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Figure 1.4 Percentage of Internet users in the EU and Norway browsing (dark bar) and buying (light bar). Conversion percentages (shown in brackets) are the proportions of all who research the product online who buy online

Source: EIAA (2005)

The figure suggests that the way companies should use digital technologies for marketing their products will vary markedly according to product type. In some, such as cars and complex financial products such as mortgages, the main role of online marketing will be to support research, while for standardised products like books and CDs there will be a dual role for the web in supporting research and enabling purchase.

What is Internet marketing?

The use of the Internet and other digital media to support marketing has been granted a bewildering range of labels by both academics and professionals. In this section we review some of the different definitions to help explain the scope and applications of this new form of marketing. Before we start by defining these terms, complete Activity 1.1 which considers the relative popularity of these terms.

Activity 1.1

visit the

Question www-

There are a range of terms used to describe Internet marketing - it is called different things by different people. It is important that within companies and between agency and client there is clarity on the scope of Internet marketing, so the next few sections explore alternative definitions.

One crude, but revealing method of assessing how commonly these terms are used, is to use the Google syntax which returns the number of pages which contain a particular phrase in their body or title.

Type into Google the following phrases in double quotes or use intitle: "phrase" for these phrases and note the number of pages (at the top right hand of results page):

Phrase

"Internet marketing" "E-marketing" "Digital marketing" "E-business" "E-commerce"

Internet marketing

The application of the Internet and related digital technologies in conjunction with traditional communications to achieve marketing objectives.

What, then, is Internet marketing? Internet marketing can be simply defined as:

Achieving marketing objectives through applying digital technologies.

This succinct definition helps remind us that it is the results delivered by technology that should determine investment in Internet marketing, not the adoption of the technology! These digital technologies include Internet media such as web sites and e-mail as well as other digital media such as wireless or mobile and media for delivering digital television such as cable and satellite.

In practice, Internet marketing will include the use of a company web site in conjunction with online promotional techniques described in Chapter 8 such as search engine marketing, interactive advertising, e-mail marketing and partnership arrangements with other web sites. These techniques are used to support objectives of acquiring new customers and providing services to existing customers that help develop the customer relationship. However, for Internet marketing to be successful there is still a necessity for integration of these techniques with traditional media such as print, TV and direct mail.

E-marketing defined

E-marketing

Achieving marketing objectives through use of electronic communications technology.

The term 'Internet marketing' tends to refer to an external perspective of how the Internet can be used in conjunction with traditional media to acquire and deliver services to customers. An alternative term is e-marketing or electronic marketing (see for example McDonald and Wilson, 1999 and Smith and Chaffey, 2005) which can be considered to have a broader scope since it refers to digital media such as web, e-mail and wireless media, but also includes management of digital customer data and electronic customer relationship management systems (e-CRM systems).

The role of e-marketing in supporting marketing is suggested by applying the definition of marketing by the Chartered Institute of Marketing (www.cim.co.uk):

Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.

This definition emphasises the focus of marketing on the customer, while at the same time implying a need to link to other business operations to achieve this profitability. Smith and Chaffey (2005) note that e-marketing can be used to support these aims as follows:

• Identifying - the Internet can be used for marketing research to find out customers' needs and wants (Chapters 7 and 9).

• Anticipating - the Internet provides an additional channel by which customers can access information and make purchases - understanding this demand is key to governing resource allocation to e-marketing as explained in Chapters 2 and 4.

• Satisfying - a key success factor in e-marketing is achieving customer satisfaction through the electronic channel, which raises issues such as: is the site easy to use, does it perform adequately, what is the standard of associated customer service and how are physical products dispatched? These issues of customer relationship management are discussed further in Chapters 6 and 7.

A broader definition of marketing has been developed by Dibb, Simkin, Pride and Ferrell (Dibb et al., 2001):

Marketing consists of individual and organisational activities that facilitate and expedite satisfying exchange relationships in a dynamic environment through the creation, distribution, promotion and pricing of goods, services and ideas.

This definition is useful since it highlights different marketing activities necessary to achieve the 'exchange relationship', namely product development, pricing, promotion and distribution. We will review the way in which the Internet affects these elements of the marketing mix in Chapter 5.

Digital marketing defined

Digital marketing

This has a similar meaning to 'electronic marketing' - both describe the management and execution of marketing using electronic media such as the web, e-mail, interactive TV and wireless media in conjunction with digital data about customers' characterstics and behaviour.

Blogs

Personal online diary, journal or news source compiled by one person or several people.

Multi-channel marketing

Customer communications and product distribution are supported by a combination of digital and traditional channels at different points in the buying cycle.

Digital marketing is yet another term similar to Internet marketing. We use it here, because it is a term increasingly used by specialist e-marketing agencies and the new media trade publications such as New Media Age (www.nma.co.uk) and Revolution (www.revolutionmaaazine.com). The Institute of Direct Marketing (IDM) has also adopted the term to refer to its specialist professional qualifications.

To help explain the scope and approaches used for digital marketing the IDM has developed a more detailed explanation of digital marketing:

Digital marketing involves:

Applying these technologies which form online channels to market:

- Web, e-mail, databases, plus mobile/wireless and digital TV.

To achieve these objectives:

- Support marketing activities aimed at achieving profitable acquisition and retention of customers ... within a multi-channel buying process and customer lifecycle.

Through using these marketing tactics:

- Recognising the strategic importance of digital technologies and developing a planned approach to reach and migrate customers to online services through e-communications and traditional communications. Retention is achieved through improving our customer knowledge (of their profiles, behaviour, value and loyalty drivers), then delivering integrated, targeted communications and online services that match their individual needs.

Let's now look at each part of this description in more detail. The first part of the description illustrates the range of access platforms and communications tools that form the online channels which e-marketers use to build and develop relationships with customers. The access platforms or hardware include PCs, PDAs, mobile phones and interactive digital TV and these deliver content and enable interaction through different online communication tools such as organisation web sites, portals, search engines, blogs (see Chapter 8), e-mail, instant messaging and text messaging. Some also include traditional voice telephony as part of digital marketing.

For example, an online bank uses many of these technologies to communicate with its customers according to the customers' preferences - some prefer to use the web, others wireless or interactive TV and others traditional channels. Svennevig (2004) summarises the growth in the usage of these digital technologies.

The second part of the description shows that it should not be the technology that drives digital marketing, but the business returns from gaining new customers and maintaining relationships with existing customers. It also emphasises how digital marketing does not occur in isolation, but is most effective when it is integrated with other communications channels such as phone, direct mail or face-to-face. As we have said, the role of the Internet in supporting multi-channel marketing is another recurring theme in this book and Chapters 5 and 6 in particular explain its role in supporting different customer communications channels and distribution channels. Online channels should also be used to support the whole buying process from pre-sale to sale to postsale and further development of customer relationships.

The final part of the description summarises approaches to customer-centric e-marketing. It shows how success online requires a planned approach to migrate existing customers to online channels and acquire new customers by selecting the appropriate mix of e-communications and traditional communications. Retention of online customers

Customer insight

Knowledge about customers' needs, characteristics, preferences and behaviours based on analysis of qualitative and quantitative data. Specific insights can be used to inform marketing tactics directed at groups of customers with shared characteristics.

Electronic commerce (e-commerce)

All financial and informational electronically mediated exchanges between an organisation and its external stakeholders.

Sell-side e-commerce

E-commerce transactions between a supplier organisation and its customers.

Buy-side e-commerce

E-commerce transactions between a purchasing organisation and its suppliers.

needs to be based on developing customer insight by researching their characteristics, behaviour, what they value and what keeps them loyal, and then delivering tailored, relevant web and e-mail communications.

E-commerce and e-business defined

The terms 'e-commerce' and 'e-business' are often used in a similar context to 'Internet marketing' but their scope is different. It is important for those managing digital technologies within any organisations to achieve clarity on the meaning of e-marketing, e-commerce and e-business to help define the scope of what they are trying to achieve! Electronic commerce (e-commerce) is often thought to simply refer to buying and selling using the Internet; people immediately think of consumer retail purchases from companies such as Amazon. However, e-commerce refers to both financial and informational electronically mediated transactions between an organisation and any third party it deals with (Chaffey, 2006). It follows that non-financial transactions such as inbound customer e-mail enquiries and outbound e-mail broadcasts to prospects and customers are also aspects of e-commerce that need management.

When evaluating the impact of e-commerce on an organisation's marketing, it is instructive to identify the role of buy-side and sell-side e-commerce transactions as depicted in Figure 1.5. Sell-side e-commerce refers to transactions involved with selling products to an organisation's customers. Internet marketing is used directly to support sell-side e-commerce. Buy-side e-commerce refers to business-to-business transactions to procure resources needed by an organisation from its suppliers. This is typically the responsibility of those in the operational and procurement functions of an organisation. Remember, though, that each e-commerce transaction can be considered from two perspectives: sell-side from the perspective of the selling organisation and buy-side from the perspective of the buying organisation. So in organisational marketing we need to understand the drivers and barriers to buy-side e-commerce in order to accommodate the needs of organisational buyers. For example, marketers from RS Components (www.rswww.com) promote its sell-side e-commerce service by hosting seminars for buyers within the purchasing department of its customers that explain the cost savings available through e-commerce.

E-business defined

Electronic business (e-business)

AH electronically mediated information exchanges, both within an organisation and with external stakeholders, supporting the range of business processes.

Given that Figure 1.5 depicts different types of e-commerce, how does this relate to e-business? IBM (www.ibm.com/e-business), one of the first suppliers to coin the term explains it as follows:

e-business (e' biz' nis): The transformation of key business processes through the use of

Internet technologies.

Referring back to Figure 1.5, the key business processes in the IBM definition are the organisational processes or units in the centre of the figure. They include research and development, marketing, manufacturing and inbound and outbound logistics. The buy-side e-commerce processes with suppliers and the sell-side e-commerce processes involving exchanges with distributors and customers can also be considered to be key business processes. So e-commerce can best be conceived of as a subset of e-business, and this is the perspective we will use in this book.

E-business

Buy-side e-commerce

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