e-Marketing

Applications of Information Technology and the Internet within Marketing

Cor Molenaar

• Publisher: Routledge
• Year: 2013
• eBook ISBN: 9781136649240
• Topic: Business
• Subtopic: Business General
• Index: Business

Without a doubt, new technologies, and notably the Internet, have had a profound and lasting impact on the marketing function. A paradigm shift has occurred which will forever change the way marketers and marketing managers work. This doesn't mean, however, that 'old' marketing tools are no longer relevant.

In this brand new textbook, Cor Molenaar summarizes classic concepts and current developments to create a new, integrated marketing model, in which all components are part of a customer-oriented approach. Molenaar highlights the influence of the application of IT and the Internet within marketing and reveals how this can affect the form, focus and business model of an organization.

Supplemented by practical examples throughout, e-Marketing is an essential read for all marketing and business administration students.

Part 1

Developments of marketing

An historical outline

Figure P1.1 Outline of the book

1 Marketing and strategy

2 Marketing as concept

3 Marketing as an activity

4 Marketing instruments

5 Direct marketing as a form of marketing

6 Marketing and the Internet

Marketing has been an important business function for decades. It helps to give form to the relationship with the market and the target groups, competitive advantages are realized and more insight is gained into the needs of potential customers. In the last few decades, however, market conditions have changed immensely. There is greater prosperity, society has become multicultural, the various age groups have their own distinctive behaviour and due to greater mobility shopping can now be done everywhere, far from home. What’s more, the application of information technology (IT) has also led to changes.

Since the 1980s IT has become important, initially through adding efficiency in the business processes, and later for efficiency in direct communications. Since the 1990s, however, IT has become integrated within marketing communication (telephone, Internet and databases), and it now contributes to greater insights into the purchasing behaviour of customers and the effectiveness of marketing activities. Under pressure from IT companies, specific systems have been installed in businesses that can support and initiate contacts with customers (CRM applications). As a result, IT has become essential within marketing. But marketing, too, has become an integral part of business processes and organization functions.

All these developments in markets and within businesses have changed the application of marketing as a strategy, vision and function. Marketing developed from the economic sciences, and within marketing there is a need to predict effects, make the results measurable and work with economic models. Within the sales paradigm, which is the original paradigm of marketing, activities can be controlled by the suppliers and marketing instruments are defined. But the effectiveness of the marketing efforts is not so easy to predict and the effects of the efforts not so easy to measure. As a result a model approach to marketing is only possible under certain circumstances, as will be shown later. It is human behaviour that is the cause of this. What’s more, the market and the market conditions are not constant or uniform either. Particularly in the last few decades the market and the market conditions have changed rapidly and markedly, in part as a result of:

• fragmentation of target groups through the individualization of demand;

• technological innovations in supply and a high level/degree of product differentiation;

• globalization, in the last decades strongly stimulated by the use of the Internet; and

• the greater mobility of customers and increased prosperity and leisure time.

It is no longer sufficient for marketing to focus on bringing about a transaction or realizing a competitive advantage. Through the application of e-marketing the focus of marketing will shift towards the building and maintenance of individual, direct relationships.

The changes of the last decades have proven to be an iterative process that has had a direct effect on customers and market circumstances. The influence of IT and recently the Internet has worked as a catalyst, but this is just the beginning. e-Marketing uses the technological possibilities of direct communication based on specific individual information (database). This will lead to another application of marketing instruments, marketing activities and the place of marketing within an organization.

1 Marketing and strategy

Marketing is the noun of the verb ‘to market’, which means bringing products and services to the market. It is a commercial discipline, giving form to the relationship with the market, particularly the relationship with customers, both current and potential. Marketing developed from the sales issues faced by businesses. In the early days of the Industrial Revolution mechanization enabled mass production and there was no longer a distinction between the various products. These products (initially), which were produced for an unknown customer, had to be ‘sold’ to that unknown customer. The origins of marketing can therefore be found in the 1930s when production became increasingly more important. During the Industrial Revolution factories were built in order to process raw materials (such as cotton in England) or to produce machines. Particularly in the first decades of the twentieth century, factories were set up for the manufacture of consumer goods. This production went hand in hand with a specialization of labour and an increasing prosperity.

1.1 The product concept

Initially, marketing was based on products and had a product orientation. The focus was aimed at the production process and physical products, not on the potential customers. With further mechanization (see later Fordism) and increasing prosperity as well as an increasing specialization of the workforce (in which one was not able to meet one’s entire needs independently), the demand for products increased, but so did the supply of uniform products (or identical products). This was an interplay that was yet further stimulated by the increase in transport possibilities (train and car), which increased the sales area. The relationship between customer and supplier, however, also became increasingly diffused (compared with customization). Intermediaries such as shopkeepers and wholesalers (the distribution chain) appeared on the scene, whereas prior to that there had been direct contact between consumer and producer (Figure 1.1). In this period (the early decades of the twentieth century) the emphasis was on expanding the production possibilities and improving the efficiency of production and distribution. In terms of marketing this is referred to as the ‘product concept’, and the emphasis lies in improving the quality of the product.

1.2 The sales concept

In the further development of mass production, the focus on the creation of sales also increased. The focus shifted from manufacturing a good-quality product to the sale of this product. We refer here to a ‘selling concept’, a sales-oriented philosophy. In this concept the emphasis is on the efficiency of the sales. It is not explicitly the wishes and desires of the customers that are central here; rather, that the product can be effectively manufactured, distributed and sold to an unidentified consumer. It was not until after 1950, when prosperity increased greatly, that the focus shifted towards the needs of the market to which the production and sales could be geared. In addition, increasingly more attention was given to the needs of the market, submarkets (target groups) and eventually also individuals. This concentrated focus on market needs was made possible by the development of increasingly better technologies that enabled the analysis and monitoring of this demand (market research and market analyses, but also later scanning).

Figure 1.1 Classical approach of the market

1.3 Changes in the market

Markets became increasingly more mature, with articulate customers who knew what they wanted. This resulted in a decrease of the initial growth of the market and the supplier having to focus increasingly on replacement demand and the specific needs of certain segments in the market.

Distribution is also an important factor in this shift in focus. As a result of improvements in the distribution network (rail, hauliers and motorways) it became increasingly easy to quickly send goods to other countries. Soon even more links arose in the distribution process, such as wholesalers, importers and dealers, who managed to efficiently reach a large market. The standardization of regulations through economic collaborations such as the ECSC, later the EEC and EU, stimulated international trade. This is actually the basis of the marketing concept, whereby ‘to market’ lies at its very heart, a focus of marketing on exchange and transactions. Three elements are important in this marketing approach:

1. An orientation towards the customer: the market or the target group. The wishes and desires of this group determine the supply and the exchange factors (marketing mix).

2. An integrated approach: combining the supply, the marketing and the organization. In fact all relevant functions, instruments and decisions need to be integrated in order to be able to approach customers effectively.

3. A pursuit of profit: The exchange transaction also has to be profitable.

1.4 Relationship focus

Eventually the focus of marketing did not stay on exchange but rather on the further evaluation of relationships. Particularly in the 1980s when direct marketing made its breakthrough as a communication discipline within marketing and in the 1990s when communication technology acquired a place within marketing (such as the telephone and databases), the focus of marketing activities started to be very much directed at communicating with individual market parties. The application of IT and later e-marketing were important driving forces behind this. This shift from unidentified relationships to identified relationships is essential, as this requires a strategic approach to marketing. There needs to be a database with contacts, customer details as well as a direct relationship and communication. The marketing function as a consequence could no longer be isolated within the marketing department, but IT, too, became important. In addition, many more reports were written and analyses carried out in order to determine the effectiveness of the marketing efforts. This led in the 1990s to the development of CRM, customer relationship management. At the same time the focus also increasingly shifted from the financial function to more profitable customers along with profitable markets and products (Figure 1.2).

Figure 1.2 Marketing focus and communication

Summary

• The focus of marketing shifted from having a sales focus, in which the realization of a transaction was the objective, to a relationship focus.

• Within the sales paradigm this is a shift from a transaction moment to an identified relationship.

• Realizing a transaction was still the objective, but because the relationship was important, continuity and trust were also important factors.

• It became crucial to know and communicate directly with customers.

2 Marketing as a concept

The concept of strategic marketing is important in a competitive market. It is fierce competition that leads to an organization having to always think about the strategy to follow, and the focus and relationship with market parties – the customers in particular. An organization has to not only identify changes in the market, but also interpret and respond to them. Th...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Contents
• List of figures
• List of tables
• List of boxes
• Preface
• Introduction
• Part 1 Developments of marketing An historical outline
• Part 2 Impact of information technology on marketing A buyer's perspective
• Part 3 Impact of the Internet on marketing From support to strategy
• Part 4 Internet strategy The customer in power
• Part 5 Marketing strategy in a dynamic world Company orientation
• Index