DIGITAL MARKETING

Syllabus: 1 chapter
Power shifts due to increased Connectivity
Transformation of behaviour due to connectivity
Online communities and implication to strategy formulation
Power Shifts to the Connected
Customers
Source- Kotler – Marketing 4.0
The end of the world- the select on the boat

to save select groups of

the world’s population. The survivors on the
ships would be expected to start a new
civilization
Shift of Power
 Today, we are living in a whole new world. The power
structure we have come to know is experiencing drastic
changes.
 The internet,which brought connectivity and transparency to
our lives, has been largely responsible for these power shifts
 We are also seeing how a vertical power structure has been
diluted by a more horizontal force.
 The power shift also influences people. Now,the power lies
not with individuals but with social groups.
 The horizontal, inclusive, and social forces trump the vertical,
exclusive, Individual forces, customer communities have
become ever more powerful.
Shift of power from-

 Exclusive to Inclusive
 Vertical to Horizontal
 Individual to Social
From Exclusive to Inclusive MACRO
 At a macro level, the world is moving from a hegemony to a
multilateral power structure. West to East.
 Causes-
 Demographic profile of the emerging market populations: younger,
more productive, and growing in terms of income level. It has created
strong demand for products and services, which in turn drives
economic growth.
 Increasing innovation potential in the Asian Nations and diminishing
innovation in the US
 Political power is based on economic power and that is changing the
influence of the western super powers.
 Business itself is moving toward inclusivity. Technology enables both
automation and miniaturization, which bring down product costs and
allow companies to serve the new emerging markets
NANO – DISRUPTIVE INNOVATION
Aravind Eye Care System’s $16 cataract
surgery
From Exclusive to Inclusive MACRO
 Reverse innovation- The frugality and cost-consciousness
shown in developing products are becoming the new
sources of differentiation. GE’s Mac 400, a portable
battery-operated electrocardiogram machine, which was
designed to serve rural villagers in India.
 Entrepreneurs from emerging countries to draw
inspiration from their counterparts in developed
countries. Amazon-inspired Flipkart.com from India,
Groupon-inspired Disdus from Indonesia, PayPal-inspired
Alipay in China, and Uber-inspired Grab in Malaysia.
From Exclusive to Inclusive MACRO
 The walls between industries are also blurring. The
convergence and integration of two or more industries
are trending. Medical tourism, telecommunication and
finance- MPesa
 Within an established industry, the sub-sectors will also
be difficult to distinguish. Financial services include many
subsectors.
 Vertical integration in one industry will create business
entities that engage incomprehensive roles from material
supply to production to distribution, making it difficult to
define in which business a company is active.
From Exclusive to Inclusive MICRO
 Humans are embracing social inclusivity -Being inclusive is
not about being similar; it is about living harmoniously
despite differences.
 build relationships without geographic and demographic
barriers.
 Collaborative innovation- Wikipedia, InnoCentive
 Crowd-sourcing approach- SEE NEXT SLIDE
 Social inclusivity offline-
 concept of inclusive cities—cities that welcome the diversity of
their inhabitants. Welcoming minorities, migrants
 Fair trade, employment diversity, and empowerment of women.
CROWDSOURCING INNOVATION
From Vertical to Horizontal
 Globalization creates a level playing field-a company can
be more competitive if it can connect with
 communities of customers
 partners for co-creation
 competitors for co-opetition
 Today, innovation is horizontal; the market supplies the
ideas, and companies commercialize the ideas. Unlike the
vertical system in the past. R&D was the basis of
innovation. Research-and-develop model into a connect-
and-develop model.
From Vertical to Horizontal
 Chris Anderson’s long tail hypothesis -market is shifting
away from high-volume mainstream brands into low-
volume niche ones. The These goods have low distribution
and production costs, yet are readily available for sale.
 Small companies proliferate and increase competition
threats
 Distinctions between industries are blurring and
increasing competition. Competitors in the future will
come from the same industry as well as from other
relevant and connected industries.
 Airbnb, Uber disrupted hotel and taxi businesses
From Vertical to Horizontal
To handle this companies have to
 start with consumer objectives and potential ways in
which these can be met.
 Track competitors outside home markets (Xiaomi and
Oppo) These companies have tough home markets, low
cost, resilience and innovation. They are in online- go to
markets
 Customer are influenced by f-factor (friends, family,
facebook fans and twitter followers)
 Communal rating systems- Tripadvisor and Yelp.
From Vertical to Horizontal
 So brands have to view customers more than mere
targets.Brand is an outer shell packaging to the true value.
Customers guard themselves from fake values of brands
that target them through communities.
 Customer should be peer and friend of the brand
 Brand has to be authentic to be trustworthy
From Individual to Social
 Individual preference and conformity drive purchases.
 Weight of social conformity has increased.
 Customers paint their own picture of brands. They share
opinions and compile reviews.
 Wisdom of the crowd will drive decisions
 In store research using mobile phones.
 Customers are no longer passive targets but are active
communicators.
 Companies lose control over generated opinions and if
the censor it there will be backlashes
 Digital world increases transperancy
THE PARADOXES OF
MARKETING TO
CONNECTED
CUSTOMERS
Online vs. Offline Interaction,
Informed vs. Distracted Customer,
and Negative vs. Positive Advocacy
A new breed of customer emerging
globally is

■ young, urban, middle-class with strong mobility and connectivity.

■ Mature markets have aging populations, emerging markets have the demographic
dividend
■ They move around a lot, often commute, and live life at a faster pace. Everything
should be instant and time-efficient.
■ Digital natives- they can make purchase decisions anywhere and anytime, involving
a wide range of devices.
■ They value high-touch engagement when interacting with brands.
■ They are also very social; they communicate with and trust one another.
However, even if
the millennial
market is growing,
we cannot discount
on the “older”
generation

There are
platforms that
cater to the mature
and professional
market: LinkedIn,
even Facebook and
Youtube.
The game changer - connectivity

■ Connectivity has made us question many mainstream theories and major

assumptions that we have learned about customer, product, and brand
management.
■ Connectivity significantly reduces the costs of interaction among companies,
employees, channel partners, customers, and other relevant parties. This in turn
lowers the barriers to entering new markets, enables concurrent product
development, and shortens the time frame for brand building
What Connectivity does…
Assumptions
about brands ,
customers and
engagements

changes the way Significantly

we see the reduces the costs
competition and of interaction
customers between value
chain

Connectivi
ty
lowers the
Shortens time for barriers to
brand building entering new
markets

enables
concurrent
product
development
What connectivity is mistaken to be-

■ mere application of technology

■ simply as an enabling platform and infrastructure that support the overall direction
■ It is the base of strategy!!!
■ connectivity transforms the way customers behave
■ to fully embrace connectivity we need to view it holistically!!!
The importance of connectivity will transcend technology and demographic segment.

Connectivity changes the key foundation of marketing:

the market itself.
CONNECTIVITY

Mobile connectivity
Experiential connectivity
internet serves only
as a Social connectivity
internet is used to
communications deliver a superior
infrastructure strength of
customer experience connection in
in touchpoints communities of
WIDTH between customers customers
and brands
DEPTH
STRENGTH
Paradox No. 1: Online Interaction
versus Offline Interaction

■ ONLINE VS. OFFLINE INTERACTION: In the highly connected world created by

technology, both interactions should co-exist and complement each other to deliver
a great customer experience.
■ Online companies extend to give brick and mortar experiencies. Brick and mortar-
provide online reach.
■ Sensor technologies, such as near field communication (NFC) and location-based
iBeacon, provide a far more compelling customer experience.
■ In the engine room, big-data analytics enables the personalization that new
customers are longing for. All of these complement the traditional human interface
that was the backbone of marketing before the rise of the internet.
Paradox No. 1: Online Interaction
versus Offline Interaction

■ Traditional and contemporary media for marketing communications such as

television and social media will also complement each other. Many people go to
Twitter for breaking news but eventually return to television and watch CNN for more
credible and deeper news coverage.
 Experiences are
recorded, which Brand awareness
further improves from analytics,
the accuracy of past experiences
the analytics and FFF
engine.

Research, utilizing
Become
the reviews from
advocates for
other customers—
inexperienced
again online and
customers
offline.

Purchase-a
personalized
touch from both
the machine and
the human
interface.
INFORMED VS. DISTRACTED
CUSTOMERS

■ In making purchase decisions, customers are essentially influenced by three

factors.
– First, they are influenced by marketing communications in various media such
as television ads, print ads, and public relations.
– Second, they are persuaded by the opinions of their friends and family.
– Third, they also have personal knowledge and an attitude about certain
brands based on past experiences
■ Today’s customers have become highly dependent and would likely conform with
other’s influence despite having the power to search information which will guide
personal decision making
INFORMED VS. DISTRACTED
CUSTOMERS
■ Connectivity brings a lot of
protection and confidence. In the
customers’ minds, their inner circle
of friends and family provides
protection against bad brands and
companies.
■ Convenient to receive advice from
others, the importance of word of
mouth is growing in the final
purchase decision
■ Connectivity, along with the
presence of multiple devices and
screens, also brings distractions. It
hampers the customers’ ability to
focus and often limits their ability
to decide. Thus, many customers
make their decisions by following
the wisdom of the crowd.
■ This is further fueled by the low
level of trust that customers put in
advertising and the limited time
they have to compare qualities and
prices.
INFORMED VS. DISTRACTED
CUSTOMERS

■ Marketers challenge!
■ Get customer attention
■ WOW them to retain loyalty and convert them into advocates
NEGATIVE VS. POSITIVE ADVOCACY:

■ Delighted customers would likely advocate the brand spontaneously.

■ Other’s however need to be prompted by negative advocacies which in general create
brand conversations.
■ The most famous measurement of brand advocacy is arguably the Net Promoter Score
designed by Frederick Reichheld.
■ He argues that there are three broad categories of customers with regard to their attitude
toward a brand:
– promoters, who recommend the brand
– passives, who are neutral
– detractors, who are unlikely to recommend the brand
■ The Net Promoter Score is measured by the percentage of promoters subtracted from the
percentage of detractors.
■ The key argument is that the ill effect of negative word of mouth reduces the good effect
of positive word of mouth.
Brand Advocacy

■ When a brand stays true to its DNA and consistently pursues its target segment, the
brand polarizes the market. Some become lovers and others become haters of the
brand.
■ Sometimes a brand needs negative advocacy to trigger positive advocacy from
others. Without negative advocacy, positive advocacy might remain dormant.
■ Brand advocacy can be spontaneous or it can prompted.
■ The group of haters is a necessary evil that activates the group of lovers to defend.
They promote conversation on the brand
■ Ultimate sales force: an army of lovers who are willing to guard the brand in the
digital world
Definition

■ Digital marketing encompasses all marketing efforts that use an electronic device
or the internet. Businesses leverage digital channels such as search engines, social
media, email, and other websites to connect with current and prospective
customers.
■ Digital marketing is any form of marketing products or services that involves
electronic devices.
■ It can be online or offline
On line Communities

■ An online community is a group of people who have a common interest and

communicate through the Internet. They get together online through websites,
discussion boards, instant messaging, email, etc., and pursue their interests over
time. An online community is a network of individuals who communicate with one
another online.
■ We also call it an Internet community. It is a virtual community, i.e., a social network
of individuals who interact online.
■ “Online communities are not just a random gathering. They’re a group of people
who come together for a purpose.
■ In a VisionCritical article, Kelvin Claveria wrote that for the marketing executive,
there are four types of online communities. There are social, support, advocate, and
insight communities.
Types of online communities

Advocate
Social online Support Online Insight Online
Online
community Community Community
Community

Facebook Select customers

Provide tips to Loyal customers
Twitter with long term
customers spread WoM
Instagram relationships

Brands use them Brands use them

Used for
to make strategies to monitor product Brands reward
continuous, high
and know about and service them
quality feedback
rivals related chats
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Advocacy-Advocacy is an activity by an
individual or group that aims to influence
decisions within political, economic, and
social systems and institutions.
Insight communities
STRATEGIES

1. Consistency/Content
2. Designed To Share
3. Be On Social Media
4. Engaging/Caring – respond
5. Enabling Others To Promote Your Work – give credit to others
6. Interviews
7. Promoting Others & Telling Them About It (seek permission and post)
8. Guest Posts/Videos/Articles
9. PR:
10. Live Events/Speaking