Imw-265538

Instructor’s Manual
Digital Marketing
Sixth edition
Dave Chaffey
Fiona Ellis-Chadwick
For further instructor material

please visit:
www.pearsoned.co.uk/chaffey
ISBN: 978-1-292-07766-6
 Pearson Education Limited 2017

PEARSON EDUCATION LIMITED
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-----------------------------------
Fifth edition published 2013

This edition published 2017
© Pearson Education Limited 2017
The rights of Dave Chaffey and Fiona Ellis-Chadwick to be identified as authors of this work
have been asserted by them in accordance with the Copyright, Designs and Patents Act 1988.
ISBN 978-1-292-07766-6
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Contents
Parts and Chapters Pages
Part 1 Digital marketing fundamentals 4

Chapter 1 Introducing digital marketing 5
Chapter 2 Online marketplace analysis: micro-environment 17
Chapter 3 The online macro-environment 31
Part 2 Digital marketing strategy development 40

Chapter 4 Digital marketing strategy 41
Chapter 5 The impact of digital media and technology on the marketing mix 51
Chapter 6 Relationship marketing using digital platforms 61
Part 3 Digital marketing: implementation and practice 70

Chapter 7 Delivering the online customer experience 71
Chapter 8 Campaign planning for digital media 80
Chapter 9 Marketing communications using digital media channels 91
Chapter 10 Evaluation and improvement of digital channel performance 100
Chapter 11 Business-to-consumer digital marketing practice 110
Chapter 12 Business-to-business digital marketing practice 115
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Part 1
Digital marketing fundamentals
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CHAPTER 1
Introducing digital marketing
One sentence overview
An introduction to digital marketing and the book structure.
Notes on using slides for the first chapter in lectures – lesson plan
1. Marketing transformation. Slides 1.4, 1.5 and 1.6. Generate interest through opportunities
for new business applications online. Ask what the success factors have been for these
companies – see Activity 1.1. Innovation in digital marketing platforms
2. What is digital marketing? Slides 1.7–1.16. Apply the CIM definition to e-marketing. Ask
students how it contributes to marketing. Emphasise need for integration, hence
multichannel marketing. Use the Preface Figure P.1 to explain the scope of digital
marketing. Introduce different types of paid, owned and earned media (Figure 1.3 – Slide 1.11).
For alternative definitions, see:
• http://www.smartinsights.com/digital-marketing-strategy/customer-acquisition-
strategy/new-media-options/
3. What are e-commerce and e-business? Slides 1.17 and 1.18. Ask students to write down
definitions. Then, show Figure 1.5 to explain the distinction between buy-side and sell-side
e-commerce.
4. Introduction to digital marketing strategy. Slides 1.19–1.22. Applications of Internet

marketing. Start by asking about the need for a digital strategy. What can go wrong without
a strategy? Review 5Ss for a company such as easyJet or NWS. Different contexts of
Internet marketing (Slide 1.15) and an example of an innovative C2C site (Slide 1.18). Also
note how this site is being used for advertising to this audience.
See 5Ss of Internet marketing example (Table 1.2):
• http://www.smartinsights.com/goal-setting-evaluation/goals-kpis/goals-for-your-digital-
marketing/
5. Structured planning for Internet marketing. Slides 1.23 and 1.25. Discuss the need for
structured planning and relate to your course structure. May want to introduce SOSTAC
framework from Chapter 9.
6. Introduction to digital marketing communications. Slides 1.26–1.29. Explanation of

marketing communications terms such as medium, discipline, channel and vehicle.
Illustrates key tools by a worked example, for instance, searching for a credit card.
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Chaffey and Ellis-Chadwick, Digital Marketing, 6e, Instructor’s Manual on the Web
7. Differences between digital media and traditional media. Slides 1.30–1.35. Review the 6
Is using Slides 1.20–1.23 with references to case studies used earlier in lecture or Travel
Republic.
8. Key digital marketing concepts. Slides 1.34–1.39. Introduce these through examples, for
example:
• http://www.smartinsights.com/social-media-marketing/social-media-strategy/e-permission-
marketing/
• http://www.smartinsights.com/social-media-marketing/social-media-strategy/integrating-
social-media-marketing/
Activities
Activity 1.1: Innovation in digital marketing platforms
Purpose
To introduce some of the most important platforms used for digital marketing today and to
illustrate innovation in online business models and communications approaches.
Questions
1. Think about the innovation that you have witnessed during the time you have used the
Internet and World Wide Web and mobile phones. What would you say are the main
sites used in your country that have been created, which have changed the way you
spend your time online? Table 1.1 shows the sites that we believe have had the biggest
influence on online business models in the US and Europe, with more emphasis on the
most recent ones.
2. What do these sites have in common with the ones that you have selected and what do
you think has made them successful?
Answer
This is provided in the main text:
• All these sites are American, so the funding and publicity they can achieve is significant.
• You will notice that many of these sites were originally developed in the United States, with
the majority now used around the world. But, in each country, similar types of businesses
have evolved, for example, the search engines Baidu in China and Yandex in Russia.
• They meet a fundamental consumer need.
• They have a clear revenue model.
• They have a memorable branding and experience.
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• Initially, they had a straightforward proposition – offering one service.
• Generally they were first-movers.
• It is notable that many have taken several years before becoming widely known and used.
Activity 1.2: The latest marketing technology landscape
Purpose
To illustrate the range of systems available to support marketers and to explain the main
categories of service available.
Activity
1. Search for Scott Brinker’s latest technology roadmap for the current year on his
ChiefMartec.com site. For each of the six categories of service summarised in Figure 1.3,
write a layman’s description of how they can support digital marketing activities by
reviewing the proposition as described on the websites of the most popular services in the
category (the most popular are listed first).
2. Make a note to understand the different types of services defined in each category.
3. Choose one or two vendor systems and visit their website to see how they explain the
proposition and explain it to others in your group(s). Alternatively, identify the most
popular service(s) in each category.
Answers may vary according to choice and content of vendor websites.
Activity 1.3: Why are C2C interactions important?
Purpose
To highlight the relevance of C2C transactions to B2C companies.
Activity
1. Consult with fellow students and share experience of C2C interactions online. Think of
C2C both on independent sites and organisational sites. How can C2C communications
assist these organisations?
Answer
Examples mentioned may include the following:
1. User-generated content (UGC), a feature of Web 2.0, for example, reviews of products,
either on the retailer site (e.g. www.ebuyer.com) or on third-party review sites.
2. Online auctions, for example, eBay.
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3. Online forums are important for B2C publishers, for example, www.e-consultancy.com/
forums.
4. Contributing to customer support sites. These are specialist models. C2C is mainly an aid
for support of technical products such as software (see www.symantec.com).
Activity 1.4: Digital media differences?
Purpose
To illustrate similarities and differences between digital and traditional media.
Activity
Make two columns. On the left, write down different digital media channels and on the right,
the corresponding communications disciplines such as advertising, direct marketing or PR,
which are most appropriate.
Answer
Digital Media Channels Communication Disciplines

Search Engine Marketing SEO, pay-per-click and paid search
Online PR Publisher outreach, community participation,
media altering and brand protection
Online Partnerships Affiliate marketing, sponsorships and co-
branding
Display Advertising Ad networks and behavioural targeting
Social Media Marketing Audience participation, managing social
media presence, viral campaigns and
customer feedback
Activity 1.5: Assessing social media marketing platforms
Purpose
To explore the range of social media sites and tools in order to categorise them and assess their
business applications.
Activity
Visit the Conversation Prism (www.conversationprism.com) which is a visual map of the social
media landscape. Identify the types of social media sites you and your colleagues use. How do
you think the popularity of tools would differ for different types of B2B and B2C sites? Discuss
how businesses should decide on the most important to achieve their goals.
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Answer
Reasons for deciding relative investment:
1. Popularity with consumers – overall preferences for platforms.
2. Competitor success with platforms – benchmarking how they are using them.
3. Evaluation of how well they support business goals – can use RACE KPIs (Figure 1.10) or
the 5Ss framework referenced earlier in this chapter: Speak, Sell, Serve, Save and Sizzle.
4. Current results – assessed through using analytics – visits and sales referred to main site,
engagement on site.
Activity 1.6: Integrating online and offline communications
Purpose
To highlight differences in marketing communications introduced through the use of the

Internet as a channel and the need to integrate these communications with existing channels.
Activity
List the communications between a PC vendor and a home customer over the lifetime of a
product such as a PC. Include communications using both the Internet and traditional media.
Refer to channel-swapping alternatives in the buying decision in Figure 1.16 to develop your
answer.
The table below shows different forms of integration between the channels.
Table: Examples of communications initiated by customer and company
Communication initiated by customer Communication initiated by company

Phone call to company Advert to generate awareness, placed in
newspaper or PC magazine
Visit to website to review prices and Phone call or e-mail by courier company to
specification arrange delivery of PC
Phone call or e-commerce purchase of Traditional mail-out or e-mail after 1 year to
PC describe upgrade in service
Support call to solve problem Traditional mail-out or e-mail after 3 years to
describe new product offers
Complaint about repair Call to arrange visit (from sub-contracted
company)
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Exercises
Self-assessment exercises
1. Explain the main types of digital marketing platform.
Traditional platforms are desktop access to the web through a browser, but now mobile is more
important with apps increasing in popularity (desktop and mobile). APIs and feeds are important
as a way of exchanging information between platforms.
Can distinguish between hardware platforms as above, software platforms and different services
such as the communications channels in Figures 1.10 and 1.11.
2. Identify different ways in which a website or social media presence is used for
marketing in different markets.
The demographic profile of an online audience varies significantly. As a result, website content
should be tailored to suit the interests of the target community. Appropriate social media should
be used to engage a particular audience, for example, Facebook and Twitter attract a different
demographic to Instagram, Tumblr, etc. Online content can be used to provide information and
reach; can encourage audiences to engage with a brand; can be used to convert leads in to sales
and revenue and can also be used to build customer relationships.
3. Outline different applications of digital marketing which can help meet business goals.
You can consider the different forms of online presence and how these support digital
marketing. Within each there are different applications to support online and offline marketing.
1. Transactional e-commerce site (online sales or offline store finder).
2. Services-oriented relationship-building website (Help desk and FAQ), lead generation

through data capture.
3. Brand-building site – can include sampling, capture of leads or creation of community and
sharing.
4. Portal or media site – publishing through news or blog.
5. Social network or community site – encouraging sharing through creation of consumer-

generated content.
As noted in the text, these are not mutually exclusive; it is a matter of emphasis.
4. Explain what is meant by electronic commerce, social commerce and digital business.
How do they relate to the marketing function?
E-commerce refers to transactions for the trading of goods and services conducted using the
Internet and other digital media. E-business is broader, including electronically mediated
transactions, which are internal and with suppliers as well as those to buyers. They are both
methods of supporting the marketing function – e-commerce refers to customer facing websites,
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e-business also includes links with partners and suppliers through extranets and internal
marketing communications through intranets.
Social commerce can support both e-commerce and e-business. It refers to supporting sales
through encouraging consumer sharing, interaction and advocacy. It is integrated into e-
commerce as reviews and ratings, for example.
5. Six digital media channels are introduced in this chapter. What are they and how do
they work to reach, engage and convert an audience?
The six media channels can be distinguished by terms mentioned later in the text, that is, pull or
push or inbound marketing. They are as follows:
1. Search Engine Optimisation ((SEO) and PPC plus feeds like Google Shopping). These
are ‘pull’ in response to consumer demand through search engines and search networks (ads
are displayed on third-party sites also).
2. Online PR. This includes outreach to publishers and bloggers.
3. Online partnerships. For e-commerce sites, affiliate marketing is the main arrangement, a
commission-based approach to sales.
4. Interactive ads. Display ads use a ‘push’ approach similar to traditional ads, reaching
audiences as they use media sites.
5. Opt-in e-mail. Tends to be mainly used with in-house customer lists, but can rent
permission-based lists or advertise in other e-newsletters.
6. Social media marketing. Reaching audiences as they use the main social networks and
encouraging sharing of content.
Internet is available to all; others are restricted to those inside a company (intranet) and
favoured third parties such as large customers, suppliers and distributors (extranet).
6. Summarise the main communications difference between digital and traditional

media.
• Interactivity – not solely a push medium (e-mail), but also pull (customers search for
information). Information can be collected from customers via web pages (direct response).
• Intelligence – can monitor customers’ interests and profile them.
• Individualisation – it is possible to tailor e-mail and web communications (personalisation).
• Integration – of online and offline channels remains important.
• Intermediation – new intermediaries can be used as a route to market and there is also the
opportunity to sell direct.
• Independence of location – possible to reach a wider marketplace.
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7. Distinguish between social media marketing, inbound and content marketing.
These three concepts overlap, so we can explain the relationship between them. The main
elements are as follows:
1. Social media marketing. Encourages interactivity, participation and sharing.
2. Inbound marketing. Raises awareness through content to engage which is then shared.
3. Content marketing. Engaging content is developed for sharing as part of social media and
inbound marketing. Content is developed not just for sharing, but to support sales.
http://www.smartinsights.com/content-management/content-marketing-strategy/a-content-
marketing-and-inbound-marketing-blueprint/
8. How can the Internet and digital media be used to develop new markets and penetrate
existing markets? What types of new products can be delivered by the Internet?
International markets can be targeted without the need for sales/promotional infrastructure.
Fulfilment methods must enable delivery with minimal need for local servicing. The Internet
may give opportunities for new market segments such as the youth market that may have been
difficult to target previously. For existing markets, the Internet can be used to increase
awareness and add value to a company and its products.
Essay and discussion questions
1. Some would see digital media primarily as a means of advertising and selling products.
What are the opportunities for other uses of the Internet and digital media for
marketing?
Refer students to pages 12–16 that discuss opportunities in the areas of:
• marketing research,
• ‘below-the-line promotions’,
• customer service, and
• relationship building/loyalty enhancing.
Prompt students by considering the five different types of sites mentioned on pages 14–17. The
5Ss given in Table 1.2 are also a suitable framework for answering this question.
2. ‘The World Wide Web represents a pull medium for marketing rather than a push
medium’. Discuss.
Refer students to the introduction of digital marketing communications (page 29–31), which
describe differences in traditional and digital media. Push and pull are also discussed in more
detail at the start of Chapter 8, where different communication models are referred to.
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Answers should stress the pull nature of the medium, for example, where a consumer uses a
search engine to find a product, but the question is intended to highlight the options for push
such as personalised e-mail promotion, targeted messages on websites and banner advertising.
3. You are a newly installed marketing manager in a company selling products in the
business-to-business sector. Currently, the company only has a limited website
containing electronic versions of its brochures. You want to convince the directors of
the benefits of investing in the website to provide more benefits to the company. How
would you present your case?
The framework presented in Figure 1.8 on page 26 gives a good structure for developing a case
and this is expanded upon in Chapter 4, where an alternative approach (SOSTAC) is shown in
Figure 4.3. The main elements of this approach are as follows:
• Understand changes in media consumption – how do their prospective (?) and customers
use the web to inform their buying decision?
• Set objectives in terms of number of site visitors and leads generated.
• Formulate a strategy to develop relevant content, that is, more depth than electronic
brochures, to help customers decide on relevant products or complete their jobs.
• Develop a plan to promote the site, including details of tactics for each digital media
channel.
The directors will be interested mainly in generating new enquiries. Students may mention the
following benefits:
• Reach new audiences, for example, smaller businesses through pull effect of search engines.
• Provide a new method of generating leads through offering whitepapers to download – see
example of B2B Web Analytics provider, for instance, www.omniture.com – it is best if
students choose examples or are given companies to consider.
• Provide customer services to existing customers and promote alternative products (cross-
sell).
4. Explain the main benefits that a company selling fast-moving consumer goods should
derive from its website.
The aim of this question is to highlight that the web is not suitable for direct sales of all
products.
However, digital media may be used for generating awareness and brand building. This can be
achieved through banner advertising on third-party sites. For example, www.handbag.com for a
cosmetics company engaging a female audience or www.fhm.com for a male audience.
This engagement can occur through microsites hosted by publishers or by the brand and social
networks also. Consumers can be encouraged to opt-into e-newsletters or get involved in SMS
promotions. Students should learn the concepts of inbound and content marketing to show how
relationships with consumers can be developed. Good examples to recommend are Bacardi,
Lynx and Red Bull.
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Examination questions
1. Explain electronic commerce and social commerce and how they relate.
Social commerce is a subset of electronic commerce. Both are aimed at encouraging online
transactions. Electronic commerce provides an online catalogue of products with facilities to
search and find out more about products. Social commerce integrates user-generated content
from consumers to encourage sale. Social commerce features include reviews and ratings.
2. Which techniques can be used to increase awareness of a brand and encourage

interaction with the brand?
Digital media offer a range of platforms to increase awareness as web users search and consume
content online. These include search engine marketing, online PR and outreach and partner
marketing. Display advertising and reaching publisher audiences through e-mail lists can also be
used to increase awareness. Interaction is usually facilitated using a model where visitors are
referred to a site, microsite or social network where content marketing is used to encourage
interaction. These methods can be used across both desktop and mobile platforms.
3. A digital marketing manager must seek to control and accommodate all the main
methods by which consumers may visit a company website. Describe these methods.
Although these are introduced in this chapter, Figure 1.11 provides a good summary of the main
methods, which are as follows:
• Search engine marketing
• Online PR
• Online partnerships
• Offline communications (driving traffic to web site)
• Interactive ads
• Opt-in e-mail marketing
• Social media and viral marketing.
4. Imagine you are explaining the difference between the digital marketing and e-
commerce to a marketing manager. How would you explain these two terms?
Digital marketing is a broader term referring to using a range of digital technologies to support
marketing objectives, for example, Sell, Speak, Serve, Save and Sizzle. E-commerce is a
narrower term relating to encouraging online transactions and supporting these through
customer service.
5. What is the relevance of ‘conversion marketing’ for digital marketing?
Conversion marketing is a structured approach to increase the value of digital interactions for a
business. Assessing and improving response rates can achieve more online sales. For example,
we can increase the reach of the site to turn more web browsers into visitors; we can increase
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the conversion rate of the site to encourage more site visitors to achieve action and we can
increase conversion of leads to sales to increase turnover.
6. Explain how digital platforms can be used to increase market penetration in existing
markets and develop new markets.
To increase penetration in existing markets, the Internet can be used to reach a greater proportion
of the target market within an existing country or marketplace. It can also, in combination with
other communication channels, be used to assist in converting more potential customers to sale.
To develop new markets, the Internet can be used not only to reach new geographical markets
but also to enter new markets. For example, supermarket Tesco.com uses the Internet to sell
‘white goods’, which it did not previously sell.
This is introduced in Chapter 1, but covered in more detail in Chapter 4 (see Figure 4.12).
Case Study 1: eBay thrives in the global marketplace
Question
Discuss how eBay uses different parts of their site to focus on certain activities and how
this has contributed to continued growth.
Students should be guided as to whether they review the whole eBay business or the core
business (the marketplace).
It is best to divide this question into two parts.
1. How have the characteristics of digital media supported eBay’s growth?
A suitable framework for reviewing the unique aspects of digital media is Table 1.2 – ‘The 5Ss
of digital marketing’. ‘An interpretation of the differences between the old and the digital
media’. Also, if this case study is used later in this main text, the section at the start of Chapter 8
on ‘The characteristics of digital media’ may be useful.
The particular characteristics of digital media compared to traditional media that are important
to eBay are straightforward. They are as follows:
• Change from a one-to-many communication model to a one-to-one or many-to-many

communication model.
• The ability to create user-generated content listing products is also related to the one-to-one
aspect and is also important.
• From Push to Pull – eBay offerings are often visible within search engines.
• From monologue to dialogue (two-way information exchange for enquiries about products
facilitated by e-mail).
• Ratings for sellers are important to generate trust (although there are methods of falsifying
these).
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• Community – the sense that users are part of a community and additionally are bypassing
traditional retail channels will be important from some users.
2. How have strategic decisions supported growth?
As with other cases based on SEC filings, that is, United States Securities and Exchange
Commission submission, this case is useful for showing how growth is dependent not only on
exploiting the right opportunities but also about managing risks successfully.
SEC is a recommended resource for all US listed companies for which there are case studies in
the main text. These can usually be accessed through the relevant SEC filings, for example:
Students may structure strategic decisions in different ways according to the level of the course
they are following, but since the case is in the beginning of the text, they could be advised to
simply look for success factors. Alternatively, if they have completed Chapters 4 and 5 on
strategy and the marketing mix, respectively, these then provide alternative frameworks.
Strategic success factors students may mention include the following:
• Branding – a distinctive brand – the earlier brand name was perhaps less appropriate
although more direct.
• First-mover advantage – gaining a critical mass through the foresight of the owner.
• Security and fraud – realising that this is important to reputation, so investing in managing
this and controlling PR related to this. eBay has developed ‘Trust and Safety Programmes’
to manage this.
• Partnerships and acquisitions, which fit/relate well to the service, that is, PayPal and Skype.
• Communication of customer value proposition – the case describes how eBay explains this.
• Revenue model – the market has judged that this gives a good balance for sellers,
purchasers and eBay. Setting fees at the right level has enabled eBay to scale for some time.
• Process efficiency – the case describes how eBay measures and then seeks to improve the
key areas of Acquisition, Activation and Activity.
• Growth strategies – these are covered in Chapter 4 and include market development
(geographic) and product development (new categories for consumers and businesses).
• Technology scalability – not referred to in this chapter, but eBay has been successful in
deploying technology that has supported the company’s rapid growth.
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CHAPTER 2
Online marketplace analysis: micro-environment
Explores how the actors in the micro-environment influence digital marketing planning.
Notes on using slides for the second chapter in lectures –

lesson plan
1. The scope of the micro-environment. Slide 2.4. Ask students to imagine they are an
e-marketing manager for Blackcircles.com or a brand they are familiar with. What are the
micro and macro issues they face from Figure 2.2? Which are the most important?
2. Marketplace analysis. Slide 2.7. Talk through the online marketplace map diagram (Figure
2.5) from left to right using an example, for example, a bank or a retailer. Stress integration
with offline channels (channel chains later). Illustrate with use of tools such as Google
Keyword Tool and Google Insights for Search (http://www.davechaffey.com/SEO-Best-
Practice/google-marketing-complete-list-of-free-tools).
3. Customer analysis and consumer behaviour. Slides 2.12 and 2.13. Conversion modelling
(advanced). Explain the need to assess demand for use of different services and then to
create a conversion funnel model.
4. Evaluation of demand levels. Slides 2.14–2.16. Structure around three levels of access:
Influence: Transact as shown in Slide 2.14. Ask different groups of students in a class to
analyse main findings from graphs and implications.
5. Customer characteristics. Slides 2.17–2.20. Cover consumer and business characteristics.
6. Consumer buyer behaviour models. Slides 2.21–2.33. Review strengths and weaknesses of
each model.
7. Competitors. Slides 2.27, 2.28, 2.29, 2.32 and 2.33. Ask students to review benchmarking
criteria for different site types introduced in Chapter 1.
8. Intermediaries. Slides 2.30 and 2.31. Ask students to identify different types of
intermediaries or portals. Different types of intermediaries were introduced earlier in the
chapter in the section on marketplace analysis. Best to introduce in context of business and
revenue models that are covered in the next section. Intermediary models. Cover value
chain analysis, disintermediation, reintermediation and countermediation.
9. Business and revenue models. Slides 2.34–2.36.
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Activities and solutions
Activity 2.1: Online ecosystems
Purpose
To explore the increasing importance of facilitating communications through online platforms

and service providers.
Activity
Discuss in a group or make notes to identify the main companies (e.g. Facebook) and platforms
(e.g. tablet devices) used by consumers that are important for companies to review their online
presence. Once you have identified the main company or service types, group them together so
that their overall importance can be reviewed.
Answer
The purpose of this discussion is not only to explore how companies and organisations are using
an increasingly broad range of platforms to communicate with their target customers but also to
consider the importance of the platform in relation to a company’s competitors.
In the classroom, the discussion may take different forms, but it should create an opportunity to
consider the elements that make up the online marketplace map and also create an opportunity
to apply this model to the real world.
Activity 2.2: LinkedIn: making professional connections
Purpose
To consider the business potential of online networks.
Activity
Businesses rely on their connections to other business and key individuals to develop their
businesses. In 2002, Reid Hoffman had an idea, which he turned into the largest professional
network in the world: LinkedIn. In March 2015, there were over 332 million professional
individuals signed up to the network in 200 countries worldwide.
Visit http://press.linkedin.com/success-stories and read Success Stories of LinkedIn members

who have used this network to grow their business.
Questions
1. How have the successful LinkedIn members used the network to their advantage?
LinkedIn is a social network that enables business associates and colleagues to share their
contacts, professional interests and occupations. The network is widely used in Europe, USA
and parts of Asia, and the global reach can be beneficial to its users.
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LinkedIn has a membership base of over 160 million subscribers and successful members are
able to build up their network of contacts, share their Curriculum Vitae and find new work and
projects. In addition, the membership extends business connections by joining social interest
groups within the LinkedIn network.
2. Suggest how being a member of the LinkedIn network might help a company to
develop better customer knowledge.
Members can use LinkedIn to develop their customer knowledge in the following ways:
• Finding out about customer connections and interests.
• Joining online discussions and finding out more about their customer preferences.
• Sharing details of their skills, area of knowledge and expertise.
• Making new business connections.
Activity 2.3: Changes in consumer buyer behaviour caused by digital

channels
Although the model shown in Figure 2.14 provides a useful starting point for assessing buyer
behaviour, it should be remembered that the Internet has changed behaviour and in some ways
the model is not an accurate reflection of reality. What do you think are its main weaknesses?
We would suggest:
• The process is not necessarily sequential.
• The process is compressed – for low involvement products, the decision can be made
straight away. The process will often start with a search and is mediated through search
engines throughout, with the searches refined iteratively from generic to specific plus brand,
for example, ‘fridge’, ‘upright fridge’, ‘comets fridge’, whirlpool fridge’ and ‘whirlpool
20TBL4’.
• The participation on the web and the creation of user-generated content (UGC), such as
reviews and ratings on the retail site, and comparison intermediaries, such as Revoo
(www.revoo.com), are important in the decision process.
• Viral marketing and online PR can be important for generating awareness. In a virtual
environment, trust becomes important, as we will see below, so the strength and familiarity
of brands will be important.
Activity 2.4: Tripadvisor.com
Purpose
To examine the marketing opportunities provided by an Evaluator intermediary site.
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Activity
1. Visit the TripAdvisor for your country and search for a hotel in your home town. See how
TripAdvisor reviews rate the hotel.
2. Now imagine you are responsible for the online communications for the hotel. Make a list
of the positive and negative points raised in the reviews.
3. Suggest how you might use these comments positively to generate visitor traffic to the hotel
website.
Answer
This activity creates an opportunity to discuss and consider the value and limitations of review
sites. Furthermore, real information from hotel reviews can be used to explore how to manage
online comments. This activity can be used to stimulate an informal in-class discussion or might
be used as the start point for developing a PR/communication campaign.
Activity 2.5: Revenue models at marketing membership sites
Purpose
To illustrate the range of revenue-generating opportunities for an online publisher. This site
looks at three alternative approaches for publishing, referencing three different types of portals.
Visit Econsultancy.com, SmartInsights.com and MarketingProfs.com
1. Summarise the revenue models which are used for each site by looking at the information
for advertisers and affiliates.
• Econsultancy.com uses a membership model but also sells training courses and
materials
• SmartInsights uses a membership model and provides bespoke expert consultancy
service
• MarketingProfs.com uses a membership subscription model and sells training and
education.
2. Give the advantages and disadvantages of the different revenue models for the site audience
and the site owner.
The advantages of membership and subscription models enable organisations to build a strong
client base. However, there is continual demand to ensure that the content and services provided
are current and deliver added value. Also the initial acquisition of the membership base can be
costly.
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Case Study 2: Boo hoo – learning from the largest European

dot-com failure
Questions
1. Which strategic marketing assumptions and decisions arguably made Boo.com’s

failure inevitable? Contrast these with other dot.com era survivors that are still in
business; for example, last minute.com, Egg.com and Firebox.com
2. Use the framework of the marketing mix to appraise the marketing tactics of Boo.com
in the areas of product, pricing, place, promotion, process, people and physical
evidence.
3. In many ways, the vision of Boo’s founders was ‘ideas before their time’. Give
examples of the e-retail techniques used to create an engaging online customer
experience which Boo adopted that are now becoming commonplace.
Answers
1. Which strategic marketing assumptions and decisions arguably made Boo.com’s failure
inevitable? Contrast these with other dot.com era survivors that are still in business, for
example, last minute.com.
Boo.com lacked the expertise, resources and capabilities to make a successful launch in 18
countries simultaneously. The founders had created a successful online book business in
Scandinavia, but Boo.com was a much more complex operation.
Additionally, the underlying technology infrastructures were not in place and the
‘aspirations’ of the management team for the functionality of the website were way beyond
the ‘know-how’ of developers at the time.
Ultimately, Boo.com did not have a coherent strategy and so rather than building a scalable
business that could grow over time they aimed to build a global business overnight. The
company benefited from the high demand for high-tech stocks, which allowed money to
constantly be pumped into the business. However, once the company demonstrated its
inability to deliver, the launch date for the website was constantly put back. The failure to
deliver on time linked with the stock market crash contributed to the fact that it was almost
inevitable that the business would fold.
In contrast, other businesses were making more scalable and sustainable plans. Companies
like Tesco.com and new pureplays like Last minute.com are examples of businesses that
looked at the potential in the marketplace and developed both sustainable and scalable
solutions.
2. Use the framework of the marketing mix to appraise the marketing tactics of Boo.com in the
areas of product, pricing, place, promotion, process, people and physical evidence.
4 Ps – product, pricing, place and promotion
Boo.com wanted to offer a product range of branded goods to the 18- to 24-year-olds who were
both fashion conscious and had good incomes. In essence, this approach was OK if the size of
this target group at the time of launch was not as extensive as predicted and there were still
21
many barriers to shopping online both for this group and other potential targets. This made a
heavy demand on the promotional budget as Boo had to launch a new shopping concept;
establish credibility for the brand and reinforce to the target audience that it was ‘OK’ to shop
online. Boo failed on the logistic side, and there were many problems associated with logistics
throughout the supply chain. Goods were delivered late and returns were mishandled.
The extended service mix
Shopping with Boo was a laborious process. Physical evidence: the user interface had many
graphical features which meant slow download speeds and was not seen to be user-friendly.
When it is working, the online environment created by Boo was sophisticated and offered many
of the interactive features that shoppers were looking for; however, this was not the case for
much of the time. Furthermore, many shoppers did not have broadband and as a consequence
could not enjoy any of the benefits. Process: the shopping process did not work in a streamlined
way and there were many angry customers. People: the website used JavaScript and Flash
technology to allow Miss Boo, a sales-assistant-style avatar, to assist shoppers, but this did not
work very well especially when using a 56k modem and dial-up connection.
More specifically, the marketing mix is covered in Chapter 5, so this part of the question should
only be set if this concept has been covered previously.
Details of the marketing mix that relate to Boo.com are as follows:
• Product. Premium brands were used, leading to premium prices. Unclear on mix between
sportswear and high street fashion. Scope relatively narrow, limiting target audience.
• Price. As mentioned in the case, there were issues of pricing in different regions. No
mentions of discounting are made, consistent with the brands’ premium positioning.
However, competitive selective promotions are today commonly used by many e-retail
brands.
• Place. Boo.com had a worldwide distribution, which was good for achieving reach, but
added to the cost-base of the company, impacting on promotion. A global launch of a new
brand was ambitious and can be contrasted with the more conservative approach from the
likes of Amazon and eBay.
• Promotion. To build the Boo brand and drive visitors, it was reliant on online advertising,
which gave rise to a high cost per customer acquisition that ultimately led to the brands
failure. The use of PR was more effective and is one of the successes of Boo. The magazine
appears overambitious and did not pay for itself through sales generated. At the time, the
promotion through online marketing techniques such as search engine advertising and
affiliate marketing techniques was limited in its possibilities. Today, these are more
effective for companies.
• Process. People and physical evidence. It is well known that the technology was too
advanced for a time when the vast majority was accessing the web over dial-up modems.
This led to a ‘clunky’ experience that resulted in the low conversion rates referred to in the
article. It also seems likely that the cost of providing customer service was not factored into
the business model.
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3. In many ways the vision of Boo’s founders was ideas before their time. Give examples of
the e-retail techniques used to create an engaging online customer experience which Boo
adopted and is now becoming commonplace.
When boo.com collapsed, the company left a legacy of the underlying e-commerce
technology. This was bought for £250,000 by Dan Wagner, which enabled him through his
company Bright Station to create an e-commerce solution package, which runs many of
today’s successful online retailers’ web operations. The 3D images of products, sales
assistant avatars and multiple country online stores are examples of some of the features of
Boo.com operations that have now become commonplace, for example, IKEA for online
sales support through their ‘Ask Anna’ facility.
1. Explain the components of the digital market environment.
The e-marketing environment consists of a multi-layered trading arena which is made up of (a)
macro-environment – external forces, for example, political, legal, environmental, technological
and social influences, which affect a company but are largely beyond influence and (b) micro-
environment, which is predominantly made up of actors that can influence and be influenced by
a company, for example, customers, competitors, suppliers and intermediaries.
2. Why is environmental scanning necessary?
At the macro level, it is important to understand new constraints such as legal and technical
constraints on conducting business. These may also present opportunities. At the micro level, it
is important to be responsive to customers’ needs and competitors’ actions.
3. Summarise how each of the micro-environment factors may directly drive the content
and services provided by a website.
At the micro-environmental level, suppliers, competitors, intermediaries and customers have

influence over the content and services offered through the web. In the first instance, it is
important to ensure that customer needs are met by the website. Companies should seek to
understand their customers, their abilities (and motivations) for using the web and their needs.
Competitors also influence the design and functions of a website. In a particular industry sector,
companies tend to try to match the web offering of their competitors in order to remain
competitive. Intermediaries, especially web solution service providers, have significant
influence over the design, development and operational functionality of a website. Good
relationships are important between the client and the intermediary. Suppliers (depending on the
nature of the operation) need to align with their customer’s technology. Either the supplier of
the customer may have outdated technology which can hamper trading relations. This has been
greatly improved with e-procurement systems via the web.
4. How would you analyse demand for digital marketing services?
Environmental scanning and customer analysis (see section from pages 59 to 75) is discussed in
some detail in this chapter. The key elements to understand are customer behaviour, insight and
segments using sources of data designed to analyse the online marketplace.
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5. Why is it important to understand conversion marketing models?
By understanding the conversion models companies can plan their online marketing strategies
as they should have better knowledge of the potential online demand for their products and
services. The type of information to consider is awareness, attractability, engagement and
conversion efficiency.
6. What is the difference between demographic variables and behavioural variables?
Demographic variables suggest any personal attributes that tend to remain static throughout an
individual’s lifetime, or evolve slowly over time (such as age, gender, race, etc.), and these key
elements of a consumers’ demographic profile have been found to influence online behaviour
and Internet adoption.
Behavioural variables are any aspects of a consumer’s perceptions, beliefs and attitudes that
might influence online behaviour, and, in particular, a consumer’s intention to shop can be
defined as a ‘psychographic/behavioural variables’. Indeed, there has now been a significant
amount of recent work to explore how the consumers’ character or personality might influence
their online behaviour.
7. What are the main aspects of customer adoption of the Internet that managers should
be aware of?
Consumer access percentage:
• Role in influencing sale and achieving direct sales.
• Role of the Internet in influencing different members of the buying unit.
8. What are the main changes to channel structures that are facilitated through the
Internet?
• Direct selling – disintermediation.
• New intermediaries – reintermediation.
• Countering new intermediaries – countermediation.
9. How should a marketing manager benchmark the online performance of competitors?
You should have identified the need to distinguish between benchmarking criteria that define
the company’s 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 company reports. This information is also available from intermediary sites such as
finance information or share dealing sites such as Interactive Trader International
(www.iii.com) or Bloomberg (www.bloomberg.com) for major quoted companies.
• Marketplace performance. Market share and sales trends and significantly the proportion of
sales achieved through the Internet. This may not be available directly on the website, but
may need to use other online sources. For example, a new entrant to European aviation,
24
easyJet (www.easyjet.com), has achieved over two-thirds of its sales via the website and
competitors need to respond to this.
• Business and revenue models. Do these differ from other marketplace players?
• Marketing communication 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 basis? Beyond the competitors’ sites, 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?
• Implementation of services. These are the practical features of site design that are described
in Chapter 7, such as aesthetics, ease of use, personalisation, navigation and speed.
A variety of alternative approaches to benchmarking are possible. Different frameworks can be

identified to help group criteria for benchmarking. Alternatives include the following:
1. E-CRM egg
2. Balanced scorecard/My model
3. Customer journeys
4. Marketing mix – develop a detailed version of this. Problem – this is not user-centred – but
the E-CRM egg is.
Marketing mix Criteria

Product (customer needs and wants) Range of products
Online services/value proposition
Core product
Sales levels
Extended product offering
Branding
Price (cost) Differential pricing
Place (convenience) Representation on third-party sites
Co-branding and partnering arrangements
Promotion (communications) Attraction efficiency (visitor volume, share of
search)
Reach
Process (customer experience) Conversion efficiency to online marketing
outcomes – engagement, conversion to
opportunity and conversion of opportunity to
sales
Retention efficiency
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People (customer experience) Response quality – e-mail, co-browsing and

chat
Physical evidence (customer experience) Usability
Accessibility
Performance
Availability
10. How can the Internet be used to support the different stages of the buying process?
Essentially, each of the stages in the buying process can have different communication
objectives that can be addressed by various online and web-based communication techniques
(see Figure 2.14, page 81). Online communications can help move potential customers from
unawareness through the purchase and then facilitate after-sales support.
1. Competition is intensified when trading online. Discuss the extent to which you feel
this assertion is true.
The number of companies trading online in Europe and the rest of the world has increased
significantly during the past two decades. Consequently, competition on a global basis has
increased. However, different trading sectors and different parts of the world have had varying
experiences. Therefore, it should be possible to take a different sector and use these as a basis
for a comparative discussion. For example, supermarkets and fast fashion retailers, publishers of
newspapers and academic books, marketing communication agencies and web developers. In
each of these cases, there is a case to be argued that competition has intensified as a result of
online trading. But there is also scope to look at the offline parts of the industries as a
comparator.
2. Internet access varies from country to country; explain the key factors which might
influence different levels of access.
Analysis of the marketing environment (macro and micro) can provide insights into why
adoption levels vary. Technological infrastructure, culture, politics and other macro-
environmental influences can be explored in order to identify which factors are most influential.
This discussion could be used as a case-based desk research exercise, whereby students are
allocated a country and given the task of finding out more about the environmental factors that
influence adoption rates. The research findings can then be considered evaluated and discussed
in a plenary session.
3. Discuss how an Internet entrepreneur might identify market opportunities online.
This topic can form the basis of a very open discussion, which enables students to think freely
about the core aspects of starting a business online. From this chapter, the following topics
should help focus on some of the founding principles of online businesses: market analysis,
target market, channel structures and business models.
26
4. Perform a demand analysis for e-commerce services for a product sector and
geographical market of your choice.
This involves assessing the ratio Access: Influence: buy in a country using data sources
referenced at the end of this chapter. The weblogs for analyst Hitwise are particularly useful if
you search on a particularly creative site.
5. Perform competitor benchmarking for online services for an organisation of your

choice.
Discussion should focus on the need to distinguish between benchmarking criteria that define
the company’s marketing performance in the industry and those that are specific to web
marketing; for example:
• Financial performance. Available from About Us, Investor relations and electronic copies
of company reports. This information is also available from intermediary sites such as
finance information or share dealing sites such as Interactive Trader International
(www.iii.com) or Bloomberg (www.bloomberg.com) for major quoted companies.
• Marketplace performance. Market share and sales trends and significantly the proportion of
sales achieved through the Internet. This may not be available directly on the website, but
may need to use other online sources. For example, a new entrant to European aviation,
easyJet (www.easyjet.com), has achieved over two-thirds of its sales via the website and
competitors need to respond to this.
• Business and revenue models. Do these differ from other marketplace players?
• Marketing communication 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 basis? Beyond the competitors’ sites, 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?
• Implementation of services. These are the practical features of site design that are described
in Chapter 7 such as aesthetics, ease of use, personalisation, navigation and speed.
A variety of alternative approaches to benchmarking are possible. Different frameworks can be

identified to help group criteria for benchmarking. Alternatives include the following:
1. E-CRM egg
2. Balanced scorecard/My model
3. Customer journeys.
27
1. The relationship between intermediaries, suppliers and resellers is crucial to every

business. Discuss how the Internet potentially changes supply-chain relationships?
Online suppliers and intermediaries are increasingly important to businesses wishing to access
expanding online markets. This question is looking for student to explore issues that arise as a
result of trading online. For example, web service solution providers are arguably a new
intermediary in the supply chain, and bring unique expertise and knowledge, but in doing so
there are also new and different types of hurdles to overcome when developing trading
relationships. There are also a range of different types of intermediaries to consider.
2. Trading online increasingly involves developing multichannel strategies. Give three

examples of potential channel conflicts that might arise from using the Internet.
Illustrate your answer with examples.
Channel conflicts occur when services traditionally performed by channel partners, such as
agents, resellers, distributors or retailers, are taken back by the manufacturer/supplier. This
process is disintermediation or ‘cutting out the middleman’. Conflicts may be caused by the
following:
• Direct sales (leading to reduced revenue for channel partner).
• Direct customer service (leading to less utilisation of channel staff).
• Direct delivery (leading to less utilisation of warehousing/distribution infrastructure and

staff).
• Conflicts may also occur if channel partners are offering better services/offers to the
manufacturer.
3. Discuss the extent to which it is possible to operate as a virtual organisation.
A virtual organisation uses information and communication technology, to allow it to operate

without clearly defined physical boundaries between different functions. It provides customised
services by outsourcing production and other functions to third parties. The virtual organisations
enable new products and services to be developed by a range of collaborators. The Internet
provides a low-cost mechanism to help collaborators share necessary information through e-mail,
discussion databases and project management tools made available via document databases.
4. Using examples, suggest different ways that a company might use the Internet to build
market share.
There are two ways in which this question could be answered. This could be clarified by
referring to the location at which e-commerce occurs. The options then are as follows:
• Vendor-side e-commerce (company sells from own website).
• Supplier-side e-commerce (to sell, the company has to visit its customer’s site to respond to
requests for tender).
28
• Intermediary-side e-commerce (brokers who bring buyers and sellers together and offer
e-commerce facilities on-site).
Representation could also be considered in terms of these services at different site locations:
• Corporate website for investor and partner information.
• Main open consumer website with transactional e-commerce facilities.
• Microsites or extranets within main sites with restricted access to key customers.
• Versions of the corporate or main site in overseas markets.
• Intranet website for internal marketing communications.
• Microsites within partner sites such as intermediaries and distributors.
5. There are numerous variables that can be used to identify potential target segments
that can be used for marketing strategy and planning. Suggest which variables have
the most potential for identifying online consumers and justify your answer with
examples.
A good answer to this question could provide an outline of a particular target market in order to
give the answer a context. If consumer markets were chosen, then demographic, psychographic
and behavioural variables could be used to provide insight into how to select and respond to the
needs and wants of the target group. In addition, an answer should also explore which of these
variables are likely to deliver the greatest potential. Once again, this could be achieved by
contextualising the answer and using specific examples for real world companies.
6. Discuss the extent to which Porter’s five forces model is applicable for analysing
competition in digital markets.
This question requires application of Porter’s model to the online trading environment, but is
also looking for areas which are not covered by the model. In this chapter, pages 89–91,
Porter’s model is considered in the online context. This section is followed by a discussion of
other ways of competitor benchmarking, which should also be included in the answer.
7. Compare the physical and digital trading environments by identifying the similarities
and differences.
This question can focus on different elements of marketing planning, for example, strategic,
operations and/or implementation. Answers could focus on one or all of these elements and then
discuss them in the context of the question.
8. Imagine that you are about to set up a business online. Explain how you would go
about investigating the micro-environment as part of your situation analysis.
To answer this question, students should consider each of the groups of actors in the micro-
environment, for example, suppliers, customers, intermediaries and competitors. Then, discuss
the tools of analysis discussed in this chapter (and later chapters if a more in-depth answer is
required).
29
9. Suggest how you would advise a business that has a website which is not delivering a
benefit to the company.
This question focuses on website analysis and performance evaluation. Depending on the level
of technical information required to be included, the question could be used at an introductory
or advance level.
30
CHAPTER 3
The online macro-environment
A review of the constraints and opportunities placed on Internet marketing by the broader
environment, for example, legal and political.
Notes on using slides for the third chapter in lectures – lesson plan
Introduce through learning outcomes and questions for marketers (Slides 3.2 and 3.3).
1. Reminder of key issues in managing the macro-environment (Slides 3.4–3.6). You can
also refer to SLEPT or PEST at this point. Ask students which are the most important
aspects of the macro-environment that require management. In an e-commerce
environment, we are mainly referring to constraints such as privacy ethics and law. But
these can represent an opportunity, if executed well compared to competitors.
Also review Slide 3.5 to discuss the frequency with which macro and then micro factors
need to be reviewed.
2. Technology issues. Slides 3.7–3.12. Discuss the development of Internet technology, how
the Internet works, internal and external Internet structures, digital security and emerging
technologies.
3. Legal and ethical issues. Focusing on privacy legislation. Slides 3.13–3.17. In-depth
coverage in the text should be introduced in lectures. Slide 3.16 gives an interpretation of
the PECR law, which is the most important law for controlling spam and cookie privacy.
Activities
Activity 3.1: Environmental forces: the importance of the mobile web
Context
Many years have been heralded as ‘The year of the mobile’ where adoption of the mobile web
access and mobile commerce would grow rapidly. As long ago as 1999–2000, this was the case,
yet, if companies had invested in mobile facilities, then it is unlikely they would have seen a
return from their investment. Today, use of mobile devices and smartphones is more
commonplace, so it is important for companies to consider how they can use these technologies
within their marketing. This activity reviews the demand for popularity of mobile experiences in
your country.
31
Activity
Use publicly available data to assess the importance of consumer access to mobile devices for
different types of businesses. Determine the following for your country:
• The percentage of consumers accessing websites through mobile (divided into tablet and
smartphone users and for different demographics).
• The percentage of visits buying online via smartphones and tablets (ideally broken down
into different product categories).
• The proportion of readers who access their e-mail and social media via a smartphone.
• The relative popularity of mobile sites compared with mobile apps for different purposes.
Activity 3.2: Using video for digital marketing
Purpose
To consider the scope for using video for digital marketing communications.
Activity
1 Identify all the different types of sites that incorporate video. You should include broad
video hosting sites like YouTube or Vimeo, but also specialist sites.
2 Identify different ways in which businesses can use video to engage audiences to support
awareness building and conversion and plot them on Figure 3.3. This is a blank version of
the Content Marketing Matrix which is described in Chapter 8 as a method of reviewing
different types of content.
Identify applications for the different focus of sites defined in Chapter 1, i.e. Transactional
e-commerce site (e.g. retail, travel, financial services), relationship building site, brand site
and publisher.
Activity 3.3: Security breaches
Purpose
To reflect on the significance of security risks to the digital trading environment.
Activity:
Choose two of the top ten security risks listed in Digital marketing insight 3.3 on pages 131–133
and find an example reported in the news, for example, leading high street banks have been
exposed to phishing attacks when spoof e-mails are sent inviting recipients to provide the
banking details and security passwords, which will then allow the cyber-criminals to gain access
to bank accounts.
32
An alternative resource is to access the annual Information Security Breaches survey from PwC
by searching it at www.pwc.co.uk.
Make a list of the threats the security risk posed to the business in your examples, for instance,
loss of trade, disruption to services and business closure.
Finally, assess the severity and long-term impact of these incidents.
Answer
Digital marketing insight 3.3 on pages 131–133 lists the top ten security risks for website users.
This activity is asking students to consider the implications of these risks to different types of
businesses and the potential impact.
The impact of each of the security risks will vary depending on the business sector the website
is operating in and the types of customers a business serves.
Activity 3.4: Assessing new technology options
Purpose
To illustrate the process for reviewing the relevance of new technology options.
Activity
You work for an FMCG (fast-moving consumer goods) brand and are attending an industry
trade show where you see a presentation about the next-generation (4G) mobile phones, which
are due to launch in your country in one year’s time. You need to decide whether your
organisation adopts the new phone and, if so, when. Complete the following:
1. How would you assess the significance of this new technology?
2. Summarise the proposition of the new access devices for both consumers and your
organisation.
3. What recommendations would you make about when to adopt and which services to
offer?
Answer
These questions encourage consideration of the features of new 4G technology in a particular

context. The answers should reflect the context and identify how features of the new phone
might be used to deliver benefits to the organisation, for example, faster and more interactive
communications and greater number of applications. Answers should look at the potential of 4G
phones from both the customer and corporate perspective and conclude with recommendations.
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Activity 3.5: Security, censorship on the web and the Electronic Frontier
Foundation
Purpose
To consider the right to privacy and freedom of information argument.
Activity
Visit The Virtual Revolution and hear what John Perry Barlow, former member of the rock band
The Grateful Dead and founding member of the Electronic Frontier Foundation, has to say
about the freedom of information:
www.bbc.co.uk/blogs/legacy/digitalrevolution/2009/10/rushes-sequences-john-perry-ba.shtml
Now reflect on whether you agree with John’s views on the freedom of information and then
suggest what implications his views have for digital marketing.
Discussion from John Perry Barlow’s interview available at: http://www.bbc.co.uk/blogs/

digitalrevolution/2009/10/rushes-sequences-john-perry-ba.shtml
John Perry Barlow of the Electronic Frontier Foundation, an organisation created to champion
humanity’s right to know, have strong views about the Internet. It is the Foundation’s vision that
‘anybody anywhere may have access to anything’. It also aim to ensure the Internet maintains a
platform so that ‘anybody who’s got something to say can say it and anybody who wants to
listen can hear’. For John, one of the most important things is giving humans access to
knowledge so they are able to use it to explore all humanity, and he believes that free access to
all information will mean eventually everyone will find their own truth.
John’s idea of allowing individuals to find out the ‘truth’ for themselves has profound
implications for marketing communications.
This is an interesting interview that introduces controversial ideas about access to, and control
of, information. The interview should be used to stimulate a lively discussion about freedom of
information and the web.
Activity 3.6: Privacy and social media
Purpose
To consider the implications of government intervention in privacy online.
Activity
Visit the RUSI website and read about how a new electronic listening station has triggered
controversy as government authorities demand more cooperation from Internet companies.
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Question
After reading the article at

www.rusi.org/anaysis/cvommentary/ref:C545CB576FOA7D/#.VLu5nOesV8E, discuss the
extent to which you agree with the statement ‘privacy is not an absolute right’
(Pritchard 2014).
Exercises
1. Summarise the key elements of the macro-environment that should be scanned by an

e-commerce manager.
The most important elements are as follows:
• Legal. For updates on e-commerce legislation, see Marketing Law (www.marketinglaw.co.uk).
• Social. Ethical issues can be assessed through articles in the general press, for example, The
Guardian’s online channel (www.guardian.co.uk/online).
• Economic. Government statistical sites such as www.statistics.gov.uk can be used to

monitor this.
2. Give an example of how each of the macro-environment forces may directly drive the
content and services provided by a website.
• Social. Localised content for different cultures.
• Legal. Privacy statement.
• Economic. Funding and awards may be possible from governmental sources.
• Political. Funding and awards may be possible from governmental sources.
• Technological. The incorporation of personalisation.
3. What actions should e-commerce managers take to safeguard consumer privacy and
security?
Privacy statements should explain the actions taken to the customers. Firewalls should be
maintained to minimise the risk of unauthorised access to customer data. Data should be backed
up such that it cannot be deleted. The relevant data protection act in the country should be
followed.
4. Give three examples of techniques websites can use to protect the users’ privacy.
Privacy protection is achieved through protecting the users’ data as follows:
• Firewalls
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• Backing up data
• Login/password.
5. How do governments attempt to control the adoption of the Internet and to what
extent does this impact on the democracy of information?
Governments attempt to control the use of the Internet through policies to promote its use and
through monitoring messages through ISPs and through lobbying groups that control the
Internet.
See pages 123–125; 144–147.
6. Suggest approaches to managing the rapid change of technological innovation.
• Frequent review of new opportunities.
• Achieving balance between adopting all new technologies and conservative non-adoption.
• Careful selection of technologies that will achieve competitive advantage.
1. You recently started a job as e-commerce manager for a bank. Produce a checklist of
all the different legal issues that you need to check for compliance on the existing
website of the bank.
Suggested approaches are as follows:
• Data protection legislation – use the eight principles.
• Privacy law including use of cookies and e-mail for direct marketing.
• Distance selling law.
• Specialist industry bodies for legislation, for example, Financial Service Authority.
Students should be asked to refer to their local government data protection/privacy information
site such as www.informationcommissioner.gov.uk to ensure coverage of all data protection and
privacy (e-mail, cookies) actions.
2. How should the e-commerce manager monitor and respond to technological

innovation?
• Best to base around the concept of diffusion of innovation.
• Contrast between the risks and benefits of the earlier adopter and late majority adopter.
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• Give examples of technologies that have generated hype, but have not delivered, for
example, WAP.
3. Benchmark different approaches to achieving and reassuring customers about their

privacy and security using three or four examples for a retail sector such as travel,
books, toys or clothing.
• This is not a formal essay question. It is a web activity to visit the sites of different players
to review their privacy and security statements for differences and emphasis attached to
them.
• Include reference to certification bodies.
4. Select a new Internet-access technology (such as phone, kiosks or TV) that has been
introduced in the last two years and assess whether it will become a significant method
of access.
• Determine current levels of access.
• Evaluate how well it meets the criteria of a successful access technology (the web) in terms
of cost, speed and ease of use.
1. Summarise the macro-environment variables a company needs to monitor when

operating an e-commerce site.
These are referred to as the STEP or SLEPT factors in this chapter:
• Social. Social trends in levels of access and what is acceptable ethical use.
• Legal. Legal constraints.
• Economic. Changes to economy affecting viability of service.
• Political. Government incentives or restrictions.
• Technological. New technologies to enhance service.
2. Discuss the potential significance of economic influences on the development of digital

marketing initiatives.
Economic disruption, recession and growth have a significant effect on all businesses. However,
digital technology has given entrepreneurs the information and tools they need to be able to
anticipate change and identify opportunities. Furthermore, the digital economy has paved the
way for new types of information-based products, which the world’s best performing companies
are taking advantage of.
37
This question seeks to explore how the digital world is responding to the old world order of
economics. There are many examples of digital companies that have turned over the old models
and yet become very successful, for example, Google – a company that has given away its core
product for free in return for information based on users’ behaviour. The sophistication of the
answer for this question is largely dependent on the level at which it is set.
3. Explain the purpose of environmental scanning in an e-commerce context.
Environmental scanning and analysis is the process of continuously monitoring the environment
and events and responding accordingly. It involves scanning the micro-environment including
competitor activity and customer demand. Its purpose is to ensure that the company is compliant
with the latest laws and innovations.
4. Give three examples of how websites can use techniques to protect the user’s privacy.
• Cookies linked to an individual machine.
• Firewalls to prevent unauthorised access to databases.
• Access control through user names and passwords.
5. Explain the significance of the diffusion–adoption concept to the adoption of new

technologies to:
(a) Consumers purchasing using technological innovations
Managers should review the percentage of user base that can use/access their site using a
particular technology, for example, Flash plug in.
(b) Businesses deploying technological innovations
Managers need to review the competitive advantage through early adoption of an innovation.
6. What action should an e-commerce manager take to ensure compliance of their site
with ethical and legal standards?
Review data protection requirements in different countries.
Case Study 3: Zopa launches a new lending model
Question
Imagine you are a member of the team at the investors reviewing the future viability of the
Zopa business. On which criteria would you assess the future potential of the business and
the returns on your investment, based on Zopa’s position in the marketplace and its
internal capabilities?
Students should be given guidance on the extent to which you require an analytic answer based
on a detailed revenue model or a consideration of the strategic issues.
38
If a detailed revenue model is required, then some additional information will be necessary or
students will need to state their assumptions. The relevant section in Chapter 2 that students can
be asked to refer is ‘Demand analysis and conversion modelling’ on understanding customers.
Essentially, this question is about revenue models and costs, so it requires the students to
consider total costs of driving visitors to the site and converting them to sale in comparison with
revenue sources. Profitability will also be dependent on the long-term capability of the company
to gain revenue customers.
Students should mention these elements of a conversion-based revenue model, including the
following:
• Total market size for these products based on the size of existing loans market. Subset of
market that would meet Zopa’s lending criteria.
• Cost of customer acquisition – this is a competitive market and it may be difficult to attract
visitors to the site, for example, using search engine marketing or offline advertising.
• Cost of servicing sales – to what extent are phone contacts needed to facilitate sales?
• Conversion rate from visitor to lead to sale.
• Average revenue earned from each new borrower, which is based on ‘charging borrowers 1
per cent of their loan as a fee, and from commission on any repayment protection insurance
that the borrower selects’.
• Lifetime value from customers based on attrition rates – will borrowers continue to use
Zopa or will they use it as a one-off?
• Flexibility on revenue model – for example, after launch, Zopa has gained additional
revenue from lenders.
The section in Chapter 8 on ‘Conversion marketing objectives’ also covers many of these
concepts.
From a strategic perspective, the issues that students should consider are as follows:
• Proportion of total loans market that this service will appeal to.
• Proportion of savings and investments market this model will appeal to. It is a lot of effort
compared to other savings and investments methods for a limited differential. As a result, it
will only appeal to a limited number of investors.
• Will the number of lenders balance the number of borrowers dependent on the appeal of the
proposition as noted above?
• Business model scalability – can it be applied in other countries and to other financial
products or beyond?
• Technology costs and scalability.
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Part 2
Digital marketing strategy development
40
CHAPTER 4
Digital marketing strategy
An introduction to stages involved in developing a digital marketing plan.
Notes on using slides for fourth chapter in lectures – lesson

plan
1. What is a digital marketing strategy? Slide 4.4. The slide introduces the essence of a digital
marketing strategy.
2. Digital marketing strategy essentials. Slides 4.5–4.7. Consider the essential components for
developing a digital marketing strategy.
3. Situation review. Slides 4.8–4.9. Explore how to plan and structure a digital marketing
strategy. Figure 4.3 on page 189 sets out the SOSTAC planning framework. Students should
be aware of all elements of this model.
4. Analysis and goal setting. Discuss the types of benefits and objectives on Slides 4.10–4.18.
Useful to review in groups/pairs for examples of the five site types introduced in Chapter 1.
5. Strategy Decision 1: Market and product development. Slides 4.19 and 4.20. Illustrate this
with respect to the growth of a company such as easyJet or Smile.
6. Strategy Decision 2: Business and revenue model strategies. Slide 4.21. It is covered at the
end of Chapter 2.
7. Strategy Decision 3: Target market strategy. Slides 4.22–4.26. Show common targeting
options – relate to a company like Dell, Tesco.com or Euroffice.
8. Strategy Decision 4: Positioning and differentiation strategy. Including the marketing mix.
Alternative positionings are shown in Slides 4.27 and 4.28. An online value proposition
example is shown in Slide 4.28.
9. Strategy Decision 5 and 6: Consumer engagements and social media strategy and multi-
channel distribution strategy. Slide 4.29 shows the strategic options a company may pursue
in relation to channel significance. Slide 4.30 is a flow chart to determine the significance of
Internet to a business.
10. Decision 7: Multichannel communications strategy. Slide 4.31 shows the influences on
consumer channel decisions. A channel coverage map is shown in Slide 4.32.
11. Decision 8: Online communications mix and budget. This is covered in more detail in
Chapter 8.
41
12. Decision 9: Organisational capabilities. (7S). Alternative forms of structure and

responsibilities for e-commerce are shown in Slides 4.33–4.35.
Activities
Activity 4.1: Benefits of digital-marketing planning
Business commentators suggest that to survive it is vital to have a ‘strong digital footprint’
(Forbes, 2014). Furthermore, without a digital marketing strategy new business, brand exposure
and revenues can all be significantly affected.
Purpose
To consider the barriers and benefits to the adoption of digital marketing planning.
Activity
Imagine you are a marketing manager responsible for the development of your organisation’s
digital marketing strategy. Using an organisation you are familiar with, outline the barriers and
potential benefits of digital marketing planning.
Answer
This activity should elicit a list of barriers and benefits of digital marketing planning. Here are
some suggestions:
Barriers might include the following:
• Lack of resources to access multiple integrated media and agencies.
• Issues associated with managing relationship across a number of agencies.
• Issues associated with achieving consistency across media and messages.
• Difficulties associated with building relationships with existing and new media agencies.
• Lack of staff buy-in.
• Poor management and control.
Benefits might include the following:
• Better coordinated and more coherent message.
• Extended reach to wider target audiences.
• Stronger brand messages.
• More effective marketing planning.
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Activity 4.2: Situation analysis for an e-commerce operation
Purpose
To introduce the different types of Internet marketing analyse required as part of the situation
review.
Activity
You are a new e-commerce manager in an organisation that has operated a B2B e-commerce
presence for two years in all the major European countries. The organisation sells office
equipment and has had an established mail-order catalogue operation for 25 years. The UK,
Germany, France and Italy each have their own localised content.
List the e-commerce-related questions you would ask of your new colleagues and the research
you would commission under these headings:
• Internal analysis.
• External analysis (micro-economic factors).
• External analysis (macro-economic factors).
Answer
• Internal analysis
Should refer to current stage of adoption, key performance indicators such as unique
visitors, leads, sales and return on investment, web traffic analysis, staffing, budget for e-
commerce and outsourcing. See the performance measurement frameworks in Chapter 9.
• External analysis (micro-economic factors)

Reach of website of competitors. Online marketing mix compared to competitors (see
Chapter 5). Customer demand for services.
• External analysis (macro-economic factors)

SLEPT or STEP factors; in particular, legal and political constraints.
Activity 4.3: Strategic insight or analysis paralysis?
Purpose
Figure 4.5 shows the range of tools available to review and improve audience engagement
compared to competitors and intermediaries. The tools are structured around how they relate to
the Smart Insights Race Planning framework. This activity reviews how these tools can be
deployed effectively for a more agile, emergent approach to digital marketing.
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Questions
1. To understand the range of tools available, identify one or two tools in each category
that you believe are most important to inform action.
2. How important do you think these tools are to informing strategic decisions?
3. Given your answer to 2, what are the implications for the timing of reviewing digital
strategy?
Activity 4.4: Assessing the significance of digital channels
Purpose
To illustrate the issues involved with assessing the suitability of the Internet for e-commerce.
Activity
For each of the products and services in Table 4.3, assess the suitability of the Internet for
delivery of the product or service and position it on the grid in Figure 4.10 with justification.
Make estimates in Table 4.3 for the direct and indirect online revenue contribution in five and
ten years’ time for different products in your country. Choose specific products within each
category shown.
Answer
The first step is to source an estimate for the current time or estimate this. Future estimates can
be compiled through assessing the balance of increasing consumer demand from online
channels compared to traditional channels.
Activity 4.5: Online value proposition
Visit the websites of the following companies and, in one or two sentences each, summarise
their Internet value proposition. You should also explain how they use the content of the website
to indicate their value proposition to customers.
• Tektronix (www.tek.com)
• AO.com (www.ao.com)
• Drowned in Sound (www.drownedinsound.com)
• Harrods (www.harrods.com)
• Guinness (www.guinness.com)
Places to evaluate the OVP are on the home page, About Us and where the company is asking
the visitor to sign up to an e-mail newsletter as is the case with a resource centre (e.g. MyTek on
www.tektronix.com).
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Exercises
1. What is meant by the ‘Internet contribution’, and what is its relevance to strategy?
An assessment of the extent to which the Internet contributes to sales is a key measure of the
importance of the Internet to a company. It is a key measure used to control strategy since
companies can:
• use it to assess the current situation (their own percentage contribution) and that of their
competitors;
• use it to set future targets given the constraints of their marketplace and
• use it to measure whether targets are achieved.
2. What is the role of monitoring in the strategic planning process?
Monitoring of visits to the site and marketing outcomes is part of the process since it indicates
whether strategic objectives have been achieved. How this can occur is discussed more in
Chapter 9.
3. Summarise the main tangible and intangible business benefits of the Internet to a
company.
Refer to the section on potential business benefits within strategic goal setting, specifically
Table 4.4. The key benefits can be summarised as follows:
• Tangible: customer acquisition (new sales).
• Tangible: customer retention (incremental sales).
• Tangible: cost reduction.
• Intangible: image enhancement (corporate and brand).
4. What is the purpose of a digital marketing audit? What should it involve?
The purpose is to assess the current marketing environment, internal and external. In particular,
market research must answer how effectively competitors are using the medium and how
customers are using it. The audit also considers use within the current company customer base.
5. What does a company need in order to be able to state clearly in the mission statement
its strategic position relative to the Internet?
Essentially, the relative significance of the Internet as a mechanism for delivering customer
service.
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6. What are the market and product positioning opportunities offered by the Internet?
Refer Figure 4.10. The matrix can be applied for the Internet to identify whether it will be used
to:
• promote/sell existing products to existing customers/markets (a common application);
• promote/sell existing products to new customers/markets, that is, sectors or

geographically (may readily open new international markets for products that can be
delivered and serviced remotely) and
• promote/sell new products to existing or new customers/markets (new products give the
best opportunities for exploiting the new medium).
7. What are the distribution channel options for a manufacturing company?
Direct sales (disintermediation) through traditional distributors (wholesalers and retailers) and
through new online intermediaries (reintermediation).
1. Discuss the frequency with which an Internet marketing strategy should be updated
for a company to remain competitive.
This question is intended to highlight the impact of the dynamism of the Internet. It is not
referred to directly in the chapter, or in existing literature, but should encourage the student to
think about the following characteristics of the marketplace, which suggest that five-year
marketing plans or even one-year marketing plans are probably inappropriate:
• Rapid growth in access levels of customer base in different countries may affect feasibility/
demand for Internet services.
• Speed at which new entrants can enter market.
• Speed at which Internet can change their online services in terms of price and features.
• Changes in distribution channel/marketplace, for example, advent of business portals and

auction mechanism for purchasing.
• Introduction of new tax/export legislation.
These highlight the need for careful monitoring of the marketplace and rapid response on a
monthly basis. Porter’s five competitive forces can be used as a framework.
2. ‘Setting long-term strategic objectives for a website is unrealistic since the rate of
change in the marketplace is so rapid’. Discuss.
This question requires discussion of similar issues to Question 1 in the previous text.
46
3. Explain the essential elements of a digital marketing strategy.
The framework presented in this chapter uses the elements of a classic strategic marketing plan,
namely:
• Goal setting (develop Internet marketing strategy).
• Situation review (develop Internet marketing strategy).
• Strategy formulation (develop Internet marketing strategy).
• Resource allocation and monitoring (define Internet marketing plan and monitor).
For an answer to this question, one can review each area as it is presented in Chapter 4, noting
specific requirements for the Internet, that is, the role of the Internet contribution in goal setting
and the promotion/communications elements.
4. Summarise the role of strategy tools and models in formulating a company’s strategic
approach to the Internet.
This question gives the opportunity to apply traditional models, such as the strategic marketing
planning framework, portfolio analysis and competitive forces in an online context.
1. How might a retail business use the Internet to develop an effective digital marketing
strategy?
Refer to the section on strategy formulation on pages 208–236. The strategy planning model
should be put into a retail context with special attention being paid to have the retailer create a
competitive advantage.
Key stages to discuss are products and services, business models, positioning and
differentiation, targeting and segmentation, multichannel distribution, online communications
and organisational capabilities.
2. Discuss the extent to which Porter’s five forces model can help to identify sources of
competition online.
Students could be asked to give examples as below, refer Chapter 2, pages 88–93.
• Threat of new entrants. For example: ASOS.com, webuyanycar.com
• Threat of substitute products and services. MP3 music versus CD. Disintermediation.
• Bargaining power of customers. Use of intermediaries such as gocompare.com and

moneysupermarket.com that enable price comparisons.
• Power of suppliers. The relevance depends on the industry. But the Internet has made it
easier for smaller companies to be able to engage in e-commerce via the web.
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• Extent of rivalry between competitors. Increased rivalry since price comparison is more
readily possible and new products, services and ways of selling or business models will
rapidly occur using the Internet.
3. Which factors will affect whether the Internet has primarily a complementary effect
or a replacement effect on a company?
Kumar (1999) suggests:
• customer access to the Internet (high = replacement);
• the Internet can offer a better value proposition than other media (leads to replacement);
• the product can be delivered over the Internet (leads to replacement) and
• the product can be standardised and user does not usually need to view to purchase (leads to
replacement).
4. Describe different stages in the sophistication of development of a website, giving

examples of the services provided at each stage.
Refer Quelch and Klein (1996) model for services offered at different stages for a start-up or
existing company or could be based on six levels of sophistication given at the start of the text
from:
• Level 0. No website.
• Level 1. Company places an entry in a website listing company names such as

www.yell.co.uk to make people searching the web aware of the existence of a company or
its products. There is no website at this stage.
• Level 2. Simple static website (brochureware).
• Level 3. Simple interactive site.
• Level 4. Interactive site supporting transactions with users.
• Level 5. Fully interactive site providing relationship marketing with individual customers
and facilitating the full range of marketing functions.
5. Briefly explain the purpose and activities involved in an external audit conducted as
part of the development of a digital marketing strategy.
The external audit should consider the state of the market in terms of customers and
competitors. Pertinent factors for the Internet include:
• the size of the market, in terms of potential customers who have access to the Internet;
• the type of marketplace (are customers purchasing through price comparison services?) and
• how the market share varies across different countries and for different products and
services.
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The way competitors of a company use the Internet medium should also be assessed. This
should include:
• how competitors make use of intermediaries on the Internet and for fulfilment and
• how the channel of competitors makes use of the Internet.
It should also include reference to the economic, political, fiscal, legal, social, cultural and
technological factors usually referred to by SLEPT or STEP.
6. Which factors would a financial services sector company consider when assessing the
suitability of its product for Internet sales?
Students should refer to the ES test characteristics of de Kare-Silver.
1. Product characteristics. Does the product need to be physically tried or touched before it is
bought? (Can it be standardised?)
2. Familiarity and confidence. Considers the degree the consumer recognises and trusts the
product and brand.
3. Consumer attributes. These shape the buyer’s behaviour – are they amenable to online
purchases with respect to access to the technology, skills available and whether they no
longer wish to shop for a product in a traditional retail environment?
7. Explain what is meant by the online value proposition, and give two examples of the
value proposition for websites with which you are familiar.
The IVP is a unique feature or offer of the site for a customer; it may be based on existing
product differentiation based on quality or product features or cost. Ideally, the Internet website
should have an additional value proposition to further differentiate the company’s products or
services. It can be defined in terms of some elements of the 7Ps.
Companies such as Amazon do this well stating they are ‘the world’s largest’ or ‘rapid delivery’
or ‘up to 40 per cent discounts’.
Case Study 4: Tesco online development strategy supports

global expansion
Question
Based on the case study and your own research, discuss where you think Tesco should
focus to ensure it can continue to achieve success online and protect market share.
The strategic decisions covered in this chapter provide a useful framework for summarising the
strategic approaches adopted by Tesco.com.
• Decision 1: Market and product development strategies. Tesco has used the Internet to
extend its market into new product markets such as financial services, white goods and
DVD rental. While these are promoted through the store, the web provides a wider choice of
49
products, more detailed information about products and a method of purchase. The Internet
can also support entry into new geographical markets.
• Decision 2: Business and revenue model strategies. New revenue sources are available
through extending the product range online as explained above, and also with new digital
revenue streams such as those for music downloads and e-Diets. Tesco also supports
advertising on its site of related product such as financial services.
• Decision 3: Target market strategy.Tesco.com has a broad market of customer types, so it is

less relevant for them to use online to selectively target these with communications.
However, the article explains how Tesco has used the web and e-mail channel to target
more closely through targeting different lifecycle groups – these are customers who are
grouped according to their level of adoption of online service. Tesco also uses the web to
target specific requirements such as diets and financial services through search engine
marketing.
• Decision 4: Positioning and differentiation strategy (including the marketing mix).Tesco

offers some unique online promotions and lower online prices for selected products such as
financial services, which could attract a percentage discount when purchased online. It
appears not to use the service elements of the mix for positioning beyond the slogan ‘You
Shop, We Drop’. But attention has been paid to improving the customer experience through
usability activities and reduction of download times.
The marketing mix, which is covered in Chapter 5, is also suitable for assessing some of the
tactical elements of Tesco.com strategy.
• Product
• Price
• Place
• Promotion
• Process, people and physical evidence.
• Decision 5: Multichannel distribution strategy. This is straightforward. Tesco.com has

taken the decision to distribute Internet orders via stores unlike some rivals such as Ocado
(www.ocado.com) who have setup distribution channels.
• Decision 6: Multichannel communications strategy. This is not referred to in the article –

this describes the mix between online and offline communications tools for driving visitors
to the site. Offline communications in store and through direct mail are clearly important for
attracting visitors to the site.
• Decision 7: Online communications mix and budget. Again, this is not mentioned, although
the importance of e-mail marketing for customer communications is apparent.
• Decision 8: Organisational capabilities (7S). Tesco has achieved focus online by creating a
separate ‘Tesco.com’ brand and a separate division headed by Wade Gery.
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CHAPTER 5
The impact of digital media and technology on

the marketing mix
A review of opportunities that the Internet provides for varying the marketing mix.
Notes on using slides for the fifth chapter in lectures – lesson

plan
Introduction to the marketing mix. Introduce through Slides 5.4–5.8. Figure 5.1 presents a
summary of the elements of the marketing mix and their relevance to the Internet.
1. Product. Introduce through Slide 5.7, looking at some examples of implications for core
product (Slide 5.8) and extended product (Slide 5.9). Examples are given in Slides 5.13 and
5.14. Methods for marketing research are featured in Slide 5.10. Slide 5.11 shows the long
tail, which shows the diversity of customer behaviour in selecting products.
2. The Internet and branding. Introduction to brands (Slides 5.12–5.14).
3. Price. Implications (Slides 5.15–5.23 of pricing policies and strategies for online products
and services.
4. Place. (i) Place of purchase (Slide 5.24 considers ‘place’ in virtual market places); Evans
and Wurster model (Slide 5.26); (ii) new channel structures (Slide 5.27 – Figures in Chapter
2); (iii) channel conflicts (Slide 5.28) and (iv) virtual organisations (Slides 5.29 and 5.30).
5. Promotion. This is not covered at length in this chapter, since it is the main topic of
Chapters 8 and 9 (Slides 5.31–5.34).
6. People, process and physical evidence. People, process and physical evidence are particularly
important for service delivery. Options for supplementing people (Slide 5.35). Process for
managing inbound enquiries (Slides 5.36–5.37). See also Mini Case Study 5.3 on page 289.
Activities
Activity 5.1: How can digital media and technology be used to vary the
marketing mix?
Purpose
An activity which highlights the scope for applying digital technology as a strategic marketing
tool.
51
Activity
Review Figure 5.1 and select two opportunities that give potential for varying the marketing
mix. For each opportunity, suggest how each of the elements of the mix (Figure 5.1):
• provides new opportunities for varying the mix;
• gives rise to possible negative implications (threats) for each opportunity and
• creates opportunities to use the mix to develop relationships.
Suggested answers
Product
There are many alternatives for varying the product when a company is developing its online
strategy. These often arise as a need to differentiate the product offering to help distinguish the
offer from that of customers. These questions might include the following:
• How do we differentiate? How can we make our online presence different from that of our
competitors?
• How do we migrate a brand online? Do we use a brand variant? (See separate article on
companion website.)
• Do we become a portal or ISP?
• Do we offer an extranet for key customers? What are the facilities?
• Do we offer personalised services that help build relationships with customers?
• Are there any other features of the extended product that we can charge a premium for? For
example, some online booksellers charge for a gift-wrapping service.
Price
The advent of price-comparison engines has increased price competition and companies will
need to develop pricing strategies that are flexible enough to compete in the marketplace, but
are still sufficient to achieve profitability in the channel. Online booksellers may decide to offer
a discount of 50 per cent on the top 25 best-selling books in each category, but only a 20 per
cent discount on less-popular books.
Place
The main issue is, if and when, to offer online sales or e-commerce facilities on the website.
This will be dependent on the nature of the project and projections of the resultant sales.
Some companies think of the website as the only place for online sales, but this is an
oversimplification. Companies may well make sales from their own website, but sales could
also occur on distributor websites, at neutral intermediaries, or even be procured on a
52
customer’s website. The strategy must define its online representation – which of these are
accommodated and how to avoid conflicts between the different channels.
Promotion
There are two main issues for promotion for the Internet channel, and both concern the
emphasis that is placed on promotion. These are as follows:
• Investment in promotion compared to site creation. Since there is often a fixed budget for
site creation, maintenance and promotion, the strategy should give guidance to ensure that
there is a sensible balance and that the promotion of the site is not underfunded.
• Investment in online promotion techniques in comparison to offline promotion. Again, a

balance must be struck between the different techniques. First, a company must be
registered with general information portals (search engines and directories such as Google,
Bing) that direct traffic to the site. Payment to an external company may result in more
effective promotion. The previous point is widely recognised, but less understood is the
need to develop a network of links from other sites to your own (referring sites). A greater
number of links may prove to be more significant in generating traffic to your site than
listing in search engines.
Activity 5.2: How to develop a new brand name
Purpose
To illustrate how non-words (those not recognised in everyday language) can be used as brand
names.
Activity
Visit the brand name generator at

http://business-name-generators.com/generator.php?gen=brand-name-generator, and then
generate new brand names which you feel have potential as online brands. Evaluate your choice
using the following criteria:
1. Easy to pronounce Y/N.
2. Easy to remember Y/N.
3. Intriguing word pattern (syllables and consonants) Y/N.
4. Has the potential to attract attention.
5. Not close to existing known words Y/N.
6. Creates a feeling of trust Y/N.
7. Has an ‘air’ of professionalism Y/N.
53
Once you have a name which you feel has potential to be successful (more than 5 Ys), suggest
some products which could fit with the name.
To answer, use the questions listed 1–7 to create a grid and then text the brand names you’ve
generated, for example:
Example of a Pronunciations Memorable Intriguing Non- Possible products

brand name patterns existing
word
Zoomlax Y Y Y Y Traffic App; software;
X-tough Y/N N Y Y Technically
enhanced clothing
Donair Y N N Y Air conditioning; low
cost Asia Minor
airline
Activity 5.3: Assessing price ranges on the Internet
Purpose
To illustrate the concept of price transparency.
Activity
Visit a price-comparison site, for example, www.pricerunner.com; www.confused.com;

www.gocompare.com and then find the products below and examples of the best and worst
offers:
• insurance
• a personal loan
• a savings product.
This is a straightforward activity that illustrates price transparency through examining a range of
prices.
The interesting behaviour is that relatively few consumers use these comparison services. Instead,
they are satisfied, or decide, on the basis of brand preferences or incomplete information.
Activity 5.4: Place of purchase on the Internet
Purpose
To explore connections between physical and virtual locations.
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Activity
Imagine you are going to purchase a new second-hand car. Set out the stages in the process you
might go through from thinking about the car you might buy to finding a place to purchase your
car and then identifying the final car you might buy.
While you are going through this process, try to identify when you will be using the Internet
(virtual environment) and when you will be in the physical environment (e.g. visiting car
dealers).
This is a straightforward web activity which helps to consider the difference between how
we use the physical and virtual world as part of the buying process.
Exercises
1. Select the two most important changes introduced by the Internet for each of the 7Ps.
Possible examples include the following:
• Product – varying core product characteristics and extended product characteristics and
researching consumer needs for new products.
• Price – prices have become dynamic and more flexible.
• Promotion – highly interactive and personalised.
• Place – virtual and connected worlds are merging through widespread adoption of
multichannel strategies.
• People, physical evidence, process – highly streamlined, faster.
2. What types of product are most amenable to changes to the core and extended
product?
Products most amenable to changes are digital products such as media and music or service
products such as information services, which can be delivered via the Internet.
3. Explain the implications of the Internet for Price.
The main implications of the Internet for Price are:
• increased price transparency and its implications on differential pricing;
• downward pressure on price (including commoditisation);
• new pricing approaches (including dynamic pricing and auctions) and
• alternative pricing structure or policies.
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4. What are the implications of the Internet for Place?
The main implications of the Internet for the place aspect of the mix are:
• place of purchase – vendor oriented, neutral or buyer oriented;
• new channel structures, for example, disintermediation, reintermediation and countermediation;
• channel conflicts with distributors or sales force;
• virtual organisations and
• extended trading hours 365 days/24/7.
1. ‘The marketing mix developed as part of annual planning is no longer a valid concept
in the Internet era’. Discuss.
This is clearly unacceptable since product features and benefits, prices and distribution are still
important!
But in support of the statement, the point can be made that the customer-oriented 4Cs
perspective on the marketing mix becomes more relevant:
• Customer needs and wants (from the product).
• Cost to the customer (price).
• Convenience (relative to place).
• Communication (promotion).
This highlights the importance of assessing customer needs through research, and the Internet is
a tool to achieve this. The increased availability of information about products through the
Internet tends to lead to commoditisation, so it can be argued that customers can compare the
mix for products more readily, thus making other factors such as the trust associated with a
brand more important. Customer relationship management, based on targeting, segmentation
and positioning, has become a more important element of annual planning in the Internet era.
2. Critically evaluate the impact of the Internet on the marketing mix for an industry
sector of your choice.
This is a straightforward answer assessing each element of the mix in the order it is presented in
the chapter.
3. Explain how the Internet has affected pricing policies.
This answer should illustrate options through digital products or services that have the most
options, for example, rental/subscription, pay per use and unlimited usage. A suitable
56
framework is that of Baker et al. (2000), which suggests that companies should use these three
factors to assist in pricing:
These three factors are (1) precision, (2) adaptability and (3) segmentation.
The implications on traditional pricing options presented by Bickerton et al. (2000) should also
be reviewed:
• Cost plus pricing.
• Target profit pricing.
• Competition-based pricing.
• Market-orientated pricing.
New pricing options: forward and reverse auctions can be discussed under the heading
adaptability. Also, alternative pricing structures and policies, which are emerging alongside
new digital products, for example, digital music, software and remote services.
4. Does ‘Place’ have any meaning for marketers in the global marketplace enabled by the
Internet?
Answer could begin by discussing the significance of distance in the movement and provision of
digital products and services. For example, companies like iYogi provide computer support and
technical service around the globe from a location in India. Digital products and services are
able to largely dispense with the logistical issues associated with the movement of physical
goods.
The answer can then discuss other key main areas, for example:
• Place of purchase.
• New channel structures.
• Channel conflicts.
• Virtual organisations.
• Multichannel strategies.
1. Describe three alternative locations for transactions for a B2B company on the
Internet.
• Buy-side (purchaser-oriented request for tender).
• Neutral intermediary.
• Vendor-oriented (sell-side).
57
2. Explain two applications of dynamic pricing on the Internet.
• Selling ‘distressed inventory’, for example, flight tickets, which must be used by a fixed
date.
• Price discovery by varying prices for different segments.
3. How does the Internet impact an organisation’s options for core and extended
(augmented) product?
The answer should stress that this depends on the nature of the product. The change is most
marked for digital products and services.
4. Briefly summarise the implications of the Internet on each of these elements of the
marketing mix:
a Product
b Price
c Place
d Promotion.
• Product: new digital products and value-adds.
• Price: price reduction and new pricing models.
• Place: new representation on intermediaries and direct selling.
• Promotion: integration of online and offline techniques.
5. Explain the reasons why the Internet could be expected to decrease prices online.
Price transparency through easier comparison of prices or through intermediaries. Also, reverse
auctions for B2B.
6. How can an organisation vary its promotional mix using the Internet?
New communication options include:
• search engine marketing;
• link building;
• banner advertising and sponsorship;
• PR;
• e-mail;
• affiliate marketing;
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• social media and
• buzz marketing.
Case Study 5: Spotify streaming develops new revenue models
Question
Assess how Spotify competes with traditional and online music providers by reviewing the
approaches it uses for different elements of the marketing mix.
Answer
Spotify is a music subscription service they operate in the challenging and complex music
industry. Digital platforms have mixed things up and opened up opportunities in the market
place.
According to the British Phonographic industry (BPI), music streaming continues to be a

booming business with over 14.8 billion music tracks being downloaded in 2014 in the UK
(which is double the number on the previous year). By 2019, predictions suggest the market for
digital music will be worth approaching 14 billion US dollars. So, for Spotify, there is market
growth to capitalise on. When developing its marketing communication strategy, Spotify has
clearly defined its positioning propositions.
Daniel Ek is the co-founder and CEO of Spotify, a music application, which was launched in
2008, from it base in Stockholm, Sweden. Spotify began to attract investment and began to
implement its marketing strategy.
Use of the marketing mix:
Product and price: Spotify was aiming to create a legal and safe digital environment for music
streaming and developed a revenue model which overcame the issues of music being free at the
point of consumption in order to satisfy customer needs.
This involved using two modes of access to the music (1) a fermium model – free advertising-
supported streaming service and (2) a premium subscription service, which offered access to
millions of music tracks, free from advertising. This revenue model successfully supports a
distinct value proposition, which encourages users to sign up to the service. By 2015, Spotify
had 15 million paying customers and 45 million free users. Recording artists receive payment
per streamed track.
Promotion: Spotify uses a range of interesting advertising formats:
• Audio Ad
• Display
• Homepage Takeover
• Branded Playlist
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• Video Takeover
• Advertiser Page.
Place is virtual and streaming music from online sources has many advantages such as instant
access to a global resource of music, opportunities to share music, search for new artists and
enjoy music on the go, anywhere in the world from a mobile device. This has quickly become a
very popular way to access music and which many millions of music lovers around the world
have been keen to adopt.
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CHAPTER 6
Relationship marketing using digital platforms
Techniques for achieving relationship marketing using the Internet.
Notes on using slides for the sixth chapter in lectures – lesson

plan
1. What is it and why is it important? Figure 6.1 (Zappos Slide 6.4) gives an example of how
customer service quality can support company growth. Figure 6.2 (Slide 6.5) shows how e-
CRM and social CRM span many marketing functions. The introductory interview shows
how social media provide a means of customer service redress for customers. After the
introduction of social media, there is a discussion on how online customer engagement is
important through the customer lifecycle. It is useful to mention the 4Is of customer
engagement from Forrester on page 320 at this point. Slides 6.8–6.11 give a more classic
view of CRM.
2. Approaches to CRM. Slide 6.12 outlines the 5Is concept of Peppers and Rogers (an
alternative 5Is to that covered earlier in the chapter). These can be illustrated in the context
of a retail website or a B2B organisation.
3. Permission marketing. Slide 6.13 outlines the main elements of this. Visit
www.permission.com for an example of this in practice. In the sixth edition, this concept is
also introduced in Chapter 1 along with content marketing with which it is closely related.
Slides 6.14–6.17 describe this further.
4. Mass customisation and personalisation. This is illustrated by Slides 6.18 and 6.19, which
can be used as a framework by companies to assess their current CRM (X1) and future
options (X3).
5. Customer satisfaction and loyalty. Useful to discuss with students what the drivers of
satisfaction and loyalty are (Slides 6.20–6.22). You can recommend referencing the Foresee
Results site (www.foreseeresults.com).
6. Techniques for assessing and managing customer activity and value. Slides which
illustrate different techniques for assessing value include Slides 6.23–6.29. This section
contains fairly advanced techniques such as LTV and RFM analysis, which are mainly
relevant for professionals or postgraduate students rather than undergraduate students.
61
Activities
Activity 6.1: Charity uses lifetime value modelling to assess returns from
new e-CRM system
A charity is considering implementing a new e-mail marketing system to increase donations

from its donors. The charity’s main role is as a relief agency, to reduce poverty through
providing aid, particularly to the regions that need it most. Currently, its only e-mail activity is a
monthly e-newsletter received by its 200,000 subscribers, which features its current campaigns
and appeals. It hopes to increase donations by using a more targeted approach, based on
previous customer behaviour. The e-mail system will integrate with the donor database which
contains information on customer profiles and previous donations.
The company is considering three solutions, which will cost between £50,000 and £100,000 in
the first year. In the charity, all such investments are assessed using lifetime value (LTV)
modelling.
Table 6.3 is a lifetime value model showing customer value derived from using the current
system and marketing activities.
Table 6.3 Lifetime value model for customer base for current system
Year 1 Year 2 Year 3 Year 4 Year 5
A Donors 100,000 50,000 27,500 16,500 10,725

B Retention 50% 55% 60% 65% 70%
C Donations £100 £120 £140 £160 £180
per annum
D Total £10,000,000 £6,000,000 £3,850,000 £2,640,000 £1,930,500
donations
E Net profit (at £2,000,000.0 £1,200,000.0 £770,000.0 £528,000.0 £386,100.0
20%
margin)
F Discount 1 0.86 0.7396 0.636 0.547
rate
G NPV £2,000,000.0 £1,032,000.0 £569,492.0 £335,808.0 £211,196.7
contribution
H Cumulative £2,000,000.0 £3,032,000.0 £3,601,492.0 £3,937,300.0 £4,148,496.7
NPV
contribution
I Lifetime £20.0 £30.3 £36.0 £39.4 £41.5
value at net
present
value
A Donors – this is the number of initial donors. It declines each year dependent on the
retention rate (row B).
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B Retention rate – in lifetime value modelling, this is usually found to increase year-on-year,
since customers who stay loyal are more likely to remain loyal.
C Donations per annum – likewise, the charity finds that the average contributions per year
increase through time within this group of customers.
D Total donations – calculated through multiplying the values in rows A and C.
E Net profit (at 20 per cent margin) – lifetime value (LTV) modelling is based on profit
contributed by this group of customers; row D is multiplied by 0.2.
F Discount rate – since the value of money held at a point in time will decrease due to
inflation, a discount rate is applied to calculate the value of future returns in terms of
current-day value.
G NPV contribution – this is the profitability after taking the discount factor into account to
give the net present value in future years. This is calculated by multiplying the value in row
E by row F.
H Cumulative NPV contribution – this adds the previous years’ NPV for each year.
I Lifetime value at net present value – this is a value per customer calculated by dividing row
H by the initial number of donors in Year 1.
Based on preliminary tests with improved targeting, it is estimated that with the new system,
retention rates will increase from 50 to 51 per cent in the first year, increasing by 5 per cent per
year as currently. It is estimated that in Year 1 donations per annum will increase from £100 per
annum to £120 per annum, increasing by £20 per year as currently.
Question
Using the example of the lifetime value for the current donor base with the current system,
calculate the lifetime value (LTV) with the new system.
Answer
Table 6.3 Lifetime value model for customer base for current system
Current
Donors 1,00,000 50,000 27,500 16,500 10,725
Retention 50% 55% 60% 65% 70%
Donations per £100 £120 £140 £160 £180
annum
Total £10,000,000 £6,000,000 £3,850,000 £2,640,000 £1,930,500
donations
Net profit £2,000,000.0 £1,200,000.0 £770,000.0 £528,000.0 £386,100.0
(at 20%
margin)
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Discount rate 1 0.86 0.7396 0.636 0.547

NPV £2,000,000.0 £1,032,000.0 £569,492.0 £335,808.0 £211,196.7
contribution
Cumulative £2,000,000.0 £3,032,000.0 £3,601,492.0 £3,937,300. £4,148,496.
NPV 0 7
contribution
Lifetime value £20.0 £30.3 £36.0 £39.4 £41.5
at net present
value
After system installed
Donors 1,00,000 51,000 28,560 17,422 11,498
Retention 51% 56% 61% 66% 71%
Donations per £102 £122 £142 £162 £182
annum
Total donations £10,200,000 £6,222,000 £4,055,520 £2,822,299 £2,092,683
Net profit £1,244,400.

£2,040,000.0 £811,104.0 £564,459.8 £418,536.5
(at 20% margin) 0
Discount rate 1 0.86 0.7396 0.636 0.547

NPV £1,070,184.
£2,040,000.0 £599,892.5 £358,996.5 £228,939.5
contribution 0
Cumulative
£3,110,184. £4,069,073. £4,298,012.
NPV £2,040,000.0 £3,710,076.5
0 0 5
contribution
Lifetime value £20.4 £31.1 £37.1 £40.7 £43.0
at net present
value
Increase in
NPV for new
system £40,000.0 £78,184.0 £108,584.5 £131,773.0 £149,515.8
Return on
investment at
£50K –20.0% 56.4% 117.2% 163.5% 199.0%
Return on
investment at
£100K –60.0% –21.8% 8.6% 31.8% 49.5%
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Exercises
1. Why are digital platforms so suitable for relationship marketing?
Digital platforms give a suitable method for collecting individual customer preferences and
delivering tailored information for each customer. This is based on the principles of permission
marketing and content marketing that are based on a value exchange. Digital media also lead to
amplification or ‘viral sharing’ of content. E-mail also provides a two-way method of
interaction between the company and customer.
2. Explain ‘personalisation’ in a digital marketing context.
Personalisation is the delivery of information that is specific to an individual or group of similar

individuals. This could be information about a specific product range or information for smaller
customers. It can be delivered through specific web pages, mobile apps or through personalised
e-mail. It can be based on ‘collaborative filtering’, where preferences of a group of customers
influence the content delivered. Predictive analytics is used to show the most relevant content to
influence future behaviour based on past behaviour.
3. What is meant by ‘customer profiling’?
The use of the website to find out the customer’s specific interests and characteristics is
‘customer profiling’. It can be used for market segmentation and tailoring of communications.
4. Explain the concept and benefits of the ‘sense and respond’ approach to customer
communications.
The concept is that online web marketers can track the past behaviours of customers to customise
communications to encourage future purchases. The benefits are that relevant, targeted
communications about products or services that the customer is interested in can be delivered at
a low cost by e-mail or web. There is also less media wastage where communications are paid
for when they are not relevant for the prospect.
5. How can customer concerns about privacy be responded to when conducting one-to-
one marketing using the Internet?
Customers should be reassured about the privacy of their data. The key is openness. Companies
should do the following:
• Send promotional e-mail or pass on details to other companies, only if they opt-in to this
arrangement.
• Allow customers to access their data if required (one of the provisions of the Data
Protection Act).
• Explain why information is collected and how it will benefit the customer.
• Clearly describe techniques such as cookies that affect privacy.
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6. What are the key decisions when creating or improving an online community?
These include the following:
• Location – own community or making use of other social networks.
• Value proposition – what type of content and interactions will the community support.
• Business alignment – how will the community support marketing across the customer
lifecycle?
• Moderation – how will activity of the community be maintained?
7. Explain the concept and applications of RFM analysis to different types of web
presence.
RFM is sometimes known as FRAC, which stands for Frequency, Recency, Amount (obviously
equivalent to monetary value) and Category (types of product purchased – not included within
RFM).
For retailing, which is the main application of RFM, customers can be targeted through
personalised e-mail or website messages according to their level of activity, for example, active
and dormant.
For other types of companies, RFM can be used to assess activity levels when customers log in
to a secure service such as an extranet.
8. Explain the concept and applications of lifetime analysis.
LTV is used to review the past or future value of different customer groups based on their
contribution to profit over time due to repeat purchases and advocacy, taking into account
changes in monetary value through time due to inflation. Its most important role is determining
how much can be invested in customer acquisition. It can also be used to assess return-on-
investment for marketing campaigns and development of new services aimed at increasing
customer loyalty (e.g. a loyalty programme or customer community).
1. Explain the factors that influence the development of multichannel customer contact
strategies.
This question is about Integrated Marketing Communications. Key issues with managing a call
centre are to balance the following:
• Customer service and customer satisfaction levels.
• Cost – lower for shorter contacts and contacts that don’t repeat.
• Conversion – may be higher for personal channels rather than web self-service.
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2. Explain how customer lifetime value analysis can be applied to improve all aspects of
the customer lifecycle.
This answer should start with an introduction to customer LTV analysis as outlined in Self-
assessment Question 8. It should then explain how it supports the techniques covered on
page 43.
3. Write a report summarising for a manager the necessary stages for transforming a
brochureware site to e-CRM and the benefits that can be expected.
Main suggested stages are as follows:
• Identify incentives for encouraging customer to start dialogue.
• Identify customer information needed to maintain relationship (e-mail, existing account

number).
• Identify personalised information that will be delivered to the customer.
• Decide on the correct tool to implement a one-to-one marketing.
• Prototype concept, possibly reviewing with end-user customers.
• Implement and test.
• Review effectiveness.
4. Explore the legal and ethical constraints on implementing relationship marketing

using the digital media.
Some of the issues that should be discussed are as follows:
• Privacy – use of opt-in, opt-out and cookies, selling of customer information to other
companies.
• Legal issues – involving use of data and e-mail under the United Kingdom and European
data protection laws.
• The neutrality of organisations offering to protect the consumer, such as TRUSTe and
Which? Web Trader – are they protecting the consumer or do they only provide a minimum
of ethical protection?
• If customers are encouraged to opt-in, such as on the www.tesco.com/grocery site, then

there will be more opportunities to communicate with them.
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1. Define and explain the scope and applications of e-CRM.
The scope of e-CRM can be summarised using different elements of the customer lifecycle, that
is, how it can support the activities of CRM shown in Figure 6.4. Alternatively, Figure 6.2 can
be used to show how it can support different business functions.
2. What characteristics of the Internet make it so conducive to the direct marketing

approach?
It is a low-cost method of contacting the customer (via e-mail). Detailed product information
can be delivered by the website. It is also relatively well targeted since a customer will often
give permission for contact to be made by e-mail by completing an online form on the website.
3. Suggest how an organisation could review its e-CRM capabilities.
Different perspectives that could be used for the review are as follows:
A. How does e-CRM support effectiveness and efficiency of the different elements of the
customer lifecycle shown in Figure 6.4?
B. How does e-CRM support customer satisfaction and loyalty?
C. How does e-CRM support increase in customer lifetime value and profitability?
4. Explain the benefits to businesses of creating ‘virtual communities’ and how such
communities can be used as part of relationship marketing.
A virtual community is a forum where web users can share information through facilities such
as chat rooms or discussion threads. Communities can be used to understand the customer’s
requirements from a company.
5. Suggest three measures a company can take to ensure that a customer’s privacy is not
infringed when conducting one-to-one marketing.
• The company should adopt the principle of permission marketing, where the customer’s
details are used for direct marketing only if the customer agrees to this.
• Provide opt-out on e-mail promotions for the customer to unsubscribe if they no longer
require the service.
• Data from one customer must not be divulged to another, for example, e-mail addresses
must not be mixed up.
6. Explain how digital media can support customer advocacy. Suggest how advocacy can
be proactively managed.
The response should cover practical techniques to encourage advocacy, that is:
A. Reviews and ratings of products by customers.
68
B. Social sharing of content or offers via social media or e-mail.
C. Classical member-get-member programmes rewarding existing customers for recruiting

new customers.
7. What is ‘web self-service’? What are the typical challenges in managing this?
A call-back system can be used on the website to achieve outbound telemarketing.
8. Explore opportunities and methods for personalising the interactive web session and
adding value for that individual customer.
Information about specific products and offers can be displayed. Interactive services could
involve customer support in product selection.
Case Study 6: Dell gets closer to its customers through its

social media strategy
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 e-mail communications.
Segmentation approaches include the following:
• Geographic – Dell has a separate site for each country.
• Demographic – Dell can target different audiences by advertising or affiliate marketing on

different site types.
• Business versus consumer – Dell’s 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).
• Lifecycle – first purchase or repeat purchase.
• Accessories and add-ons– have they been purchased?
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Part 3
Digital marketing: implementation and

practice
70
CHAPTER 7
Delivering the online customer experience
Achieving a satisfactory online experience for the visitor.
Notes on using slides for seventh chapter in lectures – lesson plan
1. Introduction. Figure 7.2 (Slide 7.4) gives the elements of an online customer brand
experience, which are covered in this chapter and the previous two chapters. Figure 7.3
(Slide 7.5) introduces the stages in website development, while Figure 7.4 (Slide 7.6) shows
an iterative approach based on reviewing results. Activity 7.1 (page 364) explores the
effects of lack of planning in relation to website design. Slide 7.7 (Table 7.1) relates to
activity 7.2 and looks at options for outsourcing. Slide 7.8 (Figure 7.5) sets out an example
of a website ‘design and build’ project timeline.
2. Initiation of a website project. Slide 7.9 introduces the key concepts of accessibility,
usability and persuasion. Persuasion is now delivered as a service typically described as
CRO. Mini Case Study 7.2 Ultralase (Slide 7.11) gives an example of a site that integrates
these three concepts.
3. Discovery or Analysis phase. This phase explores website requirements using different
research techniques and analyse to find out what a business needs. Slide 7.12 Mini Case
Study 7.3 explores how Thomas Cook (Netherlands) uses customer satisfaction ratings to
improve customer services. Slides 7.13–7.15 explore website architecture. Slide 7.14 gives
examples of design tools like wireframes.
4. Design phase. Slides 7.16–7.17 show different information types and examples of different
sites with different design approaches. Slide 7.16 gives different information processing
modes that can affect site impact. Slides 7.17–7.18 give examples of retail merchandising
examples.
5. Online retail merchandising. Slide 7.19 shows important factors for retail merchandising.
6. Service quality. Applying service quality frameworks to the web: Slide 7.21 highlights
different aspects of service quality described in more detail in the text. Slide 7.22 shows i-
to-i.com which relates to Case Study 7.
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Activities
Activity 7.1: What can go wrong without a planned approach to website

design?
Purpose
To indicate potential problems to customers, partners and staff if the design of an online
presence is not carefully planned.
Activity
Make a list of the potential problems related to a poorly planned design that may be faced by
customers of an online retailer. Base your answer on problems you have experienced on a
website that can be related to planning and implementation of site design.
The answers you identify should all define the requirements for a new website design including
relevant content, acceptable performance, rendering correctly in browser (desktop or mobile),
findable within search engines (search engine optimisation (SEO)).
To answer this question you should think back to your experience of purchasing a book or
other products online. Alternatively, visit a site and go through the different stages. Write
down your expectations of service quality from when you first arrive on the website until
the product is delivered. There should be around ten different stages.
Our expectations are informed by our peers and past experience. So when we shop online we
expect, or indeed demand, that the experience will be superior to traditional shopping. The list
of requirements is long.
1. Easy to find what you are looking for by searching or browsing.
2. Site easy to use, pages fast to download, with no bugs.
3. Price, product specification and availability information on site to be competitive and correct,
but we probably prefer great customer services to great prices – this is what will keep us loyal.
4. Specification of date, time and delivery to be possible.
5. E-mail notification when order placed and then dispatched.
6. Personal data remains personal, and privacy and security are not compromised.
7. Verification for high-value orders.
8. Delivery on time.
9. Returns policy enabling straightforward return or replacement.
10. Finally, quick online or offline answers to questions when the expectations above are not
met. This means traceability through databases, someone who knows your order status and
can solve your problems.
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Activity 7.2: Options for outsourcing different digital marketing activities
Purpose
To highlight the outsourcing available for digital marketing and to gain an appreciation of how
to choose suppliers.
Activity
A B2C company is trying to decide which of its e-business activities it should outsource.
Select a single supplier who you think can best deliver each of these services indicated in
Table 7.1. Justify your decision.
Answer
1. Strategy. Best conducted in-house since there is a detailed knowledge of the product and
market. However, if new media skills are not available, it may be better to consult a digital
media agency or management consultancy (preferable option shown).
2. Design. Call in the experts (the digital media agency) for whom this is their core skill.
3. Content development. Although the initial site may be outsourced, ideally to a digital media
agency, most companies bring this function in-house since it is key to communicate benefits
to customers.
4. Online promotion. Online promotion, for example, banner advertising and search engine
registration (Chapter 8) is frequently outsourced to a new media agency since in-house
skills are unlikely to exist and techniques for both of these aspects vary greatly.
5. Offline promotion. Offline promotion, for example, print advertising and direct marketing is
frequently outsourced to a traditional marketing agency.
6. Infrastructure. This is usually managed by a combination of the IT department and an ISP.
Table 7.1 Options for outsourcing different digital marketing activities
E-marketing Traditional Digital Traditional IT Management

function marketing marketing supplier consultants
agency agency
1 Strategy
2 Design
3 Content and
service
development
4 Online promotion
5 Offline promotion
6 Infrastructure
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Activity 7.3: Using CSS to separate site content from design
Visit CSS ZenGarden (www.csszengarden.com), which shows how CSS can be used to separate
content from how it is presented. You can select different designs to see how the new design
changes radically as different styles are applied. The example shown is a current ‘flat’ or
‘metro’ design (Figure 7.11).
No answer required. The BBC (www.bbc.co.uk) and Natural History Museum

(www.nhm.ac.uk) are examples of sites that use style sheets to enforce design standards while
giving different design styles for different site sections.
Exercises
1. Explain the term ‘prototyping’ in relation to website creation.
The production of a trial version to test the website concept either internally or preferably with a
customer.
2. What tasks should managers undertake during initiation of a website project?
Managers should ensure the following:
• Analysis/market research is conducted in a structured way – ask the audience.
• Domain name is registered ASAP.
• Review/assemble suitable suppliers and partners such as ISP, design agency.
• Suitable process for developing site involving a prototype and testing.
• Cost/benefit to set investment at right level.
• Buy in from senior management team and staff.
• Plan for online and offline promotion.
• Process for dealing with web-related enquiries or orders.
• Internet marketing plan (Chapter 4) highlighting all these issues.
3. What factors should be considered for domain name registration?
4. List the factors that determine website ‘flow’.
Navigation is dependent on the following:
• Consistency
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• Simplicity
• Context
• Interactivity.
In a word, ‘control’.
5. Which requirements are important to an effective website?
The requirements for an effective website are summarised by the WEBQUAL framework and
the elements of service quality shown in Table 7.4 including tangibles, reliability,
responsiveness, assurance and empathy.
6. List the options for assessing online service quality.
The elements of online service quality in Tables 7.4 and 7.5 are also relevant here.
7. Which issues should be considered when developing a content strategy?
These include the following:
• Content value for different target audiences – to attract visits and sharing.
• Content media, including repurposing of content for different needs.
• Content syndication, including outreach to promote.
• Content participation – encouraging interaction and sharing.
• Content access platform, including desktop and mobile access.
8. What are the factors that control the performance of a website?
These can be divided as follows:
• On website hardware. Speed of hard disk, amount of memory.
• On website software. Speed of web server.
• On website web page design. Overuse of graphics or frames can reduce download time for a
site.
• Link between a company and ISP or ISP and Internet.
• Congestion on the Internet itself.
1. Discuss the relative effectiveness of the different methods of assessing the customers’
needs from a website.
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• Based on internal staff’s knowledge of market needs.
• Questionnaires (without reference to site).
• Questionnaires (with reference to existing site or prototype).
• Focus groups (with reference to own site or competitor sites).
• Piloting (paper and real prototypes) with key accounts (useful for business-to-business
sites).
2. Select three websites of your choice and compare their design effectiveness. You
should describe design features such as navigation, structure and graphics.
Students should be advised to choose examples from within a single industry or a particular type
of website such as portals. Question can also be phrased to add marketing effectiveness.
3. Explain how strategy, analysis, design and implementation of a website should be

integrated through a prototyping approach. Describe the merits and problems of the
prototyping approach.
This is a straightforward question describing the project management of the creation of a

website. The beginning of Chapter 7 and Figure 7.4 provide a framework for this.
4. When designing the interactive services of a website what steps should the designer
take to provide a quality service to customers?
Students should consider different aspects of service quality identified by Parasuraman et al.
such as the following:
• Reliability. The ability to perform the service dependably and accurately.
• Responsiveness. A willingness to help customers and provide prompt service.
• Assurance. The knowledge and courtesy of employees and their ability to convey trust and
confidence.
• Tangibles. The physical appearance of facilities and communications.
• Empathy. Providing caring, individualised attention.
1. What is website prototyping? Give three benefits of this approach.
The production of a trial version to test the website concept either internally or preferably with a
customer.
Benefits are as follows:
1. Content should have better customer orientation.
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2. It reduces likelihood of errors.
3. It is a method of rapid creation of a site.
2. What requirements should be defined at the initiation phase of an online project?
See answer to Self-assessment exercise Question 2.
3. Which factors are important in selecting a web design agency?
A. Developing experiences that support business goals and are in keeping with brand.
B. Experience in market sector to achieve A.
C. Established, reproduceable process of iterative development to support changing

requirements during the process.
D. Capability for using analytics and customer insight to review and improve.
4. How can customer analysis be used to develop a more effective online service?
Focus groups can be used to comment on existing or prototype versions of websites of a

company or its competitors. They can be used to assess issues such as the following:
• Relevance of online information, value of online services.
• Integration with off-line products and services.
• Ease of use.
• Visual appeal.
• Impact on existing brand values.
Other forms of feedback listed at http://bit.ly/smartfeedback can also be used.
5. Name, and briefly explain, four characteristics of an online service that will govern
whether a user recommends it.
The content elements of an effective service include:
• Relevant (for a range of audience types).
• Accurate.
• Up-to-date.
• Delivered rapidly.
• Clear (laid-out clearly on screen).
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The experience element depends on the following:
Findability (browse and search modes).
Performance (site speed and availability).
6. What are the constraints on web service design depending on the technology platform
the service is accessed on?
• Different versions of web browsers may display information differently.
• Different screen resolutions (especially desktop and mobile) may display information
differently.
• Users may select different text size options.
• Users may decide to switch off graphical images.
• With digital TV and WAP phones becoming more common, these platforms must be
allowed for also.
Case Study 7: Refining the online customer experience

at i-to-i.com
Questions
1. Select one country that i-to-i operates in closest to the area where you live. Define a
persona based on their age and product needs and then identify the main customer
journeys that form the customer for this persona. Which routes through the site would
this user follow?
For example, a 17-year-old gap year student in Australia who is looking to teach in China.
Which browse and search navigation options would this site user follow to find relevant
products?
2. Review the range of engagement devices on the i-to-i website to engage the audience to
generate leads.
Engagement devices that are examples of content marketing to encourage signup include the
following:
• TEFL taster – questions and answers to gain an idea of the experience.
• Ebooks – advice on teaching TEFL.
• Brochure.
• Example courses.
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3. Identify key areas for improvement for i-to-i based on your use of the site.
Use a suitable framework such as WEBQUAL or RACE (Chapter 1) to review and make
recommendations.
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CHAPTER 8
Campaign planning for digital media
Recommendations on how to structure online elements of a marketing campaign to integrate

with offline campaign elements.
Notes on using slides for eighth chapter in lectures – lesson

plan
1. Introduction. Slides 8.4 and 8.5. Start by explaining in context of digital marketing tools
introduced in Figure 1.11 in Chapter 1. Main issues to consider as with all campaigns
covered in Slide 8.4.
2. Characteristics of interactive marketing communications. Slide 8.5 summarises key

differences between new media and traditional media. Slides 8.6–8.7 give examples of
companies that use some of these techniques within their online presence. Slides 8.8–8.10
show communication models to explain differences between traditional and new media.
Slides 8.11–8.12 show the comparison of the properties of different digital media.
3. Step 1. Goal setting and tracking. Slide 8.13 summarises key campaign metrics and Slide
8.14 places them into the context of a campaign example. Slide 8.15 gives a simplified
conversion model for goal setting. Slide 8.16 (Figure 8.10) shows different online
responses. Slide 8.17 shows an example of alternative response mechanisms.
4. Step 2. Campaign Insight. This involves research into target audiences and how they select
products and services. This is critical for campaign planning.
5. Step 3. Segmentation and targeting. Slide 8.18 (Table 8.3) shows a ‘range of targeting and
segmentation approaches for a digital campaign’. For further discussion, also see Chapters
2 and 4.
6. Step 4. Offer, message development and creative. Slide 8.19 gives an example of effective
online creative with prominent proposition and calls-to-action. The CODAR model (Slide
8.19) gives an example of how the creative may vary according to campaign objectives.
Slide 8.20 (Figure 8.14) shows the content marketing matrix, which is part of Activity 8.1.
7. Step 5. Budgeting and selecting the digital media mix. Slides 8.21–8.28 show different
model approaches for setting the mix.
8. Step 6. Integration into overall media schedule or plan. Slides 8.29 through 8.32 introduce
the principles of effective integrated marketing campaigns.
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Activities
Activity 8.1: Using the Content Marketing Matrix to audit and improve
content effectiveness
We recommend that the Content Marketing Matrix (Figure 8.14) as a key technique to review
current use of different content formats and to identify new types of content that could be useful
for a business.
The matrix is structured to help you think through the dimensions of different content based on
how an audience could find content valuable and what you’re trying to achieve as a business.
Activity
Complete this process to review a company’s use of different types of content to support
marketing:
1 Review current use of content within company through plotting different content types on
the grid.
2 Repeat this review for two to three competitors (direct or indirect) again plotting on the
grid.
3 Brainstorm future content types possible.
4 Define criteria for investing in content (e.g. generating reach, helping conversion, existing
customers).
5 Use your criteria from Step 4 to prioritise the two or three types of content needed to trial in
content campaigns.
Activity 8.2: A framework for selecting media
Coulter and Starkis (2005) identify these factors for media selection. We have added comments.
Quality
1 Attention-grabbing capability (Attention) – ability of an ad placed in this specific media to

‘grab the customer’s attention’ due to the nature of that media.
2 Stimulating emotions (Stimulation) – ability of an ad placed in this specific media to convey

emotional content and/or elicit emotional responses.
3 Information content and detail (Content) – ability of an ad placed in this specific media to
convey a large amount of information and/or product description.
4 Credibility/prestige/image (Credibility) – ability of a specific media to lend prestige to a

product through association (i.e. because that product is advertised within the media).
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5 Clutter – degree to which it is difficult for a product advertised within a specific media to
‘stand out’ due to the large number of competitive offerings/messages.
[Comment: We would stress the capability of the media to generate a response, which is
dependent on the combination of factors mentioned here that relate to brand awareness and
influence. For online media, certain media such as ‘pay-per-click’ search marketing tends to be
more responsive than media buys of ads on portals since there is less clutter and the relevance is
higher since the web user is searching.]
Time
1 Short lead time – degree to which an ad can be created and/or placed within a specific
media in a relatively short space of time.
2 Long exposure time – degree to which the communication recipient is able to examine the
advertising message within a specific media for an extended period of time.
[Comment: The ability to dynamically alter an ad during a campaign to select the best-
performing creative for each placement is particularly important online – for example,
optimising different creative executions of a display ad or a Google AdWords ad.]
Flexibility
1 Appeal to multiple senses (Appeal) – degree to which an ad placed within this specific
media can communicate via sight, sound, taste, touch and/or smell concurrently.
2 Personalisation – degree to which an advertising message placed within this specific media
can be customised in order to target a specific individual or group of individuals.
3 Interactivity – degree to which the customer can respond to information conveyed in an

advertisement placed within this specific media.
Coverage
1 Selectivity – degree to which an ad placed within this specific media is able to target a
specific group of people.
2 Pass-along audience (Pass along) – degree to which an ad placed within this specific media
is seen by those other than the original message recipient.
[Comment: This is the viral marketing effect.]
3 Frequency/Repeat exposure (Frequency) – degree to which any single ad placed within this
specific media may be seen by any one particular individual on more than one occasion.
[Comment: Online, this capability is available through behavioural targeting of display ads
where cookies can be used to serve ads to the same person and develop the message with each
new exposure if appropriate.]
4 Average media reach (Reach) – degree to which an ad placed within this specific media
reaches a relatively wide audience.
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Cost
1 Development/production cost (Development cost) – relative cost of developing or producing

an ad for this specific media.
2 Average media delivery cost (Delivery cost) – average cost-per-thousand associated with
this specific media.
[Comment: We should also add cost-per-response which is dependent on the click-through rate
for each media and placement.]
The relative importance of these characteristics and the investment in different digital media
will be dependent on the product and the type of campaign – whether it is direct-response-
orientated or brand-orientated – and the scale of the budget.
Activity 8.3: Creating a digital campaign budget
Purpose
To illustrate the type of budget created internally or by digital marketing agencies. Figure 8.21
shows an extract.
Activity
Download the spreadsheet from http://blog.davechaffey.com/spreadsheet to understand how the

different calculations relate to each other. Try changing the cost of media (blue cells) and
different click-through rates (blue cells) for which typical values are shown for a competitive
retail product. View the formulas to see how the calculations are made.
How would you make this model more accurate (i.e. how would you break down each digital
media channel further)?
Answer
1. Offline outcomes can be considered (e.g. phone calls).
2. The model is based on last-click attribution. It could be modelled across media.
3. Lifetime value could be considered rather than the value from first sale.
4. Digital media channels such as search marketing, online advertising and partners could be
broken down further to show particular types of sites or significant individual sites. This
may require some reference to relevant parts of Chapter 9.
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Exercises
1. Review the reasons why continuous marketing activity involving certain digital media
channels is preferable to more traditional burst or campaign-based activity.
Digital media give potential to reach audience members at the key point in buying cycle when
they are actively seeking and reviewing products. This reduces wastage familiar from traditional
media when ads are displayed when the audience is not receptive. This is particularly relevant
for these digital media channels:
• Search engine marketing. Can target audience dependent on searches they perform.
• E-mail marketing. Can follow up on-site visit and interest in product with e-mail campaign.
• Behavioural targeting through online advertising. Can follow up ads for those who have
clicked through.
2. Describe the unique characteristics of digital media in contrast to traditional media.
In this chapter, the differences referred to at the start of the chapter are as follows:
• From push to pull.
• From monologue to dialogue.
• From one-to-many to one-to-some and one-to-one.
• From one-to-many to many-to-many.
• From lean-back to lean-forward.
• Changes in nature of marketing communications.
• Increase in communication intermediaries.
3. Give example goals for an online acquisition campaign in terms of response rates or
engagement with creative, cost and overall campaign effectiveness.
Figure 8.6 provides a relevant example:
• Response rate. Click-through rate.
• Engagement with creative. Interaction rate, IR for online ads.
• Cost. Cost per click and cost per acquisition are the main measures.
• Overall. Cost per sale and number of leads or sales against target are the most important
measures.
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4. Review the options for targeting particular audience groups online with different
digital media.
Table 8.3 provides one approach to this answer. An alternative approach is to break down by
media channel:
• Paid search. According to keywords entered.
• Online advertising. According to demographic profile of sites used.
• E-mail marketing. All approaches in Table 8.3 are possible.
5. How should a company decide on the relative investment between digital media and
traditional media in a marketing campaign?
The answer should reference the difference in balance of investment between investment
according to campaign goals and type, that is, brand campaign and direct response campaign as
suggested by Figure 8.17. Offline investment in advertising will tend to be higher when
generating awareness.
For a direct response campaign, the cost-of-acquisition of customers influenced online and
offline should be considered.
Econometric modelling is another approach to assess relative investment mentioned in the text
that can be referenced.
6. What are the options for integrating different types of digital media channels with
traditional media?
Customer journeys should be controlled as they switch between traditional channels and digital
channels.
• Online to offline. Through prompting with phone numbers and providing chat options.
• Online to offline. Providing clear web addresses and value propositions encouraging visitors
to the site.
7. How can different forms of customer insight be used to inform campaign execution?
The main types of insight you should reference are as follows:
• Site audience reach (size of sites) and composition (including media consumption).
• Online buyer behaviour and preferences.
• Search behaviour.
• Personas can be developed to characterise particular types of audience.
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8. What are the issues that a marketer should consider when defining their offer and
message for an online campaign?
• Identification of primary offer and secondary offer.
• Reasons to click-through to website.
• Prominence of call-to-action within creative format.
1. Discuss Berthon et al.’s. (1998) suggestion that effective Internet promotion is similar
to a company exhibiting at an industry trade show attracting visitors to its stand.
Students should start by describing the analogy and then for each describe similarities and
differences, summing up overall.
• Attract to stand. Similarities: Difficult for customer to find relevant sites/stands since there
is limited information in a paper or electronic directory. Differences: Visual techniques can
be used to attract attention to stand-visitors when they come near. There is no analogy for
this on the web. Grouping with similar stands may help, and there is a web analogy to this.
• Engage and inform. In both cases, customers will have expectations about quality of service
and information needs, which must be met. If a stand, or site, is busy or they cannot find the
information they need, then customers may leave, never to return!
• Call-to-action. In both situations, it is preferable to collect information about a customer – a

business card, or filling in a paper/electronic form, but brand awareness may be developed
in both cases and this may be either positive or negative, according to the quality of service.
2. Select a company of your choice and assess the effectiveness of the integration between
their traditional communications, digital media channels and their website.
• Dell is a good example of a company that integrates its online and offline communications
well. If you search in a search engine for Dell ‘as advertised’, you will see separate
categories for how they integrate:
• Catalogue
• Television
• Magazines
• Newspapers
• Online.
3. Select a recent campaign from a charity and with reference to their website campaign
pages, identify how they should set campaign goals and review effectiveness.
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Students should be advised to select an appropriate framework(s) for reviewing effectiveness,

for example:
• 5Ss – Sell, Serve, Speak, Sell and Sizzle.
• Visitor volume, quality and cost measures (illustrated in Figure 8.8).
Different types of outcomes should be identified, for example:
• Donations.
• Visits to campaign pages.
• Visits to community pages.
4. How should companies decide on the granularity of targeting in digital media

campaigns? Select two digital media channels to illustrate your examples.
Granularity refers to the size of different customer grouping that is used for targeting. This will
vary according to the type of media that is used for targeting. For different media, different
targeting criteria should be described.
• Paid search. According to keywords entered.
• Online advertising. According to demographic profile of sites used by audience.
• E-mail marketing. All approaches in Table 8.3 are possible.
1. Outline the range of goals that should be used to define success criteria for an online
marketing campaign.
Students should select an appropriate framework(s) for goal setting, for example:
• 5Ss – Sell, Serve, Speak, Sell and Sizzle.
• Visitor volume, quality and cost measures (illustrated in Figure 8.8).
2. Using an example from a business-to-business company, describe the options available

for targeting an audience through an e-mail newsletter.
See Table 8.3. Issues to consider are as follows:
• Relationship with company – prospect or customer.
• Demographic segmentation, that is, company size, sector and individual members of buying
unit.
• Pyschographic profile of individual decision maker.
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• Value of company (current and future).
• Lifecycle stage.
• Behaviour – response to previous newsletters.
3. Explain why integration between online and traditional media will make a campaign
more effective overall.
Reference the characteristics of integrated marketing communications summarised by Pickton

and Broderick (2001) as the four Cs:
• Coherence. Different communications are logically connected.
• Consistency. Multiple messages support and reinforce, and are not contradictory.
• Continuity. Communications are connected and consistent through time.
• Complementary. Synergistic, or the sum of the parts is greater than the whole!
The CODAR framework can also be referenced. This shows that certain media may be more
effective for different campaign goals, that is, idea forming, relationship building, sales activation,
product experience and help.
4. Describe different options for testing the effectiveness of competing offers online.
Offer effectiveness online can be reviewed through the following:
1. Click-through rate to the offer from the pages it is mentioned shown by web analytics.
2. Amount of sharing of the offer through social media.
3. Redemption rates of offer.
4. AB or multivariate testing of offers (serving different offers to different people to see which
is most popular.
5. Which do you think are the three most important changes in campaign
communications introduced by the emergence of digital media channels?
The answer may reference the differences referred to at the start of the chapter as follows:
• From push to pull.
• From monologue to dialogue.
• From one-to-many to one-to-some and one-to-one.
• From one-to-many to many-to-many.
• From lean-back to lean-forward.
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• Changes in nature of marketing communications.
• Increase in communications intermediaries.
6. Which considerations would determine the suitability of incorporating a mobile ‘text-

to-win’ promotion into an offline campaign?
• Usage of mobile among audience.
• Anticipated response rate given offer.
• Fit with brand.
7. In which ways is the long tail concept relevant to campaign planning?
The Long Tail concept was introduced in Chapter 5 as part of the product element of the mix.
From a campaign perspective, it is relevant to the diversity of online customer behaviour which
has particular relevance for the following:
• Search engine marketing. Does paid search advertising or SEO target the campaign head or
tail?
• Online advertising and PR. Does this target the most popular sites in the head or the smaller
sites, which may be collectively important?
For each of these, it is a trade-off between the relative cost of targeting the head which tends to
be higher, but gives a greater reach and the tail which can be more resource intensive.
8. How should a confectionary brand assess the success of a campaign microsite in uplift
of branding metrics?
The branding metrics that are referenced in the chapter include the following:
• Brand awareness.
• Brand favourability.
• Purchase intent.
Case Study 8: A short history of Facebook
Note: Since the Facebook IPO in 2012, more information is available via the Facebook Investor
relations site, including annual reports.
Questions
1. As an investor in a social network such as Facebook, which financial and customer-

related metrics would you use to assess and benchmark the current business success
and future growth potential of the company?
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From comments in the case study, the main revenue model is ad-based advertising (CPC and
CPM). Facebook has said it will not sell customer data and there is no indication of affiliate-
related models.
Customer-related metrics are related to engagement, which indicates capability to sell ad space
– not simply users, but active returning users and the number of pages viewed per day. The
proportion of ad inventory sold is also important.
A basic answer will provide the following:
• Understanding of financial metrics – revenue, costs and growth.
• Clear framework of different metrics types – efficiency versus effectiveness.
• Audience engagement and satisfaction metrics such as those mentioned in the case.
A more competent answer will reference elements of profitability (e.g. ad revenue), alternative
models (e.g. subscription) (although clear data not sold), costs (e.g. R&D, development) and
operational costs of managing business (on a per active user basis).
2. Complete a situation analysis for Facebook focusing on an assessment of the main

business risks which could damage the future growth potential of the social network.
Typical risks are as follows:
• Ad revenue limited because of difficulty of engaging audience in ads.
• Major privacy problem as with Beacon.
• Intellectual Property Rights.
• Technical problems with scalability leading to performance problems and increased

technical costs.
• New entrant or alternative company offers superior experience – what is the likelihood of
this?
Students could be encouraged to create a SWOT analysis. The likely probability and impact of
each risk should also be reviewed.
3. For the main business risks to Facebook identified in your answer to Question 2,
suggest approaches the company could use to minimise these risks.
• Ad Revenue. Review different forms of advertising. Test with users and advertisers
• Privacy. Explain clearly at signup. Test changes to use of data with user-group of trusted
users. Explain reason for future changes clearly.
• Technical problems. Testing programme focusing on load testing.
• New entrants. Developing proposition to lock-in existing users, forming partnerships to

approach new audiences.
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CHAPTER 9
Marketing communications using digital media

channels
A review of the relevance and success factors for different online communications tools.
Notes on using slides for ninth chapter in lectures – lesson

plan
1. Introduction. Structured around six key digital media channels, see Table 9.1 (page 478).
Can ask students for their ideas or explanations for the main communication techniques for
digital marketing. Slide 9.4 (Figure 9.1) gives an example of how to balance a referrer mix.
Slide 9.5 (Figure 9.2) relates to Activity 9.1: how do consumers rate communications?
2. Search engine marketing and online PR. Slides 9.6 and 9.7 (and Figure 9.5 (Slide 9.7))
show the importance of search engines. Slides 9.8–9.9 consider search engine optimisation
and paid search. Slides 9.10–9.12 examine online PR. Figure 9.6 (Slide 9.13) is a summary
of the process for creating search engine listings. Slide 9.14 gives examples of AdWords
campaign structures.
3. Online PR. Example Slides 9.15 and 9.16 give examples of different e-PR.
4. Online partnerships. Slide 9.17 explains affiliate marketing and Slide 9.18 shows why and
how long it takes between visit and sale in different markets that needs to be considered by
affiliates and merchants.
5. Interactive advertising. Slide 9.19 shows an ad buying ecosystem. Slide 9.20 (Figure 9.16)
shows the behavioural ad targeting process.
6. E-mail marketing. Slide 9.21 gives examples of how e-mail marketing can influence sales.
Slide 9.22 compares use of advertising medium and market share of Internet searches. Slide
9.23 is a summary of the strengths and weaknesses of different communication tools.
Activities
Activity 9.1: How do consumers rate communications?
Figure 9.2 shows consumer ratings of different forms of advertising. Review the alternatives
and then discuss the implications for a marketer of using these communication channels.
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Answer
Marketers should consider the likely consumer response to different forms of advertising when
planning digital communication campaigns. Personal recommendations (known to an
individual) and consumer recommendations (unknown to an individual) carry more influence
than unsolicited adverts. The ratings in Figure 9.2 suggest that consumers like to have a sense
of control, trust and reliability to the forms of advertising they are engaged with. Digital adverts
(search, banner ads, social network ads and mobile ads) are likely to be the least effective.
Traditional media (TV ads, newspaper and editorial content) are more influential than digital
advertising and potentially, the most influential are those which an individual is personally in
control of (personal recommendations, reviews and e-mails). Therefore, if a marketer is
seeking to build a relationship with online consumers, they should pay attention to making
personal connections.
Activity 9.2: Selecting the best digital media channel mix techniques
Suggest the best mix of online (and offline) promotion techniques to build traffic for the
following situations:
1. Well-established B2C brand with high brand awareness.
2. Dot-com start-up.
3. Small business aiming to export.
4. Common B2C product, for example, household insurance.
5. Specialist B2B product.
Answer
1. For a well-established B2C brand, offline advertising through TV and print is still important
to generate awareness. For example, at the time of writing, Sky (www.bskyb.co.uk) spends
just 20 per cent of budget online and is an enthusiastic adopter of online techniques. Online
techniques such as search engine marketing (SEM) and online advertising are
commonplace.
2. Likely to be unable to afford offline media and so will use a combination of Search
Marketing, Online PR and Affiliate Marketing (e.g. the approach used by Zopa, which is the
case study in Chapter 3.)
3. Search engine marketing is most effective for targeting.
4. Again, SEM and affiliate marketing tend to have the most effective cost per acquisition.
Some display ad buying for awareness. E-mail marketing tends to be best used for retention
marketing, but could be used in this application – commonly used for loans. This requires
significant online investment to drive awareness.
5. Similar to Answer 3, with SEM, possibly with ads in targeted e-mail newsletters or on niche
sites.
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Exercises
1. Briefly explain and give examples of online promotion and offline promotion
techniques.
Online promotion techniques (Table 9.4, which shows types including those below):
• Search engine marketing (paid and natural).
• Link building campaigns – referring links from related sites are also important in building
traffic to a site.
• Display advertising – used to drive traffic to sites by placing adverts on specific interest
sites or displaying adverts when particular keywords are entered. When users click on an
advertisement (a click-through), they are taken to a website with further information.
Banner advertising can also be used for other purposes such as brand building or offering
incentives. Banner adverts are usually paid for according to the cost per 1,000 people
viewing the advert (CPM).
• Affiliate marketing with partners (cost per acquisition).
• Advertising in e-mail newsletters.
• Co-branding and sponsorship.
• Viral marketing and word-of-mouth marketing.
Offline promotion techniques: Promoting the website address and highlighting the value
proposition of the website in the following:
• Company stationery and promotional literature.
• Traditional media adverts in print, or on TV.
• Through PR.
The first and last tables in this chapter also help answer this question.
2. Explain the different types of payment models for banner advertising.
• Per exposure. Typically through advertisement impressions (CPM) or possibly through the
length of time, the user views an advertisement. May be per page, or for ‘run-of-site’.
• Per response. Payment only occurs according to the number of click-throughs that occur –
cost per click (CPC).
• Per action. This is payment according to a marketing outcome such as a download of a

product fact sheet, a new sales lead received when users fill in an online form giving their
name and address or an actual sale placed online – cost per action (CPA).
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3. Which factors are important in governing a successful online banner advertising

campaign?
• Targeting the correct location and timing for the audience.
• Suitable creativity including incentive to encourage click-through.
• Good follow-up when user arrives on a site through tailored landing pages.
4. How can a company promote itself through a search engine?
The company needs to register its web address at the search engine, if not already included in
the index (this typically happens automatically when other sites link to it). The two other
techniques are search engine optimisation (SEO) displaying ads in the natural listings (no cost
per click) and sponsored listings (payment on a cost per click basis).
5. Explain the value of social media marketing.
Social media marketing can provide recommendations about products or services from other
consumers. Research shows that web users look to independent recommendations as part of the
purchase process. Social networks also provide an amplification or viral effect where content
and offers are shared at zero cost. Social media marketing also has broader benefits such as
gaining feedback about online products and services. Can use RACE to explain this as follows:
• A. Reach. Amplification through viral effect of sharing.
• B. Act. Companies can share content and offers via social networks that will help generate
awareness and then generate leads.
• C. Convert. Reviews, recommendations and ratings can help encourage conversion.
• D. Engage. Long-term engagement through social updates and further amplification.
6. How can online PR help to promote a new product?
As with traditional media, media mentions in online general and specialist newspapers and
magazines can assist. Creating buzz through comments by influencers in blogs and social
networks could help build interest and discussion about a product. This is related to viral
marketing.
7. How should websites be promoted offline?
Offline promotion techniques are listed in the answers to Question 1.
8. What do you think the relative importance of these Internet-based advertising

techniques would be for an international chemical manufacturer?
(a) display advertising;
(b) paid search marketing and
(c) affiliate marketing.
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To answer this question, we need to consider whether the advertising is targeting new or
existing customers and the capability to reach a business audience. These media are typically
most effective for customer acquisition. The strengths should be assessed through Table 9.5.
(a) Display advertising. This generates awareness of supplier or services and could be used on
specialist portals used by target audience.
(b) Paid search marketing. This would have less wastage than (a) since ads can be controlled
such that they are only displayed when relevant searches are conducted.
(c) Affiliate marketing. Affiliate marketing is less relevant for B2B marketing of high-value
items than for low-cost consumer items, so is the least relevant of the three options.
1. How should companies evaluate the relevance and effectiveness of the digital media
channels discussed in this chapter to their organisation?
• Awareness – surveys showing increase in brand awareness and familiarity.
• Value – short-term sales and profit generated by channels assessed by analytics (same visit
and attributed to previous visits or impression).
• Costs – Cost per click and cost per acquisition.
2. Discuss the merits of the different models of paying for banner advertisements on the
Internet for both media owners and companies placing advertisements.
The models that should be considered are as follows:
• Per exposure. Typically through advertisement impressions (CPM) or possibly through the
length of time the user views an advert. May be per page, or for ‘run-of-site’.
• Per response. Payment only occurs according to the number of click-throughs that occur.
• Per action. This is payment according to a marketing outcome such as a download of a

product fact sheet, a new sales lead received when users fill in an online form giving their
name and address or an actual sale placed online.
This question could be extended to include co-branding in the comparison.
Method Benefit/problems to media owner Benefit/problems to client

Per exposure + Similar to existing model, revenue + Cost of advertising well
not dependent on creativity known
+ Best revenue generating model − Pay for click-throughs that
with least uncertainty do not result in sales
Per response − Dependent on creativity and timing + Pay for active responses
− Value of advertising cannot be − Cost will be less easy to
assessed in advance estimate
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Per action − As above, but even greater + Only pay for customers who
uncertainty – dependent on creativity buy, or register
and site − Costs unknown
There is evidence from the United States that with oversupply of banner advertising space, the
power of the client is increasing, and some large clients have been able to negotiate per
response, or per action deals.
3. Explain the factors that control the position of a company’s products and services in
the search engine results pages of a search engine such as Google.
This question requires separate treatment of ranking factors within the natural (on-page
optimisation, internal linking and external linking) and paid search results (maximum CPC bid
and quality score). These are summarised in Slides 9 and 10 accompanying this chapter.
4. Compare the effectiveness of different methods of online advertising including display

advertisements, paid search marketing and affiliate marketing.
The student should define effectiveness at the start of the question by referring to the ability of
the advertisement to inform, persuade, remind, build-brand or encourage action. These need to
be offset against the cost of placing the advert and the ease of finding a suitable online location
for its target audience.
See also Question 8 in the Self-assessment section.
1. Give three examples of digital media channels and briefly explain their
communications benefits.
See answer to Self-assessment Question 1.
2. Describe four different types of sites on which online display advertising for a car
manufacturer’s site could be placed.
• General (horizontal) portal, for example, Yahoo!
• General online media, for example, Online Telegraph or Wall Street Journal.
• Vertical portal/online magazine, for example, TopGear.
• Targeted demographic in online magazine, for example, investment portal for those with
high disposable income.
3. Click-through is one measure of the effectiveness of online advertising. Answer the

following:
(a) What is ‘click-through’?

Each time a user clicks on an advert to take him through to a destination site.
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(b) Which factors are important in determining the click-through rate of a banner
advertisement?
The important factors are creative incentives, where placed (which site), when placed and
where placed (on site).
(c) Is click-through a good measure of the effectiveness of online advertising?

This depends on whether the main purpose of advertising is direct response or brand
advertising. For direct response, click-through is a useful measure, but better measures are
based on the resulting marketing outcomes such as leads or sales. For brand advertising to
increase awareness of brands and products, this can be assessed through surveys on brand
preference using measures such as brand awareness, familiarity, favourability and purchase
intent.
4. What is meant by co-branding? Explain the significance of co-branding.
Co-branding is an arrangement between two or more companies, where they agree to jointly
display content and perform joint-promotion using brand logos or banner adverts. Its
significance is that it enables long-term relationships between complementary sites, which are
usually low-cost or reciprocal arrangements. It is a good method of providing relevant content
on a site without the cost of developing it.
5. What are ‘meta-tags’? How important are they in ensuring a website is listed in a
search engine?
Meta-tags are part of the HTML file, typed in by web page creators, which are read and
displayed by the browser. They are effectively hidden from users, but are used by search
engines when robots or spiders compile their index. They were formerly used to identify
relevant sites when users type in keywords into search engines; however, they are not the only
criteria since the number of times the keyword appears on copy and backlinks to a page has a
greater influence.
6. Name three alternative types of e-mail marketing that can be used for customer
acquisition.
Needs to distinguish between acquisition and retention.
Customer acquisition:
• Rented-list
• Co-branded e-mail
• Ad in third-party e-newsletter.
Customer retention:
• Newsletter
• Campaign e-blast
• Event-triggered e-mail.
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7. Briefly evaluate the strengths and weaknesses of affiliate marketing for a well-known
retailer.
Advantages:
• Can control costs through ‘pay per performance’ cost per acquisition model.
• Can reach wider audience through network of affiliates.
• Can target individual products through strengths of different affiliates.
• Can protect brand, for example, in search listings by displacing competitors.
Disadvantages:
• It may be paying for some customers who are already familiar with offering (e.g. have
previously responded to an advertisement but affiliate is the last click before sale).
• Some level of affiliate fraud has been reported.
• A poorly selected affiliate can damage a brand.
8. Which techniques can be used to promote a website in offline media?
See answer to Self-assessment Question 1.
Case Study 9: Innovation at Google
Question
1. Explain how Google generates revenue and exploits innovation in digital technology to
identify future revenue growth. You should also consider the risk factors for future
revenue generation.
Google’s revenue has traditionally been based predominantly on advertising, which is divided
into these models:
• Pay-per-click sponsored links within the Google Search Results (and partner search engines
such as AOL).
• Pay-per-click and CPM model within partner sites of the content network, which includes
third-party sites such as newspapers and social networks and Google’s own properties such
as YouTube. Increasingly, there is a move from text-sponsored links to dynamic display ads
and advertising such as those in YouTube.
Increasingly, revenue will be from Google Applications and associated storage deployed within
businesses as paid services (although basic services are often free). The Google Search
Appliance is a physical product sold to sites for providing their online search service.
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Risk factors for future advertising revenue include the following:
• Competition in bidding has traditionally driven up prices, but this could fall as companies
become more effective in optimising their investment through introducing wastage.
• Advertising revenue from the content network may fall as site owners explore other ad
models and click-through rates on Google Ads fall as familiarity increases.
• Ad-blocking (currently limited since not an automatic feature in browsers); click fraud.
• Quality of search results falls due to spamming, so Google users turn to a competitor with
an improved search service.
Further risk factors are available in the SEC filings referenced in the case study.
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CHAPTER 10
Evaluation and improvement of digital channel

performance
Issues involved with measuring and improving the results from a website and online marketing
communications.
Notes on using slides for tenth chapter in lectures – lesson

plan
Note that since the chapter was written, the Web Analytics Association has rebranded to the
Digital Analytics Association, it should be explained that ‘digital analytics’ will become the
term used more commonly.
1. Performance management. Slides 10.4–10.5 give a summary of the performance

measurement process and Slide 10.6 (Figure 10.3) shows diagnostic categories for digital
marketing measurement. Slide 10.7 shows attrition through the shopping basket process and
the need to improve step conversion. Slide 10.8 gives a multichannel performance
measurement framework. Slide 10.9 shows common measures for traffic volume. Slide
10.10 (Figure 10.7) shows a framework for the evaluation and management of social media
marketing.
Slide 10.11 is an example of measurement from a Hootsuite application for measuring
social media marketing.
Slides 10.12 and 10.13 give an example of how multivariate testing can be used to improve
the results from a website.
Slide 10.14 (Figure 10.11) shows different types of data within a performance management
system for Internet marketing. Slide 10.15 contrasts two different methods of web
measurement.
2. Maintenance and content management. Slide 10.16 summarises a content review and
update process. Slides 10.17–10.19 provide a summary of the website document-review
process.
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Activities
Activity 10.1: Selecting the right type of digital marketing dashboard
Purpose
To assess the benefits and disadvantages of dashboards and review some of the options
available.
Activity
1 Review some of the most commonly used dashboards by digital marketers to understand
their features and how they differentiate.
• Google analytics (which offers standard and customised dashboards)
• Geckoboard
• Kissmetrics
• Klipfolio
• Sproutsocial
• Tableau.
2 Identify different types of dashboard solutions.
3 List essential requirements of dashboard solutions which differentiate them from tools such
as Google Analytics.
4 What are the potential disadvantages of dashboard systems which require management?
Answer
Review of dashboards (1) and (2) and identify different solutions.
• Google analytics (which offers standard and customised dashboards) – analytics of touch
point in the digital space. Organisational insights.
• Geckoboard – visualisation tools for KPIs.
• Kissmetrics – behaviour analytics for driving customer growth; analytics to support

audience engagement and conversions.
• Klipfolio – business dashboard software. Cloud-based app for sharing real-time business
data.
• Sproutsocial – social media management software. Enables planning and publishing of

social media content from a single interface.
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• Tableau – data visualisation and collaboration tools.
• Digital marketing measurement should cover five diagnostic categories: business

contribution; marketing outcomes; customer satisfactions; customer behaviour and site
promotions.
• Business intelligence is important to even the smallest business, and dashboard solutions
promise a great deal in terms of data analysis. As technology has become cheaper and the
proliferation of dashboard solutions, the tools which used to be only accessed by senior
managers now tend to be available throughout a business. But it is important to understand
the functionality of a dashboard and what its results are showing. Widespread access to
dashboard data across a company can affect employee motivations (positively or
negatively). There are a number of other limitations of dashboards:
- Can negatively affect performance as the take time to use.
- Often difficult to use with non-intuitive user interfaces.
- Manual data inputs can be time consuming.
- Questionable usefulness of multiple metrics.
- User training required to interpret results accurately.
Activity 10.2: Optimising a content review process
Purpose
To assess how quality control and efficiency can be balanced for revisions to web content.
Activity
The extract below and Figure 10.14 illustrate a problem of updating encountered by this
company. How can they solve this problem?
Problem description
From the moment the brand manager identifies a need to update copy for their product the
update might happen as follows: brand manager writes the copy (half a day), one day later the
web manager reviews the copy. Three days later the marketing manager checks the copy, seven
days later the legal department checks the copy, two days later the revised copy is implemented
on the test site and two days later the brand manager reviews the test site. The next day the web
manager reviews the website, followed by updating and final review, before the copy is added
to the live website two days later and over a fortnight from when a relatively minor change to
the site was identified!
In one word, the answer is empowerment. The only way to increase the speed of the process is
to involve fewer staff and this means training them in the skills required for update.
In this case, the brand manager knows their product sector best, so they have to write the copy
and it is best if they have the sole responsibility for creation and review.
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An additional check by the legal department may be necessary for certain types of changes. Of
course, they need to set up different reviewing processes according to the size of the changes
made.
A workflow system built into the content management system will also help remind staff at the
right time to review content and then update the status of the document for publishing.
Exercises
1. Why are standards necessary for controlling website maintenance? What aspects of
the site do standards seek to control?
Content quality will be poor without standards. Poor quality may be manifested by:
• brand and corporate identity inconsistent across site or compared to other channels;
• inconsistent navigation making the site difficult to use;
• poor copy with grammatical errors and
• broken links.
2. Explain the difference between hits and page impressions. How are these measured?
Page impressions are a more valuable indication of activity on a site than hits, since hits are
dependent on the number of graphical items that are downloaded on each page. The values are
measured in a ‘transaction log file’ on the web server that is added to for every piece of
information that is downloaded.
3. How should social media marketing effectiveness be assessed?

A. Reach. Amplification through viral affect of sharing.
B. Act. Companies can share content and offers via social networks that will help generate
awareness and then generate leads.
C. Convert. Reviews, recommendations and ratings can help encourage conversion.
D. Engage. Long-term engagement through social updates and further amplification.
Figure 10.7 shows an alternative framework for reviewing social media marketing effectiveness
including strategic, commercial measures at the top to tactical measures at the bottom.
Social media effectiveness can be reviewed using the RACE framework, as discussed in the
previous chapter comments.
4. Why should content development be distributed through a large organisation?
By distributing content creation, the most knowledgeable people will be writing content.
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5. Describe the different types of measures that should be used to review and improve
digital marketing.
Students should cover different types of qualitative and quantitative measures:
• Awareness – surveys showing increase in brand awareness and familiarity.
• Value – short-term sales and profit generated by channels assessed by analytics (same visit
and attributed to previous visits or impression).
• Costs – cost per click and cost per acquisition.
6. Explain how a web log file analyser works. What are its limitations?
Software is used to review the ‘transaction log file’ on the web server that is added to every
piece of information that is downloaded. Limitations are that the review is a batch process rather
than a real-time collection.
7. Why is it useful to integrate the collection of online and offline metrics?
This enables both quantitative and qualitative market research.
1. ‘Corporate standards for a website’s format and update process are likely to stifle the
creative development of a site and reduce its value to customers’. Discuss.
This answer is best tackled by developing a list of the advantages and disadvantages of
centralised control.
Arguments for statement (for central control/corporate standards):
(a) Greater consistency on site; visual and brand identity; fewer errors.
(b) Uses same tools for editing content, which will ease maintenance.
(c) Provides a framework to develop a site.
(d) Ensures marketing effectiveness.
Against statement (against corporate standards):
(a) More resources required.
(b) Ownership of content helps motivate staff developing content.
(c) Possibly, better tailoring to targets from academic information and marketing information.
(d) Promotes innovation.
2. ‘Most companies collect data about digital marketing activities, but few derive much
value from it’. Discuss possible reasons for this assertion.
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This is best addressed by considering the success factors for use of digital analytics shown in
Figure 10.1.
• Measures – defining KPIs in a framework and customising to a business.
• Tools – selecting the right qualitative and quantitative tools.
• People – skills to use analytics.
• Process – process for using analytics within marketing activities.
3. You have been appointed as manager of a website for a car manufacturer and have
been asked to refine the existing online measurement an improvement programme.
Explain, in detail, the steps you would take to develop this programme.
This would use the framework given in the answer to Examination Question 7, but describe
each stage in more detail.
4. The first version of a website for a financial services company has been live for a year.
Originally, it was developed by a team of two people and was effectively ‘brochureware’.
The second version of the site is intended to contain more detailed information and will
involve contributions from 10 different product areas. You have been asked to define a
procedure for controlling updates to the site. Write a document detailing the update
procedure, which also explains the reasons for each control.
The document should refer to the stages of updating a document given below, and identify
responsibilities for each. Standards for the extent of review and testing will vary according to
what is defined as a minor update and what is defined as a major update.
• Write
• Review
• Correct
• Publish (to test environment)
• Test
• Publish.
1. Why are standards necessary to control the process of updating a website? Give three
examples of different aspects of a website that need to be controlled.
Refer to the answer for Self-assessment Question 1.
2. Explain the following terms concerning measurement of website effectiveness:
(a) Hits
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A hit is recorded for each graphic or block of text requested from a web server. It is not a
reliable measure for the number of people viewing a page.
(b) Page impressions

A page impression is a reliable measure denoting one person viewing one page.
(c) Referring pages

A listing of the previous sites that users visited, which link to the current site.
3. Measurement of websites concerns the recording of key events involving customers

using a website. Briefly explain five different types of events.
Events include:
• customer arrives on site (from referring page);
• a user viewing a page (page impression);
• a user visiting a site (site visit/user session);
• customer fills in online form to request information or to register with company;
• customer places order; and
• customer leaves site (exit page).
4. Describe and briefly explain the purpose of the different stages involved in updating
an existing document on a commercial website.
• Write
• Review
• Correct
• Publish (to test environment)
• Test
• Publish.
5. Outline different types of measures for reviewing the effectiveness of social media
marketing.
A test version is used to trial a site to identify and remove errors before it becomes live.
6. Give three reasons explaining why a website may have to integrate with existing
marketing information systems and databases within a company.
(a) For direct marketing – collecting customer information on the site needs to be added to the
customer database.
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(b) For e-commerce – customer account information needs to be linked to the purchase.
(c) For measurement of performance review – integrating information on customer visits with
marketing outcomes such as offline communications and sales.
7. You have been appointed as manager of a website and have been asked to develop a
metrics programme. Briefly explain the steps you would take to develop this
programme.
(a) Define objectives.
(b) Define measures.
(c) Define processes and responsibilities for collection and review.
(d) Select tools.
(e) Implement.
(f) Review.
8. If a customer can be persuaded to register his or her name and e-mail address with a
website, how can this be used for site measurement purposes?
These are fundamental marketing outcomes that need to be linked to customer information.
Case Study 10: Learning from Amazon’s culture of metrics
Questions
1. By referring to the case study, Amazon’s website for your country and your
experience of Amazon offline communications, evaluate how well Amazon
communicate their core proposition and promotional offers.
Worldwide, the proposition is summarised by the well-known brand identity, which features
‘from A to Z’ suggesting the range of products and breadth within categories. Amazon used to
refer to itself as the world’s largest bookstore.
In the article, the following sentence gives an idea of the different aspects of the custom value
proposition to watch out for.
‘It believes the main competitive factors in its market segments include ‘‘selection, price,
availability, convenience, information, discovery, brand recognition, personalised services,
accessibility, customer service, reliability, speed of fulfilment, ease of use and ability to adapt to
changing conditions, as well as our customers’ overall experience and trust in transactions with
us and facilitated by us on behalf of third-party sellers’.
Googling Amazon will show the different propositions explained in your region.
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For Amazon US, the proposition is clearest – the listing in Google states:
• Amazon.com Books: New and used textbooks, biographies, children’s online shopping from
the earth’s biggest selection of books, magazines, music, DVDs, videos, electronics,
computers, software, apparel and accessories, shoes and for books.
• Amazon.com: Online shopping for electronics, apparel, computers. Online shopping for
millions of new and used books on thousands of topics at everyday low prices.
The fulfilment proposition in different countries will revolve around the minimum order for free
delivery. Discounting for different books will also vary according to their popularity.
2. Using the case study, characterise Amazon’s approach to marketing communications.
With reference to the six categories of e-communication tools described in Figure 1.10,
probably the key techniques are search engine marketing, affiliate marketing and partnerships
with non-competitive transactional websites.
In this respect, Amazon’s approach is selective, using the techniques that are most cost-
effective. The other facet is the use of automation to enable specific advertising through the
natural and paid listings of the search engines. Testing of the best approach is important to make
these ads work.
The communications approach is described in the extract towards the end of the case starting:
‘Online advertising techniques include paid search marketing, interactive ads on portals, e-mail
campaigns and search engine optimisation’.
The affiliate and search engine marketing approaches are described earlier in the article.
3. Explain what distinguishes Amazon in its uses of technology for competitive

advantage.
The following are characteristic of Amazon’s use of technology:
• Use of in-house technologies for personalisation.
• Early adopter – rapid adoption of new techniques, for example, Jeff Bezos has talked about
the merits of Web 2.0.
• Extensive testing and optimisation to find the best approach.
• Avoidance of monolithic projects, with focused teams tackling specific issues.
• Infrastructure scalable to deal with rapidly increasing demand.
• Approaches developed for one product must be extensible to others.
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4. How does the Amazon ‘culture of metrics’ differ from that in other organisations from
your experience?
This question asks students to reflect on their own experiences. From the case, the following are
characteristic of Amazon’s approach:
• Passionately driven from the top by Jeff Bezos.
• Importance of metrics in governing all marketing and technology activities.
• Arguments about the best marketing approach are often based on tests rather than those who
shout the loudest: ‘Data trumps intuition’.
• Accepted wisdom is not accepted – tests are re-run since the approach may vary through
time.
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CHAPTER 11
Business-to-consumer digital marketing practice
An overview and examples of how the Internet can support business-to-consumer (B2C) – in
particular – retailers.
Notes on using slides for the eleventh chapter in lectures –

lesson plan
1. Slide 11.4 (Table 11.1) shows consumer profile classification variables for online
marketing.
2. Slide 11.5 shows a graph of annual growth in online sales against market share of all
shopping.
3. Slides 11.6–11.7 are examples of international online retailing.
4. Slide 11.8 shows character variables, beliefs and attitudes to online shopping (Figure 11.4).
5. Slide 11.9 shows the most popular online shopping categories.
6. Slide 11.10 shows an example of Shop Direct, one of the largest UK online retailers.
7. Slide 11.11 (Table 11.2) shows loyalty variables in relation to website features and
objectives.
8. Slide 11.12 is a summary of touchpoints in multichannel shopping journeys.
9. Slide 11.13 is the ASOS brand wheel.
Activity
There are now no activities in this chapter.
Exercises
Mapping your path to purchase.
Ask a friend or friends to select a product or service that they would like to buy; ideally this will
be a completely new purchase, something they have not bought before. Ask them to tell you
how they will go about making their purchase decision.
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Make notes while they are describing the path-to-purchase as this should help you to identify
possible touchpoints, where as a marketer you might interact with the target audience your
friend represents.
Once you have gathered your research data from your friend:
a. Classify the target audience your friend represents using demographic, psychographic and
profile variables.
b. Map out the purchase journey your friend intends to take and identify the touchpoints where
digital communications, mobile incentives and prompts could be applied.
c. Reflect on how different (or similar) your friend’s journey is to the classical consumer
decision-making model.
1. Make a list of classification variables, which a retailer might use when trying to
identify an online target market for (a) high-tech training shoes and (b) organic beauty
products.
Table 11.1 shows the potential classification variables:
(a) Gender and age most appropriate.
(b) Gender, age, income and ethnicity.
2. Explain the differences between ‘classification’ and ‘character’ variables.
(a) Classification variables are those personal attributes that tend to remain static throughout an
individual’s lifetime or evolve slowly over time. These variables are particularly useful for
marketers as they can help to identify particular consumers and target groups. Moreover,
according to Jobber (2007), profile segmentation variables can be used to group consumers
together in a meaningful way, so that they can be reached by suitable media communications.
Examples include demographic variables shown in Table 11.1.
(b) Character variables are less straightforward to understand and identify as they are any
attributes of a consumer’s perceptions, beliefs and attitudes, which might influence online
behaviour and also shape an individual’s intentions to shop online, for example,
innovativeness, enjoyment, skills, experience and emotions.
3. Describe three different strategies an e-retailer might develop when creating an online
presence.
Select from the following:
• Established retailers using the Internet retail market strategically or tactically as a marketing
tool.
• Virtual merchants designing their operating format to accommodate the demands of online
trading.
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• Intermediaries who link Internet technology and the retail supplier with the consumer.
• Manufacturers using the Internet to take their goods direct to the consumer. Any one of
these types could become the archetypal model Internet retailer.
4. Describe the different types of formats that an online retailer might follow.
• Bricks and clicks.
• Clicks and mortar.
• Pureplay.
See also information-only strategies in text.
5. From a resource-based view, explain the differences between ‘resources’ and

‘capabilities’.
• Resources are what are available in terms of budget for media, site design and people.
• Capabilities are concerned with how the resources are deployed in terms of processes
followed and effectiveness of outcomes produced.
1. Discuss whether you consider that all products on sale in the high street can be sold
just as easily via the Internet.
This depends on the need to evaluate before purchase. Standardised products such as books and
CDs that do not require assessment before purchase are preferable.
Australasia is home to approximately 2 per cent of the Internet users around the globe, whereas
the USA is home to 40 per cent. Describe how an online retailer might choose to target a
market. Illustrate your answer with examples.
The issues to consider are as follows:
• Large companies, like an online bookseller, are certain to target the largest markets such as
the United States first.
• The local market can still be significant although the users are only 2 per cent. It is more
likely to be entered by local, existing vendors. Entrants from other countries would need to
review options to partner with local players.
• New entrants require building brand awareness, a convincing proposition to encourage

switching, efficient distribution and substantial investment for the above.
2. Select three websites that demonstrate the different ways in which a retailer might use
the Internet to interact with its customers. Compare the contents of the websites and
explain what the potential benefits are for the customers of each of the sites.
112
The content and services of these websites can occur using the categories listed in the chapter.
• Product information.
• Financial information.
• Company information.
• Educational information and press releases.
• Recruitment information.
• Marketing communication tool.
• Direct communications.
• Marketing research tool.
• Sales channel (total or partial).
1. It was once predicted that the Internet would replace high street stores and that within
ten years the majority of retail purchases would be made online. However, while
online shopping is continuing to grow year-on-year, it still represents a small part of
the total retail spend. Explain why the early predictions have not been met from either
the perspective of the consumer or the retailer.
The evidence of sales can be presented to show that this is unlikely to be the case. Many still
enjoy the offline shopping experience, which cannot be replicated online. For certain
standardised products such as books, the Internet offers clear advantages but despite this
physical bookshops will still exist after ten years of the prediction.
2. Tesco.com has established a position of being the world’s leading online grocer with an
estimated sales turnover of £401 million and profits up 37 per cent to £21 million (as at
21 September 2005). However, Iceland was the first UK retailer to offer nationwide
delivery of a range of groceries ordered via the web; yet, they have ceased to offer this
service. Discuss why Tesco.com has been able to establish such a dominant market
position.
This should reference both to initial adoption of the channel by existing customers and new
customers and the continued usage of the channel.
Issues to consider include the following:
• Early-first mover advantage.
• Senior management buy-in to establish a vision and strategy for Tesco.com.
• Investment in specific offline advertising to encourage online adoption.
113
• Use of existing customer data to migrate customers to digital channels (e.g. through direct
mail communications).
• Ongoing communications through e-mail and direct mail – touch strategy.
• Evaluation of customer needs – attention to loyalty drivers through satisfaction surveys, etc.
• Creation of appropriate differential marketing mix including product (new and existing
online products), price (price testing of delivery), place (use of comparison intermediaries)
and promotion (effective use of online communication tools such as affiliates and paid
search).
Case Study 11: ASOS leads the way with social media and
reinvents fashion retailing online
Questions
1. Describe how ASOS applies the marketing mix online?
Promotion: ASOS make use of Google Ad words to promote its online presence and search
engine marketing, social media marketing. The brand is positioned using celebrities that wear
the products.
Product: Branded and own label fashion products and a wide range of footwear and children’s
clothes.
Place: Online fashion retailers, Internet only.
Price: ASOS pricing strategy is ‘affordable designer fashion’.
2. Summarise the integrated communications strategy used by ASOS?
Positioned as a fast fashion retailer, ASOS sees the latest fashion item and seeks to engage its
customers through digital channels.
3. What risks do you anticipate as ASOS expands overseas?
ASOS has recently closed it operation in China after significant losses. The costs of
establishing the business in Asia have outweighed the gains. The supply side of the business
was difficult to replicate and as the economic crisis continued, the middle classes have been
spending less in China. There is also strong competition from local e-commerce retailers.
114
CHAPTER 12
Business-to-business digital marketing practice
A summary of differences required by online marketing to businesses and case studies

illustrating the services that can be provided.
Notes on using slides for the twelfth chapter in lectures –

lesson plan
1. Slide 12.4 summarises differences between B2B and B2C markets. This can be discussed
with students with regard to the implications for digital marketing activities that are
effective.
2. Slides 12.5–12.8 give screenshots of companies referenced in the case studies in this
chapter.
3. Slide 12.9 (Figure 12.6) shows key procurement activities within an organisation. Slide
12.10 gives a model of strategic value creation.
Activities
Activity 12.1: Which market characteristics distinguish B2B from B2C?
Purpose
To introduce the differences between B2B and B2C e-commerce that must be taken into
consideration when devising strategy and tactics.
Activity
Consider how you think the characteristics summarised in the first column of Table 12.1 differ
for B2C and B2B. Refer to Figure 12.1 when completing your answer.
Answer
The answer is shown in the table below.
115
Differences in characteristics between B2C and B2B trading
Characteristic B2C B2B

Proportion of adopters with Low to medium High to very high
access
Complexity of buying Relatively simple – More complex – buying
decisions individual and influencers process involves users,
specifiers, buyers, etc.
Channel Relatively simple – direct More complex, direct or via
or from retailer wholesaler, agent or distributor
Purchasing characteristics Low value, high volume or Similar volume/value. May be
high value, low volume. high involvement. Repeat
May be high involvement orders (rebuys) more common
Product characteristic Often standardised items Standardised items or bespoke
for sale
Use of content to support
customers
Use of community to support
customers
Exercises
1. Evaluate and compare the factors likely to affect (a) a construction company and (b)
an insurance brokerage contemplating setting up a transactional website aiming to
develop online market share.
The factors that affect a business in buying and selling online should be reviewed separately,
although they can be reversed. The main factors relate to the suitability of product/service for
sale – for example, commodity products such as office equipment can be readily sold and
bought online, but a high value, complex service such as enterprise software will require a sales
team to explain its purpose and the sales option of a number of different decision makers in an
industrial buying unit.
2. Explain the difference between online market efficiency and online market
effectiveness.
Key chapter extracts:
‘Improving efficiency is important to all businesses but doing things right, in other words, being
efficient is only part of the story as it is also important for an organisation to do the right thing
in other words be effective’.
‘According to Brown (1987), the critical difference between efficiency and effectiveness is that
“the former is cost focused and the latter is customer focused”’.
See also Table 12.1.
116
1. Discuss why a business operating in an industrial market might be cautious about

putting new product specifications on the company website.
Students may want to consider the following:
• Fears of security compromising customer or company data.
• Damage to the brand or corporate identity caused by poor service.
• Giving away of new product information to competitors.
• Cost/benefit.
• Fear of channel conflict.
• Role of sales representatives.
• Erosion of margins.
The main fear is clearly competitor access to this data. If placed on the site before product
launch, it would give the competitor the option to develop communication strategies to counter
the launch. Additionally, the specifications could be used as part of the development of a rival
product. Finally, it may cause some confusion in the minds of customers who are considering
older products.
Simply put, detailed product specifications can be analysed by competitors and potential
purchasers to assess the strengths and weaknesses of the product.
2. Discuss the relevance of social media marketing to B2B organisations.
Increasingly all organisations regardless of their target market are engaging with social media.
Professional networks like LinkedIn are used by private and public sector organizations. Social
media has become an instantaneous messaging service, which can be used to deliver immediate
responses to positive and negative online PR. The boundaries between b2B and b2C are being
eroded in some sectors by social media. As a result it is no longer desirable for a business to not
have a social media presence.
3. Explain how Internet technologies can contribute to the development of online

business strategies.
This refers to new potential business and revenue models introduced in Chapters 2 and 4.
Chapter 4 also reviews eight different strategy decisions, which can be reviewed. Using the
Internet to support product and market development is particularly important.
1. Discuss the extent to which B2B e-marketplaces are fundamentally different from
traditional offline markets.
117
Differences between online marketplaces include the following:
• Auction arrangements required more often by purchasers.
• Less room for negotiation by suppliers.
• May be more limited in scale.
2. Explain the options for applying social media marketing to B2B marketing campaigns.
SM platforms provide a mechanism for communicating directly with customers.
Case Study 12: B2B adoption of the Internet – Inspirational

Cosmetics
Questions
1. Assess the stage of the Internet adoption for the following:
• Multichemical;
• Inspirational Cosmetics (IC);
• The organic growers (suppliers).
2. Explain which factor and variables Henrik Bjornesson is most likely to consider when
deciding how to achieve the business goals set by Victor Karlsson, the CEO of
Inspirational Cosmetics.
These should be referenced from Table 12.3 (factors and variables affecting Internet adoption).
Customer demand should be the most important driver, but the technical feasibility and costs
will form part of a cost-benefit analysis.
3. Consider the likely stage of adoption of the suppliers of organic produce. Suggest ways
in which Inspirational Cosmetics might develop its use of the Internet with these
suppliers.
This repeats the first question. They will be at the initiation to adoption stage in Table 12.4
(stages of Internet adoption and influencing factors).
Regardless of the objective chosen, B2B strategies are likely to treat the Internet as another
channel to market and the objectives will be typically directed at achieving incremental value
from the channel. This incremental value could reach a different type of organisation (i.e. smaller
companies for companies with account teams serving large companies), different members of
the buying unit or a different geographic presence.
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Instructor’s Manual

For further instructor material

 Pearson Education Limited 2017

Fifth edition published 2013

© Pearson Education Limited 2017

Parts and Chapters Pages

Part 1 Digital marketing fundamentals 4

Part 2 Digital marketing strategy development 40

Part 3 Digital marketing: implementation and practice 70

Digital marketing fundamentals

Introducing digital marketing

One sentence overview

An introduction to digital marketing and the book structure.

4. Introduction to digital marketing strategy. Slides 1.19–1.22. Applications of Internet

6. Introduction to digital marketing communications. Slides 1.26–1.29. Explanation of

Activity 1.1: Innovation in digital marketing platforms

This is provided in the main text:

• They meet a fundamental consumer need.

• They have a clear revenue model.

• They have a memorable branding and experience.

• Initially, they had a straightforward proposition – offering one service.

• Generally they were first-movers.

Activity 1.2: The latest marketing technology landscape

Answers may vary according to choice and content of vendor websites.

Activity 1.3: Why are C2C interactions important?

To highlight the relevance of C2C transactions to B2C companies.

Examples mentioned may include the following:

2. Online auctions, for example, eBay.

Activity 1.4: Digital media differences?

To illustrate similarities and differences between digital and traditional media.

Digital Media Channels Communication Disciplines

Activity 1.5: Assessing social media marketing platforms

Reasons for deciding relative investment:

1. Popularity with consumers – overall preferences for platforms.

Activity 1.6: Integrating online and offline communications

To highlight differences in marketing communications introduced through the use of the

Table: Examples of communications initiated by customer and company

Communication initiated by customer Communication initiated by company

1. Explain the main types of digital marketing platform.

1. Transactional e-commerce site (online sales or offline store finder).

2. Services-oriented relationship-building website (Help desk and FAQ), lead generation

4. Portal or media site – publishing through news or blog.

5. Social network or community site – encouraging sharing through creation of consumer-

2. Online PR. This includes outreach to publishers and bloggers.

6. Summarise the main communications difference between digital and traditional

• Intelligence – can monitor customers’ interests and profile them.

• Individualisation – it is possible to tailor e-mail and web communications (personalisation).

• Integration – of online and offline channels remains important.

• Independence of location – possible to reach a wider marketplace.

7. Distinguish between social media marketing, inbound and content marketing.

1. Social media marketing. Encourages interactivity, participation and sharing.

Essay and discussion questions

• customer service, and

• relationship building/loyalty enhancing.

• Set objectives in terms of number of site visitors and leads generated.

2. Which techniques can be used to increase awareness of a brand and encourage

• Search engine marketing

• Offline communications (driving traffic to web site)

• Opt-in e-mail marketing

• Social media and viral marketing.

5. What is the relevance of ‘conversion marketing’ for digital marketing?

Case Study 1: eBay thrives in the global marketplace

It is best to divide this question into two parts.