Chapter 4

Digital marketing strategy

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 Chapter 4 Digital Marketing Strategy

Main topics
• Understanding the impact of digital disruptors
• Digital marketing strategy as a channel marketing strategy
• The scope of digital marketing strategy
• Importance of integrated digital marketing strategy and digital
transformation plan
• How to structure a digital marketing strategy
• Situation analysis
• Competitor analysis
• Setting goals and objectives for digital marketing
• Strategy formulation for digital marketing

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Introduction
This chapter begins by considering an appropriate process
for developing a digital marketing strategy, and then looks
at the following aspects of strategy development:
1. situation review.
2. goal and objective setting.
3. strategy formulation.

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The internal influences include
top-level business objectives,
which influence marketing strategy
and ultimately provide direction for
the digital marketing strategy.
Key external influences include the
market structure and demand,
competitor strategies and
opportunities and threats, in
particular those enabled by new
digital technologies (e.g. mobile
marketing and social media, virtual
reality, Artificial Intelligence) and
marketing tactics (e.g. use of search,
advertising, personalisation and
messaging).

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Digital marketing strategy:
Definition of the capabilities and strategic
initiatives to support marketing and business
objectives an organisaton should deploy to
harness digital media, data and marketing
technology to increase multichannel
engagement with their audiences using digital
devices and platforms.

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 Understanding the impact of digital
disruptors
Digital disruption : Innovations in digital media, data and
marketing technology that enable a change to a new basis for
competition in a market or across markets.
Examples of disruptors are:
Amazon (retail)
 Airbnb (accommodation)
 TripAdvisor (travel)
Uber and DeliverooTM (personal transportation and food
delivery)
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 Digital marketing strategy as a channel
marketing strategy
 Channel marketing strategy :Defines how a company should
set specific objectives for digital channels and how they
integrate with traditional channels, including web, mobile and
social media, and vary its proposition and communications for
this channel.
Customer touchpoints: Communications channels with which
companies interact directly with prospects and customers.
Traditional touchpoints include face to face (in-store or with
sales representatives), phone and mail. Digital touchpoints
include web services, email and, potentially, mobile phones.

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 Digital marketing strategy as a channel
marketing strategy
In order to make best use of digital channels, according to
Fulgoni (2014), there are three priorities for retail
businesses:
1. Eliminate silos and create seamless experiences for
consumers all the way along the path-to-purchase. Look
for ways to bring together the on-and offline worlds and
avoid isolated marketing campaigns, which do not
integrate. If there is any friction along the journey a
shopper is likely to defect to another supplier (e.g. if a
retailer sells products at different prices online to in-
store).
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 Digital marketing strategy as a channel
marketing strategy

2. Increase opportunities to digitally interact by

understanding more about their paths-to-purchase (e.g.
provide incentives along the way through digital advertising
and mobile promotions).
3. Analyse and measure consumer behaviour at all
touchpoints in order to develop deep and insightful
understanding of what is driving shoppers’ choices and
purchase decisions.

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 Digital marketing strategy as a channel marketing strategy

 The focus of digital marketing strategy is decisions about

how to use digital channels to support existing marketing
strategies, how to exploit its strengths and manage its weak-
nesses, and to use it in conjunction with other channels as
part of a multichannel marketing strategy.
Multichannel marketing strategy: Defines how
different marketing channels should integrate and
support each other in terms of their proposition
development and communications based on their
relative merits for the customer and the company.
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 The scope of digital marketing strategy
Enhancing website experiences that are effective for mobile and
desktop users will be a central part of the strategy, but digital
marketers should also examine broader issues of how to:
• use marketing automation tools for customer relationship
development
• develop the overall customer experience across multiple channels
• maximise the results from partnering and advertising with online
intermediaries such as publishers, and influencers such as bloggers
• harness social media marketing, both through use on its own site
through user-generated content and through paid ads within the
main social networks such as Facebook, Instagram, LinkedIn and
Twitter
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The scope of digital marketing strategy
 Strategy development may also involve redesigning
business processes to integrate with partners, e.g.,
suppliers and distributors.
 As the Internet and digitally enhanced trading
environments are more widely adopted, the scope
for redesigning business processes extends even
further.
 Marketers not only need to look for opportunities
to use technology to enhance their offer but must
also ensure they protect their competitive
positioning
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Importance of integrated digital marketing
strategy and digital transformation
There are many aspects of managing digital media and technology
to consider when seeking to integrate digital marketing across an
organisation:
1. • gaining buy-in and budget consistent with audience media
consumption and value generated;
2. • conflicts of ownership and tensions between a digital team and
other teams such as traditional marketing, IT, finance and senior
management;
3. • coordination with different channels in conjunction with teams
managing marketing programmes elsewhere in the business;

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 Importance of integrated digital
marketing strategy and digital
transformation
• managing and integrating customer information about
characteristics and behaviours collected online;
• achieving consistent reporting, review, analysis and follow-up
actions of digital marketing results throughout the business;
• structuring the specialist digital team and integrating into the
organisation by changing responsibilities elsewhere in the
organisation;
• ‘ time to market ’ for implementing new functionality on a site
Note : (quick) (time to market (TTM) is the length of time it takes
from a product being conceived until its being available for sale.)
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 Importance of integrated digital
marketing strategy and digital
transformation

Digital transformation: A staged programme of

business improvements to people, processes
and tools used for integrated digital marketing
to maximise the potential contribution of
digital technology and media to business
growth.
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 Importance of integrated digital
marketing strategy and digital
transformation
Given the scope and importance of digital marketing for many
organisations, many large organisations are now implementing
digital transformation programmes, which have these features:
1. • Gain agreement of long-term term digital marketing strategy
and investment levels between relevant parts of an
organisation, i.e. senior management team, marketing,
corporate communications/brand, e-commerce/trading, IT and
data management.
2. • Broad scope covering resource investment for digital media,
data management and marketing technology.

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 Importance of integrated digital
marketing strategy and digital
transformation
• Consider changes to process, structure and skills (internal
and resources) needed to implement change and agree
integration of communications across traditional and digital
channels.
• Review approach to insight, measurement and
improvement, e.g. agreeing relevant KPIs (Key Performance
Indicator), dashboards to review them and use of structured
experiments to make improvements.
• Define a roadmap and change programme for
implementing changes
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 Hierarchy of organisation plans including
digital marketing plans
The figure shows how the digital marketing plan supports
other strategic and tactical initiatives.

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 Table 4.2 Digital Marketing Planning failures and solutions
Potential failure or problem Potential solution
Underestimated customer Research demand, set objectives,
demand for online services allocate sufficient resources

Intense competition from Analyse the market, especially the

existing and new market intensity of rivalry, anticipate
entrants who may spark digital competitive responses, plan a clear
disruption in sector through market entry strategy or potential
new business or revenue changes to business and revenue
models models

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 Table 4.2 Digital Marketing Planning failures and solutions
Potential failure or problem Potential solution

Duplication of resources Improve internal communications to

avoid different parts of the marketing
organisation purchasing different tools
or different agencies for performing
similar online marketing tasks

Ensure budget and specific specialist

Insufficient resources and digital skills are available to support
capabilities the strategic initiatives including
‘always-on’ activities to continuously
engage audiences using search, social
and email marketing

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 Table 4.2 Digital Marketing Planning failures and
solutions (Continued)
Potential failure or problem Potential solution

Relevant customer data Research to ensure best possible

not collected or utilised knowledge of target customers; integrate
customer data into existing systems

Measure and analyse frequently to take

Lack of control corrective action to ensure achievement of
objectives

Ensure support for a long-term digital

Lack of senior transformation plan as this will be needed
management support to drive major strategic initiatives

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strategy
The Internet has increased the importance of strategy. Businesses
should be cautious and suggested and should focus when
developing their strategy.
Porter suggested six principles that could help to sustain a
distinctive strategic position:
1. Start with the right goal , which is grounded in real economic
value.
2. Define a value proposition, which is unique but, importantly,
deliverable.
3. Do things differently; create a distinctive value chain.

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 How to structure a digital
marketing strategy
4. Be prepared to make trade-offs (a compromise),
tailoring a firm’s activities to outperform rivals.
5. Create a fit between what the company does,
where it wants to be and the resources available.
6. Establish continuity. Planning decisions follow
the distinctive position set out by the original goals.

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 How to structure a digital
marketing strategy
Strategy process model: A framework for
approaching strategy development

Marketing planning: A logical sequence and

a series of activities leading to the setting of
marketing objectives and the formulation of
plans for achieving them.

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The SOSTAC® planning framework applied to digital
marketing strategy development

Source: Chaffey and Smith (2012)

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 How to structure a digital
marketing strategy
The elements of SOSTAC®planning in the context of how they are
described in this text with respect to digital marketing strategy are:
1/ Situation analysis means ‘where are we now?’.
Planning activities involved at this stage include
performing an Internet-specific SWOT analysis, and
reviewing the different aspects of the micro-
environment including customers, competitors and
intermediaries. Situation analysis also involves review
of the macro-environment .

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 How to structure a digital
marketing strategy
2/ Objectives means ‘where do we want to be?’ . This can
include a vision for digital channels, and also specific
numerical objectives for the digital channels such as
projections of sales volumes and cost savings.

3/ Strategy means ‘how do we get there?’. Strategy

summarises how to achieve the objectives for the different
decision points explained in this chapter, including
segmentation, target-ing, proposition development, including
the elements of the marketing mix and CRM .
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 How to structure a digital
marketing strategy
4/ Tactics defines the usage of tactical digital communications
tools. This includes specific details of the marketing mix ,CRM ,
experience and digital communications.
5/ Actions refers to action plans, change management and
project management skills.
6/ Control looks at the use of management information
including web analytics to assess whether strategic and
tactical objectives are achieved and how improvements can
be made to enhance results further.

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 How to structure a digital
marketing strategy
Prescriptive strategy: The three core areas of
strategic analysis, strategic development and
strategy implementation are linked together in
sequence

Emergent strategy: Strategic analysis, strategic

development and strategy implementation are
interrelated and are developed together in a more
agile fashion.
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 Situation analysis
Situation analysis: Collection and review of information about
an organisation’s internal processes and resources and
external marketplace factors in order to inform strategy
definition.
Situation analysis involves:
1. Assessment of internal capabilities, resources and processes
of the company and a review of its activity in the
marketplace.
2. Investigation of the wider environment in which a company
operates, including economic development, government
regulations, legal issues and taxation, social and ethical
issues, e.g. data protection and consumer privacy
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 Internal audit for digital marketing
According to Chaffey and Smith (2012), key performance indicators
(KPIs) for an online presence include:
• unique visitors: the number of separate, individual visitors to the
site;
• total numbers: of sessions or visits to the website;
• repeat visits: average number of visits per individual;
• duration: average length of time visitors spend on the site;
• conversion rates: the percentage of visitors converting to
subscribers (or becoming customers);
• attrition rates: through the online buying process;
• churn rates: percentage of subscribers lapsing or unsubscribing
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 customer research

A customer’s profile can strongly influence

where, when and how they engage with
digital channels and also has important
digital marketing implications.

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 Resource analysis
Resource analysis: Review of the technological, financial and
human resources of an organisation and how they are utilised in
business processes.
1. • Financial resources. The cost components of running an
online presence, including site development, promotion...
Mismatch between current spend and required spend to
achieve visibility within the online marketplace should be
reviewed using tools.
2. • Technology infrastructure resources. Availability and
performance (speed) of website and service-level agreements
with the Internet service provider. The need for different
applications to enhance the customer experience or increase
conversion rates can be assessed (e.g. on-site search, customer
review or customisation facilities).
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 Resource analysis
4. • Data and insight resources. The quality of data and
tools to analyse the performance of digital channels and
consumer characteristics and behaviour including
multichannel attribution to decide on the impact and
effectiveness of different digital media channels and
touchpoints.
5. • Human resources. Availability for an e-retailer includes
service and fulfilment resources for answering customer
queries and dispatching goods.
6. • Strengths and weaknesses. SWOT analysis is referred
to in the next section, where generic strengths and
weaknesses . Companies will also assess their distinctive
competencies
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Competitor analysis
Competitor analysis or the monitoring of competitor use of
digital marketing and e-commerce to acquire and retain
customers is especially important in the dynamic online
marketplace. Benchmarking is intended to:
•review current approaches to digital marketing to identify
areas for improvement
•benchmark with competitors who are in the same market
sector or industry and in different sectors
•identify best practice from more advanced adopters
•set targets and develop strategies for improving capabilities.

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Generic digital channel-specific SWOT analysis
showing typical opportunities and threats presented by digital media

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 Setting goals and objectives for digital
marketing
 Any marketing strategy should be based on clearly
defined corporate objectives, and digital marketing
should be an integrated element not considered
independent from other business and marketing
objectives.
When defining objectives and goals you should use
clear definitions. For digital marketing you can define
different types of performance targets and measures,
as shown in Figure 4.10:
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Figure 4.10 The relationship between
vision, goals, objectives and KPIs

Critical Success Factor; Key Performance Indicator

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The online revenue contribution:

 Online revenue contribution: An assessment of the direct

contribution of the Internet or other digital media to sales,
usually expressed as a percentage of overall sales revenue.
Allowable cost per acquisition: A target maximum cost for
generating leads or new customers profitably.
Online promotion contribution: This is an assessment of
the proportion of customers (new or retained) who are
influenced and reached by online communications.

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Setting SMART objectives :
SMART stands for:

Specific. Is the objective sufficiently detailed to measure real-world

problems and opportunities?
 Measurable. Can a quantitative or qualitative attribute be applied to
create a metric?
 Actionable. Can the information be used to improve performance? If
the objective doesn’t change behaviour in staff to help them improve
performance, there is little point in it!
 Relevant. Can the information be applied to the specific problem faced
by the manager?
 Time-related. Can the information be constrained through time?

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Frameworks for objective setting:

Key performance indicators: (KPIs) Metrics used to

assess the performance of a process and/or whether set
goals are achieved.
Leading performance indicator: A measure that is
suggestive of future performance and so can be used to
take proactive action to shape future performance.
Lagging performance indicator: A measure that indicates
past performance. Corrective action can then be applied
to improve performance.

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Strategy formulation for digital marketing

Strategy formulation: Generation, review and selection of strategies to

achieve strategic objectives.
Digital marketing strategy is a channel marketing strategy and should:
1. • be based on objectives for online contribution of leads and sales for
this channel;
2. • be consistent with the types of customers that use and can be
effectively reached through the channel;
3. • support the customer journey as they select and purchase products
using this channel in combination with other channels;
4. • define a unique, differential proposition for the channel

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Strategy formulation for digital marketing

5. • specify how this proposition is communicated to persuade

customers to use online services in conjunction with other
channels;
6. • manage the online customer lifecycle through the stages
of attracting visitors to the website, converting them to
customers and retention and growth;
7. • be consistent with the types of customers that use and
can be effectively reached through the digital
communications channels and targeted using online tactical
marketing segmentation
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Strategy formulation for digital marketing
 The firstfour are concerned with fundamental
questions of how an organisation delivers value to
customers online and which products are offered to
which markets online.
 The next four are more concerned with the mix of
marketing communications used to communicate
with customers across multiple channels and the
final decision refers to organisation and governance.

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Key decisions in strategy development:

1. Market and product development strategies

2. Business and revenue models strategies
3. Target marketing strategy
4. Positioning and differentiation strategy
5. Customer engagement and social media strategy
6. Multichannel distribution strategy
7. Multichannel communication strategy
8. Online communications mix and budget
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 Decision 1: Market and product development strategies

The market and product development matrix

(Figure 4.11) can help identify strategies to
increase sales volume through varying what
is sold (the product dimension on the
horizontal axis of Figure 4.11)

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Figure 4.11 Using digital channels to support different organisational growth strategies

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Decision 2: Business and revenue models strategies
 Strategy formulation often requires companies to evaluate
new models, since to survive in the digital age means
companies need to continually innovate in order to defend
market share from competitors and new entrants.
 Companies at the leading edge of technology such as
Facebook and Google constantly innovate through acquiring
other companies and internal research and development.
 Business model: A summary of how a company will generate
revenue, identifying its product offering, value-added services,
revenue sources and target customers.
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 Decision 3: Target marketing strategy

 Targetmarketing strategy: Evaluation and selection

of appropriate market segments and the
development of appropriate offers.

 Strategic market segmentation: A grouping of

customer types defined by their value to a business
and common characteristics, needs or psychographic
profiles.

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Decision 4:Positioning and differentiation strategy (including the
marketing mix)

 Positioning defines how a company wants to compete and

this is determined by the chosen market segmentation, the
actual target market and the differential advantage offered
by the product or service. The key to this stage of decision-
making is to focus on the minds of customers in the chosen
target markets.
 Key decisions are about how to enter the minds of the
prospective customer, which is the position where the brand
wishes to be (as shown in Figure 4.16)

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Figure 4.16 Alternative positionings for online
services

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 Decision 4:Positioning and differentiation strategy (including
the marketing mix)
 Differential advantage: A desirable attribute of a product offering
that is not currently matched by competitor offerings.
Many businesses have differentiated their own line offer by using
price, for example:
Retailers: offering lower prices online
Airlines: offering lower-cost flights for online bookings.
Online value proposition (OVP): A statement of the benefits of
online services reinforces the core proposition and differentiates
from an organisation’s offline offering and those of competitors

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 Decision 5: Customer engagement and social media strategy
 Customer engagement strategy: A strategy to encourage
interaction and participation of consumers with a brand through
developing content and experiences with the aim of meeting
commercial objectives. It is closely related to the development of
content marketing and social media strategy.
 Social media strategy: A definition of the marketing
communications used to achieve interaction with social network
users to meet business goals. The scope of social media
optimisation also includes incorporation of social features such as
status updates and sharing widgets into company websites.

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 Decision 5: Customer engagement and social media strategy
Some key questions to consider:
Question 1. Who are our target audience?
Question 2. What are the content preferences of our audiences?
Question 3. Which content types should have priority?
Question 4. How do we differentiate the social channel from other communications
channels?
Question 5. Should we consider content frequency and an editorial calendar?
Question 6. How do we manage publication and interaction?
Question 7. Should we use software for managing the publishing process?
Question 8. Should we be tracking the business impact of social network activity?
Question 9. How do we optimise the social presence?

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 Decision 6: Multichannel distribution strategy
 Distribution channels: The mechanism by which
products are directed to customers, either through
intermediaries or directly.
 Clicks and mortar: A business combining an online
and offline presence.
Clicks-only (Internet pureplay): An organisation
with principally an online presence. It does not
operate a mail-order operation or promote inbound
phone orders.
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Decision 7: Multichannel communications strategy
Customer communications channels refer to how an organisation
influences its customers to select products and suppliers through
the different stages of the buying process through inbound and
outbound communications.
For a retailer, these channels include in-store, contact-centre, web
and outbound direct messaging used to communicate with
prospects and customers:
Some of these channels may be broken down further into different
media (e.g. the contact-centre may involve inbound phone
enquiries, email enquiries or real-time chat).
Outbound direct messaging may involve direct mail, email media
or web-based personalisation.
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Decision 7: Multichannel communications
strategy
The multichannel communications strategy must assess the balance
between:
• Customer channel preferences. Some customers will prefer online
channels for product selection or making enquiries while others will
prefer traditional channels.
• Organisation channel preferences. Traditional channels tend to be
more expensive to service than digital channels for the company;
however, it is important to assess effectiveness and the ability of channels
to convert the customer to sale (e.g. a customer who responds to a TV ad
to buy car insurance may be more likely to purchase if they enquire by
phone in comparison to web enquiry) or in developing customer loyalty
(the personal touch available through face-to-face or phone contact may
result in a better experience for some customers, which engenders
loyalty).
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 Figure 4.19 Influences on customers of
multichannel decision making

Source: adapted from Dholakia et al. (2010)

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Decision 8: Online communications mix and budget
The decision on the amount of spending on online
communications and the mix between the different
communications techniques such as search engine
marketing, affiliate marketing, email marketing and online
advertising closely relates to Decision6.

They suggest using a scorecard, which is based on

performance drivers or critical success factors, e.g. costs for
acquisition and retention, conversion rates of visitors to
buyers to repeat buyers.
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 Decision 8: Online communications mix and budget

There are three main parts to their scorecard:

1. Attraction. Size of visitor base, visitor acquisition cost and visitor
advertising revenue (e.g. media sites).
2. Conversion. Customer base, customer acquisition costs, customer
conversion rate, number of transactions per customer, revenue per
transaction, revenue per customer, customer gross income,
customer maintenance cost, customer operating income, customer
churn rate, customer operating income before marketing spending.
3. Retention. This uses similar measures to those for conversion
customers

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