Smart Insights (2015b) Is this the social media backlash? Blog post by Dave Chaffey, 21 January 2015, www.smartinsights.com/social-media-marketing/social-media-strategy/
social-media-backlash/ .
Spivack (2007) How the WebOS Evolves? Nova Spivack blog posting, 9 February 2007,
http://novaspivack.typepad.com/nova_spivacks_weblog/2007/02/steps_towards_a.html . Waterman, R.H., Peters, T.J. and Phillips, J.R. (1980) Structure is not organisation,
McKinsey Quarterly In-house Journal , McKinsey & Co., New York.
Weinberg, B.and Ekin, P. (2011) Social spending: managing the social media mix, Business Horizons , 54(3), 275–82.
Weblinks
Leading portals and blogs covering digital marketing
Learning objectives
After reading this chapter, you should be able to:
● Identify the elements of an organisation’s online marketplace that have implications for developing a digital marketing strategy
● Evaluate techniques for reviewing the importance of different actors in the microenvironment: customers, intermediaries, suppliers and competitors as part of the development of digital marketing strategy
● Review changes to business and revenue models enabled by digital markets.
Chapter at a glance
Main topics
● Situation analysis for digital marketing 56
● The digital marketing environment 59
● Understanding customer journeys 61
● Consumer choice and digital influence 72
● Online consumer behaviour and implications for marketing 76
● Competitors 88
● Suppliers 93
● New channel structures 96
● Business models for e-commerce 99
Case studies
Digital marketing in practice
The Smart Insights interview with Michael Welch of Blackcircles.com on creating a new online business 57
Case Study 2: Boo hoo – learning from the largest European dot-com failure 108
Chapter 2
Online marketplace analysis:
micro-environment
Links to other chapters
● Chapters 2 and 3 provide a foundation for later chapters on Internet marketing strategy and implementation
● Chapter 3 builds on the concepts, frameworks and ideas introduced in this chapter
● Chapter 4 explains how environment analysis is used as part of strategy development
● Chapter 5 considers the principal functions of the mix in digital strategy development.
Key questions for marketing managers related to this chapter are:
● What are our capabilities for understanding our online marketplace?
● How relevant is the behaviour of the actors in the micro-environment to the future of our business?
● How do I complete a marketplace analysis and how does this inform our digital marketing planning?
● How are customers’ needs changing as digital platforms develop and what are the implications of such changes?
● How do I compare our online marketing with that of our competitors?
● How do we find suitable intermediaries at the planning stage of a digital marketing strategy?
Scan code to find the latest updates for topics in this chapter
Introduction
The demands on marketers who are responsible for planning digital marketing strategies are growing significantly as they work out how to manage commercial contributions, the complexities of the competitive marketplace, social communities and innovations in tech- nology. The growth in use of digital media and technology has led to a customer path to purchase that is now much more complex since purchase decisions are influenced by many more online touchpoints, which we introduced in Chapter 1 . In the online marketplace , consumer purchase decisions are influenced by many sources of information, such as search results, customer reviews, social media conversations, and company websites. Addi- tionally, potential customers are using multiple devices (sometimes simultaneously) to gar- ner information that will inform their purchase decisions. For example, using smartphones or tablets while watching TV. This process is known as multiscreening . The digital influ- ences are also supplemented by exposure to traditional communications such as TV, print or radio advertising.
In the next two chapters we look at how organisations might assess the digital envi- ronment and in doing so identify implications for digital marketing strategy. We begin by looking at online consumer behaviour, focussing on the main forces that influence pur- chasing and the competitive environment. Then we consider how existing companies and startups can create business and revenue models which take advantage of online market- place opportunities.
Situation analysis for digital marketing
The online marketplace is complex and dynamic; organisations should carefully analyse the market context in which they operate, identify opportunities and then plan how they can compete effectively. Understanding an organisation’s environment is a key part of
situation analysis , and forms a solid foundation for all types of marketing planning but especially when devising a digital marketing strategy as shown in Figure 1.9 .
What should be reviewed in situation analysis? From the perspective of a business creat- ing a digital marketing plan, situation analysis should review these factors which we cover in this chapter:
A Customers . Digital proposition and communications should be based around the cus- tomer: their characteristics, behaviours, needs and wants. So our view is that marketers should start with the customer when analysing the situation.
B Marketplace analysis including intermediaries, influencers and potential partners . This is a summary of the main online influences on purchase during the customer journey or path to purchase. We will see that there is a wide range of influences including search engines, publisher media sites, blogs, review sites and social networks which should all be considered. Marketplace analysis also involves reviewing opportunities and threats from digital media and technology including new business and revenue models.
C Competitors . Benchmarking customer propositions and communications activities against competitors can identify opportunities for new approaches and digital market- ing activities that need to be improved.
D Wider macro-environment . These are the broader strategic influences we cover in Chapter 3 , including social, legal, environment, political and technology influences.
Another major part of situation analysis involves an inward-looking, internal review of the effectiveness of existing digital marketing approaches. This will include reviewing
Introduction
Situation analysis for digital marketing
Path to purchase The different sites, channels and devices and information sources that consumers use to inform their purchase decision for a product or service.
Also known as conversion pathways on a site.
Online marketplace Exchanges of information and commercial transactions between consumers, businesses and governments completed through different forms of online presence such as search engines, social networks, comparison sites and destination sites.
Multiscreening A term used to describe simultaneous use of devices such as digital TV and tablet.
Situation analysis Collection and review of information about an organisation’s external environment and internal resources and processes in order to refine its strategy.
current results from digital marketing by review of key performance indicators (KPIs) and dashboards and the organisational capabilities and processes used to manage digital mar- keting summarised as strengths and weaknesses. We explain how to review performance by selecting relevant goals and key performance indicators in Chapter 4, covering digital strategy, and Chapter 10, covering digital analytics.
To be successful in online trading environments it is important to respond effectively to changes in the marketplace, as the interview with Michael Welch of online startup Black circles.com shows.
Michael Welch of Blackcircles.com on creating a new online business Overview and concepts covered
Michael Welch created Blackcircles.com (Figure 2.1) as a new way for consumers to buy tyres at competitive prices either over the Internet or on the telephone. From the site, consumers can find the best deal from a network of over 1000 local dealerships.
Blackcircles.com now has a turnover of £18 million and is growing rapidly, so we thought it would be interesting to learn the approaches its founder, Michael Welch has used to grow and sustain the business.
The interview
Q. Which factors were important to the initial success of Blackcircles.com? Michael Welch: At the very beginning it was mainly about hard work, determination and not ‘taking no for an answer’. If I’m honest, there was no real difference between me and the next guy walking down the street – I just wanted it more.
A key factor in the company getting to where it is today though was also having a strong USP (unique selling point). There were a couple of other companies around at the same time with a similar USP and there are now countless smaller operations that seem to have modelled their USP on ours.
Providing a culture of excellent customer service is an obvious way to go, back when you are a new company – at times – it is all you have. When brand awareness is zero to slim, you have to work as hard as possible to show the customers that first use you – and in reality are taking a gamble – that you give a damn and that their gamble has paid off. I worked hard to make sure customers came first.
Q. Which marketing activities are important to your continued growth?
Michael Welch: The base of our continued growth actually hasn’t altered much from those early days. Customer satisfaction is still very much key, the desire to make the company a success is there and our USP is just as strong as it was back at the start of the last decade.
I suppose there has been a shift in that we were once the underdogs and now we are leading the pack. Implementing new ideas and technologies has played a major part in helping us to stay on top, i.e. making sure we are up to date with the best SEO techniques, embracing the world of social media and continually trying to offer more attractive services to our customers – the launch of car servicing being one such evo- lution on the original ‘tyre retailer’ tag that Blackcircles.com started with.
Underneath all that, though, the company is supported by a foundation of ‘getting the basics right’.
The Smart Insights interview Digital marketing in practice
Q. How do you manage and improve service quality?
Michael Welch: It’s a vital ongoing process. The most obvious way in which we check on the site’s service quality is through customer feedback. This has been the backbone of many changes we’ve made over the years. Our customers are a great resource and I’m often surprised at the number of people I meet who don’t listen to what their cus- tomers are saying to them – it’s free advice, why wouldn’t you take it?
We recently placed Trustpilot on our website, which is the online retail industry’s equivalent of Trip Advisor. This shows independent customer reviews and an overall rating. This is a further commitment from us and a great message to customers that we will be doing everything possible to give them a great service. We are passionate about great service.
On top of listening to what our customers are saying we also actively take part in user testing. We’ve been working with a company recently which records anonymous users (which you can define as a British person in their mid-30s who doesn’t often use the Internet to shop) on our site.
Not only are we able to see what they are doing, but they are also giving a narration of their thoughts. It’s early days but we’ve already discovered areas of the site that can be improved due to this.
The newest form of testing we’re just beginning to get involved with is a heat map style technology. Seeing where users are clicking and where they are not is great. It makes you ask why certain areas of a page are receiving attention while the rest is being ignored.
Blackcircles.com Figure 2.1
The digital marketing environment
The digital marketing environment refers to the contexts in which firms operate, including how they relate to customers and other businesses participating in their markets. Each firm has its own unique space within the marketing environment, which is shaped by how they interact with internal aspects of their own business, competing businesses and the wider marketing environment.
The digital marketing environment involves two major elements: (1) micro-environment and (2) macro-environment ( Figure 2.2 ). The micro-environment is known as ‘ the operating environment ’, and focuses on the players which shape the immediate trading environment.
These players include the customers whose needs and wants are to be satisfied, along with the competitors, intermediaries and suppliers. These groups of actors shape the online
The digital marketing environment
Q. How do you review the success of your site? Which approaches do you use?
Michael Welch : As far as I’m concerned, if you don’t include web analytics in your marketing plan, then quite simply, you don’t have a marketing plan. Gone are the days when all website owners ever worried about was visitor numbers – good riddance too as it means we don’t have to put up with those horrible ‘visitor counters’ that you used to see bandied about everywhere.
Understanding not just how many visitors you have, but also how they are using your site is invaluable. We actively check out this information on a regular basis.
A quick example would be: what percentage of our visitors search for tyres? From this, what percentage then adds a set of tyres to their basket and then how many actually end up on the payment confirmation page?
Looking at these stats we can see at what point in an order process people exit our site. Then we ask ourselves what content is on each page, are there enough calls to action? Is there enough information? Is it easy to navigate? Could we add in new con- tent to encourage people to buy? If we come up with a potential change that we believe will help a page perform better, we then track to see the difference. If conversions go up, great – but how can we improve it further? If they drop – back to the drawing board.
Not only do we see the importance on an ‘order process’ based analysis, but also using it for certain technical aspects. For instance, customers with one browser end up buying in greater percentages than those with a different browser. OK, so is there a piece of code on a page that is affecting the customers’ experience? Or is it even a demographic thing?
All this is just scratching the surface. Web analytics can answer so many questions you didn’t even know you needed to ask. The trick is not getting overawed – it is too easy to get lost in an ocean of statistics.
Q. Which new approaches in the marketplace are you reviewing currently?
Michael Welch : The use of video is an interesting avenue that we are keenly pursuing at the moment. Audio and visual are right up there in terms of brand development;
and with the sheer number of opportunities available on the web, online videos have never been more exciting. We’re still testing the water at the moment with a new
‘ Blackcircles.com TV’ channel on YouTube, but I’m pleased with the results so far.
In a bit of a more traditions sense we are also enhancing our email campaigns.
However, I’m very wary of over-saturating our customers with information that they will just mark as spam. The key goal for us at the moment is engaging our customers with the brand. Social media is playing a large role in this as well, as you would expect.
Micro-environment The players (stakeholders) and their interactions which influence how an organisation responds in its marketplace.
Macro-environment Broad forces affecting all organisations in the marketplace, including social, technological, economic, political, legal and ecological influences.
marketplace and a digital marketer needs to understand their behaviour and the implica- tion of changes if an organisation is to develop an effective digital marketing strategy.
The macro-environment is sometimes known as ‘the remote environment’ and con- sists of external forces which can significantly affect organisational success. These forces originate from the marketplace, which is largely beyond the immediate control of an organisation – e.g. economic conditions, changes to international trade legislation, technological developments and innovations, social change and political interventions.
We study the parts of the macro-environment at are significant to developing digital strategy in Chapter 3.
The trading environment can have a profound impact on performance; consequently an organisation should continually monitor the environment (micro and macro). This process is often referred to as environmental scanning. Online marketplace analysis helps to define the nature of the competitive market or click ecosystem. In Chapter 1 we saw that there are a range of digital technology platforms within the mobile and desktop hardware platforms. Major online players such as Facebook, Google and Sales- force have developed their own infrastructure or online market ecosystem which con- nects websites through data exchange, giving opportunities to enhance the customer experience and extend their reach and influence. For example, Facebook has developed an API system known as the Facebook platform to enable exchange of data between websites and applications including mobile apps. This enables other site owners to incorporate information about consumer Facebook interactions into their own websites and apps and share social objects across the Facebook ecosystem to extend their reach.
Google has developed its own ecosystem related to search marketing and mobile – the Android ecosystem. As part of marketplace analysis, companies have to evaluate the relative importance of these ecosystems and the resources they need to put into inte- grating their online services with them, to create a plan.
The digital marketing environment Figure 2.2
Environmental scanning The process of continuously monitoring and analysing events in an organisation’s environment(s) which have implications for planning.
Click ecosystem Describes the customer behaviour or flow of online visitors between search engines, media sites, other intermediaries to an organisation and its competitors.
Online market ecosystem Interactions between different online systems related to a specific hardware or software technology which may be independent or developed by a particular brand.
Understanding customer journeys
Customer journeys is a term commonly used by digital marketers to describe ‘touchpoints’
or different types of paid, owned and earned media which influence consumers as they access different types of website and content when selecting products and services. It is the modern marketers’ job to make the best investments to feature their brands and provide relevant content to support this decision making. To help understand different customer journeys to purchase, customer journey maps are a technique used to model behaviour of different audience personas (see the consumer behaviour section in this chapter for an explanation). A generic example is shown in Figure 2.3 .
Google has developed a retail-specific model for understanding customer journeys, widely discussed in marketing of this consumer decision making known as the Zero Moment
Understanding customer journeys
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 presence on. Once you have identified the main company or service types, group them together so that their overall importance can be reviewed.
Online ecosystems Activity 2.1
Traditional communication
Digital communication out-of-store
Digital communication in-store
Product experience
TV
Social discovery Display Search Website/mobile Ad remarketing Email remarketing Smartphone Interactive display At home or at work
Experience product On-pack interaction Awareness
Stimulus and inspiration
Consideration Develop preference
Purchase Buy in-store or
online
Video or micro-content shared by Facebook or other social media
Later searches in journey
Online value proposition drives visit to website based on content or offer
Buy product!
Site visitor added to
‘cookie pool’ – sees ad on social network or publisher site
Sees local ad or trial coupon sent by SMS
In-store interactive display offers trial
Loop closed – share personal experience or offer to social
On-pack promotion encourages interaction on smartphone, tablet or desktop
Subscribes to CRM – email offers, events and nutrition information
An example of a customer journey map Figure 2.3