Digital Marketing PDF

© Noordhoff Uitgevers bv 13 1 1 Digital Marketing Author: Marjolein Visser Over the...

© Noordhoff Uitgevers bv 13 1 1 Digital Marketing Author: Marjolein Visser Over the past decades the framework of marketing has changed dramatically. Internet use has become part of the daily routine for almost everyone. It has radically transformed the behaviour of consumers and business buyers. Knowledge of online consumer behaviour and Digital Marketing are vital to marketers. This first chapter will explain what Digital Marketing involves and which basic principles are covered in this book. The following chapters will describe how Digital Marketing fits within all of the other marketing related business processes. The last chapters of this book describe overarching subjects eg. effective websites and apps, digital/web analytics and the planning and organisation of the Digital Marketing process. This chapter will cover: the definition of Digital Marketing Digital Marketing versus traditional marketing Digital Marketing and the marketing mix Digital Marketing in relation to business processes development of Digital Marketing basic models for Digital Marketing communication After reading this chapter you will be able to: explain what Digital Marketing involves identify the differences between traditional marketing and Digital Marketing name and recognise ‘the seven types of websites’ denote the relationship between the Four Ps and the Four Cs describe the five Digital Marketing-related core business processes describe the phases in the development of Digital Marketing using examples, illustrate how the Digital Marketing funnel is related to the RAIA model 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 13 26/11/20 3:57 PM  14 © Noordhoff Uitgevers bv § 1.1 Definition of Digital Marketing Kotler and Armstrong (2019) define marketing as follows: “Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return.” 1 Peter Drucker (1973), a famous management guru, defined the purpose of marketing as follows: “the aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.” According to Kotler, marketing is an integrated process that companies use to create value for customers and to build strong customer relationships in return for a reciprocation of value from their customers. In many instances, products or services are traded for money, but alternative exchanges are also possible, eg. political parties that trade ideological representation of interests for votes or brands that trade interesting/valuable content for the user’s time and attention. The internet plays an ever-increasing role within the marketing process. Digital Marketing is a sub-process of marketing. Therefore, we can define Digital Marketing as a process in which organisations and existing or potential customers use the internet to create value and products as well as exchange them. In this respect we do not discriminate between the various ways that the internet is accessed and the device on which the content on the internet is viewed. Whether a computer or a smartphone is used is of importance to the applied technological methods, but not to the marketing principles. Internet marketing, online marketing and e-marketing are all synonyms for Digital Marketing. In this book, we will use ‘Digital Marketing’. One frequently asked question remains: what is the difference between Ecommerce Digital Marketing, ecommerce and ebusiness? Ecommerce refers to selling products or services over the internet. Customers can complete transactions or submit changes using a website. This book considers ecommerce to be one of the possible options within Digital Marketing. Many organisations do approach their customers via the internet, but don’t sell their products online. In this case it is a question of Digital Marketing communication, an element of Digital Marketing, but not of ecommerce. Ebusiness The authors of this book see ebusiness as a way of doing business with the assistance of digital technologies. Ebusiness is a wider concept than Digital Marketing and ecommerce. In ebusiness it’s not only about the interaction with markets, but about adequately establishing all of the processes that enable an organisation to make their products or provide their services. It’s about the front and the back of the organisation, including the parts the customer does not come into contact with (see Figure 1.1). Ecommerce is simply defined as ‘selling and buying online’. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 14 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 15 FIGURE 1.1 Ebusiness encompasses digital processes throughout the entire organisation and is more inclusive than Digital Marketing Ebusiness 1 Digital Marketing Market § 1.2 Digital Marketing versus traditional marketing Digital Marketing is becoming increasingly important. As a result of the growing number of possibilities regarding digitalisation and interactivity that the internet facilitates, a number of marketers’ dreams have become reality. When used wisely, the internet makes marketing more effective: marketing objectives can be met with less effort. Consider the following possibilities: Thanks to the internet, the customer’s demands for information are more easily and simply met. The internet allows for the provision of tailor-made information. The internet offers the possibility of gathering large quantities of data about potential customers. The effects of marketing communications on the internet can (in most cases) be easily measured. A high level of interactivity with customers is possible. Also, Digital Marketing can be more efficient than traditional marketing. Eg.: It is possible to share large quantities of information with potential customers at low cost. The marketing budget can be more purposefully assigned due to the fact that the effects of marketing communications are (in general) more easily measurable. The internet has accelerated the transition from mass marketing to individual One-to-one marketing. The aim of individual marketing is to fully tailor products and marketing marketing or marketing efforts to the individual customer. Individual Because the internet allows for the customer’s individual data to be saved, marketing communications have become increasingly ‘personalised’. The profile of the individual customer is recognised; thus, they receive a ‘personalised offer’, an individual proposition. That way a travel agency can offer a customer, who Individual is recognised in their database as someone who likes to take his/her proposition children to a theme park, a last-minute deal for Disneyland Paris. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 15 26/11/20 3:57 PM  16 © Noordhoff Uitgevers bv Simultaneously, an older couple that enjoys walking are offered a peaceful holiday in the Austrian Alps. Individualised The internet makes individualised production easier. On the internet, you production can design T-shirts or greetings cards with a personalised image on them, You can even design your own brooch and have it printed in 3D. Digitised 1 services mean users can seek advice or information at any time: even in the middle of the night you can ask your bank for a statement or pay a bill; the internet and world wide web (www) are ‘always-on’ 24/7. Individualised distribution of ordered goods or services is relatively cheap and often highly effective via the internet. Eg. when you book a flight online, you can either print your ticket yourself or access it on your smartphone via the airline’s own app. A package from Amazon.com is delivered to your doorstep the following day; you don’t have to go to the store for it; moreover, you get helpful messages regarding the status of your order. The website is at the centre of Digital Marketing. Websites can be classified as follows: Corporate sites Corporate sites are aimed at supporting interaction between the organisation and the various stakeholders, eg. customers, employees, press and shareholders. Ecommerce sites Ecommerce sites are online stores or selling sites where products can Selling sites be viewed and ordered; famous examples are Amazon.com, eBay and Taobao (Alibaba). Ecommerce sites can also be procurement sites of a company or sector, where the purpose is seeking/accepting offers/bids/ tenders, ie. buying, not selling. Communication Communication sites inform their visitors more about the products or sites services of the supplier. Besides product descriptions these sites also include functional elements eg. lists of stores where the product can be purchased (or ‘store finder’ tools) and user manuals. An example of this type of site is Grundig.com. In some cases (especially for Business-to- Business ie. B2B marketing) this type of website has the specific Lead generation purpose of reaching out to potential customers. These are called lead sites generation sites. Branding sites Branding sites aim to improve brand knowledge and brand perception. These sites are usually very interactive and contain ‘fun’ recreational elements eg. forums or games intended to make the visitor come back more often. Eg. Liverpoolfc.com. Service sites Service sites not only provide information but are also involved in the production process of the organisation. Eg.; online banking, ebay.co.uk and online newspapers. In these cases, the content and functionality are the product. Portals Portals present an overview of websites for specific target groups or for particular subjects. In web history, brands like AOL, Yahoo! and msn were early examples. Content sites Content sites or publishing sites provide their visitors with information. This could be news, but also other kinds of information that would be interesting for a specific target group or in a specific situation, eg. reviews. Examples are websites eg. huffingtonpost.com or tripadvisor. com. Apps can also take on the aforementioned roles within the Digital Marketing strategy. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 16 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 17 1 The Liverpool FC brand website is interactive and contains relaxing elements In referencing PR Smith’s 5Ss model, Chaffey & Ellis-Chadwick (2019) list 5Ss model five objectives for Digital Marketing communications activity: Sell; increasing sales by accessing new markets or by developing new (online) products. Speak; initiatives for better communications with (potential) customers. Serve; improving customer service. Save; cost reduction through the use of digital media. Sizzle; initiatives to support the brand. § 1.3 Digital Marketing and the Marketing Mix The ‘Marketing Mix’ is one of the most frequently used concepts from Marketing Mix marketing theory. Originally it represents a sort of formula for marketing activities. The idea is that the marketer should be a kind of chef, mixing the four elements together in order to achieve an offer that caters optimally to the taste of the target audience; a product that aligns with their needs and desires, a price they are willing to pay for that product, a place where they can buy or reserve the product and promotion to stimulate the sales of the product. Another analogy is that of the marketer as the ‘conductor of the orchestra’, bringing in each instrument at the appropriate time and at the appropriate volume. Later, the Marketing Mix’s element ‘place’ gained a broader definition. It’s not only about the question of where the customer can buy the product (distribution), but also about the answer to the question of how the product will eventually end up in the customer’s hands. Today, almost every organisation uses the internet for customer communications. This could simply be a way of providing information (replacing traditional brochures), but also advertising (eg. online display advertising) or sales. The internet can contribute towards each of the marketing instruments: product, place, price and promotion (the Four Ps). Four Ps Examples of websites as a product are auction sites (eg. eBay) and dating sites (eg. Tinder, Grindr). Websites as distribution channels (place) are those of eg. music publishers or publishers of scientific publications. After payment you can download or stream the desired song or article. Airlines are a good example of how the internet can be deployed as part of the marketing instrument ‘price’ (see dynamic pricing). 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 17 26/11/20 3:57 PM  18 © Noordhoff Uitgevers bv It is interesting how the different marketing instruments seem to merge on the internet and particularly in the case of information-based service businesses and publishers. Banks are a clear example of this: online banking is undeniably part of the production process, but it also replaces the physical bank branch as a distribution channel. 1 Simultaneously the website functions as promotional channel for the various financial products that the bank wants to bring to the attention of their customers. The Four Ps are often denounced as not being viewed from the purchaser’s perspective. For this reason, Robert Lauterborn introduced the Four Cs model. He states that marketing has developed from a technique for organisations to sell a product (P) into a philosophy to endear themselves to their customers and encourage commitment. The old Ps are predominantly suitable for a manufacturer, the modern Cs are a better fit for a more customer-orientated organisation that views itself through the eyes of their customers (Lauterborn, 1990). Four Cs model Therefore, Lauterborn transforms the Four Ps model into the Four Cs model (see Table 1.1). TABLE 1.1 From Four Ps model to Four Cs model Four Ps Four Cs Product Customer solution: solving the consumer’s problem Price Cost to the customer: price/quality ratio Place Convenience: accommodating the customer Promotion Communication: reciprocal communication between an organisation and its customers SIVA-model Dev and Schultz followed up on this model by translating it into the SIVA model Solution, Information, Value, Access (Dev & Schultz, 2005). Both the Four Cs and the SIVA model fit in with the interactivity and customer focus that characterises Internet marketing, but they turned out to be less suitable for the structure of this book. After weighing the pros and cons of each of the established models, the format that was chosen was one that matches the core processes related to marketing as described in Philip Kotler’s recent books. This way the relationship to general marketing theory is retained. § 1.4 Digital Marketing in relation to business processes The five core processes of a business’s marketing are (Kotler & Keller, 2016): Market sensing 1 The market sensing process: the process that keeps organisations up to process date with the market’s needs, developments and trends. Product 2 The product realisation process: researching and developing new core realisation products and services, extending the market supply and the launch of process the product. Customer 3 The customer acquisition process: defining target markets and acquiring acquisition new customers. process 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 18 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 19 4 The order fulfilment process: receiving and approving orders, shipping the Order fulfilment ordered goods on time and collecting payments. (literally: delivering on process your promises). 5 The customer relationship management process (CRM): building a Customer deeper understanding, a better relationship and a better offer for relationship management 1 individual customers. Among other things, online market sensing consists of actively following and analysing the behaviour of your own website visitors, gathering information from social media and online market research (see Chapter 3). One of online market research’s biggest advantages is that results can be quickly collected and immediately accessed. With the realisation of a new product (Chapter 4), concepts eg. ‘user User generated generated content’ (UGC) and crowdsourcing come into play. Users lay the content (UGC) foundation for new products and product improvements by reviewing Crowdsourcing products and answering the questions of other users. Crowdsourcing organisations actively encourage the internet community to get involved and come up with new ideas for products. Market sensing and digital/web Digital/web analytics (Chapter 12) play a big part in forecasting how successful new analytics products will be. Immediate feedback from users leads to a more rapid process of quality improvement and product innovation. Digital Marketing communications (Chapters 5 to 8) provides a way of Digital generating new customers. Online sales and pricing are important aspects Marketing communication for this. One great advantage that the internet provides is that the results can generally be easily measured, which allows quick changes to be made if necessary. So the organisation can also calculate exactly what the most and least profitable communications activities are. Order processing is done quickly and efficiently when the website is combined with an effective and efficient payment and distribution system (see Chapter 9). The advantage of using the internet is that there is minimal time between order, payment and approval of the order (‘real-time’ transactions). The payment process is therefore more efficient and customer-friendly than in the ‘offline’ world. If the product too is digital, the whole process is even more effective: it can be delivered to the customer immediately after payment: the organisation sends a confirmation email or gives the customer access to a download on a website. Customer relationship management or CRM (Chapter 10) uses a variety of channels eg. social media, newsletters, web personalisation and email. In this way, organisations stimulate customer loyalty, allowing them to provide a more personalised service, to make individual offers and to generate higher earnings from existing customers. The main focus is to build customer loyalty. Because data from these customers can be directly included in the database, the results of these efforts are easily measurable, and the time needed to act on customers’ activities can be minimised. Market sensing does not only occur when a product is brought to market, but during all business processes. Using digital/web analytics, valuable information about the target market’s behaviour is gathered permanently. Based on that information, the processes are being optimised and 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 19 26/11/20 3:57 PM  20 © Noordhoff Uitgevers bv improvements are made to the range of products/services on offer to the customer. Digital Marketing is a continuous cycle (see Figure 1.2). FIGURE 1.2 Digital Marketing is a continuous cycle 1 Market sensing Customer relationship Product management realisation Digital Marketing Order Customer processing acquisition § 1.5 Development of Digital Marketing In recent years Digital Marketing has advanced rapidly. We can divide this development into three broad phases: the mass media phase, the internet phase and the social media phase. Figure 1.3 displays the development of marketing, brands and the role of the various types of media. In short, Figure 1.3 explains that brands and consumers are growing closer together. FIGURE 1.3 The development of marketing, brands and media B Brands Paid B media Paid Owned media 2.0 media 3.0 B 1.0 Media Earned Owned Paid C media media media Earned C media C Consumers Source: Marco Derksen/Upstream, edited by DVJ Insights, 2011 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 20 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 21 In Figure 1.3 you also see the concepts: paid (= bought), owned and earned media. These are collective concepts for types of media: 1 Paid media: these are types of media that marketers can buy to create Paid media brand awareness (consider online advertising, radio, television and print). 2 Owned media: these are types of media that are readily available to Owned media 1 marketers themselves and in which they can autonomously decide on the content (eg. websites, apps, email newsletters etc.). 3 Earned media: these are all types of media that a brand ‘earns’ thanks Earned media to customers or journalists, or bloggers/influencers writing about your brand, eg. on social media, or because other organisations refer to your brand on their website. During the first period (the mass media phase) the gap between ‘brands’ Mass media and consumers was the largest; it was mainly the marketer who sent out phase messages to the consumer, who received them. This is also called ‘push’. Push In the second marketing phase (the internet phase) there was more Internet phase interactivity between marketers and consumers and a dialogue started between them. In the last (most recent, current) phase, the social media phase, it goes Social media without saying that consumers are now influencing the brand and therefore phase are an indispensable part of the process. Not only is there dialogue, but also a reciprocal influence. In this case there is no ‘push’ anymore, but ‘pull’. The consumer has a say in what the brand entails and the marketer Pull observes the consumer’s perception of the brand and is supportive of this. (You can read more about this in Chapter 4.) § 1.6 Two important models for Digital Marketing communication As described in 1.1, the ultimate aim of marketing is the exchange of products and value. A company like ASOS aims to exchange a product for money, an organisation like the US Democratic party aims to represent the interests of specific groups in society in exchange for votes. Regardless of the presence of a commercial objective, the ultimate goal of Digital Marketing communication is always to encourage the target audience to engage in a specific action. This is called a conversion. For a commercial Conversion organisation, this conversion takes place in the digital sales channel, eg. a website or an app. We will further explain two basic models using an Digital ecommerce retailer as an example. First, the Digital Marketing funnel, Marketing funnel then the RAIA funnel. The first point of attention for a digital marketer is generating visits to the digital sales channel, in this case the ecommerce website (visit). Here, the objective is to ensure that visitors are so interested in what they find, that they want to find out more about what is on offer (captivate). The next step is ensuring that the visitors compare and evaluate products in order to come to the decision of what to buy (decide). Then the visitor orders the chosen product (order) and completes the payment procedure (payment), leading to the realisation of actual sales. The last objective is to bind the buyer to the ecommerce website in order to encourage repeat purchases (bind). This is clearly shown in the Digital Marketing funnel (Figure 1.4). This funnel is used 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 21 26/11/20 3:57 PM  22 © Noordhoff Uitgevers bv in order to ensure that the digital sales channel or communication channel, where the final conversion must take place, is structured as effectively as possible. More on this subject can be found in Section 3.3. 1 FIGURE 1.4 The Digital Marketing funnel Visit Captivate Decide Order Pay Bind People tend not to find an online retailer by chance; rather the digital marketer must first reach out and convince them. This can be done by constructing a carefully-planned mix of paid, earned and owned media, supplemented with offline communication. Offline media are not covered in this book. The target audience can be reached by, eg. posting a video on social media (Reach). Once someone has seen the message, they must give it their full attention and become aware of the website’s existence (Attention). Eg. someone is watching the first part of the video. It must attract their interest (Interest). If this person watches the video until the end, the digital marketeer knows this has succeeded. Subsequently, the potential customer must be motivated to visit the website (Activation). Activation Activation means encouraging those who have been reached online, to follow through with the digital marketer’s required action. This is illustrated RAIA model in the RAIA model (Figure 1.5). Just as in the Digital Marketing funnel, this is a funnel through which the digital marketer attempts to guide people, using a step-by-step approach. More about this can be found in Section 5.1. Conversion is a general term used to describe the group of people who have been reached by Digital Marketing communication and who have exhibited the desired behaviour (ie. ‘converted’). Any successful activation is a conversion, which can lead to some confusion. This is why the ultimate aim Hard conversion of Digital Marketing, eg. an online sale, is called a hard conversion. An intermediate step, eg. clicking on an ad or visiting the website, is called a Soft conversion soft conversion. Often, several soft conversions are necessary in order to achieve a hard conversion: someone reads a social media message, watches a corresponding video, then searches for more information using a search engine and clicks on a link in an article, leading them to the website, where they eventually buy something. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 22 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 23 FIGURE 1.5 The RAIA model Reach 1 Attention Interest Activation In summary: the digital marketer uses the RAIA model to encourage members of the target audience to visit the digital sales channel (eg. the website or app) using a clever mix of paid, owned and earned media. Next, the realisation of a sale or another form of hard conversion (eg. a subscription, vote or donation) is attempted. Then, by binding them to the organisation, customers are encouraged to remain loyal. This is illustrated in Figure 1.6. Loyalty is expressed in repeat visits, but also in online word- of-mouth. In this way, a relationship is established with the customers, further insight into their behaviour is gained and communication can become more personal and effective. FIGURE 1.6 From the RAIA model to the Digital Marketing funnel Reach Digital communication channel Attention Interest Owned media Activation Paid Earned media media Encourage Visit loyalty Captivate Digital Decide sales channel Order Pay Bind 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 23 26/11/20 3:57 PM  24 © Noordhoff Uitgevers bv § 1.7 The outline of this book Chapter 2 covers the strategic aspects of Digital Marketing. The main focus in this chapter will be on determining the relationship between the business model and the online activities. 1 Chapter 3 discusses the market sensing process, online consumer behaviour, the use of the internet in marketing and online market research. In Chapter 4 you can read how Digital Marketing translates itself into the ‘product realisation’ process. Chapter 5 covers the first part of the customer acquisition process; online brand communications. Chapter 6 covers customer acquisition through owned and earned channels. In Chapter 7 we will describe the customer acquisition process through paid channels, or in other words: online advertising (display and paid search). Chapter 8 focuses on online sales and pricing. In Chapter 9 you can read which aspects play a part in the ordering process resulting from online sales of products and services. Chapter 10 deals with the customer relationship management (CRM) process. By this point in the book, all of Kotler’s core processes will have been reviewed. Chapters 11, 12 and 13 deal with umbrella topics: designing and building effective websites, digital analytics, planning and finally resourcing Digital Marketing within the organisation. In recent years, the confidence that web users have in the integrity of organisations who sell over the internet has been damaged on a number of occasions. Examples are privacy violations, the selling of data to third parties and negligent security. For this reason, Chapter 13 will elaborate on the ethical aspects of Digital Marketing in greater detail. Figure 1.7 concisely displays the outline of the chapters. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 24 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 25 FIGURE 1.7 The outline of this book 2 Strategy and Business Models 1 3 Market 10 Sensing Customer 4 relationship Product management Realisation 5 13 9 Customer 11 Planning and Order 1 acquisition: Effective organisation processing Digital Marketing digital brand websites communi- and apps cations 6 8 Customer Customer acquisition: acquisition: owned or sales and 7 earned pricing Customer channels acquisition: paid channels 12 Digital analytics This book is structured in the same order that many organisations use to make their marketing decisions. If you are not particularly familiar with marketing and management issues you may choose to read Chapters 3 to 10 first, before tackling Chapter 2. That way you will get a better understanding of the exact contents of the business model and its specific elements and, crucially, why the selection of a business model is so important for every organisation. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 25 26/11/20 3:57 PM