A customer oriented value chain that places the customer as the center of attention, with information flows passing from a business to its customer for all facets of its operations, except for its own procurement where the firm interfaces with its suppliers.

However, to the extent that a procurement process affects production or delivery of a good, information may be shared with the customer. For example, insight enterprises, is electronically linked to nine of its own suppliers. When one of insights customers requests the availability of an item not stocked by insights ware house, insight checks the inventory availability of its suppliers in real time. All of this occurs seamlessly to the customer, who merely receives inventory availability data displayed to it by insights computer.

The four Ps of marketing product, pricing, place and distribution are examined and discussed within the context of the customer oriented value chain and internet marketing. Figure below illustrates the relationship between the customer oriented value chain and the four Ps and a fifth P personalization. In essence, the customer oriented value chain model, because of its focus in serving the customer during all phases, necessities the synthesis of business internet marketing techniques into virtually all business processes.

Product

A product is a good or service that a business offers to its customers. Without some sort of viable product

to offer, a business internet marketing cannot survive. The product component frequently mentioned in the marketing literature is placed in the production section of the customer oriented value chain. Traditional physical goods generally have a physical, tangible presence and include items such as automobiles, grocery items and printed newspapers. Traditional service products generally involve the performance of a task for the customer; examples include work performed by doctors, accountants, hair dresses and actors.

Pricing

The pricing of a good relates to the processes involved in determining the amount to charge for a specific physical good or service. Pricing models are typically used to determine a firms price. The firms strategy typically dictates the type of pricing model chosen such as a high volume, low price penetration strategy. Physical goods are frequently discounted if a large enough quantity is ordered.

Frequent purchase systems are also being used to help strengthen customer loyalty and encourage repeat buying. Because of the development of search engines, customers are easily able to compare prices of many goods offered for sale on the internet. Online auctions are a popular method for selling items on the internet. Low minimum prices are typically set, with bidders typically bidding the prices up to a fair price. One of the interesting methods of pricing the goods on the internet is through offers made by consumers.

Place (Distribution)

Place is frequently referred to as outbound logistics or distribution. The distribution task entails moving the product from the producer to the customer. The product could travel straight from the producer to the consumer or it may be channeled through intermediaries, such as wholesalers, warehouses and or retailers.

Electronic commerce involving the sale of physical goods can be very useful in exchanging information between businesses and delivery companies. The interfacing of sales or purchasing systems with delivery companies enables faster pick up of goods from ware houses and shop floors for faster delivery to the customer.

The physical internet itself is also a delivery channel for digital products. Digital products are goods that are comprised of digitally encoded software, data or multimedia files.

Promotion

The sales and business internet marketing function is a different entity in the customer oriented value chain, and the activities performed in this capacity fall under the traditional marketing category called promotion. The successful promotion of product needs that, at a minimum, a positive message be received by potential customers. This message may be communicated in many ways:

Paid advertising channels

News stories and press releases

Word of mouth

Consumers personal experiences and

Packaging

The first technique, paid advertising channels, is a common method used by companies. Typically a firm will have an advertising budget, and the funds are allocated amongst many competing advertising media, such as newspaper, magazine, direct-mail, television, radio, bill boards, and special events. Use of internet creates an awareness of products is a relatively low cost and increasingly effective medium. Internet marketing firms are aggressively selling their services to businesses. These marketing firms provide the service of attracting WWW users to specific client web sites.

The advertising channels are labeled as one-way or two-way channels. One-way channels send a message to the potential customer, but do not provide a direct mechanism for communication to the business.

Examples of one-way communication include radio, roadside bulletin boards, television, magazines, newspaper and most direct mail. Two-way channels send the message to the potential customer and provide a direct mechanism for communication from the potential customer to the business.

Examples of two-way channels include some direct mail via phone responses and inquiries, infomercials via phone responses and inquiries, telemarketing, website advertising via forms based input, electronic mail with hypertext links to interactive websites or via a reply function and web banner that link to interactive websites.

In addition to the paid advertising mediums, three additional, very powerful advertising mechanisms are available: new stories, word of mouth and customers personal experiences. The message sent out by these mechanisms can be positive or negative. Negative messages can be very detrimental to a companys success, while positive messages can help to strengthen a companys reputation and sales base. Controlled advertising mechanisms are important because word of mouth is not controllable, and the business internet marketing allows both of occur with a new speed and reach.

Another aspect of promotion is the sharing of information with customers. Businesses are increasingly informing customers beyond inventory availability, price, and product details. Customers are receiving information regarding the shipping status of products, and the sharing of such information is often used as a promotional tool.

Personalization the fifth P

The internet is leading marketers to a fundamental paradigm shift from mass marketing to personalized marketing. Databases, cookies and telecommunications technology make it very easy and cost-efficient to mass market personalized services.

Personalization on the internet offers to the ability if customers to receive personalized information or visit a website with a home page customized for them. Personalization crosses the boundaries of two of the marketing Ps, product and promotion, because it has the potential to impact and enhance both. Because personalization is automated and it is at the core of many internet marketing methods, it is deemed important enough to hold its own category.