Chapter 5 - The Internet and the marketing mix

Learning Objectives

How does one apply the elements of the marketing mix in an online context?

When a business looks at the marketing mix in an online context the must look at each of the following:

• Product
• Promotion
• Price
• Place
• People
• Process
• Physical evidence

Creating a strategy for each one of these will allow the business to understand the bigger piece of how their business works.

What opportunities does the Internet make available for varying the marketing mix?

The Internet allows businesses to be very flexible when using it to market their product. The business can use the Internet to create a very robust customer service, which can be really beneficial to both the customer and the business. The Internet can also be used to understand the consumer in a more detailed way. First by using a website, the business can track how the customer interacts with the content and also allows them to track the sales as they happen. This can give a business very good insight into how what their customers buy. With the gathering of the customer information, the business can use the data to send out mass e-newsletters, which will keep customer's coming back the website for updates in products, deals, or even information on how to use the products. The Internet is a vast space of information, which can be used by the businesses to develop a closer relationship to their customer.

What opportunities does online brand-building provide?

Branding provides many opportunities that allow a business to grow their business. A business can create the promise of convenience for their customers. The promise of convenience will allow the customer to easily purchase a product or service, than a real world purchase. It can also provide a more convenient way of purchasing a product or service than with competing businesses, either brick and mortar or online.  Branding also provides a business the promise of achievement by providing ways to the customer to support or help obtain goals in their day to day business. Another benefit branding provides is the promise of fun and adventure for their customers. This type of interaction creates the type of relationship between the business and customers that benefit both parties. The business can also promise self-expression and recognition, which allows customers to customize the online experience. Lastly, branding provide a way for customers to get a sense of belonging by way of online social communities.

Questions for marketers

How are the elements of the marketing mix varied online?

The framework to apply a varied marketing mix online is called the 7 P's. This includes product, promotion, price, place, people, process, and physical evidence. By using these in an Internet marketing strategy, a business can improve current processes and discover new opportunities.

The product refers to the what is being offered by a business. A business needs to analyze what is it is selling in order for it to be successful. This includes looking at the quality, image, branding, features, variants, mix, support, customer service, the use of the product or service, the availability of the product or service, and the warranties being offered in order to improve on the current products or services.

The promotion refers to how the product or service is being presented to the consumers of the business. Is it reaching the consumers? Are there tools that will allow the business to reach new and existing consumers? These are questions that need to be asked by the business in order to be effective. Creating the strategies that bring the customers to do business increases awareness of the product or services.

The price refers to the pricing model being implemented by the business. Creating the right pricing model is crucial to a business. By analyzing the current pricing model, a business can figure out the right pricing mix and increase customer satisfaction.

The people refers to how the internal staff is being utilized to support the e-commerce business processes. This includes who is doing the marketing activities, who is calling the customers, who is selling, who is keeping up with the culture and image of the business, how can we train our employees to better respond to the customer needs, and how can we utilize the employees to create an added-value to the product or service. When all internal staff are working together, there is an increase in proficiency of the business processes.

The process refers to how the business is focusing on streamlining the business processes. This includes activities such as focusing on the customer needs, planning for the future, how the infrastructure is going to be supported, improving the customer experience, and research and development. Business processes are important to making the business run smoothly.

The physical evidence refers to how the business responds to both the internal staff and the customers. A business must understand and meet the needs of their customers. Analyzing how these customers are making purchase and through what channels allows a business to put the correct processes into place to satisfy their customers.

What are the implications of the Internet for brand development?

Branding is an important part of the business and the Internet has magnified the importance of branding. When customers come to a company website they may have no or small perception of what the company stands for. By not taking the appropriate steps to create a good brand, the company might give the customers a bad perception, in which case the customer may not want to come back. First impressions are everything, especially on the Internet where there maybe little or no contact. With the right combination of branding, such as a good user experience or great customer service, the business can create an online environment that invites their customer back repeatedly.

Can the product component of the mix be varied online?

Yes, the product component of the marketing mix can be varied online. The product component part of the marketing mix refers to the understanding of the product, service, or brand being offered by the product. When analyzing the marketing mix for the product, the business needs to split the product into two categories. The first is the core product, which is the main product being offered to the customers. The second is the extended product, which is additional services and benefits that are built around the core product.

How are companies developing online pricing strategies?

There are four ways businesses are developing online pricing strategies, all of which are important in determining the right pricing model. The first strategy is to increase the price transparency and how it affects differential pricing. A very good example of this would be differentiating customers from different countries. The second strategy is to put downward pressure on the pricing. Downward pressure is created by the transparency in pricing along with the increased competitiveness in an industry. The third strategy is to create new pricing approaches, which might include dynamic pricing, price testing, and auctions. With the invention of the Internet, there has been an increased usage of new and exciting pricing models. Creating an inventive way to new pricing, can make for a great strategy and give a business the competitive edge it needs to thrive. The final strategy is to create alternative pricing structures or policies. Good examples of alternative pricing structures that would work on the Internet include basic price, discounts, add-ons and extra products and services, guarantee and warranties, refund policies, and order cancellation terms.

Does 'place' have relevance online?

Place is very relevant to an online business. The place refers to how the product is distributed to the customers. There are four different place aspects of the Internet marketing mix. These include place of purchase, new channel structures, channel conflicts, virtual organizations.