Activities give readers the opportunity to practise and apply the techniques described in the text.

Margin definitions help emphasise the concepts covered in the body of the text.

Mini Case Studies encourage debate and classroom discussion.

Aaker and Joachimsthaler (2000) also emphasise the importance of developing a plan to communicate the key features of the brand identity and increase brand awareness. Brand identity is again more than the name. These authors refer to it as a set of brand associations that imply a promise to customers from an organisation. See Mini Case Study 5.1 to see the different elements of brand identity which are effectively a checklist of many e-tailers are looking to achieve.

Full colour screenshots from genuine web sites help bring theory to life.

Examples which illustrate the importance of value networks to Internet marketing are the affiliate networks and ad networks described in Chapter 8. Rather than working directly with individual publishers to drive visitors to a site, an online merchant will work with an affiliate network provider such as Commission Junction (www.cj.coml or ad network such as Miva ( which manages the links with the third parties

Softres Diagram

includes IS partners, for example:

• Strategic outsourcer

e network of an or w channel s

Channel structures describe the way a manufacturer or selling organisation delivers products and services to its customers. The distribution channel will consist of one oi more intermediaries such as wholesalers and retailers. For example, a music company is unlikely to distribute its CDs directly to retailers, but will use wholesalers which have a large warehouse of titles that are then distributed to individual branches according to

Figures and tables illustrate key concepts and processes, visually reinforcing your learning.

Case Studies are positioned at the end of each section, showcasing relevant theories and themes.

channels or (3) achieving reach to enhance brand awareness, favourability and purchase intent through ads and sponsorships on third-party sites. Building brand awareness, favourability and purchase intent on third-party sites may be a more effective strategy for low-involvement FMCG brands where it will be difficult to encourage visitors to the site.

• Offline targeted reach strategy - the objective is to encourage potential customers to use online channels, i.e. visit web site and transact where relevant. The strategy is to communicate with selected customer segments offline through direct mail, media buys, PR and sponsorship.

• Online sales efficiency strategy - the objective is to convert site visitors to engage and become leads (for example, through registering for an e-newsletter or placing the first item in the shopping basket) to convert them to buy products and maximise the purchase transaction value.

• Offline sales impact strategy - the aim is to achieve sales offline from new or existing customers. Strategy defines how online communications through the web site and

.il can influence sales offline, i.e. b e, mail-order or in-store.

increase, and profi and is generally uses the Internet to support its diversification strategy

ASDA^ero , ° <° ASDA @t Home, 10.13% (17.1%) Sainsbury's, 8.42% Tesco Wine Warehouse, 8.19% Sainsbury's to You, 5.86% (15.9%)

Tesco, well known as Britain's leading food retail group with a presence also in Europe and Asia has also been a pioneer online. By September 2005 online sales in the first half of the year were £4 01 million, a 31% y and profit increased by 37% to £21 i i an annual turnooer of £1 b illion online 'and is generally recognised as the world's l

The site acts as a portal to most of Tesco's products, including various non-food ranges (for example, books, DVDs and electrical items under the 'Extra' banner), Tesco Personal Finance and the telecoms businesses, as well as services offered in partnership with specialist companies, such as dieting clubs, flights and holidays, music downloads, gas, electricity and DVD rentals. It does not currently sell clothing online but in May 2005 it introduced a clothing web site (wwwclothing, initially to showcase Tesco's clothing brands and link customers to their nearest store with this range.

Tesco currently leads the UK's ers in terms of market share. This pattern is repeated online. The compilation below is from Hitwise (2005) and the figures in brackets show market share for traditional offline retail formats from the Taylor Nelson Softres Super Panel (see

Some companies are repeated since their main site and the online shopping site are reported on separately. now seems to be performing in a consistent manner online to its offline presence. However, Sainsbury's online performance seems to be significantly lower compared to its offline performance. Some providers such as Ocado which originally just operated within the London area have a strong local performance.

Notably, some of's competitors are absent from the Hitwise listing since their strategy has been to focus on retail formats. These are Morrisons (12.5% retail share), Somerfield (5.5%) and Coop (5.0%).

Ps with Cither osline retailers, relies on in-store I and marketing to the supermarket's Clubcard loyalty scheme's customer base to persuade customers to shop online. New Med*. Age (2005) quotes Nigel Dodd, marketing director at, as saying: 'Viese are invaluable sources as we have such a strong customer base'. However, for non-food goods the supermarket does advertise online using keyword targeted ads. ^

well as ot television digital media such as wireless or mobile and media for delivering digital i as cable and satellite.

Case Study 4

Guided tour continued


This chapter has focused on online consumers and e-retailers and in doing so has introduced some of the key issues that might eventually affect the overall success^* e-retail markets.

adopt a more planned approach towards e-retailing. Additionally, in doing e-retail managers are considering who their customers are, how and where they access the Internet and the benefits they are seeking.

■b sites that do not deliver value to the online customer are unlikely to succeed. E-retailers need to develop a sound understanding of who their customers are and how best to deliver satisfaction via the Internet. Over time, retailers may begin to develop more strategically focused web sites.

Given current levels of growth in adoption from both consumers and retailers it is reasonable to suggest the Internet is now a well-established retail channel that provides an innovative and interactive medium for communications and transactions between e-retail businesses and online consumers.

The web presents opportunities for companies to adopt different retail formats to satisfy their customer needs which may include a mix of Internet and physical-world offerings. Furthermore, bricks-and-mortar retailers and pureplay retailers use the Internet in various ways and combinations including sales, ordering and payment,

>b sites focusing on the consumer vary in their function. Some offer a whole suite of interactive services whereas others just provide information. The logistical problems associated with trading online are limiting the product assortment some retailers offer.

ing via the Internet challenges e-retailers to pay close attention to the online markets they are wishing to serve and to understand there are differences between the on- and offline customer experiences.

The vi d by the Internet and as s is a growing trading platform for retailing. This arena is increasing both in terms of the number of retail businesses that are online and the extent to which the Internet is being integrated into almost every aspect of retailing. As a result retailers must choose how they can best employ the Internet in order to serve their customers rather than whether to adopt the Internet at all.

At the end of each chapter you will also find a full list of References.

Aaker, D. and Joachimsthaler, E (2000) Brand Leadership. Free Press, New York.

Allen, E and Fjermestad, J. (2001) E-commerce marketing strategies: a framework and case analysis, Logistics Information Management, 14(1/2), 14-23. Anderson, C (2004) The Long Tail. Wired. 12.10. October

Baker, W., Marn, M. ^^^(20»)^ smarts on the Net, Harvard Busies Review,

BBC (2005) Napster boss on life after piracy. BBC. By Derren Waters, 22 August.

Benjamin, R. "aiSWSS R. (1995) Electronic markets and virtu al value-chains on the information superhighway, Sloan Management Review, Winter, 62-72 n, K., Harrington, L., Layton-Rodin, D. and Rerolle, V. (1

(2000) CyberMarketing, 2nd edn. But three emerging strategies, McKinsey Q

Bickerton, P., Bickerton, M. and Pardesi, U

Heinemann, Oxford. Bicknell, D. (2002) Banking on customer service, eBusinssreview, January, 21-2. Booms, B.H. and Bitner, M.J. (1JS1) Marketing strategies and organisational structures for service firms. In Marketing of Services-, J. Donnelly and W. George, pp. 451-77. American Marketing Association, Chicago.

Brynjolfsson, E., Smith, D. and Hu, Y (2003) Consumer su ing the value of increased product variety at online bo

Burnett, J. (1JJ3) Pr ig on- and offline brands'

Christodoulides, G. and de Chematony, L. (2004) Din composite equity, Journal of Product and Brand Management, 13(3), 168-79.

Davidow, W.H. and Malone, M.S. (1992) The Virtual Coloration. Structuring and Reevitaliiing the Corporation for the 21st Ceentury. HarperCollins, New York.

Dayal, S., Landesberg, H. and Zeissberg, M. (2000) Building digital brands, McKinsey Quarterly, de Chernatony, L. (2001) Succeeding with brands on the Internet, Journal of Brand Management, 8(3), 186-95.

de Chernatony, L. and McDonald, M. (1992) Creating Powerful Brands. Butterworth Heinemann, Oxford.

Diamantopoulos, A. and Matthews, B. (1993) Making Pricing Decisions. A Study of Managerial Practice. Chapman & Hall, London.

Emiliani, V (2001) Business-to-business online auctions: key issues for purchasing process improvement, Supply Chain Management: An International Journal, 5(4), 176-86.

EVans, P. and Wurster, T. S. (1999) Getting real about virtual commerce, Harvard Business

■ Contexts, Contente and Strategies, 3rd edn. Financial ig channels of distribution, Journal of the Academy of e. Little

Times/Prentice Hall, Harlow. Ghosh, S. (1998) Making business sen

Gladwell, M. (2000) The Tipping Point: How Little Things can Make a Big Di Brown, New York.

l, S. (2004) Electronic marketing, the new kid on the block. Marketing ce and Planning, 22(3), 297-309. Introna, L. (2001) Defining the virtual organisation. In S. Barnes and B. Hunt (eds). E-Commerce and V-Business. Business Models for Global Success. Butterworth Heinemann, Oxford. Jevons, C and Gabbott, M. (2000) Trust, brand equity and brand reality in Internet business relationships: an interdisciplinary approach, Journal of Ma/ketrng Management, 16, 619-34.

-Summaries clinch the important concepts that have been presented in each section.

Suggested articles and texts for your Further Reading are listed, as are a number of useful Web links.

5 Promotion. This aspect of the mix is discussed in more detail in Chapter 8.

6 People, process and physical evidence. These aspects of the mix are discussed in more detail in Chapters 6 and 7 where customer relationship management and service delivery are discussed.

1 Select the two most important changes introduced by the Internet for each of the 4 Ps.

2 What types of product are most amenable to changes to the core and extended product?

3 Explain the differences in concepts between online B2Cand B2B auctions.

4 Explain the implications of the Internet for Price.

5 What are the implications of the Internet for Place?

Essay and discussion questions

1 'The marketing mix developed as part of annual planning is no longer a valid concept in the or an industry sector of

3 Write an essay on pricing options for e-

4 Does 'Place' have any meaning for mark

1 Describe three alternative locations fo

2 Explain two applications of dynamic p

3 How does the Internet impact an orga

4 Briefly summarise the implications of t mix:

as in the global marketplace enabled by nsactions for a B2B company on the Internet. ig on the Internet.

■tion's options for core and extended (augmented)

5 Exotain the et could be expected to de romotional mix using the In

Each chapter ends with a number of Exercises, designed for use in class, as essay titles, and in exams.

Allen, E and Fjermestad, J. (2001) E-c analysis, Logistics Information Manag 4 Ps are impacted by the Internet.

business sense of the Internet, Harvard Business Review, March-April, 127-35. This paper gives many examples of how US companies have adapted their prod-the Internet and asks key questions that should govern the strategy adopted. March, S. (2004) Electronic marketing, the new kid on the block. Marketing '■nee and Planning, 22(3), 297-309. Like the Allen and F,ermestad (2001) paper, this gives a review of the impact of the Internet on different aspects of the marketing mix. Kumar, N. (1999) Internet distribution strategies: dilemmas for the incumbent, Financial fwww.ftmasterina com). This article assesaes the impaet of the Internet on manufacturers and their distribution channels. The other articles in this special issue are also interesting. Smith, P.R. and Chaffey, D. (2005) E-Marketing Excellence: at the Heart of EBusiness, 2nd edn Butterworth Heinemann, Oxford. Chapter 2 is devoted to applying the marketing mix to

• Chris Anderson has a blog ate ( the Long Tail, to support his book

• ClickZ (www click? com). An excellent collection of articles on online marketing communications, US-focused. Relevant section for this chapter: Brand marketing.

» (www . gladwell . com). Author's ate with extracts from The Tipping Point and ie internet (MO™) by Gj^ R

intermediary. New channel structures are available through direct sales and linking to new intermediaries. Steps must be taken to minimise channel conflict.

are being raised as they become more familiar with ologies and as a result companies are being forced to nternet and

2 Critically evaluate the impact of the your choice.

on the marketing marketing vary its rce marketing strategies: a framework and case

14(1/2), 14-23. Includes an analysis of how the e digital economy: estimat-

Management Science, 4J(11),

Web links with examples, of how each of the 4 Ps of the Internet can be applied online.

• Paul Maisden's Viial Culture site (www viralnultura com). Articles related to the tipping point and

About the authors

Dave Chaffey BSc, PhD, MCIM, MIDM

Dave Chaffey ( is an Internet marketing trainer and consultant for Marketing Insights Limited. He is a lecturer on e-marketing courses at Cranfield and Warwick Universities and the Institute of Direct Marketing. Dave has been recognised by the CIM as one of SO marketing 'gurus' worldwide who have shaped the future of marketing. He is also proud to have been recognised by the Department of Trade and Industry as one of the leading individuals who have provided input and influence on the development and growth of E-commerce and the Internet in the UK over the last lO years.

Fiona Ellis-Chadwick PhD, BSc, Dip Sys Prac, PGCCE

Fiona Ellis-Chadwick is a lecturer in Marketing at the Business School at Loughborough University and is a member of the Marketing and Retailing Research Group. Fiona had a successful commercial career in retail management and development before joining the Business School in ZOOO following completion of her PhD thesis titled 'An Empirical Study of Internet Adoption Among Leading United Kingdom Retailers'. Currently, her research interests are in the area of e-marketing and e-strategy and she has published and presented widely in the areas of retail Internet adoption and Internet marketing. Her work on these topics has been published in Journal of Business Research, International Journal of Retail Distribution and Management, European Journal of Marketing, Internet Research, Journal of Retailing and Consumer Services plus additional texts and practitioner journals.

Richard Mayer MA, DipM, MCIM

Richard Mayer is a Senior Lecturer in Marketing at the University of Derby and Director of his own Marketing Training Company specialising in Strategic Marketing, Business to Business Marketing and Marketing Communications. He is programme manager for the Chartered Institute of Marketing qualifications at the University of Derby. He has co-authored and contributed chapters to several marketing publications, including Marketing - An Active Learning Approach and The Practice of Advertising.

Kevin Johnston BSc, MBA

Kevin Johnston is a Senior Lecturer at Liverpool John Moores University, specialising in marketing, strategy and e-commerce. He previously lectured at the University of Derby, where he created one of the UK's first e-commerce degree programmes. He has been published in a number of marketing, management and e-commerce journals, and several times in the International Journal of Internet Research.


I am fortunate to have shared my journey of understanding how the Internet can be harnessed for marketing with thousands of students and marketing professionals and I thank you for sharing your experiences with me. I have also been fortunate to work with many e-marketing and e-commerce specialists to support them and their organisations on their journeys. These have been important in highlighting the success factors for digital marketing. So, thanks to Pip Chesters and David Grant at 3M, Piers Dickinson at BP, Julian Brewer at Barclays, Sonia Davidson at Bank of Scotland Corporate, Matt Dooley at HSBC, Eileen Pevreall and David Hedges at CIPD, Martyn Etherington and Mike Rizzo at Tektronix, and fellow 'e-consultants', Ashley Friedlein, Jim Sterne, Neil Mason, Danyl Bosomworth and Richard Coombes.

The authors would like to thank the team at Pearson Education in Harlow for their help in the creation of this book, especially Rhian McKay who managed the book through the production process.

As always, especial thanks go to my family for supporting me in the many hours, days and weeks of writing.

Dave Chaffey

The publishers are grateful to the following for permission to reproduce copyright material: Figures 1, 4.3, 4.22, 4.24 and 4.25 from Managing an E-commerce team. Integrating digital marketing into your organization, author: Dave Chaffey, reprinted by permission of Ltd. (E-consultancy 2005); Figure 1.1 screenshot from reprinted by permission of easyJet Airline Company Ltd.; Figures 1.1, 1.2, 1.7, 1.8, 1.15, 2.3, 2.8, 2.24, 2.25, 2.26, 4.11, 4.13, 4.17, 4.18, 5.2, 5.3, 5.5, 5.6, 5.9, 6.14, 6.15, 7.5, 7.9, 7.11, 7.12, 8.15a, 8.15b, 8.21, 10.1a, 10.1c, 10.1d, 10.2, 10.4, 10.6, 10.7, 11.1, 11.2d, 11.3 and 11.4 screenshot frames reprinted with permission from Microsoft Corporation; Table 1.1 reprinted from EMarketing Excellence - at the Heart of EBusiness, 2nd Edition by P. R. Smith and D. Chaffey, Copyright 2005, with permission from Elsevier (Smith, P. 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This material is used by permission of John Wiley & Sons, Inc.; Table 2.6 from H. Menteth et al., Multi-channel experience consistency: evidence from Lexus in Interactive Marketing, Vol. 6, Issue 4, 2005, reproduced with permission of Palgrave Macmillan (Menteth, H. et al. 2005); Figure 2.8 screenshot from reprinted by permission of Lloyds TSB Group plc; Figure 2.15 data from reproduced with the kind permission of ITU; Figure 2.16 from Mori Technology Tracker, January 1997 - September 2005, reprinted by permission of Market and Opinion Research (MORI); Figures 2.17, 5.7, 5.8 and 8.13 from Brand New World: AOL UK/Anne Molen (Cranfield School of Management)/Henley Centre, 2004, reprinted by permission of AOL UK; Figure 2.18 from Hitwise ( reprinted by permission of Hitwise UK Ltd.; Figures 2.19 and 2.20 from e MORI Technology Tracker, reprinted by permission of Market and Opinion Research (MORI); Figure 2.21, Table 11.2, Figures 11.6, 11.7, 11.8, and 11.9 from Business in the Information Age - International Benchmarking Study 2004, reproduced under the terms of the Click-Use Licence (DTI 2004); Figures 2.24, 8.15a, 8.15b and 11.2d screenshots reprinted by permission of Google, Inc.; Figure 2.25 screenshot from reprinted by permission of Comet Group plc; Figure 2.26 screenshot from reprinted by permission of (UK) Ltd.; Figure 3.7 reprinted by permission of Mobile Data Association; Figure 3.9 from M. Svennevig, The Interactive Viewer: Reality or Myth? in Interactive Marketing, Vol. 6, Issue 2, Oct./Dec. 2004, reprinted by permission of Palgrave Macmillan (Svennevig, M. 2004); Figure 3.12 adapted from, Economist Intelligence Unit and Pyramid Research e-readiness ranking, used with permission from Pyramid Research; Table 4.7 reprinted by permission of Neil Mason, Applied Insights; Figure 4.11 screenshot from reprinted by permission of The Co-operative Bank; Figure 4.18 screenshot from reprinted by permission of British Airways plc; Figure 5.2 screenshot from reprinted by permission of Ordnance Survey on behalf of HMSO; Figure 5.3 screenshot from courtesy of Fisher-Price UK,; Figure 5.5 screenshot from reprinted by permission of Napster UK Limited; Figure 5.9 screenshot from reprinted by permission of Pricerunner AB; Figure 6.6 screenshot of Thomson opt-in customer profiling form reprinted by permission of Thomson (TUI UK); Figure 6.13 from M. Patron, Case Study: Applying RFM segmentation to the SilverMinds catalogue in Interactive Marketing, Vol. 5, Issue 3, 9 January 2004, reproduced with permission of Palgrave Macmillan (Patron, M. 2004); Figure 6.14 screenshot from reprinted by permission of Limited; Figure 6.15 screenshot from reprinted by permission of Chartered Institute of Personnel and Development (CIPD); Figure 7.1 based on a diagram in L. de Chernatony, Succeeding with brands on the internet in Journal of Brand Management, 8 (3), 2001, reproduced with permission of Palgrave Macmillan and the author (de Chernatony, L. 2001); Table 7.2 adapted from Benchmarks - UK 100 Report, week starting 6 October 2005, reprinted by permission of Site Confidence, UK's leading website monitoring company; Table 7.4 reprinted by permission of; Figure 7.5 screenshot from reprinted by permission of HSBC Holdings Limited; Table 7.8 from D. Chaffey and M. Edgar, Measuring online service quality in Journal of Targeting, Analysis and Measurement for Marketing, 8 (4), May 2000, reproduced by permission of Palgrave Macmillan (Chaffey, D. and Edgar, M. 2000); Figure 7.9 screenshot from used with permission from Egg plc; Figure 7.11 screenshot from reprinted by permission of J. Sainsbury plc; Table 8.1 from Janal, D. (1998) Online Marketing Handbook. How to Promote, Advertise and Sell Your Products and Services on the Internet. Copyright © John Wiley & Sons, Inc. 1998. This material is used by permission of John Wiley & Sons, Inc.; Figure 8.4 used with permission from Millward Brown UK Ltd.; Table 8.4 reprinted by permission of the Interactive Advertising Bureau; Figure 8.9 Norwich Union Rescue email reprinted by permission of Norwich Union Insurance; Figure 8.14 from RankReport.pdf reprinted by permission of aQuantive, Inc. (Atlas 2004); Figure 8.20 reprinted by permission of Epsilon Interactive,; Table 9.1 from ABCe,, reprinted by permission of ABC Electronic; Figure 9.8 screenshot reprinted by permission of; Figure 10.1a screenshot from reprinted by permission of Penguin Books; Figure 10.2 screenshot from reprinted by permission of Janice Wilson; Figure 10.4 screenshot from reprinted by permission of Ben and Jerry's Homemade Ltd.; Tables 10.5 and 10.6 reprinted by permission of Allegra Strategies Ltd. (Allegra 2005); Figure 10.6 reprinted by permission of McArthurGlen Designer Outlets, Fox Kalomaski Ltd. - Destination Marketing and Adam B. Colour Services Ltd. - Photography; Figure 10.7 screenshot from reprinted by permission of J. 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Mini Case Study 1.1 written by Peter Davies, eCommerce Adviser at Menter Mon (www.menter.mon) for the Opportunity Wales project ( reprinted by permission of the author; Mini Case Study 3.3 adapted from case study Comet: The Price is Right Promotion from reprinted by permission of Virgin Radio; Chapter 3 extracts from Data Protection Act 1984, 1998 (DPA) and extracts from Privacy and Electronic Communications Regulations (PECR) Act 2003, Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen's Printer for Scotland; Mini Case Study 4.2 reprinted by permission of Euroffice Ltd.; Chapter 4, p. 188, extract adapted from Customer Promise from reprinted by permission of Virgin Wines; Mini Case Study 4.3 print ad copy for Have you clicked yet? campaign reprinted by permission of British Airways plc; Case Study 4 reprinted by permission of Tesco Stores Limited; Chapter 5, p. 219, definition of prosumer from, Copyright © 1995-2006 Paul McFedries and Logophilia Limited, reprinted by permission of Paul McFedries; Case Study 6 from article Interactive Being in Computer Weekly, 2nd May, reprinted by permission of Computer Weekly (Nicolle, L. 2001); Mini Case Study 8.1 extract from article The medium is part of the message, published in the proceedings of the ARF/ESOMAR Conference, Rio de Janiero, 12-14 November 2000, published in ESOMAR Publications Series, Vol. 241, reprinted by permission of the author (Branthwaite, A. 2000); Mini Case Study 8.2 from DEC Tsunami 2004/5,, reprinted by permission of Disasters Emergency Committee; Case Study 8 reprinted by permission of Unilever; Mini Case Study 10.4 adapted from Internet stores expect a merry Christmas as online sales soar in The Times, 16 November 2005,,,2-1874371,00.html, © Sarah Butler. NI Syndication Limited, 16.11.05, reprinted by permission of NI Syndication Ltd. (Butler, S. 2005); Case Study 10 reprinted by permission of; Mini Case Study 11.2 extract from JupiterResearch Internet Advertising Model, 7/05 (US only) and extract adapted from JupiterResearch's European Marketing & Advertising April 2005 report Online Video Advertising: Tune Content and Placements to Web Constraints reprinted by permission of JupiterResearch; Mini Case Study 11.4 adapted from NHS Purchasing and Supply Agency ECommerce Strategy for the NHS, reproduced under the terms of the Click-Use Licence.

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