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MMM043 - Principles of Marketing

How has digital marketing changed relationships and communication between consumers and retailers in retail marketing? Use examples of your choice to illustrate your answer (you may choose one sector of this market as an illustration of your analysis)

Student Number: 20008261

Submitted to Dr. Chris Phillips

Submission Date: Thursday 17th November 2011

Introduction

Presently, a role of the Internet communication is a fundamental part of the modern organization which is focused on developing of interactions and relationships with customers. Moreover, the Internet provides a gigantic opportunity and advantages to both buyer and seller. Finally, the emergence of this phenomenon seems to be the best solution for many marketer professions and firms not only keep relation with their clients on a regular basis but also enhance the level of interactivity with low expenditure by using digital marketing. For customers point of view, a wider range of products and services are offered by different suppliers via online retail markets. Furthermore, purchasers can easily select and buy items and services through the online market. Last point is that buyers can approach to product information and present promotions without difficulty. Thus, this essay is going to discuss how digital marketing has changed relationships and communication with consumers in the retail marketing emphasizing on the definition digital marketing and e-retail, and the difference between internet marketing communications and traditional marketing communications in term of interaction between purchasers and businesses. Next, it will identify consumers relationships and communication in retail marketing is changed by digital marketing. Finally, identify the evaluation of digital marketing on consumers behavior. It seems that online marketing play an important role to influence consumers habits in retail marketing.

The definition digital marketing and e-retail and what is the difference between internet marketing communications and traditional marketing communications in term of interaction between purchasers and businesses
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The term of digital marketing is similar to Internet marketing (Chaffey et al, 2006). It is a process of interaction and marketing between suppliers and buyers via the use of digital channels such as the Internet, email, social networking, banner, online catalog, mobile phone, and digital TV (Chaffey et al, 2006). At the same time, e-retail is the method of business or organization who sells products and services on the Internet channel (Harris and Dennis, 2002). Additionally, e-retailers use a set of tools and techniques to generate value and satisfaction for patrons. This process is called the e-retail mix (Charles, Tino & Bill, 2005). Therefore, it consists of seven significant elements which are convenience, customer value and benefits, cost to the customer, communication and customer relationships, computing and category management issue, customer franchise, and customer care and service. These 7 Cs mainly emphasis on customers needs and wants rather than the traditional marketing which is marketing mix or 4 Ps concept (Kearney, 2000). The example about retail business that focuses on computing and category management topic of the 7 Cs is Tesco. The Internet system is performed between Tesco and their suppliers in order to access and reaction more rapidly to change in buyer need by using Electronic Point of Sale (EPoS) data (Charles, Tino & Bill, 2005). In addition, the main function of digital marketing is to back-up marketing activities in order to achieve a profit and maintain relationship between buyers and sellers (Chaffey et al, 2006). On traditional marketing, it is a conventional marketing method which concentrates mostly on the process that marketers created around four factors which are product, price, place, and promotion (Chaffey et al, 2000). TV, Radio, Newspaper, Magazines, Posters, Billboards, and Mailers or Flyers are the example of traditional media (Ho, 2008). Therefore, Internet marketing differs considerably from conventional marketing communications in many aspects and consumers relationships and communications are changed by the Internet.

There are many features to identify consumers relationships and communications are transformed by new media and traditional media. The first viewpoint is interactivity. Push function is applied in conventional marketing communications by passing mass marketing from companies to customers with limited communication, even though some kind of traditional media is used such as direct mails and TV (Deighton, 1996). On the Internet, Information and promotion are searched by customers on a web site. They are allowed to
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communicate straight with the source of data (Kesi, 2003). This process is called pull function where buyers are typing a particular word that connecting to companys products or services in search engines such as Google and Yahoo (Deighton, 1996). The great example is a fast moving consumer goods sector, Nestle (www.nescafe.co.uk)s web site perform special campaign that increasing interaction by offering sales campaigns to stimulate the customer to reply with their personal information such as name, address, age, and sex (Chaffey et al, 2006). The second aspect is individualization. The internet marketing communications send a particular message to each customer by using one-to-one communication at quite low price. (McDonald & Wilson, 1999). Another point is that, two-way communication or dialogues is offered to customers (McDonald & Wilson, 1999). The clearly example is Amazon.com. They welcome existing customers with their name on the website and users can speedily communicate with company by sending texts (Hoffman & Novak, 1997). However, traditional marketing communications, the same message and one-way communication are broadcasted to all customers (one-to-many communication) via conventional media such as traditional TV and radio. This procedure create a significant issue which is patrons cannot convey the message back to the origin (McDonald & Wilson, 1999). Thirdly, purchasers always use the Internet to find products and services information in the buying decision process as well as buying directly on the web whereas offline consumers search information from traditional media such as traditional TV, print, radio, and direct mail and acquire particular products at physical stores (Perea et al, 2004). Lastly, high street shops and fixedlocation stores are the popular place for offline customers shopping products or services while online buyers tend to visit websites where provide convenience and ease of use to customers (Perea et al, 2004). As a result, consumers behaviors are reformed because a novel commencing surrounding is provided to buyers with high technology of digital marketing to complete their transaction within a minute (Chaffey et al, 2006). Besides, the Internet has shown the retail sector with weighty opportunities and (Chaffey et al, 2009) and most of retail businesses in the UK are likely to have their own web site in order to provide online facilities to their customers such as House of Fraser, Superdry, Apple, and HMV (Ellis-Chadwick, Doherty & Hart, 2002).

Table 1 Comparison between Internet advertising and advertising in the traditional media

Source: Developed from Janal (1998)

Consumers relationships and communication in retail marketing is changed by digital marketing


According to the previous paragraph, there are obviously differences in consumers relationships and communications which are changed by digital marketing on the online retail business. Additionally, the retail business pays more attention about an analysis and understanding the dissimilarity in consumers behavior between online and offline customers (Chaffey et al, 2006). Moreover, digital marketings managers need to consider how to customize and tailor their web sites content and search marketing strategy in order to interact with their target market (Chaffey et al, 2006). As a result, ASOS.COM is the clear example to shows successfully digital marketing plan in garment sector. This company is the UK online
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fashion retailer which offers in-house brand (ASOS brand) and a wide range of famous brands such as All Saints, Adidas, Diesel, and Fred Perry (Kumar, 2011). ASOS uses internet marketing in a variety way to keep contact with existing customers and new customers in their business (Bayley, 2009). Therefore, ASOS is chosen as a case study for illustrating their Internet marketing strategy and the change in consumers relationships and interactions in this online retail business. To begin with, banner advertising is located at the top of ASOS website. The banner is a multimedia advertising which makes the website more attractive and outstanding. Customers attentions are drawn by this kind of digital marketing (McEleny, 2010). Then, advertisements and promotions are included in the banner which customers can click on them and will be opened to a new website such as free return for all customers within the UK (see figure 1.1) (Kumar, 2011). Next, when buyers open this website via their smart phones or laptops, they can lightly aware of the special offers and promotions that are provided (Chaffey et al, 2000). In the past, clients consumed these kinds of promotions and advertisements via traditional media such as newspapers, magazines, print media, and television (Gillin, 2007). Moreover, the trend of conventional media shows slow index of growing because restricted scope for archiving the maximal performance and people cannot easily approach these promotions and advertisements through digital marketing (Gillin, 2008). As a result, this strategy leads to ASOSs sales success in the online retail market (Marketing Week, 2011). Afterwards, the digital media allows ASOS advertises their retail business by creating social networking sites such as Facebook and Twitter for updating and providing any news such as current promotions and fashion trends to existing customers (see figure 1.2) (Lara, 2011). Additionally, other persons who have no ASOS's profile on their Facebook or Twitter can receive update news from ASOS on friends profile (Richards, 2011). Furthermore, not only opinion is posted by users for exchanging or consulting other opinions with their online peers on social network before making purchasing decisions. Users also check and examine the reliability of online retailers (Ryan & Jones, 2009). On the contrary, conventional clients consume those news and information through traditional media which provide only to a limited audience. This media make things difficult and inconvenience for users in term of approaching to the source of news (Gillin, 2008). Hence, the electronic media can generate retaining potential customers to the business in order to increase the overall visitors and profit. (Srinivasan, Anderson & Ponnavolu, 2002).
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Next, ASOS realized that e-mail address is a way to maintain customers crucial details and relationships since this method can be keep communicate the one-to-one relationship online such as public promotion and individual promotion to specific customers (see figure 1.3) (Chaffey et al, 2000, Marketing Direct, 2008) . Apart from this, the other data is collected such as customers profiles and buying history (Chaffey et al, 2000, Marketing Direct, 2008). Moreover, purchasers can access many offers and promotions via their e-mail in any day from any location which makes a message globally accessible (Kesi, 2003). Incidentally, e-mail is a noteworthy investment in digital marketing which has improved ASOSs sales by 137% in 2007 (Kumar, 2011). However, in the past, customers can get news and promotions via traditional media such as print media and TV which is very limited and lack of interactivity with sellers (Kesi, 2003). Finally, online catalogues are utilized in ASOSs website which customers are able to see real products (Lovett, 2010). Similarly, a 360 view is applied to view the whole online products which mean that purchasers can rotate product images in different angles (see figure 1.4). Moreover, these images can be zoomed which provide buyers a close view of products (Lovett, 2010). In addition, size guide is also available for customers in order to measure their size before purchase products (Lovett, 2010). Another point is that, the videos also available on the website to provide a better view of products to online customers (see figure 1.5) (Parsons, 2002). For this reason, it makes the online shopping business popular among purchasers who can view products on the Internet with a similar shopping experience at high street shops (Parsons, 2002). Meanwhile, traditional customers normally prefer to see the real products at the high street shop or department store for checking the quality of goods and try on clothing before they make final decision (Doidge & Higgins, 2000). Thus, the function of the Internet in the retail marketing can bring both of buyers and seller is closer together by merging marketing and distribution channel. Moreover, this combination causes a shift increasingly towards a bi-directional retailer and consumer relationship which customers outweighs retailer in term of power (Hagel & Armstrong, 1997).
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Figure 1.1 Free return at ASOS.com

ASOS.com (2000). Free return. Retrieved November 7, 2011 from ASOS.com: http://www.asos.com/pgehtml.aspx?cid=9548&WT.ac=UK_GlobalBanner1

Figure 1.2 Social network at ASOS.com ASOS.com (2000). Social network. Retrieved November 7, 2011 from ASOS.com: http://www.asos.com/?hrd=1

Figure 1.3 ASOS.coms e-mail ASOS.com (2000). email. Retrieved November 8, 2011 from ASOS.com: http://www.asos.com/Paul-Smith-Jeans/Paul-Smith-Jeans-Spot-Grid-T Shirt/Prod/pgeproduct.aspx?iid=1703733&cid=9827&sh=0&pge=0&pgesize=20&sort=1&clr=Grey

Figure 1.4 a 360 view at ASOS.com ASOS.com (2000). A 360 view. Retrieved November 7, 2011 from ASOS.com: http://www.asos.com/Paul-Smith-Jeans/Paul-Smith-Jeans-Spot-Grid-T Shirt/Prod/pgeproduct.aspx?iid=1703733&cid=9827&sh=0&pge=0&pgesize=20&sort=1&clr=Grey

Figure 1.5 Size guide at ASOS.com ASOS.com (2000). Size guide. Retrieved November 7, 2011 from ASOS.com: http://www.asos.com/infopages/SizeGuide/pgesizechartMan.aspx

Evaluation
Based on evidence, digital marketing in the online retail business seems to be a productive path and has conveyed important benefits to buyers as well as maximize customers satisfaction (Smith & Chaffey, 2005). Moreover, this process has become a strategic interaction and communication element straightly sustains retail businesses in achieving its competitive advantages and influencing the manner of clients (Arnott & Bridgewater, 2002). Meanwhile, some online retail businesses may not successful in their website because there are some limitations (Charles, Tino & Bill, 2005). Firstly, the substantial online investment is required for online website. This amount starts from around 20,000 Pounds up to 500,000 Pounds for the small and large company respectively. Next, in
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the case of poor design of the website, online businesses have less powerful than face to face transaction because customers uptakes slow for purchasing decision. Lastly, after-sales care may be perplex, especially if the patrons live in another country (Charles, Tino & Bill, 2005). Whereas, there are three important aspects that powerful influence on a consumers online behavior which online vendors take into account (Constantinides, 2004). To start with, functionality factors, it means practicality of the level of interactivity such as speed of a website, likelihood of interacting companys staffs, and customers services. After that, psychological factors are trust and creditability which is shown the security of transactions, safety of data and product delivery. Finally, contents factor, buyers focus on the website structure which consist of aesthetics feature such as website layout and design, presentations quality, and website atmosphere as well as implement the proper marketing mix 4 Ps (Constantinides, 2004). For this purpose, online commences can persuade consumers behavior to follow companies directions by understanding the nature of behavior of buyers and their website must accomplishing in interactivity, creditability, aesthetics, and marketing mix (Constantinides, 2004).

Conclusion
To summarize, the occupation of digital marketing in retail region strongly affects the relationships between buyer and seller in the modern retail system. Based on the evidence, the users of the Internet no need immediately to buy particular products, they always search for online information and comparing that information of certainly merchandises from digital media such as website, Facebook, and Twitter. Similarly, online catalogues and videos of products are presented to clients. These digital tools provide convenience, lower cost, product value and benefits, and communicate current promotion to customers. In addition, market professions can be motivate buyers in the companies direction by improving their website to meet four main criterions which are interactivity, trustworthiness, aesthetics, and marketing
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mix. However, standard communication media such as television, radio, and newspapers enable only one-way communication by transmitting its messages to a huge number of customers. Therefore, it creates low interactivity between recipients and senders which cannot communicate back to senders. Furthermore, customers lack of convenience to access those messages. As a result of these, relationships between buyer and seller in the online retail market are completely change if compare with the traditional one.

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