Internet Marketing, Second Edition — Overview of Chapters Chapter 1—Introduction to Internet Marketing. Internet marketing can be broken down into seven main activities, and we use these steps as divisions for this book. This chapter provides an overview of the seven parts of Internet marketing and gives a roadmap for the concepts and frameworks that will be discussed thoroughly in later chapters. Part I: Framing the Market Opportunity The first task of the Internet marketer is to assess new market opportunities. Chapter 2 provides a detailed explanation of the process that marketers use to evaluate the viability of opportunities from the perspective of the individual firm. An analysis of marketing opportunities should use rich data on the competitors, customers, and industry. Chapter 2—Framing the Market Opportunity. “Where will the business compete?” This is a fundamental question any firm must address. Ideally, location is chosen according to where customer needs are, where there are few or no competitors, where there is a large financial opportunity, and where the company is well positioned to fulfill the customer need. Obviously, it is very difficult to find all of these elements in one locale. Hence, a firm should follow a rigorous approach—such as the six-step process outlined in this chapter—to isolate market opportunities. Part II: Formulating the Marketing Strategy The second stage of an Internet marketing program is to specify strategy. This process consists of a careful assessment of how the potential marketing strategy reinforces corporate and business-unit strategies. Hence, this section begins with a discussion of the components of corporate and business-unit strategy and then looks at how marketing strategy must be aligned with the business strategy. Chapter 3 examines two marketing strategy formulation pathways: one for pure-play online firms and one for integrative firms with both online and offline distribution channels. A discussion of segmentation, target-market choice, and positioning sets the stage for the design of the marketing program in Part III. Chapter 3—Marketing Strategy in Internet Marketing. Three components of marketing strategy—segmentation, target-market selection, and positioning—still apply in the online environment. However, is it also clear that developing an overall online/offline marketing strategy is more complicated for bricks-and-mortar firms because they have the added issue of integrating an offline business with an online business. This chapter concentrates on how business-unit strategy is connected to and drives marketing strategy by describing the basic concepts of marketing strategy, then comparing the marketing strategy process of pure online firms with traditional bricks- and-mortar firms that have decided to move online. The conclusion highlights the ways in which the marketing strategy process is influenced by four key forces in the online marketplace. Part III: Designing the Customer Experience Once the firm has decided upon a positioning of its offering, it must decide on a corresponding customer experience. The customer experience articulation process can be viewed a bridge between the high-level positioning strategy and the tactics of the marketing program. Chapter 4—Customer Experience. This chapter explores the concept of customer experience by discussing its seven key attributes, then defining the four stages that customers travel through during their relationship with a firm and its website: functional, intimate, internalized, and evangelical. Because the evangelist group is such an important one, particular attention is paid to how firms can leverage this customer group in the marketplace. The chapter concludes with a discussion on how a firm can best design a winning customer experience. Part IV: Crafting the Customer Interface This section of the book focuses on website design and, in particular, the seven basic design variables (the 7Cs) that can be used to build an online customer experience. It is important to recognize that this chapter focuses on online design considerations; some marketing programs may choose to integrate a discussion of both online interfaces and traditional bricks-and- mortar design considerations at this point. Chapter 5—Customer Interface. This chapter introduces the concept of a technology-mediated customer interface. This interface can be a desktop PC, subnotebook, personal digital assistant, cell phone, WAP device, or other Internet- enabled appliance. Within a technology-mediated customer experience, the user’s interaction with the company shifts from the traditional face-to-face encounter to a screen-to-face encounter. As this shift from people-mediated to technology-mediated interfaces unfolds, it is important to consider the types of interface design considerations that confront senior management. What is the look-and-feel, or context, of the site? Should the site include commerce activities? How important are communities to the business model? These design considerations are captured in the 7Cs Framework. The 7Cs are a rigorous way to understand the interface design choices that confront senior managers as they implement their business models. Part V: Designing the Marketing Program This section covers the heart of the Internet marketing program. A comprehensive discussion of building and nurturing customer relationships (Chapter 6) precedes an in- depth description of the Internet marketing mix’s six components: product, pricing, community, communication, distribution, and branding (Chapters 7–12). In Chapter 13, the Marketspace Matrix is introduced as a way to integrate a firm’s supply-side choices (e.g., the six elements) and the demand-side requirements of target customers (e.g., the four stages). Chapter 13 also introduces several principles for the design of an integrative marketing program. Finally, Chapter 14 discusses how the Marketspace Matrix applies to the successful online (and offline) marketing of the blockbuster film The Lord of the Rings: The Fellowship of the Ring. Chapter 6—Customer Relationships. This chapter introduces a customer-centric approach to Internet marketing, emphasizing how firms can use the Internet to increase customer awareness, encourage customers to explore and expand the depth of client/company interaction, and create customers committed to the firm and its products. The circumstances under which the firm may want to dissolve or end its relationship with some customers are discussed next. An illustration of how interactivity and individualization—the 2Is—are fundamental to building close buyer/seller relationships leads to a discussion of how eBay develops online relationships. Chapter 7—Product. Recognizing that a broad body of knowledge about products already exists, the purpose of this chapter is to explain how the Internet affects the development and marketing of products today. As appropriate, additional networked- economy technologies such as customer databases and computer telephony integration are noted. Also discussed are the details of developing products, the marketing levers available to manage the offering, and how some of these levers can further customer relationships. Chapter 8—Pricing. This chapter examines the wide assortment of new and established pricing tools available to firms. It also provides a framework to help managers decide which pricing strategy is best for their products. The effects of the 2Is on traditional pricing levers, as well as the role of the 2Is in creating a new category of pricing called dynamic pricing, are also discussed. A key section of the chapter shows how various pricing levers can be used to move consumers through each of the four consumer relationship stages. Lastly, the chapter discusses eBay’s pricing levers. Chapter 9—Communication. Consumers are rapidly adopting hybrid shopping models—they might research a product via one channel, purchase via another, and request product support through a third. Therefore, firms must develop communication methods that are integrated across channels and that work together with synergy to move customers from awareness toward commitment. The key market communication levers that companies can use to create customer relationships are introduced in this chapter. This is followed by a discussion of how the 2Is of the Internet encourage the progress of relationships between firms and their customers. Chapter 10—Community. The values of online community are easy to recognize. For instance, members typically benefit from the increased ability to share resources and information. But what of the benefits for the firm that sponsors a community? How else is value specifically created and transferred throughout a community? More important, how can community be built to create committed members and, ultimately, committed customers? These questions are explored in Chapter 10. Chapter 11—Distribution. One fundamental debate in the networked economy is whether the Internet is simply another channel of distribution or a business revolution in and of itself. On one hand, it seems unlikely that all consumers will eventually buy personal computers, clothing, books, and groceries over the Internet. Some segment of consumers will always want to touch, feel, hear, smell, or taste the merchandise before they buy. Therefore, the Internet channel will never be attractive to every single customer in every single segment of the market. Yet while the Internet might not replace traditional commerce, it is impossible to overstate the impact it will have (and, indeed, has already had) on distribution. The purpose of this chapter, then, is to review the impact of the Internet distribution channel, review the levers that are available to Internet marketers, and discuss how distribution choices can affect the movement of target customers through each of the four stages. Chapter 12—Branding. The chapter begins with some fundamental issues—namely, the definition of brand and a discussion of what types of brands exist. The effects of the 2Is on branding are also examined, as is the concept of brand equity, how it is measured, and how it can be created. Then, a seven-stage process is introduced to guide firms in the development of strong brands. Finally, the principles of branding developed within the chapter are applied to the strategies of competing entities: Citibank Online versus Bank of America Online Banking, and CBS MarketWatch.com versus Bloomberg.com. Chapter 13—Designing the Marketspace Matrix. Chapter 13 begins with an integrative summary of the design of the marketing program. The Marketspace Matrix is then introduced as the integration tool that enables marketers to visualize an entire marketing program. With this visual display, the marketer is able to observe allocation of resources, the timing of individual levers, the sequencing of levers, and overall program consistency. This chapter also introduces 15 principles that help guide the development of the overall integrated program. Chapter 14—Design of the Marketing Program for The Lord of the Rings. This chapter reviews a highly successful interactive marketing campaign: the marketing campaign for New Line Cinema’s 2001 film, The Lord of the Rings: The Fellowship of the Ring. The campaign integrated offline and online levers to produce a creative, interactive campaign that propelled a large segment of people through the relationship stages and into the commitment stage. The campaign used a wide variety of creative interactive marketing levers, and also created a thriving online community. Part VI: Leveraging Customer Information Through Technology This section shows how firms can use technology to better understand and leverage their customers through market research, database marketing, and customer relationship management. Chapter 15—Customer Information Systems. This chapter focuses on three key situations that customer-centric marketers face: (1) deciding which markets they should pursue, (2) learning more about their customers and how to activate key customer segments, and (3) understanding the long-term profitability of their customers (which customers should they better serve, which customers they should weed out, etc.). These decisions are often fraught with uncertainty; however, the chapter offers some insight into how marketers can use technology to make better informed decisions. Part VII: Evaluating the Marketing Program How well did the marketing program do? Did it deliver on its objectives? This section introduces new metrics that can be used to track the success of the online marketing program. These metrics reflect customer actions as well as critical financial metrics that need to be assessed. Chapter 16—Metrics. This chapter proposes an approach to measuring both customer and business performance metrics for online firms. It begins with a review of traditional offline customer metrics, and then introduces a new model of online customer metrics. This model emphasizes the importance of capturing the cross-platform behaviors that are observed by customers. With this in mind, some of the challenges, complexities, and pitfalls of tracking customer behavior across channels are examined. The chapter concludes by applying its key concepts to the online auction website eBay.