The online value proposition

The aim of positioning is to develop a differential advantage over rivals' products as perceived by the customer. Many examples of differentiated online offerings are based on the lower costs in acquiring and retaining online customers which are then passed on to customers - to do this requires creation of a different profit centre for e-commerce operations. Examples include:

• Retailers offering lower prices online. Examples: (price promotions on selected products), Comet (discounts relative to in-store on some products);

• Airlines offering lower-cost flights for online bookings. Examples: easyJet, Ryanair, BA;

• Financial services companies offering higher interest rates on savings products and lower interest rates on credit products such as credit cards and loans. Examples: Nationwide, Alliance and Leicester;

• Mobile phone network providers or utilities offering lower-cost tariffs or discounts for customers accounts who are managed online without paper billing. Examples: O2, British Gas.

Online value proposition (OVP)

A statement of the benefits of online services reinforces the core proposition and differentiates from an organisations offline offering and those of competitors.

Other options for differentiation are available online for companies where their products are not appropriate for sale online such as high-value or complex products or FMCG (fast-moving consumer goods) brands sold through retailers. These companies can use online services to add value to the brand or product through providing different services or experiences from those available elsewhere.

In an e-marketing context the differential advantage and positioning can be clarified and communicated by developing an online value proposition (OVP). Developing an OVP, involves:

• Developing messages which:

• reinforce core brand proposition and credibility, communicate what a visitor can get from an online brand that ...

- they can't get from the brand offline;

- they can't get from competitors or intermediaries.

• Communicating these messages to all appropriate online and offline customers touch points in different levels of detail from straplines to more detailed content on the web site or in print.

Communicating the OVP on the site can help create a customer-centric web site. Look at how Autotrader does this for different types of visitors and services in Figure 4.17. Virgin Wines uses an OVP to communicate its service promise as follows:

• And what if ... You are out during the day? We promise: our drivers will find a safe place to leave your wine; but if it does get stolen, we just replace it;

• You find it cheaper elsewhere? We will refund the difference if you are lucky enough to find a wine cheaper elsewhere;

• You live somewhere obscure? We deliver anywhere in the UK, including Northern Ireland, the Highlands and Islands, and the Scilly Isles, for £5.99;

• You are in a hurry? We deliver within 7 days, or your delivery is free. clearly communicates its proposition"/>
Figure 4.17 Autotrader site ( clearly communicates its proposition

Mini Case Study 4.3 'BA asks "Have you clicked yet?"' gives an example of an ad campaign to communicate an OVP. This is a good example since it explains the benefits of online services and e-mail communications and also positions these benefits within the customer buying process.

Varianini and Vaturi (2000) conducted a review of failures in B2C dot-com companies in order to highlight lessons that can be learned. They believe that many of the problems have resulted from a failure to apply established marketing orientation approaches.

They summarise their guidelines as follows:

First identify customer needs and define a distinctive value proposition that will meet them, at a profit. The value proposition must then be delivered through the right product and service and the right channels and it must be communicated consistently. The ultimate aim is to build a strong, long-lasting brand that delivers value to the company marketing it.

Likewise, Agrawal et al. (2001) suggest that the success of leading e-commerce companies is often due to matching value propositions to segments successfully.

McDonald and Wilson (2002) suggest that to determine a value proposition marketers should first assess changes in an industry's structure (see Chapter 2) since channel innovations

Mini Case Study 4.3

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