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Figure 10.6 Online coupon redemption in an offline store

Share of voice

The relative advertising spend of the different competitive brands within the product category. Share of voice (SOV) is calculated by dividing a particular brand's advertising spend by the total category spend (De Pelsmacker et al., 2004).

Online rebate/gift with purchase

In this instance the retailer tracks the online customer's information through the use of cookies and offers some form of discount or gift offer with purchase. Generally, the customer will be required to register online (see Figure 10.7).

Just as consumer use of the Internet has been growing rapidly during the last decade so too has the use of the Internet as a medium to communicate a company's marketing messages. Research has shown the Internet as having an increasing share of voice when compared with other media. Furthermore, a survey conducted by PricewaterhouseCooper (2005) found that consumer advertisers are leading the online advertising spend (see Figure 10.8). The strategic implications of such findings are that retailers should be developing measurement techniques to determine the effectiveness of the online media on the offline spend.

Figure 10.7 Online rebate with online purchase: Sainsbury's online promotional offer


To what extent is the Internet a ubiquitous marketing communication channel? In other words, is it possible for all types of companies operating in all sectors to communicate with all consumer target markets to an equal level of effectiveness? If not, how could retailers determine how to allocate online promotional spend?

Consumer advertiser spend surges in 2005

• Consumer advertisers represented the largest category of Internet and spending, accounting for 51 per cent of 2005 second-quarter revenues, up from 49 per cent reported for the same period in 2004.

• Computing advertisers represented the second-largest category of spending at 15 per cent of 2005 second-quarter revenues, down from the 18 per cent reported in the second quarter of 2004.

• Financial services advertisers represented the third-largest category of spending at 13 per cent of 2005 second-quarter revenues, down from the 17 per cent reported in the same period in 2004.

• Telecom companies accounted for 7 per cent of 2005 second-quarter revenues, up sharply from the 1 per cent reported in the same period in 2004, while Pharmaceutical and Healthcare accounted for 5 per cent of 2005 second-quarter revenues, consistent with the second quarter of 2004.

• Retailed the Consumer-Related categories at 48 per cent, up sharply from the 40 per cent reported for the second quarter of 2004, followed by Automotive at 22 per cent, Leisure (travel, hotel and hospitality) at 13 per cent, Entertainment (music, film and TV entertainment) at 10 per cent, and Packaged goods at 6 per cent.

Internet ad revenues by major industry category*

2005 Q2 vs. 2004 Q2

Consumer Computing Financial related services


Pharma and Healthcare

Consumer Computing Financial related services


Pharma and Healthcare

Internet ad revenues by major consumer category*

2005 Q2 vs. 2004 Q2

Retail Automotive Entertainment Leisure Packaged goods Key □ 2005 Qtr 2 □ 2004 Qtr 2

* Categories listed represent the top five ranked by revenue, and may not add up to 100 per cent.

Figure 10.8 Internet advertising by major industry and retail category

Source: PricewaterhouseCooper (2005)

In conclusion, it is now widely acknowledged that there is a need for a company to have a coherent e-strategy underpinned by a clear vision of how it may take advantage of the Internet. An online retailer's strategy is likely to be affected by the type of online format it adopts, the type of products and services it sells and the market segments it chooses to serve.

Retailers will defend their existing market share through consideration of strategic and competitive forces. It is the actions of retailers and their on- and offline behaviour in response to peer actions and new entrants' behaviour and success rate that are likely to shape the future of the Internet as a retail environment. Retailers need to ensure that the value created by e-retailing is additional rather than a redistribution of profitability.

It has been suggested that by removing the physical aspects of the retail offer the Internet may also provide the opportunity for increased competition (Alba et al., 1997). Pureplays can easily combine e-commerce software with scheduling and distribution to bypass traditional retail distributors. These virtual merchants could therefore threaten existing distribution channels for consumer products. The Internet is thus likely to appeal to new entrants who have not already invested in a fixed-location network. However, the boom and bust of the dot-com era has demonstrated that this opportunity must be supported with a sound business plan aimed at generating profits and not media attention per se.

Case Study 10

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