Joe Diana's Blog

The aim of positioning is to develop a perceived differential advantage over rivals’ products. In an e-marketing context the differential advantage and positioning can be clarified and communicated by developing an online customer value proposition (OVP).

Decision 3. Resourcing - Internet marketing priorities

Internet marketing priorities have been summarised by Gulati and Garino (2000) as ‘Getting the Right Mix of Bricks and Clicks’. These expressions have been used to refer to traditional ‘bricks and mortar’ enterprises with a physical presence, but limited Internet presence. In the UK, an example of a ‘Bricks and Mortar’ store would be the bookseller Waterstones (www.waterstones.co.uk), that when it ventured online would become ‘Clicks and Mortar’.

Decision 4. CRM focus and financial control

A further strategic decision is the balance on investment on customer acquisition and retention. Many startup companies have invested primarily on customer acquisition. This resulted in a cost of customer acquisition of hundreds of pounds, euros or dollars which was impossible to recoup without effective retention strategies. For existing companies, there is a decision whether to focus expenditure on strategies for customer acquisition, customer retention or to use a balanced approach.

Decision 5. Market and product development strategies

E-commerce also offers opportunities to expand the scope of a business into new markets and products. As for decision 1 the decision is a balance between fear of the do-nothing option and fear of poor return on investment for strategies that fail. The Ansoff matrix is still useful as a means for marketers to discuss market and product development using electronic technologies. It highlights these options:

1. Market penetration. Digital channels can be used to sell more existing products into existing markets. This is a relatively conservative use of the Internet.

2. Market development. Here online channels are used to sell into new markets, taking advantage of the low cost of advertising internationally without the necessity for a supporting sales infrastructure. This is a relatively conservative use of the Internet, but is a great opportunity for SMEs to increase exports at a low cost, but it does require overcoming the barriers to exporting.

3. Product development. New digital products or services can be developed that can be delivered by the Internet. These are typically information products, for example online trade magazine Construction Weekly has diversified to a B2B portal Construction Plus (www.constructionplus.com) which has new revenue streams. This is innovative use of the Internet.

Decision 6. Business and revenue models including the marketing mix

A further aspect of Internet strategy formulation is review of opportunities from new business and revenue models. A business model is a summary of how a company will generate revenue, its target customers, core product offering, value-added services and partnership arrangements.

Evaluating new models is important since, if companies do not innovate, then competitors and new entrants will and companies will find it difficult to regain the initiative. Equally, if inappropriate business or distribution models are chosen, then companies may make substantial losses.