Digital Strategy

Session 3
Developing Digital Objectives &
Strategy

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 Learning Outcomes

At the end of this session, students should be able to:

• Develop appropriate digital objectives to support the strategic

customer acquisition, conversion and retention.
• Develop a strategic response to acquire or reach new customers
through a digital approach.
• Develop a strategic response to convert customers through a digital
approach.
• Develop a strategic response to retain customers through a digital
response.

Syllabus reference 3.1 - 3.4

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 What is a Digital Marketing Strategy?
• Provides a consistent direction for an organisation’s digital marketing
activities so they integrate with other marketing activities and support its
objectives.
A digital marketing strategy will aim to:
— Provide future direction to digital marketing activities
— Involve analysis of the organisation’s external environment and internal
resources to inform strategy
— Articulate digital marketing objectives and support marketing objectives
— Involve a selection of strategic options to achieve digital marketing objectives
and create a sustainable competitive advantage
— Include strategy formulation such as STP and specification for the marketing
mix
— Specify how resources will be deployed and the organisation will be
structured to achieve the strategy.

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Developing a Digital Marketing Strategy

• Digital marketing strategy focuses on decisions on how to

use the channel to support existing marketing strategies,
how to exploit its strengths and manage its weaknesses
• It is also about how to use it in conjunction with other
channels as part of a multichannel marketing strategy
• Need to consider:
— Acquisition
— Conversion and proposition development
— Retention and growth

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 A Digital Marketing Planning Framework –
SOSTAC ®

Chaffey & Smith, 2012 (cited Smartinsights.com, 2015)

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 Strategic vs. Tactical Marketing

Strategic Tactical
Timeframe Long Term Short term
Focus Broad Narrow
Key tasks Defining market and Day-to-day marketing activity
competitive position

Information & problem Unstructured, external, Structured, internal,

solving speculative repetitive

Example Segmentation Price discounting

NPD Communications campaign

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From Mission to Action

Mission & Values - Why we exist and what we want to be

Core Values - What we believe in

Objectives - What we’re going to achieve

Strategy - Our game plan

Tactics – How we’re going to do it

KPIs - Implementation & Control

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Hierarchy of Objectives
Corporate, derived from vision
or mission
e.g. increase earnings
per share by XX% pa

Company, Division
or Departmental,
e.g. Marketing, Finance.
Increase new customers by 10% pa

Marketing Mix objectives

e.g. increase
awareness by xx%, launch 3 new product
innovations per year

Campaign objectives, e.g. generate 1,000 new leads

for sales team, increase email response rates by 10%
through creative tests

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Objectives need to be SMART

• Specific
• Measurable and expressed in quantifiable terms
• Attainable
• Realistic
• Time bound
Increase retention levels from 50% to 75% within 18 months.

Acquire 15 new customers every month for 12 months.

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 Objective Setting: The 5 S’s
Benefit of Digital Channel How benefit is delivered Typical Objectives
Sell – Grow Sales Achieved through wider distribution to • Increase online sales for product
customers can’t serve offline by 20% in year
• Increase conversion rate by 5% in
6 months
Serve – Add Value Achieved through giving customers extra • Increase dwell time duration by
benefits online 10% by 2015
• Increase no. of customers using
online services by 30% by 2015

Speak – Get closer to Creating a two-way dialogue through • Increase social media
digital channels, gather research & followers/fans by 25% by 2015
customers information

Save – Save costs Through using digital technology • Increase web self-service to 40%
(communications, sales, service of all service enquiries by 2015
transactions etc.)

Sizzle – Extend the brand Achieved through providing a new • Improve branding metrics such as
proposition and experience online brand awareness, reach, brand
online favourability

Adapted from Chaffey & Smith, 2015

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Objective Setting: Acquisition, Conversion
and Retention

Acquisition Conversion Retention

Generate awareness Converting the Encouraging customer

of consumer to a loyalty and
product/service/bran customer and to on product/service/bran
d and encouraging site outcomes d advocacy
trial

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 Objective Setting: Balanced Scorecard

Balanced scorecard Efficiency Effectiveness

Sector

Financial • Profitability • Online contribution (direct)

• Margin • Online contribution (indirect)
• Profit contributed

Customer • Online reach • Sales

• Cost of Acquisition • New customers
(CPA / CPS) • Online market share
• Database/E-mail list quality • Customer satisfaction ratings

Operational • Conversion rates • Fulfilment times

• Average order value • Support response times
• List size and quality
• E-mail active %

Innovation and • Novel approaches tested • Novel approaches deployed

Learning • Internal education • Performance appraisal review
• Internal satisfaction ratings

Adapted from Chaffey & Ellis-Chadwick, 2015

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Considerations in Strategy Development
External Influences;
Strategic Requirements;
• Competitor strategy
• One off or on-going?
• Leader, follower, niche,
• Vision, Mission
challenger position
• Corporate objectives and
• PESTLE
influences

Internal Factors;
• Competencies Strategy
Customer Requirements
• Capabilities Development
• Culture
• 7S Framework
• Innovation Marketing Factors;
Relationships & Alliances
• Product Portfolio
• Targeted Segments
• 7Ps

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Digital Strategy Formulation: Marketing and
Product Development Strategies
• Ansoff’s Matrix can
assist organisations
in considering how
online channels can
support marketing
objectives and
suggest innovative
use of the
channel to deliver new
products and more
markets

Chaffey, and Ellis-Chadwick, 2015

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 Digital Strategy Formulation: Business &
Revenue Models
• Strategy formulation often requires organisations to evaluate new
business models as in order to survive in the digital age means
companies need to constantly innovate.
• Digital business revenue models include:
— Product/service sales
— Advertising
— Sponsorship
— Subscription
— Affiliate
— Infomediaries
— ‘Freemium’

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Digital Strategy: Segmentation, Targeting
and Positioning
Segmentation
•Consider variables for segmenting market
•Look at profile of emerging segments
•Validate segments emerging

Targeting
•Decide on targeting strategy
•Decide which and how many segments should be
targeted

Positioning
•Understand consumer perceptions
•Position products through communication
Cited in Dibb et al, 2006
•Design appropriate marketing mix

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Digital Strategy: Segmentation, Targeting and
Positioning
The most important
decisions at this stage are:
• Segmentation and target
strategy as an
organisation’s online
customers will have
differing characteristics,
needs and behaviours to
offline customers
• Positioning strategy as
competitors’ products
and service offerings will
differ in the online
environment

Chaffey, and Ellis-Chadwick, 2015

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 Market Segments

In a digital marketing planning context, market segments

should be reviewed to assess:
— The current market size of value, future projections of size
— The organisation's current and future market share within the
segment
— Needs of each segments (and unmet needs)
— Competitor market shares within the segment
— Organisation and competitor offers and propositions
— Usage of the site and conversion to action through web analytics.

Chaffey, and Ellis-Chadwick, 2015

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Customer Lifecycle Segmentation

First-time visitor • Customer Lifecycle

Segmentation is useful for
Return visitor online retailers.
• Database analysis can be
Newly registered visitor used by marketers to build
up a detailed response and
purchase history.
Registered visitor • Grouping customers by
current and future value
Purchased once or n times can enable suitable
strategies and tactics to be
Purchase inactive developed specially for
these audiences.
Purchase active

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Possible Segments to Target

By media usage:
— Difficult to reach using other media
— Heavy / Savvy users of online media
By loyalty:
— Brand loyalists – provide a home
— Not brand loyal – encourage trial
By profitability:
— Most profitable – deepen relationships – add value
— Least profitable – serve at a lower cost
By company type and individual:
— Larger companies (B2B)
— Smaller companies (B2B)
— Key members of the buying unit (B2B)

Chaffey, and Ellis-Chadwick, 2015

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 Possible Segments to Target

Segmentation approaches Method

1. Classic profile-based demographic Target customer groupings according to their
segmentation characteristics and motivations
2. Customer value Assess customers by current and future value potential

3. Customer personas Develop customer personas and target 2-10 typical

customer journeys
4. Customer lifecycle Target messages according to length of time using
online services
5. Purchase and response behaviour Use “sense and respond” behavioural targeting

6. Channel preference Communicate with customers in their preferred media

(and according to value)
7. Tone and style preference Communicate with customers according to their tastes
inferred from demographics or behaviour.

Chaffey, and Ellis-Chadwick, 2015

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Customer Personas

• A persona is a “thumbnail summary of the characteristics,

needs, motivations and environment of typical website
users” (Chaffey & Ellis-Chadwick, 2015).
• Using personas enables the company to design the best
user experience for its customers at all touchpoints, which
is a key success factor in today’s business environment.
• Profiling can be based on numerous factors:
— Demographics – ages, gender, education, occupation, company
size (B2B), position in buying unit (B2B)
— Psychographics – goals, tasks, motivations
— Webographics – how they use the online channel: experience,
usage location, usage form, frequency, how they interact online.

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Developing Customer Personas

• Developing Customer
Personas can benefit
organisations through:
— Fostering customer-
centricity
— Identifies detailed
information needs and
steps required by customers
— Can be used to test existing
web designs or prototypes
— Can be used to compare
and test strength and clarity
of online value proposition
— Can be linked to specific
marketing outcomes

Source: Blog.Kissmetrics.com

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Creating a Positioning Strategy

• In an online context, organisations can position their products/services

relative to the competition according to four main variables:
— Product quality
— Service quality
— Price
— Fulfilment time
• Chaston (2000, cited in Chaffey & Ellis-Chadwick, 2015), suggests organisations
should use online facilities to enhance their position:
— Product performance excellence – enhanced through customisation
— Price performance excellence – offer favourable pricing to loyal customers
or reduce prices when demand is low
— Transactional excellence – real-time stock updates, download options
— Relationship excellence – personalisation of experience (order history,
order tracking, repeat order options).

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The Online Value Proposition

• Online value proposition clarifies the differential

advantage and positioning of an organisation
• It involves developing online content and services and
explaining them through messages which:
— 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 or they can’t get
from competitors of intermediaries
• Communicating these messages to all appropriate
online and offline customer touch points in different
levels of detail

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The Online Value Proposition: How To
Deliver Value?
Cost
Sell
• I want the best deal VALUE FROM • Reach during buy-mode
• Be cheaper to own
. CUSTOMERS • Sense and Respond to
Convenience increase lifetime value
• Save me time
• Be faster & simpler Speak
• Research needs
Content • Inform and build relationships
• Help me decide through e-mail
• Make my life easier
Serve
Customisation • Provide online
• Tailor it for me content and services
• Personalise my
recommendations Save
• Sell and service
Choice more efficiently
• Fit my unique needs
• Making the right choice VALUE FROM Sizzle
Community
COMPANY • Differentiate our brand
• I want to belong

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 Benefits of a Clear Online Value Proposition

• It helps distinguish an organisation

from its competitors
• It helps provide a focus to
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
• It can be linked to the normal
product propositions

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Test Your Understanding

• Explain what is meant by ‘online value proposition’ (OVP), and detail

the online value proposition of an organisation of your choice.

• How does this compare to their main competitor? How could your
chosen organisation’s OVP be improved?

• Post your answer to the Discussion Board.

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 Bibliography
• Chaffey, D and Ellis-Chadwick, F (2015) Digital Marketing: Strategy, Implementation and Practice, Sixth
Edition, Prentice Hall.
• Chaffey, D (2007) Online Value Proposition, [ONLINE] Davechaffey.com. Available
at:http://www.davechaffey.com/E-marketing-Insights/Customer-experience-management/Online-
customer-value-proposition [Accessed 12th July 2010] (N.B no longer available online).
• Johnson, G and Scholes, K (2008), Exploring Corporate Strategy: Text and Cases, Eighth edition,
Financial Times/Prentice Hall.
• Chaffey, D (2015), SOSTAC © Planning Model Guide, [ONLINE] Smartinsights.com, available
at:http://www.smartinsights.com/digital-marketing-strategy/sostac-model/ . [Accessed 28 October,
2016].
• KISS Metrics (2012). How User Personas Can Improve Your SEO Strategy, [ONLINE] Available at:
http://blog.kissmetrics.com/user-personas-for-seo/. [Accessed 28 October 2016].

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