Abstract
With the rapid growth of e-commerce and changes in consumer behavior, the importance of efficient digital brand building has come into a sharper focus. Marketers are in constant search for effective methods of brand developing and promoting. This writing reviews the literature on brand marketing, analyzes the modern tendencies of brand building and proposes the best digital opportunity for leading brands relying on their effectiveness for digital marketing.
Key words: E-commerce, brand building, Internet, customer value proposition, operating model
Aim
Objectives
- Review the literature on brand marketing and analyze the modern tendencies of brand building.
- Study the evolution of a digital world and the changing role of brands in a digital context.
- Assess the different types of digital content and their influence on achieving marketing goals.
- Compare various communication channels and their effectiveness for digital marketing.
- Find the best digital opportunity for leading brands.
Rationale
Today’s interaction between buyers and brands is influenced by well-developed digital facilities. I want to know how different types of digital content influence achieving marketing goals and find the best digital opportunity for successful brands.
Introduction
In a digital world that is more open, dynamic and integrated than a traditional old world, marketers search for the efficient methods of brand building. Digital marketing strategies offer companies new ways of brand building and engaging with customers. Well-designed digital strategies may push brands deeper in consumer consciousness and increase their expectations and company’s revenues (Nielsen, 2009). This writing analyses the modern tendencies of brand building, studies the evolution of a digital world and the changing role of brands in a digital context. Additionally, this report assesses the different types of digital content and their influence on achieving marketing goals. As the result, the writing proposes the best digital opportunity for leading brands relying on their effectiveness for digital marketing.
Tendencies of Brand Building
In the recent decades, consumers and their behavior have considerably changed being influenced by modern digital achievements and technologies. Moreover, consumer goods producers have considerably changed their marketing strategies because of several developments in the modern society (Nielsen, 2009):
- Increased consumer diversity. Main demographic changes demand an expanded product range to help companies effectively hold their market shares and increase them.
- Accelerating media fragmentation. Today’s advertising is ever-present and ubiquitous. The number of television stations has greatly increased; radio, press, point of sale, and mobile, social networks are not all existing digital channels.
- Reconstruction of retail landscape. Costco, Target and Walmart establish new standards for companies and brands presented in their stores.
However, the most influential force of current changes in the society and in brand marketing is a digital force, which refers to the Internet, TV and various mobile platforms. Earlier, TV ads were the most popular way of bringing brands to consumers. Currently, Internet occupies the leading position in brand marketing and influences brand awareness and consumer behavior (Donaldson, 2012).
Modern brand consumers spend a significant amount of time online. According to the latest survey data, online accounts for more than 50 percent of our daily time spent on media compared with approximately 25 percent for traditional TV (Figure 1).
Figure 1. Daily Time Spent on Online Activities
Source: GlobalWebIndex Q1 – Q2 2014
If to compare these data with the results obtained several years ago (in 2008), Internet held 21 percent, while the TV was on the top with 50 percent (Nielsen, 2009). The increased popularity of the Internet is explained by the fact that more often people go online to learn, socialize, to stay informed, to entertain, and to buy various products (Donaldson, 2012). If to analyze the online time spent by activity and ages, there is little difference in time spent online by the age (Figure 2).
Figure 2. Online Time Spent By Activity, Ages
Source: Nielsen
The major tendencies are the following (Nielsen, 2009):
- Young consumers append more time to socialize, to entertain, to watch videos, listen to music and play games.
- Older consumers also like socializing; they are more inclined to use e-mails and to make online purchases.
The consumer’s online behavior differs by brand usage and category. Understanding how much time various consumer categories spend online and activities they are involved in can assist marketers and managers in deciding what digital strategies to apply. This information is also useful for various tactical decisions, which may help to achieve strategic objectives and for better understanding of consumer interests and attitudes towards various brands. Furthermore, brand popularity differs within the same category. Thus, online communication platform provides many advantages both to consumers and marketers, and considers precise targeting as its main strength (Nielsen, 2009). A perfect understanding of consumer interests, goals and needs are the major prerequisite to successful digital brand building. The most relevant questions, to be answered while the development of online marketing strategy, are the following (Nielsen, 2009):
- How active is the target consumer category online?
- What online activities they are involved in?
- How do these data differ from consumers of other categories?
- What differences are there to other brands in the same category?
- How are consumers open to various brand forms depending on the type of online activity?
E-commerce Evolution
The way people shop for goods has changed greatly in the recent decades. Moreover, the transformation period is still in its early stages and is forecasted to continue (Nielsen, 2009). Shopping has moved online, involving three important dimensions, and namely: convenience, value and choice (Nielsen, 2009). These are the major reasons why consumers shop online; they should be considered by marketers before digital marketing strategy development. Online shopping is growing rapidly and digital age gives reasons to believe that the growth will continue.
According to the Wall Street research data, in 2012 the U. S. and China were the leaders of global retail e-commerce, accounting $225.9 (315) and $202.2 (28%) billions correspondingly (Figure 3).
Figure 3. Global Retail e-Commerce Market (2012E) ($bns)
Source: Department of Commerce, Forrester, Euromonitor, Wall Street research
Consequently, online shopping is a faster and simpler than traditional one, and thus provides a higher level of convenience. Online shopping allows reviewing past purchases, create and edit online shopping lists, eliminate hassles. Additionally, online offers more choice, providing a great variety of customized and personalized goods available at one click (Nielsen, 2009). Value has become very important for most online consumers because there exist many tools to compare product prices online and to use online discount coupons.
Other e-commerce growth factors involve Internet technology success and demographic changes (Figure 4).
In some reports, online shopping is considered to be a more consumer-driven experience since accessing various sites and goods consumers have more control over their feelings, preferences and choice. Online shopping provides advantages not only to buyers, but also for sellers. Optimized search, social media and consumer reviews help small brands to “look big” owing to dynamic ads, which appear when consumers search for any category or browse competitors (Nielsen, 2009). Dynamic ads generate an online presence for small brands and increase their popularity and awareness. Another online principle refers to retailers: those retailers, who have limited offline presence, run successful online businesses.
Figure 4. E-commerce Growth Drivers
Source: Nielsen
Direct-to-consumers brands and retailers have benefited greatly from the digital revolution and modern technological achievements. Their businesses have got online formats and even offer e-commerce franchises (Nielsen, 2009). Avon is an example of successful online beauty products retailer, which takes advantage of online brand building and e-commerce. However, leading consumer brands face some challenges while marketing online because all brands available online are not separated from each other. Quite the contrary, they create a single and a broad online marketplace, at which all brands operate simultaneously and have equal chances to influence the consumer final choice (Nielsen, 2009). Leading brands have to improve their online performance and continue taking advantage from their offline commercials (Rubinson, 2010).
Consequently, modified e-commerce demands the following issues from retailers operating online (Nielsen, 2009):
- A distribution audit. Determine the main retailers in the category and brand availability at them.
- A virtual shelf audit. Run an online brand search and analyze its position in the search results. Evaluate brand descriptions and photos available and examine close brand competitors.
- Increase category management experience. Online retail provides more opportunities to marketers and helps reveal their potential. Retailers should realize the full power of e-commerce and work on efficient e-marketing strategy.
- Enhance your brand. Online shopping creates valuable digital environment for brand development, in which brands can easily increase customer awareness and build strong relationships with consumers.
- Improve offline presence to gain more advantages. Multi-channel retailers should efficiently combine both offline and online brand building to drive online traffic and better brand awareness (Rubinson, 2010).
- Develop a comprehensive e-commerce strategy. E-commerce provides additional valuable opportunities to brand developers and marketers, since it allows developing new ways of interaction with brand consumers and improve innovation process.
Evolution of Internet
It is well-known that online advertising involves many challenges and has failed to attract marketers broadly. Historically, there exist several important reasons for this fact. To better understand these reasons, let’s discuss briefly a history of effectiveness of online advertising (Figure 5).
Figure 5. A Brief History of Effectiveness of Online Advertising
Source: Nielsen
Previously, other media focused mainly on the audience and not on the effectiveness of advertising (Nielsen, 2009). Since the Internet has direct response roots, ads effectiveness has returned to various forms of direct responses. The Internet originated in 1993 and announced click-through rate to be the most important value of choice (Nielsen, 2009). Later, the industry understood that the initial form of direct response advertising was not efficient as had numerous limitations. Consequently, a new form of effectiveness appeared and had a form of branding impact via Dynamic Logic (Nielsen, 2009). Though the new form of effective advertising is a sort of direct response, it refers to the brand lift acquisition, rather than to customer acquisition. By 2003, there emerged a new form of online effectiveness metric – a cost-per-acquisition (CPA) model, in which online advertising was attached directly to offline sales (Nielsen, 2009). To a certain degree, this model is still frequently used by marketers.
The current influence of Internet on brand building and consumer brand awareness is crucial for ad delivery to a specific audience. Though marketers widely use TV, print and radio to reach their consumers and enhance their purchasing power, they also should search for efficient methods of brand building via Internet applying post-buy reporting (Nielsen, 2009).
For instance, CPG (consumer packaged goods) marketing involves more difficulties than branding in other industries (Nielsen, 2009). There are two possible ads solutions in relation to CPG industry addiction to direct response. The first solution is focusing on a time-based measurement and the second solution are developing a cross-media GRP (gross-rating points). Both these measures focus advertisers’ attention on the quality of the overall marketing campaign and not on the delivery of a specific unit (Nielsen, 2009).
The first measure is to go away from an impression-based currency to brand advertising with time-based measurement. Since consumers move quickly from one ad unit to another, it is very difficult to produce a strong impact on target groups. Consequently, the solution is to develop a good creative advertisement, which may increase the overall time a consumer is exposed to this ad, rather than increasing their individual impression. In such a way, the unit will have more effect and influence on consumer final choice. The digital age modifies ads presentation on Internet web-pages focusing on unique exposure time rather than on served impressions (Nielsen, 2009). This measure would improve overall consumer brand awareness and reduce the marketers’ needs to create extra page views.
The second solution is to provide online gross-rating points (GRPs), which are important for increasing CPG investment in online advertising strategies. It is well-known that Internet advertising differs from other media sources. Online GRP involves several objections, and namely: GRP is blunt and it minimizes the value of the Internet. However, numerous surveys demonstrated that the Internet increases GRPs approximately by 9-10 percent.
The approach that combines both GRPs and time-based measurements may allow better to separate the value of ads within each media.
Building a Digital Strategy
There exist four major steps to building digital strategies for any brand: planning, creation, actualization and evaluation (Red Ant, n.d.). These steps deliver a strategy that evolves brand perception by consumers.
The Planning stage of a digital strategy involves the following steps: the initial goals and expected results; the background of a brand and its perception; the audience (existing and potential), and its location.
The Creation stage involves: planning strategy element basing on the previous analysis; creating KPI and estimating expected results; design strategy elements and planning communication channels and expectations.
The Actualization focuses on creating the engagement timeline, optimizing the strategy message, recording information for evaluation.
The Evaluation step involves evaluation of KPI and fiscal results, score of the strategy and its benefits.
Methodology and Hypotheses
The major method applied for this analysis is a secondary data collection. Validity and credibility served as the main indicators for resource evaluation. The evaluation of resources was based on their relevance to the topic and with respect to the “brand building” notion. The literature review provided detailed information on peculiarities of brand building in the digital era and their influence on achieving marketing goals. At the same time, the results of literature review revealed major problems associated with brand building influenced by well-developed digital facilities. Statistical data used in this analysis is secondary data from the Nielsen Company reports and IBM Institute for Business Value.
Based on the literature review, the following hypotheses have been formulated that provided the major focus for this research as a whole:
Hypothesis 1. Changes in e-commerce and the way people shop for goods require from companies reshaping customer value propositions.
Hypothesis 2. These reshaped brand building requires remodeling company’s business operations to efficiently deliver modified propositions.
Hypothesis 3. Implementation of two transformation paths at the same time leads to the broader industry reshaping.
These research hypotheses aimed to demonstrate what steps should be undertaken to build efficient and innovative brands under conditions of market changing and strong influence of digital achievements on modern marketing.
Findings and Results
According to the numerous researches and client experience, the strategic steps to brand building and transformation of current marketing strategies are based on three major approaches (‘Digital transformation,’ 2011). One focuses on customer value offers, another on reshaping the business operating model. The third approach is more integrated because it combines the first and the second models and is considered to be the most efficient. In fact, up to now most companies have focused on either creating digital value brands or business operations applying a variety of initiatives. The major challenges facing companies are the following (‘Digital transformation,’ 2011):
- Products and services can be reshaped using the new digital achievements. The main problem is how to earn profit from these new customer value offers.
- Business operations can provide exhaustive information about customers’ needs and preferences. This requires efficient information management and integrated business activities.
Figure 6 demonstrates both sets of issues used by companies while brand building.
Figure 6. Elements of Digital Transformation
Source: IBM Institute for Business Value Analysis
In today’s digital environment, many organizations have already developed some digital strategies of brand building using interactive web sites or increased customer experiences. Additionally, they work on establishment of basic operating activities focusing mainly in digital supply chain tracking and numerous online channels (‘Digital transformation,’ 2011). Consequently, being influenced by various digital achievements and considerable change of marketing principles, companies follow one of three possible paths (Figure 7).
Figure 7. Paths to Digital Transformation
Source: IBM Institute for Business Value Analysis
Path 1. Creation and integration of digital operations with the further addressing of the customer value propositions.
Path 2. Enhancement and extension of customer value propositions using digital content with the following integration of digital operations to achieve transformation.
Path 3. Development of a new set of activities around the modified customer value offers, and business operations in a standard procedure.
Of course, the choice of a certain path by a particular company fully depends on corporate strategic goals, available resources, industry type, competitive environment and consumer expectations. For example, in industries with physical products (mining, minerals, etc.) customer expectations for digital information are low (‘Digital transformation,’ 2011). These companies will surely choose Path 1 and start their digital transformation from operations. However, such industries like, financial services, will focus on Path 2, since the level of revenues and profits may be enhanced through mobile devices and services provided online. Furthermore, entire industries will focus on Path 3 combining digital customer value products and business operations. Simultaneously focusing on the two models, these companies can become industry leaders.
Modifying the customer value proposition
Applying information, companies can easily reshape their customer value propositions at each of three phases by enhancing, extending or redefining consumer value knowledge (Figure 8).
Figure 8. Reshaping the Customer Value Proposition
Enhance physical products for better customer experience
In various industries, organizations enlarge their product range differentiating their brands on the basis of new types of interaction and information (‘Digital transformation,’ 2011). For example, BMW and Volvo provide increased security features and digital media access (sensors that reveal activity in blind spots). Lego has invented new products using virtual communities and allowing their consumers to collaborate in Lego’s design challenges.
Extend the physical or traditional products for additional revenue streams
The further crucial step is to add new revenue streams by improving traditional services and products using digitally supported information, content and services (‘Digital transformation,’ 2011). In media and entertainment, organizations should escape from lost revenue streams. For other organizations, extra revenue is the most significant benefit. For example, drivers who use “MyFord Touch” can adjust temperature and volume; take phone calls using integrated voice-identification technology. Toy Company, WebKinz, provide their admirers with the opportunity to feed and play with digital versions of their pets.
Redefine the value brought to customers
Trying to benefit from the digital revolution, some organizations modify their customer value offers. They should hardly act to win a competitive advantage in the technologically innovative marketplace (‘Digital transformation,’ 2011). For example, many publishers offer online articles, which are popular among readers, who prefer reading on PCs. The Wall Street Journal provides online platforms with a variety of news, events and information. In the healthcare industry, digital technologies allow creating disease-monitoring devices that can transmit information to remote carers.
Modifying the operating model
A focus on numerous customer value products involves creation of new operating models (Figure 9).
Figure 9. Modifying the operating model
Create new digital capabilities
Generally, organizations establish the structures, which attract customers online (‘Digital transformation,’ 2011). For example, Burberry created an online channel its admirers, which had more than 1 million followers on Facebook. It offered ability to order online during fashion shows. Consequently, they were able to considerably compress order fulfillment time.
Leverage information to manage and optimize capabilities across the organization
This step makes it possible to integrate physical and digital components, which improve delivery time to market. For example, Meredith Corporation, known for its local broadcast stations, created full-service marketing abilities for their readers and listeners.
Optimize and integrate the physical and digital elements
Focusing on remodeling the operating model, companies try to optimize all the physical and digital elements of the value chain (‘Digital transformation,’ 2011). For instance, Tesco is the leader in the innovative use of IT technologies: self-service checkouts, mobile, and interactive shopping applications, loyalty program tracking applications.
Determining the best way of brand building, any organization should leverage the full potential of modern technologies and either to create customer value propositions, or remodel their business operations. Doing both at the same time may lead to the greatest possible positive effect on industry success and effectiveness.
Discussion
Taking into consideration, the main findings justify the hypotheses proposed above. These research hypotheses help to receive a clear and precise understanding of efficient brand building in different industries influencing by modern digital achievements.
A structured approach to brand building allows companies and organizations to attract more customers, employees and partners. It is crucial to identify transformation opportunities available in the industry basing on a careful understanding of digital changes. This depends on how competitors utilize digital achievements and satisfy their consumer needs, and on the degree to which their products are digitized. Brands, which are built in accordance with modern requirements, are more popular and in greater demand.
Operating model should combine technological requirements and organizational capabilities to be efficient (‘Digital transformation,’ 2011). For the strategy execution, it is crucial to optimize online and physical interaction and build attractive digital abilities to engage consumers.
Producers of goods and services should constantly analyze customer behavior and requirements at various micro levels to be innovative and essential for society.
Conclusion and Recommendations
The primary target of this writing and the fundamental research was to investigate the peculiarities of brand building under the conditions of fast changing and innovative digital environment. In order to achieve this target, modern tendencies of brand building were studied and evolution of a digital world was discussed. Relying on the research results, the writing proposed the best digital opportunity for an organization of any industry, which surely may help while successful and efficient brand building.
Modern brand building should take into account the major tendencies at the marketplace, and namely, increased consumer diversity, accelerating media fragmentation and reconstruction of the retail landscape. Organizations should not forget that currently people spend more time online and prefer online shopping and various digital services, because they consider it to be more convenient and time-saving. Analysis of target consumer categories and activities, in which they are involved, are also crucial for successful and influential brands. Digital evolution influences the way marketers act while brands and developing strategies. The research findings emphasize the importance of digital consumer value propositions and transformation of operating models. Correlations of both methods may bring more loyal customers and enhance corporate effectiveness.
Consequently, to succeed in brand building in the digital era, companies and organizations should follow the next recommendations:
- Evaluate target consumer category and their online activities
- Run a distribution and a virtual-shelf audit
- Increase category management experience
- Develop a comprehensive e-commerce strategy or brand, which should include digital customer value propositions
- Transform operating models to successfully deliver customer value propositions to their end consumers
Consequently, efficient brand building is a difficult and important task for those companies, which want to succeed satisfying their demanding customers.
References
‘Digital transformation’ (2011). New York: IBM Institute for Business Value. Available from http://www-935.ibm.com/ [Accessed: 16/10/2014].
Donaldson, D. (2012) Building Brands in the Digital Age. Huff Post Media. [Online] 04th February. Available from: http://www.huffingtonpost.com/ [Accessed: 16/10/2014].
Nielsen (2009) Building Great Brands in the Digital Age September 2009 [online]. New York: The Nielsen Company. Available from http://www.nielsen.com/ [Accessed: 16/10/2014]
Red Ant (n.d.) Planning and Managing a Digital Strategy [online]. UK: Red Ant. Available from https://www.redant.com/ [Accessed: 16/10/2014]
Rubinson, J. (2010) Eight Brand-Building Ideas in a Digital Age. [Online] August 24th 2010. Available from: blog.joelrubinson.net http://blog.joelrubinson.net/ [Accessed: 16/10/2014].
