Internet Marketing Environment Analysis

December, 2015
Presented by: Alok Wadehra

Agenda

Introduction

Digital Advertising

Environmental Scanning

Micro-Environmental factors

Macro-Environmental factors

Summary

References

Public 2015

January 4, 2016

Introduction

Continuous Environment Scanning

Need for a process to continually monitor the environment

Need to sense and respond is particularly important for online

marketers because of the rapid changes in customer behaviour

Organizations need to look for changing behaviour within the

environment

Important for companies to evaluate their relative performance in

their market an individual companys online sales may have
increased by 20% in a period, which sounds positive, but it is not
when compared to a competitor whose sales have increased by
100% in the same period

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Digital Advertising: Ad Avenues

Search Advertisements

Display Advertisements

Mobile Advertisements

Social Media

Email

Video

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Digital Advertising: India

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January 4, 2016

Trends in breakup of online ad market spends

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Industry Wise Spends

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Ad Conversion Ratio

Source: IMRB International

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January 4, 2016

Different Environment Components

Strategy development is strongly influenced by considering the

environment the business operates in

Porter (1980) on corporate strategy and Kotler (2001) on marketing

strategy talked about micro-environment and macro-environment

Micro-environment
Also known as the operating environment
Immediate marketplace of an organization
Specific forces on an organization generated by its stakeholders

Macro-environment
Broader forces affecting all organizations in the marketplace

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January 4, 2016

Internet Marketing Environment

Public 2015

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January 4, 2016

Factors in the micro-environment of an organization

The Marketplace:

Competitive forces
Value chain analysis
New channel structures
Location of trading
Commercial arrangements for
transactions
New business and revenue models

The Organization:

Its Suppliers:

Competitor capabilities

Intermediaries:

Adaptability to change

Access levels to the Internet

Propensity to use
Integration with existing systems

Its Competitors:

11

New capabilities
New intermediaries

Its Customers:

Access levels to the Internet

Propensity to use and buy
Buyer behaviour

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January 4, 2016

Marketplace

12

Comprises the interactions between all elements of the micro-environment

Questions to ask

Competitive forces: How are the major external forces on an organization affected by the
Internet?

From value chain to value network: The value network concept describes a more dynamic
version of the value chain with increased interaction between partners.

New channel structures: What changes can occur to linkages to upstream and downstream
partners in the supply chain? What is the role of new intermediaries?

Location of trading: What are the options for location of trading online?

Commercial arrangements for transactions: How are these changed?

New business and revenue models: What business and revenue models can be adopted in
the Internet marketplace?

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Porters Five Forces

13

Bargaining
powers of
customers

Power of
suppliers

Threat of
subsitutes

The business

Extent of rivalry
between
competitors

Threat of new
entrants

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Bargaining power of buyers

14

Increase in customer power and knowledge is perhaps the single

biggest threat posed by electronic trading

Wider Choice

Prices forced down due to increased knowledge and Price

transparency

Offers from different suppliers can be readily compared through

online intermediaries such as search engines and price comparison
sites such as Kelkoo or Pricerunner or CompareBuyHatke.

In B2B, ease of use of the Internet channel makes it potentially

easier to swap between suppliers switching costs are lower
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Bargaining power of suppliers

15

Can be considered as an opportunity rather than a threat

Reverse arguments regarding bargaining power of buyers
Bargaining power of its suppliers is reduced since there is wider choice

Internet tends to reduce the power of suppliers since barriers to

migrating to a different supplier are reduced, particularly with the
B2B exchanges

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Threat of substitute products and services

16

Can occur from established or new companies

Greatest threats are likely to occur where digital product and/or

service fulfilment can occur over the Internet

These substitutes can involve the new online channel essentially

replicating an existing service as is the case with online banking or
e-books

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Barriers to entry

17

Reduced

New online entrants - a significant threat for retailers selling

products
New entrants do not have the cost of developing and maintaining a

distribution network to sell their products

These products do not require a manufacturing base

To succeed, new entrants need to be market leaders in executing

marketing and customer service
sometimes described as barriers to success or hygiene factors rather

than barriers to entry

Threat is less common in manufacturing and process industries

such as chemical or oil industries as investment barriers are much
higher.
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Rivalry between Existing Competitors

18

Internet facilitates the move to the global market increasing number

of competitors

Rivalry becomes more intense when Product Lifecycles decrease

and lead times for new products decrease.

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Competitors

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Competitor analysis
Monitoring of competitor use of Internet marketing for acquisition and

retention of customers
Very important because of the dynamic nature of the Internet medium

This dynamism enables new services to be launched and elements

of the marketing mix such as price and promotion changed much
more frequently

Competitor benchmarking is not a one-off activity while developing a

strategy

Copying of concepts and approaches may be possible, but need to

avoid any patent or copyright violations

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Internets impact on buying process for a new purchaser

Public 2015

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January 4, 2016

21

INTERNET MACRO-ECONOMIC

Public 2015

January 4, 2016

Macro-economic factors

Social factors

22

Include the influence of consumer perceptions in determining usage of the

Internet for different activities.

Legal and ethical factors

Determine the method by which products can be promoted and sold online.
Governments, on behalf of society, seek to safeguard individuals rights to privacy.

Economic factors

Political

Variations in the economic performance in different countries and regions affect

spending patterns and international trade.
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.

Technological factors

Changes in technology offer new opportunities to the way products can be

marketed

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January 4, 2016

Impact of Macro-Economic Factors

23

Macro-economic factors will influence all competitors in a

marketplace
Doesnt mean that the macro-environment factors are unimportant

Changes in the macro-environment such as changes in social

behaviour, new laws and the introduction of new technologies can all
present opportunities or threats.

Organizations that monitor and respond best to their macroenvironment can use it as a source of differentiation and competitive
advantage.
Changes in social culture tend to be very rapid
Introduction of new technologies tend to be frequent too
Government and Legal changes tend to happen over longer time scales

Public 2015

January 4, 2016

Social factors

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Internet usage varies across different countries

Social barriers to adoption of the Internet include

No perceived benefit
Lack of trust
Security problems
Lack of skills
Cost

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Legal and ethical issues of Internet usage

Ethical standards are personal or business practices or behaviours

which are generally considered acceptable by society

Privacy of consumers is a key ethical issue

Privacy of personal data such as our identities, likes and dislikes is a

major concern to consumers

Identity theft: The misappropriation of the identity of another person,

without their knowledge or consent

For marketers to better understand their customers needs, personal

information is very valuable

25

Helps in more targeted communications and develop products that are more

consistent with users needs

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Legal and ethical issues of Internet usage

26

Ensure that marketing activities are consistent with the latest data
protection and privacy laws

Companies have to take their own business decision based on the

business benefits of applying particular marketing practices, against
the financial and reputational risks of less strict compliance

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Main information types used by the Internet marketer

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Contact information
Name, Postal address, e-mail address
For B2B companies, web site address
Collected through online forms
Stored in databases linking to web site

Profile information

A customers characteristics that can be used for segmentation

Age, Sex and social group for consumers
Company characteristics and individual role for business customers
Consumers are willing to give non-financial data if there is an appropriate
incentive
Collected through online forms
Cookies can be used to assign a person to a particular segment by linking the
cookie to a customer database record and then offering content consistent with
their segment

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January 4, 2016

Main information types used by the Internet marketer

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Behavioural information (on a single site)

Whole buying process including purchase history
Web logs are used to store clickstreams of the sequence of web pages visited
Cookies are also used for monitoring visitor behaviour during a site visit and on
subsequent visits
Web analytics can be used to assess the web and email content accessed by
individuals.

Behavioural information (across multiple sites)

Can potentially show how a user accesses multiple sites and responds to ads
across sites
Web logs can tell the previous site visited by a customer

Public 2015

January 4, 2016

Marketers Actions to achieve Privacy And Trust

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Data protection legislations enacted to protect the individual, to

protect their privacy and to prevent misuse of their personal data

Public 2015

January 4, 2016

Anti-spam legislation

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Spammers rely on sending out millions of e-mails in the hope that even if
there is only a 0.01% response they may make some money, if not get
rich

Laws have been enacted in different countries to protect individual

privacy and with the intention of reducing spam or unsolicited
commercial e-mail (UCE)

Anti-spam laws do not mean that e-mail cannot be used as a marketing

tool

opt-in is the key to successful e-mail marketing

Before starting an e-mail dialogue with customers, according to European and

American law and in many countries in the AsiaPacific region, companies must ask
customers to provide their e-mail address and then give them the option of opting into
further communications

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January 4, 2016

Anti-spam legislation

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At times, E-mail lists can also be purchased where customers have

opted in to receive e-mail

Data held about individuals are commonly used for marketing

products to potential or existing customers through e-mail

Legal opt-in e-mail addresses and customer profile information are

available for purchase or rental from a database traditionally known
by marketers as a cold list

Public 2015

January 4, 2016

Email spam legislation by country

Country

Legislation

32

Sectio Implemen
n
ted

Argentina

Personal Data Protection Act (2000)

27

30-Oct-00

Australia

Spam Act 2003

Part 2

12-Dec-03

Canada

Canada's Anti-Spam Legislation2015 (CASL)

China

Regulations on Internet email Services

30-Mar-06

European
Union

Directive on Privacy and Electronic Communications

Art.13

31-Oct-03

India

None(loosely; Information Technology Act, 2000 67)

67

Israel

Communications Law (Telecommunications and Broadcasting), 1982

(Amendment 2008)

Art.30

Dec-08

Japan

The Law on Regulation of Transmission of Specified Electronic Mail

Apr-02

Russia

None (loosely: Russian Civil Code: Art.309)

Art.30

Singapore

Spam Control Act 2007

South Korea

Act on Promotion of Information and Communication and

Communications Network Utilization and Information Protection of 2001

Art.50

United
Kingdom

Privacy and Electronic Communications (EC Directive) Regulations 2003

United States

Controlling the Assault of Non-Solicited Pornography and Marketing Act of

All
2003(CAN-SPAM Act of 2003)

http://en.wikipedia.org/wiki/Email_spam_legislation_by_country

Public 2015

15-Jun-07

16-Dec-03
January 4, 2016

Regulations on privacy and electronic communications - US

33

In January 2004, CAN-SPAM Act introduced to assist in the control

of unsolicited e-mail
Controlling the Assault of Non-Solicited Pornography and Marketing

Requires unsolicited commercial e-mail messages to be labelled and

to include opt-out instructions and the senders physical address.

Prohibits the use of deceptive subject lines and false headers in

such messages

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Regulations on privacy and electronic communications - EU

34

In 2002, EU passed the 2002/58/EC Directive on Privacy and

Electronic Communications
Applies specifically to electronic communications such as e-mail and the

monitoring of web sites

This law is implemented differently in different countries

Some countries considered infringements more seriously.
A company which is in breach of the directive in Italy is threatened by

fines of up to 66,000 while in the UK the maximum fine is 5,000.

Under UK law, any use of email, e-faxes and SMS messages for
direct marketing will require the prior consent of subscribers, who
can 'opt-in' for such services.

All e-marketing messages must include a valid address to which the

recipient may address an unsubscribe request.
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Online forms - (a) Opt-out (b) Opt-in (c) Implicit opt-in

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January 4, 2016

Regulations on privacy and electronic communications - India

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No law presently in India to deal with the issue of spam

Information Technology Act, 2000 (the "IT Act") does not contain
any provision regulating the act of 'spamming'.

It does regulate 'obscenity', which covers publishing, transmitting or causing to be

published in electronic form, any material which is lascivious, or appeals to the
prurient interest

Under Section 66A of the IT Act, if interpreted generously, there

could be some action against ruthless email spammers who do not
leave you alone with their clients sales messages

In absence of any statutory protection to check spam mails on

Internet, one may rely on the traditional law principles of the 'law of
nuisance' to address the challenges posed by spammers.

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Best Practices For the customers sake

Must have specific permission to send Commercial email

Use opt-in to sign up subscribers

Hang on to evidence that subscribers have given you permission

37

Able to produce that evidence within 72 hours of request, if required

Tell recipients where you got their info

Might include a line that says you received this email because you signed up for our
newsletter at http://www.xyzmails.com

Honor all unsubscribe requests within 7 days of receipt and provide a reasonable way
for customers to unsubscribe

Reassure customers by providing clear and effective privacy statements and

explaining the purpose of data collection

Follow privacy and consumer protection guidelines and laws in all local markets

Make security of customer data a priority

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January 4, 2016

Technological factors

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Challenge for Internet marketers is to successfully assess which new

technological innovations can be applied to give competitive
advantage

Personalization technology can enhance the customers online

experience and increases their loyalty

Technology-enabled marketing technique can be too expensive or

untried

Behaviour can be
Cautious, wait and see approach;
Intermediate approach, fast-follower
Risk-taking, early-adopter approach

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Diffusion of Innovation Curve

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Public 2015

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Technological factors

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Product
Internet is changing the product and services available in a big way
Using extranets means that certain clients can be provided with access

to the firms internal systems which both adds value and locks in clients
to your service

Price
Lot of information to be obtained easily by customers
Much easier to compare prices making price competition fiercer
Internet can make it more difficult to offer discriminatory pricing

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January 4, 2016

Technological factors

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Place
Developments in the power of databases
Direct marketing can be very successful since new segments can be easily identified

allowing segments-of-one to be profitably targeted

Internet is also a great source of information allowing you to keep up

with your competitors and clients activities

On-line polls and surveys can yield a large amount of additional
information about your clients
Much more difficult to retain any form of differentiation when your
services and approach are clear for all including your competitors to
see
Allows you to reach a much wider geographical spread
Internet makes markets more even allowing smaller players to
compete with big players and overseas competitors to enter new markets
with ease

Public 2015

January 4, 2016

Technological factors

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Promotion
Personalization and interactivity are making fundamental changes to

the way marketing works in every sphere (advertising, direct marketing,

personal selling, public relations)
Advertising
All sorts of new advertising media now available electronic posters,

information kiosks, banner advertisements, on-line directory entries

Direct Marketing
Email lists make it easier to have more regular and focused communications
Permission marketing is where customers provide information about their

needs and preferences and agree to the supplier using this information for
further marketing activities.

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Technological factors

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Public Relations
Brochures and publications are now electronic, interactive and tailorable to

the specific needs and interests of smaller markets and even individuals.
Media relations can be enhanced by providing background information and
news releases on web sites.
Personal Selling
Technology helps undertake fast research into prospects
Databases have revolutionized client and contact management systems and

field sales staff effectiveness and supervision

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Impact of Technology on Marketing [Malcolm McDonald]

Integration

Interactivity Dialogue

Individualization Information enabled Tailoring

Independence of location Death of Distance

Intelligence Informed Strategy

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January 4, 2016

Economic factors

45

Marketeers need to be aware of economic prosperity and

competitive environment in different countries

Managers developing e-commerce strategies will target the countries

that are most developed in the use of the technology

Trend to globalization can insulate a company to some extent from

fluctuations in regional markets, but is of course no protection from a
global recession

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Political factors

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Regulatory environment is shaped by the interplay of government

agencies, public opinion and consumer pressure groups

Political action through government agencies include

Promoting the benefits of adopting the internet for consumers and

business to improve a countrys economic prosperity

Sponsoring research leading to dissemination of best practice amongst
companies
Enacting legislation to regulate the environment, for example to protect
privacy or control taxation
Setting up international bodies to coordinate the internet

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Summary

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Constantly changing Internet environment should be monitored by all

organizations in order to be able to respond to changes in the microenvironment or the immediate marketplace

Organizations should deploy tools such as Porters five forces to

assess opportunities and potential threats posed by the Internet

Regular competitive benchmarking should be conducted to compare

services

Analysis of the macro-environment are necessary in order that a

company can respond to environmental changes and act on legal
and ethical constraints on its activities

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Summary

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Social factors include variation in usage of the Internet

Ethical issues include the need to safeguard consumer privacy and

security of details

Privacy issues include collection and dissemination of customer

information, cookies and the use of direct e-mail

Marketers must act within current law, reassure customers about their
privacy and explain the benefits of collection of personal information

Rapid variation in technology requires constant monitoring of adoption

of the technology by customers and competitors and appropriate
responses

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January 4, 2016

References

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Internet Marketing - A highly practical guide to every aspect of

Internet Marketing Alex Jones, Anna Malczyk, Justin Beneke

Digital Marketing: Strategy, Implementation and Practice, Dave

Chaffey, Fiona Ellis-Chadwick

Impact of Technology on Marketing http://www.kimtasso.com/faq/what-is-the-impact-of-technology-onmarketing/

Statistics in internet growth:

http://www.internetlivestats.com/statistics/

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Thanks