MANG6198 Daniel Lurcock Contem porary Marketing Assignm ent 01131702

December 2011
To communicate effectively and efficiently, marketers have to go where the customers are and increasingly that is on-line. (Keller, 2009, p147) More and more of the population are coming online, as well as spending increasing amounts of time on the internet. 77% of all UK households are now connected to the internet, up from 73% last year, and around 80% of all adults use the internet. And this increase is true regardless of age, gender or income level (Office for National Statistics 2011a; Office for National Statistics 2011b; Pew Research Center 2011b; Ofcom 2011). There is growing thought that this presents new implications and opportunities for marketers. In order to fully explore the topic, the discussion has been split into related sub-topics as follows: Who are the Customers? Where are the Customers? Communicating effectively and efficiently. Implications for marketers.

Who are the Customers?

This question is fundamental to developing a businesss marketing strategy. Knowing your customers is vital for securing the sales revenue necessary for business survival and growth. The identity of the customer is not always straightforward to recognise. For example, the customer is in many instances not the purchaser, as is true for many childrens sectors and in the context of many corporate business operations. The first part of this topic therefore involves finding out who the customers are. Marketers can attempt to ascertain this by conducting surveys of purchasers: by talking to them in person; by telephone; by email; or increasingly by analysing the data from online surveys taken at the time of ordering over the internet. The usefulness of each approach will depend on the business sector, for example the internet survey approach might be useful to a large scale internet based business, whilst talking in person might be more helpful for a local florist.

The inevitable question may be asked as to whether online customers are desirable customers. After all, not all customers are profitable for all businesses. There are demographic differences in the types of people with access to an internet connection, in addition to how much time they spend online. For example, it has been suggested that low-income, less-educated people spend more time online. (Goldfarb & Prince 2007, Abstract) The reason for this has been suggested to be primarily due to opportunity cost of leisure time, with the crude implication that richer people have better (i.e. more expensive) things to do in their leisure time, such as perhaps gym or golf club membership, whilst the internet provides a more cost effective source of entertainment for lower income households.

Where are the Customers?

It is currently possible to purchase goods and services through a variety of methods including in person, over the phone, by mail order and of course through the internet. Businesses taking into account the location of the customer only at the time of purchase, are however only seeing a small part of a much larger picture. A customer purchasing a product over the phone, might have learnt about the product from an advertisement in a newspaper, or maybe through participation in an internet discussion forum. In 2010, 78% of American internet users looked for information online about a product or service they were thinking about buying (Pew Research Center 2011a). In the UK, 72% of internet users claim to use the internet for purchasing, with 37% doing so at least once per week (Ofcom 2011). In recent years, social networking has become an important part of internet usage, with 22% of UK internet time involved in this type of activity, visiting blogs, Facebook, Twitter and so on. Traditionally the younger generations have been leading this social networking revolution, but the older generations are now catching up (Ofcom 2011). Whilst growth is observed in internet use amongst all user groups, it should be noted that only 26% of those aged over 75 in the UK have an internet connection at home. This is an important statistic for marketers involved with customers in this sector to bear in mind. The average amount of time spent online in the UK has now risen around 100 minutes per day per adult, dependent slightly on user group. Figure 1 shows the average consumption of various communications services.
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250 Minutes per person per day 200 150 100 50

242 219 185 173

98

2005 2010

15 0 TV Radio

28

21

Internet at home

Internet in general

Figure 1. Average time spent per day using communications services (Ofcom 2011; Ofcom 2005)

Whilst internet use is increasing in both uptake and amount of time spent online, a 2007 survey of college students showed that much of their time was also spent listening to the radio and watching TV (C.B. Budden, Anthony, M.C. Budden & Jones 2007). Internet use at home is not necessarily mutually exclusive of consumption of other communications services, many people use the internet whilst watching TV or listening to the radio. All this shows that the traditional marketing channels are not yet obsolete. However, given the rapid growth observed in internet use, the effectiveness of traditional TV and radio marketing might be expected to be reduced in the future. There is an inherent tendency for certain products to be purchased in a physical shop. This tends to apply particularly to fashion articles such as clothes and jewellery. Indeed, it is not even possible to purchase some premium items (e.g. Rolex watches) over internet channels, and instead the customer must instead visit some reputable dealer. Notably, in such cases, the whole experience of purchasing the item adds value to the product itself. customers will often research the products online beforehand (Fielding 2011). With the development and adoption of Virtual Try-on technology, customers are able to visualise what they might look like wearing certain products. It is predicted that as this technology continues to improve, more and more people will use the internet for clothes shopping in place of visiting bricks-and-mortar clothes shops (Kim & Forsythe 2008). Use of the internet has also grown as more and more people are choosing to work remotely over commuting to a physical workplace. This applies particularly for those in management and
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Nevertheless,

senior business positions. For those that work remotely, some visits previously made to shops en route to or from the workplace are increasingly replaced by internet shopping. In addition, 61% of people now use online banking, whereas visiting the bank would previously have been a major reason for making a trip into town. When trips are made, many people are using the internet to plan their journeys. The use of mobile internet is also growing significantly amongst commuters (Mokhtarian, Handy & Salomon 1995; Lyons 2002; Ofcom 2011). What else are the customers doing? For many people, outdoor recreational activities are an important part of their lives. This is a trend which has been increasing over at least the last twenty years (Cordell, Green & Betz 2009). Increased use of the internet is believed to have supported this rise in outdoor recreation, as people are able to more easily obtain information on scenic walks, bike trails, fishing spots and so on, and find routes and modes of transport to take them there (Lyons 2002). Despite the observed increase in internet usage, there remain concerns by many users over security and privacy issues. This is particularly true when purchasing goods and services online. Horrigan (2008, p16) indeed observed that More people would shop online if they trusted the e-commerce environment more. The implication is that as the perceived privacy and safety of internet improves, usage will increase (Angwin 2011). The willingness of an individual to try out new technology is also an important factor in the acceptance of online shopping. The importance of these factors depend on the type of product or service on offer as well as the characteristics of the individual (Lian & Lin 2008).

Communicating effectively and efficiently

Effective communication is deemed to be that which provides maximum impact of the firms message to the intended recipient. Efficiency in this context refers to how much that communication cost the business financially. Some of the vast number of options open to modern firms in internet communication include providing websites, running email campaigns, interactive advertisement banners, sponsored ads with search engines, setting up and participating in blogs, posting videos and pictures, and setting up profiles on social network sites such as Facebook, Twitter and LinkedIn. The number of ways that a firm can have an internet presence seems to be ever increasing as new
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internet technologies and emergent ideas come to the fore (Kaplan & Haenlein 2010; Mangold & Faulds 2009). Whilst considerable costs should be expected to be associated with keeping abreast of internet communication technologies, and maintaining websites and social network profiles, accessing the same numbers of people with traditional forms of promotion such as TV advertising would in general be a much more costly exercise. Internet marketing in this respect is considered to be more efficient. Users are now able to communicate their experiences back to the firm and increasingly to other users by rating a product or service and/or by posting a comment or review for all and sundry to see. Research has suggested that around 30% of internet users have contributed in this way, and that such activity is relatively independent of age group (Horrigan 2008). With the growth of social networks, marketers are becoming increasingly able to communicate with very specific people groups that may be interested in their products or services. Conventional websites are also able to track a users internet activity in order to provide relevant advertisements tailored to that particular user. This selective targeting means that internet marketing has the potential to be highly effective. However, results are not always immediate or obvious, and marketing effectiveness can be difficult to measure. After all, a like on Facebook is not easy to equate with an increase in sales. The value of a significant internet presence is likely therefore to be highly dependent on product segment, as well as the value of branding in the promotional mix (Keller 2009).

Implications for marketers

The fact that internet access and use has been increasing in every user group is well established. It is also predicted that this will continue to be the case for some time. However, it is important to note that at this present time there are still sectors that the internet has not yet permeated to a significant degree, for example for those customers aged over 75. This should be an important consideration for those marketers that have an interest in such groups. The evidence that conventional TV and radio consumption in the home still trumps internet usage should lead marketers to use caution when abandoning traditional forms of marketing, at least for the time being. And yet the observed changes occurring in customer behaviour and location remain very real. It is the authors view that marketers need to increasingly prepare themselves for new ways of
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communicating and developing product offerings with this in mind. One of the most important considerations with the current internet trends is the control that firms might have over communication. A firms products or services attract opinions and reviews that can be freely exchanged between internet users, which could be equally beneficial or detrimental to the firm. In order to improve control marketers may wish to invest resources into maintaining participation in relevant blogs and internet discussions. It has also been suggested that firms may design unusual features into their products or advertising campaigns in order to spark positive discussions and thereby exposure within the internet based community (Mangold & Faulds 2009). It is in the above context that it is recommended that marketers critically and continually review their current practices. As an example, it may be advisable for certain marketers that use public transport poster facilities heavily for advertisements to move to a more internet based approach, given the increased use of mobile internet, and potential change in the number and types of people commuting.

Summary
Increased use of the internet is changing customer location and behaviour. Accordingly, modern marketers should be preparing to utilise internet based marketing methods in order to reach their customers. Nevertheless, traditional marketing channels are still popular and their continued use and/or abandonment should be considered with great care, with particular attention to who and where the customers really are.

References
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