An Evaluation of the Role of Online Information in Developing Online Marketing Strategy - Essay Example

? An evaluation of the role of online information in developing online marketing strategy BY YOU YOUR SCHOOL INFO HERE HERE An evaluation of therole of online information in developing online marketing strategy Introduction Digital marketing differs from traditional marketing in many ways. With traditional marketing, there is a significant focus on the marketing mix which is often used as a competitive tool to differentiate one competing brand from another. For instance, in traditional marketing, marketers may understand that their target consumers are price sensitive and therefore place more promotional emphasis on pricing in order to gain consumer attention and brand following. There may also be more financial capital invested into the physical distribution process in order to ensure that convenience is injected into the consumer decision-making process as a criterion for making future purchases. Digital marketing, however, makes use of technologies in order to maximise the return on investment for marketing activities. For example, online blogs, video streaming, text messaging on wireless devices, email and instant messaging provide new opportunities for marketers to reach their customers and build a solid brand personality (Reitzin 2007). Digital marketing makes effective use of a variety of electronic devices so as to better engage with important and profitable stakeholders in society. Websites, social networks and various mobile apps are yet three more examples of what constitutes digital marketing. Even though digital marketing differs from traditional marketing, there are some similarities as well. There must be focus placed on understanding the consumer decision-making processes using various models of consumer behaviour, recognising the importance of the traditional 4Ps of the marketing mix, and acquiring valuable demographic data in order to properly target the most viable consumer segments. This report evaluates the role of information in helping to develop an online marketing strategy, discusses how competitive advantage is achieved through digital marketing objectives, and how digital marketing can better manage consumer behaviour processes in the online environment. Importance of online information In the digital marketing process, having access to online information is critical to building an effective marketing strategy that will bring significant return on investment for marketing. Online information provides a metric by which success in marketing can be measured or whether the marketer has failed in achieving objectives. Such metrics are referred to as key performance indicators which serve as an empirical medium to measure marketing effectiveness (Stokes 2012). Quite often, marketers utilise websites as a means of engaging with consumer segments, offering opportunities to sign up to receive future offers and promotions or stay in contact with changes or innovations associated with a product or service. This creates electronically-stored data on customer demographics, including such characteristics as age, geographic location, or even income levels. This information, stored in the company’s server, with assistance from appropriate digital software, allows the company to segment their consumers more effectively, locate correlations to similar customer demographics, and thereby be able to better target consumers most likely to make future purchases in the online environment. Metrics are highly critical to digital marketers as it provides the foundation of knowledge about what types of consumers are actively seeking engagement with the company. Once this is understood, a business can create specialised offers or promotions that will best satisfy specific demographic groups. Some companies also utilise web-based surveys, research instruments online that allow a business to understand, in real-time, what consumers value and perceive about a particular product or service brand. Web-based surveys are being utilised in much higher volume today in order to improve the value-added dimensions of a particular brand (Ambler 2003). These research instruments allow disparate consumer segments to give their impressions about a company or its brands which can be extracted via company servers and correlated using metrics or statistical software packages. Through the process of using web surveys, a company can provide better products, diversify its online product offerings, or even change the method by which the company is interactive with consumers to make it more convenient or less invasive depending on what responses consumers provide in the surveys. This information is critical for a company to develop a marketing strategy that will provide consumers with a sense of brand value and also satisfy return on investment for marketing activities designed to gain consumer following and loyalty (Ambler, Kokkinaki and Puntoni 2004). Financial figures that are maintained on company servers also provide valuable information to marketers to develop or revamp existing marketing strategies. For example, many corporate databases actively track consumer expenditures and calculate this into daily, monthly or even annual sales volumes. Using support technology, the company can compare total marketing expenditures in the digital marketing process to determine whether marketing is over-spending its budget as compared to revenues. Therefore, online information allows the company to manage cost controls or reallocate resources to a more effective marketing objective when considering online information as a potential revenue analysis tool. Many companies that market digitally also rely on online information to properly align online advertising with budget. Many companies utilise banner advertisements that automatically provide knowledge about customer click-through rates, which is the extent to which the consumer clicks on the ad and actually browses the website where the consumer is directed through the advertisement. In today’s marketing environment, it is known that click-through rates are tumbling to new lows (Albee, et al. 2011). This would suggest a fragmentation between relevant websites that are attractive to consumers or poorly mismanaged advertising strategy that is not making important emotional or lifestyle-relevant banner advertisement. Being able to track the click-through rates of consumers will assist in developing more consumer-accepted advertising strategy in the online environment. It is highly crucial when developing a digital marketing strategy to be aware of expenditures and control costs if the business does not want to burden its revenue streams. The ability of online software to measure this aspect will determine whether new advertising strategies should be developed or redevelop content that would be considered more relevant and viable to disparate consumer market segments. In order to gain consumer loyalty, which allows companies to charge higher prices and improves the word-of-mouth for the brand (Chaudhuri and Holbrook 2001), it is absolutely crucial for the marketer to be transparent, trustworthy and illustrate to customers what the company or brand believes in (Goodson 2011). Companies now have the ability to have their internal representatives engage in interactive blogging or various social media sites to build this type of transparency and trust in the brand. This strategy improves customer satisfaction which is defined as the extent to which a product or service exceeds consumer expectations (Farris, Bendle, Pfeifer and Reibstein 2010). Many social networking sites provide valuable online information such as whether the consumer likes or dislikes company-produced social media content, a common tracking metric available on sites such as Facebook. If the business is putting blog information or general business values information that is not meeting with positive consumer sentiment, it provides real-time opportunities to change the methodology of engagement with consumer target segments. Essentially, this type of online information allows the company to be innovative and flexible in its self-generated social media content and determine, instantly, how many followers and loyal customers are available in this media forum. All of the aforementioned online information sources provide valuable information for creating a digital marketing strategy. Consumers have very disparate needs that are driven by social factors, lifestyle factors and even psychological constructs in the cognitive process. By having revenue-related metrics, social media tracking of loyalty and consumer approval of corporate-generated content online, click-through rate tracking, and even interactive online survey data, a business can recognise budgetary controls and ensure that advertising and other promotional content is adjusted effectively to the attitudes and needs of consumer segments. Maintaining competitive advantage and managing consumer behaviour Attainment of competitive advantage is also reliant upon online information and is not dissimilar to traditional marketing activities. Marketing theory indicates that when a brand is able to provide consumers with a sense of self-improvement and expansion, they are more likely to develop strong emotional connections to the brand (Zhang and Chen 2009). Therefore, it should be said that consumers are largely hedonistic, which is self-indulgent and self-gratifying by definition (Mees and Schmitt 2008). Why is understanding the emotional and psychological needs of consumers so important in digital marketing? Consumers often perceive brands based on their previous experiences with the product as well as their stereotypes and first impressions (Schiffman and Kanuk 2010). Consumers are not likely to respond positively to digital offerings if the consumer maintains their own pre-conceived notions about a product and its relevancy to their lifestyle or potential fulfilment of their psycho-social needs. Therefore, maintaining competitive advantage occurs through proper utilisation and analysis of online information in order to build potent connections with the consumer at the psychological level. There is a phenomenon in marketing known as conspicuous consumption, a consumer characteristic whereby utilising products and services consumption to improve their social standing is a principal need. Social sciences and psychological domains of study indicate that consumers, generically and internationally, want to achieve a sense of social belonging (Morris and Maisto 2005; Greenwald, et al. 2002). If digital marketers can create useful and socially relevant positioning of the brand or promote a product effectively, they will gain much higher levels of loyalty to other competing brands that do not invest this type of financial and labour-based capital into making important mental connections with consumers. How are such connections built, however? Many companies utilise cheap email advertising as a method of building important connections. Email advertising allows the business to enter a more personalised environment of consumers and is much less expensive than traditional direct mail advertisements. For example, it costs a business only ?5 to ?7 per thousand consumer addresses as opposed to ?500 to ?700 in the Royal Mail (Martin, et al. 2003). Hence, there is a cost competitive advantage using this method to promote the brand as well as being able to generate lifestyle or socially-related content that makes important emotional connections with desirable consumer segments. Emails often contain hyperlinks inviting consumers to visit a website or engage with the marketer, which provides significant metrics by which to measure actual visitation to the product or brand website. A survey consisting of 1,015 different consumers indicated that 77 percent of all respondents actually desired email promotional materials and offers (Double Click 2002). Therefore, consumers are not being pushed, but are instead being pulled with email advertisements in an environment that is considered favourable for their needs through permission-based email correspondence. It is through this cheap medium that consumers are satisfied, content can be developed with lifestyle and/or social factors in the integrated communications strategy, and tangible, empirical measurements can provide competitive advantage through loyalty attainment and better click-through rates with email-generated hyperlink invitations. Online information that is also generated by the consumer is highly valuable for sustaining competitive advantage. One example can be witnessed with Procter and Gamble which had created a product website for the baby brand Pampers that offered special offers (coupon incentives) and highlighted innovations to the Pampers brand. Pampers consisted of a very narrow target market which complicated generating content relevant these consumer segments. By establishing an online signup form and survey, Procter and Gamble learned that consumers wanted knowledge about proper parenting skills rather than knowledge about the brand. Now, the business was able to launch the Pampers Parenting Institute online in order to build lifestyle connections with consumers and found better word of mouth through the process and more consumer interactivity with the online content on the site (Hensell 1998). The abovementioned scenario with Pampers illustrates how competitive advantage is achieved by making one brand appear differentiated and more relevant to satisfy consumer lifestyle needs. This is how companies also manage to alter consumer behaviours by providing digital content (in this case website content and email advertisements). The businesses utilise recurring market research to gain consumer perspectives and then alter their marketing strategies to change how consumers seek information. Along the traditional consumer behaviour model, consumers recognise they have a need, search for information, seek alternatives, and ultimately make a purchase decision (Brassington and Pettit 2003). By building content that is considered favourable and socially relevant to consumer segments, it shortens the process of seeking alternatives and searching for information as they now have strong emotional connections to the brand, which was identified previously by Zhang and Chen (2009) regarding brands that provide for self-improvement and self-expansion as a means of building strong emotional connections. Consumers now trust in the brand and there is transparency toward Pampers’ values which was supported by Goodson (2011) as being vital to building consumer loyalty. It is through generation of digital content that consumers build competitive advantage and also enhance development of brand attachments that radically change consumer behaviour. Companies that do not perform research into consumer needs and preferences are not likely to achieve a positive return on investment for their efforts. Furthermore, the role of ICT is critical to managing such stakeholder relationships and sustaining brand loyalty. The ICT role is to update and manage information online and manage the communications processes between consumer and marketer. An effective ICT staff can extract important financial data (such as revenues), consumer demographics, or even survey results and then compile these into valuable market reports that will, subsequently, alter marketing strategy to achieve a greater return on investment for digital marketing activities. The generic availability of online information, however, does not guarantee that a business will experience knowledge creation (Vilaseca-Requena, Torrent-Sellens and Jiminez-Zarco 2007). ICT can enhance competitive advantage, improve marketing strategy and even change consumer behaviour if the data extraction processes are efficient and aligned with marketing objectives. Only an effective ICT division within the company can properly manage online data and produce a new type of knowledge exchange that is highly critical to establishing a relevant marketing strategy that will gain consumer following and consumer loyalty. It is through loyalty production, founded on effective data extraction and metrics analyses, that a business experiences its highest competitive advantages both in terms of cost and brand preference that can be established through relevant lifestyle-related digital content focused at target consumers. Conclusion As illustrated by the report, digital marketing is a dynamic process that is similar yet different to traditional marketing which focuses on the 4Ps of marketing to gain competitive advantage. Digital marketing utilises a variety of different technologies and mediums by which to communicate and engage with consumers in order to build a solid brand reputation with important target segments. Whether social media, text messages, blogging, or banner ads are utilised (among many other options) digital marketing provides tremendous opportunities for building an effective marketing strategy and build a brand online. The utilisation and coordination of data that is often inexpensive and easy to track over the Internet provides valuable financial data, demographic data, and can even change consumer behaviour patterns by providing a foundation for content and message generation that strikes an emotional chord with consumer segments. Digital marketing is the future of marketing in a world where Internet usage, internationally, continues to increase and where consumers are using the Internet to purchase more products and services than ever before. References Albee, A., Arikan, A., Boyd, E., Dushinski, K, et al. (2011). 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