Gamification in Marketing - Term Paper Example

Gamification in Marketing Student’s Name Institutional Affiliation Date Gamification in Marketing Introduction The concept of Gamification entails the use of game mechanics, designs, techniques and game thinking in non-traditional game systems to enhance the engagement and experience of users. From its inception in 2008, gamification has gained fame and widespread in 2010 after its popularization in the digital media. According to Herger, many organizations, especially multinationals, are using gamification as a powerful marketing strategy focused on driving engagements across their internal and external business environment and programs. Proponents believe that gamification is the next generation of organization’s advertising strategy. They postulate that gamification will enhance customer relationship by making them stronger and long-term as it shall offer entertainment for its users while they interact with the respective brand. According to a study done by Mind Commerce Research in 2012, gamification is expected to be used by over eighty percent of the top two thousand global companies by the year 2017. The study also states that gamification will grow to about $3.6 by 2017. In spite of these findings, no literature exists to identify the projected use of gamification, especially at what rate by these organizations (Roy, 2016). In this report, the paper offers a critique of the current issues concerning gamification, its potential benefits to marketers, its implication for enterprises and industry applications based on two organizations; Starbucks’s “My Starbucks Rewards” and M&M’s “Eye-Spy Pretzel.” Overview of the two organizations Starbucks is an American coffee corporation and chain founded in Seattle, Washington in 1971. The coffeehouse operates over twenty-three thousand locations around the world, with a majority in the United States. The organization is considered as the epitome of “second coffee wave in the United States based on the quality coffee that it offers. The organization serves cold and hot drinks, whole-coffee beans, and a variety of micro-ground instant coffee, for instance, espresso, and caffe latte among others (Starbucks Company, 2016). The company is known for its customer care and employee loyalty and engagement. The Starbucks Reward program is a marketing strategy where the organization uses gamification to transform their traditional card loyalty program to a more appealing and complex aspect to growing its sales (Hector, 2015). Once a player registers through the application, they accumulate stars with every purchase that they make at the stores. The game has three levels based on the degree of user’s loyalty. For instance, frequent visits to a Starbucks coffee shop are awarded through the upgraded levels. The game’s benefits include an extra cup of coffee, birthday gifts and sometimes specially designed offers to the customers (Starbucks Company, 2016). Figure 1.0 The Starbucks Reward program M& M chocolates are produced by the candy makers Mars Incorporated that was established over one hundred years ago. The Mars Incorporated started manufacturing M&M candy in 1941, and today the chocolate brand has become an iconic American candy. According to the organization, over four hundred million M&Ms are produced daily. In 2013, the candy maker launched the M&M’s pretzel marketing campaign (Mars Company, 2016). The game was premised on the eye-spy logic in which players were given large graphic design of M&Ms scattered with one small pretzel hidden among the big ones. The logic was for the player to find the hidden pretzel (Chou, 2015). While the design and thought-process of the application was inexpensive, the viral marketing campaign brought huge benefits for the organization as it improved engagement, and the motivation to buy the pretzel brand. The campaign would generate over twenty-five thousand likes, eleven thousand comments and over six thousand shares on the social media, especially Facebook. As demonstrated by these organization and others, the hype generated on gamification has made the subject a trending topic as different researchers come up with different opinions on the application. For instance, the gamification at Starbucks Corporation is aimed at enhancing its customer loyalty program. The gifts offered through the game encourages customer engagement while at the same time gives them information that concerns the preferences, habits and tastes by customers (Roy, 2016). Additionally, other studies postulate that building full-fledged gamified components need additional investment and dedication. However, these platforms give massive rewards for the organizations and the continuous interactions between customers and these firms make them enjoy the products offered. Further, the strategy allows these firms to manage the changing consumer behavior and offer a greater understanding of the strategy and how it can be used in enhancing new products set to be launched in a market. Gamification and its Potential Impacts Gamification involves designing of gaming elements with the aim of providing solutions to firms by engaging its users and existing and potential customers. Users of these applications may include any of the organization’s stakeholders (Roy, 2016). Therefore, gamification is a support process based on the gaming experiences of its users with the purpose of creating customer value. It suffices to note that this attribute of gaming conforms to the belief that customer service is important and that consumers are value creators. Again, gamification provides the opportunity for a higher level of engagement and interaction with customers (Huotari & Hamari, 2012). It also stimulates innovation and transforms consumer behavior. Current research demonstrates that gamification has risen as a modern business model that uses game design elements so as to influence, measure consumer behavior and rewards them. Imperatively, gamification creates a secondary situation based on its source. According to Gartner (2011), the essence of gamification is founded on three crucial components of an excellent game that are essential to business enterprises. The first component is game Mechanics that consists of rules, procedures and constraints with technologically-backed reinforcement. Using this component, an organization can manage the performance of its players through rewards, incentives, points, levels, challenges and feedback. The game mechanics are also used to turn user’s intentions and motivate them to buy products from business organizations. Therefore, game mechanics are designed to trigger one’s desire and perhaps get them to engage in the game or the business activities. Proponents of gamification postulate that rewards and any other incentive offered in these games reward consumer’s interest. Psychologically, a person feels great when they can earn something in life and that could be a badge, recognition or points, and it does not matter as long as it can satisfy their desires. The second component is the game dynamics that essentially comprises of the interaction between a player and its dynamics. Accordingly, the idea of game dynamics uses behavioral communication between the game and its player. Therefore, game dynamics are founded on the motivational experience of its user that arises from one’s desire (Hamari & Koivisto, 2013). Imperatively, gamification in business is meant to offer incentives to customers to buy more products where they are entitled to earn a motivational reward based on the business activities that they partake. The behavior model created by Fogg that consists of three elements demonstrates how gamification can influence a consumer behavior. These elements include ability motivation and trigger that work together to create a certain consumer behavior. For example, under the motivational component, a person would wish to carry out an activity that motivates him or her most while the ability aspect allows one to take note of their behavior with ease (Fogg, 2009). Thirdly, triggering is a process where a potential customer is influenced or urged to undertake a certain behavior in their decisions or ability to act. Imperatively, gamification is important for a business since the game mechanics and dynamics can positively influence human conduct because their design purpose is to drive a player beyond activation and trigger them to take certain actions or steps in their buying process (Wu, 2011). Figure 2: Fogg’s Behavior model As highlighted by the behavior model presented by Fogg, gamification influences consumer behavior in their buying situations, especially in the virtual space. However, it is essential for marketers to understand that while gamification influences strategy formulation based on its design, it has the potential to increase sales and manipulate consumer behavior at the same time. Therefore, it is important that continuous research on the issue is carried out to ascertain how business organizations, like Starbucks Coffee and Mars Company can analyze consumer conduct so that they can maintain latest trends and incorporate digital marketing strategies and technologies to increase their sales and gain a competitive advantage in a highly competitive business environment. It is on this basis that social critique of gamification is founded. Opponents of the system argue that gamification benefits consumers in the least possible manner. In fact, many believe that it manipulates consumers as it is a form of bribery. According to Bartle (2012), it is a form of bribery for consumers are rewarded for doing what they are required to do. Bartle argues that gamification offers prizes to consumers that are not valuable and as such an invaluable reward is not a real reward. Therefore, the superficial motivation created by the virtual rewards embedded in the gaming mechanics is not enough to remunerate customers. Further, Costa (2012) argues that it is bribery if the only motivation for participating is to serve a brand. Eventually, consumers will feel used and stop gaming. Costa postulates that gamification does not provide a real game experience like known video games because most of these applications are not sophisticated and participants get rewards too soon. Therefore, long-term rewards must be used to show the commitment from businesses for their consumers. For instance, the M&M eye-logic pretzel is a game that may not take much time for a consumer to find the hidden pretzel. Additionally, by a mere visit to a Starbucks Store, one gets to increase their level or points on their gamification platform. These rewards are too soon and not complicated as a normal game would offer. In fact, gamification may fail to motivate genuine and interested consumers. According to Barraud (2012), some people do not like competition and when they play and lose, they are likely not to make repeat purchases or go to such stores. Additionally, Zecherman states that if gamification encourages competition and takes away the genuine intrinsic interests of other competitors, it is bound to promote an expensive activity for the participants. It suffices to note that organizations like Starbucks and Mars Company use gamification to increase interactions with their customers and influence the business environment of their brands. Therefore, consumers can understand their product offerings and buy based on their needs and preferences. As a result, gamifaication does not offer any new insight into a company’s products but may only serve to increase contacts with the customers. Eventually, consumers give money in exchange for their proffered goods or services from these organizations. Therefore, gamification equates to browsing an organization’s online information concerning a product and its price and just doing an online window shopping expedition. At a time when marketing is becoming digital, Öncel (2015) asserts that it would be wrong for marketers to confuse gamification with simple marketing. The need for businesses to use the digital platform in its marketing activities cannot be overemphasized and gamification provides one example of digital marketing. However, it should not be seen as the best way to grow and expand since all businesses are moving into the digital space. Öncel believes that gamification should be used as a way of expanding the marketing activities in a company where relevant techniques can be utilized to influence consumer behavior, especially in making purchasing decisions. Further, organizations should not just focus on increasing their brand awareness but strive to use the platform to create long-term engagements and meaningful and beneficial relationships with its customers beyond the normal rewards. Industry application Gamification mechanics and other attributes are forming the next digital platform for advertising and marketing. Digital marketing is expanding and gamification demonstrates how the traditional dominant sense of marketing is transitioning from trading of products to an interactive customer relationship and service offering logic. The transition is enabled by innovative advances in digital marketing and technologies like gamification. Therefore, the growth in the digital environment dictates that digital information from customers is an integral component of an organization’s effective marketing strategies. According to the Mind Commerce Research (2012), the relevance of gamification system to business enterprises can be ascertained through the digital environments, where the platforms are ranked among the top four forms of digital marketing. Therefore, gamification in businesses can be effective and efficient if it operates outside the digital platform or environment. For instance, it would be difficult to manage participating customers on an organization’s loyalty program and reward them through scores made with a pen on a piece of paper. Therefore, it is more convenient to gather, store, retrieve and manage digital information than doing it manually. Imperatively, gamification allows organizations to have convenient ways of rewarding customers. Secondly, gamification compliments digital marketing as one would argue that the two concepts are linked. Digital marketing allows consumers or potential customers to perform business activities in the virtual space. For example, businesses advertise their products online whereas gamification encourages the users to buy more goods. Therefore, the two concepts work hand in hand to deliver desired organizational results in different situations. Thirdly, gamification used in developing customer relations management processes in the retailing environment. For example, based on the information concerning customer behavior in different market segments, organizations like Starbucks and Mars Company can use the information to establish platforms to ensure that customers get quality services and products. The gamification theory gives these entities the opportunity to find services and products that interest their customers. Imperatively, through gamification, an organization’s CRM can identify customers as the most profitable part of its activities, especially in multi-channel retailing (Xu, 2012). Gamification enhances customer interactions and engagements and eventually leads to building of customer relationships. As a result, an organization can attract more loyal customers as demonstrated by the massive support that Mars’s M&M eye-logic pretzel campaign generated went it went viral. According to Khanlari (2015), organizations are keen on building long-term customer relationships and if they can use applications like gamification, then they are bound to achieve their overall marketing goals ad increase the performance of their brands in their respective industries. It suffices to note that gamification can build customer relationships based on different game elements that can impact the relationships at different stages of their engagements. Again, it allows organizations like Starbucks Coffee and Mars Company to identify customer perceptions that can create value for products. Marketers need to understand that the use of gamification can enable an entity to resolve some of the problems it faces in identifying consumer behavior. More fundamentally, organizations must conduct requisite studies to ascertain if they can implement the gamification strategy in achieving their envisioned targets and objectives. Fourthly, gamification can be used in attaining benefits that an organization may not get using the conventional marketing tools in engaging, re-engaging, motivating and creating loyalty among its customers. Therefore, using gamification allows organizations to create products and services that provide motivational experiences to customers. For example, the Frequent Flyer Program (FFP) is a service and loyalty scheme that uses gamification techniques and has successfully demonstrated that gamification accrues benefits to organizations through fun (Zichermann & Linder, 2010). Again, gamification is an example of ideologies that can impact human psychology when applied in businesses. These ideologies are essential since they can inspire and manipulate consumer purchasing behavior. The core function of any marketing activity is to influence consumer purchasing decisions (Cialdini & Rhoads, 2012). Therefore, business strategies are meant to attract new customers, keep the existing ones and build stronger relationships with them through various platforms. These marketing goals can be realized through conventional marketing campaigns, advertising and a sound social corporate responsibility platform. Therefore, the dawn of gamification idea can be considered as a new and exciting approach aimed at attaining these and other objectives by a business entity. Furthermore, gamification satisfies consumers’ desires and business goals and objectives. Imperatively, gamification is a relevant marketing tool for organizations like Mars Company and the Starbucks Company because it allows them to meet their marketing goals by expanding the available advertising platforms. Gamification can be used as a communication tool in different organizations. For example, M&M pretzel and My Starbucks Rewards are platforms that allow these organizations to communicate with their customers. Again, gamification is more creative, cost-efficient and a highly commendable communication tool in marketing. For example, instead of companies voicing their business messages, gamification offers an approach that tries to create a conversation with the users based on the kind of coffee they prefer once they win their rewards. Further, M&M pretzel became a sensational phenomenon when Mars Company launched it in 2013; a situation that allowed the organization to communicate with its existing customers and potential customers. It suffices to note that gamification should be considered as a powerful business communication tool and not just as an interactive game for customers. Moreover, gamification is an essential tool in ascertaining if a heavily game-based technique can be used in an environment that has diverse clientele. For example, Kultima and Stenros in the study sought to examine how gaming design aspects and game experiences can be used for a diverse audience or market. Through their findings, the concept of gamification implies that casual games comprise an expanding segment in the digital advertising space with a projected growth of over twenty percent each year (Kultima & Stenros, 2010). Therefore, organizations like Starbucks and Mars should use gamification as marketing strategy in diverse business environments together with other activities that constitute a normal part of one’s daily activities. It follows that online activities are becoming part of a person’s daily activities and thus using gamification will allow these organizations to tap into such potential customers and grow their marketing reach. Consequently, designers of these games must consider the different audiences in the market and create games and applications that motivate them based on various aspects like literacy and level of skills (Deterding et al., 2011). Furthermore, the designers may need to attempt to normalize some of the games to make them relevant and appealing, especially as a form of digital marketing and not just for the sake of creating brand awareness. Conclusion Essentially, the use of games and gamification techniques in marketing is considered to be the next generation of digital marketing. The idea of gamification is shaping how organizations market their products and the future growth prospects of marketing. It suffices to note that digital marketing and gamification will continue to rise in prominence as marketing platforms for organizations as demonstrated by Starbucks Coffee and Mars Company. These organizations have demonstrated that gamifications techniques can be used to market products, increase sales and create overall brand awareness in different market segments. Imperatively, more businesses are set to incorporate gamification in their marketing operations based on the goals that they will strive to achieve. However, critics assert that gamification violates consumer’s independence to make purchasing decisions by creating desires. Again, various researchers have offered criticism on the concept based on its definitions, implication, potential benefit to businesses and industry use. For example, using the Fogg’s behavioral model, the potential influence of gamification is ascertained while programs like the Frequent Flyers Program emphasize the essential role in recognizing customer behavior. It suffices to note that while the concept is still developing, its potential benefits to businesses are so enormous and are bound to increase as more organizations adopt it as a means of digital marketing. Enterprises that seek to gain competitive advantages in the digital space cannot ignore gamification. References Anderson, J. Q., & Rainie, H. (2012). Gamification: Experts Expect'Game Layers' to Expand In the Future, With Positive and Negative Results. Pew Internet & American Life Project. Bartle, R.A. (2011). Too much of a good thing. Gamification. Accessed on January 9, 2017, from http://gamification-research.org/2011/05/richard-bartle-on-gamification-too-much-of-a-good-thing/ Bhattachary, C. B. and Bolton, R.N. (2000). 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