Executive Summary

This essay has focused on the role of digital marketing in contemporary businesses which highlights the importance of digital marketing compared to its limited disadvantages. The essay furthermore emphasizes how each online marketing, social media and mobile marketing which is considered to be sub components of digital strategies have influenced consumer behavior in general. Latter part of the essay elaborates how firms measure the effectiveness of the digital marketing effort formulated within.

 

 

 

 

The role of digital marketing in contemporary businesses

Introduction

Many scholars such as Kotler and Drucker who are affiliated with the concept and philosophy of Marketing has identified that Marketing has shifted from concerning on Price and Distribution of a product to customer needs and other non-commercial arenas (The Financial Express, 2008); (refer link indicted by 5. in references). In such an era where customers have become digital oriented, the need of marketing oriented firms to change to Digital marketing has become Vital. Chaffey (2013) identified digital marketing as the use of technologies to assist marketing activities in order to develop customer understanding by matching their needs. This theoretical essay on importance of digital marketing gives a brief insight as to how digital marketing’s scope could be combined with a firm’s generic strategic framework in order to synchronize with the targeted consumer mindset to achieve high level of brand acceptance in the market.

Importance of a digital strategy

1.1 What is a digital strategy?

The determination of the rudimentary long-term goals and objectives of a firm and embracing of sequences of action and the allocation of resources necessary for carrying out these goals is defined as a strategy (Chandler, 1962). Burg and Singleton (2005) put forward their definition on digital strategy as a functional strategy that assists companies through cost reductions and increased efficiencies.

1.2 Digital strategy and firms

Formulation of a digital strategy basically involves integration of information and technological expertise, IT equipment with the company’s strategic framework in order to gain competitive success against the players in the market. This allows organizations to interact with the customers on a digital perspective whilst focusing on the interests of the important stakeholders of organizations. In comparison with the conventional customer management approaches, implementation of digital strategies assists organizations to identify and adapt to the changing customer needs as the organizations get exposed to the changing industrial dynamics more conspicuously. Even though this permits organizations to reduce costs related to research, customer management, promotional activities and other operational activities, the initial set up costs of a well-integrated digital strategy will be significant which would make SME’s and few of the novice yet highly potential brands to limit from adaptation of such digital strategy. Furthermore it should be highlighted that there are still segments of customers who are highly dependent on conventional methods of businesses and marketing and who are yet to experience the luxury of digital strategy. These segments could be vastly lucrative for firms which are being filtered out from the revenue sources generated by the digital strategies.

Despite the limited amount of disadvantages of formulation and implementation of a digital strategy, it is evident that such strategies assist organizations (such as Apple Inc., Microsoft, Google) to change the game through improving its competitiveness in their respective industries digitally.

Understanding digital consumer

2.1 Who is a digital consumer?

Consumers who interact with companies electronically using interactive technologies including emails, websites, online forums and newsgroups, interactive television, mobile communications etc. (Kotler and Armstrong, 2009). The traditional methods of transactions in this case are being executed on online digital platforms. How consumers who are digitally active uses following basic online platforms to fulfill their given needs.

2.2 Online marketing, Social media and Mobile marketing

Online marketing – Tools including websites, online banners and advertisements, video streaming and online direct marketing are few of the most utilized online marketing tools which currently have influenced consumer behavior significantly.

Figure 1. % of internet usage

The above chart sourced from the annual report of www.smartinsights.com (refer link indicted by 1. in references) highlights that the overall percentage of increment in internet usage has been increased by 43.5% compared to 2015. This has significantly affected on global digital consumer base to enlarge further. With the increased internet usage, digital consumers have increased their online purchase searches simultaneously causing a general increment of 37.09% compared to the year 2013 (SimilarWebPro report, 2014).

Figure 2. How firms and consumers interact through internet

Social media – At present, digital consumers’ usage of social media such as Facebook, Twitter, Instagram and other social media platforms have impacted their consumer behavior as they are exposed to vast amount of information related to products, experiences and reviews which are mostly consumer generated contents. The following chart illustrates which type of social media platform has affected consumers frequently (Statista, 2016) (refer link indicted by 3. in references) highlights.

 

Figure 3. Social media networks

It is evident that numbers of social media users are increasing by the minute which allows organizations to focus on high social media platform presence to influence consumers significantly.

Mobile marketing – Mobile marketing is quite similar to online marketing yet it is much more user friendly and the level of consumer interaction is comparatively high. Mobile marketing has impacted the digital consumer’s behavior in many ways including how they search for alternatives, make the purchase and execute the post purchase evaluation of the product. Each stage of consumer decision making process is integrated with mobile online platforms which comprises varieties of mobile applications, SMS’s, MMS’s and mobile aimed advertising allowing the consumer decision making process’s time to get reduced.

Digital marketing tools and platforms

Mainly, digital marketing tools consist of online marketing, social media and mobile marketing. The following bullet points briefly have given an analysis as to what these digital marketing platforms are consisted of and how they are integrated with an organization’s strategic framework.

Online Marketing – Kiani (1998) identified that online marketing differs from conventional marketing as online marketing is based on one to one or many to many communication model whilst conventional marketing focused on one to many communication model. Online marketing is based on websites, online banners, pop up ads and etcetera which have been in the use for many years. The basic foundation of digital media which is considered to be online marketing provides the ability to make or increase awareness of the brand or the firm amongst a significant amount of audience.

Social Media – Antony Mayfield (2008) defined social media as a group of online media which contains following characteristics; participation, openness, conversation, community and connectedness. Social media allows organizations and consumers to interact with each other with fewer amounts of barriers. Social media simultaneously increases brand engagement with the consumers while forming social media communities in order to provide a platform to express consumer views and experiences related to the brand.

Eg: – Radio 1 Lebanon is one of the most active and efficient Facebook profiles which has been communicating with its targeted audience for many years. More than its radio shows, the Facebook profile has been getting consumer feedback in the recent years. (Refer link indicted by 2. in references)

Mobile Marketing – Mobile Marketing is a set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network (Mobile Marketing Association, 2016) (refer link indicted by 4. in references) highlights. It is evident that more than the typical online platform, mobile platform has become a vast game changer as the usage of Smartphones amongst the consumers has increased significantly within the last decade. Mobile platforms which include mobile applications, SMS’s, MMS’s allows brands to engage with consumers 24*7 (such as Uber, PickMe and CNN) as consumers nowadays have made Smartphones part of their lives. This has ensured that brands ability to communicate with the consumers to be enormous and effective.

Measuring and management of success

In order to measure the success of the digital strategy of a firm, there are varieties of metrics which could be used. The following measures are few of the metrics which an organization can take into consideration.

Overall site traffic – total number of unique online visitors

Mobile traffic – total number of visitors in terms of mobile platforms, mobile app downloads

Bounce rate – tendency of visitors immediately leaving when they find the content is irrelevant

Average cost per page views – Provides a basic insight as to the amount invested in for each individual visitor

All the above measures are technical metrics which a firm can use as criteria to measure the success of its digital strategy. However word of mouth and consumer recommendation rate and other consumer generated measures are far more effective as it directly communicates the efficiency and the success of the digital strategies.

  • Eg: – The local underdog brand PickMe which is popular for its Uber like mobile app measures its digital success through number of bookings done through its mobile application and comparing that with the number of downloads of the mobile application. This allows the company to identify clearly the contribution of its mobile platform to its aggregate revenue. (Source: – http://pickme.lk/)

Figure . PickMe mobile app

Conclusion

It is evident that digital marketing has affected almost ever organization despite its position in the market. With its ability to interact effectively with the targeted consumer, formulation of a digital strategy has become vital in order to achieve a great degree of competitiveness. Digital marketing which is consisted of online marketing, social media and mobile marketing has drastically changed how consumers make their decisions related to their needs. Furthermore, how firms measure their success of their strategies has completely turned around allowing all the criterions to be digitally based.

References

  • Kumar, A.; Bezawada, R.; Rishika, R. et al (2016). “From Social to Sale: The Effects of Firm-Generated Content in Social Media on Customer Behavior”, Journal of Marketing. pp 1-3
  • Lee, J.; Ham, C.; Kim, M. (2013). “Why People Pass Along Online Video Advertising: From the Perspectives of the Interpersonal Communication Motives Scale and the Theory of Reasoned Action”. Journal of Interactive Advertising. Issue 1 Volume 13
  • Hudson, S., Huang, L., Roth, M. S., & Madden, T. J. (2016). The influence of social media interactions on consumer–brand relationships: A three-country study of brand perceptions and marketing behaviors. International Journal of Research In Marketing. pp 1-4
  • Kim, Angella J.; Johnson, Kim K.P. (2016). “Power of consumers using social media: Examining the influences of brand-related user-generated content on Facebook”. pp 2- 6
  • Fill, C; Hughes, G; De Franceso, S (2013). Advertising strategy, creativity and media. London, UK: Pearson. pp 16 – 20
  • Chatterjee, Patrali (2001), “Beyond CPMs and Clickthroughs: Understanding Consumer Interaction with Web Advertising,” in Internet Marketing Research: pp 209-216, Ook lee ed, Idea Group Publications
  • 1) Chaffey, D. (2016) Digital marketing statistics in 2016 – the best sources. Available at: http://www.smartinsights.com/marketplace-analysis/customer-analysis/digital-marketing-statistics-sources/ (Accessed: 6 December 2016).
  • 2) Radio One Lebanon (no date) Available at: https://m.facebook.com/profile.php?id=124271334261942 (Accessed: 5 December 2016).
  • 3) Statista (2016) Global social media ranking 2016 | statistic. Available at: https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/ (Accessed: 5 December 2016).
  • 4) Association, M.M. (2016) Mobile marketing. Available at: http://www.mmaglobal.com/wiki/mobile-marketing (Accessed: 5 December 2016).
  • 5) T.F.E. (2008) Blessings of Digital Marketing. Available at: http://www.thefinancialexpress-bd.com/2016/11/25/54318/Blessings-of- (Accessed: 5 December 2016).