chapter
1
Introduction to Internet
Marketing
McGraw-Hill/Irwin
© 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
Introduction to Internet Marketing —
Today’s Objectives

Objectives will be to:

Define the scope of Internet marketing

Explore the stages of Internet marketing

Discuss the relationship stages and the Marketspace Matrix

Examine guidelines for success

Outline the progression of the book
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Definition and Scope of Internet
Marketing
Exhibit 1.1: Assessing the Impact of
Internet Marketing
Bricks-and- Mortar
Location of Revenue Stream
Marketing Resource Allocation
Offline
Online
Cell 4
Cell 2
Cell 3
Cell 1
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Exhibit 1.2: The Seven-Stage Cycle of
Internet Marketing
Step 2
Formulating the
Marketing Strategy
Step 3
Designing the
Customer
Experience
Step 1
Framing the
Market
Opportunity
Step 4
Crafting the
Customer
Interface
Step 7
Evaluating
the
Marketing
Program
Step 6
Leveraging Customer
Information Through
Technology
Step 5
Designing the
Marketing Program
Exhibit 1.3: Framework for Market
Opportunity
Seed Opportunity in Existing New Value System
Identify Unmet and Underserved Need(s)
Identify Target Segment(s)
Declare Company’s Resource-Based
Opportunity for Advantage
Assess Competitive, Technological, and Financial
Opportunity Attractiveness
Make “Go / No-Go” Assessment
Framework for Market Opportunity
Microsoft CarPoint Example
Leverage the Internet to Improve the
Consumer Car-Buying Process
Car Buyers Are Dissatisfied With Current
Retail Car-Buying Process
Shoppers Who Feel Intimidated by Sales
People and Look for More Efficient Way
Microsoft’s Software and Free Placement on
All Its Websites
How Big Is the Online Car-Buying Market?
Who Are CarPoint’s Main Competitors?
Make “Go / No-Go” Assessment
• MSN CarPoint identified an opportunity to leverage the
Internet to deliver customer value in the car industry
• The retail car-buying process was frustrating and
inefficient:
• Little information available to the consumer
• Bargaining with salesperson viewed as an hassle
• Long process overall
• MSN CarPoint selected two primary target
segments for its service:
• “The intimidated by the process”
• “The information seekers”
• MSN CarPoint could leverage Microsoft’s expertise
in software development, its brand name and its
multitude of online properties
• Competition was getting fierce with more and more
online car services entering the market…
• But the financial opportunity was large: 66% of
new car buyers were estimated to use online
services in 2000
• In 1996, the first version of CarPoint was shipped
• By 1998, CarPoint was driving $5 million in car
sales a day
Exhibit 1.4: Corporate, Business-Unit
and Marketing Strategy
Linkages
Example
Corporate Strategy
Amazon
Business Unit Strategy
Tools and Hardware
Integrated Marketing
Strategy for Unit
Integrated Marketing
Strategy for Tools and
Hardware Unit
Internet
Marketing
Traditional
Marketing
Online
Marketing Mix
Offline
Marketing Mix
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Exhibit 1.5: The Four Key Stages of
Customer Relationship
Four Key Stages of Customer Relationship
Awareness
Exploration /
Expansion
Commitment
Dissolution
Level of
Intensity
Exhibit 1.6: Four Key Stages of Customer
Relationship by Level of Intensity
Intensity
Awareness
Exploration
Commitment
Dissolution
Stages of Customer Relationships
Exhibit 1.7: Internet Marketing Mix
Branding
Product
Pricing
Communication
Community
Distribution
Exhibit 1.8: Impact of the 2Is on the
Internet Marketing Mix
Interactivity
Branding
Product
Pricing
Communication
Individual
Community
Distribution
Exhibit 1.9: The Marketspace Matrix
Relationship Stages
Awareness
Exploration
Commitment
Dissolution
Categories of Levers
Product
Price
The 2Is should influence
the design of each cell in
the matrix
Communication
Community
Distribution
Branding
Branding can also
accentuate (or lessen)
the impact of the levers
in each cell
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Critical Success Factors for Internet
Marketing Executives

The willingness to understand customer needs
and provide added value to each customer
interaction

The ability to have a holistic view of the
customer and the enterprise in order to create
a uniquely advantaged strategic plan

Being able to understand the dynamic tension
between one-to-one marketing and mass
marketing and being able to strike a strategic
balance between them

The willingness to change the status quo, take
chances and use “bleeding edge” tools to lead
teams to success

The ability to manage marketing campaigns in a
more uncertain, dynamic environment, with a
new set of tools that often have few records of
successes, failures or best-practices
Customer Advocacy and Insight
Integration
Balanced Thinking
Passion and
Entrepreneurial Spirit
Willingness to Accept
Risk and Ambiguity
Exhibit 1.10: The New Rules of
Marketing for the Global Digital World

The New Rules
1. Target segments of one, and create virtual communities
2. Design for customer-led positioning
3. Expand the role of branding in the global portfolio
4. Leverage consumers as coproducers through customization
5. Use creative pricing in the Priceline.com world
6. Create anytime/anyplace distribution and integrated supply chains
7. Redesign advertising as interactive and integrated marketing,
communication, education and entertainment
8. Reinvent marketing research and modeling as knowledge creation and
dissemination
9. Use adaptive experimentation
10. Redesign the strategy process and supporting organizational architecture
Source: Wind, Jerry and Vijay Mahajan. Digital Marketing. New York: John Wiley and Sons, p.8.
Point-Counterpoint: New Rules or Old
Rules of Marketing
Point-Counterpoint
New Rules
Old Rules
Several
Differences
One
Segmentation
There
From
basic conceptual and process
changes occur in online marketing
such change is the increased ability
to deliver on the promise of one-to-one
marketing
is also a fundamental shift to a
more consumer-driven and controlled
world — for example, a shift towards
pull-marketing and the use of more
“pull” levers, such as online community
in the online marketing world
are overstated
is still at the core of
marketing — “clusters” of consumers will
emerge that share behavior
the supply side, it is most efficient
to aggregate these consumers to reduce
costs
Successful
marketing programs include
mixing different marketing levers, both
new and old: the “master-mixer” concept
still remains
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Exhibit 1.11: Overview of the Chapters
1. Framing the
Market
Opportunity
4. Crafting the
Customer
Interface
2. Formulating
the Market
Strategy
5. Designing the
Marketing
Program









Customer Relationships
Product
Pricing
Communication
Community
Distribution
Branding
Designing the
Marketspace Matrix
Illustration: Marketing
Campaign for The Lord of
the Rings: The Fellowship
of the Ring
3. Designing the
Customer
Experience
6. Leveraging
Customer
Information
through
Technology
7. Evaluating
the Marketing
Program
Chapter 1: Introduction to Internet
Marketing

Definition and Scope of Internet Marketing

Seven-Stage Cycle of Internet Marketing

Four Key Relationship Stages and the Marketspace Matrix

Guidelines for Internet Marketing Success

Overview of the Book

Conclusion
Introduction to Internet Marketing —
Conclusion

Traditional marketing methods are still highly relevant in the
networked economy, though firms must now consider a host of
new and innovative marketing methods available online (e.g.,
dynamic pricing, online community)

In contrast to the one-way mass promotion that characterizes
modern marketing, Internet marketing enables firms to engage
the individual in personalized dialogues

Individualization and Interactivity are two forces that make
online marketing different

Marketing, and the relationships it creates, should be
considered in the context of particular processes and stages