Part 3 CUSTOMER BEHAVIOR AND E-MARKETING.

6: Consumer Buying Behavior 7: Business Markets and Buying Behavior 8: Reaching Global Markets 9: Digital Marketing and Social Networking

Chapter 9 Digital Marketing and Social Networking Professor Jason C. H. Chen, Ph.D. School of Business Administration Gonzaga University Spokane, WA 99258 chen@jepson.gonzaga.edu

Definitions Digital Media Digital Marketing Digital media are electronic media that function using digital codes; this includes media available through computers, cellular phones, smartphones and other digital devices Digital Marketing Uses all digital media, including the Internet and mobile and interactive channels, to develop communication and exchanges with customers Electronic Marketing (e-marketing) The ________ process of distributing, promoting and pricing products and discovering the desires of customers help marketers to share information to the customers using digital media and digital marketing strategic

Growth and Benefits of Digital Marketing Marketers use __________ to form relationships, coordinate, communicate, and share information with stakeholders It is now possible to target markets more precisely and reach markets previously inaccessible Small businesses - Use digital media to reach new markets and access inexpensive communication channels Large businesses - Use digital media to supplement their brick-and-mortar stores The digital world is evolving quickly and is still in an early stage of ____________ into marketing strategy technology integration

Table 9.1 Characteristics of Online Media Definition _____________ Marketers’ ability to identify customers before they make a purchase Interactivity Customers’ ability to express their needs and wants directly to the firm In response to the firm’s marketing communications Marketers’ ability to obtain digital information Connectivity Consumers’ ability to be connected with marketers along with other consumers Control Customer’s ability to regulate the information they view and the rate and exposure to that information Addressability Accessibility

Consumer-Generated Marketing Two major trends that have caused consumer-generated information to gain importance 1) Use of blogs or digital media by consumers to publish their thoughts, opinions, reviews, and product discussions 2) Consumers’ tendencies to ______ other consumers over corporations Marketers can use these online forums to interact with consumers, address problems and promote their company trust

Interactivity of Social Media The main distinguishing characteristic of digital media is their ____________ Traditionally, customers faced a lengthy, dissatisfying experience when supplying feedback Digital media allows interaction in real time Interactivity helps marketers maintain high-quality relationships with existing customers Allows customer to develop relationships with each other interactivity Copyright © 2014 South-Western, Cengage Learning. ALL RIGHTS RESERVED.

Types of Digital Media Social networking sites: Facebook, Twitter Blogs and wikis Media-sharing sites: Youtube, Flickr, Podcast Virtual reality sites: Second Life, Sim City Mobile devices: Smartphones, Tablets, PDAs Applications and widgets (p.239) Widgets: small bits of software on a website, desktop, or mobile device that enable users “to interface with the application and operating systems” Widgets are an innovative digital marketing tool to personalize webpages, alert users to the latest company information, and spread awareness of the companu’s products.

Social Networks A social network is a web-based meeting place for friends, family, coworkers and peers allowing users to create a profile and connect with other users to get acquainted, keep in touch, or build a work related network Marketers use them to: Promote products Handle questions and complaints Assist customers in buying decisions

Figure 9. 1 - Do You Use Social Networking Sites Figure 9.1 - Do You Use Social Networking Sites? Social Networking Usage by Adult Population

Social Network Facebook Twitter Used by marketers to: Market products and interact with consumers Take advantage of free publicity Engage in e-commerce Engage in relationship marketing, making consumers feel more connected to their products Facebook Hybrid of a social networking site and a micro-blogging site Used to enhance customer service, create publicity about products, and gain a competitive advantage Twitter

Blogs and Wikis Blog Wiki Web-based journal where writers can editorialize and interact with other Internet users Gives consumers control and can affect the image of a company Used by corporations to: Answer consumer concerns Defend their corporate reputations Wiki Software that creates an interface enabling users to add or edit the content of some types of websites Used as an internal tool for teams on projects requiring lots of documentation Provides companies with a better idea of how consumers feel about the company brand

What is Web 2.0? "Web 2.0" refers to the second generation of web development and web design. It is characterized as facilitating communication, information sharing, interoperability, user-centered design and collaboration on the World Wide Web. It has led to the development and evolution of web-based communities, hosted services, and web applications. Examples include social-networking sites, video-sharing sites, wikis, blogs, mashups and folksonomies. Web 2.0 is the business revolution in the computer industry caused by the move to the Internet as a platform, and an attempt to understand the rules for success on that new platform. What Is Web 2.0 Design Patterns and Business Models for the Next Generation of Software by Tim O'Reilly The bursting of the dot-com bubble in the fall of 2001 marked a turning point for the web. Many people concluded that the web was overhyped, when in fact bubbles and consequent shakeouts appear to be a common feature of all technological revolutions. Shakeouts typically mark the point at which an ascendant technology is ready to take its place at center stage. The pretenders are given the bum's rush, the real success stories show their strength, and there begins to be an understanding of what separates one from the other. The concept of "Web 2.0" began with a conference brainstorming session between O'Reilly and MediaLive International. Dale Dougherty, web pioneer and O'Reilly VP, noted that far from having "crashed", the web was more important than ever, with exciting new applications and sites popping up with surprising regularity. What's more, the companies that had survived the collapse seemed to have some things in common. Could it be that the dot-com collapse marked some kind of turning point for the web, such that a call to action such as "Web 2.0" might make sense? We agreed that it did, and so the Web 2.0 Conference was born. Source: http://en.wikipedia.org/wiki/Web_2.0

Media Sharing Sites Allows businesses to share their corporate messages in more visual ways (e.g., photo and video sharing and podcasts) Limited in scope in how companies interact with consumers More promotional than reactive Popularity of these sites provides wide reach

Media Sharing Sites Photo-sharing sites Video sharing sites Podcasts Allow users to upload and share their photos with the world Companies can market themselves by displaying snapshots of their: Corporate events Staff and products Photo-sharing sites Allow users to upload videos Companies can upload ads and informational videos about their products Video sharing sites Audio or video files that can be downloaded from the Internet with a subscription Automatically delivers new content to listening devices or personal computers Companies can create brand awareness, promote their products, and encourage customer loyalty Podcasts

Virtual Sites User-created, three-dimensional worlds that have their own: Economies and currencies Lands and residents Offer opportunities for marketers to connect with consumers in unique (creative and fun) ways Technology used by some firms for recruiting purposes Virtual sites include Second Life, Everquest, Sim City and World of Warcraft

Mobile Devices Allow customers to leave their desktops and access digital networks from anywhere Common mobile marketing tools SMS messages and multimedia messages Mobile advertisements Mobile websites Location-based networks Mobile applications: Software programs that run on mobile devices and give users access to certain content

Applications and Widgets Offer convenience and cost savings to consumers Companies use mobile marketing to offer additional incentives to consumers Allow shoppers to compare prices or download electronic discounts Widgets Small bits of software on a website, desktop, or mobile device Enables users to interface with the application and operating system Used to: Personalize webpages Alert users to company information Spread product awareness

Changing Digital Media Behaviors of Consumers regulate Consumers are better able to _________ the information that they view as well as the rate and sequence of their exposure to that information. Result of digital media Marketers: Have limited control over the content to which users are exposed Adopt a different approach than traditional marketing Effectively target their messages to the audience Easily track the success of their online marketing campaign Enjoy free publicity by way of positive customer feedback

Online Consumer Behavior Consumers are grouped into seven segments according to how they interact with digital media (see Table 9.2): Creators – create their own media outlets such as blogs, podcasts, videos and wikis Conversationalists – regularly update their Twitter feeds or status updates Critics – are people who comment on blogs or post ratings and reviews Collectors – gather information and organize content generated by critics and creators

Online Consumer Behavior Joiners – are anyone who becomes a member and participates in a social networking site Spectators – this is the largest group and is composed of those who read what other consumers produce but do not create any content themselves Inactives – online users who do not participate in any digital online media but this number is dwindling By knowing how to segment the online population, marketers can better tailor their online messages to their target markets

Table 9.2 - Social Technographics Consumers are grouped into seven segments according to how they interact with digital media: By knowing how to segment the online population, marketers can better tailor their online messages to their target markets

E-Marketing Strategy More than one-fourth of the world’s population uses the Internet and the number is growing. More than three-fourths of people in North America have Internet access Businesses use digital marketing to gain or maintain market share __________ considerations Opportunity to: Add a service dimension to traditional products Create products accessible only on the Internet Ability to access product information for any product impacts buyer decision making Product

E-Marketing Strategy ___________ considerations Distribution Essential for continually upgrading products to meet consumer needs Online advertising campaigns and contests can be used to help develop better products ___________ considerations Makes products available at the right time, place, and in right quantities Helps businesses increase efficiency Push-pull dynamic Push products through the marketing channel to consumers Enable customers to pull products through the marketing channel Distribution

E-Marketing Strategy __________ considerations Allows marketers to approach promotion in new, creative ways Increases brand awareness and markets to consumers Traditional promotional events can be enhanced or replaced by digital media _________ considerations Consumers gain access to more information about costs and prices Demand for low-priced products increases Enables customers to compare prices of products Sellers are pressured to: Offer buying incentives to generate demand Differentiate products so that customers focus on attributes and benefits other than price Promotion Pricing

Ethical and Legal Issues ________ ___________ ______________________ Privacy Online fraud Intellectual property

Privacy One of the most significant privacy issues involves the misuse of personal information collected from website visitors May violate user's privacy Hackers can steal personal information Scraping - Collecting personal information from social networking sites and other forums Counteractive measures Developing regulations to limit the amount of consumer information that can be gathered online Web advertisers are attempting self-regulation

Online Fraud Online fraud includes any attempt to conduct dishonest activities online Avenues for fraud Fraudulent profiles on social networking sites Mobile payments Counteractive measures Some firms monitor social networks for fraudulent accounts To avoid divulging personal information online

Intellectual Property Copyrighted or trademarked ideas and creative materials developed to solve problems, carry out applications, and educate and entertain others Consumers’ rationalizations for piracy No money to pay for what they want Peer influence to engage in piracy and swap digital content The thrill of getting away with it and the slim risk of consequence Allows them to show how tech savvy they are

Video Case 9.1 ROGUESHEEP’S POSTAGE APP: THE POSTCARD OF THE FUTURE.

Summary   This case discusses how a company is using mobile apps to supplant traditional postcards with digital ones. RogueSheep created the “Postage” iPhone app, a mobile app that allows users to choose from over 90 postcard designs, customize the design by inserting their own photos, and send the postcard to their friends or relatives. Since its introduction, the Postage app has won several awards and has broken into the social networking world. To create awareness of the product, RogueSheep uses a combination of traditional media, apps, social networking sites like Facebook, and free trials.

1. How do you think businesses could effectively use RogueSheep postcards in their communications program?   Businesses can use the app to send digital postcards to remind customers about their products or special events. This application could potentially be customized to be a less expensive, more impactful business-to-the-consumer promotional postcard.

2. Is it possible for RogueSheep to advance its digital postcards to those who do not have access to iPhone apps?   Since RogueSheep is continually creating new products and looking into new technologies, it seems feasible that digital postcards can be advanced beyond iPhones. Other likely candidates for non-iPhone digital postcards are laptops (some people bring their laptops with them on trips), smartphones, or iPads.

3. What are the advantages of the RogueSheep digital postcard over traditional postcards?   Advantages include saving money on postcard and mailing costs, the speed with which a digital postcard can reach the recipient (versus snail mail), the ability to customize their postcards and share their designs with others via social networks, and the reduction of paper waste.