CAP. 1 Flashcards
The impact of digital communications on traditional business
Managers had to determine how to apply new digital communications technologies to transform their organisations. Innovation is relentless. Organisations have to review new digital communications approaches for their potential to make their business more competitive and manage ongoing risks such as security and performance. Two key opportunities of digital transformation: inbound marketing and mobile marketing.
Inbound marketing
In the digital world is often the customer who initiates contact and is seeking information by discovering information on an organisation’s digital presence. It is a pull mechanism. Google refers to this consumer decision-making before they visit a retailer as the Zero Moment of Truth (ZMOT); this describes the combination of multi-channel influences on a purchase. Inbound marketing is powerful since marketing wastage is reduced. Search marketing, content mktg and social media mktg can be used to target prospects with a defined need. Weakness: marketers may have less control than in traditional communications. Advocates of inbound mktg argue that content, social media and search mktg have a role in generating demand.
Social media marketing
The popularity of social media is a major trend in digital business. The growth of blogs is still a significant force, and these have become more diverse as bloggers move away from simple text content and develop richer. Social media mktg also includes rich media. It’s important to understand the business and revenue models of the major social networks and platforms. There are many types of social presence: six categories of Weinberg (2010):
1. Social networking.
2. Social knowledge.
3. Social sharing.
4. Social news.
5. Social streaming.
6. Company user-generated content and community
six categories of Weinberg (2010):
- Social networking.
- Social knowledge.
- Social sharing.
- Social news.
- Social streaming.
- Company user-generated content and community
Mobile commerce
The potential of mobile commerce and mobile business is evident from the predictions of Mary Meeker. The growth in popularity of mobile apps is a significant development. Yahoo Flurry: 90% of mobile time was in apps rather than browser. Location-based use of mobile devices is another significant trend; location-based tracking of goods and inventory as they are manufactured and transported.
E-commerce defined
The scope of electronic commerce is narrower than digital business: it’s not only buying and selling on Internet but is all electronically mediated transactions between an organization and any third party it deals with. Kalakota and Whinston (1997): range of different perspectives for e-commerce:
1. Communication perspective: the delivery of info, products and services or payment by electronic means.
2. Business process perspective: application of technology towards the automation of business transactions and workflows.
3. Service perspective: enabling cost-cutting at the same time as increasing the speed and quality of service delivery.
4. Online perspective: buying and selling of products and information online.
E-commerce also includes pre-sale and post-sale activities.
It is useful to identify opportunities for buy-side and sell-side e-commerce transactions, since systems with different functionalities will need to be created in an organization to accommodate transactions with buyers and suppliers:
- buy-side e-commerce;
- sell-side e-commerce.
Social media commerce is an important part of e-commerce for site owners since incorporating reviews, ratings and social media interactions into a site and linking to social networking sites can help understand customers’ needs and increase conversion to sale; it can also involve group buying, using a coupon service such as Groupon.
Digital business defined
Digital business is broader in its scope than e-commerce. It is similar to e-business (coined by IBM in 1997) = the transformation of key business processes through the use of internet technologies. The key digital business processes include research and development, marketing, manufacturing, inbound and outbound logistics, buy-side and sell-side e-commerce transactions
Internet and extranet
Most internet services are available to any business or consumer that has access to it. However, many digital business applications that access sensitive company information require access to be limited to qualified individuals or partners.
Intranet: information restricted to employees inside an organisation.
Mini Case Study 1.2: Slack is an example of such enterprise social media software.
Extranet: the access to an organisation’s web services is extended to some other, but not everyone beyond the organisation. If you log on to an Internet service (e-retailer or online news site) this is an extranet arrangement, although the term is most often used to mean a b2b application.
Case study 6.1
Different types of sell-side e-commerce
Sell-side e-commerce: selling products online, using digital technologies to market services using a range of techniques. Not every product is suitable for sale online, so the way in which a website is used to market products will vary. Five main types of online presence for sell-side e-commerce:
1. Transactional e-commerce sites: purchase of products online; also supports the business by providing info to purchase offline. Include retail sites, travel sites and online banking services.
2. Services-oriented relationship-building sites: info to stimulate purchase and build relationship through the website and e-newsletters to inform purchase decisions. Encouraging offline sales and generating enquiries or leads from potential customers (lead generation).
3. Brand-building sites: experience to support the brand; main focus is supporting the brand developing an online experience; for low-value, high-volume, fast-moving consumer goods (FMCG brands).
4. Publisher or media sites: info, news or entertainment about a range of topics, on the site and through links to others. Media sites have a diversity of options for generating revenue, including adv, commission-based sales and sale of customer data.
5. Social network sites (SNS): social can be publisher or media sites, but the influence of social on company and customer communications suggest they form a separate category.
Digital marketing
Digital mktg is closely related to e-commerce. Digital = the range of access platforms and communications tools that form the online channel that marketers use to build and develop relationships with customers. Different access platforms deliver content and enable interaction through a range of different online communication tools or media channels; some are well-established techniques. One of the most exciting things about working in digital media is the introduction of new tools and techniques, which have to be assessed for their relevance to a particular campaign. Recent innovation includes dark social systems (WhatsApp, Snapchat). Boyd and Ellison (2007) social networking site as: a site which facilitates the easy creation and sharing of content with contacts. Text, audio and video can be uploaded and shared with contacts. Content uploaded and shared by others can be commented on and shared too. Social networking sites general rely on users having a public or semi-public profile within the boundaries of the site and growing and maintaining connections with other users
The second part of the definition of digital marketing shows that it should not be the technology that drives digital marketing, but the business returns from gaining new customers and maintaining relationships with existing customers. Marketing is most effective when integrated with other communications channels. Role of the Internet in supporting multichannel and omnichannel marketing and multichannel marketing strategy is a recurrent theme. Digital channels should also be used to support the buying process or customer journey. Different mktg channels should integrate and support each other in terms of proposition development and communications. Customer-centric marketing shows how digital success requires a planned approach to migrate existing customer to digital channels and acquire new customers by selecting the appropriate mix of e-communications and traditional communications. Gaining and keeping digital customers need to be based on developing customer insight by researching their characteristics and behaviour, what they value and what keeps them loyal, and then delivering tailored, relevant web and email communications.
Owned, earned and paid media options
a. Paid media: investment to pay for visitors, reach or conversion through search, display adv networks or affiliate marketing. Offline media remain important, accounting for a large proportion of paid-media spend.
b. Earned media: publicity through PR invested in targeting influencers to create awareness; it also includes WOM that can be stimulated through viral and social media mktg and includes conversations on social networks, blogs and communities. Developed through different types of partners, and/or different forms of conversations between consumers and businesses.
c. Owned media: owned by the brand. An alternative investment to other media and offer opportunities to promote products using similar ad or editorial formats to other media; it emphasises the need for all organisations to become multichannel publishers.
There’s an overlap between paid, earned and owned media; achieving it requires integration of campaigns, resources and infrastructures.
The six key types of digital media channels
Chaffey and Smith (2012): six main types of digital media channels for reaching audiences:
1. Search engine marketing: messages on a search engine to encourage clickthrough to a website when the user types a specific keyword phrase. Two types: paid placements or sponsored links using pay-per-click (PPC), and placements in the natural or organic listings using search engine optimisation (SEO).
2. Digital PR: maximising favourable mentions and interactions with a company’s brands, products or websites using third-party sites; also includes responding to negative mentions and conducting public relations via a site through a press centre or blog.
3. Digital partnerships: long-term arrangements to promote on third-party websites or through email. Link building, affiliate marketing, aggregators, digital sponsorship and co-branding.
4. Interactive advertising: digital ads to achieve brand awareness and encourage clickthrough.
5. Opt-in email marketing: renting email lists or placing ads in third-party e-newsletters or the use of an in-house list for customer activation and retention.
6. Social media marketing: encouraging customer communications on a company’s own site, or a social presence or in specialist publisher sites, blogs and forums. It can be applied as a traditional broadcast medium; it is important to participate in customer conversations
The social internet and user-generated content
Web 2.0 concept increased among website owners and developers. Tim O’Reilly: behind the label “Web 2.0” lies a bewildering range of interactive tools and social communications techniques. Web 2.0 also references methods of exchanging data between sites in standardised formats. Main characteristics of Web 2.0:
A. Web services or interactive applications hosted on the web or blogging services.
B. Supporting participation.
C. Encouraging creation of user-generated content.
D. Enabling rating of content and digital services.
E. Ad funding of neutral sites.
F. Data exchange between sites through XML-based data standards.. data can also be exchanged through standard microformats used to incorporate data from other sites into the Google listings. New classes of content can also be defined and mashups created.
G. Use of rich media or creation of rich Internet applications (RIA) which provide for a more immersive, interactive experience.
H. Rapid application development using interactive technology approaches known as “Ajax”.
The terms Web 3.0 and 4.0 are not commonly used today. Many sites still don’t have these characteristics
Supply chain management
Supply chain management (SCM): coordination of all supply activities of an organisation. Value chain: describes the different value-adding activities that connect a company’s supply side with its demand side. We can identify:
* Internal value chain.
* External value chain.
A company will manage many interrelated value chains, so we also consider the concept of a value network.
Business or consumer models of e-commerce transactions
a. Business-to-consumer (B2C)
b. Business-to-business (B2B)
c. Consumer-to-consumer (C2C)
d. Consumer-to-business (C2B)
e. G2C, G2B, G2G.
f. E2E
