103
C H A P T E R 8
Digital marketing
Table of contents
Learning outcomes 103
Management issues 103
Chapter at a glance 103
Learning outcomes
After completing this chapter the reader should be able to:
Assess the need for separate digital business and digital marketing strategies
Management issues
The issues for managers raised in this chapter include:
How do we integrate traditional marketing approaches with digital marketing?
How can we use electronic communications to differentiate our products and services?
How do we redefine our marketing and communications mixes to incorporate new media?
Chapter at a glance
Main topics
What is digital marketing?
Chaffey, Digital Business and E-Commerce Management, 6th edition,
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Digital marketing planning
Situation analysis
Objective setting
Focus on
Characteristics of digital media communications
Online branding
Case studies
8.1 The evolution of easyJets online revenue contribution
Suggested teaching and learning approaches
The scope of activities that need to be managed as part of digital marketing are covered in
Figure 8.1. Since not all readers may have a grasp on marketing concepts, the first section
Marketing defined introduces the role of marketing within an organisation, and also
explains the context of e-marketing. Figure 8.2 can be used to explore the relationship
1. Situation analysis including reviewing the marketplace including demand analysis,
2. Objective setting including the online revenue contribution. Table 8.3 shows how goals
should be integrated with strategy and tactics. Case study 8.1 is useful for exploring this
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3. Strategy (see also strategy definition section in Chapter 5). Market and product positioning,
target market strategies.
4. Tactics. A lecture can be structured around the 6Is covered in the Focus On section. The
diagrams work well since students can be prompted to explain the differences between
5. Actions. In this section the box (Box 8.5) shows a typical marketing plan. Assignments can
6. Control. The concept of control is introduced, but a more detailed assessment of this is in
Chapter 12, maintenance and measurement.
Case studies
Case study 8.1 The evolution of easyJets online revenue contribution
Questions
1. To what extent was the Internet revenue contribution of around 90% achieved more
by luck than judgement?
2. Explain the proposition of using the Internet for the customer and define the benefits
for the company.
3. Explain how easyJet uses the website to vary the different elements of the marketing
mix and as a marketing communications tool.
4. Use a news source such as www.ft.com or review its investors relations site to find
out how easyJet has extended its Internet applications.
No suggested answer.
Chaffey, Digital Business and E-Commerce Management, 6th edition,
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Case study 8.2 Dell gets closer to its customers online
Question
Describe approaches used by Dell within their site design and promotion to deliver
relevant offers for different types of online customers.
The answer should centre on different segmentation techniques. Different segments can then be
targeted by different media (e.g. paid search, display advertising, affiliates and offline
communications); on site through specific content for these audiences and through event-
triggered email communications.
Segmentation approaches include:
Geographic Dell has a separate site for each country.
Demographic Dell can target different audiences by advertising or affiliate marketing on
different types of sites.
Business vs. consumer Dells site offers products in each of these areas.
Value Higher value consumer audiences (gaming) and business audiences (larger
companies are offered separate content).
Vertical business markets (e.g. government, education and healthcare particularly in core
markets such as the United States).
Life cycle first purchase or repeat purchase?
Accessories and add-ons. Have they been purchased?
Questions for debate
Debate 8.1 Is a distinct digital marketing plan necessary?
A separate e-marketing plan is not necessary as part of the marketing planning process
e-marketing can and should be integrated into existing marketing plans.
Summary of arguments for:
There are already a large number of types of marketing plans (see Figures 8.1 and 8.2).
E-marketing should be integrated into plans at other levels.
Summary of arguments against:
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Specific objectives needed to achieve e-marketing contribution.
Exercises
Self-assessment questions
1. Explain the link between digital marketing and digital business and why they may be
considered separately.
2. Outline the stages in a strategic e-marketing planning process, for each stage noting
two aspects that are of particular importance for digital marketing.
Situation Where are we now? 1. External (customers, competitors, PEST), 2. Internal
resources.
Objectives Where do we want to be? Online revenue contribution, complementary vs.
3. What is the Internet contribution and what is its relevance to digital marketing
strategy?
Can consider a direct and indirect form:
Direct Online revenue contribution
Indirect Online promotion contribution
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4. What factors will govern the Internet contribution that is set for a given organisation?
Deciding on the objective can use a form of Kumar or de Kare-Silver test that is, Kumar: high if:
2. the Internet can offer a better value proposition than other media (i.e. propensity to
purchase online is high);
4. the product can be standardised (user does not usually need to view to purchase).
De Kare-Silver: high if these attributes are positive:
2. Familiarity and confidence
5. Why and how should a company approach benchmarking of online competitors?
Why rapidly evolving marketplace new entrants and new services give competitive advantage.
Approaches companies should review:
well-known local competitors (e.g. UK/European competitors for British companies);
Can use three-criteria test:
1. Business effectiveness (online revenue, profitability)
3. Internet effectiveness. Effectiveness of website as a communications tool.
6. Describe what is meant by a complementary and replacement Internet channel
strategy and give examples of products for which companies follow a particular
approach.
Complementary Internet is an additional channel, but less significant than others high
7. Summarise new opportunities to vary the marketing mix that arise through deploying
the Internet.
Use 5Ps as framework.
Product (new digital products and value-adds)
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Place (new representation on intermediaries, direct-selling)
8. How can online and offline techniques be used in the control stage of strategy?
This question is about marketing research aspect of control. Refer to Chapter 12. Online
Essay and discussion questions
1. Select a particular market sector and assess the past, current and future customer
use of the Internet as a medium to select and buy products.
This is an online research exercise, it will also form part of Question 2. The key site to keyword
search on the chosen sector is:
Clickz Stats (www.clickz.com/stats)
This will highlight analyst reports including projections. For use, students should look at:
Customers connected to Internet (%)
2. Develop an outline strategic digital marketing plan for an organisation with which you
are familiar.
3. Traditional strategic planning has no relevance for the start-up company given the
dynamism of the marketplace. Discuss.
This question prompts students to consider the relevance of traditional situation analysis,
objective setting and strategy definition in a cyclical annual planning process. To help answer
4. Assess the value and importance of the Internet contribution in setting digital
marketing objectives in relation to other possible objectives.
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In this chapter the Internet contribution has a strong emphasis. This can be justified since:
It can be applied to all companies (direct and/or indirect reach).
Weaknesses are that it is tangible and does not address issues such as:
Brand equity
Acquisition, retention and loyalty measures (equally important)
5. Explain how the digital business can make use of technology to monitor and control
its operations.
This question requires reference to the different tables showing frameworks for goal setting and
control for Internet marketing. Students should also be advised to read the focus on e-marketing
measurement section in Chapter 12. Technology includes:
Server log file analysis (describe different aspects traffic volume and online behaviour, for
example, conversion).
Examination questions
1. Outline the stages involved in developing a strategic digital marketing plan.
The SOSTAC framework can be applied here:
Situation where are we now?
Objectives where do we want to be?
Strategy how do we get there?
Tactics how exactly do we get there?
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Action what is our plan?
Control did we get there?
2. Explain what is meant by the Internet contribution and outline how companies will
decide on a realistic objective.
Can consider a direct and indirect form.
Direct Online revenue contribution
An assessment of the direct contribution of the Internet or other digital media to sales, usually
expressed as a percentage of overall sales revenue.
Indirect Online promotion contribution
An assessment of the proportion of customers (new or retained) who use the online information
sources and are influenced as a result.
Kumar: high if:
2. the Internet can offer a better value proposition than other media (i.e. propensity to
purchase online is high);
4. the product can be standardised (user does not usually need to view to purchase).
De Kare-Silver: high if these attributes are positive:
2. Familiarity and confidence
3. What opportunities may there be to vary the Price and Place components of the
marketing mix when delivering services through the Internet?
Refer to sections on Price and Place.
Price often requires reduction to offer incentive to purchase online (with lower selling costs for
company). New pricing models can be adopted for digital products, for example, pay per use or
subscription.
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4. What is a complementary Internet channel strategy and for which companies will
this be most appropriate?
This is where the product is not amenable to purchase online or the barriers to this route, such as
channel conflict, are too high. This situation will apply to companies who sell products, such as a
5. What different aspects of digital marketing should be monitored as part of controlling
digital marketing? Name three examples of how technology can be used to assist
monitoring.
The framework in Chapter 12 can be used here:
Channel promotion
Channel behaviour
Channel profitability.
Three examples of monitoring are:
Site log file analysis (first two of the above)
6. Explain the strategic options available for a company currently selling the majority
of its products in a single country for product and marketplace positioning.
This question requires reference to the options of:
Current product, current market
New product, current market
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7. What do the concepts of reintermediation and disintermediation imply for the
tactics a company employs for the Promotion and Place elements of the marketing
mix?
Reintermediation The keyword is representation assessing suitability of new intermediaries
for selling or promoting services.
8. Outline how the electronic medium requires different tactics for effective marketing
communications.
The 6Is is a suitable framework to answer this question:
Interactivity (online communities, opt-in email promotions, profiling)
Intelligence (analysis of customer buyer behaviour through log files, etc.)
Activity answers
Activity 8.1 Using the Content Marketing Matrix to audit and improve
content effectiveness
No suggested answer.
Activity 8.2 Customer activity in the car market in your country
No suggested answer.
Activity 8.3 Customer activity in the car market in your country
You have been commissioned by a major company to evaluate the marketing effectiveness of
their online services in comparison with their competitors. You have to present your
findings on their services and how they can be improved in a 10-minute PowerPoint
presentation.
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Work individually or in groups to identify the type of information that should be available from
Table 5.10 may also prove useful.
You should have identified the need to distinguish between benchmarking criteria that define
the companys marketing performance in the industry and those that are specific to web
marketing as follows:
Financial performance (available from About Us, Investor relations and electronic copies of
Business and revenue models (see Chapter 2) do these differ from other marketplace
players?
Marketing communications techniques is the customer value proposition of the site clear?
Does the site support all stages of the buying decision from customers who are unfamiliar
with the company, through to existing customers? Are special promotions used on a
monthly or periodic basic? Beyond the competitors site, how do they make use of
intermediary sites to promote and deliver their services?
Services offered what is offered beyond brochureware? Is online purchase possible, what
is the level of online customer support and how much technical information is available?