Mar. 2007, Volume 6, No.3 (Serial No.45)
China-USA Business Review, ISSN1537-1514, USA
Online marketing and its strategy
ZHANG Wei-nian
(School of Business Administration, Zhongnan University of Economics and Law, Wuhan 430064, China)
Abstract: Information networking is becoming the key driver of world market. The battlefield of business is
evolving from traditional market to networking cyberspace. Confronted by the new networking market, the
traditional marketing strategy is diminishing while online marketing concepts and strategies are developing to
correspond with new economics: it becomes the main stream marketing mode in modern time. As the new
marketing mode and strategy guide the business to target their markets, online marketing covers numerous aspects.
The purpose of this article is to analyze the online marketing theory, according to its relevance and features.
Several marketing approaches will be discussed based on the analyses of direct-response marketing, relationship
marketing, online marketing, merging marketing and database marketing.
Key words: online marketing; traditional marking; comparison; strategy
As new corporate strategies shift to target their markets, online marketing endeavors to bridge many co-needs.
Functionally, this approach is based on the Internet, E-mail and data integration to support and serve their markets.
Practically, it needs targeted Internet promotions to deliver a compelling Return on Investment.
The most important factor of the online marketing is targeted communication to the consumers, and
otherwise, trading has no basis. Moreover, online marketing has many compelling benefits: eliminate regional
boundaries, multi-media, instantaneous, collaboration, entrepreneurial, and Hi-Tech prowess is bonus.
1. Online Marketing Theory
Online marketing theory is still developing, and the theoretical system and content needs to be improved.
However, the basic theory shares the same foundation of traditional marketing discipline which is direct-response
marketing, relationship marketing, online marketing, merging marketing and database marketing, etc..
1.1 Direct-response marketing theory
From the point view of selling: online marketing is a kind of direct-response marketing. “Direct” means to
connect with buyer without any middlemen. On Internet, consumers can purchase and execute orders directly.
“Response” refers to the exchange between the sellers and buyers. Companies can analyze online statistics by
measuring the effectiveness of their marketing initiatives. The main advantage of this marketing approach over the
traditional shotgun is that it can be surgically applied, measured and evaluated. With these advanced tools,
executive decision makers can effectively fine-tune their marketing strategies to realize superior achievement.
1.2 Relationship marketing theory
The core of relationship marketing is to keep consumers by providing Hi-Tech products and services to
satisfy them. It aims to enhance the customer relationship to achieve marketing goals. Networking, as an
ZHANG Wei-nian, female, Ph.D. candidate, Master supervisor and associate professor of School of Business Administration,
Zhongnan University of Economics and Law; research fields: E-commerce, quality management and business negotiation.
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Online marketing and its strategy
interactive medium, makes enterprise-consumer communication low cost and efficient. On Internet, enterprises
can take orders directly from consumers, while consumers can personalize their requirements; in response
enterprises can personalize the products to maximally satisfy the consumers’ needs and bring their profits to
maximum. Moreover, by analyzing consumers’ orders, corporations understand the market needs. Therefore they
can categorize the markets and dominate the markets. As a result, companies can minimize the marketing cost and
react to the market efficiently. This win-win solution of online marketing can establish business-to-business
relationships with the related companies and organizations.
1.3 Flexible marketing theory
Flexible marketing emerged as a new theory in response to strong marketing model which featured
large-scale products during the industrial economy period. It focuses on the consumers while enterprises are
exercising the marketing activities and consumers would accept the marketing approaches at a rather comfortable
level. Basically, these two marketing methods can be distinguished as: in flexible marketing, consumers are in the
drivers’ seats; while in strong marketing, enterprises take the charge. Flexible marketing is to achieve marketing
goals by making use and obeying the cyber-protocol or etiquette. The personalized consuming activities created
the consuming psychology that customers want to take charge, while the interactivity of the networking makes it
possible.
1.4 Merging marketing theory
Networking marketing is a kind of “merging marketing.” The real-time response and the interactivity of the
networking make it possible for consumers to participate the complete process of marketing management, while
the personalized consuming greatly enhance the consumers’ positive roles. The enterprises are required to adopt
the modern marketing ideas, which take consumers’ needs as the main concern, inviting consumers to the
marketing process. Customers’ needs should be considered as important as the business profit. Enterprises should
be constantly and continuously communicating with customers. Every single marketing strategy should be
focused on the consumers, not focused on enterprises in traditional marketing strategy.
2. The Comparison and Analysis of Online Marketing and Traditional Marketing
2.1 The connection of online marketing and traditional marketing
(1) Online marketing keeps the same essential principles as the traditional marketing. The technology
changes, while law lags.
(2) Online marketing and traditional marketing develop and improve along with each other. Online marketing
also emphasizes on difference marketing, service marketing, analyses the industry and competitors, categorizing
the markets and targeting the market as what the traditional marketing does. The traditional strategy to develop
new products competed with the competitors also applies to the online marketing.
(3) Four-C theory is also the basic rule of online marketing. Firstly, enterprises should study the Consumers’
wants and needs, to sell according to the consumers’ request; Secondly, enterprises should consider the Cost that
consumers are willing to pay to satisfy their needs; Thirdly, enterprises need to provide shopping Convenience;
Lastly, enterprises need to enhance the Communication to customers to promote themselves.
2.2 The differences between online marketing and traditional marketing
(1) From the view of the product and consumer, it is a challenge for the traditional industry which provides
standard merchandises. Currently the general goal of all enterprises is to endeavor to provide personalized
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products to satisfy consumers’ needs. Every online business is facing such challenge.
(2) From the view of price and cost, online marketing is to directly connect the consumers, which reduces the
involvements of distributors and retailers. Therefore they see a lower marketing budget and cost, as a powerful
advantage that online products can price lower than the traditional markets products. Internet access also provides
easy access to the prices of products of same kind. Setting up a right price becomes an important consideration of
enterprises, especially to those who are used to take advantage of favorable prices.
(3) From the view of traditional marketing places and communications, in online marketing, market places
involve neither middlemen or distributors, nor special member stores or chain stores. Enterprises can establish the
direct connection, communication and exchange with the consumers via internet—the importance of middlemen is
diminishing. While building new marketing place management and new product management mode, efficient
direct and distributing sell are the new supply lines to most companies.
(4) From the view of promotion and communication, online marketing can adopt the methods of Email,
website, Internet advertisement, etc, as well as the traditional promotion method which should be creative enough
to attract consumers. Ecommerce, on one hand, provides consumers convenience of shopping without getting out
of the house; on the other hand, reduces visual and sensual perceiving of the products. Consequently, the honesty
and reliability of the enterprises should be considered, as well as the authenticity of the product information. The
other inconvenience of E-commerce is that the consumers have to wait for the delivery and the mailing of the
merchandise.
3. Diverse Strategy of Online Marketing.
3.1 Website strategy
Basically, design your website to market. Website should focus on the navigation system, look and feel,
providing web surfers most information; furthermore, website should stand out from the millions of other website,
keeping the traveling and impatient web surfers which is so-called web page promotion. Certain disciplines are
essential to establish a successful online marketing.
(1) Design a good website and promote the site. Website is the important icon and resource to the enterprise.
The website should be simple, distinguished, and easy to remember which should be named after the brand or the
name of the enterprise.
(2) Design the website structure carefully. The structure should be simple, convenient to navigate and easy to
browse.
(3) Maintain the website. Designing the website is a long-term job, which does not end at setting up the
website. It involves in maintaining the website, such as updating the product and price catalogs.
3.2 Product strategy
When the enterprises design the product strategy, it should consider the online marketing environment, try to
satisfy the personalized needs of the different customers, develop new products to fit the market trends, create new
market needs and establish the self-advantage of the enterprise.
(1) Analyze the online shoppers to decide the most suitable products for online selling. According to survey
and analyses, the most suitable products for E-commerce are those high-circulated products—books, newspaper,
software information, audio and video products such as CD, VCD and DVD, air ticket reservation and related
services, etc..
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(2) It requires a wide coverage of market with Hi-Tech communication and information technology. So far
there are over 180 countries and regions that have internet infrastructure. Wider market coverage could
substantially increase the trading opportunities and bring maximum profits.
(3) Enterprises should take advantage of the direct communication with the customers to provide
personalized products to the consumers. They also should promptly understand the customers’ evaluation of the
product to improve and speed up the research and development of new product.
3.3 Price strategy
The difference of product prices between the online business and traditional business is substantial in terms
of market demand and supply, consumers’ psychological situation and the market competition while the price of
the online business is more flexible. Hence, when designing the online business price strategy, every aspect of the
business should be considered to set up the most reasonable price.
(1) Design and establish an auto-adjust price system to cope with the online environment. The online product
prices will face the competition from the same industry. Thus enterprises should design and establish an
auto-adjust price system to modify the price according to the change of season, demand and supply, price
fluctuation of the competitors and promotion, etc.. The system should adjust the prices in order to maximize the
profit of the enterprise and perform the market survey at the same time to obtain the prompt feedback of the
pricing.
(2) Develop intelligent bargain system to negotiate with the consumers online. Two standing points (cost and
price) still work which demonstrate the merging feature of online marketing: sellers and buyers negotiate directly.
(3) As the prices of the online product are transparent, consumers can easily check out the prices of the
product of the same kind. In order to avoid the price war, enterprises can show the public how the prices are set up,
and compare the product functional and price index with the products of the same kind to help the consumers
make decision.
3.4 Promotion strategy
The point of the promotion strategy is to take advantage of the online feature to realize the communication
between the business and consumer. This communication is not the traditional push-style, but pull-style, not
traditional strong marketing but flexible marketing.
(1) Make full use of online advisement. Online advertisement will become the preferred choice for
enterprises’ promotion and it will augment promotion strategies together with the other promotion methods.
(2) Establish online public relationship positively. That will improve the enterprise’ public relationship image.
As the public relationship between the enterprises and media evolves, making the enterprise website a major
information source of media is an important project for the online PR study. At the same time, enterprises should
make use of community services, such as online forum, Email, mailing list, newsgroup, etc., to develop the public
relationship with the potential consumers.
3.5 Online place strategy
Networking connects the enterprises and the consumers, and provides the enterprises a brand-new online
selling place. This new place not only simplifies the wall and mortar selling structure in traditional business, but
also merges selling, customer service, product information and customer information into one place, which makes
the advantage.
(1) Join with related business to set up complimentary products on line. This joint selling style can increase
the consumers’ online visits and consuming motive, provide huge convenience for the customers and make the
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online shopping more attractive. For example, computer manufacturers can join hands with software developers,
networking services provider to do promotion and marketing.
(2) Enterprises can set up virtual stores, using 3D multi-media to set up a good shopping environment. The
virtue stores can be creative and personalized, and show different atmosphere according to the changes of time,
season, promotion and different consumer groups to attract more customers to the virtue stores.
(3) After the customers making the consuming decisions, they can place order via email, or make payments
via wiring the bank account and the enterprises provide merchandise delivery or have the post office mail the
products.
With the development of the computer and networking technology, we are certainly in an E-commerce time.
Our enterprises should take a positive approach in this new time, promptly change the business management and
principle, and adjust the management mode and strategy to be prepared for the challenge of the new century.
Reference (omitted)
(Edited by Gavin Dai and Rainbow Lee)
(continued from Page 62)
of shareholding and neglect the restriction by the cost of capital of shareholding. Then, company managers can
take financing of shareholding with the price (sometimes even is evil zero cost of financing) far below the market
rate (which is the cost of financing of bonds), but the investors still go. Under such circumstance, company
managers obviously prefer the financing of shareholding when refinancing. This shows that the important role of
the capital cost reflects on the property right restriction of capital cost. What is more important, the imperfection
of restriction of property right impacts the normal operation of corporate governance, which causes Chinese
company managers lack of tough constraints happening in developed capital market. So that they can continue to
increase their investment unbridled in the circumstance of the interests of shareholders diluted, and causes super
function for financing in capital market.
Therefore we can say that, it is the restriction or imperfection of the capital cost that causes the diametrically
opposite financing preference of listed companies between Chinese and foreign countries.
References:
[1] Myers, S. C. and Majluf, N. S.. Corporate financing and investment decisions when firms have information those investors
do not have. Journal of Financial Economics, 1984(13): 187-221.
[2] Modigliani, F. and Miller, M. H.. Some estimates of the cost of capital in the electric utility industry. American Economic
Review, 1966(6).
[3] The Preferred Group of Mutual Funds. Cost of Capital. http://www. preferredgroup.com/Glossary/c7.aspx.
(Edited by Gavin Dai and Caroline Lu)
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