Web marketing in the present market scenario
occupies a pivotal place. The underlying idea for the businessmen is
to build image of their product and capture a larger slice of
financial returns. For doing so, it is imperative to understand with
clarity the four missions that large and small enterprises tend to
achieve, these are: (1) brand development, (2) revenue generation, (3)
cost savings, and (4) customer support.
By MOHAMMAD MAJID
Jan-07- 13, 2002
You may have never thought about your company as a
brand, so this may be new to you, but track with me. One of the chief
reasons your company to be equipped with a website is to demonstrate
that you're staying up with the times, that you're on the cutting
edge. You're seeking to communicate an image about your company that
will register in the minds of your potential customers. Professional
marketers refer to this as brand development.
Your brand is the image of your business in the
minds of customers. Everything about your site — the quality of the
design, the clarity of your wording, the sense of interest and
excitement, the color scheme, the download time, and much more —
contributes to your image, and your image is your brand identity. Your
goal is that when someone leaves your site he'll remember you —
positively. And that the next time he'll make a purchase or pick up
the phone. Your brand image is also the trust the customer has in you.
There are no real shortcuts here. Major
corporations spend millions of dollars to develop their brand image
and keep it fresh in the minds of consumers. Now the question is how a
small business can compete?
Yes, your site can look every bit as good on the
Web as a major corporation's, and without huge investment. Even though
the Web is no longer a level playing field, small businesses can still
compete for first impression.
To compete today you either need graphics training
and an artistic sense yourself, or you need to hire it. Do-it-yourself
will undercut the strong brand identity you are trying to build. Sure,
it's cheaper to do it yourself. Design includes the color scheme and
graphics, but also structure of the site, the all-important navigation
system, the size and quality of the photos or illustrations. All these
affect your brand image.
Four Ps and internet marketing plan
If you have studied marketing in the 40+ years since E. Jerome
McCarthy originally wrote his classic Basic Marketing, then you are
familiar with the 4 Ps of Marketing. It's a neat and memorable
classification system of the various controllable elements of the
marketing program portion of your Internet Marketing Plan. Focused on
a particular target market or customer, 4 Ps are illustrated in a
Individual goods, product lines, or services
Includes features, accessories, installation, instructions, service,
warranty, packaging, and brand names.
Getting the product to the customer.
Channels, distribution systems, middlemen
warehousing, transportation, fulfillment, and shipping.
Communicating with the customer
Personal selling, mass selling, sales promotion, sales personnel,
advertising media selection, copywriting.
Setting a price that serves the customer well and maximizes profits to
Price flexibility, level pricing,
introductorypricing, discounts, allowances, and geographic terms.
Internet Marketing Plan takes considerable energy
to understand and characterize the market, the customer, and the
environment in which you are doing business. One way to look at this
is uncontrollable factors vs. controllable factors:
•Uncontrollable — The current economic
environment includes elements such as consumer confidence, degree of
unemployment, new technologies that threaten to displace your own,
competitors that suddenly appear on the horizon, movement regulations
thought up by your favorite legislator, and changing consumer
preferences. You can't control these.
•Controllable — The 4 Ps represent elements of your marketing
strategy that you can control. They depend upon such
"givens" as your budget, personnel, creativity, etc., but
you can do a lot to influence them.
The second major goal is revenue generation. Hobby
sites don't need to generate revenue, (Web Commerce Today, Issue 21,
April 15, 1999) Your Company may be putting off revenue generation
until they learn the ropes of e-business, or until they generate
enough site traffic to produce revenue. But the bottom line for all
companies that want to stay in business is revenue generation. There
are three primary models at present: (1) prospect generation, (2)
online sales transactions, and (3) advertising and referral income.
We'll look at each in turn.
The first model, the web provides information to
support the sale. Then you close the sale by phone, e-mail, or
face-to-face. Many small businesses, especially service businesses,
use this model successfully.
A main tool for the Prospect Generation Model
businesses is a carefully designed online response form. Mailto:
e-mail links allow people to contact you, but the online form allows
you to structure the information people give you, so you can qualify
the prospect and know how to respond. Some years ago a police products
cataloguer set up a website to generate requests for a print
catalogue. He was astounded at all the internationals who requested a
catalogue, and found that the people who requested a catalogue via his
Internet site were more likely to purchase products than the leads he
developed from conventional sources — and, at a much lower cost. He
qualified his leads by asking the name of the organization the
inquirer was a member of. It helped him cut down on catalogue requests
from people who weren't likely to purchase.
If yours is the kind of business where people take
a while to come to a decision, or need customized information before
they purchase that can only be supplied by a real human being, then
Prospect Generation is probably your main revenue model. This is
especially true of products that have a higher price tag or need
You can do a great deal to support the sale,
however, by providing a wealth of information online. Sometimes I hear
businessmen protest, "If I tell them everything they need to
know, they won't phone me, and I won't be able to complete the
sale." Perhaps. But increasingly, if the prospect doesn't find
the information on your site, he'll surf until he finds it on your
competitor's site, and then call your competitor instead of you. One
of the rules of Internet business is that your competitor is but a
click away. Your online presentation and information should be so
complete and compelling that your prospect has no need to leave. God
says, "Treat people the way you'd like to be treated," works
very well in business. Trust prospects with all the information they
need to make a decision and you increase the chances that they'll
trust you with their business.
Be aware, however, that increasingly, companies are
finding ways to automate the delivery of customized information,
provide quotes via database queries, and then consummate the sale
online. Though you may begin with a Prospect Generation model, you may
eventually be forced to adopt an automated system or be crushed by
The second revenue model is completing the actual
Sales Transaction over the Internet. This is often referred to as
"e-commerce." In spite of all the media hype, but in few
years those that don't sell online may go out of business.
The real promise of the Internet, is its ability to
extend your company's reach beyond your present market area. If you
can sell products or services on the Web that can be delivered outside
your geographical area, then the world is your marketplace.
Business-to-business e-commerce is growing even
faster than online retail; nearly 80% of online transactions are
between businesses. While this may not represent so much new money as
a new sales channel, it does represent substantial cost savings by
reducing transaction costs.
While it's much easier now to set up an online
store that is no guarantee it will be successful. You need to have a
number of ingredients in place to make it work. But when they are in
place, an online store can be very profitable.
Advertising and referral revenue
The third common revenue generation model is
Advertising and Referral Revenue. Many site-owners dream of sitting
back and letting advertising revenue generate from their site support.
Few realize this dream. Since the number of commercial websites is
increasing faster than the demand for online advertising, many
millions of web pages go without paid advertising, and this tends to
drive the cost of advertising down. A couple of years ago the average
price of banner advertising was $37 CPM (Cost Per Thousand page views
or "impressions"). In mid-1999 it has fallen to about $35
CPM. And much advertising sells for less than the stated rate card
prices. Unless you have millions of impressions for sale per month,
you can't hire an ad rep to find advertisers for you, so signing up
advertisers is part of the work involved for this type of site.
To make a site pay for itself on advertising
revenue alone requires a great deal of traffic. For example, at the
rate of $20 CPM that less targeted site might generate, you'd need to
have half a million page views sold to bring in $10,000 gross revenue
in a month, That's a lot! The way you attract that kind of traffic is
to have outstanding content: information, entertainment, news, an
online community, etc. And that content itself is expensive. Most
portals realize that they need multiple streams of revenue in order to
prosper, so many now try to sell products directly to their visitors
as they pass by. Time Warner's Pathfinder site will close down
because, given their site traffic, an advertising model alone is not
sufficient to underwrite the costs of publishing. On the other hand,
Slate found that charging subscribers cut into their ad revenue
(because they had fewer page views); Slate content is now free and
total revenues are said to be higher as a result. Finding the right
combination of revenue streams can be difficult.
A promising source of revenue, especially for
smaller site owners, is Affiliate Program referral revenue. If the
genius of the Internet is the hyperlink that connects every site in a
vast network, then affiliate programs are native-born sons and
daughters of the Web. Amazon.com pioneered the revenue sharing model,
and now pays affiliates 15% for sales that result from direct links to
a book, and 5% of sales that result from the affiliate bringing the
shopper to the Amazon.com site. Merchants have found that customer
acquisition costs from an affiliate program are substantially less
than paying for banner ads with CPM prices. For example, at $35 CPM, a
0.5% click-through rate, and a 5% conversion rate (the percentage of
visitors who make a purchase), it would cost a merchant $140 to make a
sale. With an Affiliate Program, the merchant only pays after an
actual sale occurs, and the cost per sale is usually 10% or less than
the cost of banner advertising.
Many smaller site owners, and some large online
companies, have entered into affiliate agreements with merchants.
While the monthly income amounts are relatively modest for most
site-owners, added to other sources of revenue they can help make a
site profitable. Don't expect your small site to support you from
affiliate referrals or advertising alone, but consider these an
additional revenue stream for your business.
Cost Savings is a fourth revenue generation model.
New Internet companies may not appreciate the cost-savings possible on
the Web, but many businesses are able to lower costs significantly by
moving essential business processes to the Internet. Ben Franklin
recognized this revenue source when he told us, "A penny saved is
a penny earned." Let us look at some of the ways that the
Internet can save costs:
Staffing. Simply stated, the Internet saves
time. It is significantly less expensive — and more accurate — to
have a customer enter an order over the Internet than it is to take it
by phone or re-key it into your computer system after the sale. In
online stores, customers usually wait on themselves, so you don't need
as many sales clerks. However, you will need to increase staffing in
other areas -answering e-mail, for example. Since it is so easy to ask
questions, many more customers are doing so on the Web, overwhelming
some businesses. A few react by making it impossible to e-mail them at
all. Others automate their e-mail response systems and provide enough
staff to respond to more complex inquires.
Procurement departments have found that online
transactions dramatically cut the cost of processing a purchase order.
With the availability of Web-based EDI (Electronic Data Interchange),
many smaller businesses are able to conduct B2B commerce
electronically where it was previously cost-prohibitive.
Distribution of sales materials. If you've ever
run a catalogue business, or sent sales materials to your far-flung
offices, you know how much money and energy is invested in printing
and postage. The Web shines as a way to distribute great amounts of
information inexpensively. Many companies put their entire catalogue
on the Web and then keep it up-to-date, longing for the year when they
won't have to print a catalogue at all. Others put their sales
materials on the Internet (or on a company Intranet for employees).
While there is some expense in converting text and graphics to the
Web, once the material is there, it costs next to nothing to keep it
there. Updating of data is simpler, too, especially on database-
Advertising costs. For some businesses,
especially those in neatly defined niches, advertising costs are
lower. Sierra Digital Communications in Rocklin makes microwave radios
that transfer data over short distances where trenching and hardwiring
would be cost prohibitive. Since more and more purchasing agents are
using the Web for shopping, and since this is an established product
they can search for, advertising costs are low; search engines do much
of the work. But most new online businesses seriously underestimate
the costs of advertising. People must have a reason to come to your
site. If they don't find you by search engines, then you'll need to
drive them there by a combination of paid online and offline
Start-up costs. When you compare the costs of
beginning an Internet business to opening a new brick- and-mortar
store, the Web wins hands down. You can probably think of other ways
the Internet saves your company money. But the point is easy to make.
One of the purposes of your website should be saving money. For some
businesses this will be more significant than any other purpose.
As Patricia Seybold so eloquently states in her
best selling book Customers.com, successful businesses have this in
common: they focus on the customer's needs. This ought to be an
important purpose for most business websites.
Pre-sales support can be enumerated under revenue
generation, but post-sales support to your customers is a category all
of its own. Fortunately, the Web can provide the very best in customer
Providing customer support on the Web is not only
efficient for the customer, it is also a bone to company customer
support departments, who can refer callers to their website for
detailed and complete information, substantially shortening phone
There's no need to be fuzzy about your website's
purposes. Ask yourself these questions:
1. How can I present my company in the best
possible light? (brand development)
2. What source(s) of revenue can we realistically expect from
our online business.
3. How can we achieve maximal cost savings on the Internet? and
4. How can we provide excellent online customer support?
Answer these four questions and you're well on
your way to online success.