Interactive Marketing Lecture Notes

Principles of Marketing Chapter 17: Interactive Marketing Creating Customer Value, Relationships, and Experiences in a Digital Environment 17.1: Describe what interactive marketing is and how it creates customer value, customer relationships, and customer experiences. ● Consumers and companies populate two market environments today. ○ Traditional: buyers and sellers engage in f2f exchange relationships in a material environment characterized by physical facilities (stores and offices) and mostly tangible objects. ○ Digital marketplace: a digitally enabled environment characterized by face-toscreen exchange relationships and electronic images and offerings. Marketing Challenges in Two Environments ● Many consumers browse and buy in both market environments, and more are expected to do so. Legacy Companies ● Legacy companies that trace their origins to the traditional marketplace, such as P&G, Walmart, and General Motors, are continually challenged to define the nature and scope of their marketspace presence. ○ These companies consistently refine the role of digital technology in attracting, retaining, and building consumer relationships to improve their competitive positions in the traditional marketplace while also bolstering their marketspace presence. ● Other companies with marketplace origins have chosen not to participate in the marketspace. ○ For the most part, Luxury fashion designs. Digital Natives ● Ex: Amazon, Google,eBay, E*TRADE ● They’re challenged to continually refine, broaden, and deepen their markespace presence. ● These companies must also consider what role, if any, the traditional marketplace will play in their future. ● A company’s success in achieving a meaningful makerspace presence hinges largely on… ○ Its ability to design and execute a marketing program that capitalizes on the unique value creation ○ The relationship-building capabilities of digital technology in delivering a favorable customer experience. Creating Customer Value in a Digital Environment ● Why has the marketspace captured the eye and imagination of marketers worldwide? ● Recall that marketing creates time, place, form, and possession utilities, thereby creating value for customers. ● Marketers believe that the possibilities for customer value creation are greater in the digital makerspace than in the physical marketplace. ○ Consider place and time utility. In marketspace, the provision of direct, ondemand information is possible from marketers anywhere to customers anywhere, at any time. ○ Why? Operating hours and geographical constraints do not exist in marketspace. ● Possession Utility (getting a product to consumers so they can own or use it) is accelerated in marketspace. ● The greatest marketspace opportunity for marketers: the potential for creating form utility ○ Communication capabilities in marketspace invite consumers to tell marketers specifically what their requirements are, making customization of a product or service to fit their exact needs possible. Interactivity and Individuality Create Customer Relationships ● Marketers benefit from two unique capabilities of digital technology that promote and sustain customer relationships: interactivity and individuality. ○ Both capabilities are important building blocks for buyer-seller relationships. ● Interactive Marketing: involves two-way buyer-seller electronic communication in which the buyer controls the kind and amount of information received from the seller. ○ Interactive marketing is characterized by sophisticated choiceboard and personalization systems that transform information supplied by customers into customized responses to their individual needs. Choiceboards ● Choiceboard: an interactive, digitally enabled system that allows individual customers to design their own products and services by answering a few questions and choosing from a menu of product or service attributes (or components), prices, and delivery options. ● Customers today design their own computers with Dell’s online configurator, custom fit their clothing at indochino.com, assemble their own investment portfolios with Schwab’s mutual fund evaluator, build their own bicycle at sevencycles.com, and decorate M&M’s with photos of themselves and unique messages at mymms.com. ○ Because choiceboards collect precise information about the preferences and behavior of individual buyers, a company becomes more knowledgeable about a customer and better able to anticipate and fulfill that customer’s needs. ● Most choiceboards are essentially transaction devices. ● Collaborative filtering: a process that automatically groups people with similar buying intentions, preferences, and behaviors and predicts future purchases. ○ Ex: Amazon “Customers who bought this (item) also bought…” Personalization ● Typically buyer-initiated efforts ● Personalization: the consumer-initiated practice of generating content on a marketer’s website that is custom tailored to an individual’s specific needs and preferences. ● Permission marketing: the solicitation of a consumer’s consent (called opt-in) to receive email and advertising based on personal data supplied by the consumer. ○ A proven vehicle for building and maintaining customer relationships ○ Companies that successfully employ permission marketing use three rules: ■ Opt-in customers receive only information that is relevant and meaningful to them ■ Their customers are given the option to opt-out, or change the kind, amount, or timing of info sent to them ■ Their customers are assured that their name or buyer profile data will not be sold or shared with others. Creating a Compelling Online Customer Experience ● Customer experience: the sum total of the interactions that a customer has with a company’s website, from the initial look at a home page through the entire purchase decision process. ● Seven fundamental website elements contribute to a customer experience ○ Context ○ Content ○ Community ○ Customization ○ Communication ○ Connection ○ Commerce Figure 17-1: Seven website design elements that drive customer experience Context ● Context refers to a website’s aesthetic appeal and the functional look and feel of the site’s layout and visual design. ● A functionally oriented website focuses largely on the company’s offering, be it products, services, or information. ● Deal-oriented travel websites (like Priceline.com) tend to be functionally oriented with an emphasis on destinations, scheduling, and prices. ○ In contrast, beauty websites, such as Revlon.com are more aesthetically oriented ○ Context conveys the core consumer benefit provided by the company’s offerings. Content ● Content applies to all digital information on a website, including the presentation form (text, video, audio, and graphics) ● Content relevance and presentation along with context dimensions combine to engage a website visitor and provide a platform for the five remaining design elements. ● “Content is king” Customization ● Customization is the ability of a site to modify itself to, or be modified by and for, each individual user. ● Involves moving items around to reflect a consumer’s priorities or selecting topics of interest to them. ● Prominent in websites that offer personalized content like My Amazon. Connection ● Connection is the network of linkages between a company’s website and other sites. ● These links are embedded in the website; appear as highlighted words, a picture, or graphic; and allow a user to effortlessly visit other sites with a mouse click. ○ Ex: companies routinely display links to their Facebook, Instagram, and Twitter accounts. ● Connection is a major design element for info sites like the NYT. Communication ● Communication refers to the dialogue that unfolds between the website and its users. ● Consumers now expect communication to be interactive and individualized in real time, much like a personal conversation. ● Many websites enable a user to talk directly with a customer rep while shoppii the site. ● An increasing number of websites use chatbots: sophisticated computer programs that mimic human conversation using artificial intelligence. Community ● Many company websites encourage user-to-user communications hosted by the company to create virtual communities, or simply community. ● Has been shown to enhance customer experience and build favorable buyer-seller relationships. Commerce ● Commerce: the website’s ability to conduct sales transactions for products and services. Online Consumer Behavior and Marketing Opportunities and Practices Who is the online consumer? 17.2: explain why certain types of products and services are particularly suited for interactive marketing and online shopping and buying ● Online consumers: the subsegment of all internet users who employ this technology to research products and services and make purchases. ● As a group, online consumers are equally likely to be women and men and tend to be better educated, younger, and more affluent than the general U.S. population. ● The average U.S. household spends about $5,200 online. ● Even though online shopping is popular, a small percentage of online consumers still account for a disproportionate share of online retail sales in the United States. ○ It is estimated that 20% of all online consumers account for 69% of total consumers online sales. ○ While women and men shop online with equal frequency, men tend to spend more per purchase transaction than women. What Consumers Buy Online ● Five broad product classes or categories account for almost 70% of online consumer buying today and for the foreseeable future. ● Four product characteristics: ○ Items for which product info is an important part of the purchase decision but prepurchase trial isn’t critical. ○ Items that can be delivered digitally ○ Items that are regularly purchased and where convenience is very important ○ Highly standardized products for which information about price is important Figure 17-2: five product categories account for about 70% of U.S. online retail sales today Why Consumers Shop and Buy Online 17.3: describe why consumers shop and buy online and how marketers influence online purchasing behavior. ● Marketers emphasize the customer value-creation possibilities; the importance of interactivity, individuality, and relationship building; and the ability to produce a compelling customer experience. ● Customers typically refer to six reasons why they shop and buy online: convenience, choice, customization, communication, cost, and control. Convenience: ● Online consumers use bots, electronic shopping agents or robots that search websites to compare prices and product or service features. ● Eight-second rule: customers will abandon their efforts to enter and navigate a website if download time exceeds 8 seconds. Choice: ● Exists in product or service selection ● Choice assistance: choiceboard and personalization technologies invite customers to engage in an electronic dialogue with marketers for the purpose of making informed choices. Customization ● Customerization: the practice of not only customizing a product or service but also personalizing the marketing and overall shopping and buying interaction for each customer. ○ Seeks to do more than offer consumers the right product at the right time/price ■ Combines choiceboard and personalization systems to expand the exchange environment beyond a transaction and makes shopping and buying an enjoyable, personable experience. Communication ● Promotes the development of company-hosted and independent web communities: websites that allow people to congregate online and exchange views on topics of common interest. ● Can take the form of electronic junk mail/unsolicited e-mail ● 67% of emails sent worldwide are spam. ● Viral Marketing: a digitally enabled promotional strategy that encourages individuals to forward marketer-initiated messages to others via email social networking websites, and blogs. ○ Embed a message in the product/service so customers cant tell they’re passing a message along Cost ● Dynamic pricing; the practice of changing prices for products and services in real time in response to supply and demand conditions. ○ Flexible pricing that can result in lower prices When and Where consumers shop and buy online ● 80% of online retail sales occur Monday - Friday ● Busiest shopping day is wednesday ● 35% of retail store sales are on the weekend ○ Saturday is the most popular shopping day How Consumers shop and buy online ● 75% of online consumers rely on social media for product/service ideas, referrals, and reviews ● Social commerce: the use of social networks for browsing and buying Cross-Channel Consumers and Multichannel Marketing 17.4: define cross-channel consumers and the role of multichannel marketing in reaching these consumers ● Cross-channel consumers: online consumers who shop online but buy offline, or shop offline but buy online. ○ They differ from exclusive online consumers and exclusive offline consumers ● Showrooming: examining products in a store and then buying them online for a cheaper price ● Webrooming: the practice of examining products online and then buying them in a store ● Multichannel marketing: the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in the traditional marketplace and the digital marketspace. ● Marketing attribution: the practice and techniques used to credit or value a particular channel and consumer touchpoint