October 30, 2007

Online Marketing in four simple steps

SYNERGY: The Organizational Integration

Creating an online presence is one thing but making this part of your organization and its network is another. These are the issues that the Synergy in the Web Marketing Mix model is dealing with.
Integration into the organizational processes, value chain and network is a process often underestimated by web designers and site operators. Yet this can make the difference between functional and dysfunctional web sites, between online success and failure.
What is exactly the Synergy and what are the main issues underpinning the integration of the online and the offline organization? Synergy is the integrating processes necessary for realising the virtual organisation’s objectives. Synergies can develop between the virtual and the physical organisation as well as between the virtual organisation and third parties. This Synergy factor embraces a wide range of issues divided into three categories of integration: The Front Office, the Back Office and the Third Parties.

a. The Front Office Integration. Refers to integration of the company web presence with the conventional above the line marketing activities i.e. the corporate communication and product distribution. That means the full integration of the Web operation into the company’s communication plan (advertisement, promotions, PR) as well as the existing channel structures.
It makes a lot of sense to integrate the online presence part of the marketing program by assimilating for example the promotion of the virtual activities into the current promotional plan. The effort must be focused on utilising existing communication strategies, brands, tools and channels in order to promote and support the Web operation during the introduction stage. The objective of this communication is to inform existing as well as potential customers about the firm’s Web activities and communicate to target markets the advantages of doing business online.
In addition to the promotional integration the web operation must become an integral part of the existing distribution structures. Depending on the type of the firm distribution structure this integration can face different degrees of difficulty. The easiest case manifests itself when existing distribution models can accommodate the online distribution requirements without serious changes and disruption of existing operations. Mail-order or telephone sales firms had no difficulty whatsoever to use the existing distribution structures for virtual operations.

b. The Back Office Integration. The second type of synergy refers to integration of the web activities into the value-adding organizational activities like production, fulfilment, logistics and Total Quality Management. Often firms underestimate the effects of online operations on their operations, something resulting in bottlenecks and unhappy customers. The web forces many firms to review their traditional methods and find ways to improve their efficiency: Online customers require customize rather than mass products and the disintermediation of the Internet means that organizations must be able to respond directly to changes in demand levels without the luxury of the dealer’s buffer inventory; firms are forced to introduce lean and clean production and logistics structures.
Other organizational integration issues often overlooked are the assimilation of the web activity into the legacy TQM and control systems, ERP Systems and Databases. While these types of integration seem trivial they often become the reason of major bottlenecks and source of customer dissatisfaction.

c. Third party Integration. Until last year when I was referring to this type of integration I was talking about integrating the web activities into the organizational value chain by finding how to create win-win situations with channel partners and avoid channel conflicts. Another form of third party integration refers to finding other parties and co-operate with them in order to increase your online exposure and attract more customers. In this sense search engine optimization and affiliate marketing can be very useful tools.
However the last years another form of third party integration emerges. With the advent of the Web 2.0 and the Social Media, online firms and traditional companies must explore the available options to utilize such media as part of their online networks but also as means of informing their customers, listening to their wishes or complaints and influencing their buying behavior. Using the social media as marketing tools is a very interesting yet complicated issue but worthwhile to look at: according to a recent study of Deloitte Touche in the USA 62% of the US consumers read consumer-generated online reviews and 98% of them find these reviews reliable enough while 80% of these consumers say that reading reviews has affected their buying intentions. Engaging the social media as means to influence consumers is the secret of the tremendous success of companies like Amazon.com and it is also the dream of every direct marketer.

Next week: The Technology Issues (SYSTEM)
Details: The 4S Web Marketing Mix