Chapter 2

Environment Analysis & Strategy Development

Objectives  After reading this chapter you will be able to:  Understand the concept of Situational Analysis for 

  

internet marketing Create an effective strategy to build a strong Internet based business by using the four stage model for e-marketing strategy development Learn how to transition business to the web Get a clear understanding of Competitor performance benchmarking Understand the process of Online marketplace analysis & mapping

Introduction  In today’s online market, the website needs to be a

core element in all marketing strategies  An e-marketing strategy is needed to provide consistent direction for an organization’s emarketing activities that integrates with its other marketing activities & supports the overall objectives of the business

Introduction  Through the creation of an e-business model, your

business can reach millions more customers across the country---or even around the world  Benchmarking of competitors’ online strategy & services is a key part of E-marketing planning activity & should also occur on an ongoing basis

Situational analysis for Internet marketing  Basics of situation analysis for Internet marketing  Introduction to Internet marketing strategy  Four stage model for e-marketing strategy

development  The Internet Micro Environment  The Internet Macro Environment

Basics of situation analysis for Internet marketing

Internal Resources: E-marketing effectiveness | Financial resources & cost/benefit | Service quality | Technology infrastructure resources | Structure | Strengths & Weaknesses

Introduction to Internet marketing strategy

Introduction to Internet marketing strategy  The e-marketing strategy process:  Continuous internal & external environment scanning or analysis is required  Clear statement of vision & objectives is required  Strategy development can be broken down into formulation & selection  After strategy development, enactment of the strategy occurs as strategy implementation  Control is required to detect problems & adjust the strategy accordingly  They must be responsive to changes in the marketplace

Four stage model for e-marketing strategy development

Strategic Analysis

Strategic Objectives

Strategy Definition

Strategy Implementation

Strategic analysis  Continuous scanning of the micro & macro-

environment of an organization are required  Techniques include resource analysis,  demand analysis & competitor analysis,  applications portfolio analysis,  SWOT analysis &  competitive environment analysis 

Strategic objectives  Organizations must have a clear vision on whether

digital media will complement or replace other media & their capacity for change  Clear objectives must be defined & in particular goals for the online revenue contribution should be set

Strategic definition

Decision 1. Target Market Strategies

Decision 2. Positioning & Differentiation Strategies.

Decision 3. Resourcing

Decision 4. CRM Focus & Financial Control

Decision 5. Market & Product Development Strategies

Decision 6. Business & Revenue Models

Decision 7. Organizational Restructuring Required

Decision 8. Channel Structure Modifications

Strategic implementation  Includes devising & executing the tactics needed to

achieve strategic objectives  This includes relaunching a web site, campaigns associated with promoting the site & monitoring the effectiveness of the site.

The Internet Micro Environment  Pertinent factors for the Internet include demand

analysis, competitor analysis intermediary analysis, channel structure  Demand analysis or online customer activity is a key factor driving e-marketing & e-business strategy objectives

The Internet Micro Environment  In a B2B context customer activity can be

determined by asking for each market:

What % of customer businesses have access to the Internet?  What % of members of the buying decision in these businesses have access to the Internet?  What % of customers are prepared to purchase your particular product online?  What % of customers with access to the Internet are not prepared to purchase online, but choose or are influenced by web-based information to buy products offline?  What are the barriers to adoption & the facilitators amongst customers & how can we encourage adoption? 

The Internet Micro Environment  Competitor analysis or the monitoring of

competitor use of e-commerce to acquire & retain customers is especially important in the emarketplace due to the dynamic nature of the Internet medium

The Internet Micro Environment

The Internet Macro Environment  These can be classified into  Social,  Legal,  Economic,  Political &  Technological  The big giants of global business have taken a little

longer to see the Internet marketing opportunity

The Internet Macro Environment

Socio-cultural & Demographics Technology Economic Conditions Ecology & Physical Environment Political & Legal

Socio-cultural & Demographics

Technology  Technology encompasses

more than computers!  Remember that technology comes in many forms – medical devices, new plastics, production techniques  The technology discussion should not include what the business does – but what is available to members of the industry!

Economic Conditions  The state of the economy

is usually in some sort of flux  The current situation (specific to the industry) & any changes that may be forecast are important  The current economic situation is not conducive to new car sales, but may be better for used car sales.

Ecology & physical environment  Plays a large part in many bussineses – especially

those who have production facilities  But also, everyday businesses are affected  For example, the impact of climate change must be considered  water & fuel costs could change dramatically if the world warms by only a couple of degrees 

Political & Legal  An analysis is made of pertinent

local, state, & federal legal information in the business & industry environment  Differnet political parties have fundamentally different views on business, environment, taxes, & many other issues that may affect a business  Additionally, an industry may have specific laws & regulations.

Transitioning business to the web  In order to keep your business healthy, you need to

ensure that it stays relevant  Through the creation of an e-business model, your business can reach millions more customers across the country---or even around the world

The 7 steps for smooth transition to the web Step 1. Choose the Right Leadership Step 2. Prepare Employees and Customers Step 3. Meet With Graphic Designers Step 4. Bring In the IT Experts Step 5. Determine What Your E-Business Will Look Like Step 6. Go Live Step 7. Monitor Your E-Business's Performance

The 7 steps for smooth transition to the web Step 1. Choose the Right Leadership • Transitioning to an e-business model requires more than just information technology (IT) expertise

Step 2. Prepare Employees and Customers • Once you have some leadership in place (one to three managers), share the plans to transition to ebusiness with the rest of your staff and---of course--your customers

The 7 steps for smooth transition to the web Step 3. Meet With Graphic Designers • Choose a graphic designer or design team to come on board and help your company arrive at a polished finished Web product that is representative of your company's brand Step 4. Bring In the IT • n order to support the transition period and bring your business to the Web, you will obviously need IT experts to help

The 7 steps for smooth transition to the web Step 5. Determine What Your E-Business Will Look Like

• With your leadership team and IT consultants, you need to figure out what exactly your online business is going to entail Step 6. Go Live

• Send an e-mail to your customers to notify them that your website is ready for their business

The 7 steps for smooth transition to the web

Step 7. Monitor Your E-Business's Performance

• Perhaps the most important stage of the transition comes at the end, when you will need to monitor and evaluate how your e-business is doing

Types of e-business models  An eBusiness model describes how an organization

operates and provides products or services  Most eBusiness models consist of various components - concept, value proposition and sources of revenue

Brokerage  The brokerage eBusiness model entails bringing

buyers and sellers together to make possible business transactions  A transaction broker offers buyers and sellers a third-party payment venue where the parties can settle business transactions

Infomediary  This particular eBusiness model entails capturing

and sharing information. Some organizations may have website users to register to gain access to the information on the website, even free information

Advertising  The advertising eBusiness model works in the

same way as the convention media broadcast version  The business may offer free or paid services, such as email, blogs or instant messaging

Affiliate  The affiliate eBusiness model offers products or

services whenever people may surf on the Web  An Internet merchant offers financial incentives, usually as a commission, for a web site owner to place advertisement with links on the affiliate's website

Strategic objectives of Internet marketing  Smith and Chaffey (2001) suggest there are five

broad benefits, reasons or objectives of emarketing  This framework is useful since it presents a comprehensive range of objectives  Marketers will decide whether all or only some will drive e-marketing

Strategic objectives of Internet marketing

Strategic objectives of Internet marketing  Specific objectives should be created for each of the

5Ss  These objectives can be further broken down according to CRM objectives of acquisition, conversion and retention

The online revenue contribution  The key objective for e-marketing is the online

revenue contribution  Online revenue contribution objectives can be specified for different types of products, customer segments and geographic markets

Competitor performance benchmarking

Competitor performance benchmarking  Review of internal capabilities  From core proposition through branding to online    

value proposition (OVP) Different aspects of the customer lifecycle Qualitative to Quantitative In-sector and out-of-sector From user experience to expert evaluation

Competitor performance benchmarking  Review of internal capabilities:  such as resourcing, structure and processes vs. external customer facing features of the sites  From core proposition through branding to online

value proposition (OVP). The core proposition will be based on the range of products offered, price and promotion  The OVP describes the type of web services offered which add to a brands’ value. 

Competitor performance benchmarking  Different aspects of the customer lifecycle:  Customer acquisition, conversion to retention as well as many others  Competitor capabilities should be benchmarked for all the digital marketing activities of each competitor  Qualitative to Quantitative:  From qualitative assessments by customers through surveys and focus groups to quantitative analysis by independent auditors of data across customer acquisition

Competitor performance benchmarking  In-sector and out-of-sector:  Benchmarking against similar sites within sector and reviewing out of sector to sectors which tend to be more advanced  From user experience to expert evaluation.  Benchmarking research should take two alternatives perspectives, from actual customer reviews of usability to independent expert evaluations

Online marketplace analysis and mapping  To help summarize the linkages and traffic flows in

your e-marketplace, it is helpful for marketers working on an e-marketing plan  In a more advanced form, it could also show the flow of clicks between different customer segments and to different company site(s) and different competitors via the intermediaries

The main elements of the e-marketplace  Customer segments: Identify different

segments to understand their online media consumption and the type of content and experiences they will be looking for from a website  Search intermediaries: These are the main search engines in each country

The main elements of the e-marketplace  Intermediaries and media sites:  Mainstream news media sites or portals  Niche / vertical media sites, e.g. E-consultancy, ClickZ.com in B2B  Price comparison sites  Affiliates  Niche affiliates or bloggers

The main elements of the e-marketplace  Destination sites:  The sites that the marketer is trying to generate visitors to, whether these are transactional sites, like retailers, financial services or travel companies or manufacturers or brands  The OVP is a key aspect to consider within planning – marketers should evaluate their OVPs against competitors and think about how they can refine them to develop a unique online experience.

The main elements of the e-marketplace Alexa Google Trends Hitwise Netratings Comscore

ABCE Database Search key phrase analysis tools Forrester Gartner IAB US, IAB UK and IAB Europe IMRG

The main elements of the e-marketplace  Alexa  This is a free service owned by Amazon which provides traffic ranking of individual sites relative to all sites  Google Trends  This is a free tool giving trends in searches for high volume phrases - can be used to compare the strength of different brands and the seasonality of different generic phrases  Hitwise  Paid tool, but free research available at the Hitwise Blog

The main elements of the e-marketplace  Netratings  This is a Panel service based on at home and at work users who have agreed to have their web usage tracked by software  Comscore  A similar panel service to Netratings, but focusing on the US and UK  ABCE Database  The Audit Bureau of Circulation (Electronic) gives free access to its database of portals (not destination sites) who have agreed to have their sites audited to prove traffic volumes to advertisers

The main elements of the e-marketplace  Search key phrase analysis tools:  These can be used to assess the popularity of brands and their products reflected by the volume of search terms typed into Google and other search engines.  Forrester:  Paid research service offering reports on Internet usage and best practice in different vertical sectors such as financial services, retail and travel  Gartner:  This research service focuses on technology adoption within companies.

The main elements of the e-marketplace  IAB US, IAB UK and IAB Europe:  The Internet or Interactive Advertising Bureau has research focusing on investment in different digital media channels, in particular display ads and search marketing.  IMRG:  The Internet Media in Retail Group has compilations on online e-commerce expenditure in the UK which as the time of writing was averaging around £5 billion per month or over 10% of all retail spend.

End of Chapter 2

Environment Analysis & Strategy Development