Introduction.

Place.

Promotion.

People, process and physical evidence.

Summary.

References.

Introduction

This month we complete the series of articles on e-marketing
strategy by looking again at the options the Internet presents to
vary the marketing mix. In the last article we looked at Product and
Price. This month, we review Place and Promotion the elements of the
extended mix: People, Process and Physical evidence. Next month its
back to getting our hands dirty when we look at two important new
books which describe detailed techniques to measure the success of
the web site.

Place

The Place element of the marketing mix traditionally refers to how
the product is distributed to customers. Allen and Fjermestad (2001)
argue that that the Internet has the greatest implications for Place
in the marketing mix since the Internet has a global reach. Some key
implications of the Internet for the Place aspect of the mix are:

1. Place of purchase. Marketers need to review the options
for place of purchase. McDonald and Wilson (2002) identify five
options:

A. Seller-controlled sites are those that are the main site of the
supplier company which are e-commerce enabled.

B. Seller-oriented sites are controlled by third parties, but are
representing the seller rather than providing a full range of
options.

C. Neutral sites are independent evaluator intermediaries that
enable price and product comparison and will result in the purchase
being fulfilled on the target site.

D. Seller-oriented sites are controlled by third parties on behalf
of the seller.

E. Seller-controlled sites usually involve either procurement
posting on buyer-company sites or those of intermediaries that have
been set up in such a way that it is the buyer who initiates the
market making. T

For B2C organisations, A, B and C are important. Take the travel
industry. If you are promoting packaged holidays, a strategy that is
based solely on customers directly visiting your web site (A) would
be ineffective. Instead holiday companies use affiliate arrangements
(B) and search engine marketing to drive visitors to their site.
Furthermore, many consumers will go to neutral intermediaries (C)
such as LastMinute.com to find the best deal. For B2B organisations,
A, B and C are still relevant, but some large organisations such as
General Electric post bids to tender on their own web site, so these
also have to be carefully monitored.

2. Navigation. Evans and Wurster (1999) have argued that
there are three aspects of navigation that are key to achieving
competitive advantage online. These are:

Reach. This is the potential audience of the e-commerce site.
Reach can be increased by moving from a single site to representation
with a large number of different intermediaries. Allen and Fjermestad
suggest that niche suppliers can readily reach a much wider market
due to search engine marketing.

Richness. This is the depth or detail of information which is both
collected about the customer and provided to the customer. This is
related to the product element of the mix.

Affiliation. This refers to whose interest the selling
organization represents consumers or suppliers. This particularly
applies to retailers. It suggests that customers will favour
retailers who provide them with the richest information on comparing
compeititive products.

3. Localisation. Providing a local site, with, or without a
language specific version is referred to as localisation. A site may
need to support customers from a range of countries with:different
product needs; language differences; cultural differences.

4. New channel structures. The main types of phenomena that
strategies need to be developed for are:

A. Distintermediation. Is there are an option for selling direct?
Selling direct can lead to the channel conflicts mentioned in the
next section. When assessing this option there will be a number of
barriers and facilitators to this change.

B. Reintermediation. The new intermediaries created through
re-intermediation, for example Lastminute.com or JamJar.com should be
evaluated for suitability for partnering with for affiliate
arrangements. These intermediaries receive a commission on each sale
resulting from a referral from their site.

C. Countermediation. Should the organization partner with another
independent intermediary, or set up its own independent intermediary?
For example, a group of European airlines have joined forces to form
Opodo (www.opodo.com) which is
intended to counter independent companies such as Lastminute.com
(www.lastminute.com) or eBookers (www.ebookers.com)
offering discount fares.

5. Channel conflicts. A significant threat arising from the
introduction of an Internet channel is that while disintermediation
gives a company the opportunity to sell direct and increase
profitability on products, it can also threaten distribution
arrangements with existing partners. Such channel conflicts are
described by Frazier (1999), and need to be carefully managed.
Frazier (1999) identifies some situations when the Internet should
only be used as a communications channel.

Promotion

The Promotion element of the marketing mix refers to how marketing
communications are used to inform customers and other stakeholders
about an organization and its products. Much that has been written
about e-marketing, including many articles in Whats New in Marketing
focuses on promotion, so I will keep this coverage brief. Of course,
the Internet offers a new, additional marketing communications
channel to inform customers of the benefits of a product and assist
in different stages of the buying process. Some different approaches
for looking at how the Internet can be used to vary the promotion
element of the mix include:

1. Reviewing new ways of applying each of the elements of the
communications mix such as advertising, sales promotions, PR and
direct marketing using new media such as the web and e-mail.

2. Assessing how the Internet can be used at different stages of
the buying process. For instance, the main role of the web is often
in providing further information rather completing the sale. Think of
car purchase. Many consumers will now review models online, but most
still buy in the real world.

3. Using promotional tools to assist in different stages of
customer relationship management from customer acquisition to
retention. In a web context this includes gaining initial visitors to
the site and gaining repeat visits through these types of
communications techniques:

Reminders in traditional media campaigns why a site is worth
visiting such as online offers and competions;

Direct e-mail reminders of site proposition and new offers;

Frequently updated content including promotional offers or
information that helps your customer do their job that reminds them
to visit.

4. Looking at how the Internet can be integrated into campaigns.
For example, we are currently seeing many direct response print and
TV ad campaigns where the web is used to manage entry into a prize
draw and profiling of the entrant for future communications.

A recent campaign by Virgin Atlantic shows the power of integrated
e-marketing campaigns. In June, a viral campaign was launched
offering one customer the chance to Fly Free For Life. A competition
and game were used to encourage people to visit a microsite, provide
their email address and refer friends for another opportunity to
enter. This campaign was promoted via cold e-mails to bought-in
lists, banners on various sites, the flying club newsletter, a radio
campaign and poster site all driving traffic to a specially built
microsite. The total traffic from all online advertising and all
email activity was 241,460 visits. The viral element was very
successful with just under one email per visitor sent to friends This
resulted in 200,000 additional e-mails being delivered from the site
and was the main source of visitors. Click through for opened emails
was extremely high, averaging around 80% suggesting that the offer
and creative were compelling.

The promotion element of a marketing plan also requires key
decisions about investment in the the online communications mix. One
is What is the balance between investment in site promotion compared
to site creation and maintenance? Since there is often a fixed budget
for site creation, maintenance and promotion, the e-marketing plan
should specify the budget for each to ensure there is a sensible
balance and the promotion of the site and e-marketing campaigns are
not underfunded. Furthermore, what is the investment in online
promotion techniques compared to offline promotion? A balance must be
struck between these techniques. Typically, offline promotion
investment often exceeds that for online promotion investment. For
existing companies, traditional media such as print are used to
advertise the sites, while print and TV will also be widely used by
dot-com companies to drive traffic to their sites. Finally, decisions
are required about investment in different online promotion
techniques for example, how much to pay for banner advertising or Pay
Per Click search engine advertising or search engine optimisation as
against online PR

People, process and physical evidence

The service elements of the marketing mix are as important in the
virtual world as they are in the physical world. The importance of
online service for some organisations are indicated by bank
Nationwide which Bicknell (2002) reported has received 900,000
registrants on site with 2.4 million visits to the site in August
2001. Of the 1.2 million who entered the online bank, 900,000 made
transactions resulting in 60,000 online contacts which require
customer service. These figures highlight the number of transactions
that will have reduced customer contacts in real-world branches and
by phone, but this still leaves 60,000 online contacts. The
Nationwide believed that customers should expect service to be fast
and accurate. Mark Cromack, operations manager said:

There was a huge demand for more and more information and an
explosion in the level of information that people wanted.

The People element of the marketing mix refers to the how an
organisations staff interact with customers and other stakeholders
during sales and pre and post sales. Smith and Chaffey (2001) suggest
that online, part of the consideration for the people element of the
mix is the consideration of the tactics by which people can be
replaced or automated. Some of the options:

Autoresponders. These automatically generate a response
when a company e-mails an organisation, or submits an online form.

E-mail notification. Automatically generated by a companies
systems to update customers on the status of their order, for
example, order received, item now in stock, order dispatched.

Call-back facility. Customers fill in their phone number on
a form and specify a convenient time to be contacted. Dialling from a
representative in the call centre occurs automatically at the
appointed time and the company pays which is popular.

Frequently Asked Questions (FAQ). For these, the art is in
compiling and categorising the questions so customers can easily find
(a) the question and (b) a helpful answer.

On site search engines. These help customers find what
theyre looking for quickly are popular when available. Site maps are
a related feature.

Organisations can test actions and answers needed at each stage
for different types of scenario e.g. enquiry from a new or existing
customer, enquiry about the web site or e-mails from different stages
in the buying process such as pre-sales, sales or post-sales. To
reduce the volume of calls at the Nationwide, Frequently Answered
Questions (FAQ) were not sufficient. It uses Firepond Concierge on
the home page to provide a facility with natural language searching
to help customers find the answers to their queries more rapidly. It
uses Firepond Answer as an automated message routing tool that
provides automated answers to simple questions which can be reviewed
by contact centre staff before dispatch and yet is able to spot the
phrasing of more complex queries for completion by call centre
operators. Using these solutions, the quality of answers improved to
give a first time resolution rate of 94%. With the reduced staff time
involved, the cost per contact has been reduced from 4 to 2.

The Process element of the marketing mix refers to the methods and
procedures companies use to achieve all marketing functions such as
new product development, promotion, sales and customer service. The
restructuring of the organisation and channel structures described
for the product, price, place and promotion all require new
processes.

The Physical evidence element of the marketing mix refers to the
tangible expression of a product and how it is purchased and used. In
an online context, physical evidence refers to customers experience
of the company through the web site and associated support. It
includes issues such as site ease of use or navigation, availability
and performance. Keynote Europe Ltd (www.keynote.com)
independently assesses site performance so that companies can be
warned when their service levels drops. These data shows a wide
variation between the performance of the best companies and the
worst:

Site Download (secs.) Availability (%)

Yahoo 0.37 99.74

Go-Fly 0.47 99.68

BT 0.49 98.95

Iceland 0.59 99.74

Easyjet 0.62 99.10

Worst 7.65 93.13

Responsiveness to e-mail enquiries is another key aspect of
performance. The process must be right to enable an acceptable
response within the notified service standards such as 24 hours.

Summary

We have looked at evaluating the opportunities provided by the
Internet for varying the marketing mix as a useful framework for
assessing current and future Internet marketing strategy. Some of the
options are:

Product. Opportunities for varying the core product through
new information-based services and also the extended product should
be reviewed.

Price. The Internet leads to price transparency and
commoditization leading to lower prices. Dynamic pricing gives the
ability to test prices or to offer differential pricing for different
segments or in response to variations in demand. New pricing models
such as auctions are available.

Place. Place refers to place of purchase and channel
structure on the Internet. There are 3 main locations for e-commerce
transactions: seller-site, buyer-site or intermediary. New channel
structures are available through direct sales and linking to new
intermediaries. Steps must be taken to minimize channel conflict.

Promotion. The communications mix should be revised to
integrate new media such as e-mail and the web

People, process and physical evidence. Service delivery
online is as important in the virtual world as it is in the physical
world. Revising processes to manage the potentially large volume of
support processes is key to maintaining satisfaction with the online
service.

References

Allen, E. and Fjermestad, J. E-commerce marketing strategies: a
framework and case analysis. Logistics Information Management.
Volume 14 . Number 1/2 . 2001 . pp. 14-23.

Bicknell, D. (2002) Banking on customer service. e.Businessreview.
Jan 2002, pp21-2.

Frazier, G. (1999) Organising and managing channels of
distribution, Journal of the Academy of Marketing Science,
27(2), 22240.

McDonald, M. and Wilson, H. (2002) New marketing: transforming
the corporate future. Oxford: Butterworth-Heinemann.

Smith and Chaffey (2001) eMarketing eXcellence: the heart of
eBusiness. Oxford: Butterworth-Heinemann.

Virgin Atlantic case courtesy of Tara Topliff and Naomi Broad at
Virgin Atlantic and Glenn Jones at glue London.

Note: This article is one of a series originally written between 2000 and 2003 for The Chartered Institute of Marketing What's New in Marketing Newsletter. Many of the concepts remain valid, but some more recent concepts such as Web 2.0 and social networks aren't referenced. More recent editions of my books contain more up-to-date examples and latest thinking.

For the latest on these concepts see my DaveChaffey.com blog site for E-marketing mix articles.