DIGITAL MARKETING

1. CHAPTER 4
THE INTERNET AND
THE MARKETING MIX
NUR AQILAH BINTI ZAINUDIN
2014416824
BM240 3B

2. LEARNING OBJECTIVES
• Apply the elements of the marketing mix in an online context
• Evaluate the opportunities that the Internet makes available for
varying the marketing mix
• Assess the opportunities for online brand-building

3. INTRODUCTION
• Show how the well-established strategic framework of
marketing mix can be applied by marketers to inform their
digital marketing strategy.
• It explores this key issue of digital marketing strategy in more
detail.
• As well as the marketing mix, online branding is another major
topic.

4. WhatisMarketingMix?
Widely refered to4P’s of
Product, Price, Place and
Promotion by Jerome
McCarthy (1960)
Extended to 7P’s which include
people, processes and physical
evidence by Booms and
Bitner,(1981)
8th P online is the partnerships

5. ELEMENTSOFMARKETINGMIX

6. The4Psand4Cs
Product
Price
Promotion
Place
Cost
Communications with
company
Customer needs and
wants
Customer convenience

7. PRODUCT
Product Variable
=========
Element of marketing
mix that involve
researching customer
needs and develop
appropriate product
Extended Product
=========
Additional features and
benefits beyond the
core product
Core Product
=========
The fundamental
features of product that
meet users needs

8. OPTIONSFORVARYINGTHECOREPRODUCT
Can I offer additional information or
transaction services to existing customer
Can I address the need of new customer
segments by repackaging current info by
new business propositions
Use ability to attract customer to generate
new sources revenue or sales.
Will my current business be significant
harmed by other company.

9. OPTIONSFOROFFERINGDIGITALPRODUCTS
• Traditional publisher
revenue model
• Different period at
different price point
* Fee for single download/
viewing session at higher
relative price than the
subscription
* Different channels/content
can be offered as individual
product/ group at reduce
price
• No direct price set yet
• Revenue source through
adverts on site
Subscription
Ad supported contentBundling
Pay-per-view

10. OPTIONSFORCHANGINGTHEEXTENDEDPRODUCT
endorsements awards
testimonie
s
Customer
lists
Customer
comment
warranty guarantee
Money
back
Customer
service
Incorporating
tools to help user
during their use of
product

11. CONDUCTINGRESEARCHONLINE
Online focus group
=========
Compare
customers
experience of
product use
Online
questionnaire
survey
=======
Focus on site visitor
experience, can
include question
Customer feedback
/ forums
======
Comment post to
site
Web Analytics
=========
Response data
from e-mail

12. The internet provides a platforms
which enable new product to be
developed more rapidly as it is
possible to test new ideas,
concept or explore different
product through online market
research.
= The law of the few
= The stickiness factors
= The power of context
VELOCITY OF NEW PRODUCT
DEVELOPMENT
VELOCITY OF NEW PRODUCT
DIFFUSION

13. BRANDS
Branding
=========
Process of creating
and evolving
successful brand
Brand
=========
Sum of the
characteristic of
product/service
perceive by user
Characteristic of successful brand
=================
1. Brand is dependent on customer
perception
2. Perception influence by added-value
characteristic
3. Added-value need to be sustainable
Brand experience
=========
Frequency and depth
of interactions with a
brand can enhance
through internet
Brand equity
=========
Asset/liabilities
linked to a brand
name and symbol
that add to a service

14. Traditionalmeasuresofbrandequityandonlinemeasuresofbrand
equity

15. SUCCESSFACTORFORBRANDSITES(METHOD
ENCOURAGEVISITORTORETURN)
Create a compelling, interactive experience
including rich media which reflects the brand
Consider how the site will influence the sales cycle
by encouraging trial
Developing an exchange programmed on website to
begin conversation with most valuable customer
segment

16. Brand identity
========
Totality of brand
association including
name and symbol that
must be communicated
Brand names for online
brand
===========
* Should be simple.
Distinctive, meaningful
and compatible with
product
Rules for naming online
brand
===========
• Law of the common
name
• Law of proper name

17. PRICE
Price variable
======
Element of marketing
mix that involve defining
product price and
pricing models
Pricing models
======
Form of payment such
as outright purchase,
rental, volume purchase

18. INCREASEDPRICETRANSPARENCY
Price Transparency
=============
Customer knowledge about
pricing increases due to
increases availability of
pricing information
Differential pricing
============
price different for different
types of customer, market
and buying situation.
Price elasticity of demand
============
Measure of CB based on
economic theory

19. DOWNWARDPRESSUREONPRICE
Precision
============
each product has a price
indifference band where
varying price has little or no
impact on sales.
Adaptability
============
respond more quickly on
demand of marketplace with
online pricing
segmentation
============
pricing differently for
different groups of customers

20. RANGEOFOPTIONFORSETTINGPRICING
Competiti
on-based
pricing
Cost-plus
pricing
Market-
Oriented
pricing
Target
profit
pricing

21. NEWPRICINGAPPROCHES
DYNAMIC PRICING = price can
be updated in real time
according to the type of
customer or current market
conditions.
SHIPPING FEES = dramatic
effect both on conversion rates
and ability according to
research completed by Lewis et
al. (2006)

22. ALTERNATIVEPRICINGSTRUCTUREORPOLICIES
Pricing options which
could be varied online
include
==============
Basic price
Discounts
Add-ons and extra
products and services
Guarantees and
warranties
Refund policies
Order cancellation
terms
Online retailer should ask following question
when reviewing pricing online
============================
1. How many competitors are there at a point
in time?
2. What is the position in PLC
3. What is the price sensitivity or elasticity of a
product?
4. Are we stuck in the middle?

23. NEWPRICINGAPPROACHES

24. PLACE
PLACEOFPURCHASE
Seller-controlled sites
are those that are the
main site of the supplier
company which are e-
commerce enabled.
Seller-oriented sites are
controlled by third
parties, but are
representing the seller
rather than providing a
full range of options
C. Neutral sites are
independent evaluator
intermediaries that
enable price and
product comparison
and will result in the
purchase being fulfilled
on the target site.
Seller-oriented sites are
controlled by third
parties on behalf of the
seller.
Seller-controlled sites usually
involve either procurement
posting on buyer-company sites
or those of intermediaries that
have been set up in such a way
that it is the buyer who initiates
the market making.

25. NEWCHANNELSTRUCTURES
Disintermediation = digital marketers
should ask themselves the questions.
Reintermediation = the new
intermediaries created through
reintermediation.
Countermediation = the strategic
options to make better use of online
intermediaries.

26. CHANNELCONFLICT
Different forms of channel
the internet can take
==================
1. A communication channel
only
2. A distribution channel to
intermediaries
3. Direct sales channel to
customers
4. Any combination of
above
Strategic option when
existing reseller arrangement
in place
=====================
1. No internet sales
2. Internet sales by reseller
only
3. Internet sales by
manufacture only
4. Internet sales by all

27. VIRTUALORGANIZATIONS
Features of virtual organizations
==============
1. Processes transcend the
boundaries of a single form and
are not controlled by a single
organizational hierarchy.
2. Production processes are
flexible, with different parties
involved at different times.
3. Parties involved in the
production of a single product are
often geographically dispersed.
4. Given this dispersion, co-
ordination is heavily dependent
on telecommunications and data
networks.

28. DIFFERENTSTRUCTUREFORVIRTUALORGANIZATION
CO-alliance model
=======
Effort and risk share
equally by partners
Star alliance model
=========
Effort and risk centered
on 1 organization that
sub-contract other
virtual partner
Value alliance model
=========
Partnership where all
element contribute
across supply chain
Market alliance model
===========
Similar to value
alliance, but more
likely to serve differ
marketplace

29. PROMOTION
Elements of promotional mix
====================
1. Advertising
2. Selling
3. Sales promotion
4. Public promotion
5. Sponsorship
6. Direct mail
7. Exhibitions
8. Merchandising
9. Packaging
10. Word-of-mouth

30. PEOPLE

31. PROCESS
REFERS to the method
and procedure
companies use to
achieve all marketing
function
Customer contact strategy
Customer-
preferred
channel
Company-
preferred
channel

32. PHYSICALEVIDENCE
Physical evidence variable
=========
Elements of the marketing mix that
involves the tangible expression it is
purchased and used.

33. SUMMARY
• Evaluating the opportunities provided by internet for varying the
marketing mix is a useful framework for assessing current and future
digital marketing strategy
• Product. The product that will be sold which is a core product
through the medium of web or new information based
• Price. Internet leads to the price transparency and commoditization.
• Place. Place of purchase and channel structure on internet
• Promotion. The medium uses to promote the product in a web
• People, process and physical evidence.