Principles and application of e-marketing in SBL
The Strategic Business Leader study guide (section on E-business: value chain) considers e-business, with two of the learning outcomes specifically referring to e-marketing. This article will focus on the following learning outcome:
Explore the characteristics of the media of e-marketing using the 6 ’I’s of Interactivity, Intelligence, Individualisation, Integration, Industry structure and Independence of location.
In the SBL exam you will not earn marks for explaining the terms, but you do need to understand them in order to apply them. Additionally, as technology and marketing practices continue to evolve, it is important that candidates take note of the changing environment in relation to any technological learning outcomes such as this.
The article will begin with an overview of how the characteristics of e-marketing differ from traditional marketing, and then focuses on the practical application of e-marketing in the context of an exam-style question.
The characteristics of e-marketing: the 6 ‘I’s
The 6 ‘I’s refer to the characteristics making e-marketing different from other, perhaps more traditional, forms of marketing. These characteristics are recognised for their ability to provide enhanced results from marketing activity.
The 6 ‘I’s and how they differ from traditional marketing are displayed in Figure 1.
|E-marketing tools can be used to gather much more information about a potential customer’s interests, by recording click patterns for example, and determining at what point a customer loses interest. This helps to inform future product decisions as a result.
|With traditional advertising, businesses have no indication of how many people were interested in the advert or at what point they stopped watching or reading the marketing material.
|This refers to the ability to aim marketing directly at different individuals. The use of customised home pages or responsive advertising allows for this through technology and ensures the marketing is more relevant to each, and therefore more likely to be successful. This can also be linked to the intelligence gathered through e-marketing.
|Traditional marketing cannot be targeted individually, only at specific groups of people through – for example, the programme choice (TV advertising) or publication choice.
|Marketing can be linked to other activities – for example, ‘click here to buy’ or ‘see upgrade options’. It can also allow the integration between companies – for example, book discounted services with partner organisation.
|Separate steps have to be taken with traditional marketing in order to convert it into a sale – for example, make a phone call, go into a shop.
|E-marketing is ‘pull’ marketing in which the recipient of the marketing can participate in it – for example, by chatting with a bot, or clicking on different links or entering search terms. This interactivity can lead to greater intelligence.
|Traditional marketing is ‘push’ marketing with the message being broadcast to the potential customer rather than being sought by them. The aim is to try and ‘sell’ rather than provide a solution to a customer’s specific requirements.
|Independence of location
|E-marketing can cover broad geographical boundaries and could actually allow for delivery of some products or services – for example, online training courses, but companies still need to consider whether their product is suitable for boundaryless marketing – for example, a large physical product with expensive shipping may not lend itself to this.
|Whilst traditional marketing can cover wide geographical areas this may still need access to local sales forces. Additionally, it will be expensive to reach broader markets using traditional marketing as different methods of advertising may be needed to reach different markets.
|E-marketing can lead to changes in an industry allowing for disintermediation and the growth of consumer-to-consumer business models.
|Traditional marketing supports traditional industry structure.
Figure 1: The 6 ‘I’s – comparison between traditional marketing and e-marketing
Practical application of e-marketing to an exam-style task
In SBL exams, candidates are provided with a variety of exhibits. Tasks may relate to one or more exhibit and it is important for candidates to recognise which particular exhibits may provide some assistance in responding to a given task. Additionally, the task itself may provide some clues. For example, if the term ‘e-marketing’ appears in the wording of the task it might suggest a potential to use the 6 ‘I’s within your response. However, and this cannot be emphasised strongly enough, a model such as this should only be used if it fits the context in which the question is being asked. Consider the following three tasks:
- Task 1 – Explain how e-marketing may be used to grow market share for ABC Company.
- Task 2 – Evaluate the benefits of e-marketing in the introduction of the new business opportunity.
- Task 3 – ABC has decided to develop an e-marketing strategy. Evaluate this decision from a financial perspective.
Task 1 has a clear goal, specifically the growth of market share, and as such any response should be made within that context. The wording used is to ‘explain how' so the response needs to give some practical suggestions for this. The breadth is the entire organisation so a number of exhibits are likely to provide some assistance with this response.
Task 2 has different context entirely. There is no ‘goal’ of e-marketing as such; the business opportunity is being introduced regardless so that is not the aim of the e-marketing activity. You are simply being asked to discuss to what extent e-marketing will be of benefit in this instance. Here, you need to consider the benefits themselves and provide an evaluation of them – for example, how beneficial will they be? Are the expected benefits likely to materialise, and if so, to what extent? Are there any potential problems or disbenefits associated with the suggestions? The breadth is a single initiative, the launch of a new business opportunity, and therefore the exhibits you need to assist with your response are likely to be more specifically related to this business opportunity.
Task 3 is the evaluation of e-marketing as a business strategy in its own right. The context is from a financial perspective only, so all responses would need to incorporate this context.
Now we need to consider whether the 6 ‘I’s can be used in response to these tasks.
Task 1 – Explain how e-marketing may be used to grow market share for ABC Company
It is unlikely that the use of all of the ‘I’s will be useful in this instance, and indeed they may form more of the extension of the point rather than be a specific heading within the response. For example, ‘Industry structure’ may not be applicable as this is about growing market-share, not necessarily changing the nature of the industry, and industry structure itself is not an explanation of how ABC Company itself could use e-marketing, more of a characteristic of e-marketing. Therefore, it may not be useful to include in the response.
Similarly, it would be of no benefit to discuss individualisation by simply listing the information from Figure 1 above; this would neither explain how e-marketing would be used (it is a characteristic, not a method), nor would it justify the inclusion in terms of how it would grow market share.
However, consider a response to Task 1 which reads:
'ABC Company could use search functions and chatbots within their website to determine what customers are interested in, and what questions they may have about existing products. This could lead to two benefits for the company, enabling growth:
i) The activity itself could lead to the potential customer making a purchase, as the chat bot may respond to their questions immediately leading to an instant purchase. The inclusion of a ‘BUY NOW’ link would make it easy to translate the intent to purchase into an action. Without this combination of interactivity and integration the customer may not have returned to make a purchase. Thus, the conversion of intent to action could lead to an increase in market-share for ABC.
ii) ABC could record and analyse the data gathered from the search terms and also the click patterns of visitors to the website, gaining valuable intelligence. Using the information from this analysis, the company could adjust and improve future product offerings leading to enhanced sales, and growth in market share.'
Note how in the above response, the focus is on the ‘how’ (search functions and chatbots) and in what way these will lead to growth. The use of the 6 ‘I’s is almost of secondary importance but displays understanding and awareness of the characteristics of e-marketing being employed. Indeed, some parts of the response, or practical suggestions for growth, may make no reference to the 6 ‘I’s at all.
Task 2 – Evaluate the benefits of e-marketing in the introduction of the new business opportunity
This lends itself much more clearly to a structure using the 6 ‘I’s (or some of them) as headings, but candidates should not discard additional headings they believe to be relevant. It is important to not feel constrained by a model or to try and make it fit the task, when maybe it doesn’t in all aspects.
Task 2 may be approached in the following way:
ABC could use integration to make customers aware of its new service and encourage them to buy. ABC could incorporate marketing into its existing website. Existing customers could be offered an option to try the new service by clicking a link on the website page or selecting a check box on the order page. This may lead to existing customers also purchasing the new service in future. However, given that these are entirely unrelated businesses it is unlikely that there will be a high conversion rate and the benefit from this aspect of e-marketing could be very small.
In the response to task 2, the characteristic of e-marketing is used as a sub-heading. As this question requires evaluation of the benefits, the response starts by explaining what benefits may arise, and how. It then goes on to discuss how much of a benefit this really is.
Task 3 – ABC has decided to develop an e-marketing strategy. Evaluate this decision from a financial perspective
This task would be supported by financial information. Candidates would need to determine the relevant financial data, for example an investment appraisal, from the exhibits in the examination, in order to respond to this task.
A response to this may be as follows:
It is suggested that e-marketing will bring additional revenue of $x million over the next five years. Revenue is forecast to grow exponentially over those five years, which is unlikely to be justified by an e-marketing strategy alone. Year five shows a forecast 25% increase in revenue over the current year, in what appears to be a mature market. It is questionable whether this revenue increase would be achieved.
In the response to task 3, notice that there is no specific detail of the characteristics of e-marketing. The focus is entirely on the financial evaluation in relation to the strategy.
In summary, SBL candidates must take note of the context of each task before deciding on an approach to answering. The three tasks above all include the term ‘e-marketing’ within the requirements, but the tasks would be answered in very different ways. It is important not just to see the term and list the 6 ‘I’s but to firstly determine how important each of those 6 ‘I’s are in responding to the task (eg not at all in task 3) and secondly, how they can be applied to the context of the task. It is unlikely that any marks will be awarded for simply describing the characteristics.
Written by a member of the Strategic Business Leader examining team