The Internet In The Traditional Marketing Mix

Hundreds of books have been written on the theory of strategy and different tools and models strategists use to craft better plans. Sun Tzu, a famous warrior (and military strategist), wrote The Art of War in the 6th century BC, and copies are still selling by the thousand on Amazon.com.

There are various elements that need to be evaluated when developing a strategy. These elements are also likely to change over time, again highlighting the importance of being dynamic and agile in terms of strategic adjustments. An effective strategy involves making choices, as the brand that attempts to be all things to all people risks becoming unfocused or losing the clarity of its value proposition. To make a strong choice, a strategist must first examine what the choices are: what are the factors that affect your business? These include market, competitor landscape, customers and core competencies. For example, a new airline, before launching, would need to consider whether their product is a domestic or international service; whether its market would be budget travellers or international and business travellers; and whether their channel would be through primary airports or smaller, more cost effective airports. Each of these choices will result in a vastly different strategic direction. In order to assist strategists in the formulation of business strategies, models such as The Four Ps (product, price, placement and promotion) and the Porter

Five Forces analysis have become widely adopted – both of these tools assist in evaluating the kind of value the business is offering and the competitiveness of the market. The Internet, however, impacts hugely on both of these aspects, prompting us to re-examine and adapt traditional models to the changing market environment and new consumer behaviours.

The Four Things: 

The Four Ps are fundamentally changed by the Internet and need to be looked at in view of the context offered by digitally connected media and from the perspective of the consumer.

1. Products and Services

Products and services are what a company sells. From fast moving consumer

goods to digital products such as software, to services such as consultancy, the

Internet has allowed for a huge range of new products. Technology allows for mass customisation of products, seen in a growing trend of letting customers customise goods online before they are created. For example, NIKEiD (http://nikeid.nike.com) and Converse (www.converse.com) both allow customers to create their own trainers based on a number of preset options that will then be manufactured to the customer requirements. In a similar fashion, computer products can be built to specifications, as the costs of offering this type of service to customers is reduced by the Internet.

Digital products can exist because of the Internet. The very framework of the

Internet allows for products such as software and digital music to be distributed.

The Internet as a distribution medium is what makes these products possible.

2. Price

With customers, able to access pricing information from a number of suppliers with relative ease, the Internet is growing a market of near perfect competition (Porter, 2001). The prevalence of search engines and of shopping comparison websites, such as www.pricerunner.co.uk and www.nextag.com, make it easy for customers to compare product prices across a number of retailers. The opportunity for companies to differentiate themselves on price has led to decreased prices for many commodities, from the regularly reduced pricing of books on Amazon.com to ticket prices on low cost airlines such as EasyJet (www.easyjet.com) in Europe. With price differentiation, especially for smaller players in the market, becoming a challenge, businesses need to consider differentiating on value. Value is a combination of service and price, where a customer might be willing to pay a higher price for a better experience. 3.

Placement or Distribution

Particularly for digital products and services, the Internet gives companies

access to a global marketplace. Product distribution and markets no longer

have to be dictated by location. With efficient delivery and shipping channels,

products that are not digital can also benefit from a far wider market place.

The Internet allows the basic foundations of mail order businesses to flourish

online with a catalogue that is cheaper to produce and update and cheaper

to distribute - a website. In the travel industry, travel agents stopped issuing

paper tickets as of 31 May 2008 (Iata 2008). Nearly all aeroplane tickets are

now e-tickets. Technology such as APIs, SOAP services, RSS and XML allow information and services to be distributed throughout the world. For example, the API for a hotel reservations database, Starfish Luxury Travel Distribution (www.starfishinteractive.com), allows a diverse range of websites to offer instant online bookings for hotels in the inventory. Partners with booking engines include www.spaworld.tv and www.mrandmrssmith.com.

This is both a huge opportunity and a huge challenge for businesses. On the one hand, it can allow niche products and markets to flourish in a global

space. On the other hand, it can be tempting for a marketer to try to reach too

many markets at once. A global marketplace is also not yet fully supported by

national banking and tax legislation across the world.

4. Promotion

The Internet, as an information and entertainment medium, naturally lends

itself to being used to promote products. The online promotional mix is

an extension of the offline, but with some significant differences. Online

promotion can be tracked, measured and targeted in a far more sophisticated

way. Advertising, personal sales, promotions based marketing and public

relations can all be conducted through the online medium. These tactics and

applications are developed further, later-on in this textbook.