Ferrell Hirt Ferrell
A CHANGING WORLD
EIGHTH EDITION
FHF
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
part
Digital Marketing and
Social Networking
5
Chapter 11 Customer-Driven Marketing
Chapter 12 Dimensions of Marketing Strategy
Chapter 13 Digital Marketing and Social Networking
FHF
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What is Digital Marketing?
E-Business
 Carrying out the goals of business through use
of the Internet
Digital Media
 Electronic media that function using digital codes
Digital Marketing
 Using digital media to develop communications and
exchanges with customers
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Growth and Benefits of
Digital Communication
Digital media has created opportunities for businesses to:
 Create relationships with consumers
 Target markets more precisely
 Reach new markets worldwide
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Digital Marketing
Has five key characteristics
1. Addressability: The ability for a business to identify
consumers before they make a purchase
2. Interactivity: Allows customers to express their needs and wants
directly to the firm in response to its communications
3. Accessibility: Allows consumers to find information about competing
products, prices, and reviews and to become more informed about a firm
and the relative value of its products
4. Connectivity: Keeps customers and businesses connected with each other
5. Control: Consumers’ ability to regulate the information they receive via
the Internet
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Using Digital Media in Business
 Digital media have created new ways of doing
business and shopping
• Fast communication
• More interactive
• Comparison shopping easier
• Easier to conduct marketing research and advertise
…continued on next page
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Using Digital Media in Business
 Digital media have lowered the cost of
communication and transactions
 Digital media are more similar to traditional media
than they are different
 Growing problem with controlling employee access to digital
media
• Wasting time at work on personal communications
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Digital Media and the
Marketing Mix
Some key differences between digital and traditional
media in the marketing mix:
 Communications are richer, faster and more interactive
 Companies can reach target markets more easily, affordably and quickly
 They help marketers utilize new resources in seeking out and
communicating with customers
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Digital Media and the
Marketing Mix
Digital media let marketers and consumers
share information
 Websites
 Online social media sites
 Email
 Listservs
…continued on next page
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Ways Users Spend Time
on the Internet
Rank
Sector
Global Reach
1
Search
85.9%
2
General Interest Portals
85.2%
3
Software Manufacturers
73.4%
4
Online Communities
66.8%
5
Email
65.1%
Source: Nielson Reports, “Global Faces and Networked Places,” March 2009, p. 3
http://blog.nielsen.com/nielsenwire/wp-content/uploads/2009/03/nielsen_globalfaces_mar09.pdf.
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Product Considerations
Digital media connectivity creates opportunities
to add services and benefits to products
 Some products only available digitally
 Internet can make it easier to learn about and anticipate consumer needs
 Competition makes quality and service offerings more important than ever
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Distribution Considerations
The Internet is a new distribution channel
 Processing orders electronically can reduce inefficiencies, cost and
redundancies
 Can also increase speed
 Shipping times and costs are important to customers
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Promotion Considerations
Promotion is one of the best applications
for digital media
 Consumer consumption patterns are changing
•
The products they want to buy
•
The way they get information
 Marketers must react and give consumers what they want
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PepsiCo.’s Online Promotions
Online promotions have made Pepsi
the #1 soda in China
 Pepsi holds 23% of soda market in China
 Online social media is essential when marketing in China and other
markets with many Internet users
 “Pepsi Creative Challenge” was a massive online promotion to celebrate
the 60th anniversary of the People’s Republic
Source: “Pepsi’s Web-Smart Thrust into China,” Businessweek, September 28, 2009.
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Price Considerations
 The most flexible element of the marketing mix
 Digital media can enhance a product’s value by providing
service, information, and convenience
• Discounts and sales can be quickly communicated
• Deals websites allow consumers to compare prices of
products
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Price comparison
Many websites allow consumers to compare prices
to find the best deals
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Online Social Networks
 A web-based meeting place for friends,
family, co-workers and peers that lets users
create a profile and connect with others for
a variety of purposes
 Build relationships with customers
 Provide product information
 Learn about customer needs
 Contact new target markets
• Starbucks, Dell, eBay and Google all excel at using social
media for marketing
FHF
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Types of Consumer-Generated
Marketing and Digital Media
Two factors sparked the increase in consumer-generated
information:
1. Increased tendency for consumers to publish their thoughts, opinions and
reviews of products via blogs and other digital media
2. Consumers tend to trust other consumers over corporations
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Blogs and Wikis
Blogs (Web-Logs)
 Web-based journals through which authors can editorialize
and interact with other Internet users
 2/3 of Internet users read blogs
 Give consumers power over companies because they cannot control what
bloggers write
Wikis
 Websites where users can add or edit content of posted articles
 Monitoring wiki sites can give corporations ideas about how consumers feel
about their company or products
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Most Popular Blog
• A liberal conglomeration news website
• Mostly links to stories on other sites
• Launched in 2005 by former conservative commentator
Arianna Huffington
• Over 3,000 bloggers contribute, 60 employees
• Also utilizes vlogging (video blogging)
• More than 28 million visitors a month
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Video and Photo Sharing
Video Sharing
 Lets users upload videos to the Internet
 Viral Marketing: Using video sharing and online social
networking sites to spread an advertisement or message about a product
 Companies increasingly use consumer-generated content for ads rather than
professional ad agencies
Photo Sharing
 Similar to video sharing sites, but allow users to upload, edit and share
photos instead
 Businesses use photo sharing to display images of products
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Podcasting
Podcasts
 Audio or video files that can be downloaded form the Internet via a
program that delivers content to listening devices or personal computers
 Convenient
 Can listen on an Mp3 player or other portable device
 Popular with the 18-29 demographic
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Social Networks
 2/3 of consumers have visited online social
networking sites
 There are many different sites and the number is growing
• MySpace
• Facebook
• LinkedIn
• Twitter
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



The largest social networking site in the world




Good resource for marketers
Appeals to a broad demographic
Fastest-growing demographic is women over 55
Encourages consumer interaction with companies and
products
Market research
Low-cost means of advertising
Reach new markets
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



A social network for professionals
A profile resembles a résumé
Facilitates professional networking, job searches and recruiting
Companies use the site to familiarize people with their
business
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 Twitter is a hybrid social networking and microblogging site
 140 characters or less
 Companies announce sales, promotions and product updates
via tweets
 Can help (re)build customer relationships
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Virtual Worlds
 Allow users to select an avatar and live out an
alternative life online
• Many virtual worlds allow users to buy and sell goods, services, even
real estate
• Big business: Nearly $300 million on advertising in virtual worlds
annually
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Virtual Worlds Have a Downside
 Although they can be lucrative, some
companies may choose to avoid virtual-worlds and
similar systems
• Negative publicity when gamers claim addiction
• A Hawaii resident sued the creator of virtual-world game Lineage II
• Claimed game rendered him unable to function normally
• Played for 20,000 hours over five years
(or 833 24-hour days)
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Advertising in Virtual Worlds
 Search engine Bing advertised on the social
game
FarmVille and generated 400,000 Facebook fans in
a day
• Users gained virtual currency in FarmVille
by becoming a Bing Facebook fan
• FarmVille is a virtual world farming game
available through Facebook
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Mobile Marketing
 Consumers increasingly do their business and
shopping from mobile devices and smartphones
• Marketers can use digital media to their
advantage
• Requires adapting to new technologies
and consumption patterns
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More Adults Use Cell Phones as
Primary Phone
Source: USA Today Snapshot, March 7, 2009, A1.
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What kind of digital technology
user are you?
 Creators: Create their own media outlets (e.g. blogs,
podcasts, videos)
 Critics: People who comment on blogs or post ratings
and reviews
 Collectors: Collect and organize content generated by creators and critics
 Joiners: Includes anyone who becomes a user of social networking sites or
other online communities to connect and network
 Spectators: Read online information but to not join communities or post
anywhere
 Inactives: Do not participate in online digital media; numbers are
dwindling
Developed by Charlene Li and Josh Bernoff of Forrester Research
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Using Digital Media to
Learn About Consumers
 Digital media is a great learning tool
 Market research
• Gathering data on consumers
• Asking consumers about preferences
 Crowdsourcing involves using communities if interested
consumers to gather input and feedback for marketing
purposes
 Can help small businesses on limited budgets compete with
large businesses
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Legal Issues in Internet
Marketing: Privacy
 Shopping on the Internet allows companies
to better track consumers
• Cookies are often used for tracking
 Laws and regulations cannot keep up with the rapidlychanging Internet
• Federal Trade Commission considering creating legislation that
limits information companies can gather online
 The Better Business Bureau and other organizations can help
organizations develop privacy policies
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Legal Issues in Internet
Marketing: Identity Theft
 Occurs when criminals obtain personal information
that allows them to impersonate someone else in order to
access financial accounts and make purchases
• Security breaches are serious threat to organizations and individuals
• Phishing is using a familiar website to deceive people into divulging
private information
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Main Sources of Identity Theft
Source: “Consumer Sentinel Network Databook, 2009,” The Federal Trade Commission,
February 3, 2010, p. 3, http://www.ftc.gov/sentinel/reports/sentinel-annual-reports/sentinel-cy2009.pdf
(accessed May 12, 2010).
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Legal Issues in Internet
Marketing: Online Fraud
 Includes any attempt to conduct fraudulent
activities online
 Cybercriminals are increasingly using online social
networking sites and other digital media to commit fraud
• They sometimes use social networking sites to pose as charities
and collect donations
 Always be careful what information you give out when online;
and used trusted sites whenever possible
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Legal Issues in Internet Marketing:
Intellectual Property
 Intellectual property can include songs, movies,
books, electronics, software, etc.
 It is generally protected by patents and copyrights, but these
can be difficult to enforce globally
 Piracy and illegal sharing costs global industries billions
annually
 90% of illegal software copying is done by businesses
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Digital Media and how They are
Changing Marketing
 Digital media can make your company more
efficient and productive
• Transition to digital media can be challenging
• Correct blend of traditional and digital media in marketing mix takes
time and consideration
• Future marketing opportunities will require a
knowledge of digital media and how to use them
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