The Internet provides organisations with both new opportunities and marketing challenges. Strategic planning undertaken by Star Records requires consideration of the changes in consumer behaviours that result from the growing online retail sector. Catering for markets in multiple countries the decision to construct a website means that many marketing, demographic and technical questions must be addressed before online strategy can be implemented.
The fast changing nature of the Internet requires Star to approach the development of their website with flexibility and the knowledge that what may appear to be an optimal solution can quickly be rendered obsolete. Undertaking a strong focus on customer relationships and management by the organisation is paramount. To be successful the website must be designed with a user focus.
E-marketing refers to the strategies that are used to build and maintain customer relationships through online activities. In today’s market driven by globalisation a solid Internet marketing strategy can provide Star with a competitive advantage. Companies that have succeeded using the Internet as a tool for delivering their marketing strategy have predominantly been ‘click & mortar’ organisations which are defined by Turban et al as ‘those that conduct some EC activities, but conduct their primary business in the physical world.(Turban et al p.5)
A website will provide Star with more than just an additional distribution mode for its sales but more importantly a marketing and communication platform to increase overall interest in its artists and their music and will assist the organisation in marketing products in multiple locations globally. It will also allow interaction with customers in the relevant languages 24/7.
A successful Internet strategy for Star will be one that combines both online and offline exercises in ways that strengthen the existing advantages of the organisation. The development of the website should use technology to augment the strategic business model already devised for the recording and exporting of Chinese artists.
The website should be developed on a solid technology infrastructure that allows for content and data management to occur on one global platform accessible from multiple office locations. Designed effectively the system should be successful in turning customer data gathered through the site into market intelligence to be incorporated into a CRM system. This information can then be leveraged to create targeted and personalized campaigns, which can assist in creating brand awareness and help develop a mutually beneficial customer relationship. (Dann, S. & Dann, S., 2004)
By clearly defining its target market Star can focus its campaigns, increase the number of site visits, responses and purchases. Star should undertake a ‘Bleed-Over’ approach when defining their target users in order to appeal to new market segments as well as their pre-existing customer base.
To target online marketing campaigns effectively Star will need to perform research to analyse target users demographics and psychographics. Due to the heterogenous state of the Asia Pacific market this will need to be undertaken locally to identify different buying patterns as well as to help determine which products and services will initially be most suitable for the site. The information collected will assist in segmenting the market into groups with similar characteristics and help develop and target marketing campaigns. (Forrest, E. 2003)
Email also provides an inexpensive and effective way to target potential customers for traditional commodities. If e-mail is used Star should personalize them with specific information regarding the individual customer. With multiple markets being entered, Star Records needs to ensure its website content is accessible in various languages. Online advertising campaigns can target relevant organisations in certain cities or regions.
In their article: ‘The New Rules for Digital Marketing’ Wind & Mahajan propose that customers should be ‘targeted individually’, not as broader segments and use ‘interaction to make customers partners’. (Wind & Mahajam 2001) A virtual community would enable Star Records to target multiple users based on their requirements.
Turban et all describes market segmentation as ‘The process of dividing a consumer market into logical groups for conducting marketing research, advertising and sales.’ Through the use of technology, organisations are able to approach segmenting as a more interactive process by using data mining and related techniques to target, attract and retain customers. (Mahajan.V 2000 p.9) By successfully segmenting their market, Star Records will be able to tailor its website and online marketing activities to smaller more defined groups. This will assist in achieving an increase in the percentage of positive responses to their online IMC activities.
Using traditional segmentation methods Star Records will need to divide its market into user groups who share similar tastes, beliefs and values including the characteristics that make them susceptible to a particular marketing exercise. Through successful application of online marketing techniques the organisation can create communities of like-minded consumers, which provide the basis for sales of their products. Research and segmentation will also assist Star Records in determining a strategic distribution plan for its products.
According to Michael Porter in his article Strategy and the Internet, ‘Internet technology provides better opportunities for companies to establish distinctive strategic positionings than did previous generations of information technology’ (Porter 2001).
Star Records folio will determine largely how online offerings are to be strategically communicated to the target market. Successful execution of this will assist in securing a strong position in consumer perceptions of Star Records offerings.
Smith and Chaffey (2001) describe five key online marketing activities (the ‘5Ss’) that can be applied by an organisation to implement various online marketing tactics.
‘The 5Ss are:
* Sell, Serve – Add value
* Speak – Get closer to customers by creating a dialogue, asking questions
* Save – Save costs
Sizzle – Extend the brand online’. * (Smith and Chaffey 2001)
If it assumed that sales are the aim for Star website they must know the on-line music industry well and have knowledge of technical and infrastructure issues. They must also know the target audience well. The main advantage of sales being made online is the ability to sell directly to consumers, without the associated costs of a fixed location or direct sales operation, however traditional retail methods must be considered.
An online sales facility may allow customers to compile their own CDs from samples downloaded via the website or delivered on CD via traditional mail. The provision of free samples or member access to new releases may also be considered. Distribution methods for its offerings and copyright issues will need to be addressed if an online sales function is to be incorporated.
Providing fast and easily accessible products through a clear and easy to use website will also motivate users to make purchases online. The Star Records site would also provide the organisations with cross-promotional opportunities. Star must consider threats to its operations in the form of the piracy and must decide whether to allow single tracks to be downloaded to provide a ‘taster’ to encourage people to buy CDs by more conventional means or to encourage full downloads using online payments with digital security added to discourage copying.
Starbucks and other franchises are expanding in all areas including mainland China and are increasing viewing coffee house CD sales as part of their business. Star Records may be better off integrating online and offline strategies such as using Starbucks or Costas (UK based chain).
An online community focused on generating personal relationships and transactions would provide a service for users in differing time zones and geographical locations as well as encourage customer involvement, help gain feedback and contribute to building brand awareness. Blogs or bulletin board can be implemented similar to the system utilised by Amazon.com, enabling users to rate offerings, write reviews and provide personal referrals and testimonials.
The contents and functionality of the virtual community will be defined by the needs of the target audiences. Online discussions with recording artists, artist information, lyric downloads are simply a few of the available applications.
Chat facilities can also be used to develop personal relationships with the target audience. Special events (‘chat live with the artist’) promotion will encourage repeat visits and generate awareness through word-of-mouth.
E-Mail Newsletters provide an excellent way to obtain new customers and boost sales and can be used to maintain relationship with an existing customer base. Using CRM data Star can customized its e-Newsletter to reflect individual preferences. They should be used to inform users of changes to the site, competitions special events /offers and new releases.
E-mail marketing campaigns can provide Star Records with a cost-effective way to implement promotional campaigns in multiple countries.
A comprehensive and relevant website can also provide cost savings through the provision of product information and support areas. Discussion boards for specific products will also encourage peer support and reduce staff time and input.
Manufacturing and distribution costs of Star Records offerings could be minimized through electronic sales and distribution facilities.
Support material for its artists and music (e.g. lyrics, ringtones, tour dates, photos) can be available online and would help Star in further developing its brand awareness for both its online and offline marketing efforts.
By offering discounts on albums purchased online in a digital format and advertising this via other methods of IMC could generate both new and repeat customers to the Star website.
Issues that need to be taken into consideration by management when undertaking the planning of the website include payment methods / models as well as ways to distribution methods.
Blogs, bulletin boards and e-mails will minimize the initial costs required in marketing a web presence as well as the development and ongoing maintenance costs.
When selling music over the Internet Star must be aware of technical and infrastructure issues.
To be able to benefit fully from the implementation of ecommerce, changes in the sales and procurement functions will be necessary as new demands will be made of the sales personnel and the distribution chains
Underlying sustainable businesses for distributing music online will be technologies that limit who can use downloaded music files, and that can potentially track ownership and usage.
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Dann, S. & Dann, S., 2004. Strategic internet marketing (2nd ed.). Sydney: Wiley.
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Malone, T., Yates, J. and Benjamin, R. (1987) Electronic Markets and Electronic Hierarchies,Communications of the ACM, 30:6, pp. 484-497.
Mohammed, R., Fisher, R., Jaworski, B. & Cahill, A. 2004. Internet marketing: Building advantage in a networked economy (2nd ed.). Boston: McGraw-Hill.
Porter.ME (2001) Strategy and the Internet< http://www.cis.gsu.edu/~emclean/R0103Dp2.pdf >Harvard Business Review, accessed 20/08/2007
Vijay Mahajan.V, 2001, Digital Marketing: Global Strategies from the World’s Leading Experts, John Wiley and Sons
Wind.J, Mahajan.V, 2000; http://www.mccombs.utexas.edu/news/magazine/00f/rules.asp#target;, ‘Key points and excerpts from Digital Marketing’ Mc Combs School of Business, Austin