Challenges of Internet Marketing and Customer Empowerment - Essay Example

? Challenges of Internet Marketing and Empowerment August 10, Table of Contents Introduction………………………………………………………………………………..3 The Impact of Technology………………………………………………………………...3 Strategies for E-Marketing………………………………………………………………...5 Relationship Management Issues with Internet Marketing……………………………….7 Challenges of Brand Identity and Relationship Selling…………………………………...9 Challenges of Tools for Internet Marketing……………………………………………...12 Building Loyal Customers with Internet Marketing……………………………………..15 Conclusion……………………………………………………………………………….18 References………………………………………………………………………………..19 Introduction Changes in marketing are now based on global representations that are taking place outside of normal activities. The marketing is based on associations with not only basic needs for brick and mortar businesses but have expanded to technology and the use of the Internet for marketing. While there are several new possibilities that are available with marketing, issues are also being raised in terms of new ways to reach customers and what is required to create a sense of loyalty with the use of Internet marketing. The ability to build relationships while using online tools is now becoming a central point for those that are working in marketing. This paper will examine the issues which connect both Internet marketing and loyalty of customers while expanding the theories and models based on the creation of loyal relationships. Defining this problem from different perspectives can then initiate specific strategies which marketers can use when working with technology. The Impact of Technology The use of the Internet as a central point for businesses and consumers has boomed since 1995 and is now becoming a central area for businesses to work toward specific solutions. In recent years, there has been a large amount of growth with individuals connecting online as well as searching for online strategies that have been developed to assist businesses in connecting with others that are online. The use of the Internet is one which has not only developed in given areas, but is becoming a global way of connecting to businesses and to individuals for information. As seen in figure 1, the use of the Internet is continuing to evolve with millions of individuals in every region of the world using this particular tool as a main method of connecting. Figure 1: Use of the Internet by Region The growth that is occurring with the Internet is then being noted as a primary force for businesses, information and connections that are needed for the evolution of different needs on a global level (Internet World Stats, 2011). The growth by region has furthered with changes that are now affecting businesses as a main way to connect online and to connect with others. Businesses are using this as a main proponent for a variety of reasons. The first is based on the economic recession which began in 2008. Many businesses are finding that Internet marketing is a way to leverage the costs and businesses from different levels while finding new opportunities that are needed in the area. The second is based on advertising opportunities, such as social media and connecting with others at a global level. For businesses, this is a simplistic way of expanding into the market and across regions. It is also noted that there are changes in consumer behaviors that lean toward the use of technology, specifically with growth of consumption on the Internet by 27%. This is inclusive of e-Commerce sales that are continuing to rise across the Internet. Within this are new forms of advertising that are now expected, including video and mobile advertising that are used to connect with consumers (Kronik Media, 2011). Strategies for E-Marketing The growth of Internet businesses and marketing has also led to a shift in strategies and expectations that are within the market. It has been found that for consumers to respond to e-commerce is also the need to build strategic implications within virtual communities, specifically so individuals recognize a business and create a sense of loyalty toward the product. The strategies are based on the activities that are taken within communities and also based on individual levels as well as being interactive with fragments of individuals that are on the Internet (Kozinets, 1999: p. 252). The strategies based on community and individual relations are furthered with the understanding of businesses that the international level of connecting to others is a part of the strategic management. This is altering the strategies to fit with cultural aspects as well as with certain tools that connect to others across the globe (Pride, 2006: p. 12). The main approaches and focuses are combined with strategies that integrate the framework of promotional strategies. There are three main strategies which are implemented in relation to this, including the random and scale free network, as seen in figure 2. Figure 2: Network Models In these particular theories, there is a connection of data systems that link to others. The random network functions with each node being a point of data. This connects to other nodes through a random process that allows the next central point to be found. In the scale free network, there are similar components; however, the distribution of information goes to the nearest point of data to create an easier path of information from one point to another (Barabasi, 2009: p. 412). The marketing strategies on the Internet are based on one of these two theories by communicating information between websites, social networks and other areas that hold information to link back to the business or e-commerce solution. The association created is then based on a structural strategy that is able to connect the data points together in a different manner (Sreenivasan et al, 2007: p. 75). Along with this generalized ideology of networking functions and attributes are different approaches with strategies based on how one communicates with others. The main ideology with the random or scale – free network is to connect to individuals or communities to interest specific fragments or target markets in the main business products sold. The ideology is based on a sense of social cognitive theory, which creates an understanding that the social aspects and recognition of a business become the most important factors. Combined with this is social capital, which shows that as groups and individuals respond to businesses, there is a growth in recognition and the capital that is involved. The social capital is one which is heightened by the number of individuals which recognize and connect to the business as well as how they distribute the information among others that are looking for similar information or businesses (Huang, Lin, 2009: p. 160). Relationship Management Issues with Internet Marketing While there is known potential on the Internet that continues to define the needs of customers for e-commerce, there are also other factors which relate to the relationship management that becomes central for the distribution of information and business potential. Customer relationship management has now become an integral part of marketing, specifically because it is the only way to find potential customers and to grow with the loyal customers that are online. While different levels of information can be placed with those who are searching online, gaining the reputation and responses from potential customers is reliant on a combination of marketing through these alternatives with interpretations, communication and the ability to interact on a personal level. This is especially important because consumers are reflexive in consumption, meaning that there is a better response dependent on the engagement which is taken for consumer interactions within a business (Beckett, Nayak, 2008: p. 299). An important aspect of the customer relationship management is based on the empowerment of consumers and the reactions which are now being taken with online engagements. According to a recent study (Pires, Stanton, Rita, 2010: p. 936), information technologies has not only shifted the business associations but also has empowered the consumer. Consumers are now able to move through processes of finding data, engaging with businesses and understanding the realities of how a business works. The nature of this is inclusive of psychological empowerment and value in which the consumer believes one has. This creates different associations with quality and customer satisfaction for those in the industry (Pires, Stanton, Rita, 2010: p. 936). The approach to customer empowerment is one which is known to bring new challenges in terms of how a business has to relate with others that are online. The customer community is the first association with this, specifically with groups of individuals that have the capacity of creating and developing associations with leading businesses, which begins to change the loyalty and understanding of the business. The empowerment then relates to others that are interested in the same community development. The customer communities are furthered by individuals that become responsible for the interactions and networking through leadership roles. Networkers and marketers become the main drive with the business and the responses that empower others online. If individual relationships and ideologies are not built at this level, then difficulties begin to become a part of creating the right relationships with customers that are online (Rowley, Teahan, Leeming, 2007: p. 136). The problem which occurs with the network marketing, group empowerment and individual leadership as well as empowerment comes from false representations of the brand identity of a business and difficulties with creating the right image of those that are online. It is noted through a current study (Simmons, 2008: 299) that consumers are looking for both individual and community brand experiences. However, one of the experiences can change or alter the overall association with those that are expressing both group and individual opinions. If a business works with the empowerment in the correct manner, then there is the ability to work with viral marketing in the correct manner. However, if consumers are not able to reveal the correct perspective, then the empowerment which they have can cause the brand identity to have difficulties in building and growing the correct identity (Simmons, 2008: p. 299). Challenges of Brand Identity and Relationship Selling The relationship marketing that is based on customer empowerment is further defined by creating a brand identity for those who are interested in the specific parts of building the brand. The relationship management is based on the brand identity which comes from word of mouth, perceptions and the relationships which are created through the open network theories, such as the scale –free network. For the brand identity to continue to work effectively, relationship selling has to incorporate the same brand identity in all the networks and in relation to the consumer perceptions. This includes the ability to understand dimensions such as the mechanics of how the website works, what is associated with the business and the quality of the business. The brand identity is inclusive of both the internal and external environment as well, which links to the security, privacy, fulfillment, value and non – deception which is incorporated into the business. Without these aspects, there is the inability to create the right alternative to the consumer perceptions (Roman, Cuestas, 2008: p. 641). When looking at Internet strategy with this form of relationship management, it can be seen that consumer perception has to be both empowered and controlled first from the understanding of the internal environment. The displays of the business first have to be perceived from the understanding that there is a strong customer relationship management aspect as well as a link to the security and understandings within the main framework of the corporation. If it is believed that the company is fraudulent, does not have high quality or is unable to meet corporate responsibility from various standards, including environmental and social, then there will be customer empowerment which causes the business to lose the growing reputation online. The communication strategies then have to consist of supporting processes to manage relationships internally first while operating by giving the correct sets of information to customers. If this is not done correctly or if a consumer has a negative experience, then it easily begins to be placed as a part of the information with the operations of the company (Chaffey, 2009: p. 14). The external environment then links to the internal relationships that are built within a given business both for marketing and because of the reputation of a business. The relationship marketing becomes effective when the tools used for the external environment become reflective of the internal environment. The information and reviews of the internal environment is used as a means and form of advertising for the company while dispersing data to others that are a part of the company. The consumer behaviors which are associated with this become based first on the psychological relationship and loyalty to a company. This is combined with the behaviors and patterns which occur, either which supports or moves against a brand. It has been found that customer loyalty, retention rates, relationship quality and buying online all relate to cross relationships on the Internet. The advertisements and the available information combine to create a different understanding and positive or negative influences on how the customers react to a given situation (Ju, Hung, 2008: p. 769). The changes which are made create a different challenge to businesses, specifically because it demands an alteration in the organizational environment to meet the dynamics of the Internet. Currently, the approach which is taken is based on mass production of products that are to be sold to a variety of individuals. However, the consumer empowerment is allowing for individual reactions and interactions to have more weight than the mass production and to change the advertising and components of a business. Most businesses aren’t looking into the prospect of customization and of customer retention by individual need. The inability to change the businesses so it caters to the interactions of online opportunities then is creating new challenges for businesses. The change which would have to be made for the brand identity is to change the experiences so it is learning oriented, as opposed to being based only on the sales of products at a mass level (Pine, Peppers, Rogers, 2000: p. 103). The lack of strategy to change the brand identity and to incorporate the changing needs of consumers is then not providing a strong response to those that are looking at the alternatives for the correct Internet marketing. Challenges of Tools for Internet Marketing The components of Internet marketing and relationship building are furthered by the expected relationships that are now emerging online. There is a direct association with the e-commerce, business and social trends that are made between businesses and individuals. While this builds several opportunities, it also raises specific questions that are associated with marketing and changing the trends which are required. The tools which are available are continuing to create challenges, specifically because new strategies from the customer empowerment are being heightened and customer loyalty for online needs is required. The questions which are now arising are based on the use of tools for Internet marketing as well as the relationship which this holds to others that are looking at the online businesses through the customer relationships that are forming (Kenneth, Guercio, 2001: p. 3). The framework of tools that are available for businesses consists of the scale free model that is used to disperse information. The basis of this is search engines that are able to provide information as well as directories and links that guide consumers in the right direction with specific needs. The information continues to be built with relationships that are formed indirectly, specifically with Web 2.0, such as social media portals, review centers and interactive places that connect individuals to businesses. This is followed by direct marketing, specifically which consists of e-mail marketing, and direct contact with others. The most common area for customer empowerment is through Web 2.0 portals; however, information can be given through the search engines and email marketing to combine with the understanding that is given by different individuals and groups (Constantinides, Fountain, 2008: p. 231). The different tools which are presented to consumers create new opportunities as well as challenges that are created online. The most important aspect of this is the word of mouth and viral marketing that takes place. The forms of tools that are available are able to spread positively or through negative means, depending on the communications which are available and the associations which individuals have. The disadvantage of this is based on the brand identity or the specific applications with relationship marketing not working effectively. Competitors who have a stronger brand identity or consumers who have not held an ideal experience may have difficulties with those who are looking at a business. However, if the word of mouth and viral marketing tools combine with the Web 2.0 aspects, then it can help to leverage the brand identity. Controls through strategy, narration and overall image can be used to ensure that this is done correctly while incorporating stronger marketing messages to those that are online (Kozinets et al, 2010: p. 71). According to a recent study (Godes, Mayzlin, 2009: p. 21), customer to customer communication and the controls of businesses face two main challenges. The first is that there is difficulty in creating effective word of mouth, meaning that most is either illegitimate information or does not contain the correct alternatives in promotion of a business. The second is based on low awareness levels that are still on the Internet, specifically because driving sales through word of mouth comes from opinions and leader designations among those who are marketing. It has been found that potential customers who don’t have a sense of loyalty often don’t relate to the word of mouth advertising or the reviews unless there is a sense of negativity or opposition that is heard. If it is for promotion, then most consider it as an advertisement and begin to move outside of the sense of loyalty and trust. The lack of control then comes from the psychological belief by potential customers that the loyal individuals have alternative motives in the promotion of a business while the awareness is limited by the level of loyalty which one holds to the business (Godes, Mayzlin, 2009: p. 21). The result is that those who are required to move into the promotion of business are unable to control the tools on the Internet or to create the high noise levels and responses required with relationships, other than those who have a close association with the business. The challenge which is then raised comes from the tools which are used and how this affects the loyalty of consumers. The most powerful tools of Web 2.0, indirect marketing and the word of mouth often lead to incorrect information and the inability for a business to control reactions from potential customers. However, the promotion mix requires the consumer to consumer communications and other aspects to be developed for higher responses (Mangold, Faulds, 2009: p. 357). This makes the customer channel migrations the most important part of the strategy for businesses and also the area which is least developed and has the least control. The migration which is required through the tools then has to uphold certain standards and has to create a specific system that is linked to the customer channels, specifically so all data and information through the various sites have positive responses and work toward customer relationships at different levels for other forms of advertising. These channels are based on both promotional materials and of the knowledge formats that are used to ensure that the loyal customers and others who are only looking at the business for the first time receive positive information (Ansari, Mela, 2008: p. 15). The challenge then becomes based on the upholding of the brand while building customer relationships with the customer to customer experiences that are formed online. Building Loyal Customers with Internet Marketing The challenge which is now faced by Internet marketers and businesses is to incorporate the tools, strategies and expectations with new controls for loyal customers. The use of marketing online has to incorporate new strategies and associations, specifically to create a positive response from those who are interested in the Internet marketing. According to a recent study (Javalgi et al, 2005: p. 658), there is the need to create sustainable competitive advantage first. The customer relationship management is the only way in which this can be done within the firm and toward the Internet marketing. Managerial insights, consumer centric approaches, technology and focused strategies for consumer needs and wants became the main areas of performance that determined the success of the firms. The values of those that were looking at the business changed with these specific strategies and were able to move into marketing tools to build stronger relationships with those who were interested in the overall functions of a business (Javalgi et al, 2005: p. 658). One way in which the customer relationship management can work through the challenges of online brands is through the image that is withheld on various portals. Through a current study (Yun, Good, 2007: p. 4), several customers were tested to determine what made the e-customer loyalty a main attribute. It was found that the decision making process was reliant on the image that was associated with the different portals. While there was an understanding of the reviews and reactions, other concepts were also associated with this. The image included the look of the website, advertisements that were available, e-retailers that worked with customer service and the overall value that was created. Potential customers which did not hold this loyalty were known to create different types of attributes and relationships that built into the loyalty (Yun, Good, 2007: p. 4). This particular study shows that, while Web 2.0 and the consumer to consumer relationships hold certain strength, there is also the ability to strategically build a business to counteract this. Another aspect to consider is based on going outside of other parts of the online marketing initiatives to create other responses. Direct marketing, for instance, is now known as one of the most powerful tools for creating loyal customers and moving into the needs for Internet marketing. The methods are based on one – to – one relationship building that is used through the navigation of a website, customer relationships, associations with potential customers and continuous reminders that create a specific image with the company. The challenges which are faced with Web 2.0 and other interactions become secondary when this is created, specifically because an alternative image is able to hold a more powerful spot with those that are looking into the business. Direct marketing is able to create an image that is able to work with both loyal and potential customers, specifically by offering more attention to the individual while adding in tools and techniques to balance the use of Web 2.0 alternatives (Stone, Jacobs, 2009: p. 24). The overall focus that Internet businesses need to take is the strategy of creating stable relationships within the company while focusing on the potential customization of solutions which are needed. Combining this with information and communication that goes through the marketing channels and offering higher performance levels through the basic settings can then work in conjunction with the needs of the company. While there are threats and difficulties within the Internet business alternatives, there are also strategic plans which counteract this. The result is inclusive of distributing to channels in a different respect while creating a sense of management that is better than the competitors who are working in the same manner. The result is that customer trust can easily be built while new strategies are developed to create stronger customer relationships among those within a given company (Alvarez, Martin, Casielles, 2007: p. 453). Another aspect to creating loyal marketers and Internet solutions is with the association with fragmented and target markets as well as associations with database marketing. This allows companies to create strategies not according to the needs within the overall market, but to instead focus on a segment of loyal customers or those in need of the business services. Doing this then creates an alternative to filling in the knowledge gaps which may be online while creating more sustainable solutions with the strategies, methods and tools that are created. This allows businesses to move beyond the basic word of mouth complexities and the tools with Internet marketing while focusing on building a segment of the market. If this is done in a way that is stronger, then it becomes easier for a business to create loyal customers and to overcome the challenges of marketing online (Blattberg et al, 2007: p. 11). Conclusion The challenges of customer relationships and Internet marketing have created different scenarios for businesses to build a business in an alternative manner. The changes are created from the open channels for information and data that is being outsourced at a global level and which is based on consumer empowerment. The challenges then become based on customer to customer interactions that change the impression of a business and cause a loss of controls among those that are a part of the Internet marketing. This is combined with the tools that are not able to create a strong business presence or image because of the customer empowerment. To counteract this, businesses are required to enhance the internal and external environment, grow a stronger business image and to build a better database of knowledge for potential customers so a stronger sense of loyalty is created. The result is the ability to create newer strategies that are more conducive to the growth of Internet marketing and the responses and customization which is now required to succeed online. References Alvarez, Leticia, Ana Martin, Rodolfo Casielles. 2007. “Relationship Marketing and Information and Communication Technologies: Analysis of Retail Travel Agencies.” Journal of Travel Research 45 (4), 453-463. Ansari, A, CF Mela. 2008. “Customer Channel Migration.” Journal of Marketing 57 (2), 37-61. Barabasi, Albert. 2009. “Scale – Free Networks: A Decade and Beyond.” Science 325 (5939). Beckett, Antony, Ajit Nayak. 2008. “The Reflexive Consumer.” Marketing Theory 8 (3), 299-317. Blattberg, Robert, Byung Kim, Pyong Kim, Scott Neslin. 2007. Database Marketing: Analyzing and Managing Customers UK: Springer. Chaffey, Dave. 2009. Internet Marketing: Strategy, Implementation and Practice. UK: Pearson Education. Constantinides, E, Stefan Fountain. 2008. “Web 2.0: Conceptual Foundations and Marketing Issues.” Journal of Direct, Data and Digital Marketing Practice (9), 231-244. Godes, David, Dina Mayzlin. 2009. “Firm – Created Word of Mouth Communication: Evidence from a Field Test.” Marketing Science 28 (4), 21-37. Huang, Chien, Tung Lin. 2009. “Factors Affecting Pass – Along Email Intentions: Integrating the Social Capital and Social Cognition Theories.” Electronic Commerce Research and Applications 8 (3), 160-169. Internet World Stats. 2011. “Internet Users in the World: Distribution by World Regions – 2011.” Retrieved August 8, 2011 from: http://www.internetworldstats.com/stats.htm. Javalgi, R, Lori Radulovich, Glenna Pendleton, Robert Scherer. 2005. “Sustainable Competitive Advantage of Internet Firms: A Strategic Framework and Implications for Global Marketers.” International Marketing Review 22 (6), 658-672. Ju, Liang, Wen Hung. 2008. “Does Online Relationship Marketing Enhance Customer Retention and Cross Buying?” The Services Industry Journal 28 (6), 769-787. Kenneth, Laudon, Carol Guercio. 2001. E-Commerce, Business, Technology, Society. UK: Butterworth – Heinemann. Kozinets, Robert. 1999. “E- Tribalized Marketing?: The Strategic Implications of Virtual Communities of Consumption.” European Management Journal 17 (3), 252-264. Kozinets, Robert, Kristine De Valck, Andrea Wojnicki, Sarah Wilner. 2010. “Networked Narratives: Understanding Word of Mouth Marketing in Online Communities.” American Marketing Association 74 (2), 71-89. Kronik Media. 2011. “Growth of Internet Marketing – Top Factors.” Retrieved August 8, 2011 from: http://www.kronikmedia.co.uk/blog/growth-of-internet-marketing-top-factors/406/. Mangold, Glynn, David Faulds. 2009. “Social Media: the New Hybrid Element of the Promotion Mix.” Business Horizons 52 (4), 357-365. Pine, Joseph, Don Peppers, Martha Rogers. 2000. “Do You Want to Keep Your Customers Forever?” Harvard Business Review (March), 103-114. Pires, Guilherme, John Stanton, Paulo Rita. 2009. “The Internet, Consumer Empowerment and Marketing Strategies.” European Journal of Marketing 40 (9), 936-949. Pride, William. 2006. Marketing: Concepts and Strategies New York: Cengage Learning. Roman, Sergio, Pedro Cuestas. 2008. “The Perceptions of Consumers Regarding Online Retailers’ Ethics and Their Relationship with Consumers’ General Internet Expertise and Word of Mouth.” Journal of Business Ethics 83 (4), 641-656. Rowley, Jennifer, Beata Teahan, Edward Leeming. 2007. “Customer Community and Co – Creation: A Case Study.” Marketing Intelligence and Planning 25 (2), 136-146. Simmons, Geoff. 2008. “Marketing to Postmodern Consumers: Introducing the Internet Chameleon.” European Journal of Marketing 42 (3), 299-310. Sreenivasan, Sameet, Reuven Cohen, Eduardo Lopez, Zoltan Toroczkai, Eugene Stanley. 2007. “Structural Bottlenecks for Communication in Networks.” APS 75 (3). Stone, Bob, Ron Jacobs. 2007. Successful Direct Marketing Methods. New York: McGraw Hill. Yun, Zee, Linda Good. 2007. “Developing Customer Loyalty from E-tail Store Image Attributes.” Managing Service Quality 17 (1), 4-22. Read More