MASTER'S THESIS
Attracting Customers Online
Effectiveness of Online Marketing Tools
Abdulkadir Efendioglu Fabiola Igna
Master of Arts, Master programme Electronic Commerce
Luleå University of Technology
Department of Business, Administration, Technology and Social Sciences
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Abstract
Recent developments on internet have created new possibilities of doing business and communicating with customers. And these technology developments have led to the foundation of e-commerce. E- commerce sales kept growing in the recent years and it has been foreseen by researchers that this growth will continue even more in the next years.
Consumer behavior online has changed as well and online users have become all-powerful, due to large numbers and promiscuous – consumers visit a lot of websites, but purchase from just a few. Also, the new social consumer uses the internet to be connected and receive information.
As a result, internet became a new intermediary between companies and their customers. It is already acknowledged as an important marketing communication channel competing with the traditional ones, such as TV, Magazines, and Radio. Internet provides different ways of online communications with different communication tools that need a better judgment of their effect on consumer communication.
The purpose of our thesis is to provide a better understanding on the effectiveness of each online marketing communication tools. In order to reach the purpose of this study our conceptual framework is designed based on earlier studies. A mix of qualitative and quantitative method and case study was chosen. In order to collect data face-to-face semi-structured interviews are held with sixteen students of Luleå University of Technology.
The findings of this study showed that customers are conscious about online marketing communication activities and efficiency of the online marketing communication tools are effected by the attributes towards this tools. These tools can be successful at leading for positive outcomes and attracting new visitors to the website if adopted correctly. We have discovered that „entertaining‟ and „trustworthy‟ are the most important attributes in online communication and will make any B2C communication successful.
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Preface
Firstly, we would like to thank our supervisor Håkan Perzon at Luleå University of Technology for all his support and guidance during the writing of our thesis. Secondly, we would like to thank the students of Luleå University of Technology, who participated in our interviews, for their sacrificed time and pertinent answers.
On a personal level, I would like to thank my Mum, Dad and Sisters for their love and continual support throughout my life. I would also like to thank the Swedish Institute for supporting my studies here in Sweden.
- Abdulkadir EFENDIOGLU On a personal level, I would like to thank first of all my mom for the financial and moral support to finish my education. Second, I would like to thank my friends for their advice and thank my boyfriend for encouragement to go on. Last, but not least, I dedicate my work to my father.
- Fabiola C. IGNA
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Table ofContents
List of Figures ... i
List of Tables ... ii
1. Introduction ... 1
1.1. Background ... 1
1.1.1. Development of the Internet and E-commerce ... 1
1.1.2. Online Marketing ... 1
1.1.3. Online Customers ... 2
1.1.4. Effectiveness ... 3
1.2. Problem Discussion ... 3
1.3. Research Problem... 4
2. Literature Overview ... 6
2.1. E-Commerce and B2C ... 6
2.2. Online Marketing ... 6
2.3. Online Marketing Communications ... 7
2.3.1. Search Engine Marketing ... 7
2.3.2. Online PR ... 8
2.3.3. Online partnership... 9
2.3.4. Interactive Ads ... 10
2.3.5. Opt in e-mail ... 10
2.3.6. Viral Marketing ... 11
2.4. Online Customer... 11
2.5. Effectiveness in communication... 12
3. Frame of Reference ... 14
3.1. Conceptual Framework ... 14
3.2. Conceptual Definitions ... 15
4. Methodology ... 17
4.1. Research Purpose ... 17
4.2. Research Approach ... 17
4.3. Research Strategy ... 18
4.4. Sample Selection ... 19
4.5. Data Collection ... 19
4.6. Data Analysis ... 20
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4.7. Research Quality; Validity and Reliability ... 21
5. Data Presentation ... 22
5.1. Online Behavior ... 22
5.2. Online Communication Experience ... 22
5.3. Online Marketing Communications ... 24
5.4. B2C Communication ... 32
6. Data Analysis ... 33
6.1. Cross Case Analysis ... 33
6.2. Within-Case Analysis ... 35
6.2.1. Search Engine Marketing ... 35
6.2.2. Online PR ... 35
6.2.3. Online Partnership ... 36
6.2.4. Online Ads... 36
6.2.5. E-Mail Marketing ... 37
6.2.6. Viral Marketing ... 37
7. Conclusion, Further Implications ... 38
7.1. Conclusion ... 38
7.2. Further Implications ... 39
References ... 41
Appendix A - Questionnaire... 44
Appendix B – Findings of the Interview Part 3 ... 59
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List of Figures
Figure 2-1 Digital marketing framework and levers ... 13
Figure 3-1 Conceptual Online Marketing Communication Framework to Attract visitors... 14
Figure 5-1 Results from third part of the interview questionnaire - Easy to reject ... 24
Figure 5-2 Results from third part of the interview questionnaire - Enjoyable ... 25
Figure 5-3 Results from third part of the interview questionnaire - Trustworthy... 25
Figure 5-4 Results from third part of the interview questionnaire - Informative ... 26
Figure 5-5 Results from third part of the interview questionnaire - Convenient ... 26
Figure 5-6 Results from third part of the interview questionnaire - Acceptable ... 27
Figure 5-7 Results from third part of the interview questionnaire - Entertaining... 28
Figure 5-8 Results from third part of the interview questionnaire - Reliable ... 28
Figure 5-9 Results from third part of the interview questionnaire - Appropriate ... 29
Figure 5-10 Results from third part of the interview questionnaire - Objectionable ... 29
Figure 5-11 Results from third part of the interview questionnaire - Annoying ... 30
Figure 5-12 Results from third part of the interview questionnaire - Time Consuming ... 30
Figure 5-13 Results from third part of the interview questionnaire - Difficult to Ignore... 31
Figure 5-14 Results from third part of the interview questionnaire - Disruptive ... 31
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List of Tables
Table 3-1 Conceptual Descriptions of Attributes for RQ1 ... 15
Table 3-2 Conceptual Definitions of Online Marketing communications for RQ2 ... 16
Table 4-1 Relevant Situations for Different Research Strategies ... 18
Table 4-2 Use of differenet types of interview in each of the main research categories... 20
Table 5-1 Results from the second part of the interview questionnaire ... 23
Table 5-2 Top 5 attributes of the interview results ... 24
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1. Introduction
The present research paper is looking into effectiveness of online marketing communication tools on attracting visitor to the B2C website. In this section, a background on internet, e-commerce, online marketing and online customers is provided in order to give the reader an introduction.
1.1. Background
1.1.1. Development of the Internet and E-commerce
According to Internet World Stats1, total number of internet users reached to approximately 2 billion, which equals 28.7% penetration rate of world population. Today, the internet has become an important part of our daily routines. We use internet to make shopping, to socialize, to access information, for entertainment or many other purposes.
These developments have also brought changes in the way of doing business and led to the foundation of electronic commerce. Chaffey (2006) defines e-commerce as “both financial and informational electronically mediated transactions between an organization and any third party it deals with”. By the nature of business transactions, e-commerce is classified into business-to-business (B2B), business-to- consumer (B2C), consumer-to-consumer (C2C), consumer-to-business (C2B), and intra-organizational e- commerce (Dou and Chou, 2002) B2C, the focus of our research, is defined by Chaffey (2006) as,
“commercial transactions between an organization and consumers”.
E-commerce took the attention of companies and in the past years many companies were present online and made investments on e-commerce. In the same time, advancements in information and communication technologies also enabled customers to use internet wherever and whenever they want. E- commerce easily got accepted by users because of latest developments on internet and internet enabled devices such as mobile phone, computers, and tablet computers. Oppenheim (2006) states that one of the main reasons for the growth of B2C e-commerce is increasing number of internet users. And also there are other effects that shouldn‟t be underestimated such as e-commerce made it easy to shop and convenient to find more information about products.
All of these factors led to growth on e-commerce transactions in recent years and it is foreseen that the development will continue in the next year. According to research done by eMarketer2, US retail e- commerce sales reached to $144.1 billion in 2009, and with an increase of 14,8% it has reached to 165.4 billion in 2010 and it is been predicted to reach $188,1 billion in 2011 and $209.3 billion in 2012.
1.1.2. Online Marketing
Besides, being a new platform for buying and selling, internet has also become a new intermediary for companies to promote their businesses. Because of its characteristics and the high numbers of users, internet has become as powerful as traditional communication channels, such as TV, magazine, and radio.
There is no common term to describe marketing through online medium and terms such as hypermedia marketing, digital marketing, online marketing and e-marketing, are used by different researchers
1 http://www.internetworldstats.com/stats.htm
2 http://www.emarketer.com/Reports/All/Emarketer_2000770.aspx
2 (Dholakia, 2005). The term “online marketing” will be used in our research. Elley and Tilley (2009) described online marketing as online communication activity which can be in different forms and can include different online techniques, such as Search Engine Marketing, online partnership, social media, online advertising, email marketing. These online marketing techniques have become vital communication tools for the marketing department of a company to promote its websites, services and products in the online environment. Ab Hamid (2008) states that, internet offers many opportunities for companies and it can be a useful platform for their marketing activities, such as to spread information, attract new customers, retain existing ones and even to improve relationship with existing customers by online customer relationship management.
Today, most of the companies adopted internet as a part of their marketing communications in their marketing strategies. According to Adegoke (2004 cited in Jensen, 2008) “online marketing communications has grown to be an important part of a company‟s promotional mix”. This view is also motivated by Shankar and Batra (2009) and they state that companies are using online medium as a new marketing communication channel and marketing through internet is growing rapidly.
1.1.3. Online Customers
The Internet is no longer a novelty in the minds of today‟s population as it is the availability of having internet connection. In fact, the Internet and digital information have taken over many aspects of our lives from communication to information consumption, to new ways of doing business. It has reinvented our vocabulary and gave new meanings to words in cyberspace, for example surfing, visitors, hits or navigate (Nicholas and Dobrowolski, 2000). These changes in meaning can be discovered as well in the word
„user‟; it can mean a surfer or a visitor.
Now, in the 21th century, borders represented by gender, occupation and education in using or navigating the Internet and other digital mediums have been sponged away by habit, supported by changes in system technologies. So surfing the Internet, texting a mobile message or reading an online magazine is available to and even used by elderly, children or unemployed and technologies have become more mobile, real- time and interactive to support those behaviors (Nicholas et al., 2003).
By now, it is a common knowledge that consumers of all ages shop online, but as Silverman (2000 cited in Seock and Norton 2008) point out, college students aged between 18 and 22 are the „hottest‟ market and can be the main customers to generate revenue and growth for online sales. They are interested in the latest products and developments, are very easily accepting and adopting new trends. The common trait of this age group is that although college students are avid information seekers though the internet, the conversion rate to online buyers is very low, only 4,9 % from general online visitors buy also the products online (Kerner, 2005 cited in Seock and Norton, 2008). With short attention spans and high number of choices, marketing communication has to be more efficient.
Internet World Stats shows that, in 2010, 92,5% of Sweden‟s population was using the Internet, making it
„one of the most developed Internet and broadband markets in the EU‟, a so called „online nation‟3. All members of the age group of 15 to 24 year old are using the Internet on a daily basis with an average of 155 minutes online per day4, but it is only the 3rd biggest age group that is actually shopping online. 72%
3 http://www.internetworldstats.com/eu/se.htm
4 http://www.internetstatistik.se/content/2495-15-24-aringar-agnar-mest-tid-at-internet.html
3 of Swedish males aged 16 to 24 have purchased online in 2010, whereas 82% of the 25-34 female users have purchased in the last year5.
The trends in connectivity and being online also differ with age group. According to Internetstatistik.se, 15 to 24 year olds are more involved in communication through social media (66%), such as Facebook, Twitter, and YouTube rather than communication through e-mail (44%)6. This emphasizes even more the need of new insight into social commerce as Shop.org named it.
1.1.4. Effectiveness
“New technologies have changed the ways customers and companies relate to one another and „has challenged the traditional process of transactions and the way communications between consumers and companies are managed” (Ozuem et al., 2008). When evaluating these new technologies, it is important to consider the advantages and disadvantages of traditional and new channels as well as translating them into effectiveness, from a manager‟s point of view (Danaher and Rossiter, 2011). Companies are not using the whole potential of online marketing tools although they perceive them as effective (Teo, 2005).
However, measuring marketing effectiveness poses numerous challenges due to the “multitude of possible metrics for assessing effectiveness” (Gray, 2006 cited in Martin, 2011). Chaffey (2009) translates effectiveness as “doing the right thing‟ and from a practical point of view „producing the required outputs and outcomes”. Kierzkowski (1996) expresses five wanted outcomes from a marketer‟s point of view attract customers, engage customers, retain customers, learn about customers and relate to customers.
It is critical for companies to know; how do they attract customers to their website, engage them to turn into paying customers and also retain them to keep returning to your website. Chaffey (2009) states
“Online communications techniques used to achieve goals of brand awareness, familiarity and favorability and to influence purchase intent by encouraging users of digital media to visit a web site to engage with the brand or product and ultimately to purchase online or offline through traditional media channels such as by phone or in-store”.
As Teo (2005) has established in his research, effectiveness does not have to translate necessarily only into revenue, but it can be measured in building customer relationships, traffic on the company‟s website or another outcome that satisfies management. Our research will refer to the same five points outcome from Kierzkowski et al., (1996) and will explore the different ways customers reach companies via internet.
The problem arises into how to blend new social media and other new technologies into an effective online marketing strategy in order to obtain the wanted conversion from online visitors to online customers. What comes after building a Facebook company account, twittering about the new promotion and optimizing your website?
1.2. Problem Discussion
Today, companies realized the potential of e-commerce and most of them already started to get into this new business environment. Ščeulovs and Gaile-Sarkane (2010) state that, “E-commerce has now become
5 http://www.scb.se/Pages/TableAndChart____281500.aspx
6 http://www.internetstatistik.se/content/1435-stora-skillnader-i-internetanvandningen-mellan-olika- generationer.html
4 a key component of many companies in the daily running of their businesses”. Thus, the online marketing component of a company‟s marketing strategy has grown in importance; Baker (2007) states that, “In a short period of time, e-marketing has become a facet of marketing that cannot be ignored”. New developments on internet technologies enables new ways of marketing, communication, gathering customer opinions and experiences about products, services and firms, and also allows personalized one- to-one marketing (Li and Bernoff, 2008 cited in Mangold, 2009).
It has been already mentioned by the earlier researchers that internet is a new and important channel for companies to promote and strengthen their businesses. Andrews, et al. (2007 cited in Ab. Hamid, 2008) point out that “for firms the increased importance of Internet channels can be seen in its contribution to disseminating information, enhancing consumer value, improving consumer satisfaction, loyalty and retention as well as consumer perception which in turn leads to better profitability and expanded market share”. All of the above mentioned abilities of internet are making it a must for the companies to implement new online marketing plan for their marketing strategies.
Baker (2007) notes that, “marketers need to carefully assess the significance of e-marketing and assimilate it, as appropriate, into all aspects of marketing from strategy and planning to marketing research, objectives setting, buyer behavior, marketing communications and the marketing mix”. For these reasons we became interested in effectiveness of online marketing communication.
1.3. Research Problem
Given that the Internet has not only changed the way companies do business, but as well consumer‟s behavior to shop or to look for information, the matter of effectiveness of online tools arises. Online marketing tools need to be identified well by the companies and marketers should validate the economics of their promotional activities against their effectiveness (Kierzkowski et al., 1996).
Starting from an existing study on online marketing (Kierzkowski et al., 1996), online marketing effort consists of five processes: Attract, Engage, Retain, Learn, Relate and in our study, we have chosen to focus on the attracting side of the online marketing efforts which lead to bringing new customers to the websites. Chaffey (2009) states to attract customers and bring them to the companies‟ website there are six different online communication tools.
While searching for relevant cases, researches and articles we have discovered that companies are using internet as a marketing communication channel but that brings another challenge to them. Online marketing communications is a broad term and consist of many tools as mentioned earlier such as Search Engine Marketing, online PR and Viral Marketing. And there might be comparatively difference between each tool and some of them maybe more effective in some situation while others not. Thus, we started to search for earlier studies and we noticed that this has not been studied before especially from the user perspective. Therefore, we think that further research needs to be done in order to provide better understanding to the effectiveness of online marketing communications to attract new customers to company‟s B2C website.
The purpose of this research is to assess the effectiveness in attracting customers by using online marketing communication tools that‟s why we have developed the following research problem:
How effective are online marketing communication tools in attracting customers
5 In order to study this problem we will try to describe the online marketing communications from the users‟ point of view. And finally, we will focus on the comparison of each online marketing communication tools.
1. How online marketing communications can be described?
2. How online marketing communication tools can be described as a way of online marketing communication.
The limitation of this study is to focus only on the attracting effort of online marketing strategies. That‟s why the main focus of this research will be on the marketing communication efforts to bring new customers to company‟s B2C website. And, online marketing communication tools will be limited to the six tools listed by Chaffey (2009): Search Engine Marketing, Online PR, Online Partnerships, Interactive Ads, Opt in e-mail and Viral Marketing.
Our research revolves around the internet as a communication channel from companies to visitors and potential customers. From a company‟s point of view, the internet is used as marketing channel and companies expect to get return form their e-efforts, but there is little research that takes the customer‟s point of view. Starting from Danaher and Rossiter (2011), who have formulated attributes that describe and compare different communication channel, this research tries to describe the internet marketing tools from a customer point of view.
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2. Literature Overview
This section will present review of relevant literature relating to our research. We will identify the theoretical base on which our study will be built.
2.1. E-Commerce and B2C
According to Chaffey (2009) e-commerce defined as “all electronically mediated non-financial transactions and financial transactions between an organization and any third party it deals with”.
Internet enabled users to pay lower transaction costs and it provided an easy way of access on information and details; and internet provides more alternatives and more competitive prices about the products or services rather than traditional environment (Chun and Kim, 2005). Huang (2010) expresses that, internet has changed the way of business and created new marketplace where companies and customers come together and create communication with each other more efficiently. Similar to this view, Pries et al., (2006) states that internet enabled easy access to a global marketplace where information of products, prices and distribution are equal for all.
Chaffey (2009) states “Business-to-consumer (B2C) markets have made a significant contribution to the commercial development of the Internet encouraging wide-scale use of computer networks by a diverse and increasingly global range of consumers”.
2.2. Online Marketing
Development of internet led to new changes in businesses and created a new, interactive and social communication platform for companies to interact with customers. Shih and Hu (2008) states that, Internet is an important channel for companies and it must be used wisely by marketing departments to attract new customers and retain the existing ones. Nowadays, companies started to use the online medium as a new effective way of marketing communication. Bush et al., (2000) supports this view by stating “The astonishing growth of the Internet coupled with its unique capabilities has captured the attention of the marketing community”.
All these changes and developments brought up a new activity which is marketing through internet.
Chaffey et al., (2009) states that “E-marketing is focused on how a company and its brands use the web and other digital media such as e-mail and mobile media to interact with its audiences in order to meet its marketing goals”. In addition to this view, Shih and Hu (2008) states that if companies expects to get return from their e-commerce companies and online efforts, they must develop their marketing activities well to be able to reach new customers and to be able to keep current ones by providing good online customer service.
Kierzkowski et al., (1996) states that there are several digital marketing success factors for companies to succeed in the online market, these five factors are; attract users, engage users‟ interest and participation, retain users and ensure their return to an application, learn about their preferences, and, lastly, relate back to them to provide the sort of customized interactions. Similar to Kierzkowski et al., (1996), Chaffey (2009) states that there are three main operational processes of e-marketing: customer acquisition (attracting site visitor), conversion (engaging site visitors), and retention (encouraging the continued use of digital channels).
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2.3. Online Marketing Communications
Kierzkowski et al., (1996) expressed “the current clutter on the Internet virtually ensures that the „build it and they will come‟ model is insufficient to draw consumers, marketers need to actively attract users in the first place” online marketing is much more complicated and planned communication activity rather than just putting an online advertisement.
Companies may have great content, dynamic and attractive design on their website, but the customer may not be aware of that website because of wrong or inadequate online marketing. That‟s why companies must start their online marketing strategy by focusing on attracting visitors to the company‟s website in first hand. Similar to this view Chaffey (2009) states: “before an organization can acquire customers through the content on its site, it must, of course, develop marketing communication strategies to attract visitors to the website”.
Online marketing communications defined by Chaffey (2009) as “Online communications techniques used to achieve goals of brand awareness, familiarity and favourability and to influence purchase intent by encouraging users of digital media to visit a website to engage with the brand or product and ultimately to purchase online or offline through traditional media channels such as by phone or in-store”.
Marketing communications through the online medium started to take active role in marketing activities of companies. Shankar and Hollinger (2007) state “the role of online marketing communications in the marketing mix is constantly evolving.”
There are different online marketing communication tools for companies to adopt to promote and increase the visits of their websites. Chaffey (2009) lists those acquisition tools, which are Search marketing, Online PR, Online partnership, Interactive Ads, Opt in e-mail and Viral Marketing, under the operational process of online marketing. Now, we will take a closer look to each acquisition tools which are listed by Chaffey (Ibid).
2.3.1. Search Engine Marketing
According to Ho (2010), Search Engine Marketing aims to increase page ranking of a website to be seen in the top of the results and by doing so attracting new users and increasing the visits of the webpage.
Wu et al. (2005) expresses that searches are getting more important day by day and more than half of all visitors come from search engines. For these reasons search engines play vital intermediary role between companies that wants to be seen in the internet and their target users. Gefen and Straub (2000, cited in Dou, 2010) state “Online information search is a ubiquitous and critically important activity in e- commerce”. Skiera et al., (2010) states Search Engine Marketing is the most popular online advertising method among advertisers. Dou (2010) finds that search engines can be useful tool for e-commerce companies to create brand positioning in the virtual market.
According to Gruhl (2005) online information searching is an essential process of online buying and the most popular information access tool is the online searching for online buyers. Google is the most popular in the search engine choice of the users in the western countries when compared with the other popular engines such as Bing, and Yahoo! (Skiera et al., 2010).
There are two different types of Search Engine Marketing; Search Engine Optimization (SEO) and Pay per Click (PPC)
8 2.3.1.1. Search Engine Optimization (SEO)
Search engine optimization is a technical background process to leverage the visibility and the positioning of a website among the search results. Hernández et al., (2009) states that “SEO tool tries to capture users who are actively looking for information about a product related to the firm, which converts them into potential clients openly expressing their needs”.
Highest ranking in search engines can attract more visitors to the website. The ultimate goal of SEO is to bring more visitors to your website by improving the search engine ranking (Ledford, 2009). SEO is a great tool to create brand awareness and increase the website visits. Virtually, SEO is a must for every business to promote their website and they must be successful at implementing it (Odom, 2011).
2.3.1.2. Paid search Pay-per-click (PPC)
Pay-per-click enables companies to list their website in the first page of the search results. Chaffey (2009) defined PPC as “a company pays for text adverts to be displayed on the search engine results pages when a specific key phrase is entered by the search users”.
Companies can decide for which keywords or phrases their advertisement will appear and company will be charged for every click search engine users make on the advertised links.
Grzywaczewski et al., (2010) states that “Google‟s pay per click (PPC) AdWords model consists of allowing businesses to choose keywords and create adverts that relate to their site and bid (against competitors) how much per click their business is willing to spend in order to generate traffic direct to their site”.
2.3.2. Online PR
Online PR defined by Chaffey, (2006) as “maximizing favorable mentions of your company, brands, products or web sites on third-party web sites which are likely to be visited by your target audience”.
Ryan and Jones (2009) states that “online PR distils down to two key things: raising the online profile of your business, products and services by contributing positively to the online community; and managing your reputation by monitoring, assessing, responding to and influencing online conversations about you”.
According to Chaffey (2009) blogs, RSS, podcasting, link building, social networks and online communities can be categorized as Online PR activities.
2.3.2.1. Social media and online communities
“Social media is defined as a group of Internet-based applications such as blogs, social networking sites, content communities, collaborative projects, virtual game worlds and social worlds that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of user generated content” (Kaplan and Haenlein, 2010).
“„Social media‟ is the umbrella term for web-based software and services that allow users to come together online and exchange, discuss, communicate and participate in any form of social interaction”
(Ryan and Jones, 2009).
Social media helps companies to spread messages easily to millions of people. Frick (2010) states that,
“When you share content on social profiles and your network of friends in turn share it as well, the
9 potential for reaching huge numbers of people with little effort and in a small amount of time could be construed as a tangible business transaction, at least in terms of its marketing potential”.
Facebook, Twitter, YouTube, Flickr are the most known examples of social networks. Today, Facebook has more than 500 million active users7, and Twitter has more than 106 million users8. These networks are tools for companies to reach customers. Kaplan and Haenlein (2010) state that “each Social Media application usually attracts a certain group of people and firms should be active wherever their customers are present”.
2.3.2.2. Blogs, podcasting, and RSS
Scott (2010) states that many of the marketers and PR managers are using blogs to access the information what others say about their companies and large number of the people are using blogs for their marketing purposes in their marketing strategies.
“Organizations use blogs to measure what‟s going on with their stakeholders and to understand corporate reputation,” Glenn Fannick (cited in Scott, 2010).
Ryan (2009) express that companies also tries to encourage and persuade the blog writers to write about their brand and products and it is been seen that especially the high profile bloggers can increase the online traffic of the website, brand and helps to create an effective online profile.
Frick (2010) defines really simple syndication (RSS) as “an easy way to spread your content to many people across multiple locations, including social networks that support the format in its many flavors”.
He also stated that within the latest developments and increases on blog writings, RSS became very valuable tool for the marketers to reach many people.
2.3.3. Online partnership
Ryan (2009) states that online partnership refers to a win-win agreement between two or more parties for the desired outcomes. According to Chaffey (2009) online partnership is an important part of online marketing mix and can be managed through link building, affiliate marketing and sponsorship.
2.3.3.1. Affiliate marketing
Chaffey (2009) defines affiliate marketing as “a commission based arrangement where referring sites (publishers) receive a commission on sales or leads by merchants (retailers or other transactional sites)”.
Akçura (2010), “Affiliate marketing programs help firms to increase their reach and acquire other firms”
customers when the firms agree to refer their customers to the third parties‟ Chaffey (2009) states that affiliate marketing is one of the useful tools of online partnership to create website traffic.
According to Duffy (2005) affiliate marketing provides win-win opportunity for both websites and the publishers and it has a potential to be mainstream marketing tool for e-commerce companies in the next years if there will be enough publishers and affiliates.
7 http://www.facebook.com/press/info.php?statistics
8 http://www.time.com/time/business/article/0,8599,1982092,00.html
10 2.3.3.2. Sponsorship
Ryan and Whiteman (2000, cited in Chaffey and Smith, 2008) define online sponsorship as: “ the linking of a brand with related content or context for the purpose of creating brand awareness and strengthening brand appeal in a form that is clearly distinguishable from a banner, button or other standardized ad unit” . According to Schumann and Thorson (2007) similar to the traditional sponsorships, online sponsorships take the advantage of an event or activity and create traffic or maybe positive tendency towards the sponsor company‟s website.
2.3.4. Interactive Ads
“The Internet has become a proven medium for advertising and has become a viable alternative to traditional media such as television and billboards” Wang et al., (2002).
Chaffey (2009) states that display ads help websites to build a traffic and it is used to create brand awareness, familiarity, favourability and purchase intent. Interactive ads can be in graphical, text, or rich media forms such as banner, pop-up, pop-under ad, streaming media or text ads.
There is a going on discussion whether Online Ads are effective or ineffective. McCoy et al., (2007) states that recent advertisements through internet described as nonsensical, uninformative, forgettable, ineffective, and intrusive. Wang et al., (2002) states that online advertisements more suited for the goal oriented customers.
Chaffey (2009)expresses that many ads demands an interaction from the user such as rolling over the video to play or hear the sound, clicking on the ad to go to mentioned website, filling form or maybe playing a game.
2.3.5. Opt in e-mail
Merisavo and Raulas (2004) states “e-mail offers a promising tool to enhance brand loyalty as it helps marketers keep in touch with their customers on a regular basis at low cost.”
Opt in e-mail is a permission based e-mail communication which is widely used among e-commerce marketers. DuFrene et al., (2005) states that “A wide variety of e-commerce marketers are using permission-based e-mail communications to notify prospects of promotions and services, acquire new customers, increase sales, and, most importantly, develop and nurture an ongoing dialogue and relationship with their customers”. According to Martin (2003) e-mail marketing is popular because it is cheaper than traditional mail and it has faster response time from consumers.
According to Martin (2003) companies can create awareness and “generally simplify customer‟s life” i.e.
websites may full of content and opportunities for the customers but they may have not a time to visit their website everyday so companies can send permission based e-mails to inform them about the updates and opportunities they may have.
Ryan (2009) states that although spam mails are one of the most important problems of email marketing in the way of being irrelevant communication, emails can still be seen as beneficial and effective marketing tool which can provide real value for both customers and companies. Similar to this view the findings of Merisavo and Raulas (2004) show that; opt-in emails has positive effect in many ways and especially on
11 brand loyalty and he states that e-mails increase the visits of the website of the company even it motivates them to visit their retail stores and buy their product.
2.3.6. Viral Marketing
Viral Marketing defined by Chaffey and Smith (2008) as a tool which “harnesses the network effect of the Internet and can be effective in reaching a large number of people rapidly in the same way as a computer virus can affect many machines around the world”. Viral Marketing communications can be in form of a video clip, song, link, picture or text formats.
Cruz and Fill (2008) expresses that Viral Marketing transferred the form of Word of Mouth communication to the online environment by enabling people to share news, information or entertainment in the online network to another person. “With viral techniques, traffic is built either through using e-mail (virtual word-of-mouth) or real-world word-of-mouth to spread the message from one person to the next”
(Chaffey and Smith, 2008).
Viral Marketing has an important potential to reach many people online. Cruz and Fill (2008) states that people like to share their experiences, ideas, involvements regarding products and services for a variety of reasons. Frick (2010) expressed that if the content of the company is good enough to attract users to share it, social media website such as YouTube, Facebook, and Twitter could easily help companies to reach thousands or even millions of views in small amount of time.
2.4. Online Customer
Starting with the term of „end-user‟ which was pushed by scholars in the late 1970s to define the persons that would finally benefit from the usage of information, the growing number of users, we refer to tens of millions, in the coming 20 years after that have given birth to the term “consumers‟ which recognizes their economic power of purchase (Nicholas et al., 2003).
Nicholas and Dobrowolski (2000) argue the over-usage of the term ‟user‟ in reference to the Internet and introduce the new term of „player‟ to explain the interconnectivity between a person and today‟s interactive information systems. The term offers a new name for the information consumer and characterizes information seeking behavior as interactive, recreational, social and competitive with nuances depending on individual online engagement.
According to their following research in 2003, the digital player‟s characteristics are:
a) Enormous and unprecedented numbers; we have gotten used to see and speak of website traffic in millions.
b) All-powerful; power given by numbers, by huge choice possibilities and backed-up by governments.
c) Personal characteristics; they cover all age groups, education groups and gender. More than that, the research has revealed that the Internet is no longer dominated by male consumers, but is balanced spread thought general population that needs a new demographic profiling in consumer behavior.
12 Huge choice in information and sources is causing:
d) Promiscuous users – short attention spans and short visits; Nicholas et al., (2003) refers to users as
„bouncers‟.
e) Promiscuous behavior; consumers visit a lot of sites online, but purchase from just a few.
f) Untrusting; all electronic media is two-dimensional and the information provider can be everyone.
g) Unpredictable; for example in e-commerce, new brands as EasyJet, Amazon and new ways of delivery can give birth to world leaders in a very short time.
All these characteristics are obvious in a digital players‟ online behavior as pointed out by Nicholas and Dobrowolski (2000):
They don‟t like paying directly for information;
They do not stay long enough to notice all information, even less for advertising;
Online consumers bounce from website to another due to short attention spans, running against homepages they do not like or huge choice of websites;
Dependent on the search engine. More, they total delegate trust to the search engine, not questioning how and why search results are given.
Download and print data for later use;
They find surfing a leisure activity, as window-shopping offline;
They are more brand conscious, but less brand loyal.
This new generation of digital players or, more popular called, online consumers precedes what Rowlands et al., (2008) calls, the „Google generation‟: those born after 1993 that have no recollection of life before the web. They present all of the above characteristics, plus total dependency and trust in the search engine, no analytical skills for the information presented. They have a poor understanding of their information needs and are not more skilled then the previous generation in handling the information given to them.
Although untrusting and promiscuous(Nicholas et al., 2003), there is a new social consumer that is connecting daily via internet or other mobile devices to do business and get informed.
“They expect information to be available to them on demand and at the same time have the tools and the desire to share and socialize that information with those same trusted peers – whether they actually know them or not” (Ibid). Nicholas et al (Ibid) calls them transactional consumers that involve much more interaction and engagement from the company then just the ability to download a few pages.
To sum up, today‟s online customers are provided, even bombarded, with a lot of information and communication messages that has changed their online behavior into a promiscuous and demanding user that is all-powerful in his choice.
2.5. Effectiveness in communication
According to Lasswell (1948, cited in Danaher and Rossiter, 2011) communication has 4 main components: a source or initiator, a message, a channel of transition or media and a receiver. Effective communication is seen as the sender‟s ability to properly anticipate and transmit, through a certain media or channel, a message that mirrors receiver‟s needs. (Ibid)
13 Danaher and Rossiter (2011) put a lot of emphasis on the media that the message is transmitted through and the important role of that media in the communication effectiveness. To test channel and communication effectiveness they have established a list of 14 attributes that describe and measure channel effectiveness in communication: easy-to-reject, enjoyable, trustworthy, informative, convenient, acceptable, entertaining, reliable, appropriate, objectionable, annoying, time-consuming, difficult to ignore, disruptive.
Cho and Huh (2010) linked „enjoyable‟ and „entertaining together‟ and discovered the importance of these two attributes in the form of multimedia features that can increase effectiveness of customer interaction.
Seock and Norton (2007) divide attributes into direct, indirect, positive and negative attributes that can influence students‟ online purchase intentions. Positive attributes were linked directly to positive attitudes to purchase from B2C websites. „Fun to visit‟ was also mentioned as a big plus for favorite websites and
„utility‟ of a website.
They also connect intention of purchase directly to security and trustworthiness of websites and data presentation. But they argue an increase in positive meaning of this attribute to repeated purchase. Also Nicholas et al., (2003) point out that obtrusive advertising is a directly link to reduction in brand trustworthiness.
For marketing managers, the problem of effectiveness is more complicated as there are numerous ways to quantify data and the results can be as many as the possibilities, all with different meanings. Adam et al., (2009) showed that traditional marketing efforts (TME) and online marketing efforts (OME) are separate marketing performance elements and they need different tools of measurement. Even more, their results showed that OME are predicting marketing performance, while TME are predicting financial performance.
Traditional expressions of effectiveness refer to return of investment, which can be influenced by market orientation (Adam et al., 2009). Marketing performance can be expressed in non-financial results as attracting the consumer, engaging, retaining, learning and relating to the consumer (Kierzkowski et al., 1996).
Figure 2-1 Digital marketing framework and levers
Source: Adapted from Kierzkowski et al, (1996)
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3. Frame of Reference
Selected research and references are presented and explained in order to offer logic and deductible picture of the frame in with we will conduct our research. This section will help to a better understanding of the research questions we are putting and the model used to investigate the research problem.
3.1. Conceptual Framework
Kierzkowski et al., (1996) states that, companies must build a new model for online marketing to be successful in the new developing online environment and he developed new model which is called digital marketing framework. Digital marketing framework consists of five efforts which are followed by one after another. These efforts are attracting new customers, engaging attracted customers, retaining by being sure they are returning back to website, learning from attitudes and behaviors, and lastly relating by offering personalized service or products. Hence, our research question is focused on attracting new customers to the website we will take attracting as a targeted marketing effort in our study. Other marketing efforts will be excluded in our conceptual framework which are engage, retain, learn and relate.
Figure 3-1 Conceptual Online Marketing Communication Framework to Attract visitors
Source: Adopted from Kierzkowski et al., (1996) [1] and Chaffey (2009) [2]
Chaffey (2009) classifies online marketing communications, which are used to attract visitors, in six different tools in the operating process of online marketing. These six tools are: Search Engine Marketing, Online Partnership, Online PR, Interactive Ads, Opt-in Email, and Viral Marketing.
Figure 3-1 presents our modified framework adopted from the research of Kierzkowski et al., (1996) and Chaffey (2009). This framework presents our research flow. Firstly, we will try to describe internet as a marketing communication channel to attract new visitors. Secondly we will try to describe and assess each communication tool form the users‟ point of view.
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3.2. Conceptual Definitions
RQ1: How online marketing communications can be described?
To answer this question we have selected the research of Danaher and Rossiter (2011) where they listed fourteen attributes that have been tested on different types of offline and online communication channels.
And we will use the same list to be able to describe online marketing communications. The attributes have been extensively tested by the previous research (Danaher and Rossiter, 2011) and have been understood to have a positive or negative effect on the customer interpretation of different offline and online communication channels. By our own understanding and judgment, the attributes have been singled out and awarded a positive or negative perception on the internet as a B2C communication channel.
Table 3-1 Conceptual Descriptions of Attributes for RQ1
A tt ri bu te s
Attributes Description Perception Source
Reject Do not receive communication - Roach (2009) Enjoyable Pleasant to read and receive + Danaher and
Rossiter (2011)
Trustworthy True information + Roach (2009)
Informative „find out what I want to know‟ + Danaher and Rossiter (2011) Convenient Suits communication channel + Danaher and
Rossiter (2011) Acceptable Proper channel and media for
communication
+ Roach (2009)
Entertaining „fun to visit‟ + Seock and
Norton (2007) Reliable The correlation of a message
with a message just like it
+ Roach (2009)
Appropriate Suited communication message
- Danaher and Rossiter (2011) Objectionable Questionable communication - Danaher and
Rossiter (2011) Annoying Disturbing communication.
Time and message dimensions
- Danaher and Rossiter (2011) Time-consuming Cost of time. Relative
attribute.
- Danaher and Rossiter (2011) Ignore Refuse to acknowledge
communication
- Danaher and Rossiter (2011)
16 RQ2: How online marketing communication tools can be described as a way of online marketing communication.
In order to answer this research question, latest researches and books are reviewed and we tried to obtain list of online marketing tools which are used to attract customers to the website. We have selected the online acquisition tools list which has been presented by Chaffey (2009).
Table 3-2 Conceptual Definitions of Online Marketing communications for RQ2
A tt ra ct
Tools Conceptual Definitions Source
Search Engine Marketing “SEM is an internet marketing method that - increases the ranking of the website in search engine and brings more users and the
bandwidth”
Ho (2010)
“More than half of all visitors come from a search engine rather than from a direct link on another web page”
Evans (2007)
Online PR “Maximizing favorable mentions of your company, brands, products or web sites on third-party web sites which are likely to be visited by your target audience”
Chaffey (2006)
“Each Social Media application usually attracts a certain group of people and firms should be active wherever their customers are present”.
Kaplan (2010)
Online partnership affiliate marketing is one of the useful tools of online partnership to create website traffic
Chaffey (2009)
“Affiliate marketing programs help firms to increase their reach and acquire other firms‟
customers when the firms agree to refer their customers to the third parties”
Akçura (2010)
Interactive Ads “Display ads help websites to build traffic and it is used to create brand awareness,
familiarity, favourability and purchase intent.”
Chaffey (2009)
Opt in e-mail “A wide variety of e-commerce marketers are using permission based e-mail
communications to notify prospects of promotions and services, acquire new customers, increase sales, and, most
importantly, develop and nurture an ongoing dialogue and relationship with their
Customers”
DuFrene et al., (2005)
Viral Marketing Viral Marketing harnesses the network effect of the Internet and can be effective in
reaching a large number of people rapidly
Chaffey (2009)
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4. Methodology
This chapter presents the research design and methodology planned to be used in this study. Diverse alternatives for research approaches, designs and strategies are discussed, and the specific choices made in this research proposal are clarified.
4.1. Research Purpose
There are three different types of research purposes: exploratory, explanatory and descriptive. The purpose is chosen depended on the type of research questions and research interest.
“Descriptive study is designed to obtain data that describes the characteristics of the topic of interest in the research” (Hair et al., 2011). It is performed to describe situations and events. Descriptive researches aim to “portray an accurate profile of persons, events, or situation „and‟ there is an extensive need of previous knowledge of the situation to be research or described” (Robson, 2002). Descriptive purpose is used when research problem is well structured. Similar to this, Arbnor and Bjerke (2008) states that “The problem of a descriptive study is to come up with as detailed a map as possible of some fictive reality”.
Since, our thesis is more interested in finding out the effectiveness of the online marketing tools rather than making accurate descriptions we don‟t think descriptive study is appropriate for our study.
Robson (2002) states that explanatory study “seeks an explanation of a situation or problem, traditionally but not necessarily in the form of causal relationships”. Explanatory study is more interested in explaining relationship between variables through studying a situation or a problem (Saunders et al., 2009). Arbnor and Bjerke (2008) states “The problem of the explanatory or hypothesis-testing study is to explain the connections between causes and effects of some characteristics or events”.
Our study is more focused on attributes towards different marketing communication tools rather than finding and explaining causes of them. That‟s why we think our study is not suitable for our thesis.
Robson (2002) states exploratory studies aim “to find out what is happening; to seek new insights; to ask questions and to assess phenomena in a new light”. Exploratory study is valuable when trying to find out what is happening and Saunders et al., (2009) state “It is particularly useful if you wish to clarify your understanding of a problem, such as if you are unsure of the precise nature of the problem”. “The problem for the explorative study is to come up with a more precise statement of the problem, which can be brought forward in further efforts of creating knowledge” (Arbnor and Bjerke, 2008).
According to Kolb (2008) “companies should use exploratory research when a research question deals with finding information on consumer attitudes, opinions and beliefs”. Hence our study aims to find an insight on effectiveness of different marketing communication tools by asking question about attributes and we decided on exploratory research in our thesis. Regarding aspects of consumer behavior, our work can be regarded as explanatory, but we believe that the exploratory approach describes better this research.
4.2. Research Approach
There are two sub categories for research approaches. First category is deciding between deductive or inductive approach and the second category is deciding between qualitative or quantitative approach.
