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Internet Marketing Strategy

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Objectives

• Defining the business model

• Integrating Internet marketing strategy

• Levels of web development

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Defining The Business Model

• the first determinant of a firm’s

performance is its business model

• the method by which a firm builds and uses

its resources to offer its customers better

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Determinants of Business

Performance

<b>Business Model</b>

•Components & linkages

•Dynamics

<b>Environment</b>

•Competitive

•Macro

<b>Change</b>

•Properties

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Internet Business Models

• Given such landscape-transforming

properties of the Internet, the question is,

How can a firm take advantage of them and

make money.

• The Internet business model is the system –

components, linkages, and associated

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Internet Business Models

• It takes advantages of the properties of the Internet

in the way it builds each of the components – value,

scope, revenue sources, pricing, connected activities,

implementation, capabilities, and sustainability – and

crafts the linkages among these components.

• Categorized as pure play or clicks-and-mortar

– Pure play Internet business model - if firm does not have a

bricks-and-mortar model.

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Properties of the Internet and the

5-Cs

<b> Internet Properties</b>
•Mediating technology
•Universality
•Network externalities
•Distribution channel
•Time moderator
•Information
asymmetry shrinker

•Infinite virtual capacity
•Low cost standard

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Determinants of Firm Performance

Business Model

•Customer value

•Scope

•Price

•Revenue sources

•Connected activities

•Implementation

•Capabilities

•Sustainability

Internet

Environment

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Taxonomy of Business Models

• Brokerage model – firms act as market makers who

bring buyers and sellers together and charge a fee for

the transaction that they enable.

• Advertising model – the owner of a web site provides

some content and services that attract visitors. Charge

advertisers fees for banners, permanent buttons …

• Infomediary model – a firm collects valuable

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Taxonomy of Business Models

• Merchant model – is the “e-tailer” model in which

wholesalers and retailers sell goods and services

over the Internet.

• Manufacturer model – try to reach end users directly

through the Internet instead of going through a

wholesaler or retailer.

• Affiliate model – a merchant has affiliates whose

websites have click-through to the merchant.

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Taxonomy of Business Models

• Subscription model – access to a web site is

not free. Members pay a subscription price

and in return receive high-quality content.

• Utility model – firms pay as they go.

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Internet Marketing Strategy

• Block Strategy – firm erects barriers around its

product market space by having inimitable

capabilities and lowering prices.

• Run Strategy – an innovator often has to run.

Running means changing some subset of components

or linkages or business models or reinventing the

whole business model to offer customers better value.

• Team-up Strategy – if a firm can not do it alone. Use

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David Teece argued that two things

determine the extent to which a firm can

profit from its invention or technology:

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Who Profits from Innovation

I

Difficult to make

money

II

Holder of

complementary assets

makes money

IV

Inventor makes money

III

Party with both

technology and assets

or with bargaining

power makes money

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Strategies for Building Business Models

<b> I</b>
Run
<b> II</b>
Team-up

•Joint venture
•Strategic alliance
•Acquisition
Internal development
<b> IV</b>
Block
<b> III</b>
Block
Team-up
•Joint venture
•Strategic alliance
•Acquisition
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Internet Technology Life Cycle

•Locate profit

site •Determine strengths and weaknesses of business model

•Build business model

•Defend
competitive
advantage

•Decide where in
the Internet value
network you
want to be

•Build capabilities
•Build network

•Invest in infrastructure
•Win customers

•Build brand name

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