Digital Marketing: Global Strategies

The Internet and the development of WWW have changed communication patterns and greatly impacted marketing channels and techniques. Digital marketing proposes opportunities for companies to reach their target audiences faster and at a low cost. This connection between good levels of customer service and good levels of customer satisfaction and retention underpins the common association of customer service with keeping, rather than winning, customers. Customer service, therefore, plays a pivotal role in digital marketing. Getting this role right and to a standard of expertise that is superior to that of competitors and sustainable in the longer term, requires an in-depth understanding of the nature and nuance of customer service. Knowing customers means closing the loop between the messages sent to them and the messages they send back.

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Digital marketing is defined as “a model based on the possibilities created by tightly networked markets” (Boswell 2002). Digital marketing involves traditional methods of online advertising and internet marketing but also makes use of mobile phones, SMS, banner ads, digital outdoor. Following Turban et al. (2004), no matter how powerful the technology, the goal of digital marketing is to aggregate and then distribute manufacturers’ products in a manner that provides real value to consumers and manufacturers. If no value is created, either through passing on cost savings of e-business to the consumer or through a truly improved shopping experience, then the e-retailer will not last longer than the amount of cash it has in the bank. This is the core of good merchandising. Consumers use products from many different manufacturers, and the need to aggregate as many as possible into each shopping experience is what really justifies nationwide Internet retailing as well as brick-and-mortar retailing and justifies the shipping costs associated with it (Bird, p. 4). The sites that give the most solutions and actionable content, aggregated into one box, with one reasonable shipping cost, will be the winners.

Digital marketing linked to fulfillment won’t be for all brick-and-mortar retailers because some stores will offer value to their customers through other means without the link to a fulfillment solution. But, even these brick-and-mortar stores may still use digital marketing to make their supplier chain dramatically more efficient or to offer better promotions towards driving in-store traffic. An important lesson is that digital marketing, with its link to fulfillment, should not be confused with e-business; using electronic means to improve the infrastructure of a business. The Web is no different than the brick-and-mortar world in the need for the retailer to create value for its suppliers. Digital marketing has both advantages and disadvantages for companies and consumers. It is explained by the nature of the Internet environment and legal rules applied to these spheres of business (Evans et al., p. 35)

  1. For businesses, digital marketing offers potential benefits that are not available through traditional advertising media. This new medium has caught the attention of advertising and marketing experts in several fields, and a range of research has just begun to highlight the differences between online and traditional advertising.
  2. Information richness is another important criterion. The broadcast nature of television, radio, billboard, and print constrain a traditional advertisement to one short, memorable message. With the Internet, the advertising message is no longer so constrained. The Internet allows for communicating to consumers substantially more content-rich product information.
  3. It is easy to update digital information and save costs usually spent on printed materials and their distribution. Maintaining an online ad is less costly than maintaining traditional ads and lacks the delays of other media. Furthermore, online information can be quickly and easily changed and updated.
  4. (Whereas certain brand-relevant information is often considered too frivolous, given the space limitations of a traditional ad, the online ad can contain more brand-relevant information important for building brand image. For instance, the site can contain trivia about the company, provide detailed information about the organizations it sponsors, and link to interesting image-related sites (Evans et al., p. 35)
  5. Digital marketing helps companies to gather information about consumers, their tastes, priorities, and demands. In exchange for this information and/or other product incentives, the company can easily and inexpensively collect detailed data about their Internet market, as well as obtain precise measures of which pages in their sites were visited, for how long, how the individuals came to the site, and where the visitors originated. The Internet also has the capabilities to gather consumer reactions to current products and ads as well as product and ad concepts through such means as online focus groups.
  6. As the most important, digital marketing allows companies to penetrate other countries at low costs and minimum efforts. Clearly, the Internet expands the company’s market to include global markets, allowing those from around the world to visit the website. Companies can respond to this global accessibility easily by having pages available in languages other than English. Gaining brand recognition from a global market could give a company the competitive advantage it needs in a marketplace that is increasingly expanding its borders (Evans et al., p. 36)
  7. Customization is another potential benefit of digital marketing. The Internet’s interactive nature allows for greater flexibility than traditional media in the type of information transmitted and the method of transmission. For instance, decisions regarding whether the information should be technically advanced or simple, whether the information should be textual, graphic, video, or auditory, and whether a product demonstration or detailed product description is used can all be made by the consumer rather than the advertiser.
  8. Following Winer (2004), digital marketing facilitates purchases. The digital environment can facilitate purchase decisions not only by providing detailed product and purchase details (e.g., by finding the nearest dealer and quoting prices) but also by giving consumers the option of buying at that moment from their own homes. This removes the gap between ad exposure and purchase response, creating the opportunity for the ultimate in impulse buying.

Digital marketing has attempted to present and discuss a number of issues focusing on promoting on the Web: interactivity, consumer factors, advertising strategy on the Internet, public policy, and special interest groups. The great advantage of digital marketing to advertisers is that it provides a means of identifying customers, differentiating them, interacting with them, and then customizing purchasing and post-purchase services. These actions increase the potential for satisfied and loyal customers. Digital marketing interactivity allows customers greater access to companies through customer discussion groups, email, direct ordering, and links to more information. The ability of the digital environment to target, customize, and provide massive volumes of information on the spot is unparalleled as an advertising medium. It will do more to decrease the perceptual size of the world than any single activity since long-distance telephone (Fill, p. 45).

The main disadvantages of digital marketing include customers’ suspicion and a high level of fraudulent actions within the virtual environment. Unlike the straightforward means of interacting with a company, consumers today must go to considerable effort, typing, searching, and interweaving through the Internet. These activities may take significant time. For their customers’ efforts, advertisers must keep their web pages current. Consistent updating of a website will prevent audience wear out (Fill, p. 48). A great deal of advertising research suggests that wear out due to repeated exposure to the same ad can lead to negative attitudes and responses toward the advertised product. This personal preference information process makes assumptions about its audience: what they need and what they value. These assumptions will naturally lead to more subjective information being offered via the Web, and this will lead to the elimination of some information. Indeed customization, viewed as an advantage to consumers, may, in actuality, lead to greater restriction of information and less control (Turban et al., p. 29).

Mobile phones and SMS are the tools used in digital marketing campaigns in order to reach a wide target audience and attract their attention to a particular product or service. Developments in I.T. have led to interactive communication tools such as mobile phones being used to complement less interactive mechan­isms such as mail or media advertisements. The growing use of carefully targeted direct mail has characterized this as the age of address­ability. “Mobile commerce refers to transactions using a wireless device and data connection that result in the transfer of value in exchange for information, services, or goods. Mobile commerce, facilitated generally by mobile phones, includes services such as banking, payment, and ticketing” (Mobile commerce, 2005). For suppliers, building longer-term customer relationships with the help of m-commerce means maintaining a dynamic knowledge of customers’ requirements, prefer­ences, and expectations. While corner shop managers may be able to retain customer likes and dislikes in their heads, larger organizations need customer relationship management systems that manage data throughout the customer life-cycle, from initial contact, through information exchange and sales, to delivery and post-sales service. According to research:

SMS advertising is most appropriate for low-price items. Almost all respondents were satisfied or very satisfied with reading and interpreting the messages. Most (81 percent) reported reading all messages, 63 percent responded or took action, and 17 percent forwarded at least one message (Trappey and Woodside, p. 382).

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According to Sadeh (2002), as surveys continue to show, advertising products and services with the help of e-commerce and digital outdoor are relatively easy. For effective campaigns, more difficult but absolutely crucial is to gather vital customer information, obtain customer feedback, utilize existing knowledge about the customer and exploit the interactive nature to add value through product configuration (Sadeh 39). Apart from striving continually to offer a superior product at a com­petitive price, with strong brand values (or corporate image), what else can a company do to stop its customers from preferring to do business with the competition? Increasingly, organizations realize that they need to develop active customer retention strategies using mobile technologies as opposed to the more conventional passive approach to retention (Sadeh, p. 41).

The marketplace of the twenty-first century is much more volatile than hitherto and is characterized by a greater willingness on the part of customers to switch brands or suppliers. Hence, the need to develop explicit programs to improve customer retention has become a business imperative. The average rate of customer retention that results from implementing the process represents the organization’s customer reten­tion level. The customer retention improvement process can be viewed as working from the top of the figure downwards, with the output of early warning and remedial action feeding back into customer retention level measurement. However, it is important to note that a single customer may be retained by more than one supplier within the same product or service category, and thus the retention rate being measured is “non-exclusive” (Stone, p. 87). For example, customers may hold savings or credit accounts with two or three different financial services providers concurrently in order to optimize their (personal or corporate) financial status. It is important to note also that a single customer might place the bulk of his/her busi­ness with one supplier while still holding open less-used accounts. Thus the retention rate measured by the supplying organization that has the customer’s major account will reflect a greater’ share of wallet’ than the organizations that have the customer’s minor accounts. For these reasons, it is wise to track changes in individual and collective customer spending; that is, to monitor fluctuations in account spend­ing and to identify any patterns of behavior that digress from the customer norm (Shimp, p. 22).

WebTV networks and banners ads are still very popular among digital marketers, but they have low response levels. The evolution of Internet marketing communications ensued with sponsored banners (banner advertising, i.e., banners, buttons, keywords, hot corners, etc.). It became possible with the first browsers and evolved into extended variations (cross-branded content, interstitials). Banner advertising represents efforts to apply the traditional broadcast ad model on the Web; online direct reflect attempts by direct marketers to exploit their ad model in cyberspace (e.g., direct response, advertising networks, etc.). If push extended digital marketing from online to offline advertising, WebTV networks reflected and accelerated the convergence of the traditional television set and the contemporary P.C. Providing a form of hybrid access into the Web, and it also gave rise to new opportunities in digital marketing (Bird 192, 195). Following Chaffy et al. (2000), banner effectiveness was influenced by some ten basic determinants, which ranged from the general objectives of the campaign to the details of the design. To be effective, for instance, banners had to be properly targeted; strategic use of animation grabbed attention far more effectively than static banners, and so on. Having first familiarized advertisers and Web publishers with sponsored content, HotWired also took it further by rolling out “microsites” sponsored by its advertisers. Less intrusive than banners, sponsored sites attracted many advertisers who hoped the users would associate the content with the advertiser’s company, product, or service (Chaffy et al., p. 43). One of the earliest examples was HotWired’s site called Dream Jobs, which was sponsored by Dockers. Designed to promote the idea that, in one’s dream job, one could wear Dockers at work, the microsite exploited lifestyle marketing. Many microsites expanded the advertorials to multiple ad/ content pages and were reminiscent of special ad supplements to magazines and newspapers (Chaffy et al, p. 44).

Great merchandising is the key to success for most retailers, online and offline. Great retail brands are not built through advertising, but through store use, through being in front of your customers, and by being at the right place with the right product at the right time. Most of the failures of digital marketing during the past were caused by brand managers who were brought in to run the digital marketing campaigns and confused brand building with successful merchandising (the core to building a retailer). Above all, the experiences of the past few years have shown that the traditional rules for successful advertising is different in the online world than in the traditional brick-and-mortar world (Griffin and Mcarthur, p. 19). Despite recent difficulties, this new medium is only 10 years old and will have an incredible impact on how consumers shop, retailers sell, and manufacturers create their brands. The key to understanding the Internet’s impact on retailing lies in comprehending that the Internet is not so much a separate retail channel as it is an extraordinary tool to accelerate and streamline all aspects of a retail business. In fact, the best way to view the Internet is to understand that it is simply an incredible database of knowledge and information that is approachable and actionable whenever and wherever a customer wants (Jacoby et al, p. 6).

Because of its global reach, digital marketing is ideal for market development strategies, where existing products can be offered in new markets without the need to establish an expensive physical presence in the country concerned (Trappey and Woodside 382). Wind and Mahajan (2000) note that new market segments may also be drawn in if products are offered online. They quote the examples of consumer retailer Argos (www.argos.co.uk), which has also attracted business customers, and the business-focused R.S. Components (www.rswww.com), which is now attracting individual consumers online. It may also be possible to develop new information-based products that provide added value to existing customers (product development). A common application here is the development of free ‘white papers’ or case studies providing useful information while also promoting the activities of the company itself. Online diversification is unusual because it carries the most risk. Unlike the other categories, both product and market are unknown quantities. Hotmail account holders send an advertising message that is attached to the bottom of every email. Email newsletters offer an opportunity to raise brand awareness and generate goodwill through dissemination of useful free content, and many contain the plea to ‘forward to a friend’. Corporate branding is an important factor in building up reputation, Web traffic and, ultimately, revenues online. Reputation is one aspect of branding that is often highlighted as an intangible asset: very difficult to create, imitate or substitute, but extremely important as a source of competitive advantage. Research by Chaffy et al (2000) showed that companies with an established reputation are more likely to attract attention online than new Web-based firms. Brand-building features such as community groups provided on the Web site allow customers to interact and share information with others, which helps in building up a degree of trust that can partly compensate for the absence of an established retail presence and then result in increased revenues (Hieging and Cooper, p. 272).

For instance, in banking sector, many corporations are aimed to focus on organic growth and operational cost reduction through investments in infrastructure and innovative products in order to brand the bank as an early adopter of new technologies (Turban et al, p.65). Online, a customer is interacting with the brand. The interesting thing about interactive is that it is exactly what it sounds like. It is interactive and that shifts advertising and branding a lot. Online, a customer is starting to see it shift and move from motivation to customer acquisition. With digital marketing, there is purchasing through banners or buttons or whatever. A company, in it s turn, can target advertising, it can do broadcast advertising. And with T.V. and radio moving into digital, they will look more like interactive and they too will be addressable. Following Dayal et al (2000): “Digital brand builders should care about the consumer’s online experiences for the simple reason that all of them–good, bad, or indifferent–influence consumer perceptions of a product’s brand”.

The threat for the future of digital marketing is data protections and privacy laws accepted in order to protect personal information from undesirable intrusion. The field of marketing communications has seen dramatic changes since the 1980s, not least the unprecedented advances in marketing technologies (Turban, p. 35). The ubiquitous Internet, ingenious smart cards, sophisti­cated customer databases, easily accessible data warehouses, and cost-effective direct mail have all contributed to a quantum leap in the quantity and quality of information exchanged between companies and their customers. Through information and communications tech­nology, the pace of exchange has reached lightning speed and the costs of information processing have plummeted. The impact on the everyday lives of businesses and individuals has been profound.

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Privacy concerns relate not only to interception and subsequent misuse of credit card or other personal data on the Internet but also extend to private use of information held on computers about individuals, such as health, tax and social security records, and to monitor­ing of what is downloaded from different sites and by whom. For instance, if someone goes into a e-shop the staff can record which items they are buying and their personal information such as email, telephone, etc (Turban et al 76; Wind and Mahajan 109). The role of digital marketing is to inform the market clearly and persuasively about the company, its products and services. As businesses compete in a progressively fiercer market place for a larger wallet share of an increasingly discerning and diverse customer base, they become ever more communication-dependent. The emergence of direct marketing, customer relationship management, and various other marketing disciplines underline the importance of this approach.

Digital marketing demonstrates it has been able to successfully sell propositions where the content owners have failed with a direct approach. Customer retention-level measurement must also consider the reality that some customer relationships are more precious to the sup­plying organization than others. As limited resources dictate that no organization ‘can be all things to all people’, it is vital that marketing strategies are selective and prioritizing. The aim of digital marketing should be to retain the most valuable customer relationships and to develop or drop the least valuable ones. This involves rewarding ‘valuable customer rela­tionship’ behavior visibly while actively dissuading customers who up to that point have not met (in the case of existing customers) or are unlikely to meet (in the case of potential customers) the ‘valuable customer relationship’ criteria. Experience has shown that companies that systematically attempt to use digital marketing methods, have opportunities to compete on the market and obtain a leadership position.

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