Digital marketing impact on consumer buying behavior - Essay Example

Marketers can now be in touch with their customers on a more frequent basis and increase the level of personalization and interactivity with low or non-excessive cost. Our main claim is that being frequently in touch with customers should help achieve positive effects on customer loyalty. For instance, customers can be offered additional information and brand communication when buying products or when using them. This can include newsletters, maintenance and repurchase reminders, help for keeping their products up-to-date, and tools for interacting with friends and peers.

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For example, Linesman sends their customers email reminders when they expect customers to start running out of their supply of contact lenses. Linesman uses database and purchase information to predict the repurchase moment and produce the personalized email. This way Linesman can sell cost-effectively to their existing customers, and automate he re-selling process. While Linesman gains in decreased sales costs, this kind of reminder also adds value to the customer. It may strengthen customer loyalty as customers feel that Linesman takes care of their stock and assists them to repurchase at the right time with low effort.

Customers might perceive emotional value for being personally remembered and cared, and appreciate the extra service (see e. G. Cram 2001). For being regularly in touch with customers is also one of the central ideas of CRM. Recent studies have found that the relational information processes of CRM (regular immunization, information collection, etc. ) play a vital role in enhancing an organization’s customer relationship performance Asynchrony et al. 2005). Furthermore, the use of CRM applications is positively associated with improved customer knowledge and improved customer satisfaction (Mathis et al. 005). Reinsert and Kumar (2003) show how profitable customer lifetime duration is positively related to the number of mailing efforts of the company. Simulations show that to maximize customer profitability by optimizing spending the dominant form of communication should be email (Reinsert et al. 005). While email is substantially cheaper to send than conventional direct mail, research also suggests that it can deliver significantly better response rates (Brandon 2000; Did lanai 2000; Roseanne 2000).

That is, from a company point of view, digital channels offer cost efficient opportunities for a brand to keep frequently in touch with customers which not only improves marketing performance, but particularly customer loyalty. With such prospects in mind, it is not surprising that the use of digital channels in marketing is becoming an essential part of strategy in many companies. Car manufacturers use the Internet and email to launch new models, as well as engaging their customers into interaction on their web sites and with email.

BMW uses a mobile portal to distinguish itself from its competitors, providing customers pictures of new models, games, and service. Nikkei targets the youth segment by launching a digital spring fashion show, which allows consumers to use the brand’s latest fashion catalogue online to create their own looks and photos, and a virtual identity (Harvest-Silk 2005). Canon image Gateway helps consumers share their digital photos with friends online. L’Orealall’s brand LanaГ¶me uses email newsletters to keep in touch with customers and hence strengthen their brand loyalty (Immersion and Aralias 2004).

Magazine publishers can activate and drive their customers into the Internet with email and SMS messages to improve reconstruction rate (Immersion et al. 2004). Such interaction and low cost communication with customers increases the effectiveness compared with traditional direct marketing efforts that publishers have used to win orders. In line with Furrier’s (1998) ideas, marketers increasingly bring brands closer to consumers’ everyday life. The changing role of customers as co-producers of value is becoming increasingly important (Parallax and Ramsey 2004).

Interactivity in digital media offers customers better options to search for information, work as initiators, and get help. Interactivity also offers customers new ways to spend time with a brand, like playing games, participating in an activity on a website, or learning about the product or service they are using. This is what Canon pursues with image Gateway service, which can lead to improved customer involvement and satisfaction. Interactivity also provides marketers with more information about customer needs, references and interests. Furthermore, interactive and virtual brand communities, like those built by Harley Davidson and Ducats, bring consumers with specific interests together from different geographic areas to strengthen their brand loyalty (Necromancer et al. 2002; Wind et al. 2002, 97). McDonald’s uses online channel to reinforce brand messages and relationships. They have focused their online community building on communities for children, such as the Happy Meal web site with educative and entertaining games (Rowley 2004).

Digital channels also contain opportunities and tools for personalization. By using chital channels, customers can actively create or shape the form of brand communication, for example by stating their channel and content preferences. Likewise, marketers can create more personal brand communication based on customers’ behavior and preferences, which can increase the effectiveness of brand communication by making customers perceive it as more relevant and interesting, and wanting to maintain a relationship with the marketer (Simonton 2005).

As Simonton notes about customized offers; “If successful, marketers will be rewarded for the superior value they provide with higher customer loyalty. ” (see also Peppers ND Rogers 1997, 177). For example, L’Orealall’s CRM initiative aims to enhance personal communications with customers by analytical profiling, segmentation, database build and design, and bolstered data gathering (Brown 2003). This way L ‘Oral seeks to increase the return on investment and capitalist on their customer insight for the long term.

Despite the growing use of digital channels in marketing and the evolving research around it, there are few models for explaining the mechanism of how digital marketing communication works from a relationship marketing perspective, especially for enhancing customer loyalty. Ideas have been suggested in many areas of marketing literature. Relationship marketing (ARM), customer relationship management (CRM), as well as brand management and service literature emphasize the importance of building and managing customer relationships, and offer useful models to understand how customer relationships develop.

Also consumer behavior, advertising, direct marketing, and e-marketing literature give insight into how digital channels can be used to communicate with customers in order to enhance customer loyalty. The objective of this paper is to draw together previous research into an integrative inception model for understanding how digital marketing communication affects customer loyalty. In the following, we first define digital marketing communication. We then present and describe the model. Next we examine in more detail the components of the model and the theories behind 6 it, and construct research propositions.

The paper concludes with a discussion and suggestions for future research. DEFINITION OF DIGITAL MARKETING COMMUNICATION The use of digital channels to strengthen customer loyalty has received surprisingly little attention, despite the obvious opportunities for using these channels to keep in ouch and serve customers cost-effectively. It seems like the concept of “digital marketing” has been used more operationally, while the theoretical understanding and comprehensive models of how and why to use different digital channels are still developing.

Despite the growing use of CIT in marketing, there are few definitions of digital marketing. Urban (2004, 2) suggests that “Digital marketing uses the Internet and information technology to extend and improve traditional marketing functions. ” This is a broad definition, concerning all of the traditional 4 AS, and both customer acquisition and retention. We also acknowledge that terms like “interactive marketing,” “one-to-one marketing,” and “e-marketing” are close to digital marketing, but neither are they defined very precisely.

Civilly, Milled and Marcello (2001, 26) have defined e-marketing as “using the Internet and other interactive technologies to create and mediate dialogue between the firm and identified customers. ” They also consider marketing as a subset of e-commerce. In their view, more than creating discrete transactions, marketing is focused on managing continuous IT-enabled legislations with customers by creating dialogue and interactivity. In this paper we focus mainly on the communication function of digital marketing, and how it helps to enhance the loyalty of existing customers.

By “brand communication” we offer to communication between the brand and customers. This can include advertising, direct marketing, newsletters, or consumer’s activity 8 in a brand community. This complies the view that the process of building brands and customer relationships is much more than traditional media advertising of (see e. G. Asker and Schematically 2000, 42; Duncan and Minority 1998). The main focus in our model is on how brand communication affects customer loyalty. Two main factors in brand communication that are expected to affect customer loyalty are frequency (e. G. How many brand messages) and content (e. . Promotional or relational).

The main outcome, customer loyalty is divided into behavioral (e. G. Purchases) and attitudinal loyalty (e. G. Brand attitudes). For true customer loyalty to exist, a pattern of repeat purchase must be accompanied by a positive attitude (see Jojoba and Chestnut 1978). This distinguishes it from spurious loyalty, where only behavioral loyalty is detected with low relative attitudes (Dick and Bass 1994). We acknowledge that different elements of DAM can influence both types of loyalty. Brand communication can also be personalized. For example, customer profiles or references can be used to create customized message content for different segments or individual customers, sent via their preferred channels.

This should increase the value of communication to the customer. We have identified content, timing, and channels to be the personalized elements. Furthermore, brand contacts can be interactive; customers can search for information, make inquiries, give feedback and engage in various other activities with marketers or other customers. This can likewise have positive effect on customer loyalty. We have divided interactivity into functions (e. G. Web contact form), processes (e. G. That messages are contingent upon previous messages), perceptions (how customers perceive interactivity), and time spent with a brand (e. G. Playing games on brand’s website).

The effects of brand communication are constructed in customers’ minds through information processing, leading to perceived value and commitment. Finally, the effects of brand communication on customer loyalty can be detected from behavior and attitudes: e. G. Purchases, website visits, brand attitudes, and satisfaction. There are also mediating factors that affect how the loyalty effects of DAM are rated. For instance, a message received in a specific situation can be perceived as more valuable. One example to demonstrate the model is General Motor’s internet-based owner center My Smiling (www. Mingling. Com), which offers customers a single location to manage all postprocessor needs.

With the use of this information and service portal, customer-brand communication and interactivity are increased because customers are able to visit the website anytime, anywhere – more often than stores. This way, the frequency of brand communication is increased, with the positive moderating role of interactivity. Customers also get different types of value from services like email service reminders, maintenance tips, seasonal safety tips, and special privileges and offers. GM also provides personalized information to customers. For example, they can check the current resale value estimate of their own car and determine the optimal time for selling it, which brings economic value. This can also lead to a shorter buying or trading cycle for cars.

When customers get used to visiting the website regularly they may become emotionally attached to it, which builds commitment. Overall, customers’ increased brand contacts by using My Smiling service possibly strengthen Gem’s customer relationships with more sales, and enhanced attitudinal and behavioral loyalty. Next we examine in more detail the components of the model and theories behind it, and construct research propositions. We first discuss the effects of regular brand communication on customers, and then examine the additional effects of personalization and interactivity, and finally examine how to measure the outcomes of DAM on customer loyalty. 3. 1 Regular Brand Communication – Benefits of Being in Touch with Customers