be presented on Internet pages with
related topics.
(3) Regional-speci c advertising can be provided on
regional-speci c search engines.
(4) Detailed information can be collected in order to assist
buyers determine the success of
speci c banner advertisements.
The portal sites appear to have been successful in maintaining a
premium price for their
targeted advertising space, with Yahoo being prominent in not
discounting its space (Lockett
et al., 2000). As a result, a number of intermediaries are
attempting to duplicate the bene ts of
the portal sites by delivering banner advertisements to groups
of second tier Internet sites;
however, the price of the advertising space here is much
lower.
Direct e-mail: registered users or subscribers to e-mail
services
Customers can be encouraged to register their interest in
receiving details of new product
launches by e-mail or register for regular news or information
updates. On the basis of e-mail
lists messages can be targeted with advertisements included in
the e-mail or the customers
contacted with speci c product updates. For example, the
companies Ad-Online (http://
www.a-o.com/) and NUA (http://www.nua.ie/) disseminate weekly
e-mails to subscribers
informing them of their latest products and research. However,
the problem still exists that traf c
has to be initially directed to a central site in order that the
customer may register for the
service. Therefore, although e-mail may be a quick, low cost
alternative to postal mail (Mehta
and Sivadas, 1995), the strategy still requires the identi
cation and compilation of a list of
potential customers to contact.
Direct e-mail: junk mail or spam-mail
In addition to solicited e-mail, junk mail or spam-mail e-mail
is the Internet s version of
unsolicited direct mail. There are a number of techniques
available for building very large e-mail
lists. In addition, the cost of distributing the e-mail is very
low. The spammer often uses the
unprotected servers of other companies in distributing the
e-mail, avoiding the cost of dis-
tributing the mail. The person who receives the e-mail then
effectively pays to receive the junk
mail in the time taken online to delete or download the mail.
Complaining to the junk mailer is
generally not a good idea as it con rms that you have read the
mail and that your e-mail
account is active, thus attracting further mail. Spammers are
generally regarded as the marketing
low life of the Internet, whose business model is based on
abusing the open structure of the
Internet in order to use other companies resources.
BUILDING A CUSTOMER BASE ON THE INTERNET 53
http://www.a-o.com/http://www.a-o.com/http://www.nua.ie/
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In summary, leaving the strategy of junk mail/spam-mail aside,
the common problem that
is common to all site-centric strategies is the increasing costs
that have become associated
with attracting traf c to a central site and building a customer
base. Symbiotic marketing may
be viewed as a response to some of the problems associated with
the site-centric approach to
building a customer base on the Internet.
Sym biotic m arketing
The term symbiosis , as borrowed from biology, refers to the
living together in intimate
association of two dissimilar organisms for mutual bene t
(Street, 1975). The existence of such
mutualistic interactions has been widely reported from a wide
range of taxa and include many
different types of relationships in the biological sciences
(Boucher, 1985). The driving force
behind the formation of the symbiotic relationship must be that
the mutualism should lead to an
increase in tness of both participants (Poulin and Vickery,
1995). Adler (1966) highlighted
the case of the African buffalo bird that lives on the back of
the rhinoceros. In return for a free
mobile home and a free food supply of insects off the hosts back
the bird provides a valuable
service. The bird, with its nely tuned sensory equipment, is
able to detect danger at an early
stage and, thus, is able to squawk and y off the back of its
host thereby providing an early
warning of any potential danger.
Adlers (1966) article was the rst to explore the concept of
symbiosis in marketing. Although
the concept has become one that is highly applicable in the
context of business practice it is one
that has been largely under-researched in the academic world
(Varadarajan and Rajaratnam,
1986). Symbiotic marketing is an alliance between two or more
independent organizations
which is designed to increase the market potential of each
(Adler, 1966, p. 60). This de nition
only refers to organizations that remain distinct and excludes
the traditional marketer marketing
intermediary relationship (Varadarajan and Rajaratnam, 1986).
The present paper applies the con-
cept of symbiotic marketing to the case of Internet marketing
and, in particular, to the develop-
ment of a customer base. As with Adler s (1966) example of the
buffalo bird and the rhinoceros,
the basis of this symbiotic marketing relationship is the
concept of mutuality, i.e. both parties
derive a bene t from the relationship. The services provided
will bene t the host site, which will
form the incentive to include the services on their site. In
addition, the service is delivered to
the site that the customer would prefer to use rather than the
customer being directed to the site
the supplier would prefer they used. In addition, by forming a
symbiotic relationship with the
host site an organization can easily provide its services to a
wider audience than they could
otherwise do if they only existed on their own site. The
development of symbiotic relationships
in the market-space is manifested through electronic links
between organizations websites. The
willingness to link to different rms websites is in effect the
provision of a seal of approval for
that website; however, the link relationship is very different
from the concept of a relationship
that we think of in the context of strategic alliances between
organizations. In the case of
a symbiotic strategy such a link may be implemented by a rm
without the consent of the
content-providing link partner. The easy implementation of links
is an important element in a
symbiotic strategy as an organization will want to link to as
many other websites as quickly as
possible. However, although symbiotic relationships are
characterized by no interpersonal contact
between rms this is not to understate their potential
importance. Recent research by Ennew et
al. (2000) examined the importance of links in determining the
level of traf c on an Internet
site and found that links were overwhelmingly the most important
determinant of site traf c
with elasticities of approximately 0.75 across a range of
different market sectors.
54 LOCKETT AND BLACKMAN
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On initial examination this strategy may appear to be
counter-intuitive because, under the
site-centric model, companies protect their functionality and
attract customers to their central
site. However, the service industry does not enjoy the same
legal protection of intellectual
property as the manufacturing industry. Although companies are
able to protect intellectual
property in the form of trademarks and brand names they are less
able to protect ideas. An
extreme example of this is the nancial services industry where
it is not possible to patent
an actual service concept/idea (Naslund, 1986). Therefore, if it
is not possible to protect the
intellectual property rights of a service, the actual
functionality of an Internet page becomes a
rm-speci c resource that cannot be fully protected. This has
interesting implications for how
rms approach their strategy towards marketing on the
Internet.
As discussed earlier, the building of a customer base is
considered to be key in developing a
viable Internet-based organization. However, the traditional
approach of the site-centric strategy
is becoming increasingly costly and one that is not an option
for rms with small advertising/
promotion budgets (Lockett et al., 2000). The strategy of
symbiotic marketing builds on the idea
that it is not possible to protect content and, therefore,
concentrates on what is the best way
to build and defend a customer base. The case below demonstrates
that, rather then protecting
content, in certain instances the best strategy may be one of
providing content to whichever
Internet page the customer requires. However, the important
distinction to make is that giving
away content is not the same as losing customers. The customers
of the service will remain
with the company, as it is the original company that provides
the service. The only difference is
that the port of entry for the client is not always the service
provider s own Internet site. The
strategy of symbiotic marketing is represented diagrammatically
in Fig. 2.
The symbiotic strategy has the advantage that, by making the
service available on as many
sites as possible, the chances of a new customer nding the
service are increased. The technique
appears to be particularly appropriate for the
business-to-business market where the most
important site for a service to be referenced is their own
companys Intranet site or access page
FIGURE 2. The symbiotic marketing approach.
BUILDING A CUSTOMER BASE ON THE INTERNET 55
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to the Internet. In addition, through the development of its
links the company is effectively
building itself an electronic presence in the market-space. Not
only does each link raise the
visibility of an organization and, therefore, drive more traf c
to a site, the possession of a link has
the added advantage of depriving a direct competitor of building
the same link (Ennew et al.,
2000). The strategy is explored using case data in the following
section.
RESEARCH METHOD
The present research employed a case study-based method based on
those of Eisenhardt (1989)
and Yin (1994). The decision to use a case-based methodology was
based on two main con-
siderations. First, the number of companies that are following a
symbiotic strategy in developing
their customer base appears to be very small and only three were
identi ed during the course of
the research: Xenon Laboratories, Google and Amazon. In
addition, as the strategy of symbiotic
marketing in the case of the Internet has not been explored
before, the case study method pro-
vides an important vehicle for the development of theory
generation. This was considered to be
an appropriate approach when focusing upon this novel research
area. The information sources
used in the development of the case included interviews with
board-level employees of Xenon
Laboratories, information collated from the Xenon servers that
host their website and additional
data that is publicly available from web monitoring companies,
the best of which is considered
to be Alexa (http://www.alexa.com/). (The data provided by
Alexa.com is publicly available and
provides measures of site traf c, links into a site and a number
of different site-level data relating
to factors such as the speed, freshness and content of a web
site. For a fuller discussion of
the data see Ennew et al. (2000).) The motive for employing a
range of different data sources
was that such an approach would facilitate the triangulation of
evidence (Deshpande, 1983). A
case approach involving the use of multiple sources of data is
particularly useful in areas where
existing theoretical and conceptual frameworks are not
applicable and, thus, the research pursues
the less common direction of moving from data to theory.
A CASE EXAMPLE OF SYMBIOTIC MARKETING
The objective of the case is to present a real life example of
how a strategy of symbiotic
marketing may be used in order to build a customer base on the
Internet. One company that has
pursued such a strategy is the Canadian Internet nancial service
provider Xenon Laboratories
(http://www.xe.net/). (A corporate overview of Xenon
Laboratories may be obtained from its
web site at (http://www.xe.net/xenon/brief.htm). Xenon
Laboratories states that it aims to
work in partnership with nancial institutions in order to
develop and deliver Internet-based
international nancial services for their corporate customer
base.) Xenon Laboratories has
followed a symbiotic approach to building a customer base as it
attempts to enter the nancial
services market in order to support cross-border
business-to-business trade. However, as the case
demonstrates, the strategy of symbiotic marketing may not be
considered to be initially intuitive.
Instead, Xenon Laboratories symbiotic strategy has been one that
has emerged over time, the
logic of which has become increasingly apparent.
The market for international payment services is highly
fragmented, with basic services pro-
vided by over 4000 different banks and the introduction of high
value-added services dominated
by the large international banks, including Citibank, Bank of
America, Chase and ABN AMRO.
Xenon Laboratories strategy in entering the market has been to
build a customer base of
importers and exporters by providing free information tools.
This was the rst stage as, once
56 LOCKETT AND BLACKMAN
http://www.alexa.com/%29.http://www.xe.net/%29.http://www.xe.net/xenon/brief.htm%29.
-
a customer base has been developed, it is then possible to
contact customers in order to test
product concepts and develop enhanced information products that
prompt the purchase of a
nancial product. By employing such a strategy Xenon Laboratories
has been able to circumvent
the large expense of the traditional site-centric model of
attracting hits to a central site. In
addition, the cost of developing a fully functional service can
be postponed until after the
product concept has been tested with a signi cant customer
base.
Attracting a custom er base of im por ters and exporters
In April 1995, Xenon Laboratories launched a simple foreign
exchange calculator on the Inter-
net, the Universal Currency ConverterTM
(http://www.xe.net/currency). This is a free service
that enables users to calculate a value in a second currency. In
addition, a free daily e-mail
delivery of a foreign exchange table expressed in the currency
of the customers choice was
provided. The e-mail service was not advertised, with the bulk
of registrations obtained from
users clicking on a link on the output page of the Universal
Currency ConverterTM. The
registration procedure for each of the services provided a suf
cient level of information such
that Xenon Laboratories was able to determine that the users of
the converter were split
between two main segments.
(1) Business-to-business: importers and exporters using the
service to price transactions in
their trading partners currency.
(2) Retail users: converting prices for holidays.
(The level of data collected from the registration procedures
for each of the services
included capturing information regarding (1) the respondents
name, address and personal
details, (2) company information, where necessary, (3) reasons
for using the Xenon Labora-
tories services, (4) users of level awareness of other Xenon
Laboratories services, (5) how
users became aware of the Xenon Laboratories services and (6),
potential service
improvements.)
In August 1996 the customer base of the Currency Update Service
was large enough to
test an initial product concept with only just over 300
registered customers. The initial product
concept tested was the Exporter Pricing ServiceTM, a service
aimed at reducing the risk
facing exporters when pricing sales in their customer s currency
(see Naud et al., 1998). As a rst stage in the new service
development process e-mails were forwarded to 300 customers
requesting their input on the product idea. The e-mail contained
the address of a simple
questionnaire placed on Xenon Laboratories site. Within 24 h of
sending the e-mails over 15%
of the sample had completed the questionnaire on the site.
The purchasing of advertising was not an option in growing the
user base for two main
reasons. First, Xenon Laboratories did not possess the required
nancial resources and,
second, there are a limited number of high use exporter- and
importer-speci c sites on which to
advertise. In addition, Xenon Laboratories faced the problem
that, during 1995 and 1996, there
was a limited number of companies who entered the market
offering a similar service. However,
during this time the site did receive considerable coverage in
the press and a large number of
links from other sites.
In the rst year of use it was found that other sites were
creating their own input pages
and sending the calculations to the Xenon Laboratories server;
the result was then returned as
the Xenon Laboratories output page. While the actual page views
of the Xenon Laboratories
site were reducing relative to the number of calculations, the
likelihood of an importer or
BUILDING A CUSTOMER BASE ON THE INTERNET 57
http://www.xe.net/currency
-
exporter using the Xenon Laboratories service and, therefore,
seeing the links to the Currency
Update registration form increased. Therefore, it was decided
that rather than blocking the use
of Xenon Laboratories services that did not originate on the
Xenon Laboratories site, Xenon
Laboratories would actually encourage it. In order to do this,
in late 1997 instructions were
provided in order to help customers produce their own customized
versions of the Universal
Currency ConverterTM (http://www.xe.net/cus/customize.htm).
However, customers who
established their own customized versions of the service were
still requested to register
and, as a user, were asked why they were using the converter. In
early 1998 an average of
10 customized versions of the Universal Currency ConverterTM
were being registered per
day. The daily average signi cantly increased in March 1999 when
the process for setting up
the input pages was simpli ed by providing a downloadable le.
The growth in the number
of monthly new registrations for customizing the converter over
the last 12 months is shown
in Fig. 3.
The large number of customized versions of the Universal
Currency ConverterTM greatly
increased its coverage on the Internet and, thus, the
probability of an Internet user nding the
service. In addition, the large number of sites listed with the
Universal Currency ConverterTM
also resulted in the Universal Currency ConverterTM taking a
large portion of listings when a
search was made for a currency converter on the main search
engines. As a result, the growth
of the service has continued to date with usage increasing
approximately 8% compound per
month. Fig. 4 shows the increased usage of the converter over
the period March 1997 to
November 1999.
As a defensive measure Xenon Laboratories also provided
co-branded versions of their
converter for use by the large portal sites (e.g. eBay,
AT&T, Go and Virgin) where the site
owner s prime objective was to retain customers on their own
site. Again, the main bene t in
providing functionality to a non-Xenon Laboratories site was
that a link was shown to Xenon
Laboratories additional services in order to build the database
of customers for testing product
concepts.
FIGURE 3. Registration of customized versions of the Universal
CurrencyConverterTM.
58 LOCKETT AND BLACKMAN
http://www.xe.net/cus/customize.htm
-
Initially it was anticipated that, by following the symbiotic
strategy, the bulk of calculations
would be delivered by sites that had placed the input page
within their own site with custom-
ized versions of the calculator, with the majority of
calculations coming from the key portal sites
using co-branded versions of the service. However, during April
1998 it was found that 85%
of calculations were entered into the calculator on the actual
Xenon Laboratories site and that
10% were from free customized versions and only 5% from the
prominent portal sites.
Following the analysis, Xenon Laboratories concentrated on
simplifying the process for
smaller sites in order to implement the free customized versions
within their own site rather
trying to convince the large portal sites to implement tailored
co-brands within their sites. In
order to illustrate the bias towards the Xenon Laboratories
site, the ratio of page views for the
Universal Currency ConverterTM to the number of calculations is
shown in Fig. 5. Although
the proportion of calculations that come through the Xenon
Laboratories web site appears
to be lower than in April 1998 the proportion is holding
relatively stable at around 65%. This
proportion has been achieved despite a strong growth in the
number of input pages installed
within other sites.
The reason why only a low and stable proportion of calculations
are being performed on the
prominent portal sites or co-branded sites is not yet fully
understood. The low proportion of
calculations generated by the portal and other sites may re ect
their low share of the business-
to-business market on the Internet. The peak load on the Xenon
Laboratories service is at the
start of the working day on the West Coast of America with a
large portion of the calculations
generated from corporate Intranet sites. The portal site for the
business users is their companys
home page when the employees are accessing services from the
company Intranet or from links
on their companys home page (both are effectively the portal
site for the organization).
It appears that a strategy of assisting business customers in
either inserting links or the input
pages for Xenon Laboratories services on their own Internet and
Intranet sites is an effective
approach to generating a virtual portal site or
business-to-business marketing.
FIGURE 4. Usage of the Universal Currency ConverterTM over the
last 18 months.
BUILDING A CUSTOMER BASE ON THE INTERNET 59
-
As with the portal sites the reason why usage of the converter
from customized sites may
be far less than rst anticipated is not fully understood. One
potential explanation is that users
of the customized site typically bookmark the output page (on
Xenon Laboratories site) rather
than the input page used to make the calculation on the
customizer s site. If the customer
does this then they will automatically go to the Xenon
Laboratories central site each time rather
than the customized company site. Other websites may be linking
to the Xenon Laboratories
site rather than the site that has implemented their own input
page to the Xenon Laboratories
service. Xenon Laboratories encourages this by providing simple
instructions on how to
implement the link.
Com par ison of Xenon Laborator ies with com petitor s
The above case outlines how Xenon Laboratories has been
successful in growing its own
customer base by using a strategy of symbiosis. In order to
determine the success of Xenon
Laboratories relative to its competitors two public sources of
data were used. The search engine
Google (http://www.google.com/) was used to provide a list of
the 10 most popular currency
converters. Google ranks websites according to the number
and/quality of links to a website.
(The Google ranking takes into account the quality of links
directing traf c to a site. A rms
ranking is computed using a complex algorithm which attributes a
weight according to the
popularity of a site.) The second source of data used was that
provided by one of the range of
web monitoring services that currently exist. Rather like the
omnibus consumer surveys which
operate in conventional markets, web monitoring surveys collect
data on the Internet activities
of consumers registered with the particular service. Of the
range of monitoring services avail-
able, Alexa (www.alexa.com) was identi ed as probably the most
comprehensive. Alexa is a page
FIGURE 5. Ratio of Universal Currency ConverterTM calculations
to page views.
60 LOCKETT AND BLACKMAN
http://www.google.com/http://www.alexa.com
-
counter site which has one of the widest reaches in terms of
both sites covered and number
of users (estimated at approximately 0.5 million users). For the
user, it appears as a toolbar once
a web browser has been invoked. It provides the user with
background information on the
sites visited. When a user visits a site, Alexa recognizes the
location, identi es any related links
and gives the user the opportunity to comment. The number of
visits recorded is based on the
number of Alexa users who have visited the site in the previous
6 months. Every time an Alex
user visits the site, it counts as a visit and the number of
visits is recorded on a daily basis. The
ten most popular currency converters identi ed by Google and
their volume of Alexa traf c are
presented in Table 1.
Table 1 indicates that Xenon Laboratories had the largest
customer base (as measured by
Alexa data) of the websites providing currency converters. The
market for currency converters
appears to be highly concentrated with most of the traf c going
to Xenon Laboratories and its
main competitor Oanda, which it appears has also adopted a
symbiotic approach to marketing
its services. The importance of the symbiotic strategy is
demonstrated by the fact that four of
the top 10 web pages listed by Google are linked to the Xenon
Laboratories converter and one
other is linked to the Oanda converter. The high degree of
market concentration between the
two companies demonstrates the potential of a symbiotic strategy
for reducing competition by
creating barriers to entry for new entrants. The ndings are
consistent with those found across a
range of different market segments including books, CDs, retail
broking, retail banking and travel
agency services (Ennew et al., 2000).
The va lue of links
The symbiotic approach appears to be successful in building a
customer base on the Internet and
reducing the likelihood of competitors entering the market.
However, such an approach does
require a considerable amount of time in order to build up a
network of links and a client base
(5 years for the present case). The site-centric approach offers
a much quicker strategic option
for rms wishing to build a customer base which may be pursued
through the use of advertising
in order to purchase temporary links from other sites as banner
adds. An estimate of the number
of banner advertisements required to generate the equivalent
page views as the output page
of Xenon Laboratories converter should give an indication of the
value of the symbiotic
process used by Xenon Laboratories. An attempt to calculate the
value of the symbiotic strategy
is presented in Table 2. During December 1999, Xenon
Laboratories Universal Currency
ConverterTM was processing an average of approximately 95 000
calculations daily. The pro-
portion of these calculations that came through links to the
Xenon Laboratories web page was
approximately 35%. Therefore, in order for banner advertising to
generate the same volume
of page views as do links it would be necessary for banner
advertisements to result in 33 250
calculations per day. The click-through rate for banner
advertisements is estimated at 0.5%
and, thus, Xenon Laboratories would have to purchase the
equivalent of 6 650 000 banner
views in order to drive the same level of calculations. If the
cost per thousand impressions
(CPM) is taken as $6, then the total value of Xenon Laboratories
links in driving calculations
on the converter is $39 900 per day (the gures for the
click-through rates and CPM are both
conservative industry standards).
Table 2 indicates that, if Xenon Laboratories did not have any
links and required maintaining
its current level of calculations through its site via banner
advertising, then it would face costs
of around $39 900 per day. Therefore, the symbiotic approach can
be seen to have saved Xenon
Laboratories a substantial amount of money as it has not
incurred the costs of accessing a
BUILDING A CUSTOMER BASE ON THE INTERNET 61
-
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62 LOCKETT AND BLACKMAN
http://www.oanda.com/classic/http://www.xe.net/ucc/http://www.asia1.com/html/currency.htmlhttp://www.travelnotes.org/General/currencies.htmhttp://www.195583.com/http://www.rosewoodhotels.com/currency.htmhttp://www.ozemail.com.au/%7Eman7/osa/ccc.htmlhttp://www.travelfinder.com/currency.htmlhttp://www.4tourism.com/uk/convert.htmlhttp://www.myna.com/%7Ecfeltham/money.htm
-
customer base via banner advertising (or any other form of
advertising). The costs identi ed in
Table 2 highlight the prohibitive costs of building a customer
base that any potential entrant
faces in any Internet market. In addition, the value of the
links to Xenon Laboratories may be
considered to be greater than in the case provided above because
of the non-temporary nature
of the links. Unlike banner advertisement which are only visible
as long as a company continues
to pay, the link will remain until it is removed by the company.
Therefore, the link also provides
a form of barrier to entry for companies as they would have to
displace existing links before
creating their own.
Case discussion
The case demonstrates that Xenon Laboratories, by actually
encouraging companies to
incorporate their own content into their own Internet sites,
have built a customer base. This
has been achieved without having to incur the costs generally
involved in a more traditional
site-centric approach. However, it must be acknowledged that the
strategy of symbiosis was not
initially intuitive to Xenon Laboratories. The emergence of the
symbiotic strategy was due to
the realization that other websites were linking into the Xenon
Laboratories site and that, by
doing this, Xenon Laboratories would be gaining rather than
losing customers. In addition to
not stopping customers from embedding Xenon Laboratories
functionality in their own web-
sites, Xenon Laboratories actually saw the potential bene ts
from making the process as simple
as possible in order to encourage this behaviour. An additional
bene t that has accrued to
Xenon Laboratories and one that the management of Xenon
Laboratories do not fully under-
stand is why over 50% of all calculations are input on the Xenon
Laboratories site. It appears as
though even when the Xenon Laboratories input pages are embedded
in third party websites,
that customers overwhelmingly prefer to use the actual Xenon
Laboratories site for inputting
their calculations. This has interesting implications for the
symbiotic strategy as it means that, not
only can the symbiotic strategy lead to low cost development of
a customer base, but also that
these customers may choose to make either a bookmark or link
their site to a source provider of
the functionality.
The lessons that may be drawn from the case are that it appears
as though it is more import-
ant to be the rst to promote the symbiotic approach for the
service by other sites than the rst
to produce the solution. The important aspect of the strategy is
that the content of the service is
delivered to as many different Internet sites as possible and as
quickly as possible. The greater the
TABLE 2. The value of Xenon Laboratories links interms of banner
advertising
Number of daily calculationsProportion of calculations from
links %Number of views of outputs page linksClick-through rate from
banner adds %Number of banner views required to achieve
comparable level of page viewsCPM ($)Cost per day ($)
95 00035
33 2500.5
6 650 000
6.0039 900
BUILDING A CUSTOMER BASE ON THE INTERNET 63
-
Internet coverage of the service, i.e. the more Internet sites
it is embedded in, the more dif cult
it becomes for the competition to remove it. Evidence of this is
Amazons strategy of associate
companies and the more than 200 000 associate members it has on
the Internet. This makes it
increasingly dif cult for other book retailers to erode Amazons
position as Internet users are
more likely to be directed to the Amazon site than a
competitors. The recommendation of
the service by another web site may increase the likelihood of a
customer using the service as
this could raise the perception of trust in the service. A
comparison on the effectiveness of the
approach versus purchased advertising banners is an area for
future research.
THE POTENTIAL SCOPE OF SYMBIOTIC MARKETING
Although the case above demonstrated the advantages of employing
a strategy of symbiotic
marketing for Xenon Laboratories this is not to say that it will
be universally applicable. The
following section attempts to examine which factors will in
uence an organizations strategy
towards building a customer base on the Internet. This is a
similar approach to the one taken by
Holland et al. (1992) in their paper on the implementation of
EDI strategies. It is anticipated
that a number of factors will in uence on organizations decision
as to the strategy they
will follow in building a customer base. It is anticipated that
building a customer base using a
symbiotic marketing strategy will be best suited to services
where (1) the service is based on
changing data, i.e. that there is a requirement for an enquiry
to be sent to the central server and
a results page to be returned, (2) the service is viewed as
adding value to the host site and not
seen as competitive threat, (3) the service is simple for other
sites to implement and (4) the
feedback from clients can be immediately used to enhance the
service.
In addition to the characteristics of the service, the nature of
the market the service is targeted
at may in uence the choice of strategy in building a customer
base. It is anticipated that the
strategy will be best suited to the following cases.
(1) Where markets are fragmented and, thus, there are no big
established dominant players
in the industry. In addition, this will be related to a large
number of small Internet
sites serving a particular market segment, on which the
functionality of the service can be
placed.
(2) Where market segments have had traditionally long product
development cycles. This is
important as it provides a suf ciently long time period to build
a large enough customer
base before competitors react.
(3) Where the customer base is in a business-to-business rather
than a consumer context. This is
considered important as it is anticipated that there will be
less need for a highly established
and visible brand name than with consumer marketing. In
addition, the big portal sites are
perceived to be less important and companies own portal sites
more important in this
market.
It is anticipated that highly concentrated Internet markets are
least suited to the symbiotic
approach. For example, the Internet-based book retailing
industry is dominated by Amazon
(http://www.amazon.com/) which has been particularly aggressive
in implementing a combined
advertising campaign (site-centric) and symbiotic approach.
Here, tailored Amazon bookstores
are offered by other (non-Amazon) sites who receive a share of
the revenue from the books sold.
It is anticipated that, to displace Amazon from the sites which
they are already receiving a
revenue share from, will be a dif cult and costly exercise. This
is exempli ed by Barnes and
Noble (http://www.barnesandnoble.com/) who are currently working
with Bertelsmann (http:/
64 LOCKETT AND BLACKMAN
http://www.bertelsmen.de/http://www.amazon.com/http://www.barnesandnoble.com/
-
/www.bertelsmen.de/) of Germany in order to attempt to displace
Amazon. The companies
have stated that they intend to spend several hundred million US
dollars in order to develop and
promote their alternative service.
A related issue is what role links may play in the competitive
dynamics of a market-space.
The work of Ennew et al. (2000) highlighted the fact that links
are the most important
determinant factor in driving traf c to Internet sites. Although
the dominant theme in the
literature is that the advent of the Internet will lead to the
creation of electronic markets
as the Internet reduces barriers to entry (Malone et al., 1987,
1989), barriers to entry exist
in part due to the large budgets needed to advertise in order to
drive traf c to a site and links
may be another way in which companies may begin to erect
barriers to entry. Once the
links are put in place then it seems likely that the site is not
going to replace the link with
another if the services being offered are as good as any other
in the market, i.e. there has to
be some positive net bene t to offset the costs associated with
switching services. Therefore,
if links are relatively stable then there is obviously a rst
mover advantage to developing them
because every link you have developed is an additional link that
a competitor is unlikely
to capture. The building of links may be viewed as a method of
erecting barriers to entry for
competition.
The concept of employing links in order to develop barriers to
entry in markets has interest-
ing implications for whether or not a company pursues a strategy
of being a leader in a market.
The advantage to moving rst and establishing links in the
market-space has a logic in that
companies on the Internet face the problem that services cannot
be patented (see Naslund,
1986) and, therefore, the content or functionality of a site is
something that cannot be protected
from imitation. This problem is further exacerbated by the fact
that the speed with which
services can be imitated on the Internet is very high.
Therefore, rather than try and pro-
tect content, it seems logical to give the content away to build
links that are a much more
protectable resource. In addition, the quicker and greater the
number of links you develop as a
company the more dif cult it becomes for other companies to
develop such links.
The one downside of the symbiotic approach is that the building
of links requires time and,
therefore, there are time-based issues regarding whether or not
such a strategy may be feasible in
all cases. In the case of Xenon Laboratories it appears as
though no other market participant has
retaliated strongly to its strategy; however, retaliation is
always a threat. Any company that lacks
resources and is fast building a customer base on the Internet
is always facing the threat of a
larger organization committing large amounts of resources to
advertising campaigns to attract
traf c and/or acquiring it whilst it is in its infancy. In
addition, replicating a symbiotic strategy
whilst channelling resources towards sites to provide these
links may be a hybrid strategy that
would accelerate the process considerably. A company that
pursues a pre-emptive strategy of
symbiotic marketing may be able to build barriers to entry and,
therefore, deter market entrants.
However, such an outcome is dependent on how long the company
pursuing the symbiotic
approach is allowed to grow without retaliation. It appears as
though Amazon was handed very
long lead times for developing its links and customer base
before Barnes and Noble entered the
Internet book retailing market. If Barnes and Noble had
responded to the Internet threat of
Amazon as a market entrant much earlier then Amazon may not have
been able to build the
dominant position in the market sector.
The most dif cult issue to be tackled by large corporations is
organizational, as the symbiotic
approach does not t comfortably with organizations that have
developed sophisticated,
marketing push strategies. The key issues that face an
organization in wishing to implement a
symbiotic strategy are due to the method having the following
qualities.
BUILDING A CUSTOMER BASE ON THE INTERNET 65
http://www.bertelsmen.de/
-
(1) It is relatively cheap. In organizations where the size of a
managers team or budget is the key
determinant of their position and status within the
organizations the symbiotic approach
may offer few bene ts to the management team.
(2) It is slow to generate results. Senior managers are unlikely
to be willing to sponsor
projects that are unlikely to generate results within 2 years.
Key staff are also unlikely to
want to be attached to business projects that are unlikely to
progress their careers in the
short term.
(3) It has potential impact on the brand value of an
organization. The lack of control of the type
of site that implements a symbiotic service and the potential
impact on the reputation of the
large organization could result in a large number of controls
that would dramatically impact
on the value of the service. Few large corporations would be
willing to have a branded
service on a pornographic site.
(4) Reluctance to assist competitors. To be effective there has
to be a willingness to let a
potential competitor enhance the value of their website by
implementing the symbiotic
service. This approach can be completely counter-intuitive to
marketing departments in
large organizations.
Initially, large organizations could approach the technique as
an investment in research
and development. The key bene ts would be the data that could be
captured on the type of
customers and the popularity of Internet sites in their target
market that have implemented the
symbiotic services. With smaller sites the information could be
used to target acquisitions,
whereas with larger potential competitors that use the symbiotic
service the technique is an
effective blocking strategy thereby reducing the likelihood of
them developing a similar service.
CONCLUSION
The paper has presented an alternative marketing strategy for
testing and launching Internet-
based services. While the approach of symbiotic marketing is a
relatively low cost strategy it does
have the downside of the need for long lead times and may
require more persistence than would
be tolerated within a large organization. The advantages of
successfully adopting a strategy of
symbiotic marketing are that it simultaneously reduces the need
to purchase advertising through
enhancing Internet coverage and leads to the development of a
targeted customer base.
Symbiotic marketing presents companies with a strategy for the
possibility of developing a
presence on the key portal sites in the business-to-business
market through giving away content.
This approach of developing useful content and giving it away
appears to be counter-intuitive to
larger corporations and is most probably the greatest barrier to
the adoption of such a strategy
by large corporations. However, the authors do not suggest that
such a strategy will be optimal
for all companies; rather, it may be applicable in certain
instances. It is anticipated that the
strategy will be most useful in a business-to business context
where market segments are highly
fragmented and there are traditionally long product development
cycles and little differentiation
between products.
A large corporation willing to commit a substantial investment
to advertising alternative
products could still overtake a company that has concentrated on
developing a customer
base with a symbiotic approach by paying web sites to take their
service. However, comparable
new entrants would nd dif culty in raising suf cient funds to
mount a marketing campaign to
catch up. In addition to the bene ts of building a low cost user
base, advantages exist in the
incremental approach of symbiotic marketing where the feedback
from customers can be used
66 LOCKETT AND BLACKMAN
-
to enhance services. The cross-marketing of additional services
to registered websites appears to
be a key bene t in reducing the lead time to building client
bases for second generation services
that meet a different need for the same target markets.
Companies that have implemented
a symbiotic approach should be able to accelerate their growth
as they broaden their product
range. Amazons broadening of its af nity programme in order to
include additional products to
books is a clear example.
The analysis used in the case study was limited due to a lack of
tools for analysing the large
amounts of data involved. The current research project is
ongoing and longitudinal data is being
stored in order to address a number of important future research
questions that follow from the
symbiotic strategy outlined in the present paper. First, does
the effectiveness of a link vary over
time, i.e. does the link become less effective the longer it has
been in place. Second, how can the
effectiveness of links be enhanced? It is envisaged that there
are a number of different strategies
that may in uence the effectiveness of a link such as the amount
of functionality that is delivered
to a partner site. Third, if links are the most important
determinant of traf c on a site then
the prohibitively high costs of banner advertising may mean that
advertising should be targeted
not at end customers but rather at developing links with
suitable sites that may wish to link
symbiotically. Finally, via the use of cookies it may be
possible to examine whether individual
customers continue to access a web site via a link or bookmark
the original site.
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