1. The Digital Marketing Opportunity 5A3190 DMCM David Edmundson-Bird

2. The Digital Marketing Opportunity So what’s the problem? You have to produce a target market report which specifies the main audience for your product/service/offering You have to produce a viability report in which you compare suitable digital marketing approaches and make choices about which approaches you will use You have to produce an anti-viability report in which you discuss approaches that are not suitable for use on this occasion

3. The Digital Marketing Opportunity So what do you need to learn? What the market opportunity analytic framework is How the two “generic value types” work How we identify unmet and under-served needs How we segment and target digital customers What resources we have for evaluating digital market opportunities

4. The Market Opportunity Analytical Framework and “Value Types”

5. Market Opportunity Analytical Framework We have to workout where and howwe will compete See opportunity in (existing or new)value system NEW IMPACT OF NETWORK ECONOMY Horizontal competition across industries not within industries Industry value systems rapidly reconfiguring New speed of competitive behaviour Customer behaviour easy to influence at early stages The concept of“co-opetition” Reveal the heart of the opportunityIdentify unmet / underserved needs Identify target segments Identify organisation’s resources thatprovide opportunity for advantage Check competitive, financial & technicalopportunity attractiveness Decide whether to engage

6. 2 Types of Generic Value A value system is the linkage of processes and activities inside and between organisations that creates benefits for participants and end users VALUE THAT’S TRAPPED & UNTAPPED Create a more efficient marketplace Create a more efficient value system Wreck existing pricing Make it easier to access your offering Increase the reach of your offering Customise your offering Build a community around your offering HYBRID COMBINATION Introduce new functionality in your offering Introduce a new experience in your offering VALUE THAT’S NEW TO THE WORLD

7. Exploring Generic Value VALUE THAT’S TRAPPED & UNTAPPED More efficient markets lower search and transaction costs More efficient value systems compress or eliminate steps in an existing value system HYBRID COMBINATION Disrupt pricing and change pricing-power relationships Enable ease of access and help customers find products Extend reach and welcome distant customers VALUE THAT’S NEW TO THE WORLD Customizing offerings allows customers to add and remove features Build communities to leverage customers’ participation Introduce new functionality to transform all or part of an industry value chain Can you think of anyone that’s done any of this?

8. Spotting Value Think about horizontal and vertical dimensions Horizontal “value plays” improve functional operations that are common to multiple industries and types of value systems E.g. being good at managing retail operations within any industry Vertical “value plays” create value within activities that are central to a particular business Oil companies suck the oil out of the ground and deliver it to your vehicle (and do everything in between) Look for clues to trapped value Asymmetric information (The situation where one party in a bargain has information which is superior to that of the other ) Poor access to information and advice Significant time and resources required to do something Little collaboration between key participants

9. The Customer Decision Process A framework to look for unmet or underserved needs

10. The Customer Decision Process (CDP) ProblemRecognition What causes the customer to engagein the first place? Search What are the things that influencea customer’s decision? PRE-PURCHASE Creating value is based on understanding and meeting customer needs Evaluation ofAlternatives What properties of an offering doesa customer consider? Choice What options do customers consider?What decisions do they make? PURCHASE Post-acquisitionEvaluation What does the customer do withthe decisions made? POST-PURCHASE Do you want to know more? Read J. Mowen “Consumer Behaviour” in the Library

11. CDP for Eating Out ProblemRecognition Social Hunger Search No. of diners& relationship With children? When & forhow long? Weighting Ambience, costwine list, quality PRE-PURCHASE Howclose? Cuisine Reviews Experience Dresscode Evaluation ofAlternatives Choice Stay home Fast Food Sit down Fine Dine Room serve PURCHASE Home made Takeaway Eat in Takeaway Post-acquisitionEvaluation Food Service Ambience Memorability POST-PURCHASE Likelihood of repeat or referral

12. Using CDP What is the customer’s ideal experience like? How does it change in the stages of decision-making? How closely does the real experience compare to the customer’s ideal? What are the key frustration points? Does the customer’s experience yield the result that best meets his needs? What might help the customer achieve better results? Does the desired customer experience change at all? What are customer beliefs about the decision-making process and the options available for purchase? What barriers block participation by potential customers? What technological, communication or digital opportunities might enhance the customer experience? How do customers define value for critical steps in the process? Would they be willing to pay for certain elements of that value? Whenever you write an answer for these questions – ask yourself: “What’s my evidence?”

13. Segmenting & Targetting

14. Designing the Value Cluster WHO IS THE TARGET? VALUE WHAT ARE THE BENEFITS? WHY DO WE BELIEVE THIS?

15. Who is the Target?How can we segment Customers? Old fashioned Use just one segmentation type 21st Century Increase number of segments used to 2 (or even 3, 4, 5……) Think about forgetting demographics

16. Forgetting Demographics Many commentators think demographics is irrelevant in the digital economy Demographics – age, gender, income, education Consider using alternative segmentation approaches

17. How can we segment digital customers?

18. Other segmentation ideas Children’s Toys Relationship to purchaser (e.g. self, peer, parent) Age of purchaser Reason for purchase (e.g. entertain, reward, educate) Online Trading Value of stock portfolio Frequency of trades Internet Service Providers Age of purchaser History of Internet use Primary online activities For each segment defined, how might you locate the customer? Remember to think of all the possibilities

19. Geographic Digital Segmentation GDS Divides market into distinct geographical units, such as nations, states or regions In Digital world, geographic barriers are often removed Still many industries where local relationships and distribution channels play key role, maintaining the need for local focus Example GDS: Country Region Urban vs. Rural Density Climate

20. Demographic Digital Segmentation DDS B2C Demographic Market division into groups based on customer demographic variables Most popular method for distinguishing customer groups, highly actionable Age Income Occupation Nationality B2B Organisational Demographic Market division into groups based on business demographic variables Highly actionable, since business demographic data is readily available Industry Company size Location

21. Needs-Based Digital Segmentation NBDS Consumers and businesses purchase goods and services because they satisfy their needs Same product may satisfy many different needs Why do people chew gum? Seeks to understand why a purchase is made (i.e., what needs are being satisfied) and to divide market into groups of buyers whose needs are homogenous Particularly compelling for technology companies Can prevent companies from developing new technology features because they are “cool” or possible

22. Behavioural Segmentation How do people behave in a digital world? Search terms and key phrases Abandoned shopping baskets People who buy once Converts & non-converts People who do “x” on the Internet

23. Does Segmentation Matter? No Everything can be customized for each individual customer Good Web businesses attract customers from all segments It doesn’t make sense to treat them the same way Back-office supply systems and infrastructure can easily accommodate every type of customer Why limit it to a few segments? Multiple storefronts can be constructed in a real-time basis Yes Segmentation happens, whether intentional or not Segmentation is needed to help companies identify which classes of customer are profitable and unprofitable

24. Requirements for Effective Digital Segmentation Customers must demonstrate needs, aspirations or behavioural patterns that are similar within segment and different across segments Distinction between a price-sensitive and a quality-seeking segment is meaningful, since the two segments demonstrate distinguishable sets of needs Organisation must be able to reach customers within segments through effective and targeted digital marketing programs Customer segment consisting of customers with blue eyes is not actionable, since it is very hard to identify and reach only customers with blue eyes Segments must be large and profitable enough to make the investment worthwhile Key characteristics of segments (e.g., size and spending patterns) must be easy to measure

26. Is the value relevant to the target customers’ needs?

27. Do target customers believe the value proposition?

28. Will the value proposition provoke customer action?

29. Will the organisation support the proposition?

30. Does the organisation have the resources and capabilities to “own” the proposition?

31. Does selection of the proposition limit future growth into other markets?

32. Are competitors trying to provide a similar value proposition?

33. Do current competitors have the resources and capabilities to copy the proposition?

34. How easy is it for the required resources and capabilities to be developed?Caution: Wrecking two benefits is less valuable than fully delivering one.

36. How the two “generic value types” work

37. How we identify unmet and under-served needs

38. How we segment and target digital customers

39. What resources we have for evaluating digital market opportunities