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					Implementation of Internet
   Marketing Strategy
Stage Five: Designing the
Marketing Program
 Entails designing a particular combination of
  marketing actions (termed levers) to move
  target customers from awareness to
  commitment.
 Framework used is the Marketspace Matrix.
Stage Five: Designing the
Marketing Program
To understand the Marketspace Matrix, the four stages
    of the customer relationship and the six associated
    classes of levers that can be employed must be
    defined first.

        Four Stages of Customer Relationship:
    1.     Awareness
    2.     Exploration
    3.     Commitment
    4.     Dissolution
Stage Five: Designing the
Marketing Program
        Six Classes of Variables in the Internet Marketing
         Mix:
    1.     Product
    2.     Pricing
    3.     Communication
    4.     Community
    5.     Distribution
    6.     Branding
Stage Five: Designing the
Marketing Program
Two more important concepts, Individualization
   (customization) and Interactivity, need to be
   explored to fully understand the profound
   implications the Internet brings to business.
1. Individualization
      The Internet enables the firm to engage in customer-
       specific actions – a broadcast to an audience of one.
      Equally important, the customer can control the degree of
       customization by taking action to set the level of
       customization desired.
Stage Five: Designing the
Marketing Program
2.   Interactivity
        Defined as the extent to which a two-way
         communication flow occurs between the firm and
         customers.
        The Internet enables a level of customer
         dialogue that has not previously been
         experienced in the history of business.
        Products and services can be designed in real
         time by the customer, maximizing both
         interactivity and customization.
Stage Five: Designing the
Marketing Program
The Marketspace Matrix
 The Marketspace Matrix is a framework
  illustrating the levers that the Internet
  marketer may choose to use at each stage of
  the customer relationship.
The Internet’s 2is
 The 2is allow firms to choose levers that can
  move customers through the relationship
  phases faster and more effectively than ever
  possible.
 The 2is affect each category of levers
  differently, but the end results remain
  consistent across all levers.
 Product, Pricing, Communications,
  Community and Distribution.
  The Marketplace Matrix

                                      Relationship Stages
                          Awareness Exploration Commitment Dissolution
           Product
Categories Price
of Levers Communication
           Distribution
           Community
                            Two Integral Components of
                                  Implementation
           Objectives
            Deliver the promised
             customer experience
                                            Build the
            Turnstrategic intent /     infrastructure to
             concepts into results    deliver on the brand
                                             promise




                                                                       Objectives
                                                    Innovate / Renew
                                                                        Maintain fit between
                                                      the customer
                                                                         Marketspace evolution
                                                       experience
                                                                         and the company’s
                                                                         delivery system and
                                                                         product offering



Source: Monitor Analysis
                 Why Does Implementation Matter?
                                                                                   Strategy
                                                                Appropriate                        Inappropriate

                                                                 Success                              Roulette
                                                           All that can be done to            Good execution can
                                                            assure success has been             mitigate poor strategy,
                                                            done                                forcing management to
                                          Good
                                                                                                success
                                                                                                          or
                                                                                               Same good execution can
                                                                                                hasten failure


                    Implementation
                                                                  Trouble                              Failure
                                                           Poor execution hampers             Difficult to diagnose - bad
                                                            good strategy -                     strategy masked by poor
                                          Poor              Management may never                execution
                                                            become aware of
                                                                                               More difficult to fix - two
                                                            strategic soundness
                                                                                                things are wrong
                                                            because of execution
                                                            inadequacies




Source: Modified version of materials in The Marketing Edge by Thomas V. Bonoma. 1985. New York: The Free Press.
Guidelines for the
Marketspace Matrix
 No single best strategy
 Best strategies provide superior customer
  support
 Levers should emphasize the functional,
  symbolic and experiential aspects of
  consumption experience.
Principles for Marketspace
Matrix Design
   Which lever should be used?
       Choose Levers to Effect a Change
       Determine Which Levers Have the Most Leverage
       Consider Barriers to Advancement
       Consider the Medium’s Effect on Desired Behavior
       Level of Involvement Matters
       Understand Consumer Learning Trends
       Credibility of the Channel Matters
       The Choice of Levers Must be Consistent with Positioning
        Choice
       The Medium can be the Message – or the Product
       Matrix Design Must be Adaptive
How should Marketing Resources be
Allocated on a lever-by-Lever Basis?
   How should Marketing Resources be Allocated on a
    lever-by-Lever Basis?
       Consider Correlation of Effect

   How do the Levers Interact?
       Beware of Segment Alienation
       Selected Levers Must be Integrated

   How should the Levers be Sequenced?
       There is no one silver bullet
       Sequencing of Levers matters.
Basic Product
Development Levers
Basic Product
 Packaging
 Attributes and Features
 Customer-Specified Attributes and Features
 Mass-Customized Product
Augmented Product
Development Levers
   Customer Service Programs
       Postsales support, customer care, & customer
        relationship management.
 Loyalty Programs and Privileges
 Availability of Complementary Products
 Upgrades
 Enabling Community
 Additional Functionality
 Fulfillment Capabilities
How Products Enable
Customer Relationships
    Two primary techniques:
    1.   Deploying the product development levers that
         are appropriate for the existing relationship and
    2.   Emphasizing the elements of the value
         proposition that are most relevant at a given
         stage of the relationship.
How Product Enable
Customer Relationships
Relationship Stage   Lever(s)
AWARENESS            Packaging

EXPLORATION/         Packaging                  Availability   of complementary
EXPANSION            Product Attributes   &     products
                     Features                    Customer-specified attributes
                     Fulfillment Capabilities   and features
                     Customer Experience        Mass Customization
                                                 Advanced Internet Functionality

COMMITMENT           Upgrades                   LoyaltyPrograms
                     Customer-specified         Customer Experience
                     attributes and features     Enabling Community
                     Mass Customization         Customer Relationship
                     Postsales Support          Management
DISSOLUTION          Customer   Care
Basic Pricing Strategies
   Cost Plus
   Target Profit Growth
   Target-Return Pricing
   Prestige Pricing
   Price as a Sign of Quality
   Cyclical Promotional Pricing (Hi-Lo)
   Everyday Low Pricing
   Fairness in Pricing
   Promotional Low-Cost Pricing
Dynamic Pricing Strategies
 Dynamic Pricing is one of the most significant
  contributions the Internet and the 2Is have
  made to pricing strategy.
 The Internet has enhanced dynamic pricing in
  two ways:
       Decreased Menu Costs
       Interactivity
Auction Types
   English Auctions
       Reverse-Price English Auction
 Dutch Auctions
 First Price Sealed-Bid Auctions
 Reverse First Price Sealed-Bid Auctions
 Group Buying
 Exchanges
Implementation Across the
Four Relationship Stages
Relationship Stage       Pricing Levers
AWARENESS                Promotions                Price as a Sign of Quality
                         Bundling                  Hi-Lo Pricing
                         Frenzy Pricing            Dynamic Pricing
                         Prestige Pricing          Everyday Low Pricing

EXPLORATION/ EXPANSION   Promotions
                         Justify Prices
                         Loyalty   Programs
COMMITMENT               Promotions                Affiliates
                         TieredLoyalty Programs    Profit-Enhancing
                         Wide Variety of Pricing   Opportunities
                         Programs
DISSOLUTION              Discontinue Pricing       Adversely Affect   Profit
                         Promotions                 Programs
                         Reconfigure Loyalty
                         Programs
How the Internet Affects
Communications
 Competition and Expectations
 Transformation of Communication
 The 2Is
       Interactive
       Individual
Importance of Integrated
Communication
 Goal of marketing and communication is to
  convey relevant messages to the right
  consumers at the right time.
 Synergy between messages is integrated
  communications.
 Traditional and interactive marketing methods
  are converging.
Communication Types –
Marketing Levers
    Marketing communications, which includes
     all the points of contact that a firm has with
     its customers, can be grouped into four
     categories:
1.   Mass offline
2.   Personal offline
3.   Mass online
4.   Personal online
Communication Types –
The Marketing Levers
Mass-Offline Marketing Levers:
 Broadcast Media: television, radio, outdoor & public
  relations
 Print Media: newspapers, magazines, yellow pages,
  brochures, newsletters
 Point-of-Purchase Displays
Communication Types –
The Marketing Levers
Personal Offline Marketing Levers:
   Telemarketing
   Direct Mail
   Statement Stuffers
   Customer Service
Communication Types –
The Marketing Levers
Mass Online:
   Basic Online Tools: banners, interstitials, search
    engines, point-of-purchase displays
   Applications of Basic Online Tools: partnerships and
    affiliate programs, sponsorships, chat rooms, serial
    marketing
Communication Types –
The Marketing Levers
Personal Online:
   Personalized Commercial Websites
   E-mail Marketing: viral marketing, loyalty programs,
    customer service
Communication Process
1.   Identifying the Target Audience
2.   Determining the Communication Objective
3.   Developing the Media Plan
4.   Creating the Message
5.   Executing the Campaign
6.   Evaluating the Effectiveness of the
     Campaign
Implementation Across the
Four Relationship Stages
Relationship   Marketing Levers
Stage
AWARENESS      Online  levers: online billboards, search engines, e-mail, viral marketing
               Offline levers: television, magazines, radio, yellow pages, billboards/
               outdoor
EXPLORATION/   Online  levers: online billboards, search engines, e-mail, viral marketing,
EXPANSION      website, permission marketing, serial marketing
               Offline levers: television, radio, newspapers, packaging

COMMITMENT     Online  levers: targeted email/ permission marketing, personalized pages
               Online/ Offline levers: loyalty programs, customer service
               Offline levers: telemarketing, direct mail permission marketing with
               personalized offers
DISSOLUTION    Personalized   pages
               Termination
Is the Internet a
Distribution Channel?
 A distribution channel is the system of
  organizations involved in the process of
  making a product or service available for
  consumption or use.
 Marketing channels therefore facilitate the
  exchange of goods and services between
  buyers and sellers.
How have the 2Is Revolutionized
Distribution Channels
The Internet:
 Is a substitute for other forms of
  communication.
 Has radically changed buyer-seller
  relationships.
 Has changed the customer shopping
  experience.
 Has increased the power of consumers.
Objectives of Channel
Intermediaries
1.   Efficiency: Distribution costs are reduced
     only if the retailers can perform the required
     functions more efficiently than the
     manufacturers could in the direct channel.
2.   Effectiveness: the ability of the channel to
     perform functions that create value for
     customers.
Disintermediation
 A strategy that involves the elimination of a
  channel intermediary.
 Internet has become a driving force for
  disintermediation
 Overall result is positive because channel
  works more closely to create value for
  customers.
Designing Channel Systems:
The Distribution Levers
   Intermediary Type
       Direct
       Traditional Retailers
       Virtual Shopping Malls
       Internet Exchange
Process: Designing
Distribution Channels
1.   Identify and evaluate consumer preferences
     by segment.
2.   Design a customer-based channel system.
3.   Modify channel strategy based on firm
     objectives and constraints.
4.   Select channel intermediaries or partners.
5.   Develop a channel feedback system.
Distribution Levers and the Four Key
Stages of Customer Relationships
   Awareness
       Number of Intermediaries
       Number of Channels/ Intermediary Type
   Exploration/ Expansion
       Degree of Channel Integration
       Number of Channels/ Intermediary Type
   Commitment
       Degree of Channel Integration
       Intermediary Type
       Number of Channels
       Intermediary Functions and Responsibilities
   Dissolution
       Elimination of Channel Types
       Reduction in the Number of Intermediaries
       Reduction in Channel Integration
eBay’s Application of the Marketspace Matrix
eBay’s Application of the
Marketspace Matrix (1995-98)
 eBay provides a logical first example of
  Marketspace Matrix in action.
 Since the product – an online auction service
  – was completely new, its brand had little
  value.
 Thus branding levers were inapplicable at the
  start.
 Yet, eBay, even in its nascent phases,
  developed levers in nearly every category.
eBay’s Application of the
Marketspace Matrix (1995-98)
   Awareness
       Novelty of internet based, dynamic, auction-based pricing system
       Benefits to both buyers and sellers
       Low cost
       Viral marketing and word-of-mouth
       Strong presence at trade shows

   Exploration/ Expansion
       Focus in one key area: website itself
       Easy-to-use search engine and easy-to-explore community converted
        visitors to customers.
       With more converted customers, eBay fostered exploration and expansion
        by the community equity that arose.
   Commitment
       Relied primarily upon the enabling community product lever to advance
        users into the commitment phase.
eBay’s Application of the
Marketspace Matrix (1998-99)
 Once eBay had advanced a significant
  number of users into the exploration/
  expansion phase, the firm needed to focus on
  sustaining commitment.
 As the firm’s needs changed, so did its
  Marketspace Matrix.
eBay’s Application of the
Marketspace Matrix (1998-99)
Awareness
       Began first major advertising campaign in late 1998.
       Radio and print campaign with “You might just find it on eBay”
        slogan
       Strategic alliances with AOL.com and the now defunct Go.com
       Sponsored auction of famous memorabilia for free media exposure

   Exploration/ Expansion
       Added new attributes and features
       Offered complementary services
       Improved existing services
       Enhanced community offerings
       Forums where veteran eBay users will answer questions of new
        users
eBay’s Application of the
Marketspace Matrix (1998-99)
   Commitment
       Community enabling remains a constant product lever to
        advance user to and sustain commitment.
       Loyalty program where seller can earn “Power Seller” status.
   Dissolution
       Needed to dissolve relationships with customers who
        damaged the community.
       These were sellers who accepted bids and money and then
        never delivered the goods as well as buyers who bid and
        never paid.
       Relied on community and feedback forum to dissuade users
        from dealing with these miscreants.
eBay’s Application of the
Marketspace Matrix (2000-present)
   Having nearly perfected its community and ability to retain
    customers, eBay requires new buyers and sellers to continue its
    history of growth.
   Pursued international strategy through building international
    sites and acquiring competitors.
   To increase core business in the US, eBay has stepped up
    efforts to win new users.
   Television campaign in late 2000.
   Promote ancillary services including a bill-paying service called
    Billpoint which competes with PayPal, which allows anyone with
    an email to receive a payment.
eBay’s Application of the
Marketspace Matrix (2000-present)
   Awareness
       Offering price promotions to sellers to encourage them to list
        items for the first time – for free, provided they sign up for
        and accept Billpoint.
       Television ad campaign.

   Exploration/ Expansion
       Expansion of product categories to include real estate and
        cars.
       Added “buy it now” option.
       Augment offerings, e.g. deal to provide discounted UPS
        shipping to all eBay users through Mail Boxes Etc.

				
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