Digital Marketing Fundamentals PDF

 Digital Marketing Fundamentals Marjolein Visser RM Berend Sikkenga SMP Mike Berry Second edition Noordhoff...

 Digital Marketing Fundamentals Marjolein Visser RM Berend Sikkenga SMP Mike Berry Second edition Noordhoff Groningen / Utrecht 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 1 26/11/20 3:54 PM  Cover design: G2K Creative Agency (Groningen-Amsterdam) Cover illustration: Getty Images Any comments concerning this or other publications should be addressed to Noordhoff Uitgevers bv, Afdeling Hoger onderwijs, Antwoordnummer 13, 9700 VB Groningen or via the contact form at www.mijnnoordhoff.nl. The information contained in this publication is for general information purposes only. No rights or liability of the author(s), editor or publisher can be derived from this information. 0 / 21 © 2022 Noordhoff Uitgevers bv, Groningen/Utrecht, The Netherlands This publication is protected by copyright. If you wish to (re)use the information in this publication, you must obtain prior written permission from Noordhoff Uitgevers bv. More information about collective rights management for Dutch educational institu- tions can be found at www.onderwijsenauteursrecht.nl. ISBN: 978-1-032-06741-4 (hbk) ISBN: 978-90-01-74984-2 (pbk) ISBN: 978-1-003-20365-0 (ebk) NUR 802 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 2 26/11/20 3:54 PM  © Noordhoff Uitgevers bv Preface Welcome to this, the Second Edition of Digital Marketing Fundamentals. It is three years since the first edition of Digital Marketing Fundamentals was published, and nine years since the original Dutch version of this book was launched. Marjolein and I have been gratified to learn that the books have found a permanent place in the curricula of providers of accredited marketing courses and in the business education programmes of universities across the world. Universities and business schools in Australia, New Zealand, Asia, Scandinavia, the Netherlands, the US and the UK have adopted the book which won the PIM Marketing Literature Prize for The Best Marketing Study Book. Sadly, just after we started working on this edition, we received the news that Berend Sikkenga, co-initiator and co-author of this book, had died unexpectedly. We dedicate this edition to him. Berend was an inspirational Digital Marketer and Digital Marketing Fundamentals would not exist without him. Naturally, we also wish to thank to our publisher Bert Deen for his enormous dedication, and patient encouragement. We thank our colleague Tony Williams – who is not only an accurate and tireless translator, but fluent in Dutch, English and Digital Marketing. We also thank our families including Jane and Douwe for their support and understanding while we wrote this book. Contributions from over twenty Digital Marketing specialists (see ‘About the authors’) ensure that contemporary best practice is firmly embedded in the approach and techniques in this book. We are grateful for their involvement. In addition, we thank all Digital Marketing professionals and organisations who have provided us with current examples and cases. Digital Marketing continues to evolve and the pace of change is increasing. For this edition the book has been completely revised and many new examples and cases added. We feature emerging technologies such as Artificial Intelligence (AI) and Natural Language Processing (NLP) and the opportunities they increasingly offer to marketers. We focus on the need to quantify objectives and to measure systematically the return on investment in Digital Marketing activities. Recent research outcomes, techniques, sources and examples have been incorporated throughout the book. Two essential models are introduced in Chapter 1 and run through the whole book: the Digital Marketing funnel and the RAIA model for Digital Marketing communication. 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 3 26/11/20 3:54 PM  © Noordhoff Uitgevers bv We very much appreciate the fact that the first adopters of this book have provided several suggestions for improvement. It is wonderful that an increasing number of teachers and students from across the world are sending us tips and ideas. We value your contributions! We hope to meet all readers soon in the groups for this Book: digitalmarketing.noordhoff.nl: the official website, including test questions, trainer concepts and Teaching PowerPoints LinkedIn Lecturers Digital Marketing Fundamentals (linkedin.com/ groups/13568788/): for tips, current events, research results and discussion Digital Marketing Fundamentals on Facebook (www.facebook.com/ groups/digital.marketing.fundamentals.book): eg. new insights and information exchange For educators there is a special Dropbox folder available with additional study materials. Ask for access by sending a mail to [email protected]. Meanwhile: feel free to connect with us on LinkedIn: https://www.linkedin.com/in/mikeberrylinkedin https://www.linkedin.com/in/marjoleinvisser See you online! Mike Berry and Marjolein Visser RM 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 4 26/11/20 3:54 PM  © Noordhoff Uitgevers bv Overview of the most important changes from the First Edition These adjustments make it difficult to use the 1st and 2nd editions side by side. Chapter 1 Digital Marketing: introduction of the Digital Marketing funnel and the RAIA model have been added theory, examples, questions and case have been updated Chapter 2 Strategy and Business Models: theory, examples, questions and case have been updated Chapter 3 Market Sensing: the order of the sections has been changed 3.1 and 3.2 on online consumer behaviour have been significantly adjusted based on recent research 3.4 on the use of social media has been supplemented and updated concepts such as biohacking, immersive experiences and connected home have been added remaining sections have been updated questions have been updated new case study Chapter 4 Product Realisation: structure has been changed theory, examples, questions and case study have been updated concepts such as contextual interaction, crowd management, Customer Effort Score, journey innovation, proactive personalisation, product owner, Minimal Viable Product, relationalisation, scrum, user stories and Willingness to Pay have been added new case study Chapter 5 Customer acquisition: digital brand communications: adapted to the use of the RAIA model theory, examples, questions and case have been updated mobile communication from Chapter 6 has been moved to this chapter more attention has been given to influencer marketing concepts such as attention signals, celebrity influencers, newsjacking, interest signals, micro influencers, native apps, personal relevance, social media influencers and web apps have been included Chapter 6 Customer acquisition: recruiting visitors through owned or earned channels: adapted to the use of the RAIA model theory and examples have been updated a section about marketing automation has been added concepts such as lead nurturing, lead scoring and Search Engine Results Page have been added questions have been supplemented and updated 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 5 26/11/20 3:54 PM  © Noordhoff Uitgevers bv Chapter 7 Customer acquisition: recruiting visitors through paid channels: adapted to the use of the RAIA model theory and examples have been updated concepts such as ad extensions, bumper, effective cost per click, embedded formats, feature phone banner, first and second price model, mid- and post roll, mobile phone interstitial, open auction, preferred deal, private auction, programmatic direct, search intent, smart bidding, smartphone banner and negative keyword have been added questions and case study have been supplemented and updated Chapter 8 Customer acquisition: sales and pricing: theory and examples have been updated more attention has been given to marketplaces concepts such as mobile commerce, personal pricing and social log-in have been added questions have been supplemented and updated Chapter 9 Order processing: theory, examples, questions and case have been updated concepts such as seamless customer experience, social care and wallets have been added Chapter 10 Customer Relationship Management: structure has been changed theory, examples and questions have been updated concepts such as usage data and collaborative experiences have been added new case study Chapter 11 Designing effective websites and apps: section about effective apps has been added theory and examples have been updated concepts such as cultural probing, Google Actions, hallway test, HEART framework, persuasive design, shadowing and task completion rate have been added questions have been updated and supplemented new case study Chapter 12 Digital analytics: theory, examples and questions have been updated concepts such as attribution model, connection ratio, event, intelligent tracking prevention and property have been added new case study Chapter 13 Planning and organisation: section about security measures for the prevention of cyber crime has been added theory, examples, questions and case have been updated concepts such as cryptoware, DDoS attacks, defacing, Design Thinking, product backlog, ransomware, scrum and sprint have been added 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 6 26/11/20 3:54 PM  © Noordhoff Uitgevers bv Contents 1 Digital Marketing 13 1.1 Definition of Digital Marketing 14 1.2 Digital Marketing versus traditional marketing 15 1.3 Digital Marketing and the Marketing Mix 17 1.4 Digital Marketing in relation to business processes 18 1.5 Development of Digital Marketing 20 1.6 Two important models for Digital Marketing communication 21 1.7 The outline of this book 24 Questions and assignments 26 Case: Digital Marketing at Marriott 26 2 Strategy and Business Models 31 2.1 Digital Marketing and Strategy 32 2.2 Marketing Strategy 34 2.3 The business model 37 2.4 Determining the impact of new internet technology on Digital Marketing 57 Questions and assignments 62 Case: Cleartrip 63 3 Market Sensing 69 3.1 Internet usage 70 3.2 Online shopping behaviour 73 3.3 Online buying process and the Digital Marketing funnel 76 3.4 Use of social media 89 3.5 Online Market Research 94 3.6 Big data and customer insights 107 3.7 Relevant trends in Digital Marketing 115 Questions and assignments 126 Case: How Alibaba benefits from Singles Day 127 4 Product Realisation 131 4.1 The aim of the product realisation process is customer value 132 4.2 Co-creation 135 4.3 Product development, mass collaboration and crowdsourcing 137 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 7 26/11/20 3:54 PM  © Noordhoff Uitgevers bv 4.4 Developing and setting up online products 142 4.5 Product improvement 159 Questions and assignments 165 Case: Hire your neighbour’s car with SnappCar 166 5 Customer acquisition: digital brand communications 171 5.1 Digital Marketing communication: the basis 172 5.2 Role of Digital Marketing communications in brand management 184 5.3 Role of social media in digital brand communications 189 5.4 Content marketing 200 5.5 Mobile communications 208 Questions and assignments 216 Case: Digital Brand communications at Patagonia 217 6 Customer acquisition: recruiting visitors through owned or earned channels 223 6.1 Using digital communications and sales channels to reach and win customers 224 6.2 Search Engine Marketing 226 6.3 Link-building 232 6.4 Use of social media channels 243 6.5 Email marketing 254 6.6 Marketing automation 266 Questions and assignments 272 Case: Samsung UK targets SMEs 272 7 Customer acquisition: recruiting visitors through paid channels 277 7.1 Digital Marketing communication through paid channels 278 7.2 Paid Search (Pay-Per-Click = PPC) 279 7.3 Online display advertising 295 7.4 Advertising on social networks 314 7.5 Affiliate marketing 320 7.6 Using online games for advertising 337 Questions and assignments 340 Case: Under Armour ecommerce (Google Shopping) 341 8 Customer acquisition: sales and pricing 347 8.1 Selecting digital sales channels 348 8.2 Online sales via ecommerce sites and apps 351 8.3 Online sales advice 365 8.4 Online price setting 370 Questions and assignments 384 Case: ASOS 385 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 8 26/11/20 3:54 PM  © Noordhoff Uitgevers bv 9 Order processing 389 9.1 Selection of distribution channels 390 9.2 Payments 395 9.3 Sub-processes of order processing 407 9.4 Online service 411 Questions and assignments 420 Case: IKEA focuses on customer experience and self-service 420 10 Customer relationship management 427 10.1 Digital customer relationship management 428 10.2 Working with customer groups 439 10.3 Encouraging customer satisfaction and loyalty 444 10.4 Increasing customer value 451 10.5 Individual value propositions 456 10.6 Social CRM 461 Questions and assignments 467 Case: Fashion brand Diane von Furstenberg makes customers feel special 467 11 Designing effective websites and apps 473 11.1 Effectiveness of websites and apps 474 11.2 Influencing the visitor 478 11.3 Website usability 484 11.4 Web content and web text 489 11.5 Interaction and conversion 497 11.6 Effective landing pages 502 11.7 Search Engine Optimisation (SEO) 505 11.8 The development of an effective app 513 Questions and assignments 520 Case: An International Marketing Award for the Anne Frank Foundation 521 12 Digital analytics 525 12.1 Digital analytics: definition and starting points 526 12.2 The Digital Marketing funnel translated into performance indicators 528 12.3 Different traffic sources within digital analytics 537 12.4 The ABC Model: the Digital Marketing funnel 548 12.5 Recognising the phase that the visitor is in 551 12.6 Social media metrics 553 12.7 Digital analytics in the organisation 556 Questions and assignments 559 Case: Digital Analytics in practice at Van der Valk Hotels 560 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 9 26/11/20 3:54 PM  © Noordhoff Uitgevers bv 13 Planning and organisation 565 13.1 Organising Digital Marketing activities 566 13.2 Digital Marketing plan 577 13.3 Project management 590 13.4 Security measures against cybercrime 603 13.5 Legal aspects of Digital Marketing 605 Questions and assignments 617 Case: Online food delivery service Deliveroo 618 References 622 Illustrations 632 Index 634 About the authors 645 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 10 26/11/20 3:54 PM 00_275468_DIGITAL_MARKETING_FUNDAMENTALS_FM.indd 11 26/11/20 3:54 PM  12 2 Strategy and Business Models 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 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 12 26/11/20 3:57 PM  © 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  26 © Noordhoff Uitgevers bv Questions and assignments 1 NOW CHECK YOUR UNDERSTANDING: 1.1 Compare the way that amazon.com sells books to how a bricks-and-mortar bookstore like Barnes & Noble does this. a What are the comparisons and differences in the way books are being sold? b Describe your idea of how each of the five marketing related processes (see Figure 1.2) progress for amazon.com and for Barnes & Noble, the bookseller. c How would you characterise both organisations: as a Digital Marketing organisation, as a traditional marketing organisation or as a mixture of both? Support your answer with evidence. d Digital Marketing has developed in three phases. To what extent have both organisations adapted to the most recent phase? Support your answer with examples. 1.2 a In Section 1.2, seven types of websites are discussed. For each of the following websites, specify which category it belongs to: www.unilever.com www.staples.com www.independent.co.uk web.wechat.com www.apple.com www.citymapper.com www.airbnb.com b Pick one of the above suppliers and construct the Marketing Mix using the Four Ps and the Four Cs. What do you notice? c Using the Digital Marketing funnel and the RAIA model, create a coherent system of Digital Marketing objectives for the office supplies retailer, Staples.com. You may rely on assumptions but try to find some realistic conversion percentages online. 1.3 CASE Digital Marketing at Marriott By Marjolein Visser Marriott International, the parent organisation of, amongst others, the Marriott and Ritz Carlton hotels, tries to make use of as much modern technology as possible in order to meet the needs of the young, contemporary business traveller, so-called Millennials. Using the Marriott Bonvoy app, guests participating in the loyalty programme are able to book a 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 26 26/11/20 3:57 PM  © Noordhoff Uitgevers bv DIGITAL MARKETING 27 hotel, check in on their mobile device, request services and extras, and chat with Marriott employees before, during, and after their stay. The app uses chatbots for simple questions, allowing guests to receive an immediate response. On the day before their arrival at the hotel, guests receive a push 1 notification on their smartphone, informing them that they can check in. They will then receive an automatic notification when their room is ready for them. This prior communication means that the hotel is prepared for their arrival. Since payment information is stored in the guest profiles, guests are given a virtual key via the app or, upon entering the hotel, they may visit a dedicated check-in counter where a pre-programmed key card is already waiting for them. At the end of their stay, guests receive another push notification alerting them to the availability of a mobile checkout option. Should they so choose, guests are asked to provide an email address to which their invoice can be sent, meaning they no longer have to call at the Hotel Reception. Within the hotel itself the many possibilities that mobile communication has to offer are also employed. Marriott app users can request the most commonly used services from a drop-down menu, such as the provision of extra towels, pillows or breakfast in bed. With increasing frequency, hotel rooms are also being equipped with a digital assistant which connects guests with the Reception, allowing them to request room service, for example. Stephanie Linnartz, Group President, Consumer Operations, Technology & Emerging Businesses, commented at the Skift Tech Forum: “To remain the market leader, we are constantly improving and expanding our offer through direct channels. We offer our loyal customers benefits when they book directly, such as free wi-fi, member rates and mobile check-in/out, mobile keys as well as other benefits. Our new and improved booking solution makes it possible for customers to ‘customise’ their stay. They can choose rooms with specific features, including ones they are willing to pay extra for and be assured of. Our customers enjoy knowing what their options are and being in control of them”. “Marriott combines ‘high tech’ with ‘high touch’ to offer guests a seamless and personalised experience. We use technology that enables our members to have an ongoing “conversation” with us, regardless of which channel or device they are using, whether they are staying in one of our accommodations, or communicating through our call centre agents, our app or whilst searching for something on Marriott.com”. The M Live social media monitoring hub also plays an important role in providing a seamless customer experience. Messages that hotel guests send via social media are analysed from social hubs in the United States, Europe and Asia. When someone is staying in a Marriott hotel, this is identified from the geolocation that is linked to the messages. “Let’s say you’re staying in a Ritz Carlton hotel somewhere in the world and you’ve posted a photo on Instagram to let everyone know that you’ve become engaged”, said Scott Weisenthal, Vice President, Global Creative and Content Marketing, in an interview on inc.com, “a second later this comes up in our M Live Command Centre... we will then call the hotel and the hotel will send up a bottle of champagne”. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 27 26/11/20 3:57 PM  28 © Noordhoff Uitgevers bv By monitoring what guests share, Marriot can deploy personalised marketing communications and surprise customers, leading them to become loyal customers and begin spreading positive messages about the brand. Of course, this needs to be done both sensitively and legally to give every guest a personal and valuable experience at every point on 1 their customer journey. The Marriot app even allows you to unlock the door to your room Sources: hotelbusinessweekly.com, inc.com, skift.com and mobile-appmarriot.com NOW CHECK YOUR UNDERSTANDING: a There are seven different categories of websites. To which category does the website Marriott.com belong? b Make an inventory of how Marriott International uses mobile communications for Digital Marketing. To help you with this, take a look at https://mobileapp.marriott.com/ (N.B. This works on a tablet, laptop or desktop with Windows 10) c Section 1.2 explains how Digital Marketing can be more effective and efficient. Which of the seven advantages mentioned would also apply to mobile marketing as used by Marriott? Show evidence for each applicable advantage. d As part of which of the Four Cs does Marriott use mobile marketing? e Within which of the five marketing-related processes does Marriott use mobile marketing? Give an example for each core process. f The M Live social media monitoring hub plays an important role in providing a seamless customer experience. Find at least three other examples that demonstrate how Marriott has adapted well to the socially-connected world. g Devise a social media campaign for a Marriott hotel. Use the RAIA model and the Digital Marketing funnel to illustrate how this campaign can drive online hotel bookings via the Marriott website. 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 28 26/11/20 3:57 PM 01_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH01.indd 29 26/11/20 3:57 PM  30 2 Strategy and Business Models 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 02_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH02.indd 30 26/11/20 4:00 PM  © Noordhoff Uitgevers bv 31 2 Strategy and 2 Business Models Author: Marjolein Visser In the previous chapter, five marketing-related, relevant core processes in an organisation were identified: market sensing product realisation customer acquisition order processing customer relationship management (CRM). These five business processes will be discussed in Chapters 3 to 10. However, before an organisation determines what role Digital Marketing will play in each of these five processes, senior management must establish the organisation and marketing strategy, thereby formulating the management framework for Digital Marketing. The strategy is closely linked to the business model: ie. the building blocks that the organisation uses to determine the organisation and business processes and to make money. The internet provides different building blocks from those of the physical, offline world. As a result, new and often surprising business models have emerged in recent years. In this chapter, you will learn various terminology and models associated with strategy and business models. Examples will be used to show how organisations determine business models in practice and adapt to changing circumstances. In addition, we will look at how an organisation determines what impact digital innovations have on the business model, marketing strategy and on the implementation of marketing activities. Please note: if you are still a little unfamiliar with marketing and management and you are finding this chapter difficult, then we recommend reading Chapters 3 to 10 first, after which you can return to this chapter. Hopefully you will then have a better overall understanding. 02_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH02.indd 31 26/11/20 4:00 PM  32 © Noordhoff Uitgevers bv This chapter will cover: the place of Digital Marketing within the organisation’s strategy the business model determining the impact of digital innovations for Digital Marketing After studying this chapter, you will be able to: identify the overall strategic marketing issues within an organisation explain how Digital Marketing can have a major impact on corporate 2 strategy name the steps in the strategic process and explain them using examples define what a business model is and how it relates to an organisation’s strategy distinguish between online business models in practice name examples of ‘earning models’ that are widely applied online and explain why these models are popular with organisations doing business online explain how organisations determine what their business model should look like describe the four steps for adapting the business model to external changes describe how an organisation determines the effects of digital innovations in Digital Marketing § 2.1 Digital Marketing and Strategy The rise of mobile internet (accessed via smartphones and tablets) has led to huge shifts in the way consumers and business users interact with the internet. Today, the world wide web (www) is widely accessible and information is available immediately ‘on the go’. It’s not only people who are using the internet, also devices like smart thermostats and even cars. This has not led to changes in the way a marketing strategy is established, but the role of Digital Marketing within this strategy is becoming increasingly important. We will first establish what is meant by strategic marketing and then consider the effects of digitisation. 2.1.1 What does strategic marketing mean? In their book ‘Marketing Strategy’ Frambach and Nijssen (Frambach & Nijssen, 2017) write: Strategic Strategic marketing deals with the way in which customers can be marketing offered value in a sustainable manner, that is, in the perception of those customers, superior and distinctive to the value offered by competitors and potential providers. An organisation must positively distinguish itself from its competitors in the eyes of the customer. By ‘sustainable’, Frambach and Nijssen mean that strategy is about establishing long-term objectives, making fundamental choices about target markets, about the extent to which the organisation approaches the target markets identically or in a differentiated manner, the mode of positioning and in a broad sense what is put into the marketing mix. A marketing strategy is usually determined for a period of three to five 02_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH02.indd 32 26/11/20 4:00 PM  © Noordhoff Uitgevers bv STRATEGY AND BUSINESS MODELS 33 years (which in practice may be longer than the time the Marketing Director/ CMO remains in their job!). The marketing strategy sets the framework for the processes described in this book: from market sensing to customer relationship management (CRM). 2.1.2 Rethinking processes Increased digitisation has had a major impact on the choice of resources and methods that the organisation uses to structure its marketing strategy. The array of choices is ever increasing. Location-based communication and 2 augmented reality (AR) are examples of methods that are increasingly used in marketing. Eg. location-based communication is done using robots, Beacons beacons (see image) and wearables, devices that you can wear on your Wearables body and that collect personal information, eg. the number of steps you walk or your heartbeat. Augmented reality (AR) is the fusion of the physical Augmented with the virtual world. An AR application places a virtual layer over the real reality world. Using AR applications, brands are able to show customers what it would look like if, eg. a cupboard were painted in a different colour or they were wearing a different spectacle frame. Beacons are devices that transmit a signal that can be picked up by smartphones. This allows retailers to monitor customers in a store, to advise them and make them appropriate offers Digitisation has a huge impact on user/customer interaction. Eg. a customer’s online search behaviour, what products they buy and how they communicate online about these products can be tracked exactly. Intelligent devices connected to the internet, eg. smart thermostats, provide rich data about user preferences and behaviour. This not only provides insight into the customer’s purchasing process, but also facilitates highly personalised communications. Digital technology can also be used in an organisation’s production or service processes. This can have far-reaching consequences for ways of thinking and working. For this reason, Cruise Company Royal Caribbean equips their ships with state-of-the-art technology, making it possible to monitor guests’ behaviour, and to adjust their service accordingly, ie. they adopt an increasingly customised approach. Checkout is also no longer a problem: exactly who has booked what activities and what they have 02_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH02.indd 33 26/11/20 4:00 PM  34 © Noordhoff Uitgevers bv consumed is recorded digitally. The customer only needs to authorize the final invoice. Another example is ‘Amazon Go’ technology for physical stores without checkouts. (see https://bit.ly/2G5UpFk). Digitisation also has an effect on prices. Due to openness (transparency) on the internet, downward price pressure has increased. All prices, product specifications and ratings are public. So, retailers have ‘nowhere to hide’; price comparison (‘shopping around’) is easier than ever before. 2 Manufacturers or brokers can opt for price leadership and carefully monitor who offers the lowest prices or alternatively focus on service. In some sectors, brokers are becoming obsolete, as consumers are no longer willing to pay for the ‘added value’ they offer. Examples of distribution channels that have been struggling to survive for years now, are travel agencies and bookstores. Also, due to the influence of digitisation, we see Vertical vertical integration. Eg. travel company TUI merged with TUI Hotels, a integration number of charter companies and TUI Cruises in 2012, making it possible to offer the end-customer hotels and cruises that are not for sale anywhere else. TUI also operates its own travel agency offices. An additional advantage of this integration is that the fees previously paid to intermediaries remain in TUI’s own pocket. Price transparency may also lead to changes in the service concept (brokers, notaries) or to new services. Rapid developments surrounding the internet make it necessary to test the marketing strategy regularly for future sustainability. § 2.2 Marketing Strategy The marketing strategy is formulated by answering the following questions: 1 What does the organisation want to achieve? 2 What is the current and future situation in the market? What are the opportunities and what are the threats? 3 What are the possibilities and competencies of the organisation in the technical, financial and organisational fields? What are their strong points and what are their weaknesses? 4 What conclusions can be drawn from looking at these strengths and weaknesses in relation to the opportunities and threats? What should the organisation do to ensure lasting success in the future? 5 How can the organisation best segment the market and what choices does the organisation make regarding target markets and positioning? 6 What does the organisation need to change in order to achieve this? Broadly speaking, what will the new marketing mix look like? 7 What needs to happen in technical, financial and organisational terms to achieve this? Figure 2.1 shows schematically the steps of formulating a marketing strategy. 02_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH02.indd 34 26/11/20 4:00 PM  © Noordhoff Uitgevers bv STRATEGY AND BUSINESS MODELS 35 FIGURE 2.1 Formulating a Marketing Strategy Goal Market analysis Organisation analysis 2 Confrontation Segmentation Target market Positioning Objectives and outlines marketing mix Implementation The starting point for describing the marketing strategy is the marketing objectives that an organisation strives for over the next three to five years. These are general objectives, eg. a larger share of the market, introducing new products or approaching new markets. These objectives are based on the mission and vision of the organisation and expressed in the organisational strategy. The mission describes the organisation’s ‘raison Mission d’être’ and the vision is the shared concept for the future that has been Vision formulated by the organisation’s management. An important basis for the marketing strategy is the current market situation (competition and potential customers) and expected future developments. If we look at the role of Digital Marketing within the marketing strategy, then the technological developments are especially relevant, combined with the socio-cultural consequences of these developments. Eg. the rise of social media has led to a completely different way of communicating within society. Today, people are available 24/7 and there are no real obstacles to contacting someone living on the other side of the globe. Eg. an organisation may ask what further ‘robotization’ will mean for the market. How will consumers react, how far along is the competition and what will they do in the future? Would it be possible to replace face-to-face sales 02_275468_DIGITAL_MARKETING_FUNDAMENTALS_CH02.indd 35 26/11/20 4:00 PM  36 © Noordhoff Uitgevers bv staff with robots? That could certainly be useful: by providing them with information from the customer database, robots can offer customers personalised help, they know exactly what a customer has bought before, they can advise them about matching products, they know the prices, can rapidly calculate/adjust prices, can tell exactly what the composition of products is and so on. But will customers appreciate that? Or would a flesh- and-blood human sell more? Is robotization an opportunity or a threat to the sector the organisation is in? These are big questions,