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DIGITAL MARKETING
STRATEGY, IMPLEMENTATION AND PRACTICE
Seventh Edition

Part 1
Digital marketing fundamentals

Chapter 1
Introducing Digital Marketing

Chapter 1 – Introducing Digital Marketing
Main Topics:
•
•
•
•

How digital marketing has transformed marketing
What are digital and multichannel marketing
Introduction to digital marketing strategy
Introduction to digital marketing communications

Case Study: eBay thrives in the global marketplace.

How digital marketing has transformed
marketing
Digital marketing today is about many more types of audience interaction than simply websites. It
involves harnessing the following ‘5Ds of managing digital marketing interactions’, for which we need
to assess consumer adoption and how our business can manage them to support marketing goals:
•

Digital devices: Our audiences interact with businesses using a combination of smartphones,
tablets, laptops, desktop computers, TVs, gaming devices, virtual assistants (like Amazon Echo)
and other connected devices forming the Internet of Things (IoT).

•

Digital platforms: Most interactions on these devices are through a browser or apps from the
major ‘platforms’ or online services, e.g. FacebookTM (and InstagramTM), GoogleTM (and
YouTubeTM), TwitterTM, LinkedInTM, AppleTM, AmazonTM and MicrosoftTM.

•

Digital media: Different communications channels for reaching and engaging audiences are
available, including advertising, email and messaging, search engines and social networks.

•

Digital data: The insight businesses collect about their audience profiles and their interactions
with businesses now needs to be protected by law in most countries.

•

Digital technology: This is the marketing technology – or martech that businesses use to create
interactive experiences from websites and mobile apps to in-store kiosks and email campaigns.

What are digital and multichannel
marketing?
Digital marketing can be defined as:
Achieving marketing objectives through applying digital media data
and technology
Multichannel (omni-channel) marketing:
Customer communications and product distribution are supported
by a combination of digital and traditional channels at different
points in the buying cycle or ‘path to purchase’. With the range of
mobile and IoT touchpoints, some have expanded the term to
omni-channel marketing.

Paid, owned and earned media
To help develop a strategy to reach and influence potential customers
online, it’s commonplace to refer to three main types of media channels
that marketers need to consider today:

1. Paid media: Also known as bought media, a direct payment occurs to a
site owner or an ad network when they serve an ad, a sponsorship or pay
for a click, lead or sale generated.
2. Owned media: Different forms of online media controlled by a company
including their website, blogs, email list and social media presence.
3. Earned media: The audience is reached through editorial, comments
and sharing online.

Paid, owned and earned media

Introduction to digital marketing strategy

Key considerations:
Key features of digital marketing strategy
Applications of digital marketing
Benefits of digital marketing

Introduction to digital marketing strategy
1. Key features of digital marketing strategy
– An effective digital marketing strategy should:
•
•
•
•

•
•
•

Be aligned with business and marketing strategy.
Use clear objectives for business and brand development and the online contribution
of leads and sales for the Internet or other digital channels
Be consistent with the types of customers who use and can be effectively reached
through the channel.
Define a compelling, differential value proposition for the channel, which must be
effectively communicated to customers.
Specify the mix of online and offline communication tools used to attract visitors to
the company website, or interact with the brand through other digital media such as
email or mobile.
Support the customer journey through the buying process as they select and
purchase products using the digital channel in combination with other channels.
Manage the online customer lifecycle through the stages of attracting visitors to the
website, converting them into customers and retention and growth.

– Value proposition: The benefits or value a brand offers to customers in its products
and services.
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Introduction to digital marketing strategy
2. Applications of digital marketing:
For established multichannel organisations, digital media offer a range of
opportunities for marketing products and services across the purchase cycle
that companies need to review as part of their digital strategy.
Digital media and technologies can be used as follows:
1. Advertising medium.
2. Direct-response medium.
3. Platform for sales transactions.
4. Lead-generation method.
5. Distribution channel, such as for distributing digital products.
6. Customer service mechanism.
7. Relationship-building medium.

Introduction to digital marketing strategy
3. Benefits of digital marketing:
The benefits of digital marketing in supporting marketing is suggested by applying
the definition of marketing by the Chartered Institute of Marketing (www.cim.co.uk):
– Marketing is the management process responsible for identifying,
anticipating and satisfying customer requirements profitably.
This definition emphasises the focus of marketing on the customer, while at the
same time implying a need to link to other business operations to achieve this
profitability.
– Digital marketing can be used to support these aims as follows:
Identifying. The Internet can be used for marketing research to find out customers’
needs and wants.
Anticipating. The Internet provides an additional channel by which customers can
access information and make purchases – evaluating this demand is key to
governing resource allocation to e-marketing.
Satisfying. A key success factor in e-marketing is achieving customer satisfaction
through the electronic channel, which raises issues such as is the site easy to use.
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Challenges in developing and managing
digital marketing strategy
1. There are unclear responsibilities for the many different digital marketing
activities.
2. No specific objectives are set for digital marketing.

3. Insufficient budget is allocated for digital marketing because customer
demand for online services is underestimated and competitors potentially
gain market share through superior online activities.
4. Budget is wasted as different parts of an organisation experiment with using
different techniques, martech suppliers without achieving economies of
scale.

Challenges in developing and managing
digital marketing strategy
5. New online value propositions for customers are not developed since the
Internet is treated as ‘just another channel to market’ without review of
opportunities to offer improved, differentiated online services.
6. Results from digital marketing are not measured or reviewed adequately, so
actions cannot be taken to improve effectiveness.
7. An experimental rather than planned approach is taken to using ecommunications with poor integration between online and offline marketing
communications.
Given the future importance of digital marketing, larger organisations have
introduced digital transformation programmes to help manage these
challenges.

Challenges in developing and managing
digital marketing strategy
Digital Transformation:
A staged programme of business improvements to people, process and tools
used for integrated digital marketing to maximise the potential contribution of
digital technology and media to business growth.
– Altimeter produced a visual proposing enablers and barriers to digital
transformation (Figure 1.7). It shows how disruptive digital technologies such
as social media, mobile platforms and real-time marketing should be
harnessed to create an effective digital customer experience.

A strategic framework for developing a
digital marketing strategy
-To realise the benefits of digital marketing and avoid the pitfalls, an
organisation needs to develop a planned, structured approach.
– Figure 1.8 suggested a process for developing and implementing a
digital marketing plan. This diagram highlights the key activities and
their dependencies, which are involved for the creation of a typical
digital marketing strategy, and relates them to coverage in different
chapters.

Introduction to digital marketing
communications
-Marketing campaigns were based on traditional media including TV, print and radio ads
and direct mail supported by public relations. But, in a few short years, since the web
concept was first proposed in the late 1980s by Sir Tim Berners-Lee, there have been
huge changes in marketing communications.
-The digital equivalents of these traditional media, which are known as digital media
channels, are vital components of most marketing campaigns today.
-For example, in an online campaign, marketers can use ads and content on social media
to engage audiences:
– Display ads, the familiar banner and skyscraper ads seen on many online publisher
sites
– Pay-per-click (PPC) ads, such as the Sponsored Google Ads adverts in Google;
– Search engine optimisation (SEO) to gain higher positions in the natural listings of
Google.
– Affiliate marketing, where sites that generate a sale for a merchant gain commission. – Email marketing, which is most effective when messages are sent to an existing
customer base – i.e. customers who have given their permission to receive them.

Source: Smart Insights (2010)

Introduction to digital marketing
communications
-But the approaches used to target the online audience are potentially
very different, with personalisation based on the customer profile and
previous interactions with communications giving many options to
deliver more timely, relevant messages.

-(Personalised communications are also effective on the website,
where landing pages are commonly used to make the page more
relevant to what the customer is seeking.)
-Leading websites also provide great opportunities to engage the visitor
through in-depth text content, rich media such as video and audio and
participation in customer communities.

Source: Smart Insights (2010)

Using digital media channels to support
business objectives
RACE consists of four steps designed to help engage prospects, customers
and fans with brands throughout the customer lifecycle:
Step 1: Reach – Build awareness of a brand, its products and services on
other sites and in offline media and build traffic by driving visits to web and
social media presences.
Step 2: Act – Engage audience with brand on its website or other online
presence to encourage them to interact with a company or other customers. In
many sectors, the aim of the Act stage is lead generation, i.e. to gain
permission to market to a prospect using email, SMS or mobile app
notifications.

Source: Smart Insights (2010)

Using digital media channels to support
business objectives
Step 3: Convert – Achieve conversion to generate sales on web presences and
offline.
Step 4: Engage – Build customer relationships through time to achieve
retention goals.

-Digital channels always work best when they are integrated with other
channels so, where appropriate, digital channels should be combined with the
traditional offline media and channels.
-The most important aspects of integration are, first, using traditional media to
raise awareness of the value of the online presences at the Reach and Act
stages and, second, at the Convert and Engage steps where customers may
prefer to interact with customer representatives.

Source: Smart Insights (2010)

Figure 1.9 RACE: Reach-Act (Interact)-ConvertEngage

Source: Smart Insights (2010)

Types of digital media channels
There are many online communications tools that marketers must review as
part of their communications strategy or as part of planning an online marketing
campaign. Online marketing tools are divided into six main groups , as shown
in Figure 1.10.
1. Search engine marketing. Gaining visibility on a search engine to encourage
click-through to a website when the user types a specific keyword phrase.
2. Online PR. Maximising favourable mentions of your company, brands, products
or websites on third-party websites such as social networks, blogs, podcasts or
feeds that are likely to be visited by your target audience.
3. Online partnerships. Creating and managing long-term arrangements to
promote your online services on third-party websites or through email
communications. Different forms of partnership include link building, affiliate
marketing, aggregators such as price comparison sites, online sponsorship and comarketing.
Source: Chaffey and Smith (2017)

Types of digital media channels
4. Display advertising. Use of online ads such as banners and rich media ads
to achieve brand awareness and encourage click-through to a target site.
5. Opt-in email marketing. Placing ads in third-party e-newsletters or the use
of an in-house list for customer activation and retention. Buying or renting lists
of email addresses is considered as a spamming technique and not permitted
under the privacy legislation.
6. Social media marketing. Companies participate and advertise within social
networks and communities to reach and engage their audience. Viral marketing
or online word-of-mouth messages are closely related to this. Here content is
shared or messages are forwarded to help achieve awareness and, in some
cases, drive response.

Source: Chaffey and Smith (2017)

Figure 1.10 Six categories of digital
communications tools or media channels

Source: Chaffey and Smith (2017)

Benefits of Digital Media
– Digital marketing communications differ significantly from conventional
marketing communications because digital media enables new forms of
interaction and new models for information exchange.
– A useful summary of the differences between new media and traditional media
was originally developed by McDonald and Wilson (1999) and is still valid –
they describe the ‘6Is of the e-marketing mix’, which are practical benefits of
digital marketing that the marketer should exploit.
1. Interactivity.
2. Intelligence.
3. Individualisation.
4. Integration.
5. Industry restructuring.
6. Independence of location.

Benefits of Digital Media – Interactivity:

Figure 1.11(a) shows how traditional media are predominantly push media where the marketing
message is broadcast from company to customer, although interaction can be encouraged through
direct response to phone, website or social media page. However, online it is often the customer who
initiates contact and is seeking information through researching information on a website.
In other words, it is a ‘pull’ mechanism where it is particularly important to have good visibility in
search engines when customers are entering search terms relevant to a company’s products or
services. Amongst marketing professionals this powerful new approach to marketing is now commonly
known as inbound marketing.

Inbound marketing:
The consumer is proactive in seeking out information for their needs, and interactions with brands are
attracted through content, search and social media marketing.

Benefits of Digital Media – Interactivity:

Figure 1.11(b) shows how digital media should be used to encourage two-way
communications, which may be extensions of the direct-response approach.
For example, FMCG suppliers use their website or Facebook presence as a method of
generating interaction by providing incentives such as competitions and sales promotions
to encourage the customer to respond with their names, addresses and profile
information such as age and sex.

Benefits of Digital Media – Intelligence:
– Digital media and technology can be used as a relatively low-cost method of
collecting marketing research, particularly about customer perceptions of products and
services.

Interactions with consumers across all the different touchpoints shown in Figure 1.1.
can be stored in data lakes or data warehouses to provide insight collectively known
as ‘Big Data’.

– Data lake and data warehouse:
A data lake is a storage repository that holds a diversity of raw data in its native format
where it is available for analysis and reporting by people across a company. This
contrasts to a data warehouse, which contains structured data.

Benefits of Digital Media – Individualisation:
Another important feature of interactive
marketing communications is that they can
be tailored to the individual (Figure
1.12(b)) at relatively low costs, unlike in
traditional media where the same
message tends to be broadcast to
everyone (Figure 1.12(a)).

This individualisation is based on the
intelligence collected about site visitors
and then stored in a database and
subsequently used to target and
personalise communications to customers
to achieve relevance in all media.

Benefits of Digital Media – Integration:
The Internet provides further scope for integrated marketing communications.
Figure 1.13 shows the role of the Internet in multichannel marketing. When assessing
the marketing effectiveness of a website, the role of the Internet in communicating with
customers and other partners can best be considered from two perspectives.

1. Outbound digital communications:
Website, mobile push notifications or email marketing are used to send personalised
communications to customers.
2. Inbound digital communications:
Customers enquire through web-based forms, social media and email.

Benefits of Digital Media – Industry
restructuring:
Disintermediation and reintermediation are key concepts of industry
restructuring that should be considered by any company developing a digital
marketing strategy.
– Disintermediation:
The removal of intermediaries such as distributors or brokers that formerly
linked a company to its customers.
– Reintermediation:
The creation of new intermediaries between customers and suppliers
providing services such as supplier search and product evaluation.

Benefits of Digital Media – Independence of
location:
Electronic media also introduce the possibility of increasing the reach of
company communications to the global market.

This gives opportunities to sell into international markets, which may not
previously have been possible. The Internet makes it possible to sell to a
country without a local sales or customer service force (although this may still
be necessary for some products).

Key communication concepts for digital
marketing
The three key concepts that underpin digital communications and inbound
marketing across the digital media:
1. Permission marketing: Customers agree (opt in) to be involved in an
organisation’s marketing activities, usually as a result of an incentive.

2. Content marketing: The management of text, rich media, audio and video
content aimed at engaging customers and prospects to meet business goals
published through print and digital media including web and mobile platforms
which is repurposed and syndicated to different forms of web presence such as
publisher sites, blogs, social media and comparison sites.

-Content marketing hub:
A central branded location where your audience can access and interact with all
your key content marketing assets. In a practical sense, the content hub can be
a blog or new section, an online customer magazine or a resource centre.
3. Customer engagement: Customer engagement
Repeated interactions through the customer lifecycle prompted by online and
offline communications aimed at strengthening the long-term emotional,
psychological and physical investment a customer has with a brand.
Source: Smart Insights (2015a)

DIGITAL MARKETING
STRATEGY, IMPLEMENTATION AND PRACTICE
Seventh Edition

Part 1
Digital marketing fundamentals

Chapter 2
Online marketplace analysis:
micro-environment

Chapter 2 – Online marketplace analysis:
micro-environment
Main Topics:
• Situation analysis for digital marketing
• Digital marketing environment
• Understanding customer in digital markets
• Consumer. Choice and digital influence
• Customer characteristics
• Competitors
• Suppliers
• New channel structures
• Digital business models for e-commerce
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Situation analysis for digital marketing
The digital marketing environment or ‘online marketplace’ that an organisation competes
in 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.
Situation analysis
Collection and review of information about an organisation’s external environment and
internal resources and processes in order to refine its strategy.

Situation analysis for digital marketing
Situation analysis should review the following factors:
•
•

•

•
•

Customers. Digital marketing propositions and communications should be based around the
customer – their characteristics, technology usage, behaviors, needs and wants.
Marketplace analysis. Including intermediaries, influencers and potential partners. This involves
identifying and reviewing the main online influences on purchase behaviors. There are many
influences to consider, including search engines, publisher media sites, blogs, review sites and
social networks. Marketplace analysis also involves reviewing opportunities and threats from
digital media and technology, including new business and revenue models.
Competitors. It is essential to understand how organizations compete in a particular marketplace;
benchmarking customer propositions and communications activities against direct and indirect
competitors and out-of-sector businesses can identify opportunities for new approaches and
digital marketing activities that need to be improved.
Wider macro-environment. These are the broader strategic influences including social, legal,
environmental, political and technological influences.
Internal review. Another major part of the situation involves an inward-looking, internal review of
the effectiveness of existing digital marketing approaches. This will include reviewing current
results from digital marketing by review of key performance indicators (KPIs) and dashboards and
the organizational capabilities and processes used to manage digital marketing, summarised as
strengths and weaknesses.

The digital marketing environment
➢ The (digital) marketing environment involves two major elements:
1) micro- environment and 2) macro-environment (Figure 2.1).
➢ The micro-environment is known as the operating environment and
focuses on the players that 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 players shape the online marketplace, and a digital marketer
needs to understand their behaviors and interpret this correctly in order to
build and adapt an efficient and effective digital marketing strategy.

➢ The macro-environment, sometimes known as ‘the remote environment’,
consists of external forces that can significantly affect success. These
forces originate from the marketplace that 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).

Figure 2.1 The digital marketing environment

– Micro-environment
The players (actors) 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.
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Understanding customer in digital markets
Customer segments
Search intermediaries
Intermediaries, influencers and media or publisher sites
Destination sites and platforms

Understanding customer in digital markets
– In the physical world, ‘going to the shops’ is a well-understood
concept, but less is known about the range of triggers and influences
that can shape a shopper’s journey and inform their ultimate purchase
decision. In the digital world, the same basic principles are true, but the
online customer encounters many more ‘touchpoints’ (digital triggers
and influences), which influence their decision making (e.g., websites,
social media content and blogs).

– To help understand customers’ interactions with physical and digital
touchpoints, triggers and influences, journeys maps are increasingly
used to model behavior of different types of target audiences. (See
Figure 2.2 for an example of a customer journey map.)

Figure 2.2 An example of a customer
journey map

Understanding customer in digital markets
–

To help understand the influences on online customer journeys it is useful to
produce an online marketplace map, as shown in Figure 2.3, which
summarizes how target customer segments might be influenced by different
types of digital sites.

–

The main elements of the online marketplace map are:

Customer segments:
The marketplace analysis helps identify and outline different target
segments, which have implications for digital marketing, and helps to
understand the target group’s online media consumption, behaviour and
relevant types of digital content.

Search intermediaries:
The main search engines are typically Google, Yahoo!, BingTM and
AskTM, but others are important in some markets such as China
(BaiduTM) and Russia (YandexTM).

Understanding customer in digital markets

3. Intermediaries, influencers and media or publisher sites:
Media sites and other intermediaries such as individual influencers, social
networks, aggregators and affiliates are often successful in attracting
visitors via customer search or direct to their websites.

4. Destination sites and platforms:
These are the sites that the marketer is trying to attract visitors to,
including transactional sites by retail, financial service, travel,
manufacturers and other companies or non-transactional sites like brand
or relationship-building sites.

Figure 2.3 An online marketplace map

Consumer choice and digital influence
Customer characteristics:
– Demographic variables
– Psychographic and behavioural variables
Social media and emotions
Consumer Personas
The buying process

Consumer choice and digital influence
➢ Consumer choice and the subsequent decision making are crucial to the purchasing
process (online and offline) but digital media and especially Mobile digital media now
plays an increasingly important role in buying decisions. Many buyers visit online first
to find information that will inform what they buy, so the web and social media are :
•
•

a vital part of the research process, as Internet users now spend longer
researching products online;
used at every stage of the research process from the initial scan to the more
detailed comparison and final checking of specifications before purchase.

➢ The result of this change in behaviour means that buyers are more informed, and
refer to a multiplicity of sources to find information that will inform their final
purchasing decision, e.g. brand websites, social media, review sites, traditional print
media and personal recommendations .
➢ Digital sources of information now play a more important role in shaping purchase
decisions. So, companies have to think carefully how they can maximise the value of
positive comments and reviews and reinforce consumer perceptions through product
quality, and service experiences both on and offline.

Consumer choice and digital influence
Customer characteristics:
➢ Research has identified that there are many factors that influence online
behaviour and over time the market segments that use the Internet and digital
services have changed significantly, so it is important for digital marketers to a)
be aware of important behavioural variables, and b) to understand how to model
online consumer behaviour.
➢ Research suggests a fruitful place to begin identifying consumer target markets
is to consider:
1.

Demographic variables: any personal attributes that tend to remain static
throughout an individual’s life time, or evolve slowly over time – such as age,
gender, race etc. – can be defined as demographic variables. Key elements of
a consumer’s demographic profile that have been found to influence online
behaviour include variables such as: income, education, race, age, gender and
lifestyle, cultural and social make-up that influnces online behaviour.
Psychographic and behavioural variables. Any aspect 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 variable.

Framework for understanding online
customer experiences
Figure 2.9 shows a framework for understanding the concepts that motivate and
influence the online consumer. The antecedents or background to the online experience
consist of an important list of concepts that can positively or negatively influence or
motive the consumer to engage with a digital offer:
1. Information processing (IP). This is very important as it shapes how a consumer deals with
available data and information that will shape their future behaviour.
2. Perceived ease-of-use. This also needs consideration by digital marketers, as the easier a
website or mobile site is to use, the more likely a customer will have a positive online
experience.
3. Perceived usefulness. This refers to the extent to which the digital offer fits with the
customer’s daily life – for instance, shopping, online booking train tickets, banking.
4. Perceived benefits. If a customer feels they will be rewarded in some positive way by
engaging with a digital offer, this is likely to generate support for an online brand.
5. Perceived control. If a customer is a skilled user of the digital technology in question then
they will feel they are able to function successfully in this environment.
6. Skill. This refers to the customer ability to use the technology to achieve their desired.
7. Trust and risk. Both play an important role in how a customer behaves online.
8. Enjoyment. This is an outcome of a positive online experience.

Figure 2.9 Framework for understanding
online customer experiences

Source: Rose and Hair (2011)

Consumer choice and digital influence
Social media and emotions:
➢ social media is increasingly influential for capturing and sharing
consumer experiences and is a major conduit through which
consumers share, recommend and feedback on their product and
service, choices and experiences.
➢ Social media has become important as a means of communicating
and interacting online and also as a source of peer
recommendations.

Consumer choice and digital influence
Consumer Personas:
➢ Personas are fictional profiles that represent a particular target
audience. Personas are a tool, which can help understand online
customer characteristics and behaviour and then create
communications more relevant to your audience.
➢ Creating personas is a powerful technique for developing customercentered online strategies, company presences and campaigns and
forms part of marketplace analysis.

Consumer choice and digital influence
The buying process:
➢ There are different stages in the buying process. At each stage the
purpose (from both the buyer and supplier perspective) is a particular
outcome:
awareness; interest; evaluation; trial; adoption.

➢ This set of outcomes has been considered in the digital market and
Chaffey and Smith (2017) describe them as:
1. problem recognition; 2. information search; 3. evaluation;
4. decision; 5. action (sale or use of online service); 6. post purchase.
➢ Figure 2.10 gives a summary of how the Internet can be used to
support the different stages in the buying process. Note that social
media can potentially support each stage as consumers ask others via
social networks for recommendations or read reviews and ratings.

Figure 2.10 A summary of how digital media can
impact on the buying process in a new purchase

Competitors
➢ The shape and nature of online competitive markets
– The five competitive forces are
• bargaining power of buyers.
• bargaining power of suppliers.
• threat of substitute products and services.
• threat of new entrants.
• intensity of rivalry.

Competitors
➢ Competitor analysis and benchmarking
– Competitor analysis
• Involves identifying the companies that are competing for our
business and then reviewing what they are good at, what are their
strengths, where are their weaknesses, what are they planning,
where do they want to take the company and how do they behave
when other companies try to take their market share.

– Competitor benchmarking
• A structured analysis of the online services, capabilities and
performance of an organisation within the areas of customer
acquisition, conversion, retention and growth.

Suppliers
Digital marketing intermediaries
– Marketing intermediaries
• Firms that can help a company to promote, sell and distribute
its products or services, for example publisher or media sites,
comparison sites, search engines, social networks and blogs.
– Destination sites
• Sites typically owned by merchants, product manufacturers
or retailers providing product information.
– Online intermediary sites
– Online intermediary sites: Websites that facilitate exchanges
between consumer and business suppliers.

New channel structures
➢ Channel structure
The configuration of partners in a distribution channel.
➢ Disintermediation
The removal of intermediaries such as distributors or brokers that
formerly linked a company to its customers.
•

The benefits of disintermediation to the producer are clear – it is able to
remove the sales and infrastructure cost of selling through the channel,
and some of these cost savings can be passed on to the customer in
the form of cost reductions.

•

Moreover, since purchasers of products still require assistance in the
selection of products, this led to the creation of new intermediaries, a
process referred to as reintermediation.

➢ Reintermediation
The creation of new intermediaries between customers and suppliers
providing services such as supplier search and product evaluation.
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

New channel structures
Figure 2.12 illustrates disintermediation in a graphical form for a simplified retail
channel. Further intermediaries, such as additional distributors, may occur in a
business-to-business market.
Figure 2.13 (a) shows the former position where a company marketed and sold its
products by ‘pushing’ them through a sales channel; it also shows two different
types of disintermediation in which the wholesaler (b) or the wholesaler and retailer
(c) are bypassed, allowing the producer to sell and promote direct to the
consumer.

Case study; Boo hoo – learning for the
largest dot com failure
Questions
1) Discuss which strategic market assumptions and decisions led to
Boo.com’s inevitable failure?
2) Compare and contrast the marketing strategy of Boo.com with
successful online travel and leisure retailer lastminute.com. Suggest
what made the difference between success and failure
3) Use the framework of the marketing mix to appraise the marketing
strategy and tactics of Boo.com
4) In many ways the vision of Boo’s founders was ‘ideas before their
time’. Give examples of e-retail techniques adopted by boo.com that
are now common place.

DIGITAL MARKETING
STRATEGY, IMPLEMENTATION AND PRACTICE
Seventh Edition

Part 1
Digital marketing fundamentals

Chapter 3
The digital macro-environment

Chapter 3 The Digital macro-environment
Main topics:
• The rate of environmental change
• Technological forces
• Economic forces
• Political forces
• Legal Forces
• Social Forces
Case Study:
Social media – Do celebrities call all the
shots?

Introduction to the digital macroenvironment. (1 of 2)
For the professional digital marketer, the most important task is to carry out a
thorough assessment of the forces that are shaping the online marketing
environment and identify which forces have implications for their own marketing
planning and strategic initiatives.
The macro-environmental forces in the following order:
• Technological forces. Changes in technology that influence marketing
opportunities, create new product development opportunities, introduce new
ways to access target markets through channel integration and create new
forms of access platforms and applications.
• Economic forces. Cause variation in economic conditions and affect trading
opportunities, influence consumer spending and business performance and
have significant implications for digital marketing planning.

•

Political forces. National governments and transnational organizations
have an important role in determining the future adoption and control of
the Internet and the rules by which it is governed.

Introduction to the digital macroenvironment. (2 of 2)
• Legal forces. Determine the methods by which products can be promoted
and sold online. Laws and ethical guidelines that seek to safeguard
individuals’ rights to privacy and businesses’ rights to free trade.
• Social forces. Cultural diversity among digital communities, that influences
use of the Internet, and the services businesses provide online.

-The main reason for keeping track of changes in the macro-environment is to
be aware of how changes in social behaviour, new laws and technological
innovation can create opportunities or threats. Organisations that monitor
and respond effectively to their macro-environment can create differentiation
and competitive advantages that enable the business to survive and
prosper.

The rate of environmental change
In the digital world, changes in market forces are increasingly rapid. Firms should
respond to these changes, emerging opportunities and threats by developing
strategic agility.
Strategic agility is the capability to innovate and so gain competitive advantage
within a marketplace by monitoring changes within an organisation’s marketplace,
and then efficiently evaluating alternative strategies, selecting, reviewing and
implementing appropriate candidate strategies.

Strategic agility involves:
1. Collection, dissemination and evaluation of different information sources from
the micro- and macro-environment.
2. Developing processes for generating and reviewing the relevance of new
strategies based on creating new value for customers.
3. Research into potential customer value against the business value Generated.
4. Implementation of prototypes of new functionality to deliver customer Value.
5. Measurement and review of results from prototypes to revise further to improve
proposition or to end a trial.

Technological forces
These are key factors, which currently have significant implications for digital
marketing planning which are:
• Internet technology
• Cyber security
• How to develop secure systems
• Mobile and SMS messaging and applications
• Mobile Apps
• Wi-Fi and Bluetooth wireless applications
• Emerging technologies

Internet technology.
-The recent dramatic growth in the use of the Internet occurred because of the
development of the World Wide Web.
-Marketers need to understand the main principals of the web technology such
as web content is stored on web server computers and then accessed by
users who run desktop or mobile web browser ( Safari, Google) which display
the information and allow users to interact and select links to access other
websites.
-Promoting website addresses is important to marketing communications. The
technical name for web addresses is uniform universal resource locator (URL).

Web addresses are structured in a standard way as follows:

The ‘domain-name’ refers to the name of the web server and is usually
selected to be the same as the name of the company, and the extension
will indicate its type. The ‘extension’ is also commonly known as the
generic top-level domain (gTLD).

Internet technology.
Common gTLDs are:
.com represents an international or American company.
.org are not-for-profit organisations .
.mobi was introduced in 2006 for sites configured for mobile phones.
.net is a network provider.

URL strategy:
A defined approach to forming URLs including the use of capitalization
hyphenation and subdomains for different brands and different locations. This
has implications for promoting a website offline through promotional URLs
search engine optimization and findability.
How does the Internet work.
The Internet is a large-scale client–server system where content is transmitted
from client PCs whose users request services from server computers that hold
content, rich media and host business applications that deliver the services in
response to requests. Client PCs within homes and businesses are connected
to the Internet via local Internet- service-providers ISPs, which in turn are
linked to larger ISPs with connection to the major national and international
infrastructure or backbones.
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Internet technology.
Web standards:
The information, graphics and interactive elements that make up the web
pages of a site are collectively referred to as content.
Text information–HTML(Hypertext Markup Language):
A standard format used to define the text and layout of web pages. HTML files
usually have the extension HTML or HTM.
Cascading style sheets (CSS) are now used by most websites to enable
standard styling and interaction features across a site.
Text information and data–XML(eXtensible Markup
Language)
A metadata language providing data about data contained within pages is much
more powerful and is provided by XML(eXtensible Markup Language),
produced in February 1998. For example, product information on a web page
could use the XML tags , , and
.

Internet technology.
Javascript
Javascript is a technology that marketers should understand since it is so
important to creating more interactive experiences than are possible with
traditional HTML.
Javascript tags are used by most of the different marketing technology or Cloud
Computing/Marketing Cloud services used to provide interaction and capture
insight from web users.
Application programming interfaces (APIs)
• Amazon Web Services (
• Facebook and Twitter
• The Guardian Newspaper Open Platform
• Google APIs
• Kayak

Internet technology. (cyber security)
Cyber security: digital marketers need to understand security issues and the
risks they might encounter in order to manage their online operations
effectively.

These are the main security risks involved in an e-commerce transaction:
• Confidential details or passwords accessed on user’s computer, for example
through keylogging software or malware.
• Transaction or credit card details stolen in transit, for example through
packet sniffing’ software.
• Customer’s credit card details stolen from merchant’s server, for example
through hacking.
• Customer’s details accessed by company staff (or through a hacker who is
in the building and has used ‘social engineering’ techniques to find
information).
• Merchants or customers are not who they claim to be, and the innocent
party can be drawn into a fraudulent trading situation.

Internet technology (Approaches to
developing secure systems).
Digital certificates: There are two main methods of encryption using digital
certificates:
1- Secret-key or symmetric encryption: involves both parties having an identical
(shared) key known only to them. Only this key can be used to encrypt and
decrypt messages.
2- Public-key or asymmetric encryption.
Asymmetric encryption is so called since the keys used by the sender and
receiver of information are different. The two keys are related by a numerical
code, so only the pair of keys can be used in combination to encrypt and
decrypt information.
Digital signatures:
Can be used to create commercial systems by using public key encryption to
achieve authentication: the merchant and purchaser can prove they are
genuine. The purchaser’s digital signature is encrypted before sending a

message using their private key, and on receipt the public key of the
purchaser is used to decrypt the digital signature.
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Internet technology (Approaches to
developing secure systems).
The public-key infrastructure (PKI) and certificate authorities:
It is necessary to ensure the public key intended for decryption of a document
actually belongs to the genuine person whom you believe is sending you the
document. A system of trusted third party (TTP) certificates are used as a
means of containing owner identification information and a copy of the public
key used to unlock the information.
Secure Sockets Layer protocol (SSL)
CAs like VeriSign who issue an SSL certificate that verifies the identity of the
certificate owner. The SSL approach enables encryption of sensitive
information during online transactions using PKI and digital certificates to
ensure privacy and authentication.

Intent technology (Mobile and SMS
messaging and applications).
SMS applications:
• Database building direct response to ads direct mail or on pack.
• Location based services.
• Sampling trial.
• Sales promotions.
• Rewarding with offers for brand engagement.
• Short codes.
• Offering paid or services and content.
Mobile apps:
Questions businesses ask before developing a mobile app: Are apps a
strategic priority for us? Do we build our own app and or leverage existing
apps? Free or paid apps? How to best promote mobile apps? How to refine
apps in line with feedback?

Internet technology (Social location-based
marketing through mobile)
-Social location-based marketing: where social media tools give users the
option of sharing their location and hence give businesses the opportunity to
use proximity or location-based marketing to deliver targeted offers and
messages to consumers and collect data about their preferences and behavior.
-QR Codes: QR codes can be used in promotional initiatives to allow target
consumers to have quick access to a variety of information, such as instant
access to email addresses, phone numbers or business cards.
-Bluetooth-wireless-applications: Bluetooth technology has potential for
different forms of local marketing campaigns known as proximity marketing: (1)
viral communication; (2) community activities (dating or gaming events); (3)
location-based services –electronic coupons as you pass a store.

Assessing the marketing value of
technology innovation.
Depending on the attitude of the manager, this behavior can be summarised as
1. Cautious, a ‘wait and see’ approach.
2. Intermediate, sometimes referred to as ‘fast-follower’ approach. Let others
take the majority of the risk, but if they are proving successful then rapidly
adopt the technique, i.e. copy them.
3. Risk-taking, an early-adopter approach.
The diffusion–adoption curve can be used in two main ways as an analytical
tool to help managers:
1. To understand the stage at which customers are in adoption of a
technology, or any product.
2. To look at adoption of a new technique by other businesses from an
organisational perspective.

Assessing the marketing value of
technology innovation.
Hype cycle concept:
A graphic representation of the maturity adoption and business application of
specific technologies.
Hype cycle stages:
1. Technology trigger.
2. Peak of inflated expectations.
3. Trough of disillusionment.
4. Slope of enlightenment.
5. Plateau of productivity.
What action should marketing and e-commerce managers take when
confronted by new techniques and technologies?
– Competitors are likely to be reviewing new techniques and incorporating
some, so a careful review of new techniques is required.

– A company monitors new ideas as early adopters, trials them and then
adopts those that will positively impact the business.
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Economic forces.
Economic forces affect supply and demand and consequently it is important for
digital markets to identify which economic influences they need to monitor.

Market growth and employment: The economic environment can have a
critical impact on the success of companies through its effect on supply
and demand. Companies must choose those economic influences that are
relevant to their business and monitor changes.
Economic growth: when there is economic growth companies should be
prepared to experience increased demand for their products and services.
For digital marketers the challenge (from an economic perspective) is
predicting the next boom or slump as they need to consider investments,
research and development and if they fail to correctly anticipate the
changing state of the economy they may encounter difficulties or miss
opportunities.

Economic Forces
-Interest and exchange rates: Interest rates are a key monetary tool used by
governments in conjunction with banks and financial institutions to manage a
country’s economy. Western economies tend to lower interest rates during hard
times in order to stimulate economic activity and encourage borrowing and lending,
in the hope that they can avoid a downturn.
-Exchange rates: are the price of trading one currency against another.
fluctuations in exchange rates mean that the price a consumer in one country pays
for a product and/or the money that a supplier in an overseas country receives for
selling that product can change.
-Globalization: In the digital world, globalization reflects the move towards
international trading in a single global marketplace and the blurring of social and
cultural differences between countries.
-Digital marketers need to be aware of the implications of trading in global
markets and consider whether to develop bespoke branding and marketing
campaigns or whether to apply a standardised approach, and should also not lose
touch with the needs and wants of local markets.

Political Forces.
-The political environment is shaped by the interplay of government
agencies, public opinion and consumer pressure groups and industrybacked organisations.
-The political environment has many factors that influence the trading
environment, such as taxation, investment and management of
business and public affairs.

Political Forces.
Government action that can have a significant impact on the online
marketplace is control of intermediaries. This depends on the amount of
regulation in a given country and in individual markets.
Internet governance.
Internet governance refers to the controls put in place to manage the growth of
the Internet and its usage. There are many individuals, businesses and
organisations that have a vested interest in ensuring the stability of the Internet,
there is no central governing body.
The net neutrality principle.
The net or network neutrality principle enshrines equal access to the Internet
such that telecom providers do not discriminate access to data or connectivity
for different users based on their type or amount of content and platforms.
Taxation.
The Internet may cause significant reductions in tax revenues to national or
local governments if existing laws do not cover changes in purchasing patterns.
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Political Forces.
Tax jurisdiction: determines which country gets the tax income from a
transaction. Under the current system of international tax treaties, the right to
tax is divided between the country where the enterprise that receives the
income is resident (‘residence’ country).
Social media and political change:
Social media allows people to join together and political lobbyists are very
aware of the power of social media networks, when it comes down to
campaigning.

Legal forces.
The main information types used by the digital marketer that are governed by
ethics and legislation, are:
1- Contact information
2- Profile information
3- Platform usage information
4- Behavioural information.(on a single site)
5- Behavioural information. (across multiple sites)

Legal forces.
1- Data protection low.
The guidelines on data protection law are set out in the General Data
Protection Regulation (2018).
The GDPR applies to the gathering and using of personal and sensitive
data and requires that personal data shall be:

•
•
•
•

Processed lawfully, fairly and in a transparent manner in relation to
individuals.
Collected for specified, explicit and legitimate purposes and not further
processed in a manner that is incompatible with those purposes.
Adequate, relevant and limited to what is necessary in relation to the
purposes for which they are processed.
Accurate and, where necessary, kept up to date; every reasonable step
must be taken to ensure that personal data that are inaccurate, having
regard to the purposes for which they are processed, are erased or
rectified without delay.
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Legal forces.
•

kept in a form that permits identification of data subjects for no longer than
is necessary for the purposes for which the personal data are processed.

•

processed in a manner that ensures appropriate security of the personal
data, including protection against unauthorised or unlawful processing and
against accidental loss, destruction or damage, using appropriate technical
or organisational measures.

Anti-spam legislation:
-Laws have been enacted in different countries to protect individual privacy and
with the intention of reducing spam or unsolicited commercial email (UCE).
-Anti-spam laws do not mean that email cannot be used as a marketing tool but
the recipient has to agree to receive the mailing. This approach is called
permission marketing.

Legal forces.
2- Disability and discrimination law:
Web accessibility refers to enabling all users of a website to interact with it
regardless of disabilities they may have or the web browser or platform they are
using to access the site.
The visually impaired or blind are the main audience whom designing an
accessible website can help.
3- Brand and trademark protection law:
Online brand and trademark protection covers several areas, including use of a
brand name within domain names and use of trademarks within other websites
and in online adverts.
A- Domain name registration:
Those who are responsible for websites, they need to check that domain
names are registered and automatically renewed by the hosting company.

Legal forces.
B- Reputational damage in advertising:
Companies fear reputational damage through advertising on sites with which
they wouldn’t want their brand associated because of ad buys on social
networks or ad networks where it was not clear what content their ads would be
associated with. Many advertisers withdrew their advertising as a result.
C- Monitoring brand conversations in social networks and blogs through,
online brand reputation management and alerting software tools offer real-time
alerts when comments or mentions about a brand are posted online in different
locations, including blogs and social networks.

4-Intellectual property rights:
protect designs, ideas and inventions and include content and services
developed for e-commerce sites. Copyright law, which is designed to protect
authors, producers, broadcasters and performers.

Legal forces.
5- Online advertising law:
One particular challenge of online advertising for consumers is that marketing
communications must be obviously identifiable.
Guidance covers these cases:
• Unsolicited email marketing communications must be obviously identifiable as
marketing communications without the need to open them.
• Marketing communications must not falsely claim or imply that the marketer is acting
as a consumer (i.e. marketers should not leave reviews about their companies or
competitors on behalf of their business).
• Marketers and publishers must make clear that advertorials are marketing
communications; for example, by heading them ‘advertisement feature’.
For example: In the UK, the Advertising Standards Authority (ASA) has this guidance and
examples on celebrity endorsements, particularly applying to social media summarised
as:
• Endorsements must be genuine.
• Claims must be accurate
• Avoid the social media pitfalls.
• Remember age matters (in alcohol and gambling ads).
• Be aware of sector restrictions.
• Be responsible.
• Seek permission.
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Social forces.
-Changes in population are important to marketers as they create new market
opportunities.
-Analysis of demographic trends can reveal important issues, such as there is a
significant group in each national population of at least a quarter of the adult
population that does not envisage ever using the Internet. The lack of demand
for Internet services from this group needs to be taken into account when
forecasting future demand.
-Social exclusion:
The social impact of the Internet has also concerned may commentators
because the Internet has the potential effect of accentuating differences in
quality of life, both within a society in a single country and between different
nations, essentially creating ‘information haves’ and ‘information have-nots’.
Developed countries with the economies to support it are promoting the use of
IT and the Internet through social program.
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DIGITAL MARKETING
STRATEGY, IMPLEMENTATION AND PRACTICE
Seventh Edition

Part 2
Digital marketing strategy
development

Chapter 4
Digital marketing strategy

Chapter 4 Digital Marketing Strategy
Main topics
• Digital marketing strategy and channel strategy
management
• Importance of integrated digital marketing strategy
• How to structure a digital marketing strategy
• Competitor analysis
• Setting goals and objectives
• Strategy formulation
• Strategy implementation
• Assessing different digital projects

Digital marketing strategy and channel
strategy management. (1 of 2)
Digital marketing strategy definition:
Capabilities and strategic initiatives to support marketing and business objectives an
organization should deploy to harness digital media, data and marketing Technology to
increase multichannel engagement with their audiences using digital devices and
platforms.
Digital marketing strategy as a channel marketing strategy
For existing businesses, digital marketing strategy is a channel marketing strategy, which
defines how a company should set channel-specific objectives and develop differential
advantage while at the same time considering how channels should integrate.
Digital channel strategy has two components:
1- digital communications strategy.
2- changes to the proposition enabled by digital channels including product, pricing,
place, promotion and changes to customer service.
Customer touchpoints concept is:
Communications channels with which companies interact directly with prospects and
customers which includes web services, email and mobile.

Digital marketing strategy and channel
strategy management. (2 of 2)
The focus of digital marketing strategy is decisions about how to use digital channels
to support existing marketing strategies, how to exploit its strengths and manage its
weaknesses, and to use it in conjunction with other channels as part of a multichannel
marketing strategy.
Multichannel marketing strategy:
Defines how different marketing channels should integrate and support each other in
terms of their proposition development and communications based on their relative
merits for the customer and the company.
Figure 4.1 provides an overview of digital marketing strategy development. The internal
influences include top-level business objectives, which influence marketing strategy and
ultimately provide direction for the digital marketing strategy. Key external influences
include the market structure and demand, competitor strategies and opportunities and
threats, in particular those enabled by new digital technologies.

Source: Hart et al. (2017)

The scope of digital marketing strategy
❖ Use marketing automation tools for customer relationship
development.
❖ Develop the overall customer experience across multiple channels.
❖ Maximize the results from partnering and advertising with online
intermediaries such as publishers, and influencers such as
bloggers.
❖ Harness social media marketing, both through use on its own site
through user-generated content and through paid ads within the
main social networks such as Facebook, Instagram, LinkedIn and
Twitter.

Source: Hart et al. (2017)

Importance of integrated digital
marketing strategy.
Aspects of managing digital media and technology:

➢ Gaining buy in and budget consistent with audience media consumption and value
generated.
➢ Conflicts of ownership and tensions between a digital team and other teams such
as traditional marketing, IT, finance and senior management.
➢ Coordination with different channels in conjunction with teams managing
marketing programmes elsewhere in the business.
➢ Managing and integrating customer information about characteristics and
behaviours collected online.
➢ Achieving consistent reporting review, analysis and follow-up actions of digital
marketing results throughout the business.
➢ Structuring the specialist digital team and integrating into the organization by
changing responsibilities elsewhere in the organization.
➢ Time to market’ for implementing new functionality on a site.
➢ Insourcing vs outsourcing online marketing tactics, i.e. search, affiliate, email
marketing, PR, and staff recruitment requirements.
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How to structure a digital marketing
strategy:
Michael Porter (2001) suggested six principles that could help to
sustain a distinctive strategic position:
1. Start with the right goal.
2. Define a value proposition which is unique but, importantly,
deliverable.
3. Do things differently.
4. Be prepared to make trade-offs tailoring a firm’s activities to
outperform rivals.
5. Create a fit between what the company does, where it wants to be
and the resources available.
6. Establish continuity. Planning decisions follow the distinctive
position set out by the original goals.

Situation Analysis. (1 of 3)
Situation analysis is defined as:
Review of information about an organization’s internal processes and
resources and external marketplace factors in order to inform strategy
definition.

Situation analysis involves:
❖ Assessment of internal capabilities, resources and processes of the
company and a review of its activity in the marketplace. (Macro and
Micro analysis).
❖ Investigation of the wider environment in which a company
operates, including economic development, government
regulations, legal issues, taxation, social and ethical issues.

Source: Smart Insights (

Situation Analysis. (2 of 3)
Internal audit for digital marketing involves:
❖ Reviewing business effectiveness.
Financial or commercial contribution from digital channels, including
online leads, sales and profit.
❖ Reviewing marketing effectiveness.
Review leads (qualified enquiries), sales, customer retention,
satisfaction and loyalty.
❖ Reviewing digital marketing effectiveness.
Specific measures of the volume, quality, value and cost.
❖ Customer research.
Using user profiling to capture the core characteristics of target
customers involves more than using demographics.

Situation Analysis. (3 of 3)
❖ Resource analysis involves:
1 Financial resources. 2 Technology infrastructure resources. 3 Data
and insight resources. 4 Human resources. 5 Strengths and
weaknesses.
❖ Competitor analysis.
The monitoring of competitor use of digital marketing and e-commerce
to acquire and retain customers
❖ Intermediary analysis.
Identifying relevant intermediaries and looking at how the organization
and its competitors are using the intermediaries to build traffic and
provide services
❖ Assessing opportunities and threats.
SWOT analysis
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Setting goals and objectives for digital
marketing: (1 of 6)
– Any marketing strategy should be based on clearly defined corporate objectives,
and digital marketing should be an integrated element not considered separately
from other business and marketing objectives.

– When defining objectives and goals you should use clear definitions. For digital
marketing you can define different types of performance targets and measures,
as shown in Figure 4.10:

Setting goals and objectives for digital
marketing: (2 of 6)
1.
2.

Vision: A high-level statement of how digital marketing will contribute to the
organization.
Goals: These are the are broad aims to show how the business can benefit
from digital channels. They describe how your digital marketing will contribute
to the business in key areas of growing sales, communicating with your
audience and saving money.
Objectives: Specific SMART objectives to give clear direction and commercial
targets. Objectives are the SMART targets for digital marketing, which can be
used to track performance against target.
KPIs: Key performance indicators (KPIs) are used to check you are on track.
KPIs are specific metrics that are used to track performance to make sure you
are on track to meet specific objectives. They are sometimes known as
performance drivers or critical success factors for this reason.
Metrics and measures: Other measures that may be referenced, but aren’t
typically used in high-level reporting.

Setting goals and objectives for digital
marketing: (3 of 6)
The online revenue contribution:
A key objective for digital marketing is the online revenue contribution since this gives a
simple measure of the proportion of online sales achieved in different product categories.
It is important that companies set sales and revenue goals for online channels for
which costs are controlled through an allowable cost per acquisition.
Setting SMART objectives:
SMART is an easy-to-recall acronym that is used to assess the suitability of objectives.
SMART stands for:
❖ Specific. Is the objective sufficiently detailed to measure real-world
❖ problems and opportunities?
❖ Measurable. Can a quantitative or qualitative attribute be applied to create a metric?
❖ Actionable. Can the information be used to improve performance? If the objective
doesn’t change behavior in staff to help them improve performance, there is little
point in it!
❖ Relevant. Can the information be applied to the specific problem faced by the
manager?
❖ Time-related. Can the information be constrained through time?

Setting goals and objectives for digital
marketing: (4 of 6)
For SMART digital marketing objectives for an online presence such as a website or
mobile app it is important to measure traffic, value and cost.
VQVC Technique:
Volume measures of traffic.
Unique visits, Page view
Quality measures.
Bounce rate, Duration, Pages per visit.
Value measures.
Revenue per visit.
Cost measures.
Cost includes the cost of content and experience creation and promotion – i.e. paid,
owned and earned media costs.
Examples of SMART objectives across VQVC:

Digital channel contribution objective: Achieve 10 per cent online revenue (or
profit) contribution within two years. ( see other examples below this title.)

Setting goals and objectives for digital
marketing: (5 of 6)
Frameworks for objective setting:
Two methods of categorising objectives. First, objectives can be set at the level
of business effectiveness, marketing effectiveness and Internet marketing
effectiveness, as explained in the section on internal auditing as part of the
situation analysis. Second, the 5S framework of Sell, Speak, Serve, Save and
Sizzle provides a simple framework for objective setting.
Performance drivers:
Specific performance metrics are used to evaluate and improve the efficiency
and effectiveness of a process. Key performance indicators (KPIs) are a
special type of performance metric that indicate the overall performance of a
process or its sub processes.

Setting goals and objectives for digital
marketing: (5 of 6)
Leading and lagging performance indicators:
A leading performance indicator is a metric that is suggestive of future
performance.
Example of leading performance indicators can be applied to e-commerce:
– Repeat sales metrics: If repeat conversion rates are falling or the average time
between sales (sales latency) is falling, then these are warning signs of future
declining sales volume for which proactive action can be taken, e.g. through a
customer email marketing programme.
– Customer satisfaction or advocacy ratings such as the Net Promoter Score: If
these are trending downwards or return rates are increasing, this may be a sign of a
future decline in repeat sales since more customers are dissatisfied.
-Sales trends compared to market audience trends: If, for example, online sales
are increasing at a lower rate than overall online audiences for a product category are
indicated, e.g. through panel data, hitwise or searches in particular categories, then
this is a warning sign that needs to be acted upon.

Setting goals and objectives for digital
marketing: (6 of 6)
lagging performance indicators:
A lagging performance indicator is one where the measure indicates past
performance.
Lagging performance indicators for a transactional retail site
include:
– Sales volume revenue and profitability: These are typically compared
against target or previous periods.
– Cost per acquisition (CPA): The cost of gaining each new customer will also
be compared against target. Variations in trends in CPA for different referrers
(traffic sources) and between different product categories can potentially be
used as leading indicators.
– Conversion efficiency metrics: For an e-commerce site these include
process efficiency metrics such as conversion rate, average order and
landing page bounce rates.
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Strategy formulation and implementation
Digital marketing strategy is a channel marketing strategy and should:
be based on objectives for online contribution of leads and sales for this
channel;
❖ Consistent with the types of customers..
❖ Support the customer journey
❖ Define a unique, differential proposition for the channel.
❖ Specify how this proposition is communicated to persuade
customers to use online services.
❖ Manage the online customer lifecycle .
❖ Be consistent with the types of customers.

Key decisions in strategy development:
Digital marketing strategy development based on familiar elements
of marketing strategy which are :
1. Market and product strategies.
2. Business and revenue model strategies.
3. Target marketing strategy.
4. Positioning and differentiation.
5. Customer engagement and social media strategy.
6. Multichannel distribution strategy.
7. Multichannel communication strategy.
8. Online communication mix and budget.
9. Organisational capabilities and governance to support digital
transformation.

Market and product strategies.
1- Market penetration.
This strategy involves using digital channels to sell more existing
products into existing markets through:
• Market share growth.
• Customer loyalty improvement.
• Customer value improvement.
2- Market development.
Online channels are used to sell into new markets.
3- Product development.
The web can be used to add value to or extend existing products for
many companies.
4- Diversification.
New products are developed that are sold into new markets.

Business and revenue model strategies.
Business Model.
A summary of how a company will generate revenue, identifying its
product offering, value added services, and revenue sources and target
customers.
Strategy formulation often requires companies to evaluate new models
companies need to constantly innovate in order to defend market share
from competitors and new entrants.
Example:
Transactional e-commerce sites can sell advertising space or run co
branded promotions on site or through their email newsletters or lists to
sell access to their audience to third parties.

Target marketing strategy.
Evaluation and selection of appropriate market segments and the
development of appropriate offers.
The two key decisions for the marketing strategist are:
1- Segmentation/ targeting strategy.
2- Positioning/differentiation strategy.
Segmentation based on:
❖ Customer profile based on demographic characteristics.
❖ Customer lifecycle groups.
❖ Behavior in response and purchase value.
❖ Multichannel behavior channel preference.
❖ Tone and style preference.

Positioning and differentiation strategy.
( 1 of 2)
Differential advantage and positioning can be clarified and communicated by
developing an online value proposition (OVP).
Online value proposition (OVP).
A statement of the benefits of online services reinforces the core proposition
and differentiates from an organization’s offline offering and those of
competitors.
Developing an OVP, involves:
1- Developing online content and service and explaining them through
messages that:
• reinforce core brand proposition and credibility;
• communicate what a visitor can get from an online brand that they can’t get
from the brand offline and they can’t get from competitors or intermediaries.
2- Communicating these messages to all appropriate online and offline
customers with touchpoints in different levels of detail, from straplines to more
detailed content on the website or in print.
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Positioning and differentiation strategy.
(2 of 2)

Having a clear online value proposition has several benefits:
➢ It helps distinguish an e-commerce site from its competitors (this should be a
website design objective).
➢ It helps provide a focus on marketing efforts so that company staff are clear
about the purpose of the site.
➢ If the proposition is clear, it can be used for PR, and word-of-mouth
recommendations may be made about the company.
➢ It can be linked to the normal product propositions of a company or its
product.

Customer engagement and social media
strategy. Multichannel distribution
strategy.
Every company must develop a customer engagement strategy as a key part of their
digital marketing strategy. This customer engagement strategy reviews approaches to
create compelling content and experiences that form the online value proposition.
Customer engagement strategy.
A strategy to encourage interaction and participation of consumers with a brand.
Social media strategy.
Marketing communications used to achieve interaction with social network users to meet
business goals.
key questions to consider:
1- who are our target audience? 2- what are the content preference of our audience? 3which content type should have priority? 4- How do we differentiate the social channel
from other Communications channels? 4- should we consider content frequency and
editorial content calendar? 6- How do we manage publication and interaction?
7- should we use software for managing the publishing process? 8- Should we be
tracking the business impact of social network activity? 9- how do we optimize the social
presence?
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Multichannel distribution strategy.
Multichannel distribution strategy.
– Distribution channels refer to the flow of products from a manufacturer or service
provider to the end customer.
– The general options for the mix of ‘bricks and clicks’ are shown in Figure 4.17. If
the objective is to achieve a high online revenue contribution of greater than 70 per
cent then this will require fundamental change for the company to transform to a
clicks and mortar or clicks-only. (Internet pureplay) company.
– Kumar (1999) suggested that a company should decide whether the Internet will
primarily complement the company’s other channels or primarily replace other
channels. Clearly, if it is believed that the Internet will primarily replace other
channels, then it is important to invest in the promotion and infrastructure to
achieve this. This is a key decision as the company is essentially deciding whether
the Internet is ‘just another communications and/or sales channel’ or whether it will
fundamentally change the way it communicates and sells to its customers.

Multichannel communication strategy.
Online communication mix and budget.
(1 of 2)

The multichannel communications strategy must review different types
of customer contact with the company and then determine how online
channels will best support these channels.
The multichannel communications strategy must assess the
balance between:
Customer channel preferences.
Organization channel preferences.

Multichannel communication strategy.
Online communication mix and budget.
(2 of 2)

Online communication mix and budget:
– The decision on the amount of spending on online communications
and the mix between the different communications techniques such as
search engine marketing, affiliate marketing, email marketing.

– Making these decisions requires digital marketers to decide the focus
of their communications and whether the primary purpose is customer
acquisition, retention or relationship building.
There are three main parts to their scorecard:
1. Attraction
2. Conversion
3. Retention.

Organizational capabilities 7S framework
and governance to support digital
transformation.
How the organization manages changes required by deployment of
digital media such as managing marketing technology, data and insight
and changes to structure and skills.

The online lifecycle management grid
Generic digital marketing strategies to achieve objectives in the
grid include:
– Online value proposition strategy.
Defining the value proposition for acquisition and retention to
engage with customers online
– Online targeted reach strategy.
communicate with relevant audiences online to achieve
communications objectives
– Offline targeted reach strategy.
Encourage potential customers to use online channels.

– Online sales efficiency strategy.
Convert site visitors to engage and become leads to maximize online
purchase.

– Offline sales impact strategy.
Achieve sales offline from new or existing customers.

Case study 4 – ASOS shifts the focus of
high street retailing
Questions:
1. Apply the SOSTAC model to ASOS and highlight why it has
become such a successful online fashion brand
2. Describe how ASOS uses elements of the marketing mix as part
of its digital strategy
3. Discuss how ASOS has used digital to develop its differentiated
market position

DIGITAL MARKETING
STRATEGY, IMPLEMENTATION AND PRACTICE
Seventh Edition

Part 2
Digital marketing strategy
development

Chapter 5
Digital media and the
marketing mix

Chapter 5 Digital media and the
marketing mix
Main topics:

• Product
• Price
• Place
• Promotion
• People, process and physical evidence
Case study: Spotify streaming
develops new revenue models

What is the marketing mix?
Marketing mix
The series of seven key variables – Product, Price, Place, Promotion, People, Process
and Physical evidence – that are varied by marketers as part of the customer offering

What is the marketing mix?
Digital marketing affects all aspects of the traditional and service marketing mix, and in
this chapter we explore:
Product: looking at opportunities for modifying the core or extended product for digital
environments.
Price: focusing on the implications for setting prices in digital markets; new pricing
models and strategies.
Place: considering the implications for distribution for digital marketing.

Promotion: exploring promotional techniques.
People, process and physical evidence: reviewing the principal ideas, where the
focus is on how these elements of the mix relate to customer relationship
management and managing an organization’s digital presence.

Product
The product variable of the marketing mix refers to characteristics of a product, and has
implications for service or branding. Product decisions should be informed by market
research where customers’ needs are assessed and the feedback is used to modify
existing products or develop new products.

There are many alternatives for varying the product in the online context when a company
is developing its digital strategy; product decisions can usefully be divided into decisions
affecting the core product and the extended product.

The core product refers to the main product purchased by the consumer to fulfil their needs,

while the extended or augmented product refers to additional services and benefits that are
built around the core of the product.

Product
Implications for digital technology for the product element of the mix
1.
2.
3.
4.
5.
6.

Options for varying the core product
Options for offering digital products
Options for changing the extended product
Conducting online research
Speed of new product development
Speed of new product diffusion

Product
1. Options for varying the core product:
For some companies, there may be options for new digital products that will typically be
information products that can be delivered over the web. Originally, Ghosh (1998) talked
about developing new products or adding ‘digital value’ to customers. The questions he
posed still prove useful today:
•

Can I offer additional information or transaction services to my existing customer base?

•

Can I address the needs of new customer segments by repackaging my current
information assets or by creating new business propositions using the Internet?

•

an I use my ability to attract customers to generate new sources of revenue such as
advertising or sales of complementary products?

•

Will my current business be significantly harmed by other companies providing some of
the value I currently offer?

Product
2. Options for offering digital products:
•

Publishers, TV companies, media owners and other companies that can
offer digital products such as published content, music or videos now
have great flexibility to offer a range of product purchase options at
different price points, including:

•

Subscription.

•

Pay-per-view.

•

Bundling.

•

Ad-supported content.

Product
3.

Options for changing the extended product

When a customer buys a new computer or mobile phone it consists not only of the
tangible product, and peripheral devices, but also the information provided by the
salesperson, the instruction manual, the packaging, the warranty and the follow-up
technical service. These are elements of the extended product. Chaffey and Smith
(2012) suggest examples of how the Internet can be used to vary the extended
product:
• Endorsements.
• Awards.
• Testimonies.
• customer lists.
• customer feedback.
• Warranties.
• guarantees.
• money-back offers.
• customer service (see people, process and physical evidence).
• Incorporating tools to help users during their selection and use of the product.
Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved

Product
4.

Conducting research online

Options for performing new product development research online include:

•

Online focus group.

•

Online questionnaire survey.

•

Social media listening.

•

Customer feedback or support forums.

•

Web analytics.

Product
5.
•

Speed of new product development
Digital channels give instant access to target markets and provide platforms, which
enable new products to be developed more rapidly as it is possible to test new ideas
and concepts and explore different product options through online market research.

6.
•

Speed of new product diffusion
Tipping point: Using the science of social epidemics explains principles that underpin

the rapid spread of ideas, products and behaviours through a population.
•

There are three main laws that are relevant from The Tipping Point:

The long tail concept
Long tail concept
A frequency distribution suggesting the relative variation in popularity of
items selected by consumers.

Branding in a digital environment
– Branding
Branding is the process by which companies distinguish their product offerings from the competition
by the sum of the characteristics of the product or service as perceived by the customer.
– Brands Organisations are able to get into the minds of the customers, to position their brands, using
a range of brand elements contributing to brand equity:
•

brand domain – key target markets, where the brand competes;

•

brand heritage – the background and culture of the brand;

•

brand values – the core characteristics, e.g., price, quality, performance;

•

brand assets distinctive names, symbols, images;

•

brand personality – the character of the brand;

•

brand reflection – how the customer perceives themselves as a result of buying the brand.

– Brand equity:

Branding in a digital environment
Success factors for brand sites
Some of the methods Flores suggests to encourage visitors to return include:
• Creating a compelling, interactive experience including rich media that
reflects the brand.
• Considering how the site will influence the sales cycle by encouraging trial.
• Developing an exchange (permission marketing) programme on your
website to begin a ‘conversation’ with the most valuable customer
segments.

Brand advocate
A customer who has favorable perceptions of a brand who will talk favourably
about a brand to their acquaintances to help generate awareness of the brand
or influence purchase intent.

Branding in a digital environment
Brand identity
The totality of brand associations, including name and symbols that must be
communicated.
Brand names for online brands
1. The Law of the Common Name. They say ‘the kiss of death for an Internet
brand is a common name’. The idea is that common names such as Art.com
or Advertising.com are poor since they are not sufficiently distinctive.
2. The Law of the Proper Name. They say ‘your name stands alone on the
Internet, so you’d better have a good one’. This suggests that proper names
are to be preferred to generic names, e.g. PinkMoods.com against
Woman.com.

Price
•

The price variable of the marketing mix refers to an organisation’s pricing
policies, which are used to define pricing models and to set prices for
products and services, which ultimately differentiate a brand.

The main implications of the Internet for the price aspect of the mix are:
1. increased price transparency and its implications on differential pricing.
2. downward pressure on price (including commoditisation).
3. new pricing approaches (including dynamic pricing, price testing and
auctions).
4. alternative pricing structure or policies.

Price
1.

Increased price transparency and its implications on differential
pricing.

– Price transparency
Customer knowledge about pricing increases due to increased availability of
pricing information.
– Differential pricing
Identical products are priced differently for different types of customers,
markets or buying situations.
– Price elasticity of demand
Measure of consumer behaviour that indicates the change in demand for a
product or service in response to changes in price. Price elasticity of demand is
used to assess the extent to which a change in price will influence demand for
a product.

Price
2. Downward pressure on price
The competition caused by price transparency and increased number
of competitors is the main reason for downward pressure on price.
Baker et al. (2000) suggested that companies should use the following
three factors to assist in pricing.
1. Precision. Each product has a price-indifference band, where varying
price has little or no impact on sales.
2. Adaptability. This refers simply to the fact that it is possible to respond
more quickly to the demands of the marketplace with online pricing.
3. Segmentation. This refers to pricing differently for different groups of
customers.

Price
3. Innovative pricing approaches
The Internet has proved to have the technological capacity to create
new pricing options.
Figure 5.6 summarises different pricing mechanisms, which have been
used effectively online. While many of these were available before the
advent of the Internet and are not new, the Internet has made some
models easier to apply. In particular, the volume of users makes
traditional or forward auctions (B2C) and reverse auctions (B2B)
more tenable – these have become more widely used than previously.
•
Forward auctions
Item purchased by highest bid made in bidding period.
•
Reverse auctions
Item purchased from lowest-bidding supplier in bidding period.

Figure 5.6 Alternative pricing mechanisms

Price
4. Alternative pricing structure or policies
Pricing options that could be varied online include:
• Basic price.
• Discounts.
• Add-ons and extra products and services.
• Guarantees and warranties.
• Refund policies.
• Order cancellation terms.

Place
Place variable
The element of the marketing mix that involves distributing
products to customers in line with demand and minimising cost
of inventory, transport and s…
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