Internet Marketing, 2nd Ed
Mohammed, Fisher, Jaworski, Paddison
Chapter 3 Lecture Slides
Marketing Strategy in Internet
Marketing
Exhibits and Tables
Copyright © 2003 by Marketspace LLC
Marketing Strategy — Today’s Objectives
To understand how business-unit strategy affects the choices made about
marketing strategy
Business-Unit
Strategy
Marketing
Strategy
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–A: Link Between Business-Unit and Marketing Strategy
Business-unit strategy provides a context for the choices made while creating a
marketing strategy
Business-Unit
Strategy
• Guidance
• Benchmarks
• Direction
Marketing
Strategy
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–1: Assessing the Fit Between Business-Unit Strategy and
Marketing Strategy
Effective marketing strategy must be aligned with business-unit strategy along
four organizational dimensions
Goal Alignment
Implementation
Alignment
Fit
Resource Alignment
Activity Alignment
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–B: Goal Alignment
The strategic, financial and customer goals of the business unit and marketing
group must be in sync.
Common barriers to this alignment include:
Goal Alignment
– Rapidly changing business strategy
– Poor communication between the leaders of the
groups
– Lack of process checkpoints to ensure alignment
Fit
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–C: Resource Alignment
The marketing program must be adequately supported with business-unit
resource allocation
Common barriers to this alignment include:
– System-wide constraints that impose high market-development goals
but underestimate the necessary resources
– Insufficient justification for an increase in marketing spending
Fit
Resource
Alignment
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–D: Activity Alignment
For marketing activities to make an impact, there must be consistency with the
firm’s other activities (i.e., hiring, customer service, order fulfillment, etc.)
Common barriers to this alignment include:
– Lack of coordination across departments and activities
– Activities are not explicitly mapped onto objectives
Fit
Activity Alignment
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–E: Implementation Alignment
Inconsistencies in implementation can undermine marketing strategy, even if
there is alignment in the other three areas
Common barriers to this alignment include:
– Timing issues
– Allocation of resources as needed
Implementation
Alignment
Fit
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–F: Key Concepts in Marketing Strategy
There are three components of a traditional marketing strategy
Marketing Strategy
Segmentation
Targeting
Positioning
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–2: Marketing Strategy Decisions
Marketing strategy, the sum of segmentation, targeting and positioning choices,
is then taken to the market through the four elements of the Marketing Mix.
Marketing Strategy Decisions
Product
Promotion
Positionin
g and
TargetMarket
Selection
Price
Distribution
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–3: Caricature Marketing at the Palm Restaurant
When The Palm steakhouse opens up a new restaurant, it attempts to attract
local leaders by drawing large caricatures of them on the restaurant’s walls
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Cartoon
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–4: Prioritizing Segments
Buyer Readiness Stage
Attitude
Segmentation
Prioritization
Trend/Market Leaders
Willingness to Pay
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–5: Segmentation and Prioritization
E-Music Segmentation Example
Actionable Variables
Female
Male
Top 40
Listener
Meaningful
Variables
Male
Segment A
Classic
Rock
Listener
Segment
B
Rap
Listener
Segment
D
45 and Older
30–44
18–29
<50K
50K+
Segment E
Segment
G
Segment
C
Female
Segment
I
Segment
J
Segment
K
Segment
F
Segment
H
Segment
L
High
Priority
Medium
Priority
Low
Priority
Does not
exist
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–6: Marketing Strategy Formulation
Pure Play vs. Bricks-and-Mortar
Although marketing strategy development follows a similar path for both pure-play
online firms and bricks-and-mortar firms, there are differences
Pure Play
Bricks-and-Mortar
Online
Business-Unit
Strategy
Business-Unit
Strategy



Marketing
Strategy for
Online
Business
Choices
1. Segmentation
2. Target market selection
3. Positioning
Overall
Online
Offline
Integrated
Marketing
Strategy
Marketing
Strategy for
Offline
Business
Marketing
Strategy for
Online
Business
Choices
1. Same vs. different segment
2. Same vs. different target market
3. Same vs. different positioning
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–G: Bases for Segmentation
Segmentation divides the market into useful sub-units of similar consumers
based on:
–
–
–
–
Demographics
Geography
Psychographics
Cognitive and behavioral attributes
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–H: Effective Segmentation
In order for segmentation to be effective, segmentation must be:
Meaningful

Explains why consumers behave in
certain ways
Actionable

Can be feasibly executed against
Financially Attractive

Offers profitability
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–I: Target Market Selection for Pure Plays
Targeting seeks to identify the most attractive consumer sub-unit(s) based on:
Segment Size and Growth
Structural Attractiveness
Company Resources

Total size of the segment now and in
the future

Whether the segment offers profitable
entry to capitalize upon

How well the company capabilities
and resources match the segment
requirements
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–J: Positioning for Pure Plays
Positioning communicates the product benefits in language relevant to the target
market and can be based in one aspect of the product
Positioning on features/service
FedEx brings the world on time
Positioning on benefits
Disneyland is the happiest place on Earth
Positioning on specific usage occasions
1-800 Flowers delivers birthday bouquets
Positioning on user category
Positioning against another product
Product-class positioning
McDonald’s is good for families with children
Tide whitens whites better than bleach
Montblanc: Precision writing instruments
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–K: The Positioning Plan for Pure Plays
A positioning strategy is translated into a positioning plan through a five-step
process:
Identify actual
product positioning
 Uses
a
perceptual
map to identify
the variables
that matter to
consumers
when they
make
purchases
Determine ideal
product position
 Identifies
the
most favorable
placement on
the perceptual
map that the
product could
occupy
Develop alternate
strategies for
achieving ideal
product position
 Generates
alternatives for
either
repositioning to
reach ideal
state or the
introduction of
a new product
Select and
implement the
most promising
alternative
 Chooses
plan
that is most
consistent with
the company’s
objectives,
resources and
strengths
Compare new
actual position with
ideal position
 Evaluates
outcome of
positioning
efforts
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–7: Perceptual Map for the Online Automobile Industry
Through perceptual maps like this, it is easy to see where firms are competing and how their
offerings differ
Information-Only Site



GM
Ford
Honda


Edmunds.com
Kelley Blue Book
Manufacturer Site
(One specific line of cars)
Aggregate Site
(Many different lines of cars)



CarPoint
Autobytel
Cars Direct
Direct Purchasing-Only Site
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–8: Automotive Perceptual Map with Customer Preference
Clusters
There are clusters of customers whose needs are not being met, indicating an opportunity to
develop a unique offering for that segment
Information Only Site



GM
Ford
Honda


Edmunds.com
Kelley Blue Book
Manufacturer Site
(One specific line of cars)
Aggregate Site
(Many different lines of cars)



CarPoint
Autobytel
Cars Direct
Direct Purchasing Only Site
= Customer Cluster
Size of circle indicates
financial size of cluster
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–9: Bricks-and-Mortar
Segmentation Scenarios
Change in Segmentation Characteristics
Due to Internet
Yes
Market Expansion
Reclassified —
Expansion
Changes in Size of
Market Segments
No
No Change
No
Market Reclassification
Yes
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–L: Segmentation for Bricks-and-Mortar Firms Moving
Online
Segmenting the online customer universe for a bricks-and-mortar firm will have
one of four results:
No Change
Market Expansion
Market Reclassification
Reclassified Expansion


Existing customer base is already
online
Online universe expands firm’s reach
beyond physical limitations

Online customer needs and tastes are
distinct from those of offline
customers

Both characteristics and size of online
customer base differ from offline base
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–10 Reflect.com
Reflect.com
focuses on
creating
customized beauty
products for its
clients
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–M: Targeting for Bricks-and-Mortar Firms Moving Online
Strategies for targeting online customers can be classified as one of four types:
Blanket Targeting
Beachhead Targeting
Bleed-Over Targeting
New Opportunity Targeting

Online capabilities are a product
enhancement that will appeal equally
to all target customers

Online capabilities are a product
enhancement that will appeal only to
a subset of target customers

New capabilities offer online appeal to
a new customer segment as well as
the existing offline customer base

New capabilities offer online appeal
only to a new segment of customers
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–11: Bricks-and-Mortar
Targeting Scenarios
Customer Similarity
Serve Same
Segment
Online as
Offline
Same Customers
Different Customers
Blanket Targeting
New Opportunity
Entire
Current
Segment
Focus of Effort
Serve a
Portion of
Offline
Segment
Online
Beachhead Targeting
Bleed-Over Targeting
Serve New
Segment
Online
Serve Part
of Offline
Segment as
Well as
New
Segment
Online
Portions of
a Segment
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–12: Bricks-and-Mortar
Positioning Scenarios and Guidelines
Customer Similarity
Different Customers
Same Customers
Blanket Targeting

Entire
Segment

Borrow heavily from
existing offline positioning
Tout basic advantages of
the Internet—convenience
and accessibility
New Opportunity Targeting


Reposition entirely
Position differentiations
that cater to the new
segment
Focus of Effort
Beachhead Targeting

Portions of
a Segment


Also borrow from offline
positioning
Focus more, however, on
needs of the smaller group
Stress value-add of the
Internet
Bleed-Over Targeting



Use dual positioning
Leverage existing
positioning
Position added benefits,
such as augmented
offerings via the Internet
(e.g., increased product
customizability)
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–N: Pure-Play Case Study - eBay
EBay offers an opportunity to examine the integration of business-unit and
marketing strategy for a pure-play firm.
eBay
Pure-Play
Bring auction-based
commerce to the masses
Mass-market auctions as
being easy, fast and fun
Choices
1. Segmentation
2. Target market selection
3. Positioning
Online
businessunit
strategy
Marketing
strategy for
online
business
Choices
1. Segmentation
2. Target market selection
3. Positioning
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–13: Breakdown of EBay’s Gross Merchandise Listed
“We help people trade practically anything on Earth.”
Tickets & Travel
0.3%
Everything Else
Toys & Hobbies 3%
9%
Antiques & Art
3%
Books
5%
Business, Office, &
Industrial
1%
Clothing &
Accessories
9%
Stamps
2%
Coins
2%
Sports
11%
Real Estate
0.04%
Pottery& Glass
4%
Photo
1%
Collectibles
20%
Music
7%
Computers
3%
Movies & Television
5%
Jewelry,
Gemstones, &
Watches
6%
Source: Auction Watch, April 3, 2002.
Consumer
Electronics
4%
Home & Garden
4%
Dolls & Bears
2%
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–14: EBay’s Acquisition of Half.com Helped It Expand into the
Fixed-Price Business
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–15: EBay’s Global Expansion
Sweden
Austria
Germany
Netherlands
Belgium
Canada
United States
Ireland
UK
France
Switzerland
Italy
Spain
(including 60
localized versions)
Sweden
China
Korea
Taiwan
Hong Kong
Mexico
Singapore
Brazil
Australia
Argentina
New Zealand
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–16: EBay’s Constant Evolution
eBay Payments
Formerly Billpoint, acquired
May 1999
eBay Live
Launched September 2000
eBay Stores
Launched September 2001
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–17: EBay’s Business-Unit Strategies
EBay Premier
EBay Motors
Half.com
EBay Stores
Large User Base
Expands reach of
offer to specific
customer niche and
general community
Offline car buyers,
sellers, and
collectors
Differentiated user
base of customers
averse to auction-like
transactions
Targets profitable
small-business
segment
Local and
International
Serves local and
international users
Serves local and
international users
Serves local and
international users
Serves local and
national interests
Strong Brand
Leverages eBay
brand to traditional
auction house
community
Leverage eBay
brand to collectible
and used-car buyers
and sellers
Sellers cost-effectively
sell relatively
inexpensive items
previously prohibitively
expensive to list
Provides sellers with
a merchandising
showcase for multiple
listings and buyers
with a single shopping
destination
Broad
Trading Platform
Expands core
business
Expands core
business
Expands core
business
Expands core
business
Community
Affinity
High-end items
appeal to a more
affluent demographic
Replaces classified
ads for sellers and
used-car showrooms
for buyers
Sellers can list items
by entering the ISBN
or UPC barcode
number of their item,
along with the item's
condition and selling
price
People can pick up or
deliver items to others
in their vicinity
Features
and Functionality
Stable source of
traditional auction
house merchandise
Access to inventory
and channels
Opportunity to roadtest fixed-price trading
without risking core
business
All of a seller’s
auctions are available
in one place
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Exhibit 3–18: Offering-Based Segmentation of Auction Market
Segmenting the commerce market by type and scope identifies where eBay plays
in relation to similar businesses
Qool
DealDeal
uBid
Mass
eBay
Type of Offering
Amazon
Yahoo
Egghead.com
eBay via
Half.com
eBay Live
Niche
Sotheby’s
Christie’s
CollectorsCarAuction
Manheim Autos
Dell Auction
Auction Laptops
eBay Motors
Live
Auction
Online
Auction
Multitype
Auction/Retail
Breadth of Business
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–O: eBay Positioning
EBay positions itself with one simple message:
eBay is “the world’s online marketplace”
This tagline expresses two of eBay’s key benefits:
The size of its membership
and product offerings

EBay has positioned itself as a global
business with products so varied that they
would attract consumers from around the
world
Its sense of developed community

By positioning itself as a marketplace
rather than simply an auction site, eBay
communicates its emphasis on community
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–P: Bricks-and Mortar Case Study - LifeSavers
LifeSavers offers an opportunity to examine the integration of online and offline
marketing strategy at a bricks-and-mortar firm
LifeSavers
Bricks-and-Mortar Firm
America’s
favorite candy
Business
-unit
strategy
Integrate
d
marketin
g
strategy
LifeSavers
candies add fun
to your life
LifeSavers
candies add fun
to your life
Candystand.com
offers online fun
for the whole
family
Choices
1. Same vs. different segment
2. Same vs. different target market
3. Same vs. different positioning
Marketing
strategy
for offline
business
Marketing
strategy
for online
business
Choices
1. Same vs. different segment
2. Same vs. different target market
3. Same vs. different positioning
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–Q: Lifesavers Segmentation
The development of Candystand.com as an online business allowed Lifesavers
to reach a growing and younger target segment.
Change in segmentation
characteristics due to Internet
Reclassification and
expansion
Yes
Market expansion
Changes in size
of market
segments
No
No change
Market
reclassification
No
Yes
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–R: LifeSavers Candystand Homepage
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–S: LifeSavers Bleed-Over Targeting
Gaming sites proved to be an attractive destination for both young and old. They
offered current LifeSavers customers a new destination and widened the brand’s
appeal to younger candy consumers.
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Supporting Slide 3–T: LifeSavers Bleed-Over Positioning
Their positioning captures the idea that LifeSavers has something for everyone
and focuses on the key benefit of fun.
At the LifeSavers Candystand, fun comes in all flavors
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Chapter 3: Marketing Strategy

The Fit Between Business-Unit Strategy and Marketing Strategy

Traditional Marketing Strategy

Internet Marketing Scenarios: Pure-Play vs. Bricks-and-Mortar Firms

Internet Marketing Strategy: Pure Plays

Internet Marketing Strategy: Bricks-and-Mortar Firms

Pure-Play Case Study: eBay

Bricks-and-Mortar Case Study: LifeSavers

Conclusion
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC
Marketing Strategy — Conclusion

Marketing strategy has three main components:
1. Segmentation, or identifying relevant market segments with
specific needs
2. Targeting, or choosing an attractive segment consistent with the firm’s
resources and goals
3. Positioning, or strategically communicating the product’s benefits to the
target segment

Marketing strategy for bricks-and-mortar firms differs from that of
pure-play online businesses in that they must make choices in
segmentation, targeting and positioning that explicitly reconcile the
offline and online components of the business
Last Updated: 04/10/03
Copyright  2003 by Marketspace LLC