From Traditional Marketing to the Digital World: 5 questions you should ask!
The last decades of massive technological developments have seen a dramatic change, not only in the consumer markets but to Marketing itself. According to researchers, digital technologies now “play a key role in the present and future of marketing”. Digital marketing is rapidly gaining ground to the more traditional means but there are still unresolved questions.
Do you want to become a Marketing guru but are still stuck in the past? No problem! Two marketing researchers — P. K. Kannan and Hongshuang (Alice) Li — developed a framework that highlight the touchpoints in the marketing strategy process, helping us understand what role the digital technologies will play in the present and thefuture of marketing.
Let’s break down this framework, analyzing the concepts and asking the right questions to understand how companies can conquer the Digital World.
1. Digital Environment — How do the digital technologies interact with 5 C’s?
It’s important to understand how emerging digital technologies impact consumer behavior. Customers can influence other potential buyers through online reviews, social media, and so forth, during both the pre-purchase and post-purchase stages. The customer decision journey often spans across digital as well as traditional offline environments.
Another important characteristic that sets the digital environment apart from the traditional marketing environment is the ease with which customers can share word-of-mouth information. In the digital environment, customers can post reviews on products, services, and brands at companies’ websites as well as third-party websites and social networks, and these reviews reach a much larger number of potential customers. The results showed that negative eWOM — Electronic Word of Mouth — is more influential than positive eWOM, whereas the reverse is true for observational learning.
Several platforms and platform markets have emerged in the digital environment. Online platform markets have empirically examined the existence of network effects, that is, more users/buyers will increase the number of advertisers/sellers of the two-sided marketplace. However, there is still a significant gap in our understanding of the processes within the platforms that can lead to more efficient and effective interactions and outcomes (for both firms and customers).
Search engines allow customers to acquire free information on products and services and identify firms and brands that fit their search criteria. Search engines provide organic (natural) listings of websites as well as paid search listings in response to the keywords that users type in.
Regarding contextual interactions, companies should know that digital environment cuts across geographical boundaries, online customer preferences, and choices are still very much a function of geography.
2. What is the impact of digital technologies in Marketing Actions?
The augmentation of the core product with services is becoming increasingly digital, wherein the core value of the product is increased with the value derived from digital enhancements. To understand digital marketing and its impact, it is essential to focus on how digital technologies are augmenting and transforming the core product.
Digital products and services have very low or zero marginal cost of production and distribution. This has important implications for pricing and revenue models, especially in the context of product lines consisting of traditional formats as well as digital formats. But why does the dynamic of pricing vary? Well, search costs for consumers and menu costs for retailers are lower, changes in the shopping environment are rapid, and retailers can respond to customers’ searchers more quickly.
One of the most used ways to recommend products is using collaborative filtering or adaptive personalization. These can be viewed as augmented services around the core product (Netflix’s recommendation system, for example) or as a personalized promotion.
One of the advantages of the digital environment from a firm’s viewpoint is that it is much easier to get data on the specific customer touchpoints with the firm. The data is very useful to measure the efficiency and effectiveness of various online marketing actions, and thereby optimize the marketing spending on various actions.
3. What is the importance of Marketing Research?
There is a growing need for empirical data, centered in understand the digital environment and to relate it to the consequences of a company’s marketing actions. Online data can be very helpful in understanding how online customers behave, thus helping to develop marketing strategies and measure the effectiveness of its actions and tactics on marketing outcomes.
4. What about Marketing Strategy?
The two core marketing elements that a firm focuses on to maintain a sustainable competitive advantage are its brand and its customers. The introduction of new channels, new shopping devices, and new customer interactions calls for an updated understanding of customer management and brand management and requires the firms to re-define their marketing mix metrics and CRM metrics.
5. Which are the expected Marketing Outcomes?
The consequences of marketing actions translate into a series of dimensions: customer satisfaction, brand value, customer value, brand equity, etc. Each firms’ actions have consequences on how the brand will be perceived and on the customers’ loyalty.
Selling online or offline will impact not only sales but how much the consumer will be happy with his product. We should also expect that major changes will occur on how the brands communicate according to the markets they are in. Researchers have found that web design is a very important factor when brands wish to communicate to diverse cultures.
Conclusion:
We should point to the necessity of deliberating pros and cons and the respective ROI, when implementing technological developments with the expectation of gaining competitive advantage.
Finally, this framework sends an alert for researchers to take a critical look at the issues outlined from observational studies and field experiments. Digital technologies open a new world, where practitioners can provide the raw material and academics can provide the rigor. Together they can extend the knowledge of the constantly changing digital environment, from a corporate and an academic perspective, elevating the future of marketing as a pivotal point in today’s economy.
This post is based on “Digital Marketing: A Framework, Review and Research Agenda” and written by: Anabela Garcia, Hugo Sanina, Inês Filipa Morais; Rui Mendes. For further reading, click here.
