Role of Digital Marketing to Build Customer Relationship in Amazon-com - Research Proposal Example

Research Proposal: Role of Digital Marketing to build customer relationship in Amazon.com, Inc.

Table of Contents

Introduction4

Background and Initiatives4

Research Problem5

Importance of the topic5

Research questions5

Aims and objectives6

Literature Review6

Importance and history of digital marketing6

Diverse tools of digital marketing7

Way in which customer relationship develops9

Buying habits of different segments11

Digital marketing activities of Amazon11

Research Methodology13

Research purpose13

Research Methods13

Research Philosophy13

Research Approach13

Data collection14

Sampling14

Research Limitation14

Ethical consideration15

Timescale15

15

Reference list16

• Introduction

The purpose of this research proposal is to study the effectiveness of digital marketing for building relationship with customers for a company like Amazom.com, Inc, which launched itself as an e-commerce site for selling books but later progressed to sell almost everything as a virtual retail outlet. Digital initiative has opened doors to reach out to the mass in very short span of time but it has also aggravated the need to be extremely innovative and strategic to cope up with changes. This study will be conducted to understand how effectively Amazon is using the tools of digital marketing to build, sustain and expand its customer. This study is necessary to understand what differentiates it from others when the medium of promotion is same for every other company.

• • Background and Initiatives

Information technology has brought about a phenomenal change in the way of buying and selling. It controls the minds of people through innovations, stimulating the continuous urge of staying up-to-date. It has highly influenced the way people behave or communicate and that has compelled business houses to incorporate those changes that directly affect their target consumers. People are using online medium for communication or transaction and there is a shifting trend of the use of different digital channels. Companies not only need to embrace the medium but also keep a track of the channel or device that is being used by consumers (Marketingland, 2015).

According to a survey conducted by E-consultancy in the US and UK, the rate of growth of mobile users who use it to make purchase has doubled from 2011 to 2012 (12% to 28% in US and 13% to 25% in UK) indicating the immense potential of sells through digital world.

• • Research Problem

Amazon gained significant popularity through the low prices offered by it. However, since the year 2013, the profits of the company suffered because of the price leadership strategy of it (Butterfly Communications Ltd., 2016). This states the research problem that Amazon is encountering. Therefore, the company has to change its policy in order to increase its profits and build a strong relationship with its customers.

• • Importance of the topic

The topic is important because it will guide Amazon in understanding the way in which it can expand its customer base and build strong relationship with them without decreasing the prices of its products (Butterfly Communications Ltd., 2016). In order to attain a position in the international market, Amazon lowered its prices to make it competitive. However, it has to think of other ways such as utilisation of digital marketing for attracting its customers instead of reducing the prices of products served. The findings of the research will guide Amazon in understanding about the importance of digital marketing in attaining the attention of customers.

• • Research questions
• What activities Amazon has taken up in its marketing through digital medium?
• What are the interaction channels of digital marketing that Amazon is using to communicate with its customer?
• In what pattern does Amazon invest in the different tools of digital marketing to build, retain and expand its customer base?
• What are the tools used by other online organisations for building customer relationships?
• Which online tools do the target market values?
  • Aims and objectives

The aim of the paper is to determine the importance of digital marketing in enhancing the relationship with customers. The aim can be achieved by following the continuing objectives.

• To study the digital marketing activities of Amazon.
• To study the interaction channels of digital marketing that Amazon is using to communicate with its customers in order to maintain existing customer base.
• To study the pattern of investments in digital marketing by Amazon to build, sustain and expand its customer base.
• To determine the tools used by other online organisations for building strong relationship
• To identify the online tools valued by target markets
• Literature Review
  • Importance and history of digital marketing

21st century is the era of virtual world where people are connected through electronics or social media. Geography or time is no more a constraint and information exchange has become lot easier (Inetasia solutions, 2016). There is a possibility of the occurrence of physical exchange of products over the electronic media in future. This is evident from the current rate of technological advancements such as introduction of 3-D.

Some consider digital promotion as an enhanced mode of interaction between buyer and seller as the digital platform has shortened the physical distance and reduced the communication gap; resulting in better understanding and transparency (Ghauri and Cateora, 2010; Ryan and Jones, 2009).

The beginning of 21st century saw a remarkable change in the use of internet with personal computers, laptops or mobile becoming a general household item (Inetasia solutions, 2007). Developed countries grabbed the digital world long back and shifted from traditional ways of selling to digitise selling and this method is more cost effective (Pepelnjak, 2008). Countries like Singapore have already shown successful test results on the application of digital marketing (Teo, 2005). The history of Amazon is given in the appendix.

• • Diverse tools of digital marketing

There are various tools for digital marketing like social media (Facebook, Twitter, and LinkedIn etc.), search engine optimising techniques, mobile marketing through SMS alerts or apps and email marketing. The rest of the tools used by online companies currently for marketing their products are pay-per-click techniques, content promotion systems and public relation mechanism (Ryan and Jones, 2009). They have successfully replaced monotonous traditional form of marketing like distributing pamphlets or flairs, door-to-door promotion, broadcasts or referrals. A common link between conventional and modern marketing is word-of-mouth marketing. However, the difference between the two kinds is that in modern marketing, word-of-mouth occurs through social media (Trusov, 2009).

Over the years, the meaning of marketing has changed from mere selling and advertising to creating brand loyalty among the consumers. Promotion is necessary to build the brand image as the bond between consumer and company is sustained by it (Kotler et al, 2013). Internet has brought about revolutionary change into the world of marketing. This has created the need for involving customers in the business thereby changing transactional marketing into relationship marketing (Wilson et al, 2008). It has become more important for companies to retain the existing customers.

The medium of internet access has penetrated through handsets, tablets or portable devices and this embarked the necessity of digital marketing. It is a sub category of conventional form of marketing aimed at achieving the same objectives, which is attraction, and retention of customers. While the traditional forms of marketing uses face-to-face interaction or direct approach, digital mediums reaches out to a vast population at the same time virtually through web optimizations or apps and other forms of online marketing activities.

The accessibility to internet has benefited the buyer and the seller as both can reach niche requirements without the cost of time and money. For instance, the use of search engine optimising and pay-per-click techniques has increased since the mechanism saves time and money.

The positioning of products factor is no more a thing to ponder upon, as, the promotion reaches the mass and the mass make its own customisation of what to buy or what not to. This has reduced the cost of marketers spending time and money over understanding market segments to position the product according to its targeted consumers.

Extreme and continuous innovation and creativity is required for this medium of marketing as it is an open platform and transparency of ideas is highly prone to get copied (Scott, 2010). According to a survey conducted in 2013 by Garder, companies keep 10% of their spending for promotional activities in which 2.4% is for digital marketing; it is a presumption that in future companies will spend 9% on digital marketing from the current 2.4%.

E-commerce is yet another branch of digital marketing where promotion and selling are intermixed bringing a revolutionary change in the buying pattern of consumers. The other online mediums of promotion are exclusively related to branding, positioning and marketing. In this perspective, e-commerce creates the platform for virtual transactions. It does not have its own product but acts as the mediator for those who want to sell (Strauss and Frost, 2009). It has diminished the role of agents and the hidden cost behind them, as now there is a direct link between brands and consumers. This in turn helps is building the brand equity since the frequency of visibility and interaction helps in intensifying positive perception about the brand (Godfrey et al, 2011). At the same time, it has made it difficult to understand as to what extent promotional activities through digital platform is effective. The entire business model now revolves around technology and ways of engaging the contemporary buyers whose buying behaviour changes with their online experiences (Baines et al, 2011).

• • Way in which customer relationship develops

Digital marketing has captured one of the most essential elements of marketing- promotion through communication. It has a hierarchy, which shows the outcome of marketing strategies and helps in understanding the changes in purchase behaviour.

Figure 1: People’s response to promotional activities

(Source: Evan’s et al, 2009)

The moment customer gets exposure to a promotional activity, begins the process of attraction towards a possible sell. It is important for marketers to understand the target audience and choose the most effective mode of communication to reach the right buyer with right content (Kotler and Keller, 2011). With more than 1.8 billion youth population and penetration of internet to remotest corners the only way of most effective marketing is through digital media (UN.Org, 2015). In the current scenario e-commerce sites like Amazon.com, Inc., Alibaba Group plays integrated role of promotional partner and seller.

The e-commerce sites allow the customers to give their feedbacks on offered products. The opportunity of customers to influence the decision of e-commerce companies builds a strong relationship of trust and loyalty.

• • Buying habits of different segments

In the US and other developed and developing nations, there are two segments of purchasers. This demographic segmentation identifies the age group below 18, 18-25, 26-45 and above 45 years. Online shopping medium is popular among the teenagers and working section of the population (Pepelnjak, 2008). Teenagers use search engine optimising and social media techniques for knowing about the popular products. Pay-per-click techniques, content promotion systems are popular among the working section. However, above the 45 years of age group, the online sites are not popular because they consider it unreliable, as fraudulent activities are common. The teenagers choose digital mediums for shopping because there are varied kinds of products available in a single site. The working section gives significance to digital medium because of the time constraint (Ryan and Jones, 2009).

• • Digital marketing activities of Amazon

To understand the effectiveness of digital marketing in Amazon it is important to know its development over the period of its establishment until present time.

Few strategies followed by Amazon and the patterns of investment in them are discussed in the continuing section.

• Pay per click- Amazon is never seen flashing itself on high raised billboards or flyers. It pays Google for every click on its sponsored icon that takes customers directly to its website.
• Website improvisation- User-friendly interface, high uploading speed and through continuous tracking of consumer behaviour through their website Amazon spends a lot of time and labor for betterment of user experience on its site. Their pursuits of faultlessness lead them to the rankings under ease of usability by Jacob Neilson.
• Online over offline: Amazon follows customers; with the change in buying platform shifting more towards online, Amazon decided to shift its visibility online. While it had spend $80 million in offline advertising in 1999, in 2009 it dropped its spending to $9.4 million with a sharp increase in that quarter’s sale.
• Tie-ups and services: Amazon along with operating many of its website also play host to any other retail websites. It also takes away the additional burden of packing and dispatching of orders as through its fulfilment centres, which ensures high reliability, its takes up the responsibility of inventory management and related processing. In 2007, approximately 1.3 million sellers sold products through the websites of Amazon.

Apart from these few strategies there are many more activities through which Amazon tries to gain its competitive advantage and stimulates the need for studying how it is taking the help of digital marketing and to what extent is it effective (Butterfly communication ltd., 2016).

• Research Methodology
  • Research purpose

An analysis of literature review and objective reflects the facts that it is aimed to understand the role of digital marketing in Amazon to build customer relations and determine the strategies, which can help it, improve. Based on the objective of this research the methodology that can be undertaken would be qualitative. The types of methodology and the reason for choosing one of them are discussed further in the continuing section.

• • Research Methods

The two basic types of research methods are quantitative and qualitative (Silverman, 2010). The use of qualitative research will be beneficial for the research because it allows the researcher to know about the opinions of customers and managers of Amazon on digital marketing.

• • Research Philosophy

The research philosophy suitable for this research is a mixture of positivism and interpretivism because the research will deal with both the customers and managers of Amazon. The presence of strong evidences on the role of digital marketing in building customer relationship also makes the combination suitable for the research.

• • Research Approach

The inductive research approach is suitable for this paper because it qualitative research method has been used (Bergman, 2008). Thus, a new theory on digital marketing and customer relationship will be formed after analysing the existing literature.

• • Data collection

Data collection is the functional stage of any research where according to the type of research data is gathered for further study. It can be done through various medium like online browsing of previous works related to the topic of study, questionnaire survey, conducting face-to-face or telephonic interviews (Creswell, 2013).

In this case primary data collection method is suitable for completing the research. By interviewing the managers of Amazon and identifying the online tools valued by its customers, the researcher will derive significant information on digital marketing. Online survey forms will be distributed to the managers and selected customers of Amazon through ‘survey monkey’.

• • Sampling

In an attempt to collect the data from the customers and managers of Amazon, probability cluster sampling will be used. This is possible by dividing the customers of Amazon into different age groups of less than 18, 18-25, 26-45 and above 45 years. However, for interviewing the managers, random sampling is applicable (Silverman, 2010).

The total sample size will be 50 of which the researcher will interview 10 managers and 40 customers of Amazon. Therefore, the population of the sampling will mainly be the managers and customers of Amazon.

• • Research Limitation

The main research limitation is the absence of time for collecting the data through primary research (Bergman, 2008). Apart from it, access to the managers of Amazon for interviewing them is another limitation. Participants of the research will have to be convinced through gifts, which will increase the expenditure of the researcher.

• • Ethical consideration

The researcher has to abide by the ethical considerations. By forcing the participants to participate in the survey and interview, the ethical laws are violated (Creswell, 2013). Therefore, the researcher has to take permissions before conducting the survey. The researcher will use the collected data only for academic purpose and will have to ensure the same to the participants. The ethics application is given in appendix.

• • Timescale

The researcher will follow the given timescale.

• Reference list

Baines P., Fill C. and Page, K., 2011. Marketing. [2nd ed]. UK: Palgrave.

Bergman, M.M. ed., 2008. Advances in mixed methods research: Theories and applications. New York: Sage.

Butterfly Communications Ltd., 2016. Marketing strategies of Amazon.com. [Online] Available at: < http://www.btf.gr/marketing-strategies-of-amazon-com/ > [Accessed 27 May 2016].

Creswell, J.W., 2013. Research design: Qualitative, quantitative, and mixed methods approaches. New York: Sage publications.

Ghauri, P. and Cateora, P., 2010. International Marketing: components of brand equity. [3rd ed]. New York: McGraw-Hill Publishers.

Godfrey, A., Seiders K. and Voss, G., 2011. Enough is enough! The fine line in executing multichannel relational communication. Journal of Marketing. 75(4), pp. 94 –109.

Inetasia solutions, 2016. The History of Digital Marketing. [Online] Available at: <http://www.inetasia.com/resources/articles-the-history-of-digital-marketing.html> [Accessed 23 May 2016].

Kotler, P. and Keller, K., 2011. Marketing management. [14th ed]. London: Prentice Hall.

Kotler, P., Armstrong, G., Harris, L.C. and Piercy, N., 2013. Principles of Marketing. European. Harlow: Pearson Education.

Marketingland, 2015. Buyer Behaviour Trends Driving The Digital Shift Toward Mobile. [Online] Available at: < http://marketingland.com/buyer-behavior-trends-driving-digital-shift-mobile-132039> [Accessed 28 May 2016].

Pepelnjak, C., 2008. Measuring ROI beyond the last ad. Digital Marketing Insight. Atlas Institute.

Ryan, D. and Jones, C., 2009. Understanding digital marketing. London: Kogan Page Ltd.

Scott, D.M., 2011. The new rules of Marketing & PR. [3rd ed]. England: John Wiley & Sons, Inc.

Silverman, D. ed., 2010. Qualitative research. New York: Sage.

Strauss, J. and Frost, R., 2009. E-Marketing. [5th ed]. Prentice Hall: Pearson. New Jersey.

Teo, T., 2005. Usage and effectiveness of online marketing tools among Business to- Consumer (B2C) firms in Singapore. International Journal of Information Management, 25(3), pp.203–213.

Un.org, 2015. Uniting for Youth. 10 things you did not know about the world’s population. [Online] Available at: http://www.un.org/youthenvoy/2015/04/10-things-didnt-know-worlds-population/ [Accessed 21 May 2016].

Wilson, A., Zeithaml, V.A., Bitner, M.J. and Gremler, D.D., 2008. Service Marketing. London: McGraw-Hill coop.

Appendix

History of Amazon.com, Inc.

Amazon was founded with the objective of selling books in 1994 by its founder and CEO Jeff Bezos who tagged it as ‘Earth’s Biggest Bookstore”. Later in 1995 it took up the channel of online sells and started including various range of products and changed the tagline to ‘Earth’s Largest Selection”. Jeff had a backward plan for its business strategy; work for what the customer wants and innovate or invent accordingly. His plan was to gain a huge customer base even at a loss for 4-5 years and after 4 years of its going public (1997), Amazon showed its first profit. At present Amazon is the proud host of more than 45 million customers and toughest competitors of retail giants like Wal –Mart.