While the Internet is a dynamic, highly-effective marketing medium, its ability to return a profit has, for the most part, been unproven. One possibility is to combine on-line and off-line marketing strategies. This article describes a practice-oriented model that could enable marketers to achieve that goal. On-line and off-line tactics can not only complement each other but also achieve a distinct synergy that can have a direct impact on marketing costs.
Marketers around the world are becoming more concerned about the viability of business-to-consumer marketing on the Internet. Amazon.com, which practically invented Internet marketing, has deployed a number of innovative strategies on the Net, yet it has not been able to put up a significant financial performance. Apart from books and music, services are another category that is frequently marketed on the Net. In this case, too, solid profitability has been elusive. One possibility for increasing the Web’s effectiveness is to combine on-line and off-line strategies. This article describes a practice-oriented model that could enable marketers to achieve that goal.
DIMENSIONS OF ON-LINE MARKETING
According to marketing consultant Al Ries, on-line marketing is most appropriate in four cases: when the offering is a service; when pricing is very important; when the offering is a non-fashion product; and when the costs of delivering the product (e.g., groceries) are not significant. For example, the Internet’s interactivity makes it a highly suitable medium for customized offerings like travel and financial services, given the high volume of queries generated by consumers searching for those services.
On-line marketing can build a strong base of loyal consumers who could also bring in more consumers through referrals. For example, on-line auctioneer eBay has found that consumers tend to rely on people who have referred them to its site rather than turn to eBay’s support staff for advice and guidance.
These factors that support loyalty could be more important in on-line marketing than in physical, off-line marketing. Amazon.com has created adequate trust and credibility among consumers, and most people provide the company with adequate information about themselves so that they can conduct their repeat purchases with significant ease. Fabmart, an Indian on-line marketing company which started by selling books and music, has added an innovative service—supplying groceries to parents of Non-Resident Indians (NRIs) abroad. Given the high purchasing power of these young NRI professionals, the company was sensitive to the warmth and caring feelings these professionals have towards their parents. The company started a service that enables NRI consumers to buy and arrange for the delivery of groceries to their parents in India. Fabmart is perceived as a brand that can be trusted to carry out the service.
On the flip side, on-line retailers marketing mundane, fast-moving consumer goods (FMCG) may have to concentrate on building brand personality rather than attempting to provide value on the offering, given the frequent off-line sales promotions and bargain deals.
Marketers selling durables like cars, refrigerators and television sets need to know that, apart from providing in-depth information on features and benefits and comparisons among brands, they need to use on-line marketing tools that draw consumers to the retail outlet, since “feel” aspects are still important for most durable goods. The “feel-think-buy” model is one that consumers have been used to for several years with regard to durables. Changing this behaviour radically with on-line strategies like huge price discounts or freebies for Net shopping could create dissonance among consumers of high-involvement purchases (products which have significance to buyers due to their functional or symbolic/status appeals). Consequently, there is a strong need to use both on-line and off-line strategies for durables to ensure appropriate brand-building.
A FRAMEWORK FOR COMBINING STRATEGIES
The framework in Figure 1 consists of four quadrants based on two parameters: type of product and type of consumers buying the product.
In Figure 1, BRAND TASTERS are either new to FMCG categories or they are trying out the brand for the first time. In the Indian context, “new to the category” consumers are those who graduate from a non-branded product to the branded offering (detergents, toothpastes and shampoo are categories where entry-level brands may be required). AIM in toothpastes, Wheel in detergents, and Clinic Plus in the shampoo category are examples. Brand-building is attempted through entry-level pricing (penetration pricing) along with high-visibility campaigns in the mass media (as the offerings target mass markets). The upgrading type of consumers are in the purchase stage of the decision-making process (need, information search, evaluation of alternatives, purchase and post-purchase are the various stages in consumer decision-making). They are familiar with the product category, and so the pricing and promotional strategies could motivate them to try the brand. Marketers could also attempt free sampling to enhance trials. However, a high degree of sales promotion (freebies) is likely to dilute the image of the brand.
In the case of on-line marketing to such consumers, the marketer should focus on premium brands (as consumers owning computers are not likely to be entry-level consumers in the categories cited). In turn, the focus should be on building and reinforcing the brand personality. For example, for a brand like Close-Up toothpaste, a Web site reinforcing the brand personality (young, extroverted, outdoor-oriented and modern) is likely to appeal to the “new” consumers who are attempting to switch brands in the product category.
A marketer should also constantly try to introduce brands that offer significant perceived differentiation to these new consumers. Dove moisturizer bar (soap) is an example. A Web site could elaborate on the benefits offered by the state-of-the-art ingredients used by such brands (whether it is soaps, detergents or shampoos). The site should encourage consumers to reflect on their queries about the new offerings. It would also be a good idea to provide information on the types of problems associated with the product category. Stain removal for a detergent company like P&G, or problems related to baby foods/health for a company like Nestlé, calls for specific, in-depth information that consumers need to evaluate different products. These consumers would buy the premium brand (unlike the entry-level consumers) if they find the brand to be credible.
BRAND-ID in Figure 1 represents a set of loyal consumers who identify with the brand. Though these consumers can be categorized as “loyal,” the loyalty could be divided. For instance, some consumers may be trying out different brands of soaps but may choose to buy a specific brand with greater frequency. Off-line strategies would include segmenting these loyal consumers by retail outlets (by appropriate methods of monitoring their purchases) and offering them points which they could redeem for a company’s products depending on the frequency of purchase. The new-offering launch, with associated on-line information to create awareness of various aspects, as suggested earlier for Brand Tasters, is also applicable because these consumers may become new consumers of a competitive brand if such strategies are not formulated.
Event marketing for the target segment could also sustain interest and excitement around the brand. The event has to be in tune with the personality of the brand. For example, Coke could organize a game/contest that the target segment would perceive as “fun and refreshing.” A fast-food brand could organize a contest on innovative recipes to reinforce its perception as a brand that tastes good and can be used in a variety of recipes. Children could also be a part of the contest to emphasize the “warmth and family” feeling.
HOPEFULS represent a set of consumers who are trying out a new brand of a durable product (TV, refrigerator or washing machine). This segment could also consist of a set of consumers who are entering the product category for the first time and hence may choose a brand or model which has an entry-level price. Word of mouth (or buzz) could be a very effective on-line strategy if a brand can build off-line credibility. Off-line credibility involves offering good value in the product itself, good service after the sale is over, and good rapport with the retailer. It should be noted that a satisfied customer (post-purchase stage of the decision-making process) may like to buy other products made by the company, probably from the same retailer where he bought the brand initially.
Once a brand is able to build up credibility, it could leverage its equity in on-line marketing. This could be done by offering a chat room for satisfied users of the brand, by projecting the good track record of the company with regard to service and by encouraging the consumer to take a look at the brand at the nearest retail outlet. Depending on the demand in a specific geographic area, small incentives may also be provided to the consumer. This is an attempt to push the brand into the “choice set” of the consumer, who may be evaluating a set of brands before buying a durable product with a substantial price. The on-line strategies should be pursued simultaneously with off-line strategies, like advertising in the appropriate media and demonstrations at specific outlets. It is important to reassure the HOPEFULS that they have made the right choice after they have bought the brand. This could be done with follow-up visits for a specific length of time. This eliminates dissonance in the mind of the consumer who has chosen the brand.
LIFE CONSUMERS in Figure 1 indicates those consumers who are likely to repeat-buy the brand in the respective category and also buy the brand’s other products. The repeat purchase may also involve buying an updated version of the offering (with more features/benefits). On-line strategies include developing a database of consumers (with demographics and psychographics which give information on the lifestyle of these consumers), and identifying specific segments that are ready to repeat-buy, or ready to buy another durable product that offers a specific calue deal. For example, a consumer who has bought an Electrolux refrigerator may buy a washing machine at a later point in time, so the onus is on Electrolux to market its brand of washing machines to this consumer. If there is a segment that frequently travels by air, the brand could have a tie-in with an airline and offer privileges on air travel. Ready-made clothing, hotels and theme parks are other categories that could be associated with the value deal.
The Internet helps the brand to constantly stay in touch with consumers who have bought the brand and to elicit information at various stages in the relationship. On-line newsletters, product updates, timely offers based on readiness, and on-line community building are some of the tools that can be used to keep in touch. Users of the brand could form a club, as in the case of Harley-Davidson motorcycles. This creates an emotional feeling towards the brand that could forge a relationship with consumers and, in the end, also lead to referrals.
