What is Internet Marketing?

If traditional marketing is about creating exchanges that simultaneously satisfy the firm and customers, what is Internet marketing?

Internet marketing is the process of building and maintaining customer relationships through online activities to facilitate the exchange of ideas, products, and serv-ices that satisfy the goals of both parties.

This definition can be divided into five components:

A Process

Like a traditional-marketing program, an Internet-marketing program involves a process. The seven stages of the Internet marketing program process are setting corporate and business-unit strategy, framing the market opportunity, formulating the marketing strategy, designing the customer experience, designing the marketing program, crafting the customer interface, and evaluating the results of the marketing program. These seven stages must be coordinated and internally consistent. While the process can be described in a simple linear fashion, the marketing strategist often has to loop back and forth during the seven stages.

Building and Maintaining Customer Relationship

The goal of marketing is to build and create lasting customer relationships. Hence, the focal point shifts from finding customers to nurturing a sufficient number of committed, loyal customers. Successful marketing programs move target customers through three stages of relationship building: awareness, exploration, and commitment. It is important to stress that the goal of Internet marketing is not simply building relationships with online customers.

Rather, the goal is to build offline (as relevant) as well as online relationships. The Internet marketing program may well be part of a broader campaign to satisfy customers who use both online and offline services.


By definition, Internet marketing deals with levers that are available in the world of the Internet. However, as noted above, the success of an Internet marketing program ‘may rest with traditional, offline marketing vehicles. Consider, for example, the recruiting and job-seeking service Monster’s success can be tied directly to the effectiveness of its television advertising and, in particular, its widely successful of the past two years.


At the core of both online and offline marketing programs is the concept of exchange. In both the online and offline worlds, exchange is still the heart of marketing. In the new economy, firms must be very sensitive to cross-channel exchanges. That is, an online marketing program must be evaluated according to its overall exchange impact-not just the online exchange impact. Hence, online marketing may produce exchanges in retail stores. Firms must be increasingly sensitive to these cross channel effects if they are to measure the independent effects of online and offline marketing programs.

Satisfaction of Goals of both Parties

One of the authors of this book is a loyal user of the website Each day he arises and checks the weather in his city as well as the weather in cities he will be traveling to during the week. He is clearly satisfied with and loyal to the site. To the extent that can monetize this loyalty-most likely, in the form of advertising revenueboth parties will be satisfied. However, if the firm is unable to meet its financial obligations to employees, suppliers, or shareholders, then the exchange is unbalanced. Customers are still happy, but the firm is unable to sustain its revenue model. Both parties must be satisfied for exchange to continue.

Scope of Internet Marketing

Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals The definition summarized above has four critical features.

These are:

Marketing is a Process

A process is a particular method of doing an activity, generally involving a series of steps or operations. The classical marketing approach involves four broad steps: market analysis, market planning, implementation, and control. 5 Market analysis involves searching for opportunities in the marketplace, upon which a particular firm-with unique skills-can capitalize. Market planning requires segmentation, target market choice, positioning, and the design of the marketing mix (also termed the 4Ps, or marketing program). Market implementation includes the systems and processes to go to market with the marketing pro-gram. Finally, marketing control refers to the informal and formal mechanisms that marketing mangers can use to keep the marketing program on course. Analysis, planning, implementation, and control collectively provide a process for marketing managers to follow in the design and execution of marketing programs.

It Involves a Mix of Product, Pricing, Promotion, and Distribution

Strong marketing programs do not involve one action, such as the design of a great product. Rather, the most successful marketing programs involve mixing the ingredients of marketing to deliver value to customers. This mixing entails blending the right amounts of the 4P ingredients, at the right time, and in the right sequence. Too often, marketing programs fail because they allocate too many (or too few) resources in an uncoordinated way. How often have you witnessed the hot Christmas toy advertised-but not found it on the shelf? In the Internet environment, this translates into significant problems with order fulfilment at the most pressing times of the year.

It is about Exchange

Marketing is not successful unless two parties exchange something of value. The buyer may exchange time, money, or services, while the seller must exchange something of value to the buyer. The traditional retail context provides the simplest illustration of this principle. A given consumer exchanges money for a particular good or service. However, exchange also occurs in a wide variety of contexts, many of which are non monetary. These include bartering, volunteering services, and political donations.

It is Intended to Satisfy Individual and Organizational Needs

The aim of marketing is to provide a satisfactory outcome for both the firm and the customer. Firms can have highly satisfied customers if they provide services for free. However, those organizations are not likely to have a long life. The key to modern marketing is simultaneously satisfying the customer, the firm, and its shareholders. In the long run, the firm must have a positive cash flow or show a clear path to profitability for investors to maintain confidence.

E-Business Issues & Internet Marketing

At its core, the mission of marketing is to attract and retain customers. To accomplish this goal, a traditional bricks-and mortar marketer uses a variety of market-ing variables-including pricing, advertising, and channel choice-to satisfy cur-rent and new customers. In this context, the standard marketing-mix toolkit includes such mass-marketing levers as television advertising, direct mail, and public relations, as well as customer-specific marketing techniques such as the use of sales reps. With the emergence of the Internet and its associated technology-enabled, screento- face interfaces (e.g., mobile phones, interactive television), a new era of marketing has emerged. Well-respected academics and practitioners have called for new rules and urged debate about fundamental tenets of marketing, including segmentation, mass marketing, and regionalized programs.)

At the ‘other extreme, pundits and academics alike have argued that both the basic building blocks of marketing strategy and the pathways to competitive advantage have remained the same The approach taken in the current volume falls between these polar views. That is, new levers have been added to the marketing mix, segments have been narrowed to finer gradations, consumer expectations about convenience have forever been altered, and competitive responses happen in real time. In short, these are new, exciting changes that have a profound impact on the practice of marketing. At the same time, some of the fundamentals of business strategy-seeking competitive advantage based on superior value, building unique resources, and positioning in the minds of customers have remained the same.

The intent of this text is to provide a clear indication of what has changed and what has not changed. At the same time, the text would not be complete (and indeed might be actionable from the standpoint of business practice!) if it did not propose a broader framework to understanding the practice of Internet marketing. Frameworks such as the 4Ps of marketing or the five forces of competitive analysis are important because they provide easy-to-remember, simplifying structures for complex problems. They also serve as guides to managerial action. Thus, under-standing the five forces enables firms to comprehensively map their competitive environment while simultaneously identifying specific actions for their managers (e.g., reduce buyer power by increasing the number of buyers).

The Seven Stages of Internet Marketing

Seven Stages of Internet Marketing

The given figure provides an overview of the seven stages of Internet marketing.

The seven stages are these: setting corporate and business-unit strategy, framing the market opportunity, formulating the marketing strategy, designing the customer experience, designing the marketing program, crafting the customer interface, and evaluating the results of the marketing program.

The Seven Stage Cycle Of internet Marketing

Stage One: Setting Corporate and Business-Unit Strategy

Corporate strategy addresses the interrelationship between the various business units in a firm, including decisions about which units should be kept, sold, or augmented. Business-unit strategy focuses on how a particular unit in the company attacks a market to gain competitive advantage. Consider, for example, Corporate-strategy issues relate to the choice, mix, and number of business units such as kitchen, music, electronics, books, and tools/hardware. Once these business units are established and incubated in Amazon’s corporate head~ quarters, the senior leadership team of each unit sets the strategic direction and steers the business unit toward its goals.

Stage Two: Framing the Market Opportunity

Stage two entails the analysis of market opportunities and an initial first pass of the business concept-that is, collecting sufficient online and offline data to establish the burden of proof of opportunity assessment. Let’s say, for example, that you are running a major dot-com business such as Amazon. The senior management team is continually confronted with go/no-go decisions about whether to add a new business unit or develop a new product line within an existing business unit.

What mechanism do they put in place to evaluate these opportunities? In this second part of the Internet-marketing process, a simple six-step methodology helps evaluate the attractiveness of the opportunity The six steps include: seeding the opportunity, specifying unmet or underserved customer needs, identifying the target segment, declaring the company’s resource-based opportunity for advantage, assessing opportunity attractiveness, and making the final go/no-go decision. The final go/no-go choice is often a corporate or business-unit decision. However, it is very important to stress that marketing plays a critical role in this market-opportunity assessment phase. In order for the firm to make an informed choice about the opportunity, the management team needs to obtain a sufficient picture of the marketplace and a clear articulation of the customer experience that is at the core of the opportunity. Thus, during the market-opportunity assessment phase, the firm also needs to collect sufficient market research data.

Stage Three: Formulating the Marketing Strategy

Internet marketing strategy is based upon corporate, business unit, and overall marketing strategies of the firm. This set of linkages is shown in figure . The marketing strategy goals, resources, and sequencing of actions must be tightly aligned with the businessunit strategy. Finally, the overall marketing strategy comprises both offline and online marketing activities.

Corporate, Business-unit, and Marketing Strategy Corporate

Corporate, Business-unit, and Marketing Strategy Corporate

Stage Four: Designing the Customer Experience

Firms must understand the type of customer experience that needs to be delivered to meet the market opportunity. The experience should correlate with the firm’s positioning and marketing strategy. Thus, the design of the customer experience constitutes a bridge between the high-level marketing strategy (step three) and the marketing program tactics (step five).

Stage Five: Designing the Marketing Program

The completion of stages one through four results in clear strategic direction for the firm. The firm has made a go/no-go decision on a particular option. Moreover, it has decided upon the target segment and the specific position that it wishes to own in the minds of the target customer. Stage five entails designing a particular combination of marketing actions (termed levers) to move target customers from aware-ness to commitment.

The framework used to accomplish this task is the Market space Matrix. Simply put, the Internet marketer has six classes of levers (e.g., pricing, community) that can be used to create target customer awareness, exploration, and, it is hoped, commitment to the firm’s offering. However, prior to discussion of the Market space Matrix, the stages of the customer relationship and the associated classes of levers that can be employed must be defined.

Building and Nurturing Customer Relationships

A relationship can be defined as a bond or connection between the firm and its customers. This bond can originate from cognitive or emotional sources. The connection may manifest itself in a deep, intense commitment to the brand (e.g., the Harley-Davidson HOG club-member) or a simple, functional based commitment (e.g., regular use of

Whether defined as a function or an organization-wide culture, marketing is responsible for acquiring and retaining target customers. In this process, successful marketers manage to move desirable customers from awareness through exploration and, finally, commitment. Once customers reach commitment, the firm is in a position to observe their behavior patterns and determine which customers to nurture and which customers to terminate (or serve at a lower level of cost). Managing this building and pruning process is one of marketing’s key tasks.

The four stages of customer relationships are briefly outlined below


When customers have some basic information, knowledge, or attitudes about a firm or its offerings but have not initiated any communications with the firm, they are in the awareness stage. Consumers become aware of firms through a variety of sources, including word-of-mouth, traditional marketing such as television advertising, and online marketing programs such as banner ads. Awareness is the first step in a potentially deeper relationship with the firm. However, as one can imagine, awareness without action is not in the best interests of the firm.


In the exploration stage, the customer (and firm) begin to initiate communications and actions that enable an evaluation of whether or not to pursue the four key stages of customer relationship.


This stage is also likely to include some trial on the part of the customer. Exploration is analogous to sampling songs, going on a first date, or test- driving a car. In the online world, exploration may take the form of frequent site visits, some e-commerce retail exchanges, and possibly even the return of merchandise. It may include phone call follow-ups on delivery times or e-mails about product inventory. The exploration stage may take only a few visits or perhaps years to unfold.


Commitment involves feeling a sense of obligation or responsibility for a product or firm. When customers commit to a website, their repeated, enduring attitudes and behaviors reflect loyalty.


Not all customers are equally valuable to the firm. In an industrial- marketing context, managers often refer to the 80/20 rule of profitability. That is, 20 percent of customers provide 80 percent of the profit. By implication, therefore, a large number of customers are unprofitable or have high cost to serve. Firms should segment their most valuable and less valuable customers. The most valuable customers may be identified based on profit, revenue, and/or strategic significance (e.g., a large well-regarded customer may not be profitable but opens the door to new accounts). The firm does not want this set of customers to terminate the relationship. Unprofitable, non strategic customers are a different matter.

Often it is in the best interests of the firm to terminate the relationship or encourage this set of customers to disengage with the firm. The four stages vary by the ‘intensity of the connection between the firm and the customer Intensity of connection may be defined as the degree or amount of connection that unfolds between the firm and its target customers.

Three dimensions capture intensity:

  1. The frequency of the connection. (How often does the customer visit the site?)
  2. The scope of the connection. (How many different points of contact does the customer have with the firm?)
  3. The depth of contact. (How thoroughly is the customer using the site?)

A customer might visit a website such as Amazon on a regular basis, but only to purchase books. This visitor would have a high level of frequent contact but a low level of scope. Another customer might visit Amazon frequently but not stay on the site for a long duration or engage in deeper connections such as writing reviews, commenting on products, or communicating with other Amazon users. This customer would have high frequency but low depth. In all cases, relationship intensity is correlated with the stage of the relationship.

Stage Six: Crafting the Customer Interface

The Internet has shifted the locus of the exchange from the marketplace (i.e., face—to-face interaction) to the market space (i.e., screen-tb-face interaction). The key difference is that the nature of the exchange relationship is now mediated by a technology interface. This interface can be a desktop PC, sub-notebook, personal digital assistant, mobile phone, wireless applications protocol (WAP) device, or other Internet enabled appliance. As this shift from people-mediated to technology -mediated interfaces unfolds, it is important to consider the types of interface design considerations that confront the senior management team. What is the look-and— feel, or context, of the site? Should the site include commerce activities? How important are communities in the business model?

Stage Seven: Evaluating the Marketing Program

This last stage involves the evaluation of the overall Internet marketing program.

This includes a balanced focus on both customer and financial metrics.

Customer Relationship Management(CRM)

Cross-selling and Up-selling

This application has the capability to qualify prospects, track contact or the “moments of truth and refer them to sales persons when appropriate. By implementing a cross-sell strategy, complete with the applications necessary to track customer contacts, triggers can be established to identify prospects for additional sales. For example, in a bank an event would be a large deposit, which would then trigger a sales person to call the customer and ask if she or he would be interested in investment options.

Cross-sell and up-sell application may be used to schedule sales calls, keep detailed records of sales activities, and check on the status of the customer orders. Cross-selling and up-selling depend on identifying life-path needs. For instance, in the finance industry, banks are attempting to build lasting relationships with customers by matching their life-path needs to complementary products and services. As customers approach retirement, banks could recommend assets such as money markets, bonds and annuities. If customers with young children can be identified, then banks could cross-sell education savings plans or even loan consolidation plans.

Direct Marketing and Fulfilment

This includes pre-sale interaction such as advertising that either influences or provides potential customers with the necessary information to make a purchase decision. Marketing automation is critical, as organizations grow larger. This is because, it becomes more difficult to manage multiple simultaneous programs and track costs across multiple channels. Campaign management, a direct marketing process, allows companies to manage, integrate and leverage marketing programs by automating such tasks as managing responses, qualifying leads, and arranging logistical aspects of events.

Another critical core competency is fulfilment. Marketing departments today are being deluged with requests for information via the Web and other channels. The goal of effective fulfilment is to provide a myriad of information to customers and prospects quickly, easily and efficiently. Whether it is product or service inquiries, direct mail responses, pricing or billing issues, or requests for literature, responding to requests in a timely manner is critical. This creates a need for fulfillment capabilities that can get product information, literature, collateral packages, or other correspondence into the hands of the customers and prospects when they are most receptive.

Effective fulfilment is not trivial; it requires a sophisticated interface with campaign management, sales force automation, and posting systems.

Customer Service and Support

Customer support provides customer care and other services. The applications include support for service request management, account management, contact and activity management, customer surveys, return material authorizations, and detailed service agreements. These discrete applications work together to ensure that customer service representatives can quickly assign, create and manage service requests, as well as look up detailed information about customer service contracts, contacts and activities.

Customer support capabilities are used to manage customers who are having problems with a product or service and to resolve those problems. Help-desk software automates the management and resolution of support calls and improves efficiency and effectiveness. These applications typically include capabilities to verify customer status (e.g., what level of support they are entitled to) track specific tasks needed to resolve problems across multiple workgroups, monitor service-level agreements, maintain permanent incident histories, and capture support costs for charge backs. Armed with this complete customer and product information, service professional can resolve customer issues efficiently and effectively.

Field Service Operations

There is nothing like the hands-on approach to in they with of the customers about the company your company. Field service is the hands on extension of external customer support, activated when a problem can be solved over the phone and requires sending a repair person to the customer site to perform maintenance or repair. Field service and dispatch applications have become mission critical tools that affect a company’s ability to deliver effective customer service and contain costs. The field service application provides the organization with features for scheduling and dispatching repair personnel, managing inventory and logistics, and handling contracts and accounting.

Retention Management

Effective Customer Relation must be based on differentiating customers based on account and transaction histories. Today, very few organizations are able to make these distinctions. The ability to effectively segment customers depends on the decision support technology, which most executives see as a powerful enabler of Customer Relation Management.

Effective decision support depends on the ability to gather customer information at great levels of detail. Detailed knowledge about customers allows companies to treat all customers individually and, in many cases, disengage from customers are high maintenance, low-margin prospects.

Benefit from an e-Commerce Sales Strategy

The internet is changing the balance of power between business and the customer.

Before online shopping, companies could be reasonably certain that buying almost anything was not easy, so once a customer found a supplier they were comfortable with they tended to stick with them, at least until something went wrong.

But with the advent of e-commerce, customers can check out the options nywhere, and then buy from anyone. Customers can use comparison sites or shopping agents, or “bots” as they are known, to search the web for a bundle of products and report back on which supplier is offering them the cheapest. As a general rule, whatever sells in print in a catalogue will also sell on the internet.

There are several major advantages to developing an e-commerce sales strategy:

Efficiency: Electronic purchase orders and sales orders are more economical to place, track and manage.

Convenience: Buying and selling can go on 24 hours a day, 7 days a week, 365 days a year from any location.

Speed: It takes far less time to complete the entire buy/sell process, thus speeding payment.

Accuracy: Virtually eliminates processing errors. Buying and selling firms have the same views of the transactions, which make online commerce more precise.

Global Reach: Gives businesses an instant global reach to find supplies anywhere in the world, in any time or currency zone.

Low Cost Entry: Before the web, selling direct to consumers could be expensive.Setting up a retail outlet or printing a glossy catalogue could cost hundreds of thousands of pounds. On the web, you can sell direct to consumers worldwide for a hundred pounds a month.

Up-to-date Status and Alerts: Generates instant pager, fax and e-mail notification to identify potential problems, enabling problem avoidance or swifter solutions. Also provides order histories.

Critical success factors for internet marketing executives

Marketers have always been in the business of anticipating and managing change, and technology has been their principle tool for managing it. The Internet presents an adaptive challenge for the marketing executive. Today’s Internet marketing exec-utive must have all the traditional skills of the offline marketing professional, but must place extra emphasis on some of them to account for the new economy. These critical new skills include customer advocacy and insight, integration, balanced thinking, and a willingness to accept risk and ambiguity.

Customer Advocacy and Insight

An insatiable curiosity for customers and marketplaces is a bare necessity for today’s marketing professional. This innate curiosity fuels an individual’s desire to transform mounds of customer data into meaningful and actionable insights, which in turn become a platform for advocacy. Because the Internet enables a much greater degree of interaction with customers, designing and promoting these interactions around customers’ needs and progressively gaining deeper insights are critical components of creating positive customer experience.

A true customer advocate will be looking to provide demonstrable added value to each customer interaction to form the basis for a meaningful relationship. As both customer behaviors and enabling technologies simultaneously evolve, a deep understanding of customer needs should serve as the guidepost driving marketing decisions. Marketing professionals will need to strategically collect information from many disparate sources, create insightful customer mosaics, and effectively trans-late them into marketing strategies and tactics.


The Internet represents both a new channel and a new communications medium.

The new-economy marketing professional needs to have an integrated or’ holistic view of the customer and the enterprise in order to create a uniquely advantaged strategic plan. In today’s multi channel environment, a consistent message and experience must be maintained across customer touch points in order to create a consistent brand image. Beyond strategy, a marketing manager must fundamentally understand how to integrate these new tools into the overall marketing mix.

Managers who are able to hone their marketing plan in a highly integrated fashion are more likely to capitalize on the synergies between marketing elements and thus drive greater effectiveness.

Balanced Thinking

An Internet marketing professional needs to be highly analytical and very creative. Culling specific customer insights from a veritable fire hose of data is critically important for new economy managers. It requires understanding the dynamic tension between one-toone marketing and mass marketing and being able to strike a strategic balance between them. It also requires determining the appropriate customer data requirements. Internet marketing professionals must also be technologically savvy. Understanding the strategic and tactical implications of the Internet, leveraging the rapid learning environment and accelerated decision-making process it creates, and then creatively applying the insights gleaned from analysis are critical success factors for all Internet marketing professionals.

Passion and Entrepreneurial Spirit

Although very hard to objectively assess, passion, or fire in the belly, is what will differentiate leaders from followers in the new economy. Trying to change the status quo is never easy and only people with conviction and passion will be heard over the din of the inevitable naysayer. Successful marketing managers use this passion to fuel their entrepreneurial instincts and vision, creating “bleeding edge” tools as they lead their teams to success.

Willingness to Accept Risk and Ambiguity

In the new economy, Internet marketing professionals need to retool them-selves and their companies to enter into a whole new era of customer-centric marketing. The Internet has enabled customers to have much more information and many more choices than ever before, thus shifting the balance of power toward the customer and creating the need for a whole new set of “pull” -based marketing tools. Successful Internet professionals need to rely on a whole new set of marketing tools that work in an extraordinarily dynamic environment.

Having the courage to try new things is the key to developing break-through Internet marketing. The risk and ambiguity of managing in such uncharted territory is tremendous, and the most successful Internet marketers will be willing to play at the edges. Today’s online marketing professionals must have the basic skill set of the offline marketing professional. But they must also react more quickly and manage more information and channels in order to stay one step ahead of the competition. The skill set has not changed tremendously, but-the tools need to be applied with more vigor and sometimes with greater speed. Successful Internet marketers will build their business models and value propositions around a deep understanding of customer needs-not around the product.

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