Background of the research

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- The author is responsible for the content of this report; the copyrights of this report are with the author-

Author C.B.J. Luitjens Student nr. 1345826 International Business

Organization Philips DAP

Oral Healthcare Europe Wijersstraat 1

P.O. Box 1474 3800 BL Amersfoort Supervisor Organization drs B. Sprengers

Institute

University of Groningen

Faculty of Management & Organization P.O. Box 800

9700 AV Groningen First supervisor Institute prof dr ir J.L. Simons Second supervisor Institute drs T.L.J.Broekhuizen

Amersfoort, October 2004

“The Sonicare Experience”

Untangling the marketing Web for Philips

Oral Health Care Europe

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Management summary

In January 2001, Optiva Corporation changed its name to Philips Oral Healthcare. By this acquisition Philips DAP recognized the growing importance of the Electric Toothbrush (ETB) category and established itself as the leading global brand for intelligent oral healthcare solutions. There are basically two models offered through the retail channel: the Sonicare Elite and the Sonicare Advance.

Both incorporate revolutionary technology and innovative design to deliver the most advanced power toothbrush to date. The branding name is “Sonicare by Philips”. It is a big success in the US and was the most recommended power toothbrush in 2003. Since 2002, Philips started to make preparations for the launch of Sonicare in Europe. Philips Oral Health Care Europe (POHC-E) defined two target audiences: the Dental Professionals and Consumers and focuses on four target countries (The Netherlands, Belgium, Germany and The UK).

Background of the research

Companies in the oral healthcare industry have picked up the growing interest the media devotes to Internet. The success stories of companies capturing market share because of using Internet, together with the rapidly increasing adoption of Internet by Consumers and business buyers, has resulted in a fast growing realization that all organizations must have an effective Internet presence to prosper, or possibly even survive. Philips Oral Health Care Europe (POHC-E) has recognized the potential to use Internet as a medium within Marketing Communications. It could present POHC-E new business opportunities.

POHC-E wants to use the Internet to help increasing its success and growth within Europe. It views the opportunity to use a well-considered Web site as a new medium within Marketing

Communications If the current Web presence and Web approach in Europe will be maintained, POHC-E feels this might result in a sub optimal market penetration and competitive disadvantages.

The research relates on one hand, to the potential role of Internet within POHC-E and Marketing Communications and the potential role of Internet in the Europe-wide advertisement campaign in Q4 of 2004 (to support sales of Sonicare and to help reaching the set objectives). On the other hand, it relates to the idea that the current Web presence is not based on an Internet Marketing Strategy for Sonicare, and the fact that it possibly does not meet the needs and requirements of the two key audiences: Consumers and Dental Professionals. The research description therefore refers to the problems with Internet in the direction of the organization as well as the (potential) users. POHC-E wanted a practice research that is focused on its own organization. The research period was February- August 2004.

Research objective and Research question

POHC-E’s objective with this research is: “To decide on the role Internet should play within the overall marketing strategies of Sonicare for POHC-E, to (re) design the Internet presence in terms of a functional Web design based on the needs and requirements of both Dental Professionals and Consumers in The Netherlands, Belgium, Germany and the UK before Q4 2004 and to provide direction to the National Sales Organizations in these countries in promoting the (re) designed Web site”.

The following research question has been answered:

“ What should be Internet Marketing Strategy of Sonicare for Philips Oral Health Care Europe for the key audiences in the different European target markets?”.

To be able to answer the above question, three main focus points are considered. Sub questions were formulated to cover the different focus points.

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Focus point 1: The definition of the role Internet should play within the overall marketing strategies (Internet Marketing Approach)

Sub Questions:

1.1 What is the desired Internet approach?

1.2 How will Internet impact the marketing activities within POHC-E?

1.3 What are Internet target markets and who are Internet target audiences?

1.4 What are the Internet Marketing objectives?

1.5 How can the external marketing environment be defined regarding Internet?

1.6 How can the internal marketing environment be defined regarding Internet?

1.7 What should be Internet Marketing approach?

Focus point 2: The functional (re) design of the Sonicare Web site in the European target markets based on the needs and requirements of the key audiences.

Sub questions:

2.1 What is the experience of the current Web site?

2.2 What should be the content of the new Sonicare Web site?

2.3 How should the site be structured (incl. navigation)?

2.4 Which Customer service capabilities have to be provided to the Customers?

2.5 What should be the house- style of the new Sonicare Web site?

2.6 What should be the creative direction concerning the new Sonicare Web site (look and feel)?

2.7 On what elements should the functional design be localized per target country?

Focus point 3: The promotion of the future (re) designed Sonicare Web site to generate traffic Sub questions:

3.1 How can the Web site be promoted online and offline?

Methodology

The above questions are answered in the light of a conceptual model. This conceptual model can be seen as the “hat-rack of the research”. Is based on the Strategy Process Model of Chaffey et al (2003), and it contains the concepts that will be used in the research. Based on relevant literature, the desired Internet approach, the Internet impact on the marketing activities within POHC-E, the Internet target markets, the Internet target audiences, the Internet Marketing objectives, the external and internal marketing environment regarding the Internet and the Internet Marketing Approach for POHC-E were considered. Based on an iterative process, decisions could be made about these elements. A survey was set up get insight in the needs and requirements of the stakeholders concerning the Functional design of the Sonicare Web site. Finally, a literature research was done in the area of Web site promotion to learn more about the techniques how to drive traffic to a Web site. Based on these results, a number of conclusions and recommendations could be made.

Conclusions

The Web site should not be considered as “separate” anymore: it can play an important role within the overall Marketing strategies.

After a time, the information on the Web site will become outdated and will need to be updated or replaced. Different marketing research techniques must be used to find out the needs and requirements of the target audiences. These needs and requirements can be used to drive the design and content of the Web site.

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Only through setting realistic goals and then assessing whether they are achieved, the NSO can be sure of the contribution Internet based marketing is making. The Promotion plan should be integrated within the local Marketing Communications strategy.

Promotion works most effective when offline and online techniques are combined to give a consistant marketing message.

Sitel, DSS and NSO-18 have to make their organizations ready (concerning time and human resources) for the Web site to be able to fulfill the expected increased service requests coming from the Web site by phone, fax and the new e-mail option.

Using CRM will improve the level of Customer service and Customer loyalty through Customer knowledge. The Customer information will be available, but the CRM program is in progress.

Maintaining a quality Web site is only possible when there is a strong control to establish a team that follows the same standards.

A structured measurement program is necessary for POHC-E to collect measures to asses the Web site’s effectiveness. Action can then be undertaken to adjust the Internet Marketing Strategy.

Recommendations

1. Keep integrating the Internet Marketing Strategy in the business and Marketing strategies.

2. Make a country specific Web site Promotion plan 3. Integrate channels regarding promotion

4. Coach Sitel, DSS and NSO-18 in providing Customer service through the Web site 5. Set responsibilities for Web site maintenance

6. Use the Web site for CRM

7. Maintain and monitor the online presence 8. Measure the Web site effectiveness

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Preface

This final research report marks the closing chapter of my study International Business at the Faculty of Management and Organization at the University of Groningen. The subject of the thesis is the integration of the Web into the Marketing of Sonicare and is conducted on behalf of Philips Oral Health Care Europe. The research has been conducted in the period February 2004 until August 2004.

Throughout the research period, I have been supported by several persons. First of all, I would like to thank Bill McClain and Edward Knol of Philips Oral Health Care Europe, for giving me the opportunity to conduct this research project in one of the world's biggest electronics companies. I would also like to express my appreciation and gratitude to Bjorn Sprengers for his support and commitment on content as well as process related issues during the whole research project. His feedback enabled me to stay focused on the main points of issue. Also, I would like to thank Erik Hollander, Karin Nel and Jeanette Riegel for their input from several strategic and creative sessions during the project. Furthermore, I would like to thank the management team from Philips Oral Health Care Europe in Amersfoort, the European country managers and the managers of the Business Unit in the US for their assistance and willingness to help. The interviews carried out have provided me with the resources needed in conducting this research project.

I would also like to thank both my supervisors at the University of Groningen, Prof. John Simons and Drs. Thijs Broekhuizen, for providing the support, guidance and comments that helped me structuring this research and writing the final thesis. Their critical feedback and fruitful suggestions challenged me to get the best out of this research.

The last seven months have been a challenge for me, in which I learned several valuable lessons. Not only have I learned to think more structured and analytical, I also learned how to conduct a research in practice and how to write a scientific research report. Hopefully, this research project will contribute to the success of Sonicare and Philips Oral Health Care in Europe.

Finally, special thanks go out to my family and friends. They have been a steady support over the past years. My parents’ mental support and encouragement have always kept me motivated.

Chantal Luitjens

Amersfoort, October 2004

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Message from the author

Since Philips Oral Heath Care is in its start up phase in Europe, all the strategies, objectives, tactics, conclusions and other sensitive information have been censored in this report. Despite of this, I wish the reader a pleasant time in reading the research report.

Chantal Luitjens

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Appendices

Appendix 1 History Philips

Appendix 2 Organization diagram POHC-E Appendix 3 Market development and competition Appendix 4 Sonicare target audiences

Appendix 5 Interview rounds

Appendix 6 Printout current European Sonicare Web site Appendix 7 Interview material (evaluation schedule DP’s) Appendix 8 Interview material (evaluation schedule Consumers) Appendix 9 Results second interview round: needs and requirements Appendix 10 Test DP needs and requirements Web site

Appendix 11 Results third interview round: “short term must haves” DPs Appendix 12 Content/ tools and functionalities plan

Appendix 13 English default version Functional design Sonicare Web site Appendix 14 Creative briefing document design agency

Appendix 15 URL Status www.sonicare.xx in Europe Appendix 16 Web design proposal new Sonicare Web site

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List of Figures

Figure 1 POHC-E Business model: the business development sequence. ... Error! Bookmark not defined.

Figure 2 Realization strategies (source: Oosterhaven, 2000: p. 76)...14

Figure 3 Strategy Process model for Internet Marketing Strategy (Source: Chaffey et al., 2003)...20

Figure 4 Conceptual Model (Based on Chaffey et al, 2003)...24

Figure 5 Three ways of connecting the Organization- and Internet Strategy during development...30

Figure 6 Setting up an Extranet for intermediaries/ distributors...30

Figure 7 Direct contact with the Customers trough Internet (pull-strategy) ...31

Figure 8 Creating a new distribution channel through with Internet ...31

Figure 9 Setting up new businesses by an Internet Intermediary...31

Figure 10 Potential role of Internet within the MarCom Approach...33

Figure 11 Potential role of Internet within the Consumer Marketing Approach ...34

Figure 12 Potential role of Internet in the Dental Professional Marketing approach...34

Figure 13 Internet usage in the European target countries (www.internetworldstats.com) ...37

Figure 14 The general decision making process of Customers and the influence process of the marketer ...42

Figure 15 Overview of Sonicare buying decision process (Based on Percy, 1997) ...43

Figure 16 Screen shot of current Sonicare Web site ...46

Figure 17 Total number of page views and IP- addresses per month ... Error! Bookmark not defined. Figure 18 Number of sessions per entry page... Error! Bookmark not defined. Figure 19 Number of page views per country ... Error! Bookmark not defined. Figure 20 Overview quality of experience...49

Figure 21 Consumer content...50

Figure 22 DP content ...50

Figure 23 General content ...50

Figure 24 Site map...54

Figure 25 Localization issues target countries...56

Figure 26 Key concepts of advertising in old and new media (source: after Janal, 1998)...58

Figure 27 Common offline and online communications techniques to drive visitors to the Sonicare Web site...59

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1. Introduction

“When it comes to using Internet, health-care providers are starting to heed some long-standing medical wisdom: “heal thyself”. After years of watching as other industries embraced Internet, the health-care industry is now moving -albeit conservatively- to do the same.” (www.highbeam.com).

The growing interest the media devotes to Internet, has also been picked up by companies in the oral healthcare industry. Oral healthcare companies provide oral healthcare products to their Consumers.

For these companies, Internet can remove the restrictions of traditional mass media and communicate to their Consumers in a different way. The BBC reports that more people are turning to Internet to look for health information for themselves and their families; a Datamonitor study indicates that between 32-34 percent of adults aged 18 to 54 went online to look for health information during the past 12 months (www.bbc.com <http://www.bbc.com).

The markets change more rapidly, the possibilities change and the speed of change is changing.

Internet can be seen as one of the most important causes of this. It creates fantastic new opportunities for business, cultural development and personal communications across the world. It is the medium that is asking for the attention of all organizations and everybody is asking for Internet: to e-mail, as a medium at the office or as a library in the house.

Looking at statistics, there is still a growing interest for Internet. Internetworldstats projects that the number of active Internet users worldwide 785 million in the year 2004, a 118% increase from the 358 million people who were actively using Internet in 2000. On a world basiss, 11.5% of the world’s population is using Internet at this point. (www.internetworldstats.com

<http://www.internetworldstats.com>). The Web sites clearly win on importance looking at information and communication. It can be seen as an important “business card” of the organization, which can be visited 24 hours a day and 7 days a week.

The success stories of companies capturing market share because of using Internet, together with the rapidly increasing adoption of Internet by Consumers and business buyers, has resulted in a fast growing realization that all organizations must have an effective Internet presence to prosper, or possibly even survive. (Chaffey et al, 2003).

The importance of Internet to modern business strategy is also indicated by Michael Porter (2001). He says, “An Internet Marketing Strategy is needed to provide consistent direction for the organizations’

Internet activities that integrate with it’s other marketing activities and supports the overall objectives of the business”.

Philips Oral Health Care Europe (POHC-E) has recognized the potential to use Internet as a medium within Marketing Communications. It could present POHC-E new business opportunities. Obviously, POHC-E uses different marketing communication tools to reach the existing and potential Customers to communicate the product Sonicare (the new electronic toothbrush). This chapter describes the background of the research. First, paragraph 1.1 presents a short description of the organization (Philips), Oral Health Care, Sonicare, the business philosophy and the sources of business. It serves to provide insight in the organization in which the research has been conducted. Secondly, paragraph 1.2 focuses on a further description of the background to the research.

1.1 Introduction to Philips and Philips Oral Health Care

Royal Philips Electronics of the Netherlands is one of the world's biggest electronics companies and Europe's largest, with sales of EUR 29 billion in 2003. It was established in 1891 as a lamp factory.

Today it is a global leader in color television sets, lighting, electric shavers, medical diagnostic imaging and patient monitoring, and one-chip TV products. (For a further history overview is referred to Appendix 1). Through the years, Philips has been responsible for a number of invention e.g.

Rotating dry shaving, Audio Compact Cassette, Compact Disc System, Laser vision, 100 Hertz TV and the One-chip TV.

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Its 164,500 employees in more than 60 countries are active in the six divisions: Lighting, Consumer electronics, Domestic Appliances and Personal care (DAP), Semiconductors, Components and Medical systems. Its headquarter is established in Amsterdam, The Netherlands.

Philips Domestic Appliances and Personal Care (DAP) is one of the product divisions of Royal Philips Electronics. The scope of Philips DAP is to design, manufacture and distribute electrical appliances for home management and personal well being whose installation requires no expertise. DAP markets about 400 different products and its annual sales volume amounts to about 70 million products. DAP employs about 8,200 people worldwide. It offers sales and service in 60 countries. The DAP organization comprises the Corporate Centre (CCs), five Centers of Competence (CoCs), several International Production Centers (IPCs) and about 45 National Sales Organizations (NSOs), which are organized in regions. DAP was established in 1958 and has its headquarters in Amersfoort, The Netherlands. DAP, which constitutes 7% of overall worldwide sales, is Philips' most profitable business. In 2002 DAP profits were up 20%, to $400 million, thanks in large part to robust sales of Sonicare in the U.S. This research is done for Philips Oral Healthcare Europe (which falls under the division DAP).

1.1.1 Philips Oral Healthcare

Philips Oral Healthcare (POHC) was created in late 2000. At that time, Philips was an important player in Europe in electrical toothbrushes (with Sensiflex) and even became a number 2- player worldwide with the acquisition of Optiva Corp.- the manufacturer of Sonicare power toothbrushes- in October 2000. In January 2001, Optiva Corporation changed its name to Philips Oral Healthcare. By this acquisition Philips DAP recognized the growing importance of the Electric Toothbrush (ETB) category and wished to establish itself as the preferred global brand for intelligent oral healthcare solutions. The headquarters of POHC is located in Snowqualmi (USA), the former location of Optiva Inc. This centre is dedicated to the oral care business and will continue as the production centre for Sonicare. The head of the department is responsible for 935 full time employees worldwide.

1.1.2 Sonicare

The development of what would become the Sonicare power toothbrush started with a bright idea in 1987: apply technology found in dental offices to a Consumer product. It was developed in cooperation with a team of periodontists and bioengineers at the University of Washington in Seattle, WA. By 1995 more than one-third of the dentists in the United States were recommending the Sonicare toothbrush to their patients. There are basically two models: Sonicare Elite and Sonicare Advance. The Sonicare Elite is the newest model and differs from the Advance in having a new slim angled neck; a tapered brush head and contour fit bristles (removes 20% more plaque). Sonicare fits into Philips’ overall strategy to focus on healthcare, lifestyle and technology. Forbes Global Magazine has already described the new Sonicare Elite in March 2003 as “the Rolls-Royce of the power- toothbrush market“. It incorporates revolutionary technology and innovative design to deliver the most advanced power toothbrush to date. The Sonicare toothbrush is backed by more than 60 published studies and abstracts conducted at 25 universities worldwide. It has been proven to be significantly more effective than a manual toothbrush in multiple areas, including plaque removal, gingivitis reduction and keeping teeth whiter. The branding name is “Sonicare by Philips”. Since 2002, Philips started to make preparations for the launch of Sonicare in Europe.

1.1.3 Philips Oral Healthcare Europe

Since 2002, Philips started to make preparations for the launch of Sonicare in Europe. Philips Oral Healthcare Europe (POHC-E) currently employs 65 FTE in total. Its headquarters, staffed with 10 FTE, is based in Amersfoort, the Netherlands. For the organization diagram is referred to Appendix 2.

The short-term target countries for Europe are The Netherlands, UK, Belgium and Germany. These are the countries that will be focused on, before moving actively to other European countries (Strategy report 2002-2005).In meeting its growth ambitions, POHC concentrates its efforts on five areas that drive business success. These key drivers will increase the business value for POHC-E.

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Within the daily oral health care domain, POHC-E business scope is in the business of developing, manufacturing, marketing and distributing superior Electric Toothbrushes. For information about market developments and POHC-E’s competition, is referred to Appendix 3.

1.1.4 Business development at POHC-E

In order to achieve success in the markets and optimally leverage the key business drivers, POHC-E applies a 5-step-business-model.

Using this model, it is clear, that before entering a new market (country), POHC studies the DP and User insights concerning Oral Healthcare attitudes and usage in that particular market. This is the basis

1.1.5 Sources of business: Dental Professionals and Consumers

POHC-E defined two target audiences: the Dental Professionals and the Consumers

Dental Professionals

The first target audience is the Dental Professional (DP).

Consumers

The second, and of course by far the largest, audience is the Consumer.

For further specification of the target audiences see Appendix 4

1.2 Current Internet approach at POHC-E

Paragraph 1.2.1 gives insight in the way POHC-E currently uses Internet, which will be typified and evaluated. Secondly, paragraph 1.2.2 describes the potential strategic importance of Internet including the fact that POHC-E aims at launching a new European wide advertisement campaign in which Internet might play an important role. Furthermore, the perceived benefits of a well considered Internet presence and theoretical realization issues of a well considered Internet presence are , to serve as a basis for the problem definition in Chapter 2.

Internet has different functionalities (Tiggelaar 2001). The functionalities that are most commonly used are: Video Conferencing, E- mail, World Wide Web (WWW), Newsgroups, Tel Net, and Internet Relay Chat (chatting). In this research, POHC-E is interested in the functionality “World Wide Web (WWW)”, because it is an opportunity for innovation in both the communication, delivery and selling of products. The Web gives marketers the opportunity to offer different kind of information to the Customers: text, video’s, animations etc. Real application can be offered in the form of interactive elements. Next to that, Customers can stay in contact with the provider (possibly through e-mail).

Finally, it is possible to place orders trough the Web site and do payments. This can support POHC-E in targeting the new European markets.

1.2.1 Internet use at POHC-E

POHC-E already has two “European Web sites” running: one for the UK and one for the Netherlands.

To “have an online presence”, POHC-E “introduced” the Sonicare Web site in the Netherlands and the UK in the first quarter of 2003. The UK URL (www.Sonicare.co.uk) is directly linked to the Sonicare site of the United States. This US site is featuring the US range, US programs, US Consumer and professional focus and a reference to the US distributors. Especially the US price info and Sonicare branding make this site less suitable for European use. The Web site for the Netherlands (www.sonicare.nl) is a partial copy of the US Sonicare Web site (www.sonicare.com), is directly linked to the Home & Body Catalogue site of Philips in the Netherlands (www.philips.com/sonicare) and the site language is English. Without much deliberation, this Web site has been copied from the

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The Web sites in the Netherlands and the UK are not based on any kind of strategy: due to a lack of information and human resources, POHC-E implemented a Web site without having developed a mission, vision, a strategic analysis and a strategic choice (which is necessary with regard to the development and implementation of Internet according to Tiggelaar (1999)). This means that it is not clear what the POHC-E long-term Internet ambition is. To get insight in the current situation concerning the type of Internet approach used at POHC-E, the three Internet Strategies of Oosterhaven (2000) are taken into account.

Figure 2 Realization strategies (source: Oosterhaven, 2000: p. 76).

Three Internet strategies can be distinguished a by increasing level of ambition. At this moment, Internet functions as a tool to inform Consumers with the purpose to facilitate the relation between POHC-E and the Consumers and Dental Professionals. It can be concluded, that POHC-E undeliberately uses Internet to enforce the existing business in the existing channels.

To conclude this section; POHC-E feels that the current Web presence for Sonicare in Europe, does not meet the needs and requirements of the two key audiences: Consumers and Dental Professionals.

Next to the traditional media as TV commercials and ads in magazines, a Web site is a relatively new marketing communication medium. The Sonicare Web sites are not based on a Web strategy, are not actively promoted through Marketing Communications material. If the current Web presence and Web approach in Europe (there is only a minimal Web presence in The Netherlands and the UK) will be maintained, next to the fact that there is currently no Sonicare Web presence in the other target countries, this might result in a sub optimal market penetration and competitive disadvantages.

1.2.2 Potential Strategic importance of Internet

Authors in the field of Internet Marketing Strategies underscore the managerial and strategic importance of Internet. It is acknowledged that Internet, Marketing, Strategy and Communication are strongly related and are an effective way of reaching target markets and can eventually positively influence obtaining the organizations main objectives (Porter: 2001, Tiggelaar:2001, Chaffey:2003).

Advertisement campaign

In the fourth quarter of 2004, POHC Europe aims to launch a Europe-wide advertisement campaign to support sales of Sonicare. Philips’ ambition is to build and own the premium Electric Toothbrush (ETB) segment in Europe. Philips sees it as a revolution rather than an evolution. POHC-E is still in the start-up phase and considers Internet an integral part of Marketing Communications. An insight in Internet and on how to effectively use the medium is missing.

New Business

Expansion existing Business

Enforcement existing business

Growing ambition

Expertise- scenario Strategy

Self realizing With help

Take over E- commerce Company

Merge with Market place POHC-E

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Benefits of a well-considered Internet presence

The benefits of a well-considered Internet presence can be summarized by using the 6 Cs Bocij et al.

(2003).

1) Cost reduction: Achieved through reducing the need for sales and marketing enquiries to be handled by telephone operators and the reduced need for distributing and printing marketing communication material, which is instead published on the Web;

2) Capability: Internet provides new opportunities for new products and services and for exploiting new markets

3) Competitive advantage: If a company introduces new capabilities before its competitors, then it will achieve an advantage until its competitors have the same capability.

4) Communications improvement: These include improved, communication with Customers, staff, suppliers and distributors.

5) Control: Internet may provide a better marketing research through tracking of Customer behavior.

6) Customer service improvement: Provided by Customer service questions or interactive queries of databases containing, for example, stock availability.

A well-considered presence on Internet is seen, according to the members of the POHC-E management team, as a necessity for the premium brand Sonicare because of:

The benefits Cost reduction and Control are seen as issues to be fulfilled through other means. Cost reduction by reducing the need for distributing and printing, for example, point of sale material is not desirable in the start up phase of Sonicare in Europe. A clear exposure of the product on posters and brochures is very important. POHC-E hires a specialized company to do Customer research and is not interested in Customer research online.

Realization

Tiggelaar (2001) describes four issues that play a role in the realization of (re) designing a Marketing site: The objectives have to be defined based on the business vision and strategy, the internal and external environment has to be analyzed, the site concept needs to be developed and the Web site needs to be implemented and exploited. Chaffey (2003) has described similar phases in the book

“Internet Marketing Strategy, for the overall strategy process for Internet Marketing. He mentions:

goal setting, situation review, strategy formulation and resource allocation and monitoring.

When you want to build a house, you need a sketch of the construction. When you want to build a well-considered Internet Web site, a sketch has to be made as well. There is a division of a Functional design and a Technical design according to Tiggelaar (2001). These describe all the functionalities and technical specifications of a Web site. Per Web page has to be described what the user sees, what he/

she can do and what actions take place next. Besides these functionalities, the technical specifications need to be mapped. These are the protocols, the applications and the program languages (Tiggelaar, 2001).

Once a Web site is designed, build and online, the actual work begins: the service towards the Customer. Building the Web site is a project, but delivering and maintaining the online services is a process. Attracting Customers to the site is a specific element in this process (Molenaar, 2001). The first visit as well as the repeat visit should be stimulated.

1.3 Outline of the report

This thesis is divided in three parts, each covering a different aspect of the definition of the Internet Marketing Strategy of Sonicare for POHC-E, but fist of all the problem definition and research approach will be discussed in Chapter 2.

Part 1 questions the role Internet should play within POHC-E Marketing Strategies.

Chapter 3 defines POHC-Es Internet Marketing vision. Here, decisions will be made about the desired

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Furthermore, it will determine how Internet might impact the current marketing activities. The chapter will end with the definition of the Internet Marketing Approach (Web site Approach) and is the result of an iterative process between outcomes of chapter 3-6. Chapter 4 defines the Internet target market, the Internet target audiences and the Internet Marketing objectives as part of the strategy formulation.

Chapter 5 reviews the impact of Customer, competitor and legal environmental influences on Internet Marketing Strategy and its implementation. Chapter 6 reviews how Internet changes the immediate environment of an organization, including a description of the internal automation, a review of the current Sonicare Web site, the available resources, back office possibilities and the current Web site services offered.

Part 2 of the thesis describes the Functional (re) design of the Sonicare Web site.

Chapter 7 assesses the work involved in the different stages of making a Functional Web design, in order to achieve the goal of service quality. The stages include analysis of stakeholders’ needs and requirements, design of the content, structure, and house-style and the determination of the elements that have to be localized for the target countries.

Part 3 explains how the Sonicare Web site can be promoted as part of strategy formulation.

Chapter 8 examines the novel characteristics of new media and then goes on to review different online and offline promotion techniques to build traffic to a Web site. Among the techniques covered are banner advertising, PR and promotion in search engines.

Final conclusions and recommendations are described in Chapter 9.

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2. Problem definition and research approach

Every research has five important elements. The first two elements problem definition (2.1) and the theoretical framework (2.3), form the heart of the research. Paragraph 2.2 gives insight in the research strategy. The other three research elements are the used information resources (2.4), methodology (2.5), and analysis and report methods (2.6). None of these elements can be seen as separate parts (de Leeuw, 2001).

2.1 Problem definition

POHC-E wants to use the Internet to help increasing its success and growth within Europe. It views the opportunity to use a well-considered Web site as a new medium within Marketing Communications If the current Web presence and Web approach in Europe will be maintained, POHC-E feels this might result in a sub optimal market penetration and competitive disadvantages.

The research relates on one hand, to potential role of Internet within POHC-E and Marketing Communications and the potential role of Internet in the Europe-wide advertisement campaign in Q4 of 2004 (to support sales of Sonicare and to help reaching the set objectives). On the other hand, it relates to the idea that the current Web presence is not based on an Internet Marketing Strategy for Sonicare, and the fact that it possibly does not meet the needs and requirements of the two key audiences: Consumers and Dental Professionals. It became clear that POHC-E undeliberately has implemented an approach to reinforce the existing business in the existing channels with the implementation of the current Web presence. POHC-E feels Internet could present new business opportunities. The research description therefore refers to the problems with Internet in the direction of the organization as well as the (potential) users. POHC-E wants a practice research that is focused on its own organization.

Within POHC-E it is unclear:

1. What the role of Internet should be within the overall marketing strategies 2. What the functional (re) design of the Sonicare Web site should be 3. How the (re) designed Sonicare Web site should be promoted

Ad.1 Currently, no strategy has been formulated for using Internet for Marketing. POHC-E needs insight in the role Internet should play within the marketing strategies.

Ad 2 POHC-E feels that the current Web presence for Sonicare in Europe, does not meet the needs and requirements of the two key audiences: Consumers and Dental Professionals. POHC-E needs insight in how the Sonicare Web site can be (re) designed, matching all these parties’

needs and requirements.

Ad 3 The current European Sonicare Web sites are not actively promoted through marketing communications material. Therefore (potential) Customers might not get the optimal Sonicare information POHC-E would like them to get. The basic issue here is how to promote the (re) designed Web site to generate traffic.

It is necessary to define an integrated Internet Marketing Strategy for POHC-E to untangle the Marketing Web for Sonicare. In this paragraph the problem definition of the research will be set. This consists of: Research objective (2.2.1), Research question (2.2.2) and the Research restrictions (2.2.3).

2.1.1 Research objective

POHC-E’s objective with this research is:

“To decide on the role Internet should play within the overall marketing strategies of Sonicare for POHC-E, to (re) design the Internet presence in terms of a functional Web design based on the needs and requirements of both Dental Professionals and Consumers in The Netherlands, Belgium, Germany and the UK before Q4 and to provide direction to the National Sales

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Internet Marketing or Internet-based marketing is defined by Chaffey et al 2003 as: “the use of Internet and related digital technologies to achieve marketing objectives and support the marketing concept”. In practice, Internet marketing will include the use of a company Web site in conjunction with online promotional techniques such as search engines, banner advertising, direct e-mail and links or services from other Web sites to acquire new Customers and provide services that help develop Customer relationships.

Since the Internet Marketing Strategy has to become an integral part of Marketing Communications, the research objective is linked to the business objective of this department

The next paragraph describes what question needs to be answered in order to accomplish the research objective.

2.1.2 Research question

The decision of the desired Internet role within Marketing, the functional (re) design of the Web site and the promotion options, basically all involve strategy formulation for Internet Marketing. This can be summarized in one research question as:

Within this research question, there will be three main focus points to be considered.

1) The definition of the role Internet should play within the overall marketing strategies (Internet Marketing Approach)

2) The functional (re) design of the Sonicare Web site in the European target markets based on the needs and requirements of the key audiences.

3) The promotion of the future (re) designed Sonicare Web site to generate traffic

Explanation of the definitions in the three focus points:

European target markets: The countries Philips is focusing on at this moment (The Netherlands, Belgium, Germany and the UK).

Functional design Web site: What the users see on the Web site: structure (sitemap), content (text and functionalities) and design (look and feel).

Key audiences: Dental Professionals and Consumers

Overall marketing strategies: Consumer Marketing strategy, Dental Professional Marketing strategy and Marketing Communications strategy.

Promotion: Different online and offline media can be used to drive traffic to the Sonicare Web site

In answering the research question, the three above focus points will be used to structure the research.

For a translation of the focus points into sub questions is referred to paragraph 2.5.3. The answers of these sub questions will answer the above formulated research question.

2.1.3 Research restrictions

The research is restricted on the following aspects:

Product restrictions:

The actual building and implementation of the Web site will not be a part of this research project;

The financial consequences of the realization and integration of Internet Marketing Strategy will not be considered;

The technique behind the Web site design will not be handled;

“What should be Internet Marketing Strategy of Sonicare for Philips Oral Health Care Europe for the key audiences in the different European target markets?”

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Internet Marketing Strategy must be aligned/ integrated with the current Marketing Strategies

within POHC-E;

Since the Retail Marketing is not seen as an essential point of consideration for the formulation of the Internet Marketing Approach, the Retail Marketing Strategy will not be a part of the research and integration;

The actual implementation of Internet Marketing Strategy and the Web sites in the target countries will not be a part of this research project.

As decided during the intake meetings, the Web site itself will have to be:

- Informational: Give (technical) information towards the needs and requirements - Non- informational: Be focused to exploit the brand on Internet

The target groups for Internet are described as:

- Consumers

- Dental Professionals

Process restriction:

Internet Strategy must be defined before Q4 of 2004, since Internet will be an integral part of the advertisement campaign at the end of 2004.

2.2 Research strategy

The research objective indicates that the research has an explorative character. It can be characterized as a combination of a “descriptive” and “explorative” research. The choice for this combination lies in the fact that the research does not completely fit into one of the types. The most important criteria where the derivation can be made, is the level of theory availability about the research problem (Van der Zwaan, 1990). Is the problem vague and does it seem there is not a lot of information: then an explorative study will have to give more insight. As soon as there is a certain theoretical starting point from which the problem can be analyzed; the type of research can be defined as a descriptive research.

The research is descriptive in the areas of Internet, Internet Marketing and Internet promotion. It is explorative in the area of functional Web site design. The most important implication of this research is the fact that the research will not provide in theory development, but instead existing theory was employed and used to answer the formulated research question.

2.3 Theoretical framework

In this paragraph the theoretical framework is specified. It consists of the theoretical concepts used (2.3.1), the sub questions (2.3.2), the conceptual model (2.3.3) and the explanation of the used definitions (2.3.4). The theoretical framework for this research is based on Internet as a Marketing Communication medium: a medium as part of the Marketing Communications Mix in the form of a Web site. It must be aligned with the existing Marketing Approaches within POHC-E. This is decided in consultation with the Marketing Communications Manager of POHC-E. This way of looking at Internet forces the members of the organization not to lose sight of the entire marketing context in managing the activities necessary for Internet. This means that Internet can deliver a specific contribution in the realization of the organizations’ strategy: a contribution that through other ways would be less effective or efficient. For the theoretical framework (as part of conceptualizing) is therefore searched for theories about Internet placed as part of Marketing Communications.

2.3.1 Theoretical concepts

The role of Internet as a medium for Marketing Communications within POHC-E is the central focus point in the research. Floor and van Raaij (1998) define marketing communications as: “To contact the trade and/ or Consumers, to influence their knowledge, attitude and behavior in a for the marketing policy positive direction”. Chaffey (2003) describes Internet Marketing as: “the application of Internet and related digital technologies, to achieve marketing objectives”. In practice, Internet marketing will

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include the use of a company Web site in conjunction with online promotional techniques such as search engines, banner advertising, direct e-mail and links or services from other Web sites to acquire new Customers and provide services that help develop Customer relationships”. He describes Internet Marketing Strategy in general as: “the definition of the approach by which Internet Marketing will support marketing and business objectives. Obviously this is too general, since the role Internet should play within POHC-E Marketing will be defined besides the actual functional (re) design and promotion of the Web site.

The strategy process model of Chaffey et al (2003), as shown below, will be used as the basic research process model because it provides a framework that gives a logical sequence to ensure inclusion of all key activities of strategy development of Internet Marketing.

Figure 3 Strategy Process model for Internet Marketing Strategy (Source: Chaffey et al., 2003)

The figure above shows an overall strategy process model for Internet marketing of Chaffey et al.

(2003). It illustrates the relationship between goal setting and measurement. The environment, together with the general marketing objectives and strategies, inform the desired Internet Marketing approach. Specific objectives have to be defined for the Internet Marketing Approach. This forms the input for Internet Marketing plan (4P’s), which shows how these objectives can be achieved. This details the plan for designing, creating or modifying the online presence and executing the online presence. After the site has been created or modified, it is necessary to execute e-marketing communications and monitor everything involved, in order to asses whether the strategic objectives have been achieved and feed this information back to influence future strategy and its implementation.

The last aspects (monitoring and reviewing) fall outside the scope of this research project, due to time restrictions.

In this approach there are four main phases, which relate to the above figure:

a) Goal setting (marketing objectives and strategies which feed into Internet Marketing Approach) b) Situation review (environment analysis)

c) Strategy formulation (develop Internet Marketing Approach). This includes detailed objective setting for Internet marketing.

d) Resource allocation and monitoring (define Internet Marketing Plan, Create/update the online Presence, Communication and Monitoring).

Environment analysis

Maintain and monitor metrics Develop Internet Marketing Strategy

Define Internet Marketing Plan

Create/ update online presence

Execute e-marketing communications

Review and modify Marketing objectives

and strategies

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In this research report, the above framework will be used as theoretical framework. Next to marketing communication and the strategy process model, the three theoretical focus points in the research are:

Internet Marketing approach, Functional Web design and Web site Promotion.

Internet Marketing Approach

The first focus point is to the definition of the role Internet should play within the overall marketing strategies (Internet Marketing Approach). This can be done after the goal setting and the environmental review. POHC-E does not have a well-considered idea what to accomplish with the medium Internet and does not have a well-considered vision about Internet yet. An Internet Approach should not be confused with an Internet Marketing Approach. The former has to be considered as a general basis/ direction for formulating the latter, which is focused on marketing (Tiggelaar, 2001).

One useful theory about the formulation of an Internet Strategy can be found in an article of Oosterhaven (2000). This article distinguishes three different Internet Strategies and provides insights on how Internet can be used as a medium within a commercial strategy (Oosterhaven, 2000). The three strategies are: Reinforcement of the existing business, Expansion of the existing business and New business. Within the three possible strategies, multiple variables are mentioned. A growing level of complexity, investment and ambition characterizes the strategies. This approach is very usable for POHC-E. It already served to define the current Internet approach in Chapter 1, since it does not go into Internet too deep but gives a clear direction of how the organization can position itself towards Internet. This theory will further be used in Chapter 3.

A paper of Wen et al. (2001) will be used for the actual formulation of the European Internet Marketing Approach for POHC-E. These researchers studied the emerging models of E-commerce Web site design. The models are categorized in different Web design site strategies. They claim that there are two generic Web site strategy possibilities: Informational/communicational Strategy and Online/ Transactional strategy. The models for communicational/ informational design strategy include Brand awareness and image building, cost saving, promotion and info-mediary. The models for online/ transactional design strategy include brokerage, retail, mall, advertising, subscription, community, manufacturer and customization. This theory will be used in Chapter 4. The paper has been chosen since the division in Informational/communicational Strategy and Transactional strategy is an overall Web design strategy approach for commercial Web based marketing Web sites compared to other literature (a.o. The ICDT model of Angehern (1997), US Fortune 500 Web site marketing impact examination by Palmer and Grifith (1997) and the proposed framework for examining the explosion in commercial activity on the Web by Hoffman et al. (1995). Wen et al. (2001) took this generic deviation a step further in the sense that is more thorough. This type of insight can be useful to serve the organization in the long term.

Create/ update online presence: Functional design Web site

Tiggelaar (2001) is the only author found that mentions the functional design as a separate part of designing a Web site. According to him, a functional design is part of the development of a site concept. This consists of the formulation of a briefing for the “design agency” and “building agency”(which can be an agency intern or extern of the company); the formulation of the creative direction; the decisions about design and navigation and finally the formulation of the functional and technical design. The technical design (technical restrictions) is not a part of this research project. The functional design (what users see) can be seen as a building plan for the site and contains all the functionalities of the site. Tiggelaar (2001) claims, the functional design consists of the content of the Web site, the Customer service to be provided, the house- style Web site, the structure of the site and the Web site navigation. In case the Web site will be live in multiple countries, the Web site should be localized per target country.

Since Web sites serve as an important point of contact for most companies, assessing their quality or effectiveness of the Web site is important as a way to understand whether the company is providing the type and quality of information and interaction to satisfy the Web site udders. This is especially

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true for companies selling goods and services on their Web sites. Customers must be satisfied with their experience with the Web site or they will not return. Researchers from several disciplines have developed and tested instruments to measure this Web site quality (e.g. Aladwani et al., 2002), Barnes et al., 2001 and Loiacono, 2000). The Loiacono WebQual scale is such an instrument. Every study assessing Web site quality that was located provides some evidence that Web site quality has multiple dimensions. For example, Liu and Arnett (2000) propose four dimensions: quality of (1) information and services, (2) system use, (3) playfulness and (4) system design quality. Aladwani and Palvia (2002) also examined Web site quality from a user perspective. They proposed three dimensions of Web site quality: (1) technical adequacy, (2) Web content, and (3) Web appearance.

The focus of this research project lies however not on a quality analysis of the current Web site, but on the (re) design of the Web site based on the needs and requirements of all the stakeholders since POHC-E already concluded not to be satisfied with the current Web presence. The current Sonicare Web site will however be reviewed as part of the functional design. Looking at the available literature, Web site qualities across studies practically all include “information”, “ease of use”, “entertainment”

and “trust” dimensions (Kim et al, 2003). For POHC-E, this is translated into the demensions

“Content”, “Structure”, “Look & Feel”, and “Tools/ functionalities”. This means that the current Web site and competitor Web sites have to be reviewed on these four dimensions as part of the Needs &

requirements analysis.

E-marketing communications: Promotion

The traditional techniques can be characterized as traditional offline communications or new online communications to acquire new traffic. The common offline and online communications techniques summary of Pickton and Broderick (2000) to drive visitors to the Sonicare Web site is a complete overview article.

2.3.2 Elaboration of the research question

To obtain an answer to the research question, sub questions are defined. In the definition of the research question, the three focus points (paragraph 2.1.2) help ordering the sub questions.

Focus point 1: The definition of the role Internet should play within the overall marketing strategies (Internet Marketing Approach)

Sub Questions:

1.1 What is the desired Internet approach?

1.2 How will Internet impact the marketing activities within POHC-E?

1.3 What are Internet target markets and who are Internet target audiences?

1.4 What are the Internet Marketing objectives?

1.5 How can the external marketing environment be defined regarding Internet?

1.6 How can the internal marketing environment be defined regarding Internet?

1.7 What should be Internet Marketing approach?

Since POHC-E does not have a clear vision about Internet yet, the desired approach towards the Internet has to be defined first. This will be a general approach and involves the definition of POHC- E’s commitment to Internet and the indication of the importance and potential role of Internet for the Consumer Marketing strategy, DP Marketing Strategy and MarCom Strategy. One of the most important demands of the design is the fact that it has to be aligned with these strategies.

The definition of the Internet market is important to check if there is a need for the medium. POHC-E has two well-defined target Customers: the Consumers and the Dental Professionals. Insight has to be given in what POHC-E sees as the target Internet Customers within these groups. The marketing approach of POHC-E (Consumer Marketing, Dental Professional Marketing and Marketing Communications) and the new defined Internet approach, together with the knowledge about Internet markets and the target audiences, can be translated in Internet Marketing objectives. By defining these Internet Marketing objectives, insight is given in what POHC-E actually wants to accomplish with the Web site as a medium for Marketing Communications.

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Strategy development is strongly influenced by the environment since it might cause restrictions for Internet marketing. In defining the external environment it is important to see where in the decision making process, Internet can play an influential role. In moving through the entire buying decision process, different functions of Internet that can be applied. The external analysis will also give insight in Internet activities of the competitors of POHC-E, which is only important to know with what alternatives the Customers can be confronted. Finally, some legal issues will be described. POHC-E desires might be high, but the question is whether these wishes can be realized. In analyzing the internal environment of POHC-E, the Internal possibilities and restriction are analyzed.

Finally, Internet Marketing options are explored, and a decision will be made about the Internet marketing Approach based on the different sub question-answers from focus point 1.

N.B. Answering of the above questions is an iterative process: the questions are all related to one another. The results will be described in different chapters.

Focus point 2: The functional (re) design of the Sonicare Web site in the European target markets based on the needs and requirements of the key audiences.

Sub questions:

2.1 What is the experience of the current Web site?

2.2 What should be the content of the new Sonicare Web site?

2.3 How should the site be structured (incl. navigation)?

2.4 Which Customer service capabilities have to be provided to the Customers?

2.5 What should be the house- style of the new Sonicare Web site?

2.6 What should be the creative direction concerning the new Sonicare Web site (look and feel)?

2.7 On what elements should the functional design be localized per target country?

Focus point 2 involves the research towards the Functional Design of the Web site. First the needs and requirements of the stakeholders have to be determined. In this case, the stakeholders are the Consumers, the Dental Professionals, POHC-E and the Business Unit of Sonicare in the US. The current European Sonicare Web site has to be researched to explore the user experience. There are three options for the (re) design of the European Sonicare Web site: Keep the existing Web site, Up- date the current Web site, Design a completely new Web site. Design is critical to a successful Web site since it will determine the quality of experience users of the site have: if they have a good experience, they might return. The needs and requirements can then be translated into functional Web site requirements concerning structure, content, service, navigation and house style. A creative direction will have to guide the design agency and the building company of the Web site. Concerning localization: the Internet Marketing Approach, look and feel, house style and navigation will be equal for all the target countries in Europe, but the content of the Web functional design might have to be localized for the target countries (The Netherlands, Belgium, Germany and the UK).

Focus point 3: The promotion of the future (re) designed Sonicare Web site to generate traffic

Sub questions:

3.1 How can the Web site be promoted online and offline?

The marketing mix is widely referred to as “the 4 Ps “. The 4 P’s are defined for Internet as: Product, Price, Place and Promotion, as part of strategy development. The promotional aspect of the mix is the only aspect relevant for POHC-E since the Internet will not affect price, place and product. Internet can be considered a new medium in POHC-E’s Marketing Communications (until now it was not actively used). If the (re) designed Sonicare Web site will go live the actual work really begins: the service to the Customers. Defining and building a Web site is a project, but the supply and maintenance of online services is a process. Insight in the different off line and online promotion techniques is necessary to drive traffic to the Sonicare Web site, in every target country.

Background of the research

“The Sonicare Experience”

Untangling the marketing Web for Philips

Oral Health Care Europe

Management summary

Background of the research

Research objective and Research question

Methodology

Conclusions

Recommendations

Preface

Message from the author

Table of contents

Appendices

List of Figures

1. Introduction

1.1 Introduction to Philips and Philips Oral Health Care

1.2 Current Internet approach at POHC-E

1.3 Outline of the report

2. Problem definition and research approach

2.1 Problem definition

2.2 Research strategy

2.3 Theoretical framework