Summary Digital Marketing Strategy
Part 2 Digital marketing strategy
Chapter 6 – strategies for the digital channel
Which digital strategic options can marketers choose from and why is it important to
know them?
For centuries, strategy has been a major theme in the marketing world. In this
respect, the digital setting changes both nothing and everything. Although intelligent
marketing strategies continue to be a main driver of commercial success, the way we
formulate, implement and upgrade these strategies has changed substantially. The
society and the market changes in such a high tempo, that organizations can change
their strategy quite frequent to stay up-to-date, this is called an active strategy.
Marketing strategy implementation in the digital age can best be described as:
Marketing strategy implementation is the iterative communication, interpretation,
adoption and ratification of a marketing strategy or strategic initiative on a regular
basis.
6.1 Generic strategies and growth strategies for the digital channel
The internet is an important strategic channel for almost all organizations. The
internet channel has gained a prominent position on the marketers’ remote control
and will be unlikely to relinquish that position in the future. This means that
organizations are increasingly reliant upon strategic choices relating to the digital
channel.
IT-driven strategies are strategies whereby a technology is applied to improve and
customize the offering and to more accurately segment and facilitate the crucial flow
of information that enables dialogue between customer and organization.
Every marketing strategy, IT-driven or not, should be able to trace its roots back to
the general objectives of an organization. This strategy provides then guidance for
both employees and partners. This is especially important in the context of multiple
channel marketing that now constitutes the new marketing reality with a significant
role for the digital channel.
6.1.1 Porter’s generic strategies for the digital channel
The fact that strategy selection will influence an organization’s performance is an
inconvertible truth. Different types of strategies were identified by Porter. He makes a
clear distinction between the approaches towards wide or narrow segments on one
hand and low costs or uniqueness on the other hand.
Cost leadership
Organizations that choose to operate in broad markets, based on a low-cost strategy
are known as cost leaders. It does not mean the prices of the products that the
organization sells are low, but this price can be changed easily. Continuous
adjustment of prices is known as dynamic pricing. If the digital channel increases the
, pressure on prices of certain products and services, it is wise to follow a cost
leadership strategy.
A cost leadership strategy is mostly followed by organizations that provide
standardized products. As comparing prices is easy, organizations can end up in a
vicious circle of price war.
Differentiation
Organizations that opt for this strategy want to be different and strive for uniqueness,
but still focus on broad markets. Every successful differentiation strategy should be
based on factors that are difficult for competitors to imitate.
Focus
Organizations that opt for a focus strategy concentrate their attention on specific
market segments and emphasize their low-cost attributes or uniqueness. The digital
channel makes it relatively easy for newcomers to enter the market. They must
compete with other organizations, which means that they often choose to serve a
particular niche market.
It should now be clear that long-standing theories concerning strategic choices are
still relevant today. However, in a world where organizations increasingly adopt a
multichannel strategy a different approach is required in which the digital channel
plays an important role.
6.1.2 Ansoff’s growth strategies for the digital channel
Ansoff’s growth matrix assists in determining strategies that increase the sales
volume by means of product variation and market variation. Four different growth
strategies can be distinguished within the matrix. These will now be explained in
more detail.
Market penetration
Market penetration relates to the use of the digital channel with the aim of selling
more existing products or services into existing markets. When looking at market
penetration, a distinction must be made between market expansion and market
deepening. Market deepening reflects the effort of using promotional resources to
entice existing customers to buy more. Market expansion involves the use of
promotional tools to attract new customers. The main goals and methods to use the
digital channel or market penetration are:
1. Growth of market share > organizations can compete better digitally if they
have websites that are efficient in converting visitors to customers.
2. Improvement of customer loyalty > organizations can increase the value they
deliver and as a result increase their loyalty.
3. Increasing the value of customers for an organization > maximizing customer
profitability.
Together, these strategies should lead to more sales from new or existing customers.
Market development
The digital channel is used for sales of existing products or services in new markets.
The principal methods to deploy the digital channel for market developments include:
Part 2 Digital marketing strategy
Chapter 6 – strategies for the digital channel
Which digital strategic options can marketers choose from and why is it important to
know them?
For centuries, strategy has been a major theme in the marketing world. In this
respect, the digital setting changes both nothing and everything. Although intelligent
marketing strategies continue to be a main driver of commercial success, the way we
formulate, implement and upgrade these strategies has changed substantially. The
society and the market changes in such a high tempo, that organizations can change
their strategy quite frequent to stay up-to-date, this is called an active strategy.
Marketing strategy implementation in the digital age can best be described as:
Marketing strategy implementation is the iterative communication, interpretation,
adoption and ratification of a marketing strategy or strategic initiative on a regular
basis.
6.1 Generic strategies and growth strategies for the digital channel
The internet is an important strategic channel for almost all organizations. The
internet channel has gained a prominent position on the marketers’ remote control
and will be unlikely to relinquish that position in the future. This means that
organizations are increasingly reliant upon strategic choices relating to the digital
channel.
IT-driven strategies are strategies whereby a technology is applied to improve and
customize the offering and to more accurately segment and facilitate the crucial flow
of information that enables dialogue between customer and organization.
Every marketing strategy, IT-driven or not, should be able to trace its roots back to
the general objectives of an organization. This strategy provides then guidance for
both employees and partners. This is especially important in the context of multiple
channel marketing that now constitutes the new marketing reality with a significant
role for the digital channel.
6.1.1 Porter’s generic strategies for the digital channel
The fact that strategy selection will influence an organization’s performance is an
inconvertible truth. Different types of strategies were identified by Porter. He makes a
clear distinction between the approaches towards wide or narrow segments on one
hand and low costs or uniqueness on the other hand.
Cost leadership
Organizations that choose to operate in broad markets, based on a low-cost strategy
are known as cost leaders. It does not mean the prices of the products that the
organization sells are low, but this price can be changed easily. Continuous
adjustment of prices is known as dynamic pricing. If the digital channel increases the
, pressure on prices of certain products and services, it is wise to follow a cost
leadership strategy.
A cost leadership strategy is mostly followed by organizations that provide
standardized products. As comparing prices is easy, organizations can end up in a
vicious circle of price war.
Differentiation
Organizations that opt for this strategy want to be different and strive for uniqueness,
but still focus on broad markets. Every successful differentiation strategy should be
based on factors that are difficult for competitors to imitate.
Focus
Organizations that opt for a focus strategy concentrate their attention on specific
market segments and emphasize their low-cost attributes or uniqueness. The digital
channel makes it relatively easy for newcomers to enter the market. They must
compete with other organizations, which means that they often choose to serve a
particular niche market.
It should now be clear that long-standing theories concerning strategic choices are
still relevant today. However, in a world where organizations increasingly adopt a
multichannel strategy a different approach is required in which the digital channel
plays an important role.
6.1.2 Ansoff’s growth strategies for the digital channel
Ansoff’s growth matrix assists in determining strategies that increase the sales
volume by means of product variation and market variation. Four different growth
strategies can be distinguished within the matrix. These will now be explained in
more detail.
Market penetration
Market penetration relates to the use of the digital channel with the aim of selling
more existing products or services into existing markets. When looking at market
penetration, a distinction must be made between market expansion and market
deepening. Market deepening reflects the effort of using promotional resources to
entice existing customers to buy more. Market expansion involves the use of
promotional tools to attract new customers. The main goals and methods to use the
digital channel or market penetration are:
1. Growth of market share > organizations can compete better digitally if they
have websites that are efficient in converting visitors to customers.
2. Improvement of customer loyalty > organizations can increase the value they
deliver and as a result increase their loyalty.
3. Increasing the value of customers for an organization > maximizing customer
profitability.
Together, these strategies should lead to more sales from new or existing customers.
Market development
The digital channel is used for sales of existing products or services in new markets.
The principal methods to deploy the digital channel for market developments include:
