Online marketplace analysis: micro-environment

Implications for marketing planning: conversion models

As part of a situation analysis and objective setting, experienced digital marketers build conversion or waterfall models of the efficiency of their web marketing. Using this approach, the total potential online demand for a service in a particular market can be estimated and then the success of the company in achieving a share of this market can be determined. Conversion marketing tactics can be used to convert as many potential site visitors as actual visitors and then into leads, customers and repeat customers.

The model assumes that different types of communications can be used based on where the customer is in the purchasing decision process e.g. at the beginning of the purchasing process advertising can be used to raise awareness; further, through the process, sales promotion techniques can be used to elicit action.

Customer characteristics

Research has identified that there are many factors which influence online behaviour (Keen et al., 2004) and over time the market segments that use the Internet and digital services has changed significantly, so it is important for digital markets (a) to be aware of important behaviour variables, and (b) to understand how to model online consumer behaviour.

According to Doherty and Ellis-Chadwick (2010), it is possible to look back and see that the types of individuals using the web have changed significantly since 1995. In those early days, online shoppers tended to be young males, who were generally better educated and wealthier than their contemporaries. They also had both the confidence and desire to experiment with the Internet, which at the time was an exciting new channel (Donthu and Garcia, 1999; Korgaonkar and Wolin, 1999). Some companies specifically targeted these types of customers and developed services to suit their needs.

Consumer personas

A persona is a fictional profile typically informed by research that represents a particular target audience. Personas are a tool which can help in understanding online customer characteristics and behaviour. Creating personas is a powerful technique for developing customer-centred online strategies, company presences and campaigns and forms part of marketplace analysis.

They have been used for a long time in research for segmentation and advertising, but in recent years have also proved effective for improving website design by companies that have applied the technique. For an example of the application of personas, see Mini case study 2.1. Marketers can also develop secondary personas and complementary personas to provide a fuller range of options.

The buying process

According to Kotler et al. (2001), there are different stages in the buying process. At each stage, the purpose (from both the buyer’s and supplier’s perspective) is a particular outcome.

Consumer: aware of the need, develops specifications. Company: position features, benefits and brand

Once a consumer is aware of a need and is considering what features and benefits are required from a product or online service, then they may turn straight to the web to start identifying the range of features available from a particular type of product by using a generic search using search engines such as Google or Yahoo! So influencing consumers through search engine marketing and affiliate marketing is important at this stage. Specification development effectively happens at the same time as supplier search and more suppliers can be evaluated in greater depth than traditionally.

Last word

The e-retailers are available in an initial product search on fridges. Retailers such as John Lewis and Currys are displayed in the natural listings, while others such as AO. com and Euronics are displayed in Google AdWords. The image-based ads are known as Product Listing Ads (PLAs).

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