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Precision Internet Marketing


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									         Study on the Conceptual Model of Precision Internet Marketing

                                                 In the Age of Web2.0

                                                    Lanying Du, Qing Han

   School of Management, Huazhong University of Science & Technology, Wuhan 430074, China


Abstract: Web 2.0 is a new model of network development. It is more personalized in content, more convenient in contact
and stronger in application. This paper presents a precision internet marketing Conceptual Model in the model of Web2.0
based on the theory of 4C, the theory of customer perceived value, one to one direct communication and the principle of
customer chain reaction. It is consist of the market segment and customer personalized information collection and handling,
Precision internet marketing mix, customer relationship management. The enterprise can make reference to this conceptual
model to carry out precision network marketing in the model of Web2.0.

Keywords: Precision Internet Marketing, customer personalized information, customer interaction

     Precision Marketing is one of the hottest topics in marketing research. There are many scholars who have
researched the Precision Marketing on both theory and method in China. But because of the Web2.0 Internet
model is a new generation of Internet model that puts forward recently, few scholars in China have studied the
application of Precision Marketing on Internet Marketing in the age of Web2.0.With the internet Web1.0 model
which only browsed the HTML website by browser developing to the internet Web2.0 model which is more
personalized in content, more convenient in contact and stronger in application, the way and method of the
internet marketing also change correspondingly (Table 1). The Precision Internet Marketing based on the
network and the information technique will partly replace the traditional internet marketing method in the age of
Web 2.0(Philip Kotler 2005). This paper which presents a Precision Internet Marketing conceptual Model in
the model of Web2.0 consists of the market segment and customer personalized information collection and
handling, Precision internet marketing mix, customer relationship management. The enterprise can make
reference to this conceptual model to carry out Precision Internet Marketing in the model of Web2.0.
      Table 1.   The main differences between traditional internet marketing and Precision Internet Marketing
                                     traditional internet marketing                            Precision Internet Marketing
    Market position       All visitors of the website, haven’t segmented market     Aims the gainful customer, have segmented market

  Mode of transmission              Large-scale advertise intensively                          Personalized communication
                             Mass communications, one-way dissemination           One to one communication, Understand the personalized
 Communication system
                                           information                                          demand of the customer
  Product Realization                      Standard Products                                      custom-built Product
                                                                                   Pay attention to the customer lifetime value and keep
Customer Service System      Emphasize market share and attract customers

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2.1 The principle of Precision Internet Marketing
     The basic of Precision Internet Marketing is Precision position which relying on information technology to
segment the market and establish personalized customer service system. The basic of theory in Precision
Internet Marketing consists of the theory of 4C, customer perceived value (CPV), one to one direct
communication and the principle of customer chain reaction[1].
2.1.1 The theory of 4C
     The theory of 4C contrast the theory of 4P had considered the customer’s benefit (Robert Lauterborn,
1990). It asked to attach importance to the initiative and activity of customer in Marketing. Enterprise should
pay attention to the convenience and the cost of customers in their consuming process [2]. Precision Internet
Marketing created an environment of instant Message between seller and buyer. It can maintain effective
communication and meet customer’s need expediently and economically. Precision Internet Marketing is the
practical application of the theory of 4C.
2.1.2 Customer perceived value (CPV)
     Customer perceived value (CPV) is the difference between the prospective customer's evaluation of all the
benefits and all the costs of an offering the perceived alternatives (Philip Kotler). Because of Precision Internet
Marketing emphasizes on understanding the personalized demand of the customer and Precision Internet
Marketing use the method of One to One marketing, it can increase total customer value and decrease total
customer cost.
2.1.3 One to one direct communication
     Precision Internet Marketing requires enterprise to adopt one to one direct communication in contacting
customer. One to one direct communication emphasized direct communication between enterprise and customer. It is a
two-way interactive communication; enterprise and customer both play the disseminator and receiver of information
two roles in the communication (.Figure1). The one to one direct communication in Precision Internet Marketing made
distance of communication shorter and enhance the effectiveness of communication.

                                                      E-mail Auto Reply;

                                                     Online chat services;

                  Customer                           Voice transmission;

                                                     Web Collaboration;

                                                 Automated customer service;

                                                     P      li d      i

                                        Figure 1.   Web2.0-based customer interaction
2.1.4 The principle of customer chain reaction
     Precision Internet Marketing quoted the principle of chain reaction in physics. Customer retention in
Precision Internet Marketing is the customer proliferation. The condition of a chain reaction occurred by
Precision Internet Marketing is that sustains customer relationship when reaching the critical point of reaction.
This kind of unceasing fission reaction made low-cost expansion possible. The system and method of Precision
Internet Marketing make the chain reaction of customer proliferation occurring ceaselessly, the scale more and
more larger, and the reaction more and more stronger. Precision Internet Marketing in the age of Web2.0
focuses on the customer lifetime value (CLV), and emphasizes customer proliferation and fission.

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 2.2 The new application in the model of Web2.0
        Web2.0 represents a new class of Internet applications contrasting to Web1.0 (model of internet before
 2003). Web2.0 is a new generation of the internet model which based on the six degrees of separation theory,
 xml, ajax and other new theories or technique [3]. Its core is the application of social software such as Blog, Tag,
 Sns, Rss, Wiki and etc (Table 2). The representative websites are Flickr, Craigslist, Linkedin, Tribes, Ryze,
 Friendster, Del.icio.us, 43Things.com (Blogger Don). Web2.0 2004 Conference (held in San Francisco, USA)
 put forward the Web as a platform. Wiki said that Web2.0 is a transformation on World Wide Web. From the
 gather of website to the platform, WWW provide Web applications for the end-user. From these, we can see that
 web2.0 is not specific things, but a stage.
                                     Table 2.        Introduction of some social software related Web2.0[4]
               Blog                  Users can communicate with others and engage in other activities. Ideas can be quickly released.
               RSS                                         Website can use it to share the contents with other Website
               WIKI                WIKI site can be maintenance by any visitor; everyone can express their views in there or to explore a
                                                                             common theme
               TAG                            Users carry out the activity for cooperative classification by self-defined key words.
               SNS                   Social Network Software. Based on understand the friends of friends, expand their social network
               P2P                 Peer-to-peer; strengthen the communication of users, the exchange of files, distributed computing etc;
               IM                                 Instant message. Users could have on-line communication by this software

        Precision Internet Marketing conceptual Model consists of the market segment and customer personalized
 information collection and handling, Precision internet marketing mix, customer relationship management
 (Figure 2).
   Customer                            E-mail Auto             IM (Instant            SNS (Social                WIKI         Market segment and
  touch-points                               Reply             message)            Network Software)       (Encyclopedia) information collection

                                                                                               Electronic Data
                              Ordering system            One to one personalized
                                                                                             Interchange (EDI)
                                  (EOS)                      communication

                     Product       Price       Promotion       Place      People     Process     Physical evidence             Precision internet
Front office
                                                                                                                                 marketing mix

                                             Date Mining                              OLAP

    Closed-loop                                        Executive Information System (EIS)

      structure                                         Strategic Information System (SIS)
                                                         Decision Support System (DSS)                                        Analysis of customer

                                                           Reporting and Ad Hoc Query                                             relationship

                                                        Date Warehouse or Data Mart

                                                      Enterprise Resource Planning (ERP)

                      Figure 2.     Precision Internet Marketing conceptual model in the age of Web2.0

   2262………………The Sixth Wuhan International Conference on E-Business - Innovation Management Track
3.1 Market segment and customer personalized information collection and handling
     The market segment variables of Precision Internet Marketing commonly include geographical,
demographic, psychological and behavioral factors. Enterprises can select the appropriate variables according
with their products to segment and choose their target market. For example: the enterprise which products
mobile telephone can choose the Virtual Community or Blog Marketing their products. The form of segment
market in Web2.0 model contains: Blog, virtual community, Wiki (encyclopedia) and the B2B, B2C, BBS etc
Website which adopted the Web2.0 idea.
     Enterprise should assess the segment market after choosing appropriate target market. The efficiency of
segment market can be evaluated by five indexes: Measurable, Profitable, enterable, identifiable and operable.
We should notice that the indexes of the segment market are constantly changing.
     The methods of enterprise collect customer personalized information from target market by internet contain:
①Enterprise can visit the website of target segments market and know the customer personalized demand.
②Using the interactive characteristic of website in web2.0 model, to investigate the customer personalized
demand directly by online questionnaire, Email investigation or other methods. ③Enterprise can visit the
special website to gain market and environmental information of industry. ④Enterprise can obtain information
of competitors by TAG, Blog, RSS, Wiki and other Application of Web2.0.
     After obtaining mass information of customer personalized demand, market and competitors, enterprise can
select the target market and position its product. Enterprise builds the date warehouse or data mart base on these
customer personalized information. Through data mining, enterprises can understand the information of
customer personalized demand, market trend, market segment and other useful information. Data mining
includes five models: Classification, Predictive Modeling, Clustering/Segmentation, Association Analysis and
Sequential Modeling. Finally, according to the similarity of customer information, enterprise classes the
customer and determines its target markets. When selecting target markets, enterprise should consider three
factors: the size and prospect of segment market, the attraction of segment market structure, the target and the
resources of enterprise.
3.2 Precision Internet Marketing mix
     Precision Internet Marketing mix includes seven factors: product, price, promotion, place, people, process,
physical evidence. Precision Internet Marketing emphasizes that enterprise which design marketing mix bases
on the view of customer. So Precision Internet Marketing needs to consider 4C: customer solution, customer
cost, convenience and communication (Figure 3).

                                                    Precision Internet Marketing mix

     Product:          Promotion:           Price:                Place:               People:       Process:       Physical
      Quality;       Communication;         Position            Channel;         Recruitment;       Customer        evidence:
      Figure;         Salesmanship;          Tariff;          Sales Support;     Performance        attention;      Customer
       Brand;        Sales Promotion;      Discount;           Amount of          assessment;        Business        brand
   Characteristic;   Public relation;       Credit;              channel;         Knowledge;          guide;       experience;
       Mix;          Direct marketing      Payment;            Subdivisible             Train;      IT support;   Product show;
      Support;                           Free;Increase          Channel;               Inspirit;     Design;         Online
      Service;                              in value                                    Pay;        Research &     Experience;
   Use condition;                                                                                  Development;

                                        Figure 3.      Precision Internet Marketing mix

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     One of advantages of Precision Internet Marketing compared with internet mass marketing is that it can
meet the personalized needs of the customers. The influences of Precision Internet Marketing upon product are:
①Core product diversification; ②Extending product diversification; ③Online market research; ④Accelerate
the speed of development of new products; ⑤Accelerate the speed of transmission of new products [5].
     The other advantage of in Precision Internet Marketing compared with internet mass marketing is that it
establishes a one to one direct communication system with customers. Blog、TAG、IM、SNS、RSS、Wiki etc
applications of social software make enterprise communicate with customers more convenient than before. The
ways of enterprise communicating with customers contains: E-mail Auto Reply, Online chat services, Voice
transmission, Web Collaboration, Automated customer service, personalized service, Frequently Asked
Questions (FAQ) and instant message (IM).
     In the model of Internet Marketing, Elizabeth Daniel put forward six ways to increase customer value by IT:
①Integration. Enterprise integrates and share customers’ data by various channels so that it can provide more
effective product or service. ②Interaction. Enterprise have interactive communicate with customers so that it
can understand customers more comprehensive. ③Geographical independence. Suppliers can provide product
or service to more customers. ④Individuation. Enterprise has personalized communication with customers and
provides personalized product or service. ⑤Intelligence. Enterprise obtain customer personalized demand
information. ⑥Remodeling Industry. Enterprise has direct sales or develops a new agent to provide value-added
services [6].
3.3 Customer relationship management
     The core of Precision Internet Marketing is customer relation management (CRM). In Precision Internet
Marketing, CRM is a circulatory process including Knowledge Discovery, Marketing Planning, Product
Realization, Analysis and Refinement (Figure4). CRM in e-commerce environment has established a
personalized communication system relying on Information Technology; it can maximize benefit of enterprises.
                                               Continuing to improve customer relations

           Customer                                                                       Output   Product

                                             Analysis and                 Marketing
                          Web-based          Refinement                   Planning
                          interaction                                                              Customer


                                        Figure 4.   process-based CRM system model
     Knowledge discovery requires enterprise to analyze the demand of customer. Enterprises base on
knowledge discovery to identify market opportunities and decide investment strategy. The process of
knowledge discovery includes customer recognition, customer distinction and customer forecast. Market
planning includes defining specific customer product, plan channel, cycle and affiliation. Product realization is
providing products or services to meet the personalized needs of customers according to marketing planning.

 2264………………The Sixth Wuhan International Conference on E-Business - Innovation Management Track
Analysis and refinement is utilize the information from enterprise and customer interaction to analyze demand
of customer and improve product.
     The applications of information technology in CRM include: ①Point of Sale, POS; ②Electronic Ordering
System, EOS/ Electronic Data Interchange, EDI; ③Enterprise Resource Planning, ERP; ④Call Center;
⑤Business Intelligence (BI), Data Warehouse, Data Mart, On Line Analytical Processing (OLAP); ⑥Executive
Information System (EIS), Strategic Information System(SIS), Decision Support System (DSS), Reporting, Ad
Hoc Query; ⑦Data Mining; ⑦Web-based Customer Interaction.
     Precision Internet Marketing in the age of Web2.0 allows customers directly to integrate their information
into applications of enterprise, Personal productivity software, communication and collaborative applications etc
decision-making tools. Intel call this stage Customer Information Integration era. So the competition between
enterprise and enterprise in Precision Internet Marketing has transformed to who can most effectively integrate
into the information flow of customer or the cooperative enterprises (Chris Thomas & Andrea Williamson).

     Enterprise wanting to achieve Precision Internet Marketing in the age of Web2.0 should have three factors:
Firstly, it must have measurable and precise market test technology. Secondly, enterprise should keep long-term
and personalized communication with customers. Thirdly, enterprise need to base on customer’s personalized
demand to continuing develop their marketing mix continuingly. The new applications in the age of Web2.0
make enterprise breakthrough the technological bottlenecks. Enterprise can really achieve the customer-centered
Precision Internet Marketing.

[1]Hailiang Xu. (2006). The System and Theory of Precision Marketing. from http://www.amteam.org/static/95/95900.html.
[2]Philip Kotler. (2003). Marketing Management. Pearson Education, Limited. 306-334(in Chinese).
[3]TimO, Reilly. (2006). What is Web2.0. from http://www.oreillynet com/pub/a/oreilly/tim/news/2005/09/30/what2is2web2
  20. html.
[4]http://it.sohu.com/s2005/web2info.shtml. (2006)
[5]Dave Chaffey, Richard Mayer. (2003).Internet marketing: Strategy, Implementation and Practice. Pearson Education,
  Limited. 47
[6]Elizabeth Daniel, Hugh Wilson, Malcolm McDonald, John Ward. (2001).Marketing Strategy in the Digital Age. Pearson
  Education, Limited. 108

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