Abstract
Marketing strategies have recently changed based on the emergence of more cost-effective as well as diverse digital channels of marketing. Traditionally, marketing entailed “P” strategies that did not play any meaningful role in the establishment and maintenance of customer-company relationships. Indeed, traditional marketing strategies are considered to be based on assumptions that: Customers ought to avoid the responsibility of making decisions; customers are often passive and ought to be pushed as a result; customers often have great difficulties in the learning process; and that customers rarely use – or do not use at all – imagination. These general assumptions normally create a “push-based” phenomenon of marketing in the traditional strategies, thereby eliminating the role of trust in marketing relationships between the company and the customers. The emergences of more interactive platforms in marketing have led to the facilitation of interactive communication between the customers and the marketers. In addition, the presence of digital channels such as the Internet, mobile phones, email, and digital television provide greater vision to the cultivation and maintenance of stable customer relationships. There are certain models that explain the role of digital marketing communication in developing and enhancing customer relationships from a marketing perspective. This research paper will majorly focus on the role of digital marketing communication (DMC) – and its critical elements – in the efficient running of Esbin – a college-based marketing firm. The various critical elements of DMC that will be discussed include interactivity, personalization, and content as well as frequency of the brand (Esbin) communication. Additionally, the brand’s measurement and budgeting tools will be presented, proving their worth in the company’s success.
Keywords: budgeting tools; digital marketing communication; personalization; customer relationships; brand communication; interactivity
Executive Summary and Introduction
Today’s marketers have continually been aware of the need to change their marketing strategies as communication channels also change creating more opportunities for better interactions. More than ever, marketers realize that regular communication greatly determines the ability of a company to build as well as sustain effective customer relationships. Of particular interest is the paradigm shift from a mere exchange of goods and/or services to a more viable approach that focuses on efficient service delivery, connectivity, interactivity, and continuing relationships (Vargo and Lusch 2004, p. 4). This shift has mainly been driven by recent technological innovations, changing environments in media, and emergence of new channels (Bhattacharya and Bolton 2000, p. 328) as well the transformations in the way interactions are viewed. Indeed, questions regarding the best interaction strategies - between companies and their customers – are rapidly gaining ground as well as importance mainly due to the considerations of cost aspects between the traditional and digital marketing strategies – such as the Internet and email (Reinartz et al. 2005, p. 65). It has been found that digital marketing tends to be more cost-effective and interactive compared to the traditional methods of marketing. Additionally, the digital channels greatly facilitate a continuous interaction schedule between the firm and its customers (Deighton and Barwise 2000, p. 24).
Peppers and Rogers (2004, p. 116) are now in agreement that marketers can utilize such digital marketing platforms to consistently get in touch with their direct customers; this communication and/or interaction is also maintained at more frequent rates, thereby improving personalization and interactivity levels. Moreover, the costs involved in such communication channels tend to be negligible. Peppers and Rogers, therefore, summarize their claim by stating that being in frequent contact with customers significantly achieves positivity aspects on customer loyalty. A classic example of such a scenario is when customers are offered new information as well as brand communication on buying or when using the products. The new or additional information may be in the form of newsletters, email reminders on product/service repurchases and maintenance and interaction tools for communicating with colleagues. From our research, Esbin does send its customers – who tend to be students – email reminders offering new information on its product lines. Additionally, Esbin utilizes database and purchase information to analyse as well as forecast the moments or time periods when their customers will require their products. In this way, the company is able to generate very personalized email information to the students.
Further, the studies show that the use of customer relationship management principles greatly enhances customer knowledge as well as increased customer satisfaction (Mithas et al. 2005, p. 178). Reinartz and Kumar (2003) clearly show how the duration of customer lifetime presence becomes profitable in relation to the frequency of communication between the company and the customers. Comparing these views to Esbin’s case proves the worth of frequent and personalized communication in the company’s strategic shift to utilizing the benefits of direct, interactive and digital marketing. Still on Esbin, the company has particularly focused on email as the most optimal and dominant form of communication to the student community. Its strategy seems to be in line with the arguments of Reinartz et al. (2005, p. 65) who provide simulations that point to increased customer profitability when email is used as the most dominant form of communication. This is mainly because of the spending optimization technique of email compared to conventional direct mails. Moreover, an email can provide better response rates than the same conventional mails due to its speed (Brondmo 2000).
For Esbin, its current marketing strategies have been as a result of a paradigm shift from conventional “push-based” techniques to recent digital channels of marketing that utilize “trust” as an integral factor in the marketing process. The success of these digital channels cannot be overemphasized since it is already being experienced. The company has been able to greatly reduce its marketing costs and increased its presence at the customer level by initiating frequent communication with them. As a result, Esbin’s market performance continues to rise causing a similar effect in the company’s customer loyalty. With such significant success achieved, it is not surprising to see the company among the top-most marketing companies. The company has demonstrated its longer-term commitment to the change process by making the digital channels of marketing the core of its company-wide strategies. This means that for any aspect the company may be interested in, it will always consider the digital channels as a means of communication. For instance, its use of mobile portals enables it to distinguish itself from its competitors as well as improve the re-subscription rate among the students. This increases its effectiveness in comparison to conventional methods which it had engaged earlier to win customers.
Its focus on recent marketing channels serves to bring the brand closer to the customers every single day. It has also led to a better transformation of customers into co-producers of value (Prahalad and Ramaswamy 2004). On the other end, interactivity brought about by the digital media creates better alternatives that enhance the search for information by the customers as well as enable them to seek and find help on any topic or issue. Interactivity also offers the customers (or students) new ways of spending time with the brand – Esbin – such as participating in certain activities on the company’s website and/or learning about the company’s product which they are continually using. This is indeed one of their strategies to improve the students’ involvement and satisfaction. From interactivity, Esbin can then know more on their customers’ needs and preferences as well as interests.
In its quest to improve overall performance, Esbin has turned its focus on means, moderators, outcomes, and mediators involved in enhancing customer loyalty. The means include the different channels through which the company engages its customers in brand communication. Moderators are the two aspects of interactivity and personalization; outcomes are commitment, perceived value and subsequent customer loyalty; while the mediators include customer relationships and characteristics and other situational factors (or aspects) regarding the customers. Brand communication in this context refers to the communication present between Esbin (the brand) and the students (or customer network). Esbin has rightfully provided an ultimate mix to this brand communication by including advertising, newsletters, direct marketing and the students’ activities in the brand. By incorporating these different techniques, the company ensures it deviates from its earlier conventional advertising (Duncan and Moriarty 1998, p. 4). Esbin’s main aim of providing such an ultimate mix is to address the customer loyalty issue.
There are two major aspects of brand communication that affect customer loyalty. These are: frequency of interaction and communication, and content. Frequency addresses the issue of the rate of communication, for instance the number of brand messages shared with the customers. On the other hand, content addresses issues regarding the promotional or relational aspect of the brand messages. These two factors are often the main determinants of the outcomes observed in direct, interactive and digital marketing channels. As such, Esbin is keen in ensuring that it deeply concentrates on transforming their nature of working in order to produce a similar effect on the outcomes. Usually, the main outcome – customer loyalty – consists of other subdivisions such as behavioral (or purchases) and brand attitudes (attitudinal loyalty). In order to ensure that there is genuine customer loyalty; Esbin has been at the forefront in creating patterns of re-purchases accompanied by positive attitudes (Jakoby and Chestnut 1978). This transformation has enabled Esbin to distinguish its customer loyalty from other forms of unauthentic loyalty where the only positive aspect is behavioral loyalty. In such spurious loyalties, the levels of relative attitudes are often very low and wanting (Dick and Basu 1994, p. 100).
Another strategy that Esbin utilizes in its marketing strategy is the personalization of brand communication. By personalizing the brand communication aspect, the company aims at developing customer profiles and preferences which can be used in subsequent customization of messages intended to be sent to customers. In this case, the ability to select and send different message contents to different customers will be significantly amplified due to the profiling of customers and their preferences. In addition to this, the company will be in a position to integrate different channels of communication as each individual customer will prefer their own style and channel of communication. This is expected to increase the value and response rate of communication between the company and its student community. Apart from personalization, brand communication will achieve the most important part of marketing: interaction. Through interaction, customers will be in a position to conduct searches for useful information, give feedback, make enquiries, and connect the customers with the marketer (Esbin) in various activities. This is the single most contributors to positive customer loyalty. Additional areas where Esbin is seeking transformation include the mediating factors which are important as well as determining factors on customer loyalty. An example of this is a specific message received by a customer in a specific circumstance. In such a case, the customer may perceive the message as more valuable than a generalized message sent randomly.
In measuring the outcomes of its integration process, Esbin’s main focus will be on certain aspects of brand communication and marketing. For instance through the use of database-driven direct marketing, Esbin will be in a position to utilize a variety of tools as well as techniques which help in recording, measurement, analysis and subsequent response and/or transactional measurement. Additionally, through the use of key codes on the company’s order forms, responses emerging from particular promotional efforts are identified, analyzed and measured. By measuring these variables, Esbin has been able to account for its expenditure due to marketing and compare this figure to the realized benefit of long-term establishment of customer loyalty and communication. Moreover, by analyzing the discounted stream of income that the company receives as a result of maintaining long-term (lifetime) relationship with a customer, Esbin has generated robust profits as a result of higher lifetime value of customers (LTV). The same effect is replicated at the return-on-investment (ROI) analysis. As a matter of fact, Esbin mixes digital marketing with the conventional marketing aspects so as to achieve more responsive results (Coviello et al. 2003, p. 858). However, in order to achieve this mix, Esbin had to ensure that its company processes and systems supported this multi-channel marketing (Vesanen and Raulas 2006, p. 7).
Esbin has been strong in budgeting as well as measuring the responses thereafter. Since the company’s revenues are less than the $5 million mark, Esbin allocates 7 to 8 percent of its revenues to marketing. This budget is split between various costs such as: brand development costs (including communication, website, database, consultancy advice, and sales collateral costs) and business promotion costs (including campaigns and advertising). For instance, Esbin spends approximately £ 540 on communication costs per 500 students, which translates to £ 1.08 per student on interaction costs between the company and one student. Esbin’s total customer base among the student community is currently at 35,000. This means that the company spends £ 37,800 on communication costs. Further, its website design costs cover 3% of the total budget, which translate to a total of £ 3,240. The company also engages in database re-design to ensure that response tracking is improved. As such, Esbin spends 5% of the total marketing budget on this. This translates to a total of £ 5,000. Consultancy advice costs in the company amount to £ 4,880 and are mainly based on innovative strategy integration into the company’s production process. Esbin’s larger budget allocations are given to advertising and campaign events which tend to take up to 49.08% of the total costs. For instance, the company is expected to spend a total of £49,080 on both advertising and campaigns events. However, the response rate is to be measured through the use of SMART goal setting, which ensures that the goals are specific, measurable, achievable, realistic, and timely. For instance, by continuously assessing the marketing strategy, the company will be in a position to know whether the spending has indeed helped achieve the marketing goals. Esbin is also expected to compare tactics as well as analyze seasonal effects from past history. For example, did the company achieve more in one quarter than in another, and why? This helps track the spending costs as well the return on investment because it is able to analyze its strengths, weaknesses, opportunities, and threats (SWOT). Indeed, Esbin’s strategy lies in a continuous evaluation of its SWOT analysis to the marketing strategies it adopts so that it achieves a higher retention and acquisition rate of its customers.
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