Part 2

Digital marketing
strategy development
In Part 2, we explore digital marketing strategy development by
combining traditional approaches to strategic marketing planning with
deploying digital media, data and technology. Chapter 4 presents a
framework for developing digital marketing strategies, Chapter 5
discusses the opportunities for varying the marketing mix
online and Chapter 6 reviews strategies for digital customer
relationship management.
4 Digital marketing strategy 136
• Introduction
• What is a digital marketing strategy?
• Why are a digital marketing strategy and digital transformation needed?
• How to structure a digital marketing strategy
• Situation analysis
• Competitor analysis
• Setting goals and objectives for digital marketing
• Strategy formulation for digital marketing
• Organisational issues of strategy implementation
• Assessing different digital initiatives including marketing technology

5 Digital branding and the marketing mix 189

• Introduction
• What is the marketing mix?
• Digital branding
• Product in a digital marketing context
• Price in a digital marketing context
• Place, channels and distribution in a digital marketing context
• Promotion and social media in a digital marketing context
• People, process and physical evidence in a digital marketing context

6 Data-driven relationship marketing using digital

platforms 233
• Introduction
• Concepts of data-driven customer relationship marketing
• Customer lifecycle management strategy
• Data-driven marketing techniques
• Applying artificial intelligence and Big Data to support data-driven marketing
• Using data analysis and targeting techniques to increase customer loyalty and
value
• Using social media to improve customer loyalty and advocacy
4 Digital marketing strategy

Learning objectives and topics

After reading this chapter, you should be able to:
• Explain the importance to organisations of creating a digital marketing strategy
and implementation process
– What is a digital marketing strategy?
– Why are a digital marketing strategy and digital transformation needed?
– How to structure a digital marketing strategy
• Explain activities needed to inform a digital marketing strategy
– Situation analysis
– Competitor analysis
• Define different types of goals for digital marketing
– Setting goals and objectives for digital marketing
• Evaluate alternative digital strategy approaches
– Strategy formulation for digital marketing
• Assess success factors for digital strategy implementation
– Organisational issues of strategy implementation
– Assessing different digital initiatives including marketing technology

Case study
Case study 4: ASOS shifts the focus of high-street retailing to enhance the
customer experience

Links to other chapters

• Situation analysis to inform strategy is covered in Chapters 2 and 3.

• Chapter 5 explores elements of the marketing mix that may form part of strategy.
• Chapter 6 describes customer relationship management strategies and online seg-
mentation, which are vital for strategy development.
• Chapter 8 describes goal setting for marketing campaigns and strategies for devel-
oping the right communications mix.
 Chapter 4 Digital marketing strategy 137

Introduction

In this chapter, we suggest an appropriate process for developing an integrated digital mar-
keting strategy covering these strategy development activities:
1 situation analysis (drawing on our coverage in Chapters 2 and 3);
2 goal and objective setting;
3 strategy formulation;
4 organisational issues of strategy implementation.
We start by considering the need for an integrated digital marketing strategy and its scope.
In some smaller organisations the scope of digital marketing strategy is limited to chang-
ing investment in digital marketing communications. We suggest that more fundamental
opportunities to use digital channels to impact business and revenue models should also
be considered as part of digital transformation in larger, existing businesses. Both oppor-
tunities are explored in the eight strategy decisions to be considered as part of strategy
formulation.
Figure 4.1 provides an overview of digital marketing strategy development. The internal
influences include top-level business objectives, which influence marketing strategy and ulti-
mately provide direction for the digital marketing strategy. Key external influences include
the market structure and demand, competitor strategies, and opportunities and threats,
in particular those enabled by new digital technologies (e.g. mobile marketing and social
media, virtual reality, artificial intelligence) and marketing tactics (e.g. use of search, adver-
tising, personalisation and messaging). Methods for analysing the external environment to
anticipate external opportunities and threats and competitors’ actions have been introduced
in Chapters 2 and 3.

Figure 4.1 Internal and external influences on digital marketing strategy

Business
objectives and
strategy

Multichannel
marketing
strategy

Market Digital
Competitor
structure and marketing
strategies
demand strategy

Key
Emerging
opportunities Internal influences
and threats
External influences
138 Part 2 Digital marketing strategy development

Essential digital skills Digital strategy development

Of all the topics in this text, strategy is the most difficult in which to develop your skills
without direct experience of different sectors. But, by comparing examples of strategy
development by online businesses and multichannel businesses of different sizes in
different sectors, you will be able to generate ideas for digital disruption that other
organisations have used that could apply in your sector.
We recommend you develop these skills:

• understanding digital revenue and business model trends (which we first introduced
in Chapter 2); refer to forrester.com, gartner.com, mckinsey.com for recommendations
in different industries;
• understanding how to assess audience demand for services in a sector and the
potential for a business to attract new customers at an acceptable cost-per-acquisition.

Practical ideas to boost employability by showcasing your interests and experience

include:
• using the Business Model Canvas framework, (www.strategyzer.com) to summarise
business models for the examples in this chapter or companies you are familiar with
from your work experience;
• using the tools for assessing consumer demand for digital services, introduced in
Table 2.1 – for example, using the Google Ads Keyword Planner to assess the cost
and volume of attracting visits through paid search or Facebook IQ for increasing
awareness using Facebook advertising;
• understanding the VQVC objectives explained in this chapter by accessing the
Google Analytics demo account for their retail store (you can find it via Google).

What is a digital marketing strategy?

Digital marketing Fundamentally, a digital marketing strategy should provide consistent direction for an
strategy
Definition of the organisation’s online marketing activities and channel integration. The aim is to ensure
capabilities and strategic integration of digital and other marketing activities and to support overall business objec-
initiatives to support
marketing and business
tives. In most modern organisations, digital marketing strategy aims to align with market-
objectives an organisation ing strategies to grow a business through customer acquisition and retention or to achieve
should deploy to harness communications goals in not-for-profit organisations. It may also aim to impact business
digital media, data and
marketing technology to and marketing strategy by identifying opportunities to create value for customers and the
increase omnichannel organisation by involving new business or revenue models such as subscription commerce.
engagement with their
audiences using digital
Our definition of digital strategy development emphasises the need to deploy digital media,
devices and platforms. data and technology integrated with traditional channels to achieve audience engagement
Its scope should include goals to support marketing objectives (see Chapter 1 where we define the ‘7Ds of digital
opportunities from
both new business and marketing’).
revenue models and
always-on and campaign
communications.
Digital marketing strategy as a channel marketing strategy

For existing businesses, digital marketing strategy is a channel marketing strategy, which
defines how a company should set channel-specific objectives and develop differential
advantage. At the same time it should define how communications should integrate
 Chapter 4 Digital marketing strategy 139

Channel marketing as part of a multichannel marketing strategy or omnichannel strategy (introduced in

strategy
Defines how a company Chapter 1). Today’s need for planning omnichannel marketing activities is explained by
should set specific this definition from John Bowden, Senior VP of Customer Care at Time Warner Cable
objectives for digital
channels and how they
in Stocker (2014):
integrate with traditional
channels, including web, Multichannel is an operational view – how you allow the customer to complete transac-
mobile and social media, tions in each channel. Omnichannel, however, is viewing the experience through the eyes
and vary its proposition
of your customer, orchestrating the customer experience across all channels so that it is
and communications for
this channel. seamless, integrated, and consistent. Omnichannel anticipates that customers may start in
Multichannel marketing one channel and move to another as they progress to a resolution. Making these complex
strategy ‘hand-offs’ between channels must be fluid for the customer. Simply put, omni-channel is
Defines how different
multi-channel done right!
marketing channels
should integrate and
support each other in
This highlights that omnichannel also refers to the customer experience where customers are
terms of their proposition using multiple digital channels and traditional channels, but they rightly have the expecta-
development and tion that their experience is ‘seamless, integrated and consistent’.
communications based
on their relative merits A key aim is to use digital channels to enable companies and organisations to stand out
for the customer and the from the competition when communicating with relevant target audiences. Digital channel
company.
strategy has two components – many may see it simply as a digital communications strategy
Omnichannel marketing
Planning and optimising
(reviewed in Chapters 6 to 9), but it should also define changes to the brand proposition
always-on and campaign- enabled by digital channels (reviewed in Chapter 5 on the marketing mix), including digital
focused marketing branding, product, pricing, place, promotion and changes to customer service.
communications tools
integrated across different The strategy determines the strategic significance of digital channels relative to other
customer lifecycle communications channels used to communicate directly with customers at different
touchpoints to maximise
customer touchpoints . See Figure 2.1 for further discussion of lifecycle customer
leads and sales, and
delivering a seamless, touchpoints.
integrated customer
experience to encourage
customer loyalty.
Which digital marketing activities should have focus?
Customer touchpoints
Communications
channels through which The significance of the role played by digital channels, technologies and media in marketing
companies interact planning has grown year on year. In many sectors, digital channel adoption was accelerated
directly with prospects
and customers. Traditional by the COVID-19 pandemic, with lockdowns requiring people to select and buy products
touchpoints include face online. While enhancing digital experiences for mobile and desktop users will continue to be
to face (in-store or with
sales representatives), a central part of digital strategy and implementation, digital marketers should also examine
phone and mail. Digital other key areas of focus, including:
touchpoints include web
services, email and mobile
phones.
• using marketing automation and AI tools for customer relationship development (as
described in Chapter 6); these may include email, mobile and web-based personalisation
based on predictive analytics from CRM databases;
• developing the overall customer experience across multiple channels, as described in
Chapter 7 in the section on customer experience management (CXM), including using
structured experiments such as AB testing, and innovation such as augmented and virtual
reality;
• maximising the results from integrating content-led always-on and campaign-based digi-
tal communications such as search marketing, social media, digital PR and advertising
(as described in Chapters 8 and 9);
• harnessing social media marketing, both through use on its own site through user-
generated content and through paid ads within the main social networks such as
Facebook, Instagram, LinkedIn and Twitter (as described in Chapter 9).
Content marketing fuels all of these digital marketing activities since creative content helps
gain visibility across search, display advertising and social media marketing and persuades
people to purchase via website, apps, emails and social media updates. So we also believe
that defining a content marketing strategy (Chapter 6) is important to the future of all
140 Part 2 Digital marketing strategy development

organisations. Strategy development may also involve redesigning business processes to inte-
grate with partners, e.g. suppliers and distributors.
Table P.1 in the Preface suggests the range of digital marketing activities that must be
managed as part of a digital marketing strategy, structured around the customer lifecycle
defined as the four steps in the RACE digital marketing planning framework (Chaffey, 2015).
Table 4.1 shows that the operational digital marketing activities that need to be imple-
mented and managed as part of strategy can be usefully divided into those focusing on
(1) customer acquisition, (2) customer conversion, proposition and experience development,
and (3) customer retention and growth. Improving the capability to execute many of these
activities will be decided upon through the review process of creating a digital marketing
strategy. An output from the digital strategy will be a series of strategic digital marketing
initiatives in the areas of customer acquisition, conversion or retention, such as those shown
in Table 4.1. These initiatives will typically be prioritised and placed as part of a long-term
e-commerce ‘roadmap’ defining required developments over a longer period, say one to
three years.

Table 4.1 Summary of typical focus for main types of strategic digital marketing initiatives

Type of digital marketing Commentary Examples

strategy initiative

New customer proposition Innovative digital experience features or ING uses Big Data AI analysis in its banking
(product and pricing) digital communications related to new app to predict when customers may run out
products or services that will generate of money within the next 30 days
revenue or increase loyalty

New business and revenue Brands can extend their influence in the Pharma company Abbott introduced FreeStyle
model value chain to increase revenue, Libre, a consumer subscription commerce
particularly through new, direct-to- option to improve access and loyalty for its
customer services or sales channels, or diabetes care devices
leveraging digital intermediaries

Customer acquisition Innovative marketing designed to enhance Content and inbound marketing deployed
digital capability and aimed to attract new by HubSpot™ to achieve a successful
customers stock-market flotation in the US including:
search engine optimisation (SEO) pay-
per-click (PPC)
Co-marketing and influencer marketing
Affiliate marketing and aggregators more
relevant for transactional businesses

Customer conversion Innovative features that add functionality JD Wetherspoon’s ‘order & pay’ app.
and customer experience and increase conversion rates and Customers can now find a table, order and
initiatives average order values. Strategic initiatives pay on their phone; food and drinks are
aimed at improving the customers’ brand delivered directly to the table. No queuing at
experience the bar or waiting to pay. Reducing barriers
drives sales

Customer development Investments to improve the experience and Volkswagen™ is increasing sales and
and growth strategic delivery of offers to existing customers customer conversion through its digital
initiatives ecosystems. The MyVolkswagen app links
customers to their car, providing servicing
updates and delivery information; Car-Net
connects smartphones and watches to
navigation and in-car security; Volkswagen
Connect gives driving information, charging
updates and car location capabilities

Social media and content Broader application of content marketing and Airbnb used Instagram and celebrities such
marketing social media for acquisition, conversion as Mariah Carey and Lady GaGa to act as
and retention influencers for the accommodation platform
 Chapter 4 Digital marketing strategy 141

Type of digital marketing Commentary Examples

strategy initiative

Enhanced marketing These typically involve ‘back-end or back- CRM or personalisation

capabilities through office features’ that won’t be evident Content management system
site infrastructure to users of the site, but will help in the Performance improvement – improve
improvements management or administration of the site management information, web analytics
systems including systems for multivariate
and AB testing
Improve customer feedback facilities

Resourcing and Changes needed to marketing management Process change

governance strategies given the increased importance of digital Skills development
media and technology Team structure

Source: Based on information from: www.ing.com; www.freestylelibre.co.uk/libre; www.cmswire.com; www.jdwetherspoon.com;

www.volkswagen.co.uk; www.izea.com

Why are a digital marketing strategy and digital transformation needed?

Creating business and marketing strategies are fundamental activities for most businesses
as they seek to plan their future direction to compete within a marketplace. Given this, we
think it’s useful to question why a digital marketing strategy is needed, what it involves
and how it relates to other strategies. Many experienced marketers have suggested that a
digital marketing strategy is unnecessary or tactical, as shown by the quotes and exam-
ples in Digital marketing insight 4.1. However, we believe that, for most organisations, a
defined digital marketing strategy aligned with business and marketing strategy is valu-
able, since without it they may be using digital marketing without direction, leading to
wastage of resources and missed opportunities. This can lead to a competitive disad-
vantage if more digitally savvy competitors are using digital marketing more effectively
by investing appropriately in digital media, digital experiences and technology. With a
dedicated digital marketing strategy, businesses can ensure they generate demand through
omnichannel always-on and campaign activities as consumers and businesses seek solu-
tions through online channels.
Research by Smart Insights (2021) reviewed approaches to planning digital marketing.
They asked businesses of different sizes from around the world ‘Does your organisation have
a clearly defined digital marketing strategy?’ The answers were:

• No digital marketing strategy – 48 per cent.

• Digital marketing strategy integrated into our marketing strategy – 40 per cent.
• Separate digital strategy in a dedicated document – 12 per cent.
Clearly there are many businesses doing digital marketing without a strategic approach
that may be at risk of competitive disadvantage for the reasons outlined in this section. For
those with a digital strategy, the most favoured approach is a digital strategy integrated with
the marketing strategy, and we would suggest this is what most businesses should aim for.
They may also have a more detailed digital marketing plan owned by digital marketing
specialists for improving always-on communications using marketing technology. As a first
practical step in digital transformation, it is useful to create a separate specific document
defining the need for investment in digital marketing and defining a long-term roadmap to
transform the business using digital media and technology.
The previously referenced research by Smart Insights (2021) showed that many businesses
either already have introduced (27 per cent) or were planning to introduce (35 per cent) a digi-
tal transformation programme. This requirement to run strategic digital initiatives suggests
that businesses do believe that digital is sufficiently important for their future to warrant
142 Part 2 Digital marketing strategy development

Is a digital marketing strategy needed in the

Digital marketing insight 4.1 post-digital world?

The term ‘post-digital’ has been used for many years to describe a world where digital
marketing activities are simply part of marketing. This is effectively the way custom-
ers view the world; it’s entirely natural to use smartphones or laptops for selecting
or buying products or services alongside traditional channels where needed — for
example, for high-involvement purchases. Keith Weed, Head of Communications at
Unilever™, says ‘we are no longer doing digital marketing, but marketing in a digital
world’ (Weed, 2017).
In an article ‘The post-digital era is coming: are you ready?’, Paul Daugherty, Group
Chief Technology Officer (CTO) at global consultancy Accenture, explains (Daugherty,
2019):

Digital is indeed still important, but now it is simply the price of admission for doing
business — it is no longer a differentiation advantage. . . In the post-digital world,
differentiation comes from applying digital in powerful new ways. The technologies
needed to innovate and differentiate go beyond the foundational adoption of digital
tools and concepts. It’s an era where building trust with customers, employees,
business partners and communities through a responsible approach to technology
is the top priority.

He rightly stresses that it is innovative use of digital technology to achieve competi-

tive advantage that should be the focus.
Some have questioned the need for a dedicated digital marketing strategy. In Market-
ing Week, columnist Mark Ritson (2021) suggests in a comedic example of a modern job
interview, that a candidate for a senior marketing job today who wants the job is obliged
to state, if asked about a digital marketing strategy, that ‘I think a digital marketing strat-
egy is at the core of every successful company these days’. However, he believes that
the correct, more realistic answer should be: ‘No, because if I ever develop a “digital
marketing strategy” I clearly have no idea what I am doing. For starters, the digital prefix
is inherently tactical in nature and execution’.
We hope to demonstrate in this text that although digital communications are tactical,
digital channels also offer opportunities for competitive advantage through new busi-
ness and revenue models and by executing digital tactics such as search, content and
social media marketing more effectively than competitors to gain visibility, awareness
and preference for brands online.

a separate focus to develop new processes, structures and skills for business competitiveness.
Reviewing marketing roles in organisations using LinkedIn shows that there are many new
digital marketing roles for managing digital activities, from digital transformation to digital
experiences and digital analytics through to the tactics such as search, social media and email
automation. With many specialist roles in digital marketing in businesses, a digital strategy
to prioritise and integrate their activities is important. Of course, traditional roles such as
brand, product, marketing and campaign managers are still vital to shape and implement
strategy.
Digital skills need to be developed in these teams too and many larger organisations
have a central ‘Digital marketing centre of excellence’. In an article ‘Inside 3M’s quest to
be both big and fast’ (Lloyd, 2017), Erin Craven, 3M’s Executive Director of Marketing
and Sales for Canada, describes her role as: ‘to help our marketers be better marketers and
better sell in the digital world’. For 3M Canada, 3M’s 55,000 products (from Post-It Notes
 Chapter 4 Digital marketing strategy 143

to respiratory masks) are managed by 100 marketers in 27 business divisions serving both
consumer and B2B markets. The article explains that before creation of the centre of excel-
lence, the organisation was siloed as expected for a complex company, and finding success
in digital was only sporadic. She explains:
‘It wasn’t that we had too many cooks in the kitchen; we had too many kitchens’, she told
Strategy. ‘Everyone knew they needed to “be digital,” but everyone was dabbling in it. We
weren’t building subject matter expertise.’

Her solution was to create a digital marketing centre of excellence that the 100 market-
ers can leverage. This specialised team of about 30 – staffed by a selection of internal
team members and bolstered by external hiring to fill in the skill gaps – offers everything
from SEO to digital content consultation. ‘Ruthless prioritisation is how we eat, sleep and
breathe’, she says.
This example shows that a focus on digital marketing is ‘here to stay’ in many organisa-
tions, as digital requires focused resources and focused priorities, which must align with
business priorities. It’s why there are so many digital transformation projects in play.

Challenges of managing digital marketing

Digital marketing is becoming increasingly pervasive across every aspect of an organisa-

tion’s activities, but there are many challenges of managing digital media and technology
to consider when seeking to integrate digital marketing across an organisation:

• gaining buy-in and budget consistent with audience media consumption and value
generated;
• conflicts of ownership and tensions between a digital team and other teams such as tra-
ditional marketing, IT, finance and senior management;
• coordination with different channels in conjunction with teams managing marketing
programmes elsewhere in the business;
• managing and integrating customer information about characteristics and behaviours
collected online;
• achieving consistent reporting, review, analysis and follow-up actions of digital marketing
results throughout the business;
• structuring the specialist digital team and integrating into the organisation by changing
responsibilities elsewhere in the organisation;
• ‘time to market’ for implementing new functionality on a site;
• insourcing vs outsourcing online marketing tactics, i.e. search, affiliate, email marketing,
PR; staff recruitment requirements.
Given the scope and importance of digital marketing for many organisations, as we explained
Digital transformation in Chapter 1, many large organisations are now implementing digital transformation
A staged programme programmes to manage these challenges, which have these features:
of organisational
improvements to business
models, people, process • Gain agreement of long-term digital marketing strategy and investment levels between
and technologies used relevant parts of an organisation, i.e. senior management team, marketing, corporate
for integrated digital communications/brand, e-commerce/trading, IT and data management.
marketing in order to
maximise the potential • Broad scope covering resource investment for digital media, data management and mar-
business contribution of keting technology.
digital technology, data
and media. • Consider changes to process, structure and skills (internal and resources) needed to
implement change and agree integration of communications across traditional and digi-
tal channels.
• Review approach to insight, measurement and improvement, e.g. agreeing relevant KPIs,
dashboards to review them and use of structured experiments to make improvements.
• Define a roadmap and change programme for implementing changes.
144 Part 2 Digital marketing strategy development

Figure 4.2 Hierarchy of organisation plans including digital marketing plans

Step 1. Annual business plan

Step 2. Annual marketing plan

Step 3. Annual communications plan

Campaign 1 Campaign 2 Campaign 3 Campaign 4

E-campaign E-campaign E-campaign E-campaign

component 1..n component 1..n component 1..n component 1..n

Always-on digital marketing activity – search, social and email marketing

Digital marketing plan

Ultimately, the transformation plan should integrate all of its strategic plans into the organi-
sation’s overall long-term business plan. Figure 4.2 shows a planning hierarchy for an organi-
sation, from a corporate or business plan. The figure shows how the digital marketing plan
supports other strategic and tactical initiatives.
Failure to plan how to manage digital channels can lead to the problems shown in
Table 4.2, which can be reduced if a digital marketing strategy and transformation plan is
in place to manage the problems. Activity 4.1 explores the benefits of a planned approach.

Table 4.2 Digital marketing planning failures and solutions

Potential failure or problem Potential solution

Underestimated customer demand for online Research demand, set objectives, allocate sufficient resources
services
Intense competition from existing and new market Analyse the market, especially the intensity of rivalry, anticipate
entrants that may spark digital disruption in sector competitive responses, plan a clear market-entry strategy or
through new business or revenue models potential changes to business and revenue models
Duplication of resources Improve internal communications to avoid different parts of the
marketing organisation purchasing different tools or different
agencies for performing similar online marketing tasks
Insufficient resources and capabilities Ensure budget and specific specialist digital skills are available to
support the strategic initiatives including ‘always-on’ activities to
continuously engage audiences using search, social and email
marketing
Relevant customer data not collected or uitlised Research to ensure best-possible knowledge of target customers;
integrate customer data into existing systems
Lack of control Measure and analyse regularly to take corrective action to ensure
achievement of objectives
Lack of senior management support Ensure support for a long-term digital transformation plan as this
will be needed to drive major strategic initiatives
 Chapter 4 Digital marketing strategy 145

Activity 4.1 Benefits of digital marketing planning

Digital markets are growing in complexity as reach extends through new applications,
social media platforms and technologies (Vieira et al., 2019). Without a digital marketing
strategy, new business, brand exposure and revenues can all be significantly affected,
particularly since new entrants may encourage digital disruption within a sector.

Purpose
To consider the benefits and barriers to the adoption of dedicated digital marketing
planning.

Task
Imagine you are a marketing manager responsible for the development of your organisa-
tion’s digital marketing strategy. Using an organisation you are familiar with, outline the
barriers and potential benefits of proactive digital marketing planning.

How to structure a digital marketing strategy

Michael Porter (2001) suggested the internet has heightened the importance of strategy, but
he encouraged businesses to be cautious and suggested where businesses should focus when
developing their strategy. He suggested six principles that could help to sustain a distinctive
strategic position:
1 Start with the right goal, which is grounded in real economic value.
2 Define a value proposition, which is unique but, importantly, deliverable.
3 Do things differently; create a distinctive value chain.
4 Be prepared to make trade-offs, tailoring a firm’s activities to outperform rivals.
5 Create a fit between what the company does, where it wants to be and the resources
available.
6 Establish continuity. Planning decisions follow the distinctive position set out by the
original goals.
These principles remain fundamental to how to define value through a digital marketing
strategy. More recently, Porter has recommended that innovative technologies are forcing
companies increasingly to ask the question ‘what business am I in?’ (Porter and Heppel-
mann, 2014) as competition intensifies, due to increased data processing power and almost
universal connectivity. The other aspect of a digital marketing strategy that Porter didn’t
consider, since it is more tactical, is how to improve digital marketing communications
capabilities. This requires prioritisation of investment in digital marketing activities, such as
those explored in Part 3, to improve reach, customer experience, conversion and retention.
Marketing planning and strategy comprises a complex and resource-intensive set of pro-
cesses that can deliver great rewards if fully embraced (Jobber and Ellis-Chadwick, 2020).
Strategy process model A strategy process model provides a framework that gives a logical sequence to follow to
A framework for
approaching strategy
ensure inclusion of all key activities of strategy development and implementation. In a mar-
development. keting context, these strategy development and implementation activities are coordinated
Marketing planning through a marketing plan, and the process of creating this is known as marketing planning.
A logical sequence and McDonald (2003) defined marketing planning simply as:
a series of activities
leading to the setting of the planned application of marketing resources to achieve marketing objectives. . . Market-
marketing objectives and
the formulation of plans
ing planning is simply a logical sequence and a series of activities leading to the setting of
for achieving them. marketing objectives and the formulation of plans for achieving them.
146 Part 2 Digital marketing strategy development

McDonald (2003) distinguished between strategic marketing plans that cover a period
beyond the next financial year (typically three to five years) and tactical marketing plans
that cover detailed actions over a shorter time period of one year or less, and this is equally
applicable to digital marketing planning. In a similar way, we suggest that a strategic digital
marketing plan, often known in large companies as a digital transformation plan, should
place emphasis on four areas:
1 Identification of changes to competitive forces in the micro-environment and
macro-environment that will influence customer demand for online experiences and
products.
2 Developing value propositions for customers using online services as part of their buying
process.
3 Definition of the integrated communications to support organisational goals and sup-
port via a marketing technology infrastructure and information architecture to deliver
these value propositions as a customer experience.
4 Changes to governance of marketing activities affecting the structure, skills and systems
or processes in an organisation.
Having a long-term roadmap to guide digital transformation activities for 18 months to
three years may be needed given the scale of changes to structure, skills and technology.
Equally, it is important to consider that digital environments are highly dynamic, and opera-
tional plans should aim to promote strategic agility, so shorter-term flexibility needs to be
built into the process. Outram (2015) argues for a 90-day planning approach where com-
munications strategy performance is reviewed.
Figure 4.3 shows an overall omnichannel strategy process model created by Dave Chaf-
fey and Dan Bosomworth to summarise activities involved in creating and implementing a
digital marketing strategy. The six main process activities are from PR Smith’s SOSTAC®
Planning framework (explained at www.prsmith.org), which stands for Situation, Objec-
tives and Strategy, Tactics, Action and Control. Note that each stage is not discrete; rather
there is some overlap during each stage of planning – previous stages may be revisited and
refined. SOSTAC® was originally developed as a general marketing strategy model, which
didn’t consider digital-specific activities. Within each part of the ‘wheel’, Chaffey and
Bosomworth have identified key digital marketing activities that businesses should work
on as part of the process of digital transformation. The elements of SOSTAC® planning
in the context of how they are described in this text with respect to digital marketing
strategy are:
1 Situation analysis means ‘where are we now?’. Planning activities involved at this stage
include performing a digital marketplace SWOT analysis (Figure 4.6), and reviewing the
different aspects of the micro-environment (Chapter 2) including customers, competitors
and intermediaries. Situation analysis also involves review of the macro-environment
(Chapter 3).
2 Objectives means ‘where do we want to be?’. This can include a vision for digital chan-
nels, and also specific numerical objectives for the digital channels such as forecasts of
visits, leads and sales based on a conversion model (e.g. Figure 2.6).
3 Strategy means ‘how do we get there?’. Strategy summarises how to achieve the objectives
for the different decision points explained in this chapter, including segmentation, target-
ing, proposition development, including digital branding and elements of the marketing
mix (Chapter 5), and CRM ( Chapter 6).
4 Tactics defines the usage of tactical digital communications tools. This includes specific
details of the marketing mix (Chapter 5), CRM (Chapter 6), experience (Chapter 7) and
digital communications (Chapters 8 and 9).
5 Actions refers to 90-day action plans, change management and project management
skills. We refer to some of the issues of modifications to organisational roles and struc-
tures later in this chapter (the 7Ss of Table 4.7).
 Chapter 4 Digital marketing strategy 147

Figure 4.3 An omnichannel marketing strategy process model and implementation activities

STRATEGY PROCESS
GOALS AND KPIs

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Prescriptive strategy 6 Control includes digital analytics to assess whether strategic and tactical objectives are
The three core areas achieved and how improvements can be made to enhance results further (Chapter 10).
of strategic analysis,
strategic development Arguably, due to the speed of development of digital technologies, there is a need for
and strategy
implementation are linked a more responsive, more agile approach to strategy planning (as discussed at the start of
together sequentially. Chapter 3). Rather than a top-down, prescriptive strategy development approach, similar
148 Part 2 Digital marketing strategy development

Emergent strategy to Figures 4.1, 4.2 and 4.3, a more agile, emergent strategy approach is required, where
Strategic analysis,
strategic development and strategic analysis, strategic development and strategy implementation are interrelated. In
strategy implementation reality, most organisational strategy development and planning processes have elements of
are interrelated and are
developed together in a
prescriptive and emergent strategy reflecting different planning and strategic review time-
more agile fashion. scales. The prescriptive elements are the structured annual or six-monthly budgeting process
or a longer-term three-year rolling marketing planning process. But on a shorter timescale,
organisations naturally also need an emergent process to enable strategic agility and the
ability to respond rapidly to marketplace dynamics through 90-day plans.
We will now look at each of the steps involved in strategy development:

• situation analysis (drawing on our coverage in Chapters 2 and 3);

• goal and objective setting;
• strategy formulation;
• organisational issues of strategy implementation.

Situation analysis

Situation analysis The situation analysis in classic marketing planning is an audit of current effectiveness of
Collection and review
of information about an
a firm’s activities. We reviewed issues to consider in a digital marketing audit in Chapters 2
organisation’s internal and 3. The analysis involves a review of internal and external factors (for example, the
processes and resources marketing environment) that have implications for strategy development. More specifically,
and external marketplace
factors in order to inform situation analysis involves:
strategy definition.
• Assessment of internal capabilities, resources and processes of the company and a review
of its activity in the marketplace. Consideration of the immediate competitive envi-
ronment (micro-environment) including customer demand and behaviour, competitor
activity, marketplace structure and relationships with suppliers and partners. (Micro-
environment factors were reviewed in Chapter 2.)
• Performance review of how digital marketing channels’ communications are contributing
to marketing effectiveness and sales.
• Investigation of the wider environment in which a company operates, including economic
development, government regulations, legal issues and taxation, social and ethical issues,
e.g. data protection and consumer privacy. (Macro-environment factors were reviewed in
Chapter 3.)

Internal audits of digital marketing

An internal audit involves reviewing the current contribution of the digital marketing
activities within an organisation. More specifically, this consists of assessing effectiveness,
performance measurement and reviewing web analytics. There are different levels to consider:

• Business effectiveness. Financial or commercial contribution from digital channels,

including online leads, sales and profit and offline-influenced leads and sales, and how
well it is supporting business objectives. The relative costs of developing and maintaining
digital experiences and communications will also be reviewed as part of a cost–benefit
analysis.
• Marketing effectiveness. Review leads (qualified enquiries); sales; customer retention,
satisfaction and loyalty, including lifetime value; online market (or audience share); brand
enhancement; customer service. For large organisations, these measures can be assessed
for each of the different markets a company operates in or for product lines produced on
the website.
• Digital marketing effectiveness. This includes a review of capabilities and evaluation
of the contribution from digital media. Specific measures for digital media include the
 Chapter 4 Digital marketing strategy 149

volume, quality, value and cost (VQVC, explained in more depth later in this chapter)
of visits to the website, mobile and social platforms. Evaluation also involves reviewing
audience profile and customer satisfaction for digital experiences.
According to Chaffey and Smith (2017), key performance indicators (KPIs) for performance
review of an online presence include:

• unique visitors: the number of separate, individual visitors to the site;

• total numbers: of sessions or visits to the website;
• repeat visits: average number of visits per individual;
• duration: average length of time visitors spend on the site;
• conversion rates: the percentage of visitors converting to subscribers (or becoming
customers);
• attrition rates: through the online buying process;
• churn rates: percentage of subscribers lapsing or unsubscribing.

Digital marketing capability analysis

Dave Chaffey, writing for Smart Insights, has developed a modern stage-model framework
for assessing internal digital marketing capabilities in larger organisations (Figure 4.4). This
was inspired by the capability maturity models devised by the Carnegie Mellon Software
Engineering Institute (www.sei.cmu.edu) to help organisations improve their software devel-
opment practices. Businesses can audit their capabilities to deliver effective marketing by
assessing their level of capability on a scale from 1 (lowest capability) to 5 (highest capa-
bility) for different facets of capability shown from A to G. They can then discuss and set
priorities for improving capabilities as part of digital transformation.
Now complete Activity 4.2, which illustrates the type of analysis needed for a digital
marketing situation analysis.

Figure 4.4 A digital marketing capability model

FIVE. Optimized
FOUR. Quantified
THREE. Defined
TWO. Managed
Digital
Capability ONE. Initial Business-aligned
Agile strategic
Defined vision and approach
Prioritised marketing strategy and roadmap
A. Strategic strategy
No strategy activities
Approach

B. Performance Quality-based KPIs Value-based KPIs

Volume-based KPIs Lifetime-value KPIs
Improvement No KPIs ‘Last click’ attribution Weighted attribution
No dashboards Continuous CRO
Process Business dashboards Ad hoc CRO

C. Management Verbal support, but Sponsorship and Active championing and Integral part of
Limited
Buy-in inadequate resourcing increased investment appropriate investment strategy development

D. Resourcing
Core skills centralised or Centralised hub and spoke Decentralisation and Balanced blend of
and No specific skills
agencies Dedicated resources reskilling marketing skills
Structure

E. Data
Limited / no Separate data, tools Partially integrated Integrated CRM systems Flexible approach to
and
customer database and IT services systems and data and 360º data sources optimise resources
Infrastructure
F. Integrated Integrated, personalised,
Core push activities Integrated inbound Media optimised for ROI
Customer Not integrated Paid-Owned-Earned
synchronised approach and to maximize CLV
Communications media
G. Integrated Partially personalised Integrated, personalised, Full contexual personalised
Desktop and mobile
Customer Website not integrated desktop and mobile web, mobile, email and experiences and
support, not personalised
Experience experience social media recommendations
‘Developing ‘Competent average ‘Above-sector average ‘Market leading
‘Laggard’
capability’ capability’ capability’ capability’

Source: Smart Insights (Marketing Intelligence) Ltd (http://bit.ly/smartbenchmarking)

150 Part 2 Digital marketing strategy development

Activity 4.2 Situation analysis for an e-commerce business

Purpose
To consider which elements of a situation analysis could help to avoid digital strategy
failures (see Table 4.2).

Activity
1 Imagine you are a newly appointed digital marketing manager and you have been
asked to present your views on how the company can improve its use of digital chan-
nels. Select an existing company to focus on and give context to this activity.
2 Map out how the company is currently using digital channels.
3 Make recommendations for how the company can increase and expand its use of
digital channels.
4 Review the potential failure points in Table 4.2 to ensure that your answer to 3 (above)
does not expose the company to the risk of failure.

Customer research

Research into customers should not be restricted to quantitative demand analysis. Varianini
and Vaturi (2000) point out that qualitative research about existing customers provides
insights that can be used to inform strategy. Research by Doherty and Ellis-Chadwick (2010)
suggests that using user profiling to capture the core characteristics of target customers
involves more than using demographics: it also includes customer needs, attitudes, experi-
ences and abilities of using digital technologies and the internet. A customer’s profile can
strongly influence where, when and how they engage with digital channels. See Digital mar-
keting insight 4.2 about consumer profiles and digital targeting options.

Digital marketing insight 4.2 Consumer profiles: segmenting digital audiences

We can break consumers’ profile data down into distinct sub-categories: classification
variables, character variables and affinity profiles.
Classification variables are those personal attributes that tend to remain static
throughout an individual’s lifetime or evolve slowly over time. These variables are par-
ticularly useful for marketers as they can help to identify particular consumers and target
groups. According to Jobber and Ellis-Chadwick (2020), profile segmentation variables
can be used to group consumers together in a meaningful way so they can be reached
by suitable media communications. See Table 4.3 for a list of classification variables
and possible implications for online target marketing.
Character variables are less straightforward to understand and identify for marketing
purposes as they comprise any of the attributes of a consumer’s perceptions, beliefs
and attitudes that might influence online behaviour, e.g. innovativeness, enjoyment,
skills and experience, and emotions. Character variables are also more likely than clas-
sification variables to develop, change and be significantly modified over time by online
shopping experiences. For example, if a consumer has negative beliefs about, say,
privacy and security of online transactions, which are due to lack of computer skills,
these beliefs are likely to shape negative attitudes towards the internet and reduce the
 Chapter 4 Digital marketing strategy 151

Table 4.3 Consumer profile: classification variables

Profile variable Online marketing impact

Age Since digital platforms such as Facebook, Google and Microsoft ask for
date of birth as an identifier when people register, this variable can
be used for targeting individuals of a specific age, unlike traditional
media platforms

Education and Influences how digital channels are used, e.g. university students find
literacy they are not only useful for shopping but indispensable to support their
studies. Targeting also possible in Facebook, Instagram, Pinterest

Employment Employment places time constraints on online shopping behaviour, i.e.

status when and where individuals can access online shopping channels

Gender Originally, male consumers made more purchases and bought higher-
ticket items online than females (Yorgey, 2000). Now there is a greater
balance and higher penetration of use across populations

Geography Location is an important consideration: where people live can affect the
potential size of the online market. Geo-targeting is available in all
social networks and ad-networks

Household size Household size has the potential to affect the number of people involved
in purchasing decisions and the direction of influence. For example, in
relation to online purchasing, teenagers are perceived both as experts
within their families and as a stimulator of other family for use of
technology (Hurst, 2020; Thomson and Laing, 2003)

Household type Household type has the potential to affect product and service require-
ments; major shifts towards single-person households have led to a
shift in purchasing patterns and times of purchasing. Working patterns
can cause problems if the goods cannot be delivered during working
hours, and lead to associated challenges when delivering bulky and
perishable goods

Income Income affects purchasing power and influences whether individuals

have access to the internet. Income is positively related to a tendency
to shop, both offline and online. Younger shoppers (16–24) tend
to spend the least online. Over-25-year-olds are most likely to buy
higher-priced items online (Eurostat, 2021)

Mobility Mobility affects channel access; fewer mobile targets may be

encouraged to shop online. This also applies to macro-populations,
which are poorly served by public and private transport

Race and ethnicity Race and ethnicity affects access to technology and economic
circumstances. In the US, the number of African Americans with
internet access is increasing, but this sector of the population still lags
behind Caucasians and Hispanics

Affinity and intent Although not classic demographic variables, this form of profiling and
profiling targeting has become significant online since advertisers can reduce
wastage by communicating to people who are interested in a lifestyle,
e.g. ‘gym members’, or they are ‘in-market’, i.e. actively searching
for a product or service, evidenced by their behaviour including the
search keywords they use in Google, the groups they like in Facebook
or the content of pages they view on publisher sites
152 Part 2 Digital marketing strategy development

Figure 4.5 Character variables, beliefs, attitudes and shopping intentions

Attitudes
towards perceived
Shape outcomes of
online shopping
Influence

Beliefs
about the
Internet
Intentions
shop online

Form

Character variables
Innovative, computer-
Online shopping
literate individual
Stockbyte/Getty Images experience
who is confident and
enjoys shopping
online and offline
Feedback

intention to shop online. Conversely, if a consumer believes the internet is, say, easy to
use, they are more likely to have a positive attitude towards the idea of online shopping
and ultimately have an increased intention to shop online. Each stance may be continu-
ally reinforced by positive or negative feedback from online shopping experiences. See
Figure 4.5 for a model of how character variables interact.
Digital channels also provide good insight on consumer behaviour, such as the con-
tent they consume, which can be used to deliver personalised messages on a website
and in emails.
Affinity profiling is when customers are grouped according to their interests such
as sport, dining out or health and fitness, or whether their interest has grown relative
to a baseline, i.e. they are ‘in-market’. This approach creates opportunities for online
advertisers to use behavioural advertising, such as through intent-based targeting on
Facebook based on groups or celebrities the customers ‘Like’. Care needs to be taken
to avoid challenges posed by this approach to customer selection as privacy, lack of
discrimination and need for group protection should be considered. For example, if a
digital campaign targets a group of people based around their interest in going to the
gym, then race, ethnicity and gender of individuals should also be considered and
factored into the campaign content (Wachter, 2020).

Resource analysis
Resource analysis Resource analysis is related to capability analysis, but should include an assessment of the
Review of the
technological, financial
resources needed to improve capabilities:

•
and human resources
of an organisation and Financial resources. The cost components of running always-on activities such as site
how they are utilised in and content development, media and messaging. Mismatch between current spend and
business processes.
required spend to achieve visibility within the online marketplace should be reviewed
against competitors, using tools such as SimilarWeb and Alexa (Table 2.1).
 Chapter 4 Digital marketing strategy 153

• Technology infrastructure resources. Marketing technology and data management

including website hosting and platforms, marketing automation systems, analytics and
marketing clouds.
• Data and insight resources. The quality of data and tools to analyse the performance
of digital channels and consumer characteristics and behaviour, including multichannel
attribution to decide on the impact and effectiveness of different digital media channels
and touchpoints.
• Human resources. These include digital marketing skills, both for digital marketing
specialists and non-digital roles such as brand, campaign and product managers. Suit-
ability of team structures and workflows can also be reviewed. For all companies there
is the challenge of recruiting new staff or re-skilling marketing staff to manage online
marketing.

Competitor analysis

In Chapter 2 we showed that competitor analysis, or the monitoring of competitor use of

digital marketing and e-commerce to acquire and retain customers, is especially important
in the dynamic online marketplace. This enables new services to be launched, media invest-
ments to be changed and prices and promotions altered far more rapidly than through print
communications. Benchmarking of digital marketing activities such as those summarised in
Table 2.1 and Table 2.3 is intended to:
1 review current approaches to digital marketing to identify areas for improvement;
2 benchmark with competitors who are in the same market sector or industry, and in dif-
ferent sectors;
3 identify best practice from more advanced adopters;
4 set targets and develop strategies for improving capabilities.

Intermediary analysis

Situation analysis will also involve identifying relevant intermediaries for a particular mar-
ketplace and looking at how the organisation and its competitors are using the intermediar-
ies to build traffic and provide services. We also reviewed the impact of the different types
of intermediaries on buyer behaviour in Chapter 2. For example, an online retailer should
assess where its target customers might encounter its competitors, or know whether com-
petitors have any strategic, long-term sponsorship arrangements or microsites created with
intermediaries. Another aspect to consider is the way in which the marketplace is operating:
to what extent are competitors using disintermediation or reintermediation? How are exist-
ing channel arrangements being changed? There are now many freemium online services
available to companies to help them understand their effectiveness in attracting and retaining
new customers, and competitors and intermediaries.

Assessing opportunities and threats

A SWOT analysis is a useful way to summarise the external opportunities and threats
and is a core activity for situation analysis for digital marketing. The results of a digital
channel-specific SWOT analysis (internal Strengths and Weaknesses and external Oppor-
tunities and Threats) should clearly highlight where actions should be taken (both short
and longer term). A digital strategy should plan to counter the threats and take advantage
of the opportunities. Figure 4.6 shows a generic application of SWOT. The SWOT should
154 Part 2 Digital marketing strategy development

Figure 4.6 A generic digital channel-specific SWOT analysis showing typical opportunities
and threats presented by digital media

The organisation Stengths – S Weaknesses – W

1. Existing brand 1. Brand perception
2. Existing customer base 2. Intermediary use
3. Existing distribution 3. Technology/skills
4. Cross-channel support

Opportunities – O SO strategies WO strategies

1. Cross-selling Leverage strengths to Counter weaknesses through
2. New markets maximise opportunities exploiting opportunities
3. New services = Attacking strategy = Build strengths for
4. Alliances/co-branding attacking strategy

Threats – T ST strategies WT strategies

1. Customer choice Leverage strengths to Counter weaknesses and
2. New entrants minimise threats threats
3. New competitive products = Defensive strategy = Build strengths for
4. Channel conflicts defensive strategy

review the main areas of digital marketing activity: customer acquisition, conversion, reten-
tion and growth.
Often, the most rewarding strategies combine strengths and opportunities or counter
threats through strengths. Figure 4.7 gives an example of typical digital SWOT analysis for
an established multichannel brand.

Setting goals and objectives for digital marketing

Any marketing strategy should be based on clearly defined corporate objectives, and digital
marketing should be an integrated element not considered separately from other business
and marketing objectives. We emphasised this in Chapter 1 where we recommended setting
specific digital-channel goals that impact and align with business strategy. Porter (2001)
criticised the lack of goal setting when many organisations have developed internet-related
strategies. He noted that many companies, responding to distorted market signals, have used
‘rampant experimentation’ that is not economically sustainable.
We have found that the terms ‘goals’ and ‘objectives’ are often defined and used differ-
ently within different companies or parts of a business and this can lead to confusion when
creating processes to track and improve marketing performance. Typically, in businesses you
see that objectives are specific; they cover the SMART criteria that ensure specific targets for
a time period and measure against these using sales or analytics systems. Goals are broader
aims that are informed by a vision.
When defining objectives and goals you should use clear definitions. For digital marketing
you can define different types of performance targets and measures, as shown in Figure 4.8:
Digital marketing
dashboard 1 Vision. A high-level statement of how digital marketing will contribute to the
A visual summary of KPIs
showing the contribution
organisation.
of digital marketing to 2 Goals. These are the broad aims to show how the business can benefit from digital chan-
an organisation’s goals. nels. They describe how your digital marketing will contribute to the business in key areas
It should show month-
on-month and year- of growing sales, communicating with your audience and saving money.
on-year performance 3 Objectives. Specific SMART objectives to give clear direction and commercial targets.
comparisons, and ideally
performance against
Objectives are the SMART targets for digital marketing, which can be used to track per-
target for business goals. formance against target on a digital marketing dashboard (Chapter 10).
 Chapter 4 Digital marketing strategy 155

Figure 4.7 An example of a digital channel-specific SWOT for an established multichannel

brand showing how the elements of SWOT can be related to strategy formulation

The Strengths – S Weaknesses – W

organisation 1 Existing brand 1 Brand perception
2 Existing customer base 2 Intermediary use
3 Existing distribution 3 Technology/skills (poor web
experience)
4 Cross-channel support
5 Churn rate

Opportunities – O SO strategies WO strategies

1 Cross-selling Leverage strengths to Counter weaknesses through
2 New markets maximise opportunities = exploiting opportunities = build
3 New services attacking strategy strengths for attacking strategy
4 Alliances/co-branding Examples: Examples:
1 Migrate customers to web 1 Countermediation strategy
strategy (create or acquire)
2 Refine customer contact 2 Search marketing acquisition
strategy across customer strategy
lifecycle or commitment 3 Affiliate-based acquisition
segmentation (email, web) strategy
3 Partnership strategy 4 Refine customer contact
(co-branding, linking) strategy (email, web)
4 Launch new web-based
products or value-adding
experiences, e.g. video
streaming

Threats – T ST strategies WT strategies

1 Customer choice (price) Leverage strengths to Counter weaknesses and threats:
2 New entrants minimise threat = defensive = build strengths for defensive
3 New competitive strategy strategy
products Examples: Examples:
4 Channel conflicts 1 Introduce new 1 Differential online pricing
5 Social network Internet-only products strategy
2 Add value to web services 2 Acquire/create pureplay
– refine OVP company with lower costbase
3 Partner with 3 Customer engagement strategy
complementary brand to increase conversion, average
4 Create own social order value and lifetime value
network/customer reviews 4 Online reputation management
strategy/E-PR

Figure 4.8 The relationship between vision, goals, objectives and KPIs

Vision

Goals

Objectives

CSFs and KPIs

Metrics and measures

156 Part 2 Digital marketing strategy development

Table 4.4 Tangible and intangible benefits from digital marketing

Tangible benefits Intangible benefits

Increased sales from new sales leads giving: Corporate image enhancements lead to increased revenue from:
• New customers, new markets • Enhanced brand
• Existing customers (repeat-selling) • More rapid, more responsive marketing communications including PR
• Existing customers (cross-selling) • Improved customer service
Cost reductions from: • Learning for the future
• Reduced time in customer service • Meeting customer expectations to have a website
(customer self-service online) • Identifying new partners, supporting existing partners better
• Online sales • Better management of marketing information and customer
• Reduced printing and distribution costs of information
marketing communications • Feedback from customers on products

4 CSFs and KPIs. Key performance indicators (KPIs) are used to check you are on track.
KPIs are specific metrics that are used to track performance to make sure you are on
track to meet specific objectives. They are sometimes known as performance drivers or
critical success factors (CSFs) for this reason. The examples shown in Table 4.8 are on
more detailed parts of a digital marketing dashboard.
5 Metrics and measures. Other measures that may be referenced, but aren’t typically used
in high-level reporting or dashboards.
As a starting point for setting specific objectives, it is useful to think through the benefits
of using digital channels and how these can be converted into specific objectives. Also iden-
tifying both tangible benefits (e.g. monetary savings or revenues), which are fairly straight-
forward to identify, and intangible benefits (e.g. customer service quality), which can be
difficult to identify but can be fundamental to the overall customer experience. Table 4.4
presents a summary of typical benefits of digital marketing.

The online revenue contribution

Online revenue A key objective for digital marketing is the online revenue contribution since this gives a
contribution
An assessment of the
simple measure of the proportion of online sales achieved in different product categories.
direct contribution of This is a measure of the extent to which a company’s online presence directly impacts on
the internet or other the sales revenue (or better profit) of the organisation. By understanding this contribution,
digital media to sales,
usually expressed as a business planners should be able to determine future resource allocation to online channels.
percentage of overall These objectives can be specified for different types of products, customer segments and
sales revenue.
geographic markets. For example, traditional high-street food-and-fashion retailer Marks
and Spencer™ partnered with Ocado in 2020 to boost revenues from online food sales. The
move aimed to increase the average online spend of M&S online shoppers to more than
£20. A typical Ocado customer spends more than £100 per shop (Eley, 2020). But online
fashion retailer ASOS and other online-only fashion businesses continue to eat into M&S’s
market share in the fashion sector, so M&S may need to consider increasing its investment
in resources to boost its online revenue contribution from its fashion ranges as well. (See
Case study 4 for further discussion of ASOS.)
It is important that companies set sales and revenue goals for online channels for which
Allowable cost-per- costs are controlled through an allowable cost-per-acquisition. This takes into account
acquisition
A target maximum cost
the cost of attracting visitors through techniques such as affiliate marketing, paid search
for generating leads or advertising or display advertising, as explained in budget models presented in Chapter 8.
new customers profitably. For some companies (e.g. FMCG, manufacturer of multiple brands Unilever), it is unre-
alistic to expect a significant direct online revenue contribution. In this case, an indirect
online contribution can be stated. This considers the internet as part of the promotional
mix and its role in reaching and influencing a proportion of customers to purchase the
product, generating trials or, in the case of a B2B company, leads. A company could set an
 Chapter 4 Digital marketing strategy 157

Online promotion online promotion contribution or indirect online revenue contribution of 5 per cent of its
contribution
An assessment of the target market visiting the website or social media presence and interacting with the brand.
proportion of customers
(new or retained) who are
reached and influenced by Setting SMART objectives
online communications.

SMART is an easy-to-recall acronym that is used to assess the suitability of objectives.

SMART stands for:

• Specific. Is the objective sufficiently detailed to measure real-world problems and

opportunities?
• Measurable. Can a quantitative or qualitative attribute be applied to create a metric?
• Actionable. Can the information be used to improve performance? If the objective doesn’t
change behaviour in staff to help them improve performance, there is little point in it!
• Relevant. Can the information be applied to the specific problem faced by the manager?
• Time-related. Can the information be constrained by or compared for different time
periods?
With SMART objectives, everyone is clearer what the target is and progresses towards it
and, if necessary, action can be taken to put the company back on target. For SMART digital
marketing objectives for an online presence such as a website or mobile app it is important
to measure traffic, value and cost. Applying the VQVC mnemonic is a technique used to test
whether businesses are using the right types of goals and measures for their objectives and
reporting on digital marketing dashboard. VQVC stands for:

1 Volume measures (of traffic)

Digital analytics systems such as Google Analytics have specific measures for volume:

• Unique visits. The number of individuals who visit the site in the specified period.
• Visits. The total number of times the site was accessed by different individuals.
• Page views. The total number of pages viewed by individuals.
These measures can be used with objectives and to monitor performance against plan-
ning models.

2 Quality measures
To understand the effectiveness of the online experience, conversion measures assess the
quality of the visitors and their experiences. These measures give an indication of how a
visitor has engaged with a site and include:

• Bounce rate. Percentage of visitors who leave immediately after viewing only one page.
A high bounce rate is a sign of poor-quality traffic and/or experience.
• Duration. Dwell time, which is measured as average time on page or time on site.
• Pages per visit. Arguably more useful than dwell time since it shows how many pages a
visitor views on average. Conversion rates to lead and sale are arguably the most impor-
tant quality measure since they show what proportion of visits convert to commercial
outcomes.

3 Value measures
Value shows the communications effectiveness and commercial contribution of digital mar-
keting to a business. Here we’re looking for outcomes that show intent to purchase, or
purchase itself. For an e-commerce site this is straightforward – we can look at measures
such as sales transactions and average order value. However, it’s less obvious for the many
non-transactional sites, like B2B sites. Here it’s necessary to set up goals customised for the
business in Google Analytics for when user actions are completed for qualified leads.
158 Part 2 Digital marketing strategy development

• Goal value per visit. If you assign a value to a goal such as a download, you can then
compare how different visitor sources contribute value to the site. For example, how
does social media marketing compare to email, or is LinkedIn more or less valuable than
Twitter? This is very powerful for checking your marketing investments.
• Revenue per visit. For sites with e-commerce tracking, Google will report revenue per
visit, which enables similar analysis to that of goal value.
• Page value. If marketers review this measure for pages, they can determine which pages
are prompting the creation of value, enabling the business to improve customer journeys.

4 Cost measures
Cost includes the cost of content and experience creation and promotion – i.e. paid,
owned and earned media costs. Cost-per-acquisition is typically used to assess media
effectiveness.
Examples of SMART objectives across VQVC, including those to support goal setting in
customer acquisition, conversion and retention categories for digital marketing strategy, are:

• Digital channel contribution objective. Achieve 10 per cent online revenue (or profit)
contribution within two years.
• Acquisition objective. Acquire 50,000 new online customers this financial year at an aver-
age cost-per-acquisition (CPA) of £30 with an average profitability of £5.
• Acquisition or conversion objective. Migrate 40 per cent of existing customers to using
online ‘paperless’ bill payment services within three years (e.g. for a bank or utilities
company).
• Acquisition objective. Increase by 20 per cent within one year the number of sales arising
from a certain target market (e.g. 18–25-year-olds).
• Conversion objective. Increase the average order value of online sales to £42 per customer.
• Conversion objective. Increase site conversion rate to 3.2 per cent (would be based on
model of new and existing customers in different categories).
• Conversion objective. Increase percentage of online service enquiries fulfilled online by
‘web self-service’ from 85 to 90 per cent.
• Retention objective. Increase annual repeat new customer conversion rate by 20 per cent.
• Retention objective (existing customers). Increase percentage of active users of the service
(purchasing or using of other electronic services) within a 180-day period from 20 to 25
per cent.
• Retention objective. Increase customer satisfaction rating for channel from 70 to 80 per
cent.
• Growth objective. Increase new prospects recommended by friends (viral marketing or
‘member get member’) by 10,000 per annum.
• Cost objective. Achieve a cost reduction of 10 per cent in marketing communications
within two years.

Frameworks for objective setting

A significant challenge of objective setting for digital marketing is the potential of there
being many different measures to consider, so these should be grouped to be meaningful
Efficiency
Minimising resources or
and presented on performance dashboards.
time needed to complete Table 4.5 illustrates specific digital marketing measures within the four main areas of
a process; ‘doing the organisational performance managed through the balanced scorecard technique used in
thing right’.
larger businesses (e.g. Hasan and Tibbits, 2000). In our presentation we have placed objec-
Effectiveness
Meeting process
tives within the areas of efficiency (‘doing the thing right’) and effectiveness (‘doing the
objectives, delivering the right thing’). For example, efficiency involves increasing conversion rates and reducing costs
required outputs and of acquisition. Effectiveness involves supporting broader marketing objectives and often
outcomes; ‘doing the right
thing’. indicates the contribution of the online channel.
 Chapter 4 Digital marketing strategy 159

Table 4.5 Example allocation of digital marketing objectives within the balanced scorecard framework for a
transactional e-commerce site

Balanced scorecard sector Efficiency Effectiveness

Financial results (business value) Channel costs, channel profitability Online contribution (direct)
Online contribution (indirect)
Profit contributed

Customer value Online reach (unique visitors as % of potential Sales and sales per customer
visitors) New customers
Cost-per-acquisition or cost-per-sale (CPA/CPS) Online market share
Customer propensity Customer satisfaction ratings
Customer loyalty index

Operational processes Conversion rates Fulfilment times

Average order value Support response times
List size and quality
Email active (%)

Leading and lagging performance indicators

When developing goals and measurement systems used to review and improve performance
of digital channels, it is also helpful to consider which are leading and lagging indicators of
performance. Trends should be identified within these – e.g. are they increasing or decreas-
ing year on year (often used as a good like-for-like comparison) – or compared to the previ-
ous week, month or average for a recent period?
Leading performance A leading performance indicator is a metric that is suggestive of future performance
indicator
A measure that is
– think of the amber preceding the green light on traffic lights on a short timescale. The
suggestive of future benefit of leading indicators is that they enable managers to be proactive in shaping future
performance and so can performance. There tend to be fewer leading performance indicators, but these can be
be used to take proactive
action to shape future applied to e-commerce:
performance.
• Shares of searches. An increase in the proportion of brand searches within a market
was shown to be predictive of a future increase in market share (see Digital marketing
insight 2.2).
• Repeat sales metrics. If repeat conversion rates are falling or the average time between
sales (sales latency) is falling, then these are warning signs of future declining sales vol-
ume for which proactive action can be taken, e.g. through a customer email marketing
programme.
• Customer satisfaction or advocacy ratings such as the Net Promoter Score. If these are
trending downwards or return rates are increasing, this may be a sign of a future decline
in repeat sales since more customers are dissatisfied.
• Sales trends compared to market audience trends. If, for example, online sales are increas-
ing at a lower rate than overall online audiences for a product category are indicated, e.g.
through panel data, Connexity or searches in particular categories, then this is a warning
sign that needs to be acted upon.
Lagging performance A lagging performance indicator is one where the measure indicates past performance.
indicator
A measure that indicates
Lagging indicators enable corrective action to be taken. Some also identify a coincident per-
past performance. formance indicator, which is more suggestive of current performance. Lagging performance
Corrective action can then indicators for a transactional retail site include:
be applied to improve
performance.
• Sales volume, revenue and profitability. These are typically compared against target or
previous periods.
• Cost-per-acquisition (CPA). The cost of gaining each new customer will also be com-
pared against target. Variations in trends in CPA for different referrers (traffic sources)
and between different product categories can potentially be used as leading indicators.
160 Part 2 Digital marketing strategy development

• Conversion efficiency metrics. For an e-commerce site these include process efficiency
metrics such as conversion rate, average order and landing page bounce rates.
These lagging indicators are used operationally on a daily or weekly basis so that perfor-
mance can be diagnosed and reviewed.

Strategy formulation for digital marketing

Strategy formulation Strategy formulation involves the identification of alternative strategies, a review of the
Generation, review and merits of each of these options and then selecting the strategy that has the best fit with a
selection of strategies
to achieve strategic company’s trading environment, its internal resources and capabilities. Companies should
objectives. be realistic about what their strategies can achieve and base digital strategies on sound logic
and 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). A useful technique to help align strategies and objectives is to present them
together in a table, along with the insight developed from situation analysis that may have
informed the strategy. Table 4.6 shows how objectives, strategies and performance indicators
can be mapped to produce this logical and connected flow of activity.
Here different digital marketing communications techniques are grouped according to
whether they support customer acquisition, conversion or retention.
The key 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.
The main thrust of digital marketing strategy development is taking the right decisions
on the selective targeting of customer groups and different forms of value delivery for online
channels. Digital marketing strategy is a channel marketing strategy and should:

• be based on objectives for online contribution of leads and sales for this channel;
• support the customer journey as they select and purchase products using this channel in
combination with other channels;
• define a unique, differential proposition for the channel based on the quality of content
and experience;
• specify how this proposition is communicated to persuade customers to use online ser-
vices in conjunction with other channels;
• manage the online customer lifecycle through the stages of attracting visitors to the
website, converting them to customers, and retention and growth;
• be consistent with the types of customers that use and can be effectively reached through
Online tactical the digital communications channels and targeted using online tactical marketing
marketing
segmentation.
segmentation
Tactical segmentation
enables targeting
Furthermore, digital marketing strategy development involves reappraising a company’s
based on customer approach to strategy based on familiar elements of marketing strategy plus assessing the
journey behaviour such relevance of new digital business and revenue models. We believe there are eight important
as search behaviour,
content accessed and decisions to consider. The first four are concerned with fundamental questions of how an
contribution to social organisation delivers value to customers online and which products are offered to which
media.
markets online. The next four are more concerned with the mix of marketing communica-
tions used to communicate with customers across multiple channels, with the final decision
referring to organisation and governance.
 Chapter 4 Digital marketing strategy 161

Table 4.6 An example of the relationship between objectives, strategies and performance indicators

Objectives Substantiation Strategies to achieve goals Key performance indicators

(informed by situation (critical success factors)
analysis or insight)

1 Acquisition objective Based on growth forecast Start affiliate marketing Overall CPA for online sales
Acquire 50,000 new online 40,000 sales per year, but programme and improve Incremental number and
customers (based on current with incremental sales SEO. Existing media mix % of sales from affiliate
sales) this financial year arising from new affiliate based on pay-per-click marketing programme
at an average cost-per- programme and SEO and display advertising Number of strategic
acquisition (CPA) of £30 development supported by offline keywords ranked in top
with an average profitability media positions in natural search
of 5% Use social media results page
engagement to generate
leads

2 Acquisition (or Extrapolation of current Direct marketing campaign Number and % of existing
conversion) objective natural migration coupled using direct mail, phone customers registering to
Migrate 40% of existing with increased adoption prompts and online use online service
customers to using online from offline direct persuasion to encourage Number and % of customers
‘paperless’ bill payment marketing campaign adoption. Use of incentive actively using online
services and email to encourage change services at different points
communications within three after initially registering
years

3 Conversion objective Growth estimate based on Use of new merchandising % of site visitors responding
Increase the average order current AOV of £35 plus system to show users to merchandising/cross-
value of online sales to £42 model suggesting 20% related ‘next best product’ selling messages
per customer increase in AOV for different product
categories

4 Conversion objective Model showing separate Combination of strategies: Variations in conversion

Increase site conversion rate increase in conversion Incentivised email rates for new and existing
to 3.2% for new and existing follow-up on checkout customers in different
customers based on abandonments for new product categories
strategies shown right customers
Introduction of more
competitive pricing
strategy on best-sellers
AB and multivariate
messaging improvement
of landing pages
Refinement to quality of
traffic purchased
through pay-per-click
programme

5 Retention objective Business case based on Delivery of personalised Increased conversion rate
Increase annual repeat new limited personalisation of product offers by email of retention email contact
customer conversion rate offers to encourage repeat 5% second purchase programme
by 20% purchases via email discount voucher Conversion to sale for
second purchase discount
campaigns

6 Growth objective Model based on Supported by direct mail and Response rate to direct mail
Increase new prospects encouraging 2% of email recommendation campaign
recommended by friends customers to recommend programme
(viral marketing or ‘member friends annually (based on
get member’) by 10,000 per trial scheme)
annum
162 Part 2 Digital marketing strategy development

Decision 1: Market and product development strategies

Ansoff’s (1957) strategic marketing grid can be applied for a simple review of market and product
development using an adapted form of the matrix shown in Figure 4.9. This summarises how the
internet and digital channels can potentially be used to achieve four strategic directions:
1 Market penetration. The internet can be used to sell more existing products into existing
markets.
2 Market development. Here the internet is used to sell into new geographical markets,
taking advantage of the low cost of advertising internationally without the necessity for
a supporting sales infrastructure in the customers’ countries.
3 Product development. New products or services are developed that can be delivered by
the internet. These are typically digital products.
4 Diversification. In this sector, the internet supports selling new products, which are devel-
oped and sold into new markets.
Let us now review these strategic options in more detail.

1 Market penetration
This involves using digital channels to sell more existing products into existing markets.
Digital channels have great potential for achieving sales growth or maintaining sales through
the market penetration strategy. As a starting point, many companies will use digital mar-
keting communications to help sell existing products into existing markets, although they
may miss opportunities indicated by the strategies in other parts of the matrix. Figure 4.9
indicates some of the main market penetration techniques:
• Market share growth. Companies can compete more effectively online if they have websites
that are efficient at converting visitors to sales (as explained in Chapter 7) and mastery

Figure 4.9 Using digital channels to support different organisational growth strategies

Market development strategies Diversification strategies

Use the internet for targeting: Use the internet to support:
• New geographic markets • Diversification into related businesses
New markets

• New customer segments • Diversification into unrelated businesses

• Upstream integration (with suppliers)
• Downstream integration (with
intermediaries)
Market growth

Market penetration strategies Product development strategies

Use the internet for: Use the internet for:
• Market share growth – compete • Adding value to existing products
Existing markets

more effectively online

• Developing digital products
• Customer loyalty improvement – migrate (new delivery/usage models)
existing customers online and add value
• Changing payment models
to existing products, services and brands
(subscription, per use, bundling)
• Customer value improvement – increase
• Increasing product range
customer profitability by decreasing
(especially e-retailers)
cost to serve and increase purchase or
usage frequency and quantity

Existing products New products

Product growth
 Chapter 4 Digital marketing strategy 163

of the ‘always-on’ online marketing communications techniques (reviewed in Chapter 8),

such as search engine marketing, social media marketing and online advertising.
• Customer loyalty improvement. Companies can increase their value to customers and so
increase loyalty by migrating existing customers online, and by adding value to existing
products, services and brands by developing their online value proposition (see Decision
4 and Chapter 6).
• Customer value improvement. The value delivered by customers to the company can be
increased 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,
for example using the marketing automation and personalisation techniques (described
in Chapter 6). Many companies will offer competitive online prices or discounts to help
increase their market share. Approaches to specifying online pricing are covered in Chapter 5.

2 Market development
Online channels are used to sell into new markets, taking advantage of the relatively low cost
of advertising internationally without the necessity for a supporting sales infrastructure in
the customer’s country. Online channels have helped low-cost airlines such as easyJet and
Ryanair to cost-effectively enter new markets served by their routes. This is a relatively con-
servative use of digital channels, but is a great opportunity for SMEs to increase exports at a
low cost, though it does require overcoming the barriers to exporting. We saw in Chapter 1
how Zalando, a Germany-based fashion retailer, has entered many European markets using
techniques such as search engine marketing, display advertising and social media marketing
to create awareness and demand for services. New entrants that gain market share using
Digital disruption new digital disruption techniques of innovative business or revenue models are sometimes
Innovations in digital referred to as ‘digital disruptors’.
media, data and
marketing technology that Digital disruption involves new entrants to a market and agile existing businesses deploy-
enable a change to a new ing new business models and revenue models based on digital media, data and technology.
basis for competition in a
market or across markets. The best-known examples of disruptors are Amazon (retail), Airbnb (accommodation),
Tripadvisor (travel), Uber and Deliveroo™ (personal transportation and food delivery) and
Zoom (video communications).
Innovation from the main digital platforms that consumers use to interact and select
products, such as Apple, Amazon, Google, Facebook, Instagram, Twitter and Pinterest, also
provide options for disruption. For example, Amazon (Machine Learning at Amazon Web
Services) and Google (Google Cloud Machine Learning at Scale) have launched low-cost
artificial intelligence solutions that can be deployed by businesses across sectors to achieve
digital disruption. Another example of digital disruption is in the home, where technology
is rapidly changing how we live with smart home technology products giving us more instant
and flexible control over heating, lighting and entertainment, e.g. Amazon Echo, Google
Home and Nest, smart plugs and remote-access security cameras.
Existing products can also be sold to new market segments or different types of custom-
ers. Virtual inventory enables new offerings to be made available to smaller segment sizes,
an approach known as micro-targeting. This may happen simply as a by-product of having
a website – e.g. RS Components (https://uk.rs-online.com), 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 its traditional business customers. easyJet also
has a section of its website to serve business customers. Digital channels may offer further
opportunities for selling to market sub-segments that have not been previously targeted. For
example, a product sold to large businesses may also appeal to SMEs that have previously
been unable to serve because of the cost of sales via a specialist sales force.

3 Product development
The web can be used to add value to or extend existing products for many companies. For
example, many car manufacturers have developed vehicle configurators to give customers
more choice or developed mobile apps, for example for service information or charging
164 Part 2 Digital marketing strategy development

electric cars. Similarly, music and book publishing companies have found new ways to deliver
products through new development and usage models such as subscription and pay-per-use.
Retailers can extend their product range and provide new bundling or subscription options
online also.
Truly new products or services often offer a combination of physical and digital elements.
For example, the Fitbit, a wearable fitness tracker with GPS, which monitors human activity
and performance in a range of settings from running to sleeping, provides personal infor-
mation digitally through a mobile app. When developing new products, it is important to
consider the time it takes from concept to market testing of the new product. Pure, digital
innovations, such as Instagram, can experience short development timelines and rapid adop-
tion. But as Waymo has found, introducing a driverless car takes many years, as it is not just
the creation of the time taken to develop the product but also for the product concept to be
accepted by early adopters (McGee, 2021).

4 Diversification
In this sector, new products are developed that are sold into new markets. The internet alone
cannot facilitate these high-risk business strategies, but it can facilitate them at lower costs
than have previously been possible. The options include:

• Diversification into related businesses. A low-cost airline can use the website and cus-
tomer emails to promote travel-related services such as hotel booking, car rental or travel
insurance at relatively low costs either through its own brand or through partner compa-
nies – e.g. Ryanair offers its customers discounts if they book car hire or accommodation.
• Diversification into unrelated businesses. Again, the website can be used to promote
or deliver less-related products to customers, which is the approach used by the Virgin
brand, for example, which moved from travel services to unrelated services such as Virgin
Media and Virgin Money.
• 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 (e.g. the ASOS marketplace (https://marketplace.asos.com) enables the
retailer to offer products from independent retail brands and boutiques).
• Downstream integration with intermediaries. Again, this is achieved through data
exchange with distributors such as online intermediaries. OnTheMarket.com is an inter-
mediary service that links house buyers and those wishing to rent with property agents.
The property agents provide the full services while OnTheMarket.com acts as a portal for
customers to browse before contacting agents directly.

Decision 2: Business and revenue models strategies

Strategy formulation often requires companies to evaluate new models, since to survive in
Business model the digital age means companies need to constantly innovate in order to defend market share
A summary of how a
company will generate from competitors and new entrants. Companies at the leading edge of technology such as
revenue, identifying its Facebook and Google constantly innovate through acquiring other companies and internal
product offering, value-
added services, revenue
research and development. Case study 4 on ASOS at the end of this chapter also highlights
sources and target innovation in the ASOS business model facilitated through online channels.
customers. This approach to supporting strategic agility through ongoing research and development
Skunkworks is sometimes known as a Skunkworks or, more commonly, a digital lab, or a digital innova-
A loosely structured group tion centre in larger businesses.
of people who research
and develop innovative Another method of developing new approaches is to encourage other companies in your
opportunities and sector; this was an approach taken by John Lewis™ with the JLab (www.jlab.co.uk).
business benefits.
While all digital strategies should consider all of the available options (including to do
Revenue models nothing), we note that companies can make less-radical changes to their revenue models
Describe methods for
generating income for an
through the internet that are less far-reaching, but may nevertheless be worthwhile. For
organisation. example:
 Chapter 4 Digital marketing strategy 165

• Transactional e-commerce sites (e.g. Amazon.com and Lastminute.com) can sell advertis-
ing space or run co-branded promotions on site or through their email newsletters or
lists to sell access to their audience to third parties.
• Retailers or media owners can sell on white-labelled services through their online pres-
ence such as ISP, email services or photo-sharing services.
• Companies can gain commission through selling products that are complementary (but
not competitive to their own); e.g. a publisher can sell its books through an affiliate
arrangement with an e-retailer.

Decision 3: Target marketing strategy

Deciding on which markets to target is a key strategic consideration when planning a digital
Target marketing marketing strategy. Target marketing strategy involves the four stages shown in Figure 4.10.
strategy
Evaluation and selection
The two key decisions for the marketing strategist are:
of appropriate market
segments and the • Segmentation/targeting strategy. A company’s online customers will often have different
development of demographic characteristics, needs and behaviours from its offline customers. It follows
appropriate offers. that different online approaches to strategic market segmentation may be an oppor-
Strategic market tunity, and specific segments may need to be selectively targeted through online media
segmentation channels, the company website or email communications. As we will see, personal devel-
A grouping of customer
types defined by their opment and lifecycle targeting are common approaches for online targeting.
value to a business, and
common characteristics,
• Positioning/differentiation strategy. Competitors’ product and service offerings will often
needs or psychographic
differ in the online environment. Developing an appropriate online value proposition is
profiles. an important aspect of this strategy.
The first stage in Figure 4.10 is segmentation. Segmentation is a management technique
that allows businesses to focus their efforts on the customers they can serve best. When

Figure 4.10 Stages in target marketing strategy development

Informed by Stage of target marketing Informs

Segmentation • Market segment definition

Market research
Identify customer • Personal development
and analysis of
needs and
customer data • Customer experience requirements
segment market

• Select online targeting

Target marketing • Target segments
Demand analysis Evaluate and select • Online revenue contribution
target segments for each segment
• Customer lifecycle targeting

• Core brand proposition

Positioning • Online value proposition
Competitor analysis
Identify proposition • Online marketing mix
Internal analysis
for each segment • Lifecycle brand development
and proposition messaging

• Online marketing mix

Evaluation of Planning
• Restructuring
resources Deploy resources
to achieve plan • Automated online customer
contact strategy
166 Part 2 Digital marketing strategy development

creating digital marketing plans it is useful to distinguish between strategic market segmen-
tation and online tactical segmentation, which is used for online targeting.
Strategic market segmentation can be defined as (Jobber and Ellis-Chadwick, 2020):
the identification of individuals or organisations with similar characteristics that have sig-
nificant implications for determining marketing strategy.

In a digital marketing planning context, market segments should be reviewed to assess:

• the current market size or value and future projections of size;

• the organisation’s current and future market share within the segment;
• the cost-effectiveness and likelihood of a target segment engaging with the organisation’s
offer across all aspects of the buying process – for example, whether it is cost-effective to
generate demand for leads and sales, use organic media based on content marketing or
paid media such as programmatic display, pay-per-click advertising (Google Ads), paid
social ads or affiliate marketing;
• needs of each segment, in particular 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.
Options for segmenting online customers by activity levels, which is an online tactical
marketing segmentation approach, are covered in more detail in Chapter 6 and segmenting
site visitors through web analytics systems is covered in Chapter 10.
Stage 2 in Figure 4.10 is target marketing. Here we can select segments for targeting
online that are most attractive in terms of growth and profitability. These may be similar or
different compared to groups targeted offline. Some examples of customer segments that
are targeted online include:

• The most profitable customers. Using the internet to provide tailored offers to the top 20
per cent of customers by profit may result in more repeat business and cross-sales.
• Larger companies (B2B). An extranet could be produced to service these customers and
increase their loyalty.
• Smaller companies (B2B). Large companies are traditionally serviced through sales rep-
resentatives and account managers, but smaller companies may not warrant the expense
of account managers. However, the internet can be used to reach smaller companies
more cost-effectively. The number of smaller companies that can be reached in this way
may be significant, so although the individual revenue of each one is relatively small, the
collective revenue achieved through internet servicing can be large.
• Particular members of the buying unit (B2B). The site should provide detailed informa-
tion for different interests that supports the buying decision, e.g. technical documentation
for users of products, information on savings from e-procurement for information sys-
tems or purchasing managers, and information to establish the credibility of the company
for decision makers.
• Customers that are difficult to reach using other media. Customer profiles give insights
into likely use of digital media channels, and can help companies struggling to reach
younger customers. Meeting customers where they are and on the channels they use is an
important consideration. Chipotle, a Mexican-style restaurant chain in the United States,
decided to encourage its customers to celebrate National Avocado day using TikTok.
The campaign involved the hashtag #GuacDance and entering a free competition by
uploading a video to TikTok. This was the first time the restaurant had used this chan-
nel but it was a highly effective campaign, which attracted hundreds of millions of views
(Engel, 2019).
• Customers that are brand loyal. Services to appeal to brand loyalists can be provided to
support them in their role as advocates of a brand.
• Customers that are not brand loyal. Conversely, incentives, promotion and a good level
of service quality could be provided by the website to try to retain such customers.
 Chapter 4 Digital marketing strategy 167

Figure 4.11 Smart Insights site segmentation

Source: Smart Insights (Marketing Intelligence) Ltd

Priority segments can be targeted online by using navigation options to different content
groupings such that visitors self-identify. For example, like many businesses, the main navi-
gation option for computer manufacturer Dell is product based (e.g. laptops vs gaming),
but to engage business audiences the ‘Solutions’ menus offer choices for industries such as
healthcare or higher education, or for small businesses. As a B2B online marketing training
provider, Smart Insights similarly uses a segmented navigation to appeal to different busi-
ness sectors. It also uses calls-to-action on its home page that enable it to appeal to different
target groups. Figure 4.11 shows a ‘segmented customer journey’, which gives three choices,
with the next page tailored for each audience that self-segments based on their needs. This
segmented approach helps to increase relevance and so conversion, but also gives insights
from analytics on how many share an interest. Here, the business has shared with us that the
relative proportion of clicks on buttons is 40 per cent ‘Improve my skills’ (mainly individu-
als), 40 per cent ‘Grow my business’ (mainly leaders in companies) and 20 per cent ‘Upskill
my team’ (team leaders in companies with a training need).
As part of digital strategy development, we recommend reviewing these options for seg-
menting and targeting audiences online:

1 Identify customer profile-based demographic characteristics

This is a traditional segmentation based on the disclosed or inferred customer demograph-
ics. For B2C companies this will include age, sex and geography. For B2B companies, it will
include size of company and the industry sector or application they operate in.

2 Identify customer lifecycle groups

Figure 4.12 illustrates this approach. As visitors use online services they can potentially
pass through seven or more stages. Once companies have defined these groups and set up
the customer relationship management infrastructure to categorise customers in this way,
they can then deliver targeted messages, either by personalised on-site messaging or through
emails that are triggered automatically by different rules. First-time visitors can be identified
by whether they have a cookie placed on their digital device or other ‘digital fingerprints’
related to mobile or social media use. Once visitors have registered, they can be tracked
through the remaining stages. A particularly important group is those customers who have
purchased one or more times. For many e-retailers, encouraging customers to move from the
first purchase to the second purchase and then on to the third purchase is a key challenge.
Specific promotions can be used to encourage further purchases. Similarly, once customers
168 Part 2 Digital marketing strategy development

Figure 4.12 Customer lifecycle segmentation

7 Purchased active: e-responsive

6 Purchased inactive

5 Purchased once or n times

4 Registered visitor

3 Newly registered visitor

2 Return visitor

1 First-time visitor

become inactive (i.e. they have not purchased for a defined period such as three months)
further follow-ups are required.

3 Identify behaviour in response and purchase value

As customers progress through the lifecycle shown in Figure 4.12, database analysis can be
used by the marketer to build up a detailed response and purchase history, which consid-
ers the details of recency, frequency, monetary value and category of products purchased.
Grouping customers by their current and future value and techniques can be used to develop
strategies to retain valuable customers and migrate lower-value customers to a higher value
in future (see Chapter 6).

4 Identify multichannel behaviour (channel preference)

Regardless of the enthusiasm of the company for online channels, some customers will
prefer using online channels and others will prefer traditional channels. Drawing a channel
chain for different customers is useful to help understand this. It is also useful to have a flag
within the database that indicates the customer’s channel preference and, by implication, the
best channel to target them through. Customers who prefer online channels can be targeted
mainly by online communications such as email, while those who prefer traditional channels
can be targeted by traditional communications such as direct mail or phone.

5 Tone and style preference

In a similar manner to channel preference, customers will respond differently to different types
of messages. Some may like a more rational appeal, in which case a detailed email explaining
the benefits of the offer may work best. Others will prefer an emotional appeal based on images
and with warmer, less formal copy. Testing is needed based on customers’ profile characteristics
and response behaviour, and then developing different creative treatments accordingly.

Decision 4: Positioning and differentiation strategy (including

the marketing mix)

Stage 3 in Figure 4.10 is positioning. Ultimately, positioning defines how a company

wants to compete and this is determined by the chosen market segmentation, the actual
target market and the differential advantage offered by the product or service (Jobber and
 Chapter 4 Digital marketing strategy 169

Ellis-Chadwick, 2020). The key to this stage of decision making is to focus on the minds
of customers in the chosen target markets (Ries, 2017). In their minds, most consumers
either have a brand attached to a product category or they do not; maybe because it is
an underdeveloped category (e.g. the electric car) or they have yet to exercise a prefer-
ence. In the case of the new category, there is opportunity for a brand to take first-mover
advantage (Yang et al., 2017), as Tesla™ has done in the electric car market. Either way,
to make a connection with a prospect’s mind, it is better to promote a small feature of a
brand that is known to the prospect rather than a major feature that is unknown (Ries,
2017). By taking this approach, it becomes possible to connect with the target prospect
and establish the foundations of a differential market positioning, and then build from
this point.

Differential advantage
Differential advantage The aim of positioning is to develop a differential advantage over competitors. Jobber
A desirable attribute of a
product offering that is
and Ellis-Chadwick (2020) suggest that market segmentation is at the heart of developing
not currently matched by a differential marketing strategy. Marketing strategists use elements from the marketing
competitor offerings. mix to establish the difference between their company and their rivals’. According to
Wang et al. (2019) the use of pricing to differentiate a brand is dependent on many dif-
ferent factors:

• the uniqueness of the goods in a particular market;

• competition for the goods;
• perceptions of quality;
• effectiveness and reliability of a brand’s offer.
Online the same principles apply, but in a highly complex and dynamic marketplace. Key
decisions are about how to enter the mind of the prospective customer, which is the position
where the brand wishes to be (as shown in Figure 4.13).
To make use of this pricing power, retailers vary the goods they sell at a particular price
level, the convenience of the offer, and a blend between physical product and online service.
Initially, many online retailers relied on lower prices online to draw in customers but this
is no longer the case. However, some retailers are better at improving their market com-
petitiveness by increasing their differentiated position than others. Amazon has used price
combined with attention to customer experience, service and delivery efficiency to build
brand dominance.

Figure 4.13 Alternative positionings for online services

Relationship building or
service quality
innovation
100%

smile
Dabs
Amazon

Cisco

easyJet RS Components
100% 100%
Pricing Product
innovation innovation
170 Part 2 Digital marketing strategy development

Online or digital value proposition

In a digital marketing context, differential advantage and positioning can be clarified
Online value and communicated by developing an online value proposition (OVP). Developing an OVP
proposition (OVP)
A statement of the
involves:
benefits of online
services that reinforces • developing online content and service and explaining them through messages that:
the core proposition • reinforce core brand proposition and credibility;
and differentiates from
an organisation’s offline • communicate what a visitor can get from an online brand that they can’t get from the
offering and those of brand offline and they can’t get from competitors or intermediaries.
competitors.
• communicating these messages to all appropriate online and offline customers with
touchpoints in different levels of detail, from straplines to more detailed content on the
website or in print.
Communicating the OVP on the site can help create a customer-centric website. Virgin
Wines™ used an OVP to communicate its service promise as follows:

• And what if. . . You are out during the day? We promise that our drivers will find a safe
place to leave your wine; but if it does get stolen, we just replace it.
• You find it cheaper elsewhere? We will refund the difference if you are lucky enough to
find a wine cheaper elsewhere.
• You live somewhere obscure? We deliver anywhere in the UK, including Northern Ireland,
the Highlands and Islands and the Scilly Isles for £5.99.
• You are in a hurry? We deliver within seven days, or your delivery is free.
Many strategic planning decisions are based around the OVP and the quality of online
customer experience delivered by a company. Interactive features can be particularly impor-
tant for transactional sites in that they may enhance the user’s experience and so encourage
conversion and repeat sales. Examples of how companies have developed their OVP through
interactive features include customer reviews and ratings, podcast product reviews, a blog
with customer comments enabled, buyers’ guides and video reviews (see Activity 4.3 for
examples).
Having a clear online value proposition has several benefits:

• It helps distinguish an e-commerce site from its competitors (this should be a website
design objective).
• It helps provide a focus on marketing efforts so that company staff are clear about the
purpose of website or mobile app services.
• If the proposition is clear, it can be used for PR, and word-of-mouth recommendations
may be made about the company.
• It can be linked to the normal product propositions of a company or its product.
We look further into options for varying the proposition and marketing mix in Chapter 5.

Activity 4.3 Online value proposition

Purpose
To explore the concept of online value proposition.

Activity
Visit the following websites and summarise their online value proposition. You should
also explain how they use the content, imagery and navigation of the website to indicate
their value proposition to customers:

• Shopify (www.shopify.com);
 Chapter 4 Digital marketing strategy 171

• Airbnb (www.airbnb.com);
• Netflix (www.netflix.com);
• HubSpot (www.hubspot.com);
• RS Components DesignSpark (rs-online.com/designspark/).

Multichannel Decisions 5 and 6 relate to multichannel prioritisation, which assesses the strategic sig-
prioritisation
Assesses the strategic nificance of the internet relative to other communications channels. In making this pri-
significance of the oritisation it is helpful to distinguish between customer communications channels and
internet relative to other
communications channels
distribution channels.
and then deploys
resources to integrate with
marketing channels.
Decision 5: Customer engagement and social media strategy
Customer
communications
channels Each day there are millions of social network status updates, new blog posts, videos and
The range of media used news articles published. As consumers spend more time online reading and interacting with
to communicate directly
with a customer. this content, the challenge of engaging them increases. Given this, we believe that every
company must develop a customer engagement strategy as a key part of its digital market-
Customer engagement
strategy ing strategy. This customer engagement strategy reviews approaches to create compelling
A strategy to content and experiences that form the online value proposition.
encourage interaction
and participation of
Increasingly, it’s most straightforward to achieve online engagement not on a company
consumers with a brand website but through a social presence on one of the main social networks such as Facebook,
through developing Instagram, LinkedIn, Twitter or other specialist networks. Given the popularity of these
content and experiences
with the aim of meeting social networks, many companies will seek to develop an overall social media strategy.
commercial objectives. When developing an approach for using each social network to build engagement and
It is closely related to the
development of content
community, there are some common decisions across the networks that focus on the types of
marketing and social content and how it is published. The answers for each social network will vary, but there are
media strategy. some common themes that should be part of an overall engagement and content marketing
Social media strategy strategy. Here are some key questions to consider:
A definition of
the marketing
communications used • Question 1. Who are our target audience? For a single company, the typical audience
to achieve interaction of each social network will differ in terms of demographics. If you review a sample of
and amplification with profiles for your own followers or competitors, you will get a feel for the typical audience
social network users to
meet business goals. The
and can develop the typical customer personas you are targeting.
scope of social media
optimisation also includes
• Question 2. What are the content preferences of our audiences? The type of content that
audiences like to see on each network is shown by the content they share or rate highly.
paid social media,
customer service and For example, on Facebook it may be that videos work well, on Twitter infographics and
incorporation of social on LinkedIn posting a provocative statement.
•
features such as status
updates and sharing Question 3. Which content types should have priority? Based on your analysis of cus-
widgets into company tomer needs and competitor benchmarking, you can define the types of editorial topics
websites.
and post formats that are most engaging or shareable when covered in your content
stream.
• Question 4. How do we differentiate the social channel from other communications chan-
nels? Each network will differ and have different preferences for types of content that fit
the channel. If you can define a powerful offer for the social channel, it will encourage
people to subscribe to that channel even if they are already using other channels. For
example, Gymshark, a retailer of fitness apparel, has millions of followers using its Ins-
tagram channels. The brand’s understanding of the power of social media as a channel
to market has led to sustained growth of the brand (Gilliland, 2019).
• Question 5. Should we consider content frequency and an editorial calendar? To engage
an audience requires regular content, but what does regular mean? Will there be several
status updates a day or only several updates a week? How do these link to other content,
172 Part 2 Digital marketing strategy development

such as that on a blog? There will be many different types of content, some will be quick
to create, others will take much longer and need planning or resourcing; this is where an
editorial calendar is essential. An editorial calendar for social media or a blog is part of
a broader content marketing strategy (Chapter 6).
• Question 6. How do we manage publication and interaction? Each social platform needs
someone to update the content, but also to respond and interact on other social networks.
A decision has to be taken as to whether this happens in-house or whether some of it can
be outsourced to a third party.
• Question 7. Should we use software for managing the publishing process? Software can’t
create content for you, but it can streamline the process. Tools such as Hootsuite™, Fal-
con or Sprout Social™ enable status updates to be shared across different networks. For
example, status updates can be shared across Facebook, LinkedIn or Twitter. However,
a personalised approach is recommended also.
• Question 8. Should we be tracking the business impact of social network activity? Tools
Social media are available from each of the platforms to help marketers review their effectiveness. For
optimisation (SMO)
A process to review
example, Facebook Insights is a service available to page owners on Facebook. There
and improve the are also analytics features within tools such as Hootsuite showing which messages were
effectiveness of social popular based on sharing and click-through rates.
media marketing through
reviewing approaches • Question 9. How do we optimise the social presence? Tracking isn’t worthwhile unless
to enhance content and it is reviewed and acted upon. The insights available will enable you to test, learn and
communications quality to
generate more business refine marketing activities. This is known as social media optimisation (SMO). We return
value. to social media strategy at the start of Chapter 6.

Decision 6: Multichannel distribution strategy

Distribution channels Distribution channels refer to the flow of products from a manufacturer or service provider
The mechanism by which
products are directed to
to the end customer. At the centre of any distribution channel are the movement of goods
customers, either through and the flow of information between different organisations involved in moving goods from
intermediaries or directly. the point of manufacture and the point of consumption. Depending on the players that
make up the supply chain, its structure can vary and this structure will determine whether
goods get to the right place at the right time. Players in a supply chain can include retailers,
suppliers, intermediaries, third-party logistic solution providers and transportation com-
panies that provide relevant services (e.g. warehousing and distribution management for
their clients).
In order to make best use of digital channels, according to Fulgoni (2014), there are three
priorities for retail businesses:
1 Eliminate silos and create seamless experiences for consumers all the way along the path
to purchase. Look for ways to bring together the on- and offline worlds and avoid isolated
marketing campaigns that do not integrate. If there is any friction along the journey, a
shopper is likely to defect to another supplier (e.g. if a retailer sells products at different
Clicks-and-mortar
A business combining
prices online to in-store).
an online and offline 2 Increase opportunities to interact digitally by understanding more about their paths to
presence. Mixed-mode purchase (e.g. provide incentives along the way through digital advertising and mobile
buying is supported
through ‘click-and-collect’ promotions).
(a UK term) or BOPIS (buy 3 Analyse and measure consumer behaviour at all touchpoints in order to develop deep and
online pick-up in store, a
US term).
insightful understanding of what is driving shoppers’ choices and purchase decisions.
Clicks-only (internet The options for integrating physical and digital channels are shown in Figure 4.14. The
pureplay) online revenue contribution typically increases through time. It is informed by the customer
An organisation with
principally an online demand analysis of propensity to purchase or reserve a particular type of product via online
presence. It does not channels. If the objective is to achieve a high online revenue contribution of greater than
operate a mail-order
operation or promote 70 per cent then this will require fundamental change for the company to transform to a
inbound phone orders. clicks-and-mortar or clicks-only (internet pureplay) company.
 Chapter 4 Digital marketing strategy 173

Figure 4.14 The continuum of strategic options for a company in relation to the importance
of the internet as a consumer channel

Radical
‘Majority clicks’
All transactions and
customer service online

Organisational change required

Digital
channels
replace
Mix of on- and offline
transactions and
customer service

Information only
Digital channels
Limited

complementary

Low Medium High

% Online revenue contribution

Source: Dholakia et al. (2010)

Digital marketing insight 4.3 gives examples of how retailers have developed their digital
channel strategies to support mixed-mode buying.

Digital marketing insight 4.3 Retail digital channels and mixed-mode buying

Possibilities opened up by e-commerce sparked new thinking about how computer net-
works might facilitate and increase trade in consumer markets. Retailers have devised
new operational strategies that incorporate their operations and digital technology to
develop different approaches and this has led to a proliferation of touchpoints to engage
consumer engagement online. For example:

• Bricks-and-clicks retailers (involves multichannel retailers who traditionally sold

from physical stores that now offer e-commerce sales). The digital channel is inte-
grated into their businesses either strategically or tactically as a marketing tool or a
Mixed-mode buying sales channel to support mixed-mode buying. In the United Kingdom, the majority
The process by which of major high-street brands use this type of multichannel approach, including next.
a customer changes
between online and offline co.uk, sainsburys.co.uk and specsavers.co.uk.
channels during the • Clicks-and-mortar retailers (involves online retailers developing a physical store).
buying process, including
research online, purchase For example, Oak Furnitureland™ started with an eBay shop, which was so suc-
offline; research offline cessful that the company started selling through physical stores. This strategy has
and purchase online; and
enabled growth and the company has become one of the United Kingdom’s leading
click-and-collect.
retailers (Found, 2016). Some pureplay retailers are now venturing offline, with Ama-
zon and Zalando™ opening high-street stores following the trend set by manufactur-
ers such as Apple and Samsung™.
• Pureplay or online retailers (involves ‘click-only’ and operating entirely online). While
these retailers do not have fixed-location stores they will have physical operational
174 Part 2 Digital marketing strategy development

support systems (e.g. distribution warehouses), as is the case with Zalando and
ASOS™ (read more in the ASOS case study at the end of this chapter). As a result,
retailers are becoming increasingly more creative with how they are using the internet
and associated digital technologies to serve the needs of their customers. A high pro-
portion of customers now use multiple channels when making purchase decisions,
combining online research with physical store visits (Hart et al., 2017).

Research (Hart et al., 2017; Stocchi et al., 2016) found that on a typical visit to a town
centre, consumers refer to multiple digital touchpoints before and during their shop-
ping journeys. Digital marketers should be aware of how their target markets respond
to digital to ensure they maximise opportunities to engage customers at every stage in
their journeys.
It is not only retailers that make use of multiple channels to engage their customers –
airlines (British Airways™), rail companies (Virgin Trains™), pubs and restaurants (JD
Wetherspoons™) use virtual channels (apps, websites, email marketing) to integrate
the physical customer experience with the digital to deliver services and communicate
with customers.

Decision 7: Multichannel communications strategy

Customer communications channels refer to how an organisation influences its customers

to select products and suppliers through the different stages of the buying process through
inbound and outbound communications. As part of creating a digital marketing strategy,
it is vital to define how the digital integrates with other inbound communications channels
used to process customer enquiries and orders, and with outbound channels that use direct
marketing to encourage retention and growth or deliver customer service messages. For a
retailer, these channels include in-store, contact-centre, web and outbound direct messaging
used to communicate with prospects and customers. Some of these channels may be bro-
ken down further into different media (e.g. the contact centre may involve inbound phone
enquiries, email enquiries or real-time chat). Outbound direct messaging may involve direct
mail, email media or web-based personalisation.
The multichannel communications strategy must review different types of customer
contact with the company and then determine how online channels will best support
these channels. The main types of customer contact and corresponding strategies will
typically be:

• inbound sales-related enquiries (customer acquisition or conversion strategy);

• inbound customer-support enquiries (customer service strategy);
• outbound contact strategy (customer retention and development strategy).
For each of these strategies, the most efficient mix and sequence of media to support the
business objectives must be determined. Typically, the short-term objective will be conver-
sion to outcome such as sale or satisfactorily resolved service enquiry in the shortest pos-
sible time with the minimum cost. However, longer-term objectives of customer loyalty and
growth also need to be considered. If the initial experience is efficient, but unsatisfactory to
the customer, then they may not remain a customer!
The multichannel communications strategy must assess the balance between:

• Customer channel preferences. Some customers will prefer online channels for product
selection or making enquiries while others will prefer traditional channels.
• Organisation channel preferences. Traditional channels tend to be more expensive to ser-
vice than digital channels for the company; however, it is important to assess effectiveness
 Chapter 4 Digital marketing strategy 175

Figure 4.15 Influences on customers of multichannel decision making

channel choice:
1) Knowledge
facilitates
3) Preference

Marketing strategy considerations for channel selection:

•
•
•

Source: Dholakia et al. (2010)

and the ability of channels to convert the customer to sale (e.g. a customer who responds
to a TV ad to buy car insurance may be more likely to purchase if they enquire by phone
in comparison to web enquiry) or in developing customer loyalty (the personal touch
available through face-to-face or phone contact may result in a better experience for some
customers, which engenders loyalty).
Figure 4.15 is based on the work of Dholakia et al. (2010), who suggested that there are
eight dimensions to consider when making channel choice. This figure shows these dimen-
sions and suggests the factors that affect consumer decision-making. The channel dimen-
sions have implications for planning and point to key decision areas for an organisation
that is developing its channel and communication strategies. For example, dimension 3 –
accessibility – is becoming increasingly important with the widespread adoption of wireless
technology and mobile phones; dimension 5 – flexibility of the interface – some channels
offer limited flexibility whereas others can be instantaneously tailored (e.g. advertising,
which through emotion recognition software can potentially provide a personal message as
a customer passes by an outdoor billboard).
Multichannel communications strategy needs to specify the extent of communications
choices made available to customers and the degree to which a company uses different
channels to communicate with particular customer segments (Figure 4.16). Deciding on
the best combination of channels is a complex challenge for organisations. Consider your
mobile phone company – when purchasing you may make your decision about handset and
network supplier in-store, on the web or through phoning the contact centre. Any of these
contact points may be either direct with the network provider or through a retail intermedi-
ary. After purchase, if you have support questions about billing, handset upgrades or new
tariffs you may again use any of these touchpoints to resolve your questions. Managing
this multichannel challenge is vital for the phone company for two reasons, both concerned
with customer retention. First, the experience delivered through these channels is vital to the
customer’s decision as to whether to remain with the network supplier when their contract
expires – price is not the only consideration. Second, outbound communications delivered
176 Part 2 Digital marketing strategy development

Figure 4.16 Channel coverage map showing the company’s preferred strategy for commu-
nications with different customer segments with different value

Sales force
Customer extranet

Customer value
Contact-centre
Web-supported

Web

Product sales complexity

via website, email, direct mail and phone are critical to getting the customer to stay with
the company, by recommending the most appropriate tariff and handset with appropriate
promotions, but which is the most appropriate mix of channels for the company (each chan-
nel has a different level of cost-effectiveness for customers that contributes different levels
of value to the customer) and the customer (each customer will have a preference for the
combinations of channels they will use for different decisions)?

Decision 8: Online communications mix and budget

The decision on the amount of spending on online communications and the mix between
the different communications techniques such as search engine marketing, affiliate mar-
keting, email marketing and online advertising closely relates to Decision 6. In Chapter 2
we discussed the changes in levels of adoption of different channels and media, and these
changes have a cascade effect in terms of implications for planning the communication mix.
Making these decisions requires digital marketers to decide the focus of their communications
and whether the primary purpose is customer acquisition, retention or relationship building.
In the case of e-commerce operations, Agrawal et al. (2001) suggest that success can be
modelled and controlled based on the customer lifecycle of customer relationship manage-
Performance drivers ment. They suggest using a scorecard, which is based on performance drivers or critical
Critical success factors
that determine whether
success factors, e.g. costs for acquisition and retention, conversion rates of visitors to buyers
business and marketing to repeat buyers, together with churn rates. There are three main parts to their scorecard:
objectives are met.
1 Attraction. Size of visitor base, visitor acquisition cost and visitor advertising revenue
(e.g. media sites).
2 Conversion. Customer base, customer acquisition costs, customer conversion rate, num-
ber of transactions per customer, revenue per transaction, revenue per customer, cus-
tomer gross income, customer maintenance cost, customer operating income, customer
churn rate and customer operating income before marketing spending.
3 Retention. This uses similar measures to those for conversion customers.

Campaign-based digital
We will return to this topic in Chapter 8, where we will review the balance between
communications campaign-based communications and always-on communications. Campaign-based digi-
Digital communications tal communications are often tied into a particular event such as the launch or relaunch of
that are executed to
support a specific a website or a product – e.g. an online advertising campaign may last for a period of two
marketing campaign such months following a site relaunch, or for a five-month period around a new product launch.
as a product launch, price
promotion or a website
Always-on communications investments in inbound marketing techniques should be con-
launch. tinuous, to meet continuous interest in products from consumers searching for them online.
 Chapter 4 Digital marketing strategy 177

Companies wishing to advertise using digital channels are also making changes; they are
having to invest in new staff with the required skills to understand the new media and many
established brand images need to be changed to succeed online.

Organisational issues of strategy implementation

The 7Ss are a useful framework for reviewing an organisation’s existing and future capabili-
ties to meet the challenges posed by the new digital channels, and some of the aspects of
these challenges are shown in Table 4.7.

Table 4.7 Summary of some of the organisational challenges of digital marketing that need to be managed in the
context of the 7S framework

Element of 7S model Application to digital marketing strategy Key issues from practice and literature

Strategy The significance of digital marketing in Gaining appropriate budgets and demonstrating/
influencing and supporting the organisation’s delivering value and ROI from budgets. Annual
strategy planning approach
Techniques for using digital marketing to impact
organisation strategy
Techniques for aligning digital strategy with
organisational and marketing strategy

Structure The modification of organisational structure to Integration of digital marketing and e-commerce
support digital marketing teams with other management, marketing
(corporate communications, brand marketing,
direct marketing) and IT staff
Use of cross-functional teams and steering groups
Insourcing vs outsourcing

Systems The development of specific processes, Campaign planning approach – integration

procedures or information systems to Managing/sharing customer information
support digital marketing Managing content quality
Unified reporting of digital marketing effectiveness
In-house vs external best-of-breed vs external
integrated technology solutions

Staff The breakdown of staff in terms of their Insourcing vs outsourcing

background and characteristics such as IT Achieving senior management buy-in/involvement
vs marketing, use of contractors/consultants, with digital marketing
age and sex Staff recruitment and retention. Virtual working
Staff development and training

Style Includes both the way in which key managers Relates to role of digital marketing team in
behave in achieving the organisation’s goals influencing strategy – is it dynamic and
and the cultural style of the organisation as influential or conservative and looking for a
a whole voice?

Skills Distinctive capabilities of key staff, but can Staff skills in specific areas: supplier selection,
be interpreted as specific skill sets of team project management, content management,
members specific e-marketing approaches (SEO, PPC,
affiliate marketing, email marketing, online
advertising)

Superordinate goals The guiding concepts of the digital marketing Improving the perception of the importance
organisation, which are also part of shared and effectiveness of the digital marketing
values and culture. The internal and external team among other senior managers and staff
perception of these goals may vary (marketing generalists and IT)

Source: Chaffey (2005)

178 Part 2 Digital marketing strategy development

You may have encountered the 7S framework, summarised by Waterman et al. (1980) and
developed by McKinsey and Company consultants in the 1980s. It is often referenced when
referring to the management of a business. Dave Chaffey has summarised some of the stra-
tegic resource management issues that require consideration, as shown in Table 4.7. These
remain relevant factors for organisations to review today since many businesses are still
undertaking digital transformation programmes.
Subsequent chapters in this text cover strategy implementation in more detail:
• Chapter 5 – options for digital branding and varying the marketing mix in the digital
environment.
• Chapter 6 – implementing customer relationship management.
• Chapter 7 – delivering online services and developing digital experiences via websites,
mobile apps and virtual reality.
• Chapters 8 and 9 – interactive marketing communications and digital media channel best
practices.
• Chapter 10 – evaluation using analytics and maintaining the online presence.
In each of these areas, such as CRM or development of website functionality, it is com-
mon that different initiatives will compete for budget. The next section reviews techniques
for prioritising these projects and deciding on the best portfolio of e-commerce applications.

Assessing different digital initiatives including marketing technology

A further organisational capability or governance issue is the decision about prioritising

different systems for implementing marketing applications. Typically, there will be a range
of alternative strategic initiatives competing for budgets, many of which have a high market-
ing technology component. Limited resources will dictate that only some applications are
practical and a long-term roadmap may be needed to prioritise them.
Portfolio analysis Portfolio analysis can be used to select the most suitable initiatives or projects. For example,
Identification, evaluation
and selection of desirable
Daniel et al. (2001) suggest that potential e-commerce opportunities should be assessed for the
marketing applications. value of the opportunity to the company against its ability to deliver. Typical opportunities for
strategic digital marketing initiatives for an organisation that has a simple, static site might be:
• content management systems or online catalogue facility;
• CRM system – lead generation and inbound marketing system;
• CRM system – customer service management;
• CRM system – personalisation of content and promotion recommendations for users;
• partner relationship management extranet for distributors or agents;
• transactional e-commerce facility.
The full range of marketing technology options are covered in Chapter 10. Such alterna-
tives can be evaluated in terms of their risk against reward.
For information systems investments, the model of McFarlan (1984) has been used exten-
sively to assess the future strategic importance of applications in a portfolio. This model
has been applied to the e-commerce applications by Daniel et al. (2008) and Chaffey (2019).
Potential e-commerce applications can be assessed as one of the following categories:

• Key operational: essential to remain competitive. Example: partner relationship manage-

ment extranet for distributors or agents.
• Support: deliver improved performance, but not critical to strategy. Example: e-CRM
system – personalisation of content for users.
• High-potential: may be important for achieving future success. Example: e-CRM system
– customer service management.
• Strategic: critical to future business strategy. Example: e-CRM system – lead generation
system is vital to developing new business.
 Chapter 4 Digital marketing strategy 179

Figure 4.17 Matrix for evaluating digital marketing business investment alternatives

P3. Medium
priority: P1. High priority:

High
Internal people resource (cost/time) (0–20)

Resourcing viability
Reduce scope Implement
Agency resource (cost/time) (0–20) or defer

Set-up costs and technical feasibility (0–20)

Ongoing costs (0–20) P2. Medium

P4. Low priority:
priority:

Low
Business & implementation risks (0–20) Don’t implement
Reduce scope
or defer
or defer

Low High
Organisational value and fit

Business value generated (0–50)

Customer value generated (0–20)

Alignment with business strategy (0–10)

Alignment with digital strategy (0–10)

Alignment with brand values (0–10)

Tjan (2001) suggested a matrix approach of viability (return on investment) against fit (with
the organisation’s capabilities) for digital applications that remains representative of the
decision-making process many organisations follow. Viability is ideally based on a quan-
titative business case assessment of the value of a new application that will be generated
through increasing conversion and retention rates. Fit is a more subjective measure based
on the ease of implementation given the fit of an application with an organisation’s existing
processes, capabilities and culture.
Our recommendation for a form of portfolio analysis is shown in Figure 4.17 as the basis
for benchmarking current e-commerce capabilities and identifying strategic priorities. The
five criteria used for organisational value and fit (together with a score or rating for their
relative effectiveness) are:

• Business value generated (0–50). This should be based on incremental financial benefits of
the project. It can be based on conversion models showing estimated changes in number
of visitors attracted (new and repeat customers), conversion rates and results produced.
Consideration of lifetime value should occur here.
• Customer value generated (0–20). This is a ‘softer’ measure that assesses the impact of the
delivered project on customer sentiment, for example would they be more or less likely
to recommend a site, would it increase their likelihood to visit or buy again?
• Alignment with business strategy (0–10). Projects that directly support current business
goals should be given additional weighting.
• Alignment with digital strategy (0–10). Likewise for digital strategy.
• Alignment with brand values (0–10). And for brand values.
The cost elements for potential e-business projects are based on requirements for internal
people resource (cost/time), agency resource (cost/time), set-up costs and technical feasibil-
ity, ongoing costs and business and implementation risks.
180 Part 2 Digital marketing strategy development

The online lifecycle management grid

Earlier in the chapter, in the section on objective setting, we reviewed different frameworks
for identifying objectives and metrics to assess whether they are achieved. We consider the
online lifecycle management grid at this point since Table 4.8 acts as a good summary that
integrates objectives, strategies and tactics across the RACE lifecycle management frame-
work. It can be used to select the most relevant performance metrics to track digital market-
ing contribution and performance on a digital marketing dashboard. It forms a summary of
how to track the effectiveness of digital marketing strategies and tactics.
The columns isolate the key performance areas of site visitor acquisition, conversion to
opportunity, conversion to sale and retention across RACE. The rows isolate more detailed
metrics such as the tracking metrics and performance drivers from higher-level metrics such
as the customer-centric key performance indicators (KPIs) and business-value KPIs.
In the bottom two rows of the table we have added typical strategies and tactics used to
achieve objectives, which summarise the relationship between common digital objectives
and techniques to achieve these objectives:

• Online targeted reach strategy. The aim is to communicate with relevant audiences online
to achieve communications objectives. The communications commonly include cam-
paign communications such as online advertising, PR, email, viral campaigns and con-
tinuous always-on communications such as search engine marketing or sponsorship or

Table 4.8 Online performance management grid for an e-retailer

Metric and growth Reach Act Conversion to sale Customer

engagement

Tracking metrics Unique visitors Opportunity volume Sales volume Email list quality
New visitors Email response quality
Conversation volume transactions

Performance Bounce rate Macro-conversion Conversion rate to sale Active customers

drivers Conversion rate: new visit rate to lead or Email conversion rate (%) (site and email
(diagnostics) to start quote opportunity and active)
Brand/direct visits micro-conversion Repeat conversion
efficiency rate for different
purchases

Customer-centric Cost-per-click and Cost-per-lead Cost-per-sale Lifetime value

KPIs -per-sale Customer Customer satisfaction Customer loyalty
Brand awareness satisfaction Average order value index and advocacy
Conversation polarity (AOV) Products per
(sentiment) customer

Business-value Audience share Online product Online originated sales Retained sales growth
KPIs Share of voice requests (n, £, % (n, £, % of total) and volume
of total)

Strategy Online targeted reach Lead generation Online sales generation Retention and cus-
strategy strategy Offline sales impact tomer growth
Offline targeted reach strategy strategy
strategy

Tactics ‘Always-on’ continuous Usability Usability Database/list quality

communications mix Personalisation Personalisation Targeting
Campaign communica- Inbound contact Inbound contact strat- Outbound contact
tions mix strategy (cus- egy (customer service) strategy (email)
Online value proposition tomer service) Merchandising Personalisation
Triggered emails

Note: Conversation polarity refers to assessing positive vs negative sentiment through social media listening.
Source: Neil Mason’s Applied Insights acquisition, conversion, retention approach to the Smart Insights Reach, Act, Convert, Engage framework
introduced in Chapter 1.
 Chapter 4 Digital marketing strategy 181

partnership arrangements. The strategy may involve: (1) driving new, potential customers
to the company site, social pages or mobile apps; (2) migrating existing customers to use
online channels; or (3) achieving reach to enhance brand awareness, favourability and
purchase intent through ads, influencer marketing and sponsorships on third-party sites.
Building brand awareness, favourability and purchase intent on third-party sites may be
a more effective strategy for low-involvement FMCG brands where it will be difficult to
encourage visitors to the site.
• Offline targeted reach strategy. The objective is to encourage potential customers to use
online channels, i.e. visit websites and transact or download apps where relevant. The
strategy is to communicate with selected customer segments offline through direct mail,
advertising, PR and sponsorship.
• Online value proposition strategy. Defines the digital value proposition for acquisition
and retention to engage with customers online. Includes content, experience and promo-
tional incentives used to encourage trial.
• Online sales efficiency strategy. The objective is to convert site visitors to engage and
become leads (e.g. through registering for an e-newsletter or placing the first item in
the shopping basket) and to convert them to buy products and maximise the purchase
transaction value using nurturing and personalisation, optimised through a structured
testing programme.
• Offline sales impact strategy. The aim is to achieve offline sales or click-and-collect trans-
actions from new or existing customers. Strategy defines how online communications
through the website and email can influence sales offline, i.e. by phone, mail order or
in-store. For B2B companies that don’t transact online, digital channels are aimed at
developing sales conversations with business development staff.
The case study for this chapter examines a retail example of strategy development.

ASOS shifts the focus of high-street retailing to enhance the customer

Case study 4 experience

ASOS has pioneered online social shopping and is one of enabled the company to start to build a reputation that
the most successful online fashion retailers in the United was attractive to young fashion shoppers.
Kingdom. ASOS offers tens of thousands of branded and Despite industry commentators’ doubts about sell-
own-label fashion items to millions of 20-something men ing clothing online, by 2004 ASOS had introduced its
and women around the globe. The brand is constantly own-label women’s wear and since has achieved the
reviewing the online marketplace for threats or oppor- following landmarks:
tunities for expansion and responding accordingly. This
case study explores the growth and competitive strategy • 2006 – became the first company in the United King-
of this iconic online retail fashion brand. dom to launch online catwalk shows;
The ASOS strategic pillars (see Figure 4.18) sum- • 2007 – launched ASOS own-label for men;
marise its business model, including the target audi- • 2010 – began expanding internationally into Europe,
ence and the importance of customer experience and Russia and the United States and established
sustainability. sites to serve these markets and launched ASOS
Nick Robertson and Quentin Griffiths, founders of marketplace;
As Seen on Screen (ASOS), were inspired by watching • 2011 – app launch and Australian, Italian and Spanish
American TV series Friends, and these friends set about sites established;
building a website that could sell items that potential • 2012 – began to consolidate online expansion, open-
customers had seen on television. Initially, ASOS sold ing international offices in Sydney and New York;
copies of clothing worn by celebrities, but soon the • 2015 – partnered with PayPal to connect directly with
company began developing its own brand. This focus student markets;
182 Part 2 Digital marketing strategy development

Figure 4.18 ASOS’s strategic pillars summarising its business model

Our strategic pillars provide ...and are underpinned

the framework for our global by our corresponding
business model... strategic priorities

1. 1. 2. 3.
Truly global retailer for Expand our Grow our Enhance our
fashion-loving 20-somethings global reach unique ASOS flexible and
and local scale brands multi-brand
by accelerating by launching platform
growth in key new brands and by growing
markets improving on high potential
2. 3. 4. both speed to categories,
market and implementing
price flexible
fulfilment
The ASOS The ASOS The ASOS and improving
brands platform customer proposition
experience
4. 5.
Improve our Develop our effective,
personalised customer efficient and
experience through the sustainable model by
application of data transforming our
science and organisation including
experimentation to deliver upgrading talent and
the most engaging capabilities, improving
experience cross-functional ways of
5. Effective, efficient and working and further
sustainable model driving responsibility for
everything we do

Source: ASOS (2020)

returns. ASOS has set up systems that enable product

• 2016 – invested in artificial intelligence and voice rec-
lines to be replaced quickly. Operating at this level cre-
ognition to improve social media applications;
ates many challenges for ASOS, so, in order to deliver
• 2017 – market valuations made ASOS more valu-
the promise of fast designer-look fashion, and to con-
able than M&S, the United Kingdom’s largest seller of
stantly update product ranges, ASOS has established an
clothing;
‘in-house’ design team in Europe, which creates catwalk
• 2019 – dip in online fashion sales, ASOS’s significant
lookalike items that are produced closer to the custom-
investment in restructuring and transitions costs led
ers, which aids delivery and helps the higher returns rate
to lower decline in overall valuation of the brand;
of operating online rather than in-store.
• 2021 – ASOS explores expansion opportunities in
ASOS continues to be one of the top ten online retail-
the United Kingdom with possible acquisition of one
ers globally, but recently other high-street brands, Macy’s
of its wholesale partners and leading fashion brand
and Next plc, have grown their e-commerce opera-
Topshop.
tions to become more significant competitors. In 2018,
ASOS has grown into the United Kingdom’s largest faced with growing global competition, ASOS’s CEO
online fashion retailer by deploying a competitive strat- Nick Beighton talked of how the company had invested
egy, which has established a unique market position: heavily in expanding its global platform capability in
selling a specialist range of products that have ‘the order to improve customers’ experience and facilitate
designer fashion look’. Nick Robertson, the company’s global expansion in new and existing markets (Skeldon,
co-founder, started selling branded clothing as seen 2019). The increasingly competitive nature of online fash-
in films and on television. Not only did this enable the ion means ASOS has to plan for its future growth and
company the opportunity to create a market, but it also market development. The company’s mission is to be
benefited from celebrity endorsements in PR and promo- the world’s number one destination for fashion-loving
tional campaigns. ASOS now sells over 100,000 branded 20-somethings (ASOS, 2019).
and own-label clothing products and offers a much wider
product range than its high-street competitors. ASOS Online value proposition
operates as a fast-fashion retailer, which has meant over- ‘Authentic, Brave and Creative’ are the key words that
coming many challenges to get goods to the customers sum up ASOS’s company values (ASOS, 2019). Product
on time and at the same time manage the high rate of choice is at the core of the ASOS proposition: tens of
 Chapter 4 Digital marketing strategy 183

thousands of branded and own-label products available, insights to build digital content. The ‘authenticity’ of the
with hundreds introduced each week. On pricing, ASOS content generated by the Insiders makes this a very pow-
is price competitive with its Price Promise (a price-match erful approach to digital communications and also links
offer): if you see a branded (non-ASOS) product cheaper to their own social media accounts in order to extend the
on another website, the company will match that price. reach and impact of the communications network. These
ASOS describes its website as ‘evolving constantly as digital influencers not only share their fashion favourites
we find better ways of presenting our products’. but also have an ‘Outfit of the Day’, which helps drive
In 2010 ASOS.com launched its Marketplace platform, sales of specific products.
enabling boutiques, vintage collectors, individuals and The ASOS Foundation is central to the ASOS corpo-
designers – established or unknown – to trade from their rate social responsibility strategy, which again contrib-
own virtual market stalls to customers across the world. utes to the brand’s market positioning. The Foundation
It differs from other online marketplaces such as eBay seeks to support disadvantaged young adults in the
and Amazon in that each vendor can customise their United Kingdom, India and parts of Africa. Projects
storefront and, for £50 each month, will have access to involve finding ways to develop sustainable improve-
an account manager at ASOS and some premium pro- ments in these areas: a social enterprise in Kenya that
motional spots on Marketplace. works from an eco-factory producing African-inspired
fashion designs; education in artisan skills in remote
ASOS service parts of Africa; and working with the Prince’s Trust in the
For ASOS, speed and accuracy of deliveries to custom- United Kingdom to help young people develop the skills
ers is a critical success factor. By offering same-day they need to get jobs.
deliveries the company has increased sales by 23 per
cent in the United Kingdom and even more in the EU. Search marketing
Underpinning these improvements in sales is an inno- ASOS generates interest in the brand from different
vative ethos that is evident across the company. ASOS sources: direct traffic to ASOS sites brings almost half
invested in a customer contact management system that (48.12 per cent), organic and paid search (40.65 per cent)
enables staff to respond to customer care emails more and social (5.11 per cent) (Similarweb, 2021).
quickly and efficiently. Working with Clipper Logistics, The range of terms ASOS targets for search are evi-
it has introduced an innovative reverse logistics system dent from the <title> and description tags on the home
called Boomerang, which provides quick turnaround on page, which are also used to communicate key brand
inventory when products are returned. A primary strate- messages:
gic objective is to continually innovate to ‘add conveni-
<title>ASOS | Shop women’s fashion & men’s clothing
ence and choice for ASOS shoppers’.
| Free Delivery & Returns</title>
Partnerships <meta name = “Description” content = “Discover
the latest in women’s fashion and men’s cloth-
ASOS focuses on its target market and looks for strategic
ing online. Shop from over 40,000 styles, including
opportunities and initiatives that can strengthen its posi-
dresses, jeans, shoes and accessories from ASOS and
tioning. Promotional tie-ups and associations are very
over 800 brands. ASOS brings you the best fashion
important to ASOS. In 2018, the company launched a
clothes online.”/>
global new-to-market label, Collusion. The label was
designed to represent collaborations with stand-alone
designers and ASOS creative experts (Singh, 2018). Social media marketing
The promotion received media coverage, including two The growth of the company in recent years has largely
full-page features in the national press. The collection been driven by social media. ASOS has contributed a
sold out in minutes. The ASOS Fashion Discovery pro- great deal to the digital high street. Apart from show-
gramme, launched in 2016, continues to create opportu- ing that it is possible to sell fashion online profitably, the
nities for young designers and students to work on their company has also pioneered social shopping, where
own labels, which are then stocked by ASOS for at least customers use online social network sites to share
two seasons. product ideas before they buy. ASOS has successfully
used social media to build a community of fashionistas
Marketing communications who are prepared to share their views and opinions on
e-Word of mouth is a powerful tool of this brand, able Facebook, Twitter and Instagram, and to share ideas of
to leverage advantage through links to celebrities and what to wear, giving its young shoppers fashion inspi-
fashion using the ASOS Insider community, which is a ration. With many millions of followers on social media
marketing initiative that uses individuals and their fashion sites, the company has made a significant commitment
184 Part 2 Digital marketing strategy development

to community on its own site through the ASOS blogs previously shopped online for designer and high-street
and the social network sites where it has over 1.3 million clothing.
Likes on Facebook. It runs regular promotion events inte-
grated across the social networks but focuses on stories. Customer communications
Its Instagram strategy links directly to its influencers and To encourage loyalty, for many years ASOS produced
in doing so widens the reach of the brand. a popular branded magazine. However, it now relies on
more cost-effective email and social media communica-
Basket analysis tions to engage customers.
ASOS’s basket analysis approaches were described in Ultimately, ASOS has developed a large target audi-
an interview with former Marketing and Operations Direc- ence for its products through the use of digital media
tor, Hash Ladha: and it is able to communicate new product ideas very
effectively to keep customers interested. ASOS’s innova-
One of the most interesting things we found was
tive use of social media has enabled it to influence the
that men tend to buy for their partners as well as
way young shoppers interact with online fashion retailers.
themselves. We previously thought this might work
Moreover, this is likely to be a massive growth area and
the other way around. Using this data, email content
social shopping is likely to continue to reshape the way
was generated by the company’s in-house editorial
we shop for the foreseeable future. Always keen to be
team. Generic content included a round-up of cur-
ahead of the competition, the main thing for the ASOS
rent fashion trends and ‘best buy’ recommendations.
team is being where their customers are and being able
The personalised content took into account favourite
to engage in the dialogue.
brands and budget, recommending items below a
certain price limit. Emails were sent twice a week. Sources: Armstrong (2016); ASOS (2011); BBC (2013); Davies (2018); Kakar
(2018); Kollewe (2014); Wood (2017)
Other strategies, such as encouraging customers
to refer a friend to the company, and sending viral
campaigns, were also used at this time. Our best Questions
customers visit the site every day. Shopping habits
1 Apply the SOSTAC model to ASOS and highlight
do vary, but most customers like to browse the site
why it has become such a successful online
between spending. A twice-weekly email gives them
fashion brand.
a direct link straight to the site and keeps it fresh in
2 Describe how ASOS uses digital channels to
customers’ minds.
engage its customers.
ASOS also wanted to lure lapsed customers back 3 Discuss how ASOS has used digital marketing
to its website. It targeted these individuals with tai- to develop its differentiated market position.
lored content that aimed to remind them why they had

Summary

1 The development of the online presence follows stage models from basic static websites,
through simple interactive sites with query facilities to dynamic sites offering personali-
sation of services for customers.
2 The digital marketing strategy should follow a similar form to a traditional strategic
marketing planning process and should include:
• goal setting;
• situation analysis;
• strategy formulation;
• resource allocation and monitoring.
A feedback loop should be established to ensure the site is monitored and modifications
are fed back into the strategy development.
3 Strategic goal setting should involve:
• setting business objectives that the internet can help achieve;
 Chapter 4 Digital marketing strategy 185

• assessing and stating the contribution that digital will make to the business in the
future, both as a proportion of revenue and in terms of whether digital will comple-
ment or replace other media;
• stating the full range of business benefits that are sought, such as improved corporate
image, cost reduction, more leads and sales, and improved customer service.
4 The situation analysis will include assessing internal resources and assets, including the
services available through the existing website.
5 Strategy formulation involves defining a company’s commitment to digital, setting an
appropriate value proposition for customers and identifying the role of the digital chan-
nels in exploiting new markets, marketplaces and distribution channels, and in delivering
new products and services. In summary:
• Decision 1: Market and product development strategies.
• Decision 2: Business and revenue models strategies.
• Decision 3: Target market strategy.
• Decision 4: Positioning and differentiation strategy (including the marketing mix).
• Decision 5: Customer engagement and social media strategy.
• Decision 6: Multichannel distribution strategy.
• Decision 7: Multichannel communications strategy.
• Decision 8: Online communications mix and budget.
6 The McKinsey 7Ss provide a useful framework for reviewing organisational issues that
are important to implementing digital strategies as part of digital transformation. These
are: Strategy, Structure, Systems, Staff, Style, Skills and Superordinate goals.

Exercises Self-assessment exercises

1 How does a digital market strategy integrate with corporate and marketing
strategies?
2 What is the role of monitoring in the strategic planning process?
3 Summarise the main tangible and intangible business benefits of digital channels
to a company.
4 What is the purpose of a digital marketing audit? What should it involve?
5 What does a company need in order to be able to state clearly in its mission state-
ment its strategic position relative to the internet?
6 What are the market and product positioning opportunities offered by digital
channels?

Exam and discussion questions

1 Discuss the frequency with which a digital marketing strategy should be updated
for a company to remain competitive.
2 Explain the essential elements of a digital marketing strategy.
3 Discuss the extent to which the eight key strategy decisions are important to a new
online retail business.
4 The digital environment is disruptive, volatile and highly susceptible to change.
Strategy involves long-term planning and future resource allocation. Discuss
the conflicts raised by these two statements for a firm planning its future digital
strategy.
5 Suggest how to develop a target marketing strategy for a digital marketing cam-
paign for a takeaway fast-food business.
6 Briefly explain the purpose and activities involved in an external audit conducted
as part of the development of a digital marketing strategy.
186 Part 2 Digital marketing strategy development

7 Explain what is meant by the online value proposition and give two examples of the
value proposition for online businesses of your choice.
8 Imagine you are the marketing director for a high-street fashion retailer:
• suggest how you would integrate digital media into your marketing strategy;
• outline and justify the objectives you would set for a digital strategy designed to
grow the online revenue contribution.
9 For a company of your choice, devise a digital marketing strategy.

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Weblinks

A directory of recommended website links, including recommended videos, analysis tools

and sources for statistics, is maintained by Dave Chaffey at www.davechaffey.com/book-
support. The sites for this chapter cover the latest digital trends in different industry sectors.