Chapter 4 THE INTERNET AND THE MARKETING MIX

Slide 5.
CHAPTER 4:
THE INTERNET AND THE
MARKETING MIX
AEMILLYAWATY ABAS
Chaffey et al., Digital Marketing: Strategy, Implementation and Practice, 5th edition © Pearson Education Limited 2013
Slide 5.2
Topics to cover
• Introduction
• Products
• Price
• Place
• Promotion
• People, process and physical evidence
Slide 5.3
Learning objectives
1. Apply the elements of the marketing mix in
an online context
2. Evaluate the opportunities that the Internet
makes available for varying the marketing
mix
3. Assess the opportunities for online brand-
building
Slide 5.4
Introduction
• This chapters explains about how marketing mix can
be applied in the context of online.
• Before any digital marketing strategy can be carried
out, a thorough understanding of the fundamental of
marketing (elements) are important.
• Jerome McCarthy (1960) had discussed and proposed
the main 4Ps (product, price, place and promotion).
It was then further elaborated by Booms & Bitner
(1981) by adding 3 more elements/variables to better
reflect service delivery; people, process and
physical evidence.
Slide 5.5
Figure 5.1 The elements of the marketing mix
• Marketing mix: the series of 7 keys variables that are varied by

marketers as part of the customer offerings
• Internet has a great impact on the marketing mix. As discussed in
Chap 1, engagement and relationship are important. Thus, Chaffey &
Smith (2008) had suggested the 8th P – Partnership. This will assists
the marketers in achieving reach and affiliation.
Slide 5.6
The Creation of 4Cs

• Since the 4Ps concept was introduced in the 1960s, a
lot has changed since. The 4Ps was more like a Push
Approach when the market and demographic of people
has changed a lot.
• Therefore, it is highly suggested that marketers should
focus more on customer. Hence, to cater this,
Lautenborn (1990) suggested the 4Cs framework which
it actually the 4Ps from the customers’ perspectives.
Marketers need
Customer to understand
Cost to
needs and both, Marketing
customer (Price)
wants (Product) Mix and
Customers. As
the mix is often
adjusted to fit
Convenience Communication with the
(Place) (Promotion)
customers
Slide 5.7
PRODUCT
ARTICLE & QUESTION
• QUESTION 1: WHY IT IS NECESSARY TO ADAPT

PRODUCT CHANGES FOR E-COMMERCE
SELLER?
• https://www.lessonsatstartup.com/2019/08/02/what-
is-4ps-of-digital-marketing/
Slide 5.8
PRODUCT
1. Product variable
• The element of the marketing mix that involves
researching customers ’ needs and developing
appropriate products
• For products be made available online, there are two
factors that marketers should look into upon deciding
the products.
• Core product
o The fundamental features of the product that meet
the user’s needs.
• Extended product
o Additional features and benefits beyond the core
product. The additional services that marketers
need to provide.
Slide 5.9
PRODUCT (cont’d)
The main implications of the Internet for the
product element of the mix are:
1. Options for varying the core product

2. Options for offering digital products
3. Options for changing the extended product
4. Conducting research online
5. Speed of new product development
6. Speed of new product diffusion
Slide 5.10
PRODUCT (cont’d)
❶ Options for varying the core product
• Ghosh (1998) –Developing new products or adding Digital

value (such as provide extra information, services, create
more revenues by allowing ads placements, and create
new e-products)
• Rayport and Sviokla (1994) describe transactions where
the actual product has been replaced by information about
the product
• Products can either be mass customization, prosumer or
bundling
Slide 5.11
PRODUCT (cont’d)
❷Options for offering digital products
Digital products now can be offered at different price points.

It can be done via the followings:
✓Subscription
✓Pay-per-view- music from iTunes
✓Bundling-
✓Ad supported content
Slide 5.12
PRODUCT (cont’d)
❸Options for changing the extended
• Examples:
product
• Add-on services – gift wrapping @ Amazon
• Endorsements
• Awards IN OTHER WORDS, CHANGE
• Testimonies PRODUCT EXTENSION IS ALSO
STRATEGY TO EXTEND PRODUCT
• Customer lists LIFE CYCLES
• Customer comments https://smallbusiness.chron.com/produc
• Warranties t-life-cycle-extension-strategies-
• Guarantees
3280.html
• Money back offers

• Customer service (see people, process and physical evidence)
• Incorporating tools to help users during their use of the product
• Citroën exCeed
• Information – extranets
Slide 5.13
PRODUCT (cont’d)
❹Conducting marketing research online
✓A platform where many researches can be conducted.

Information obtain online can facilitate marketers in
developing new products (Sawhney et al., 2005)
✓The methods can be via:
✓Online focus group
✓Online survey
✓Customer feedback or forums, possibly on
independent sites-Air Asia Ask
✓Web analytics
Slide 5.14
PRODUCT (cont’d)
ARTICLE & QUESTION

• QUESTION 2: WHY IT IS CRUCIAL TO CONDUCT
MARKETING RESEARCH ONLINE?
• https://sumo.com/stories/ecommerce-market-
research
Slide 5.15
PRODUCT (cont’d)
❺Velocity of new product development
✓Internet allows new product development can be done

more rapidly.
✓It is because new ideas can easily be generated and new
concepts can easily be tested.
✓The result (accept/reject) can be obtained more quickly →
quicker action can be done
WHAT IS
MEANT BY
VELOCITY?
Slide 5.16
PRODUCT (cont’d)
❻Velocity of new product diffusion
• https://simplicable.com/new/product-diffusion
• To stay relevant and competitive, marketers must produce
product more rapidly especially should penetrate international
market fast (Quelch & Klein, 1996).
• WOM has a tremendous impact on the rate of adoption of new
product (Gladwell, 2000).
• Marsden (2004) summarises 3 Tipping Points
• The law of the few – The one who share the information
create a “copycat behavior”
• The stickiness factor – Should implement tactics to make
people glue to our digital marketing strategies (products)
through engagement, uniqueness, attractiveness and others
• The power of context – Make sure the words (including 7Ps)
fit with the context (market)
Slide 5.17
PRODUCT (cont’d)
Branding in a digital environment
✓Branding is important. It defines a product and it helps the
customer to differentiate between products and services
(Jobber, 2010).
✓Chernatony & McDonald (1992) described brand as, “an
identifiable product or service augmented in such a way that the
buyer or user perceives relevant unique added values which
match their needs most closely. Furthermore, its success results
from being able to sustain these added values in the face of
competition”
✓For a brand to success online, it must fulfil these 3
characteristics; rational value, emotional value, and brand
experiences (Chernatony, 2001)
✓Marketers should also look into brand equity; the assets (or
liabilities) linked to a brand’s name and symbol that add to (or
subtract from ) a service th
Chaffey et al., Digital Marketing: Strategy, Implementation and Practice, 5 edition © Pearson Education Limited 2013
Slide 5.18
PRODUCT (cont’d)
Brands Online
• Dayal et al. (2000) say, ‘on the world wide web, the brand
is the experience and the experience is the brand’.
They suggest that to build successful online brands,
organizations should consider how their proposition can
build on these possible brand promises:
• The promise of convenience – making a purchase experience
more convenient than the real-world, or for rivals;
• The promise of achievement – to assist consumers in achieving
their goals, for example supporting online investors in their
decision or supporting business people in their day-to-day work;
• The promise of fun and adventure – this is clearly more relevant
for B2C services;
• The promise of self-expression and recognition – provided by
personalization services such as Yahoo! Geocities where
consumers can build their own web site;
• The promise of belonging – provided by online communities.
Slide 5.19
PRODUCT (cont’d)
Table 5.1 Traditional measures of brand equity and online measures of brand equity
Slide 5.20
ARTICLE & QUESTION
• QUESTION 3 : DIFFERENCE BETWEEN

BRANDING AND MARKETING?
• https://www.mediavisioninteractive.com/digital-
marketing-2/the-importance-of-brand-building-in-the-
digital-age/
• QUESTION 4: WHAT ARE THE CHALLENGES IN

BRAND BUILDING DIGITALLY?
• https://www.lucid.pro/en/news/digital-branding-
challenges-for-todays-brands-in-the-digital-
environment
Slide 5.21
PRICE
• Internet has dramatic implications for pricing in many

sectors.
• Baker et al. (2000) and Xing et al. (2006) noted 2
approaches for online pricing
• New companies use low prices to gain customer base
(while others have transferred existing prices to the
web)
• Some use differential pricing with lower prices for some
of their online products
Slide 5.22
PRICE (cont’d)
Main implications of the internet for the
price aspect
• Increased price transparency

• Downward pressure on price
• New pricing approaches
• Alternative pricing structure and policies
Slide 5.23
PRICE (cont’d)
❶ Increased price transparency
• Sellers increase the price and customers aware of it due

to location/regions.
• But be careful, do not over doing it as customers may feel
discriminated.
• To set the price, marketers should view the customer
behavior and level of satisfaction.
• If marketers want to play with the price, make sure price
become the factor of buying decision and not the product.
If not, no matter how attractive the price is, still there will
be no purchases.
Slide 5.24
PRICE (cont’d)
❷ Downward pressure on price
• Due to intense competition caused by price transparency, a
number of sellers would want to decrease their prices
• Offering products online sometime give advantage to online
sellers to sell at lower price as compared to offline sellers.
• Discounting is the most used pricing approach as compared
to others
• Baker et al. (2000) suggests to use the followings when
deciding price; precision (related to product value),
adaptability (price and demand), and segmentation (base on
group of customers)
Slide 5.25
PRICE (cont’d)
Pricing options
• Cost-plus
• Add profit margin to operational costs
• Target profit pricing
• Based on breakeven
• Competition-based pricing
• Market-oriented
• Premium-pricing (Skimming Pricing)
• Penetration pricing
Slide 5.26
❸New pricing approaches
Price can be dynamic (changes

overtime like Agoda, booking) and
shipping fees are also included
which will affect the total price
Slide 5.27
PRICE (cont’d)
❹alternative pricing structure or policies
• Different types of pricing may be possible on the internet.

• Further pricing options are such as
• Basic price
• Discounts
• Ass-ons
• Guarantees and warrantees
• Refund policies
• Order cancellation terms
• Shipping fee (types of courier)
• Credit card tax
Slide 5.28
ARTICLE & QUESTION
• QUESTION 5 : WHAT ARE THE SUGGESTED WAY

TO BE COST-EFFECTIVE IN DIGITAL
MARKETING?
• https://digitalmarketinginstitute.com/blog/9-ways-
digital-marketing-is-cost-effective-corporate
Slide 5.29
PLACE
• Place refers to how the product is distributed to
customers
• The aim of place is to maximise the reach of
distribution (widespread coverage) while minimising
cost of inventory, transport and storage
• Successful retailers that opt for online platform must
ensure that their online platform is visible to audience
(target market). Must fully utilise all helps (from 3rd
party like search engine/mobile apps/web banners).
• 4 main implications of the internet for place
• Place of purchase
• New channel structure
• Channel conflicts
• Virtual organisation
Slide 5.30
PLACE (cont’d)
❶ place of purchase
1. Seller-controlled sites are those that are the main site of
the supplier company which are e-commerce enabled
(www.guesswatches.com)
2. Seller-oriented sites are controlled by third parties, but are
representing the seller rather than providing a full range of
options (www.lazada.com.my)
3. Neutral sites are independent evaluator intermediaries that
enable price and product comparison and will result in the
purchase being fulfilled on the target site (www.Ebay.com ,
www.amazon.com)
4. Buyer-oriented sites are controlled by third parties on
behalf of the seller (www.myfave.com)
5. Buyer-controlled sites usually involve either procurement
posting on buyer-company sites or those of intermediaries
that have been set up in such a way that it is the buyer who
initiates the market making (www.mudah.com.my).
Slide 5.31
PLACE (cont’d)
Evans and Wurster view of place
• Reach. This is the potential audience of the e-commerce site.
Reach can be increased by moving from a single site to
representation with a large number of different intermediaries.
Allen and Fjermestad suggest that niche suppliers can readily
reach a much wider market due to search engine marketing
(chapter 8).
• Richness. This is the depth or detail of information which is both
collected about the customer and provided to the customer. This
is related to the product element of the mix.
• Affiliation. This refers to whose interest the selling organisation
represents – consumers or suppliers. This particularly applies to
retailers. It suggests that customers will favour retailers who
provide them with the richest information on comparing
competitive products.
Slide 5.32
PLACE (cont’d)
❷ new channel structures
The main types of phenomena
1. Disintermediation: Eliminate intermediaries with the idea
of selling direct
2. Reintermediation: Recreated intermediaries. Usually due
to high demand or penetrate new area
3. Countermediation: To make better use of online
intermediaries. Combine (to use) with other people’s
digital platform.
** When considering online platform channel structure,
marketers need to remember that there might be some
implications. Eg: for grocery products; think about delivery
and packaging
Slide 5.33
PLACE (cont’d)
❸channel conflicts
• Many issues and problems could arise when company
implement digital marketing. Different dissemination of
information could happen especially when the company has too
many representatives for the products and brands.
• Once, Frazier (1999) had mentioned that internet should only be
used for sharing information only (like one way communication)
• Moreover, different set of prices could cause an issue as well.
Product sold at cheaper price on online can create some
dissatisfaction among buyers too.
• Assessments of channel conflicts dependent on:
• A communication channel only.
• A distribution channel to intermediaries.
• A direct sales channel to customers.
• Any combination ofChaffey
theet al.,
above. th
Digital Marketing: Strategy, Implementation and Practice, 5 edition © Pearson Education Limited 2013
Slide 5.34
PLACE (cont’d)
❹virtual organisation
• Kraut et al. (1998) suggest the following features of a

virtual organisation:
• Processes transcend the boundaries of a single form
and are not controlled by a single organisational
hierarchy.
• Production processes are flexible, with different parties
involved at different times.
• Parties involved in the production of a single product
are often geographically dispersed.
• Given this dispersion, co-ordination is heavily
dependent on telecommunications and data networks.
Slide 5.35
PLACE (cont’d)
Examples of Virtual organizations
• Co-alliance model. Effort and risk is shared equally
by partners.
• Star-alliance model. Here the effort and risk is
centred on one organisation that subcontracts other
virtual partners as required.
• Value alliance model. This is a partnership where
elements are contributed across a supply chain for a
particular industry. This is effectively the value
network of Chapter 2.
• Market alliance model. This is similar to the value
alliance, but is more likely to serve several different
marketplaces.
Slide 5.36
ARTICLE & QUESTION
• QUESTION 6 : WHAT ARE THE DIFFERENT

DIGITAL CHANNELS?
• https://www.mediaocean.com/digital-marketing-
guide/channels-placement
Slide 5.37
PROMOTION
• The element that involves in communicating with
customers and other stakeholders to inform them
about the products and the organisation
• Wilmshurst (1993) described it as “Promotion
unfortunately has a range of meanings. It can be
used to describe the marketing communications
aspect of the marketing mix or, more narrowly, as in
sales promotion. In its very broad sense it includes
the personal methods of communications, such
as face to face or telephone selling, as well as the
impersonal ones such as advertising. When we
use a range of different types of promotion – direct
mail, exhibitions, publicity, etc we describe it as the
promotional mix”
Slide 5.38
PROMOTION (cont’d)
Promotion Tools
• Advertising
• Sales promotion
• Personal selling
• Public relations
• Sponsorship
• Direct marketing/Direct mail
• Exhibitions
• Merchandising
• Packaging
• Word of Mouth
Slide 5.39
PROMOTION (cont’d)
Using Promotion To Vary The Mix
• Reviewing new ways of applying each of the elements of the
communications mix such as advertising, sales promotions, PR
and direct marketing.
• Assessing how the Internet can be used at different stages of the
buying process.
• Using promotional tools to assist in different stages of customer
relationship management from customer acquisition to retention.
In a web context this includes gaining initial visitors to the site and
gaining repeat visits through these types of communications
techniques:
• reminders in traditional media campaigns why a site is worth
visiting, such as online offers and completion;
• direct e-mail reminders of site proposition – new offers;
• frequently updated content including promotional offers or
information that helps your customer do their job or reminds
them to visit.
Slide 5.40
ARTICLE & QUESTION
• QUESTION 7 : WHY MOBILE MARKETING IS

CRUCIAL FOR APPS PROMOTION?
• https://www.mobileappdaily.com/why-marketing-
important-for-app
Slide 5.41
THE OTHER Ps
People, Process & Physical
PEOPLE
.
• The interaction of staffs with customers and
stakeholders. How the staffs serve the customers
from inquiry process until the products safely
reached the customers
PROCESS .
• Methods and procedures companies use to achieve
all marketing functions. It is basically about the
buying-selling process.
PHYSICAL EVIDENCE
.
• The tangible expression it is purchased and used.
How user-friendly the platform, availability,
performance. Chaffey et al., Digital Marketing: Strategy, Implementation and Practice, 5th edition © Pearson Education Limited 2013
Slide 5.42
Questions for marketers
1. How are the elements of the marketing mix

varied online?
2. What are the implications of the Internet for
brand development?
3. Can the product component of the mix be
varied online?
4. How are companies developing online
pricing strategies?
5. Does ‘place’ have relevance online?
Slide 5.43
ARTICLE & QUESTION
• QUESTION 8 : WHAT IS THE 7Ps IN MARKETING

MIX?
• https://www.smallbusinessbonfire.com/marketing-
mix-digital/
• https://www.smartinsights.com/marketing-
planning/marketing-models/how-to-use-the-7ps-
marketing-mix/
Slide 5.44
INSTRUCTIONS:
1. Read carefully Chapter 4 from textbook and online
reliable reference.
2. Prepare your notes accordingly.
3. Answer the questions given. The article links
provided is just a basic information to assist you
answer the questions. Thus, you are need to look
for more information to answer each question.
4. Submit your answers the this link be/before 28th
April 2020 4.00 p.m in pdf format with full name,
student ID No, class, lecturer’s name, course name,
course code, semester & page no on top of the
page. https://forms.gle/yboUTp9DhcBiLHzn6
Slide 5.45
Format Hand-In Answer
Slide 5.46
SALAM RAMADHAN
&
SELAMAT BERPUASA
THANK YOU
#StaySafe
#RMO
#UiTMDiHatiku
#UiTMCawanganMelaka
#MKT558
#DigitalMarketing

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Slide 5.

Figure 5.1 The elements of the marketing mix

• Marketing mix: the series of 7 keys variables that are varied by

The Creation of 4Cs

ARTICLE & QUESTION

• QUESTION 1: WHY IT IS NECESSARY TO ADAPT

1. Options for varying the core product

❶ Options for varying the core product

• Ghosh (1998) –Developing new products or adding Digital

Digital products now can be offered at different price points.

• Money back offers

✓A platform where many researches can be conducted.

ARTICLE & QUESTION

✓Internet allows new product development can be done

ARTICLE & QUESTION

• QUESTION 3 : DIFFERENCE BETWEEN

• QUESTION 4: WHAT ARE THE CHALLENGES IN

• Internet has dramatic implications for pricing in many

• Increased price transparency

• Sellers increase the price and customers aware of it due

❸New pricing approaches

Price can be dynamic (changes

• Different types of pricing may be possible on the internet.

ARTICLE & QUESTION

• QUESTION 5 : WHAT ARE THE SUGGESTED WAY

• Kraut et al. (1998) suggest the following features of a

ARTICLE & QUESTION

• QUESTION 6 : WHAT ARE THE DIFFERENT

ARTICLE & QUESTION

• QUESTION 7 : WHY MOBILE MARKETING IS

Questions for marketers

1. How are the elements of the marketing mix

ARTICLE & QUESTION

• QUESTION 8 : WHAT IS THE 7Ps IN MARKETING

Format Hand-In Answer

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