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Business internet marketing involves applying traditional marketing principles, often referred to as the "Four Ps" (Product, Pricing, Place, and Promotion), to the digital realm. This approach centers on a customer-oriented value chain, leveraging online tools and strategies to connect with consumers more effectively. Modern internet marketing also introduces a crucial "Fifth P": Personalization, which tailors experiences to individual customer needs.

How Do the Four Ps Apply to Internet Marketing?

A customer-oriented value chain places the customer at the center of attention, with information flowing from the business to its customers across all operational facets, except for its own procurement process where the firm interacts with suppliers. However, if a procurement process impacts the production or delivery of a good, relevant information may be shared with the customer.

For example, a business might electronically link with its suppliers. When a customer requests an item not stocked in the business's warehouse, the system can check supplier inventory in real time. This process is seamless to the customer, who simply receives immediate inventory availability data from the business's computer.

The traditional Four Ps of marketing—Product, Pricing, Place (Distribution), and Promotion—are re-examined within the context of this customer-oriented value chain and internet marketing. The model emphasizes serving the customer throughout all phases, necessitating the integration of business internet marketing techniques into virtually all business processes. An additional "Fifth P," Personalization, further enhances this customer focus.

What is a Product in Internet Marketing?

A product is any good or service a business offers to its customers. Without a viable product, a business cannot thrive. In the customer-oriented value chain, the product component is often situated within the production section.

Traditional physical goods have a tangible presence, such as automobiles, groceries, or printed newspapers. Traditional service products involve performing a task for the customer, like work done by doctors, accountants, or hairstylists. Internet marketing applies to both categories, facilitating how these goods and services are presented and sold online.

How Does Pricing Work in Internet Marketing?

Pricing involves determining the amount to charge for a specific physical good or service. Businesses typically use various pricing models based on their strategy, such as a high-volume, low-price penetration approach. Physical goods are often discounted for larger quantity orders.

Frequent purchase systems are also widely used to build customer loyalty and encourage repeat buying. The internet has made it easy for customers to compare prices of many goods offered online through search engines. Online auctions are another popular method for selling items, where low minimum prices are set, and bidders drive prices up. Interestingly, some internet pricing models even allow consumers to make offers directly.

What is 'Place' (Distribution) in Internet Marketing?

'Place' is often referred to as outbound logistics or distribution, encompassing the task of moving a product from the producer to the customer. The product might go directly from producer to consumer, or it may pass through intermediaries like wholesalers, warehouses, or retailers.

Electronic commerce for physical goods greatly enhances information exchange between businesses and delivery companies. Integrating sales or purchasing systems with delivery services allows for faster pickup of goods from warehouses and shop floors, leading to quicker delivery to the customer. Furthermore, the internet itself serves as a direct delivery channel for digital products, which are goods comprised of digitally encoded software, data, or multimedia files.

How Does Promotion Work in Internet Marketing?

The sales and business internet marketing function, known as promotion, is a distinct entity within the customer-oriented value chain. Successful promotion requires that potential customers receive a positive message, which can be communicated in several ways:

Paid advertising is a common method, with firms allocating budgets across various media like newspapers, magazines, direct mail, television, radio, billboards, and special events. The internet offers a relatively low-cost and increasingly effective medium for creating product awareness. Internet marketing firms actively sell services to businesses, focusing on attracting web users to specific client websites.

Advertising channels can be categorized as one-way or two-way. One-way channels send a message without providing a direct mechanism for the customer to communicate back to the business. Examples include radio, roadside billboards, television, magazines, newspapers, and most direct mail.

Two-way channels, however, send a message and offer a direct mechanism for communication from the potential customer to the business. Examples include some direct mail with phone responses, infomercials with phone inquiries, telemarketing, website advertising via forms, email with hypertext links to interactive websites or a reply function, and web banners linking to interactive websites.

Beyond paid advertising, powerful mechanisms like news stories, word-of-mouth, and customer personal experiences also promote products. These messages can be positive or negative, with negative messages potentially harming a company's success and positive ones strengthening its reputation and sales. While controlled advertising is important, business internet marketing accelerates the speed and reach of both controllable and uncontrollable word-of-mouth promotion.

Another promotional aspect is sharing information with customers. Businesses are increasingly providing customers with more than just inventory availability, price, and product details. Information regarding shipping status, for example, is often shared as a promotional tool.

Why is Personalization the Fifth P of Internet Marketing?

The internet is driving a fundamental shift in marketing from mass marketing to personalized marketing. Technologies like databases, cookies, and advanced telecommunications make it highly efficient and cost-effective to deliver personalized services on a large scale.

Online personalization offers customers the ability to receive tailored information or visit websites with customized home pages. This concept bridges the boundaries of two other marketing Ps—Product and Promotion—as it can significantly impact and enhance both. Because personalization is automated and central to many internet marketing methods, it has earned its own category as the "Fifth P."

Frequently Asked Questions

What are the Four Ps of Internet Marketing?

The Four Ps of Internet Marketing are Product, Pricing, Place (Distribution), and Promotion. These traditional marketing principles are adapted and applied to digital strategies to reach and serve customers online.

What is the "Fifth P" in Internet Marketing?

The "Fifth P" in Internet Marketing is Personalization. Enabled by digital technologies, it involves tailoring product offerings, content, and promotional messages to individual customer preferences and behaviors, moving beyond mass marketing.

How does the internet affect product distribution?

The internet impacts product distribution in two main ways: it serves as a direct delivery channel for digital products (like software or media files), and it enhances the distribution of physical goods by facilitating real-time information exchange between businesses and delivery companies, leading to faster and more efficient logistics.

What is a customer-oriented value chain?

A customer-oriented value chain is a business model that places the customer at its core. Information flows from the business to the customer across all operations, and even procurement processes are designed to ultimately benefit the customer, often through real-time inventory checks with suppliers.