DIGITAL

MARKETING
MANAGEMENT
DMM - Session 6

Digital Media
and the
Marketing Mix
 DO YOU
REMEMBER
THE
STRATEGY ?
 STRATEGY IMPLEMENTATION
• As marketers we manipulate various elements related to marketing to implement the
marketing strategy
• These elements that we can control are combined to a concept called Marketing Mix
• Marketing mix elements are the once we can change in order to achieve the desired
marketing objectives and goals.
• The classic 4 P’s and the extended 7 P’s model of Marketing mis is still valid even in
relation to Digital Marketing.
• Today we will refresh our understanding of marketing mix to incorporate the same to
digital marketing.
• In the digital era, the marketing mix also experiencing the changes to its core.
 DIGITAL MEDIA AND TECHNOLOGY OFFER
MARKETERS

• New ways to use the marketing mix.

• Fresh paths for gaining a competitive edge.
• Opportunities to create new market positions.
• Innovative methods for building and nurturing relationships.
• Breakthroughs in overcoming time and space barriers, providing instant access to
products and services.
 DIGITAL MARKETING AFFECTS ALL ASPECTS OF THE
TRADITIONAL AND SERVICE MARKETING MIX

• Product: Digital marketing enables customization and personalization of products/services

based on consumer preferences gathered through data analytics.
• Price: Online platforms allow for dynamic pricing strategies, real-time adjustments, and the
implementation of various pricing models (e.g., subscription-based, pay-per-click).
• Place: With e-commerce and digital platforms, businesses can reach global audiences
without physical constraints, offering convenience and accessibility.
• Promotion: Digital channels such as social media, email marketing, and content marketing
offer cost-effective and targeted promotional opportunities, enhancing brand visibility and
engagement.
 DIGITAL MARKETING AFFECTS ALL ASPECTS OF THE
TRADITIONAL AND SERVICE MARKETING MIX

• People: Digital marketing emphasizes building relationships with customers through

social media interactions, online customer service, and personalized communication,
shaping brand perception and loyalty.
• Process: Automation tools streamline marketing processes, such as lead generation,
customer segmentation, and campaign management, improving efficiency and
scalability.
• Physical evidence: Digital marketing influences consumers' perceptions of a brand
through online reviews, ratings, and user-generated content, which serve as social
proof and contribute to brand credibility and trustworthiness
 PRODUCT
• Definition: Involves researching customers’ needs, developing products, and communicating
features and benefits.
• Core Product: Fundamental features meeting user needs.
• Extended Product: Additional features and benefits beyond the core.
• Implications of Digital Technology:
• Varying core product options
• Offering digital products
• Changing extended product
• Conducting online research
• Speed of new product development
• Speed of new product diffusion
 EXPLORING OPTIONS FOR CORE PRODUCT VARIATION
• Digital products present avenues for innovation and value addition.
• Can we offer additional information or services to existing customers?
• Are there opportunities to target new customer segments through repackaging or new
propositions?
• How can we generate revenue through advertising or complementary product sales?
• What risks do competitors' digital adaptations pose to our current offerings?
• Internet's Impact:
• Transformation of various industries like music, books, newspapers, and software into digital services.

• Mass Customization:
• Leveraging technology to tailor products to individual or group preferences.
 CORE PRODUCT VARIATION EXAMPLES AND STRATEGIES

• ASOS's 'catwalk view' and agile fashion turnover as an example of innovative

core product variations. (Check the text book)
• Bundling strategies employed by companies like Sky Cinema and Disney.
• Case Studies:
• Exploration of how companies adapt their core products to the digital landscape.
• Discussion on the success and challenges faced in implementing core product
variations.
 CORE PRODUCT VARIATION…
• Key Implications:
• Online platforms facilitate mass customization and bundling.
• Digital technology enables rapid adaptation and innovation.

• Final Thoughts:
• The digital realm offers boundless opportunities for businesses to diversify core products,
cater to evolving customer needs, and enhance competitiveness.

• Consumer Empowerment:
• Comparison platforms like Comparethemarket.com enhance price transparency,
empowering consumers to make informed decisions.
 OFFERING DIGITAL PRODUCTS
• Subscription:
• Various subscription periods and price points available.
• Example: Lonely Planet offers destination introductions at reduced prices.
• Pay-per-view:
• Single download or viewing session at a higher price than subscription.
• Example: iTunes for music downloads.
• Bundling:
• Channels or content grouped at a reduced price compared to pay-per-view.
• Ad-supported Content:
• Revenue generated through ads (CPM, sponsorship, CPC).
• Example: Google Adsense.
• Other Options:
• Affiliate revenue from third-party sales.
• Offering access to subscriber lists.
 IMPACTS OF DIGITIZATION…
• Opportunities and Threats Across Industries:
• Digitization brings both opportunities and threats to industries.
• Adapting to digital trends offers new revenue streams and broader reach.
• Failure to embrace digitization risks obsolescence and market share loss.

• Shifts in Newspaper Business Models:

• Newspapers are transitioning to online subscriptions.
• Online models help sustain readership and revenue.
• Adaptation is crucial to meet changing consumer preferences.

• Trust in Traditional Media Brands:

• Amidst fake news proliferation, trust in traditional media rises.
• Established brands are perceived as reliable sources.
• Their history of integrity counters misinformation spread online.
 OPTIONS FOR CHANGING THE EXTENDED PRODUCT
• Extended Product:
• Beyond tangible items, it includes various elements such as information, warranty, and technical service.

• Internet's Role:
• Utilizing the internet to enhance extended product offerings.
• Examples suggested by Chaffey and Smith (2012):
• Endorsements, awards, testimonies.
• Customer lists, feedback, warranties, guarantees.
• Money-back offers, customer service improvements.

• Customer Engagement Tools:

• Incorporating tools to aid in product selection and usage.
• Introduction of freemium content to attract and convert customers.
 LEVERAGING DIGITAL STRATEGIES FOR EXTENDED
PRODUCT INNOVATION
• Freemium Content and Trial Products:
• Offering free or trial content to attract customers.
• Facilitating conversion into paid relationships.

• Premium Services:
• Charging premium for innovative services.
• Example: Amazon Web Services offering unlimited support and Cloud Computing services to
qualifying customers.

• The internet enables diverse strategies for enhancing the extended product.
• Companies can attract, engage, and retain customers through strategic offerings,
leading to increased value proposition and revenue opportunities.
 DIGITAL CHANNELS FOR RESEARCH
• Digital channels offer cost-effective means of gathering marketing research data,
particularly for understanding customer perceptions.
• Emphasizes evaluation of online research tools for ideation, concept development,
product design, and testing.
• Options for Online Product Development Research:
• Online Focus Groups:
• Moderated sessions to compare customer experiences.
• Utilization of permanent customer panels for new idea feedback.
• Online Questionnaire Surveys:
• Collect site visitor experiences and product-related insights.
• Social Media Listening:
• Mining social media comments alongside customer feedback for insights.
• Customer Feedback/Support Forums:
• Extracting suggestions for future product innovation from online forums.
 ADVANCED ONLINE RESEARCH TOOLS
• Social Media Listening Tools:
• Example: Freshworks freshchat for live chat-based target marketing and lead conversion.
• Enables internal and external communication and collaboration.

• Web Analytics:
• Harnessing response data from email, search campaigns, and website clicks.
• Indirectly gauging customer product preferences and related offers.

• Digital channels provide a diverse array of tools for conducting online research.
• Leveraging these tools effectively can lead to valuable insights for new product
development and marketing strategies.
 SPEED OF NEW PRODUCT DEVELOPMENT
• Instant Access to Target Markets:
• Digital channels facilitate rapid access to target markets.
• Online platforms enable quick testing of new ideas and concepts.
• Efficient Online Market Research:
• Utilization of consumer panels for rapid opinion testing.
• Lower costs compared to traditional market research methods.
• Network Effect and Partnerships:
• Internet's network effect fosters easier formation of partnerships.
• Partnerships streamline the launch process for new products.
 SPEED OF NEW PRODUCT DIFFUSION
• Quelch and Klein (1996) highlighted the necessity for rapid international product launches to
maintain competitiveness in the internet era.
• Gladwell's 'The Tipping Point' (2000) emphasized word-of-mouth's influence on new product
adoption, particularly through the internet.
• Implications for Marketers:
Marsden (2004) summarizes the importance of creating a 'tipping point' for new products.
Describes the rapid spread of ideas, products, and behaviors through social epidemics.
Advises marketers on triggering a domino effect to generate widespread demand akin to a contagious
virus.
 THE TIPPING POINT
• The Law of the Few:
• Initial product adoption relies on 'connectors' who spread word-of-mouth, especially online.
• Connectors use personal blogs, email newsletters, and podcasts for propagation.

• The Stickiness Factor:

• Refers to attachment to product or brand attributes.
• Testing and research are vital for effectiveness.
• Key drivers include excellence, uniqueness, engagement, and perceived value.

• The Power of Context:

• Products spread effectively when aligned with physical, social, and mental contexts.
• Example: Crime halted in New York subway by addressing graffiti and fare-dodging.
• Products should fit their context for optimal adoption.
 UNDERSTANDING THE LONG TAIL CONCEPT
• Coined by Anderson (2004), the long tail concept stems from observations made by linguist
George Kingsley Zipf regarding word usage patterns.
• Zipf's law suggests a systematic decline in the popularity of items, where the kth item is 1/k the
popularity of the first.
• Application in Online Context:
• In the online realm, the long tail describes the distribution of popularity among
websites, web pages, or products.
• A small number of highly popular items (the 'head') contrast with a larger
number of less popular items (the 'tail'), collectively significant.
 LONG TAIL …, IMPLICATIONS AND ECONOMIC IMPACT
• Relevance to E-commerce:
• Anderson (2004) and Brynjolfsson et al. (2003, 2010) assert the long tail's applicability to e-
commerce platforms like Amazon.
• Amazon's vast product catalog reflects the long tail principle, offering a wide array of
products beyond what traditional brick-and-mortar stores can stock.

• Economic Significance:
• Brynjolfsson et al. (2003, 2010) highlight the economic impact, indicating that a significant
portion of sales come from less popular items.
• Online retailers like Amazon can justify higher prices for these niche products due to their
unavailability in physical stores.
 BRANDING IN THE DIGITAL ERA

• Branding distinguishes products and services, setting them apart from

competitors.
• It influences consumer perceptions profoundly, especially in online
environments where physical cues are limited.
• Fundamentals of Branding:
• Branding involves more than just logos or names; it covers the sum of a
product or service's characteristics.
• Manufacturers develop brands to carve unique market positions, offering
variants to cater to diverse consumer needs.
 ONLINE BRANDING AND CUSTOMER PERCEPTION
• Online Brand Development:
• All businesses are perceived as brands, with online presence playing a pivotal role in shaping
brand perception.
• Digital platforms like websites and social media influence how brands are perceived,
necessitating strategic online brand management.

• Key Branding Elements:

• Brand positioning involves creating a unique market position and establishing clear
differentials.
• Elements contributing to brand equity include domain, heritage, values, assets, personality, and
reflection.
 BRANDING CHALLENGES AND OPPORTUNITIES ONLINE

• Complexities for Online Brands:

• Digital technologies have revolutionized the brand landscape, leading to the emergence
of household names in a short span.
• Online brand experiences are information-rich, dynamic, and technologically innovative,
posing challenges and opportunities for marketers.
• Enhancing Brand Experience:
• Online environments offer opportunities for increased interactivity and real-time brand
experiences.
• Brands must focus on delivering positive online experiences to foster customer satisfaction
and loyalty.
 SUCCESS FACTORS FOR BRAND WEBSITES
• Effective Brand Website Strategies:
• Brand sites should prioritize engaging brand advocates and loyalists, rather than
focusing solely on visitor quantity.
• Strategies include creating compelling interactive experiences, facilitating trial
opportunities, and implementing permission-based marketing.
 BRAND IDENTITY AND NAMING STRATEGIES
• Brand Identity Communication:
• A clear plan is needed to communicate key brand features and increase brand
awareness.
• Brand identity encompasses a set of associations that imply a promise to customers,
extending beyond mere names or symbols.
• Naming Strategies for Online Brands:
• Ries and Ries (2000) advocate for distinct, proper names for online brands to enhance
memorability and distinctiveness.
• Research suggests that brand names should be easy to pronounce, distinct, and attention-
grabbing to increase consumer engagement.
 PRICING STRATEGIES IN THE DIGITAL ERA

• Pricing is a crucial element of the marketing mix, defining pricing models and
setting prices for products and services to differentiate brands.
• The internet has revolutionized pricing strategies across various sectors, impacting
how organizations set and justify prices.
• Online Pricing Trends:
• Historically, startups often used low prices to acquire customers, while existing companies
transferred their offline prices to the web.
• Multichannel strategies complicate pricing policies, challenging the justification for differential
online and offline pricing.
 IMPLICATIONS OF INTERNET ON PRICING
• Key Implications:
• Increased price transparency due to online comparisons challenges differential
pricing strategies.
• Downward pressure on prices and commoditization occur as online competition
intensifies.
• Emerging Pricing Approaches:
• Revenue management systems and dynamic pricing models are utilized by airlines
to optimize revenue.
• Trivago leverages price variations in the travel industry, offering price
comparisons and insights for consumers and hoteliers.
 ADAPTATION AND STRATEGIES
• Adaptation Strategies:
• Organizations extend product ranges online, allowing for discounted offerings and innovative
pricing structures.
• Banks and insurers offer online-exclusive products with discounts to attract and retain digital
customers.

• Main Implications:
• Increased price transparency challenges traditional pricing models.
• Pressure for competitive pricing and the emergence of dynamic pricing models reshape
pricing strategies.
• Alternative pricing structures, such as auctions and online discounts, become more prevalent
in the digital landscape.
 INCREASED PRICE TRANSPARENCY
• Price Transparency:
• Online platforms enhance customer knowledge about pricing, challenging traditional
pricing models.
• Differential pricing allows identical products to be priced differently based on
various factors like customer types or markets.

• Price Elasticity of Demand:

• Price elasticity of demand measures consumer responsiveness to price changes.
• Online pricing strategies must consider factors like product price, availability of
alternatives, and consumer income.
 CONSUMER BEHAVIOR AND ONLINE PRICING
• Satisficing Behavior:
• Consumers may not extensively search for the cheapest product online due to factors
like brand familiarity and trust.
• Research indicates that consumers visit multiple websites before making purchase
decisions.
• Impact of Aggregators:
• Aggregators facilitate price comparison, challenging retailers to differentiate
beyond cost.
• Companies may need to emphasize brand value, customer service, or educate
consumers about aggregator limitations.
 ADDRESSING PRICING CHALLENGES
• Strategies for Retailers:
• Retailers can highlight brand quality and service to reduce cost emphasis.
• Educating consumers about aggregator limitations can help manage pricing
perceptions.

• Impact of Commoditization:
• Some products, like electronics and cars, are becoming commoditized, leading
to increased price sensitivity.
• Strong branding and offline advertising remain crucial in shaping consumer
perceptions and driving traffic to destination sites.
 DOWNWARD PRESSURE ON PRICE
• Competition and Price Transparency:
• Increased competition and price transparency, facilitated by comparison sites, contribute to downward
pressure on prices.
• Example: mysupermarket.com compares prices across multiple supermarkets, influencing consumer
purchasing decisions.

• Online-Only Retailers and Pricing:

• Internet-only retailers benefit from lower operational costs compared to brick-and-mortar stores,
allowing for lower pricing.
• Online companies often offer discounts and better rates to attract customers, particularly in sectors like
banking.
 PRICING STRATEGIES IN THE DIGITAL ERA
• Factors Affecting Pricing:
• Price elasticity of demand measures consumer responsiveness to price changes, varying across
products.
• Discounting popular products and precision in pricing are crucial considerations.
• Pricing Methods:
• Cost-plus pricing and competition-based pricing are common strategies.
• Market-oriented pricing, including premium and penetration pricing, responds to market demand
and competitor actions.
• Future Outlook:
• While the internet initially led to price reductions, consumers now prioritize service quality over
price.
• Future pricing strategies may focus more on value-added services rather than price competition.
 INNOVATIVE PRICING MODELS ONLINE

• Forward Auctions:
• Items are sold to the highest bidder within a specified bidding period.
• Reverse Auctions:
• Items are purchased from the lowest-bidding supplier within a bidding period.
• Sealed vs. Open Bidding:
• Suppliers submit bids in response to an RFP in sealed-bid arrangements, while
in open-bid setups, bids are made sequentially with real-time responses.
 DYNAMIC PRICING AND SHIPPING STRATEGIES
• Dynamic Pricing:
• Prices are adjusted in real-time based on customer type or market conditions, but careful
consideration is needed to avoid customer dissatisfaction.
• Shipping Fees:
• Shipping fees significantly impact conversion rates and profitability.
• Strategies include offering free shipping above a certain basket size, varying fees based on
delivery time, and implementing loyalty programs like Amazon Prime for free express shipping.
 HOMEWORK

• Keep reading the Chapter 5

• Place, Promotion
• People, Processes and Physical evidence