Digital Retailing Chapter 3 & 4 PDF

Because learning changes everything.® Digital Retailing CHAPTER 3 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.  The 7C Framework of Digital Retailing...

Because learning changes everything.® Digital Retailing CHAPTER 3 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.  The 7C Framework of Digital Retailing 1 Digital Retailing The online business activities and digital assets used for creating, capturing, communicating, and delivering value to customers. Includes websites, blogs, mobile apps, and pages on various social media platforms (e.g., Facebook, Twitter, Instagram, TikTok, Pinterest, YouTube). Websites can be informational, entertaining, engaging, and transactional. © McGraw Hill LLC 2  EXHIBIT 3-1 The 7C Digital Retailing Framework © McGraw Hill LLC 3  The 7C Framework of Digital Retailing 2 1. Core Goals Retailers can pursue multiple core goals with interactive websites: Engaging visitors. Encouraging them to spend time viewing and interacting with the website’s content. Facilitating commerce. By moving consumers painlessly through the purchase process, websites can inspire shoppers to buy, even if at a later point in time. For example, if the core goal is to get customers to buy, a retailer might provide an in- depth, interactive website that features plenty of information, so that when consumers are ready, they know which item to purchase. © McGraw Hill LLC 4  The 7C Framework of Digital Retailing 3 2. Context Elements Design (colour & font) Navigation. 3. Content Information content on the site (text, graphic, video, audio) must be relevant to shoppers. By providing the right content, and updating it on a regular basis, the retailer anticipates visitors’ questions and attempts to answer those questions in an easy and accessible way. © McGraw Hill LLC 5  Context Elements Content © McGraw Hill LLC  The 7C Framework of Digital Retailing 4 4. Communication Clear, helpful, meaningful content. Not hindered by a lot of noise or confusion. Must include: Way for customer to communicate with retailer (e-mail, live chat, chatbot). Phone or e-mail contact information. Hours of operation. Directions to store. © McGraw Hill LLC 7  The 7C Framework of Digital Retailing 5 5. Community Create a sense of community by posting comments, reviews, responses, images, videos, and suggestions for new products or services. Crowdsourcing – users submit ideas for a new product or service, and/or comment and vote on the ideas submitted by others. Links to social media. Eg: Starbucks #whitecupcontest © McGraw Hill LLC 8  The 7C Framework of Digital Retailing 6 6. Commerce E-commerce: consumers buy products that retailers are selling on some digital platform, and the “storefront” they visit is the retailer’s website or mobile app. Websites may include promotional offers or coupons. Create urgency. Eg: Sign up for an account and use the coupon within 15 days Easy way to purchase without geographic constraints. © McGraw Hill LLC 9  The 7C Framework of Digital Retailing 7 7. Connection Websites and social media pages help customers obtain a sense of connection. A good retail website allows customers to: Buy products and services. Post reviews and comments. Share information with others. © McGraw Hill LLC 10  Mobile and Social Retailing 1 Mobile Retailing Mobile-Friendly Websites: Content generally appears in a single column, and the drop-down navigation options are more prominent. Attracting and appealing to users. Must be designed exclusively for mobile devices. A responsive website design automatically formats page designs differently, depending on the size of the device screen. © McGraw Hill LLC 11  Mobile and Social Retailing 2 Mobile Retailing continued Mobile Apps: 85 percent of mobile shoppers prefer to use mobile applications (apps). Apps have the lowest shopping cart abandonment rate and users spend more on average. Can establish strong cross-channel bonds and an omnichannel presence (more in Chapter 4) © McGraw Hill LLC 12  Shopping Cart Abandonment Rates by Digital Channel Access the text alternative for slide images. © McGraw Hill LLC 13  Mobile and Social Retailing 3 Mobile Retailing continued Location-Based Technologies: With push notifications, retailers send messages and alerts to users in real time, usually as an embedded online ad that appears on users’ mobile devices. Geotargeted advertising. Helps build a sense of community by driving consumers to their local store, where they also are more likely to make a purchase. © McGraw Hill LLC 14  Mobile and Social Retailing 4 Social Media-Based Retailing Social media include YouTube, Facebook (which also owns Instagram), Pinterest, Twitter (microblog), and TikTok. Can be used to engage customers in proactive dialogue. Little control over customers’ messaging. Low cost of exposure. © McGraw Hill LLC 15  The Paid-Owned-Earned Digital Media (POEM) Framework Introduction and widespread adoption of online, social and mobile channels have ushered in a more contemporary paradigm. In addition to paid media, retailers can interact with consumers through owned and earned media. © McGraw Hill LLC 16  Types of Media 2 Paid Media Includes search engine marketing (SEM), Similar to conventional advertising in that the retailer pays a fee to appear in those media. Forms of paid media: Search ads on websites like Google, Display ads that pop up on websites, Ads that exist as overlays or interruptions on videos, Ads that are displayed on social media channels (in-feed, promoted, and sponsored), Sponsored content across websites, Banner advertisements, Pay-per-click SEM results. © McGraw Hill LLC 17  Types of Media 1 Owned Media The content that retailers create and publish, such as their own e-commerce websites, blogs, social media pages, chat platforms, e-mail marketing, and mobile apps. Often represent the point of purchase. Need to drive traffic to the sites. © McGraw Hill LLC 19  Types of Media 3 Earned Media Any content or discussion of a retailer, created by others, and published beyond its owned media channels, on some third-party site or page. Can take the form of online reviews (i.e. Google review), customer conversations, mentions (Instagram story), and shares on those third- party sites (social media platforms or any relevant platforms). Search engine optimization. © McGraw Hill LLC 21 © McGraw Hill LLC  Influencer Marketing 1 Influencer Marketing Refers to paid media that uses seeds to deliver messages to a targeted audience. Seeds can be influencers in the traditional sense, but they can also be everyday consumers who have a larger audience or greater reach. Although many influencers originally gained fame in other domains, such as sports and entertainment (e.g., Ariana Grande, Tiger Woods, Leng Yein), some have solidified their influence primarily through social and mobile channels (e.g., Arieff Yong) © McGraw Hill LLC 23  Influencer Marketing 2 Assessing the Efficacy of Influencers Relevance. Encompasses both the focal influencer and her or his followers (i.e., targeted audience) and how they link with the brand and its message Influencer marketing is more effective if relevant influencers, with expertise in some related element, share a pertinent brand message. Eg: Tiger Woods promoting golf clubs Reach. Refers to the percentage of a target population exposed to a specific marketing communication at least once. For the specific context of influencer marketing, reach depends on the number of followers, the level of activity by the influencer, and the degree of engagement between followers and the influencer, as well as with others (i.e., friends of followers). Entertaining and hedonic post likely spread further than a basic, informational one. Eg: https://www.youtube.com/watch?v=xsI5EeSrFZs © McGraw Hill LLC 24  Influencer Marketing 2 Assessing the Efficacy of Influencers Response. Once followers engage with the message, retailers also need them to go further and respond in desired ways. The measure of the response depends on the core goals of the campaign. For example, if its core goal is exposure or awareness (see Chapter 18), the retailer can assess how many people liked or commented, because those actions indicate they likely can identify the brand and its message. However, if the goal is to prompt sales, the firm needs to determine whether the influencer is the source of a subsequent purchase by one of his or her followers, a measurement that is difficult to accurately obtain. Return (ROI). Refers to the revenue earned from some action, minus the cost of that action, divided by the cost. For example, the ROI of an influencer campaign would equal the revenue earned from it (which already is hard to determine), less the costs of paying the influencer, divided by those costs. To determine which influencer to collaborate with, a retailer thus must consider not just its core goals and the market it is attempting to reach but also its projected ROI. Tiger Woods vs Christiano Ronaldo selling golf clubs © McGraw Hill LLC 25  Types of Influencers Type of Definition Examples Key Channels Average Cost per Influencer Post Celebrity Large following, widely Nespresso relies heavily on George Clooney to Social media, print, television $3,000–$500,000 Recognized promote its products in marketing across platforms, leveraging his cool image to enhance its appeal but also his reputation for environmental sustainability to promote its own efforts along these lines. Micro Modest following, niche interest NUX Active (athletic clothing brand) worked with Posts on social media sites, $80–$500 Sydney Loveleigh Nelson, whose health and fitness shared promo codes posts have earned her about 21,000 followers. Blog Writes for a blog and has The FaceGym spa sponsored a blog post by lifestyle Reviews on blog, guest blog $400–$5,500 attracted readers and blogger Hannah Bronfman to provide information posts subscribers with that content about its services and treatments. Social media Popular on social platforms LaCroix worked with nutritionist Joy Bauer to create Picture posted with the $100–$500,000 (e.g., Instagram, YouTube) a Twitter post of a recipe she had created using the product, shared hashtag, among followers in specific product. video featuring the product target audiences Specialized Key opinion leader or expert in BoxyCharm, a subscription beauty box service, Social media, tutorials, $500–$5,000 a specific field worked with Kandee Johnson, a professional reviews, blog posts, sponsored makeup artist, to make videos that explained each print articles, articles in product included in a box. academic journals © McGraw Hill LLC Source: Baker, Kristen. “What Will Influencer Marketing Look Like in 2020?” HubSpot, December 2, 2019. https://blog.hubspot.com/marketing/how-to-work-with-influencers. 26  How Retailers Engage Their Customers 1 Listen-Analyze-Do Framework Listen to what customers say. Often, it is better to listen first, before offering your own insights or suggestions. For retailers, customer reviews online, in social networks, on mobile apps, or on third-party review sites represent primary sources of information about evaluations of their products and services. Customers appear willing to provide their opinions on just about anything, including their interests and purchases—both their own and their friends’. Analyze the information and content. It would be impossible for a single retail manager, or even a department, to keep track of all the chatter about the firm that gets posted across digital channels. In-depth retail analyses often require well-trained marketing managers, proven marketing analytic software, and help from consulting specialists (e.g., IBM, SAS). Specialized companies also sell sophisticated analytic tools that not only gather the information (i.e., facilitate listening) but also analyze what all those comments indicate. Do the right things to promote commerce. Even the most sophisticated analysis has little use if a retailer fails to implement what it has learned from scrutinizing its online, social, and mobile media. Customers also are accustomed to immediate responses, so retailers must acknowledge each complaint or comment and deliver the response directly and in a timely fashion. Retailers that attract substantial mobile, online, and social media attention from customers must maintain well- staffed teams of customer service representatives who are trained and able to respond quickly, personally, respectfully, and appropriately to any comment received through the retailer’s sites. © McGraw Hill LLC 27  EXHIBIT 3-9 How to Do a Digital Retailing Campaign Access the text alternative for slide images. © McGraw Hill LLC 28  Digital Retailing Campaign 1. Identify strategy & goal: Does it want to increase awareness of products? Is it hoping more potential customers might visit and “like” its Facebook page? Is its focus mainly on increasing sales of the product? Depending on what the company aims to achieve, it might focus on developing a Facebook page, creating a Facebook app, or hosting a Facebook event. 2. Identify target audience: Facebook enables retailers to perform targeting that is based on location, language, education, gender, profession, age, relationship status, likes/dislikes, and friends or connections. The retailer’s aim is to find an audience big enough that it reaches all those who might adopt its products but not so big that it ends up trying to appeal to someone way outside its target audience. 3. Develop budget: Budgeting is key. Facebook allows advertisers to set a daily budget: Once costs (usually per click) reach a certain level, the ad disappears for the rest of the day. This option can be risky if the firm is getting great feedback and all of a sudden, a compelling ad disappears. Therefore, like the campaign content, budgets demand nearly constant review. 4. Develop the Campaign: The next step is to develop the communications, including the copy and images. There should be a call to action that is clear and compelling. Strong, eye-catching images and designs are important. However, an aspect that is uniquely critical for social media is that the images and messages need to be updated almost constantly. Because people expect changing content online, it would be inappropriate to run the same campaign for several months, as the firm might if it were advertising on television, for example. 5. Monitor & change: The final step is to review the success of the campaign and make changes as necessary. After analyzing their digital marketing analytics and website traffic data, retailers should constantly make necessary changes to increase their brand presence online and improve their digital conversion rates. Too often, companies collect, store, and analyze data but do not make the necessary changes to increase the ROI from online activities. © McGraw Hill LLC  EXHIBIT 3-10 Example Facebook Targeting Choices Access the text alternative for slide images. © McGraw Hill LLC Source: Facebook. 30 Because learning changes everything.® www.mheducation.com © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC. Multichannel and Omnichannel Retailing CHAPTER 4 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.  Retail Channels Defines the way a retailer sells and delivers merchandise and services to its customers. Channel: The opportunity to complete a transaction, i.e: Stores, Internet, mobile, social media, catalogs. Medium: Used to communicate information to consumers, i.e. Facebook, Instagram, TikTok, etc. © McGraw Hill LLC 33  Retail Channels Retail Channel: Single-channel retailing: Sell and deliver through only one channel. Multichannel retailing: Cross-channel retailing. Omnichannel retailing. Boundaryless retailing. © McGraw Hill LLC 34  Progression from Single-Channel to Omnichannel Retailing Access the text alternative for slide images. © McGraw Hill LLC 35  Relative Strengths of Retail Channels 1 Advantages of In-Store Retailing Touch and smell of products. Perhaps the greatest benefit offered by stores is the opportunity for customers to use all five senses—touching, smelling, tasting, seeing, and hearing—when examining and evaluating products. Eg: perfume Personal service. Sales associates still have the unique ability to provide meaningful, personalized information. They can tell customers if a suit looks good on them, suggest a tie to go with a dress shirt, or answer questions customers might have about. Risk reduction. The physical presence of the store reduces perceived risk and increases customers’ confidence that any problems with a purchase will be corrected. Prior to purchase, consumers can reduce the risk of purchasing products that won’t meet their expectation by being able to try or sample things in person or get additional information on how to use a product. © McGraw Hill LLC 36  Relative Strengths of Retail Channels 1 Advantages of In-Store Retailing Immediate gratification. Customers can use merchandise immediately after they buy it in stores. Thus, when customers have a fever or need a last- minute gift, for example, they do not have to wait the minimum turnaround times of a day or two for the delivery. Entertainment and social experience. In-store shopping can be a stimulating experience for some people, providing a break in their daily routine and enabling them to interact with friends. It can even feel a bit like a playground, especially if the retailer strongly emphasizes the in-store experience. Cash payment. Stores are the only channel through which consumers can make cash payments. Some customers prefer to pay with cash because it is quicker, resolves the transaction immediately, and does not result in potential interest payments or excessive debt. Other customers are concerned about security and identity theft and thus prefer to use their credit card or debit card in person rather than electronically sending the payment information via the Internet. © McGraw Hill LLC 37  Relative Strengths of Retail Channels 2 Internet Retailing Internet retailing involves retailers interacting with consumers via the Internet. Characteristics of Mobile retailing, mobile commerce, m-commerce: Deeper and broader selection. More information for evaluating merchandise. Personalization. Expanded market presence. Information to improve shopping experience across channels. Perceived risks in Internet shopping. © McGraw Hill LLC 38  Advantages of Internet Retailing Deeper and broader selection. One benefit of adding Internet channels is the vast number of alternatives retailers can make available to consumers without crowding their aisles or increasing their square footage. Stores and catalogs are limited by their size. Eg: Uniqlo has Plus sized clothes on their online store, none in physical store. More information for evaluating merchandise. An important service offered by retailers is providing information that helps consumers make better buying decisions. Retail channels differ in terms of how much information customers can access. The amount of information available through the store channel is limited by the number and training of sales associates and the space allocated to informative signage. Personalization. Due to the Internet’s interactive nature, the most significant potential benefit of Internet channels is their ability to personalize merchandise offerings and information, in an economical way, for each customer. Customers control some of this personalization by drilling down through web pages until they have enough information to make a purchase decision. In addition, when using Internet channels, customers can format the information so that they can use it effectively to compare alternatives. Eg: Apple website allows you to compare few macbooks at one glance. © McGraw Hill LLC  Advantages of Internet Retailing Expanded market presence. The market for customers who shop in stores is typically limited to consumers living in relative proximity to those stores. The market for catalogs is limited by the high cost of printing and mailing them and increasing consumer interest in environmentally friendly practices. By adding the Internet channel, retailers can expand their market without having to build new stores or incur the high cost of additional catalogs. Eg: IKEA opens a new collection point in Ipoh while not having a physical IKEA store there. Information to improve shopping experience across channels. It is difficult for most store-based retailers to develop extensive purchase histories of their customers, because those retailers cannot link individual transactions to customers who pay cash or use third-party credit cards. In contrast, all transactions through the Internet have the customer identification information needed to send the product to the customer, as well as their search behavior. This information can be used to provide valuable insights into how and why customers shop and are dissatisfied or satisfied with their experiences. Eg: Uniqlo app has your purchase histories. Perceived risks in Internet shopping. Some consumers are concerned about buying products through an Internet channel. Specifically, some believe that the security of credit card transactions is greater in stores than online, and they also worry about the potential for privacy violations. © McGraw Hill LLC  Relative Strengths of Retail Channels 3 Mobile Retailing Customers access retail sites from anywhere. Location-sensitive; retailer can determine where a customer is located and send location-relevant info to the customers. Biggest disadvantage is smaller viewing screen. Some retailers design distinct websites and apps for different devices. © McGraw Hill LLC 41  Relative Strengths of Retail Channels 4 Social Retailing Social-retailing involves conducting purchase transactions through social media sites. Twitter, Pinterest, Instagram have “buy buttons” that support retailing operations. WhatsApp Business has catalogue. © McGraw Hill LLC Jimmy Tudeschi/Shutterstock 42  Relative Strengths of Retail Channels 5 Catalog and Other Nonstore Channels Catalog channel. Place an order from anywhere. Can access catalog anytime. Can be easier to browse than website. Direct selling. Face-to-face interaction with customer at home or work. Automated retailing. Vending machines. © McGraw Hill LLC 43  Opportunities Facing Multichannel and Omnichannel Retailers Multiple channels to build competitive advantage. The typical examples of the evolution toward multichannel retailing are when store-based retailers and catalogers add Internet channels. But Amazon, which is famous for its Internet channel, also is moving in the other direction, experimenting with various brick-and- mortar concepts to appeal to consumers with different needs. To start, it launched bookstores that carry a limited selection of books and accessories that had been well reviewed online. Next, Amazon launched Amazon Go, a grocery store that allows customers to scan their Amazon app on entry, pick items off shelves, and walk out the door without an additional stop to pay, for a completely autonomous shopping experience Seamless omnichannel experience. Purchase online or in-store Use various channels synergistically. Multichannel and omnichannel retailers can use one channel to promote the services offered by other channels. For example, the URL of a store’s website can be advertised on in-store signs, shopping bags, credit card billing statements, point-of-sale (POS) receipts, and the print or broadcast advertising used to promote the store. The physical stores and catalogs are also advertisements for a retailer’s other channels. The retailer’s channels can be used to stimulate store visits by announcing special store events and promotions. Lower costs for order fulfillment and processing. They can use their stores as “warehouses” for gathering merchandise for delivery to customers. Customers also can be offered the opportunity to pick up and return merchandise at the retailer’s stores rather than pay shipping charges. Many retailers will waive shipping charges when orders are placed online or through the catalog if the customer physically comes in to the store. © McGraw Hill LLC 44  Challenges Facing Multichannel and Omnichannel Retailers 1 1. Struggle to provide an integrated experience. Various channels demand various skills and unique resources Many store-based retailers have a separate org. to manage their Internet and catalog operations. However, as multichannel and omnichannel operation matures, retailers tend to integrate all operations under one org. © McGraw Hill LLC 45  Challenges Facing Multichannel and Omnichannel Retailers 2 2. Consistent Brand Image across Channels All channels should present a consistent image. Each channel reinforces the image. Eg: Patagonia reinforces its image of selling high-quality, environmentally friendly sports equipment hence all the channels must emphasise on function, not fashion. They also communicate their concerns by carefully lighting its store, using recycled polyester in their clothes, and organic instead of pesticide-intensive cotton. © McGraw Hill LLC 46  Challenges Facing Multichannel and Omnichannel Retailers 3 3. Merchandise Assortment Internet channel offers broader, deeper merchandise assortment. Suits for “look-and-see” attributes such as price, color and grams of fat. Store channel better suited for “touch-and-feel” products such as fit of a shirt, ice-cream flavour and smell of perfume. 4. Pricing Customers expect pricing to be the same across channels. Retailers adjust prices based on competition in different channels. Physical stores often set different prices for the same merchandise to deal with differences in local competition. However, online retailers face difficulties sustaining price differences when customers can easily check prices on the Internet. © McGraw Hill LLC 47  Challenges Facing Multichannel and Omnichannel Retailers 4 5. Reduction of Channel Migration Showrooming can be reduced by: Providing better customer service. Offering unique relevant information based on customer data. Promoting private-label merchandise. © McGraw Hill LLC 48 Because learning changes everything.® www.mheducation.com © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.