Online Marketing Strategy (McGill)

Where are we going?

Friday, November 20, 2009

Nothing sells like


Strategy without tactics is
the slowest route to victory.

Tactics without
strategy is the Text

noise before defeat.


A strategy is a long term
plan of action
in order to achieve
a particular outcome.


A tactic is a speciﬁc
method or action that


Children as a business model?
Ben Stein


8 Keys to a business

model

1.Value Proposition

The Why?


Fresh food from the

growers to the people


• Webvan lost over 1 billion


Fresh Direct
founded in 2002

270 million in sales
40k orders a week
$145 avg. Order
Delivery $6.49


Fresh

Technology Success Focus

NO free shipping


2. Revenue Model


• Ad Revenue / AOL
• Subscription / Netﬂix
• Sales- Retail / AMAZON
• Transaction Fee / Etrade
• Afﬁliate / Linkshare


US $160 Million


3. Market Opportunity


HSN
TV OFFLINE
CATALOG ONLINE
20%

43%

22%

16%


Market opportunity analysis!
Create More Efﬁcient
Markets, e.g., eBay
!

Enable Ease of Access,
Liberate e.g., Gap
!
Trapped
Create More Efﬁcient
Value! Systems, e.g., FedEx
!

Look at Value Disrupt Current Pricing
System to Power, e.g., Priceline
!
Discover New
Business
Opportunities! Customize Offerings, e.g. MyYahoo
!

Introduce Extend Reach and Access, e.g., keen.com!
New-to-
the- Build Community, e.g., MyFamily.com!
World
Value !
Enable Collaboration, e.g., ProjectPoint
!

Introduce New Functionality/Expertise,
e.g., C-Mode
!


Market opportunity analysis!
Customer!

Competition!

Company!

Technology!


Identify customer needs
The “Customer Decision Process” framework: analyze and discover customer needs

Gift Interested in Author/ Need for Activity/Class
Problem Recognition
!
Subject Matter
Prepurchase

Read Reviews Search for Availability Review Contents
Information Gathering

Evaluation Price Quality Availability Fits Needs
Purchase

Purchase Decision
! Purchase Online Purchase Offline

Satisfaction Arrived on Time Good Quality of Contents Easy Buying Experience
Postpurchase

!

Repeat Purchases High Percentage of
Loyalty
Consumers’ Book
!

Purchases


4. Competitive Environment


What do they have in common


Strategic analysis

When it comes to competitors, remember the
Information Economy.
Who is competing with you on CUSTOMER
ATTENTION.

It might not be the obvious candidate.


Assess competitive advantages
Direct competitors
–! Firms offering products or services that are “close
substitute”
–! Rivals in the same industry
Indirect competitors
–! Substitute Producers
•! Firms that, though they reside in different industries, offer
products and services that perform the same function
–! Adjacent Competitors
•! Firms that have the potential to provide products or services
that are substitutes


5. Competitive Advantage


First Mover


Background
• Founded in 1998 by now CEO
Mark Vadon
• Based in Seattle
• Went public in May 2004
• Largest online retailer of
diamonds and other jewelry
• 159 employees


Firm Statistics

• Profits have risen 24% since 2005
• Current market value of $1 B
• Online market share 50%
• Stock valued at around $56 a share


Technology
• Offers unique programs through website
– Ex. “Build Your Own Ring”

• Point of sale system
– Knowing their customer

• Personal website
– My Blue Nile


Competitive Advantage

• Exclusive contracts & distribution rights with
diamond suppliers
• Low acquisition costs
– Creates barriers to entry for competitors
• Purchases diamonds after customers pay
– Allows for a negative working-capital cycle


Competitive Advantage

• Doesn’t keep inventory
• Price transparency
– Compare prices, can
choose cheaper diamonds
• Large selection
– Over 60,000 diamonds to
choose from


Rival Firms
• Traditional brick and mortar jewelers
– Zale
– Tiffany’s
– Ice.com
• eBay and Amazon
• Department / Super stores
– Macy’s
– Wal-Mart

Opportunities/Threats

• Rising costs
– online marketing, diamond prices
• Diamonds as a commodity
• Complexity of predicting future sale growth
• Trying to expand in European market
• Customers want to feel diamonds


7. Market Strategy

Search
SEO/SEM Viral Social
Email Comparison Afﬁliates
Marketing Media

Customers Spread the word


7. Org. Development


8. Management team


Internet business
models


B2C B2B

C2C C2B


P

PEOPLE


Products

• Products can be digital (e.g. software)
• Technology aids with developing new
products, whether digital or not


Price

• Easier access to comparative websites allows
consumers to ﬁnd lowest price
• Organisations need to differentiate
themselves, but should not rely on price


Placement

• Digital products can be digitally distributed
(e.g. download MP3)
• Stores can be online (e.g. Amazon)


Promotion

• The Internet provides a wealth of
promotional tools
• Advertising, personal sales, promotions, public
relations and more can be conducted online
• Importantly: customers as promoters


What about “new” Ps?


Idris Mootee’s 4 New Ps


1. Personalization

• Internet allows for Mass Customization
• Marketing
• Products
• Experience


1. Personalization

Text

Converse allows customers to create their own shoes.


2. Participation

• Social media
• Consumers collaborate with companies to
create products
• Rapid feedback loop


2. Participation


3. Predictive modeling


Peer-to-Peer
• Most trusted is “someone like me”
• Social networks encourage interactions
• Word of mouth can be more easily
tracked
• Equip engaged users with tools to
promote


What are their needs?
What problems do they
have that you can solve?


Make the customer the

centre

of your marketing

Price

What is a cynic?
A man who
knows the price
of everything and
the value of
nothing.


Product

• Does your product fulﬁll customer needs?


Making money is a
hobby that will
complement any
other hobbies you
have


Placement


Promotion

• The Internet was created to share
information, not to market products
• How can you harness customer needs
online?


Deve
loping
a mar
keting
plan


1. Know yourself and
your market
• Internal audit and market
review
• Who are we?

• Who are our customers
and what are their needs?

• What is the social
context?


2. Strategic analysis

• Thorough market analysis
• Strength’s, Weaknesses, Opportunities, Threat


3. Set objectives

• What are the desired
outcomes?
• What are the speciﬁc goals?
• How will success be
measured?


4. Generate
strategies and
tactics
• The nitty gritty: what are you actually going
to do?


5. Evaluate strategies

• Budget and resources
• Prioritize
• SWOT


helpful harmful
external internal

strengths weaknesses

opportunities threats


6. Implement

Just do it


7. Track, Analyze,
Optimize

• Online, be ﬂexible
• Track, and adapt as required.


What does what?


Tactic Outcome
Email Marketing Customer Retention
Online Advertising Acquisition Branding
Afﬁliate Marketing Acquisition Branding
SEO /SEM Acquisition Branding
Branding
Social Media
Participation
Branding
Viral marketing
Participation


Online Marketing Strategy (McGill)

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