Chapter 1: The consumer decision journey in the digital age
In this chapter, I will start by presenting the marketing mix and the characteristic of each componet. Then I will present how the consumer decision journey has changed, because of the influence of new technologies and Social Media, changing the interactions between brand and consumers. By comparing different models of purchase funnels, older approaches versus new theories and new models, it will help us better understand how these new interactions between the consumer the brand are creating new ways of promoting products and services. One of these new tools is online marketing, through Google Adwords, that uses the most popular search engine to show ads that are most relevant to what the user is looking for. I will also explain what exactly is a paid ad and how does the process work. Because Google is the main generator of paid ads and has his own system of coordinating how ads are displayed and to whom they are shown, I will gather most of my information from their own website.
In the past, marketing was mainly about one-way communication. The brands had marketing campaigns that targeted a broad category of people. They used television, radio and outdoor advertising to gain brand awareness and sell their products. That meant investing a lot of money in marketing and studies about their customers. Large brands and big companies had the edge, which provided them with a big advantage over the small companies that didn't have the resources to invest in marketing campaigns. The communication between brands and consumers was limited to only one direction (from the brand to the consumer) because it was difficult for brands to interact in a more direct way with the consumer and to reach consumers worldwide.
1.1. Marketing Mix
At the begging of academic research into marketing, Neil H. Borden, professor o marketing at the Harvard Business School, introduced a essential idea to marketing academia with his theoretical concept of the “marketing mix” in which he described marketers as being managers of a mix of marketing “procedures and policies”, a “mixer of ingredients”, a term he coined from work by another Harvard professor, James Culliton (Chai Lee Goi, 2009, p.1-15). Borden argued that in this context, in implementing the marketing philosophy or concept, a marketer managed a “marketing mix” of internal operations, all of which would be subject to external forces (Borden, 1964, p.2).
Borden's original marketing mix had a set of twelve components: product planning; pricing; branding; means of distribution; personal selling; advertising; promotions; packaging; display; servicing; physical handling; and fact finding and analysis. Frey argues that marketing components should be divided into two parts: the offering (product, packaging, brand, price and service) and the methods and tools (distribution channels, personal selling, advertising, sales promotion and publicity) (Frey, 1961). McCarthy restrained Borden's idea further and defined the marketing mix as a combination of all of the elements that a marketing manager has to satisfy the target market. He regrouped Borden's 12 elements to four elements or 4Ps: product, price, promotion and place at a marketing manger's command to satisfy the target market (McCarthy, 1964).
The 4Ps delimits four distinct, well-defined and independent management processes. Although many physical businesses make a substantial effort to deal with the 4P in an integrated manner, it's hard not to divide the implementation of the P policies between various departments and persons within the organization. That's way the development of marketing mix has received considerable academic and industry attention. Many modifications to the 4Ps framework have been proposed, the most concerted criticism has come from the services marketing area (Rafiq and Ahmed, 1995, p.4-15).
The concept of 4Ps has been criticized as being a production-oriented definition of marketing, and not a customer-oriented (Popovic, 2006, p. 260-276). It's referred to as a marketing management perspective. Lauterborn claims that each of these variables should also be seen from a consumer's perspective. This transformation is accomplished by converting product into customer solution, price into cost to the customer, place into convenience, and promotion into communication, or the 4C's (Lauterborn, 1990, p.26-61). Möller highlighted 3-4 key criticisms against the Marketing Mix framework (Möller, 2006, p.439-450):
• The Mix does not consider customer behavior but is internally oriented.
• The Mix regards customers as passive; it does not allow interaction and cannot capture relationships.
• The Mix is void of theoretical content; it works primarily as a simplistic device focusing the attention of management.
• The Mix does not offer help for personification of marketing activities.
• The mix does not take into consideration the unique elements of services marketing.
• Product is stated in the singular but most companies do not sell a product in isolation. Marketers sell product lines, or brands, all interconnected in the mind of the consumer
• The mix does not mention relationship building which has become a major marketing focus, or the experiences that consumers buy.
• The conceptualization of the mix has implied marketers are the central element. This is not the case. Marketing is meant to be ‘customer-focused management'.
Even, a study by Rafiq and Ahmed found that there is a high degree of dissatisfaction with the 4Ps, however, 4Ps is thought to be most relevant for introductory marketing and consumer marketing. Even number of criticisms on 4Ps, however, it has been extremely influential in informing the development of both marketing theory and practice. There is also too little reflection on the theoretical foundations of the normative advice found in abundance in the text books. Marketing mix was particularly useful in the early days of the marketing concept when physical products represented a larger portion of the economy. Today, with marketing more integrated into organizations and with a wider variety of products and markets, some authors have attempted to extend its usefulness by proposing a fifth P, such as packaging, people and process (Chai Lee Goi, 2009, p.1-15).
1.2. Consumer Purchase Journey
For many years, the “consumer purchase journey” has been known as the “marketing funnel” (see fig.1). The Purchase Funnel proposed by Lewis in 1903 illustrates how the purchase process can be summarized in several stages. Starting with the first step when a consumer finds out a new product or service (awareness) to the moment he decides to buy the product (purchase), (Lewis, 1903, p. 124-128). This model evolved during the last years, but the basis remained the same. First, consumers start at the wide end of the funnel (eyeballs) and have a number of potential brands in mind when they were interested by a product or a service. Then marketing is directed at the consumers while to reduce the number of brands in their mind. At the end consumers will purchase the product. The Funnel model best describes the behavior of consumers when there was no internet and it was easy frame the steps they were making towards buying a product. But because of the immense explosion of product choices and digital channels, the funnel concept fails at describing how the consumer decision journey looks like nowadays.
Fig.1 (From Point A to Purchase – How Consumer Behavior is Changing – Bozell. (n.d.). Retrieved January 3, 2016, from http://bozell.com/from-point-a-to-purchase-how-consumer-behavior-is-changing/)
Forrester proposes a new model approach of the Purchase Funnel and integrates the new technologies and social media platforms to the classic Elmo Lewis model (Steven Noble's Blog. (n.d.). Retrieved November 20, 2016, from http://blogs.forrester.com/steven_noble/10-10-28-its_time_to_bury_the_marketing_funnel). The model highlights the great influence of user-generated content (feedback, reviews, real pictures from the user, videos) on the final purchase decision of the customers. Another model that is more adapted to the present situation is the one from McKinsey (Court, Elzinga, Mulder and Vetvik, 2009, p. 1-11). He transforms the traditional funnel shape of the decision journey in a purchasing loop (see fig. 2) and also introduces the notion of the trigger (as the cause of which a potential customer starts to investigate the brand and, therefore, enter the purchase funnel).
Fig. 2 (n.d. Retrieved November 20, 2016, from http://blogs.forrester.com/steven_noble/10-10-28-its_time_to_bury_the_marketing_funnel)
Another different approach is the one by Mooney and Rollins, who developed the “Fish Model” (see fig. 3) and changed the model into a different shape (Mooney and Rollins, 2008,). The first part of the former funnel is now smaller at the beginning because consumers are targeted more personally thru information like age, gender, area of interest, even hobbies. Then consumers have at their disposal various possibilities to compare products with each other to, like visiting a store, read product reviews, view trends etcetera in order make an informed decision and find out if the product fits their need. This will lead to the actual buying and consumers choose to do this in various channels, i.e. retail stores, catalogues, mobile and/or websites. Afterwards the consumers face more possibilities in the after‐sales phase where they can share their experiences with the retailer or the product or undertake other activities such as registering an account or fill out a survey.
Fig. 3 (Mooney and Rollins, 2008,)
The authors emphasize the importance of supporting and facilitating the consumers' journey and retailers should keep in mind that consumer journeys are non‐linear, multi‐channel and dependent upon the creating, sharing and influencing behaviors of consumers.
Another recent research recognizes that the decision‐making process is a circular journey and distinguishes four different phases: initial consideration, active evaluation, closure and post purchase. Initial consideration is related to the concept where consumers have a few alternatives in their mind. Active evaluation is the process of researching potential purchases, where consumers add or subtract alternatives as they evaluate what they want. Closure refers to the moment of purchase where the consumer selects a brand. Finally, in the post purchase phase consumers can experience them. After purchasing a product, customers build up expectations that are based on experiences gained during the decision journey. Subsequently these experiences are used to inform the next decision journey. In the post purchase phase different types of loyalists can be distinguished. Consumers who not only stick with a brand, but also recommend it to other people are known as active loyalists. Others are known as passive loyalists who, whether from laziness or confusion caused by the array of choices, stay with a brand without being committed to it. Passive consumers are susceptive to messages from competitors who give them a reason to switch. The research also revealed the paradox of choice at play; consumers acknowledged that they started 8 with a few products in their consideration set because they were overwhelmed with all different kinds of options, but then expanded it later on because of the influence of their peers (Court, Elzinga, Mulder & Vetvik, 2009 p.1-11). So one of the retailers' priorities is to focus on the base of active loyalists and new marketing strategies are required. Mooney updated her thinking of the former consumer journey, the Fish Model, and highlighted five topics (Updating the Outdated Consumer Journey - Resource. (2012, July 20). Retrieved January 3, 2016, from http://www.resourceammirati.com/2012/07/updating-the-outdated-consumer-journey/). In the first phase of the consumer journey, consumers either search or discover. Of these ‘discovery' is the most complex because it is all about showing up in the right place and at the right time. When consumers start evaluating the different options in the second phase (on‐ and offline), they plunge themselves in information about product specifications and comparisons (immerse) and consult friends and family about the product or service (confer). The buying process seems as a simple step but this phase keeps on evolving with different delivery options and different supply chains (e.g. pick‐up in store, same‐day delivery, shipped from a store to the home etcetera). The fourth phase distinguishes the fact that consumers consume and influence. This phase makes a distinction whether the product is used and if the consumers enjoy the experience of using the product. The retailers have to connect with their consumers to find out this kind of information. Consumers co‐create the brand's experience and will recommend the product or service to others. This corresponds to the distinction of the active and passive loyalists made by Court.
Social media is one of the best channels to analysis customer's behavior since the online conversation between potential customers plays such an important role in the final buying decision. Findings of Gupta and Harris (Gupta and Harris, 2010, p.1041-1049) revealed that consumers do actively search the web for non-commercial bias opinions prior to making a purchase decision. Online consumer conversations influence purchase decisions in a variety of ways, which include reinforcing of product involvement. In summary, it is safe to say that social media have drastically changed the shopping experience, which calls for further research in this area. The first stage, consideration, refers to the very first contact of the customer with the product or brand, with or without the desire of purchase. Customers usually convey their interest through references or expressions about the advertising campaigns. In the evaluation phase, the customer already knows the product or brand and evaluates it, frequently with respect to other similar products or brands. In this step, buyers actively investigate the brand in comparison with its competitors (asking for opinions, formulating questions, consulting product reviews, etc.) and/or express their preference towards a specific brand or product. In the “buying” stage customers either explicitly conveys their decision to buy the product or make comments referring to the transaction involved when buying the item. Finally, the post-purchase experience phase (advocate and bond) refers to the moment when customers, having tried the product, criticize, recommend it or simply talk about their personal experience with it.
1.3. The Influence of social media on the Consumer Purchase Journey
When the World Wide Web (WWW) started to become popular, there was a new way for people to interact even if they were hundreds of kilometers away. Once social platforms like Facebook and Twitter started becoming popular and gathering users, brands started realizing the potential of having the chance to interact directly with the consumer and also consumers started searching for this kind of interaction so they could give feedback and reviews. From a marketing perspective, this has manifested itself primarily in two ways: 1) a drastic increase in the number of companies that use WWW to communicate with (potential) costumes, and (2) the rapid adoption of the WWW by broad consumer segments for different purposes, including pre-purchase information search and online shopping (Trifts and Häubl, 2000, p. 4-21). Besides the WWW, social media started to play a very important role in the decision of the consumer to buy something, because it allowed the consumer to have a direct way to communicate with the companies and they could be influenced by the way companies communicate. A good example is an award winning campaign “Marc Jacobs - Cast Me Marc” (Fashion 2.0 Awards. (n.d.). Retrieved November 20, 2016, from http://fashion20awards.com/), that had as goal recruiting people via their Instagram profile. Social casting also taps into the larger trend towards using ‘real' models in advertising right now, as brands start to realize the value of using models their customer can relate to. Retailers and luxury brands that have caught on in the last year include Banana Republic, Barneys, J.Crew, Aerie, Cole Haan and Lanvin.
Consumers now had the opportunity to give feedback and share their experience they had with a brand. Marketing based on word of mouth became, even more, important than before because the opinion and recommendation of one individual can reach hundreds even thousands of people through forums, blogs and social media platforms (Facebook, Twitter, YouTube, Instagram, Snapchat etc.). If in the past, after purchasing the relationship between the consumer and brand was mainly focused on the use of the product or service, now because of social media and online communities (blogs, groups, forums) there is a more complex way on how consumers engage with the brands after purchasing.
Rather than focusing their resources on traditional marketing campaigns, that only promote the product or the service and don't involve the consumer, now brands are trying to engage the consumer as much as possible. Involving the consumer in marketing campaigns became a new objective and also new criteria for evaluating a marketing campaign. Because of how easy information can travel, it's cheaper to make a marketing campaign that can have success. Unfortunately, there is no right way to make a viral campaign that will have granted success and shared by people for free. Money isn't always the answer, there are plenty of examples where campaigns had a big success although there weren't made with big budgets. The same is available the other way around. That's way now we can talk about the democratization of marketing. Small brands can have the chance to reach more people than before without spending much. Consumers can spread the message of the brand to other users, for free if the brand's campaign has the right approach. For example, the campaign “#LastSelfie” made by World Wildlife Fund (WWF) ((n.d.). Retrieved November 25, 2015, from http://webbyawards.com/winners/2015/advertising-media/campaign-categories/social-media campaigns/lastselfie/) that was promoted on Snapchat (a social platform that allows users to take pictures and share them with other for a couple of seconds only). The message of the campaign is that time is running out for endangered species, and illustrating that with pictures of animals that were despairing after a couple of second from the users screen. Before disappearing, the image asked for help by sharing, adopting an animal, or donating through SMS. After one week, 40,000 tweets hit 120 million twitter timelines meaning 50% of all active twitter users were exposed to it. With headlines in more than 6 languages, #LastSelfie raised global awareness and in just three days WWF reached their donation target for the entire month. ((n.d.). Retrieved November 25, 2015, from http://webbyawards.com/winners/2015/advertising-media/campaign-categories/social-media campaigns/lastselfie/)
Also, brands started relying on reviews and feedback, websites like Foursquare, TripAdvisor, Yelp are only some of the large centers where consumers can leave their reviews and feedback and can be accessed by other for free anytime. For example, TripAdvisor, founded in 2000 is one of the first websites with user-generated content. Today the site has more than 290 million reviews and opinions of travelers around the world and around 350 unique visitors per month (Fact Sheet - TripAdvisor. (n.d.). Retrieved November 25, 2015, from http://www.tripadvisor.com/PressCenter-c4-Fact_Sheet.html). The site has such a big influence that business owners have resorted to offering discounts and gifts to customers who promise to leave positive reviews on the site. Negative reviews are considered so detrimental to business that TripAdvisor has been sued repentantly by establishments that were unhappy with their ranking.
1.4. The role of Google Ads in the Consumer Decision Journey
Search engine marketing (SEM) is an activity that promotes a firm through search engines (Bing, Google, Yahoo) by “delivering relevant content in the search listings for searchers and encouraging them to click through to a destination site” (Chaffey, Ellis-Chadwick, Mayer, and Johnston, 2009). This is achieved by obtaining listings in upper positions for specific search terms that refer to the products and services of an advertiser. This targeting mechanism allows advertisers to send precise messages to consumers searching for specific information. Because SEM is a pull channel, it is more often used for sales than for branding objectives. Because of the vital role of search engines for Internet users, SEM has become one of the most important forms of online marketing, constituting almost half the European online ad spend in 2013 ((n.d.). Retrieved January 5, 2016, from http://www.iab-austria.at/wp-content/uploads/2013/08/IAB-Europe_AdEx-Benchmark-2013-slides_PUBLIC.pdf). It can be separated into two major techniques: SEA, which is often referred to as pay-per-click (PPC), sponsored search, or paid search, and search engine optimization (SEO). The primary difference between the two techniques is the section of the search engine result page in which the advertiser listing appears.
Firms use SEO to increase the position of their listings in the natural or organic search results which are generated by the search engine's proprietary raking algorithms. The ranking portrays the relevance of the match between the user's search query and the websites in the search engine's index. With SEO, advertisers try to optimize their sites so that they are perceived as more relevant by the ranking algorithms and consequently appear at higher positions (Kaushik, 2007). This is favorable for advertisers because they do not have to pay for traffic from organic search results. However, SEO is a hard task and needs to be performed on an ongoing basis. The results are difficult to predict and usually take months to manifest.
In contrast, SEA or PPC offers advertisers a more deterministic way to appear for desired search queries at high ranks on the search page. Because Google is the biggest search engine, their PPC service (Google AdWords) is the most popular and used by companies around the world. Here, firms can create textual advertising messages and place bids on relevant keywords. If a user's search query contains these keywords, the ad appears on the top or on the right-hand side of the organic search results. A fee is charged only when the user clicks on the ad and is forwarded to the advertiser's website. Cost-per-click and display position of the ad are determined in an auction, when several competitors bid on the same keyword((n.d.). Retrieved January 5, 2016, from https://support.google.com/adwords/answer/1704410?hl=en). Because it can be challenging for advertisers to identify an exhaustive list of all relevant keywords for a campaign, search engines offer broad and phrase matching options. Here, the keyword only needs to be related to the search query—and not match it exactly—to trigger the ad impression. These generic matching options can help advertisers increase the reach of their paid search campaign substantially and are often used in practice: according to Google. From a consumer perspective SEA or PPC. Another benefit of Google AdWords is the targeting system. Google design this system to only show relevant ads depending on what consumers are looking for. The “Quality Score” - an estimate of the quality of your ads, keywords, and landing page. Higher quality ads can lead to lower prices and better ad positions. – (Quality Score: Definition. (n.d.). Retrieved January 5, 2016, from https://support.google.com/adwords/answer/140351?hl=en) assures both the consumer and the companies that only relevant ads will show and the targeting is done correctly. Google Ads also help the consumer to find relevant products and services and. That's way they can used to target consumer that are more close to the end of the decision journey, and deep in to the purchase funnel. For example: someone that looks for “shoes” is at the begging of the purchase funnel and is looking for options and doesn't have in mind what kind of shoes he wants or what kind of brand. If he searches for “Nike sport shoes for men” already he know what brand, type and for whom he wants to buy the product, so he's in the “Consideration” process and he's closer to acquiring the product. If he searches for “Nike Air Zoom Pegasus reviews/forums/opinions”, then he has a product in mind and is looking for arguments, pros and cons to buy the product. Usually it's recommended to avoid showing ads to this kind of search queries because it's clear that the consumer is only looking for information and it's not looking to buy the product just yet. Finally, when the consumer is looking for “Nike Air Zoom Pegasus price/buy/store” it's clear that he wants to buy the product and is looking for stores and websites. This is the ideal moment to show an ad on the search engine, because the consumer is in the decision stage of the funnel and it's likely he will purchase the product.
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