Strategy formulation

for digital marketing

Strategy formulation
involves the identification of alternative strategies, a review of the
merits of each of these options and then selecting the strategy that
has the best fit with a company’s trading environment, its internal
resources and capabilities.

Companies should be realistic about what their strategies can

achieve and must base digital strategies on sound logic and
thorough analysis.

Strategies are agreed to be most effective when they support

specific business objectives – e.g. increasing the online contribution
to revenue, or increasing the number of online sales enquiries.
 • Positioning
• Customers’ perception
of the product and brand offering
relative to those of competitors.

• Target marketing strategy

Evaluation and selection of
Targeting and appropriate customer segments
and the development of
positionong appropriate offers.

• Online value proposition (OVP)

A statement of the benefits of
online services that reinforces the
core proposition and differentiates
from an organization's offline
offering and those of competitors.
Strategy formulation
• Here different digital marketing strategies are
grouped according to whether they support
customer acquisition, conversion and
retention.

• Alternatively, they can relate to Reach,

Interaction, Conversion and Engagement .

• Digital marketing strategy formulation

typically involves making adjustments to
marketing strategy to take advantage of the
benefits of online channels rather than
wholescale changes.
Strategy formulation

• The key strategic decisions for digital marketing are the

same as strategic decisions for traditional marketing.

• They involve selecting target customer groups and

specifying how to deliver value to these groups.

• Segmentation, targeting, differentiation and positioning

are all key to effective digital marketing.

• We should remember that digital marketing strategy is a

channel marketing strategy and it needs to operate in
the context of multi-channel marketing.
 It follows that it is important that the digital marketing strategy should:

be based on objectives for online contribution of leads and sales for this
Be channel;

be consistent with the types of customers that use and can be effectively
Be reached through the channel;

support the customer journey as they select and purchase products using
Support this channel in combination with other channels;

Define define a unique, differential proposition for the channel;

specify how we communicate this proposition to persuade customers to

Specify use online services in conjunction with other channels;
 manage the online customer lifecycle
through the stages of attracting visitors
Strategy should:
to the website, converting them to
customers and retention and growth.

Online tactical marketing

segmentation: Tactical segmentation
enables targeting based on customer
journey behavior such as search
behavior, content accessed and
contribution to social media.
 This strategy involves using digital channels to sell more existing
products into existing markets.
The Internet has great potential for achieving sales growth or maintaining
sales by the market penetration strategy.

Some of the main ways in which the Internet can be used for market
penetration:
Market
penetration • Market share growth – companies can compete more effectively online
if they have websites that are efficient at converting visitors to sale such
as search engine marketing, affiliate marketing and online advertising.
• Customer loyalty improvement – companies can increase their value to
customers and so increase loyalty by migrating existing customers online
by adding value to existing products, services and brand by developing
their online value proposition
• Customer value improvement –by increasing customer profitability
through decreasing cost to serve (and so price to customers) and at the
same time increasing purchase or usage frequency and quantity.
2 Market development
• Online channels are used to sell into new markets, taking
advantage of the low cost of advertising internationally without the
necessity for a supporting sales infrastructure in the customer’s
country.

• The Internet has helped low-cost airlines such as easyJet and

Ryanair to cost-effectively enter new markets served by their
routes.

• This is a relatively conservative use of the Internet but is a great

opportunity for SMEs to increase exports at a low cost, though it
does require overcoming the barriers to exporting.
 • Existing products can also be sold to new market
segments or different types of customers.

• Virtual inventory enables new offerings to be made

available to smaller segment sizes, an approach known as
micro-targeting.

2 Market • This may happen simply as a by-product of having a

development website.

• “RS Components” a supplier of a range of MRO

(maintenance, repair and operations) items, found that 10
per cent of the web-based sales were to individual
consumers rather than traditional business customers.
 • The web can be used to add value to or extend existing
products for many companies.
• For example, a car manufacturer can potentially provide car
performance and service information via a website.

• Facilities can be provided to download tailored brochures,

3 Product book a test drive or tailor features required from a car
model.
development
• But truly new products or services that can be delivered
only by the Internet are typically digital media or
information products
• e.g. online trade magazine Construction Weekly diversified to a B2B
portal Construction Plus
• Music and book publishing companies have found new ways to
deliver products through a new development and usage model such
as subscription and pay-per-use
 • In this sector, new products are developed
which are sold into new markets.

• The Internet alone cannot facilitate these

4 Diversification high-risk business strategies, but it can
facilitate them at lower costs than have
previously been possible.
 Diversification into related
businesses.
4 • A low-cost airline can use the website and customer
Diversification emails to promote travel-related services such as
hotel booking, car rental or travel insurance at
relatively low costs
Diversification into unrelated
businesses.
• Again the website can be used to promote less-
related products to customers, although it is
relatively rare.
Upstream integration with
suppliers.
• This is achieved through data exchange between a
manufacturer or retailer and its suppliers to enable
a company to take more control of the supply chain.

Downstream integration with

intermediaries.
• Again, this is achieved through data exchange with
distributors such as online intermediaries.