Marketing was the process which convinced humans to trade and the day humans started trading, marketing was there. Recent developments in the field of marketing have led to a renewed interest in digital. O’Connor (2001) stated that one of marketing’s challenges is the arrival of the digital age.
Become a digital business is not about having a great web site, setting up separate e-businesses, having next-generation software, or writing your workforce. It’s about using digital technology to become unique. For example, use digital technology to devise entirely new value propositions for customers and for the company’s own talent, to invent new methods of creating and capturing profits and ultimately to pursue the true goal of strategic differentiation (Slywotzky, et al., 2000).
Digital platform like social media where technology is empowering people to create, participate, and share content on the Web, while having meaningful conversations around events, places, people, news, brands, and products (Rajapat, 2008).
The digital technology is providing companies with opportunities to offer real time, non-location-specific services. It’s growing all the time, and more and more consumers are exploiting new technologies for shopping on the net instead of at the usual store.
Business conditions and people behaviour are fast changing as technology evolves with new age digital platforms and tools (Rajapat, 2008), so it’s time for new technologies such as social media and e-shopping adoption retailing business which will be discussed.
Social media
Global Communication Tools
In today’s world, our society no longer relies on traditional sources of information, such as the BBC and The Times. We are in the era of social media (Thevenot, 2007). Social media has become one of the global communication tools.
Digital media doesn’t have an entry barrier, so any individual can become a news creator, subject expert, journalist, initiator, and digital activist using blogs, micro-blogs, social sharing, and networking sites (Rajapat, 2008).
Blogging is one of the most increasingly popular social media, where people are engaged through being part of a conversation (Thevenot, 2007). Micro-blogging sites like Twitter share the breaking news faster than the traditional media channels, as more and more people are using it not only for live streaming of their personal events but most importantly as an information sharing medium and a collective knowledge sharing channel with other people across the world (Rajapat, 2008).
Social media offer new tools to build community although they aren’t a magic shortcut (Cole, 2009). For example, newspapers are in crisis because they defined their trade as the newspaper industry. Today’s readers don’t wait for timely news to arrive in their driveways. They have digital access on their computers and handheld phones (Cole, 2009).
The top corporate uses for social media include brand-building and customer service, indicating that they have an important role in a crisis. “Digital” crisis communications can be valuable to reassure customers, notify the media, or quickly get out your side of the story in an unfolding crisis (Bremner, 2009). Maybe it’s risky to be a pioneer, but in a rapidly changing world, it’s even riskier to be left behind (Cole, 2009).
Consumer Power
The growth of social media induce consumer to become digital activists, as many consumers move from being passive consumers of products and services to the active participation age to voice their feedback, be part of product related discussions, and look for dialogue about brands or products they currently use or need in future. Consumers can recommend to his group of friends products and services that he or she used. So, what really drive people to engage online is the peer-influence factor and an instant re-colonization for their individual digital activities (Rajapat, 2008).
Consumers are increasingly using the Web to research before making buying decisions, so the online reputation of your brand or product has a key role in influencing people’s purchase decisions (Rajapat, 2008). Social networks allow us to interact with co-creators and produce new insights. Community sites and blogs are not just media phenomena. They are new research modalities that can be utilised to measure and understand complex consumer decision making (Cooke, 2006). Consumers are more empowered than ever, and are turning to online content to make purchase decisions (Hill, 2010). Today, individual consumers have become the primary creators of content (TNS Report, 2008).David Frederick, Coty Beauty “Social media is the real trend in marketing. It’s giving consumers control of the marketing experience.”
The social media marketing facilitates dialogues and conversations with target users or current consumers to have close proximity, better understand the brand’s online position, product or service feedbacks, and create a good online reputation. The art of success in the social media for brands is listening and engaging with consumers (Rajapat, 2008). Brands seem to be returning to the old adage ‘the customer is always right’ by listening to customer complaints and are increasingly willing to have serious dialogues with customers to learn how to correct these problems. Tina Sharkey, Baby Center “A brand is not what a company says about its product. It’s what a friend tells a friend.” If your audience is commenting on your posts, interacting with your pages and blogging or re-posting your content, you know you are doing something right (Hill, 2010). Customers’ ability to communicate and collaborate with brand representatives via review sites, industry chat pages, and social media will enhance word-of-mouth marketing (Adamson, 2009).
Digital age gives us a new window into the consumer mindset: how consumers ‘tag’ their photos on Flickr.com; what videos they post on YouTube.com; their favourite websites on del.icio.us; what content they choose to post and rate on digg.com, or how they describe themselves and their favourite things in their MySpace profile. This new type of data allows us to go beyond the traditional models created using group discussions and cluster analysis, and look at the ways that the population is building its own world and how it is referencing it via the ‘folksonamy’ that it is using (Cooke, 2006).
It allow customers to connect with the company in a more direct manner than with a Web site, and to connect using an extension of a social media platform that the customers are using already (Brennan, 2010). Scott Wilder, Intuit “The younger generation is already using social media as a way to communicate with each other, a way to evaluate companies, a way to learn about companies. It’s increasingly accepted for users to express their opinions about a product.
In general, a blog as a social networking tool frequently provides a combination of a person’s personal life and the particular subject they would like to provide comments or information on (Thevenot, 2007).
Blogs can be a powerful source of ‘word of mouth’, while on the other hand can be the source of negative influence from unsatisfied customers (Thevenot, 2007).
In the future we had better learn to engage with the population, and begin to co-create data, so that we can add the consumer insights that our clients want, or we may become ‘blogging irrelevant’ (Cooke, 2006).
In conclusion, the industry is facing the needs to look at blogs in a more serious way. The publisher may need to consider the question
‘What strategies need to be taken to deal with this new form of customer communication’ (Thevenot, 2007)?
Security and Liability
Although social media has many advantages, it also has some debits recently. Web presence is often cloaked in anonymity. The Web can harbor vitriol that wasn’t tolerated in the traditional press. The Web also tends to segregate people. One study concluded that 96 percent of cyber readers follow only blogs they agree with. This self-selection of information bypasses editors trained in assessing the credibility of information. Opinion is routinely passed off as fact. (Cole, 2009)
A warning of the increasing danger of data attacks exploiting social media (Frade, 2008). Social networking sites such as Facebook will face more sophisticated threats as the number of users grows. The explosion of applications on Facebook and other services will be an ideal vector for cybercriminals, who will take advantage of friends trusting friends to click links they might otherwise treat cautiously.
Users often let down their guard when clicking hyperlinks sent from their friends, or when installing applications offered by well-known sites. Criminal toolkits are evolving rapidly and increasing the sophistication of attacks.
Sharing data and sensitive company information via Twitter, Facebook, and LinkedIn are the greatest threats seen to protecting proprietary and confidential information, social media provide a perfect platform for individuals who want to steal data. Users blindly distribute applications, making it easy to promulgate apps that have the hidden purpose of capturing credentials and data. Finally, it works. Wherever and whenever a trusted mainstream Web site distributes, attackers seek to abuse the trust relationship established between the site and its users (Security Director’s Report, 2010).
Online posts can reach thousands of consumers at a time, increasing an employer’s exposure to liability under the guidelines if consumers later claim they were misled by an employee’s comments into purchasing dangerous or defective products (Security Director’s Report, 2010).
Kym Spell, NYC & Company “It could become the entire way that we communicate or if it’s manipulated to such an extent that people no longer trust the content of the site, it could just go away.”
E-shopping
In the UK over 50% of internet users had shopped online by the end of 2004 and this is a trend predicated to continue to grow in terms of numbers of consumers and the amount of they spend (Allegra, 2005).
Advantages of E-shopping
Nowadays, more and more people are use internet to buy things instead of at a store. The potential benefits of the internet to business such as lower costs and prices, improved service quality and greater product variety.
Communicating with customers online is significantly cheaper than serving them via telephone or person to person. The internet also permits suppliers to make contact with customers without using an intermediary, further reducing their costs.
One of the few ways of gaining a competitive advantage is through being able to deliver a superior level of customer service. A key influencer of service quality is the speed of information interchange between the supplier and the customer. Therefore, the information interchange capability of the internet offers some interesting opportunities to be perceived as superior to other firms in the same market. In terms of the amount of space available to display goods, the average high-street retail shop is physically restricted. Hence, its customers may already have faced the inconvenience of having to travel to the retailer’s location, may encounter the frustration of finding that the shop does not carry the item they wish to purchase. Online retailers do not face the same space restrictions their bricks and mortar competitors. As a result, they can use their web site to offer a much greater variety of goods to potential customers (Jobber & Fahy 2009).
Critical Analysis of E-shopping
Online consumers are buying into a trading situation that is inherently laden with uncertainty, lack of cues to reinforce trusting relationships and risk. Risk and trust are multi-dimensional constructs and have been found to improve online sales effectiveness if perceived risk is reduced and trust established. Customers now expect that if they are prepared to provide detailed personal and financial information it will be stored securely (Chaffey, et al., 2006).
The digital age is also providing companies with a new and richer source of customer information with which they can target selective audiences. Today, many web sites will gathering significant amounts of customer data in return for free information or other services. This personal information is sold, for direct marketing. However, the fact that these increasingly rich sources of customer information can and are being collated into large customer databases is the source of much concern and debate.
Are consumers sufficiently well protected from companies that can abuse this information? Consumers are becoming increasingly concerned about the amount of information that is being gathered on them and how this information is used (O’Connor, et al., 2001).
Since the 1960s, consumers’ risk perceptions have been widely discussed in the literature and have been shown to affect all purchase decisions and consumer behavior Perceived risk significantly guides consumer behavior, because people wish to avoid making mistakes.
Compared to traditional shopping, e-commerce is perceived as more risky by consumers because it is less familiar to them. Furthermore, they cannot personally verify product’s or service’s quality before deciding on it nor control the safety of the personal of financial information submitted. And because the e-service provider is often unknown, its behavior or motives may be difficult to predict.
Trust Context
Trust is a cornerstone of e-commerce. The notion of trust has a long history, various approaches have been developed to foster trust building between business partners. The dynamic modes of e-commerce stemming from globalisation and the development of new technologies challenge the traditional trust relationship.
The absence of interpersonal physical proximity and the lack of overall control in virtual environments create the perception that business in electronic environment is inherently insecure and cannot be trusted.
In typical Business-to-Customer (B2C) e-marketing like eBay, for example, goods and services are traded between anonymous sellers and buyers. The basis of business fully depends on seller’s description. As buyers normally do not inspect the item to be traded, trading parties might be tempted to cheat. Lack of trust, however, is still the biggest impendent for the development of such e-market place. Problems such as disguised identities, misleading item descriptions, the ineffectiveness of e-market’s support to dispute resolution and complex cross-border issues seriously hamper the development of such e-markets.
Despite the considerable efforts in both business and technology aspects, lack of trust is still a major barrier for the development of e-commerce. This because trust in e-commerce involves very complex and dynamic issues, no study cannot address all key aspects of this phenomenon. Most of the studies only touch on a small subset of possible complexities. A recent investigation revealed that from 275 published articles only three were related to the topic of trust (Ngai and Wat, 2002). Although the research in this area has increased remarkable in the last few years, most of these studies are either derived from traditional trust building approaches or focusing on only technical issues. With trust search in e-commerce still being in its infancy, most of the current literature revolves around the role of trust and does not offer an insight as to how trust may actually be developed and maintained (Papadopoulou et al., 2001).
To providing a secure channel, customer service including the return of merchandise, and consummating the transaction in the absence of the physical product, there are other risks associated with the purchase decisions. With an understanding of these risks and the consumers’ perceptions of them, the e-marketer will be better able to identify and predict the consumers’ behavior and manage risk reduction and trust building marketing strategies.
This paper investigates how the risk and trust factor theories work together in an online environment as part of the five stage purchase process model.
The Risk and Trust Factors in Relation to the Consumer Buying DecisionProcess Model
In an online environment consumers tend to reduce risks by selecting an e-vendor they believe can be trusted or brands they are familiar with (Chen and He, 2003). Therefore the concepts of risk and trust are bound together. Usually if the customer is more aware of the possible risks, the lower the level of trust and higher the need to control the transaction (Olivero and Lunt, 2004). Internet vendors can counteract this by increasing the company’s integrity in the customers’ eyes (Lee and Turban, 2001). Internet usage, however, does reduce the existence of concerns about privacy as well as security issues, thus increasing the trust factor (Miyazaki and Fernandez, 2001).
How do the concepts of risk and trust relate to and integrate with the five-stage Consumer Purchasing Decision Process? Cases (2002) and Forsythe and Shi (2003) specify eight risk-dimensions specific to internet shopping that have been found from four different risk sources. The product itself poses a performance risk which is best described as disappointment that the product did not perform as well as the customer thought it would.
In conventional shopping, the disappointment might have been avoided by trying the product beforehand. The remote transaction involves risks associated with time (time may be wasted in contrast with conventional shopping), financial (the absolute cost may be higher than in conventional shopping) and delivery (the product may not arrive or may arrive late). Additional risks associated with the Internet include social (how friends and family might react), privacy (personal information is not secure) and payment (there might be financial consequences from sharing the credit card number). Lastly the reliability of the information contained in the website posses a source of risk. According to Cases’ (2002) results, social risk was the least concern among e-shoppers. Privacy, source, performance, and payment risks were considered as the most crucial forms of risk in electronic commerce. Privacy risks could emerge in any form of internet browsing without the browser’s knowledge, but when a customer makes the purchase themselves, the perceived risks are at their peak (as the customer is required to submit personal information) which would place the privacy risks at the Purchase Decision stage. Some websites require registration information to be submitted before browsing their catalogue. This spreads the privacy risks to the Information Search and Evaluation phases as well. In addition gathered personal information is stored so that even after the purchase is made, the privacy risks affect the Postpurchase stage as well. The source risks refer to the credibility of the information which naturally affects the Information
Search and Evaluation stages the most. In an online environment, performance risk exists because of the customer’s inability to test the product before purchasing it. Concerns about the product’s performance emerge when the product advances to the consideration set and these concerns are likely to grow steadily as the consumer approaches the final purchase decision. However, if the customer has had a chance to try the product at some point, or has a money-back guarantee, the concerns about the product’s performance should be reduced (Akaah and Korgaonkar, 1988). The same philosophy can be utilized when considering concerns about monetary loss (financial risks).
As the amount of trust towards a certain e-marketer affects how the customer perceives the risks associated with an online purchase from that e-vendor, and the amount of risk associated with online shopping affects the customer’s trust towards e-marketers in general, it is assumed that when one of these risks affects the purchase process, the other is affected as well. Thus the combination of these two affect the purchase process.
The different types of risks in combination with the trust factor affect on some level the entire purchase process, and therefore, these concepts must be studied in conjunction with the five-stage Consumer Purchase Decision process model. Figure 1 shows a realization of the model with the integration of the external factors of risk and trust.
The model proposes that the risk and trust factors play an important role in every stage of the buying process in spite of the fact that their effects ultimately culminate in the purchase decision stage.
Figure 1: The model with the integration of the external factors of risk and trust. Comegys et al., (2009)
The Retailing Business
The new future is unfolding now, retailing landscape will have transformed completely. Retail business will have to innovate continuously as an increasingly digital environment gives shoppers dramatic new choice. Shoppers will interact with retailers and suppliers more than ever before, with online capabilities and communities playing a bigger and bigger role in the relationship. (Lemmon, 2008)
Social network site won’t just be a consumer to consumer conversation as retailers and suppliers will tap into what is being said. Indeed, the process will being to resemble the mechanics of collaborative product development. Smart retailers and savvy suppliers will learn from what they hear shoppers talk about, and they’ll provide more of whatever makes their customers happy. They’ll learn more about the need of consumers. This new empowerment of the public will also have a major impact on the retail world. (Frade, 2008)
Shopping social network website: Shoppers share information about the hottest stores, designers, trends, and must-have products- all online. Retailers and suppliers will be able to monitor social networking sites to find out what consumers want and take early action to develop and stock those products. (TNS Report, 2008)
E-Retailing Oranisational Adoption
The impact of an increasing number of consumers and businesses accepting the Internet and other forms of digital media as a stable channel to market is an increase in customer expectations, which creates competitive pressures and challenges for e-retailers.
Due to advances such as speed and interactivity brought about by digital technologies and the extension of trading time, customer expectations of levels of service have risen significantly. Therefore organisations are required to adopt a more dynamic and flexible approach to dealing with these raised expectations.
For the e-retailers it is important to identify any performance gaps and develop strategies which help to close the gaps. For example, in the case of logistics, research has found that utilizing carriers that have higher levels of positive consumer awareness with appropriate online strategies can contribute to the consumer’s willingness to buy and overall satisfaction with the online buying experience. Therefore, development of strong awareness and brand image among consumers can prove to be a beneficial strategy for both the e-retailer and the carrier.
Strategic implications for retailers wishing to be successful online are far reaching and require a retailer to develop a carefully informed strategy, which is guided by a business model that can satisfy corporate objectives through the deriving value from corporate capabilities whilst effectively meeting the expectations of the online consumer. The target market and the product category can have a significant influence on success.
It is now widely acknowledged that there is a need for a company to have a coherent e-strategy underpinned by a clear vision of how it may take advantage of the Internet. An online retailer’s strategy is likely to be affected by the type of online format it adopts, the type of products and services it sells and the market segments it chooses to serve.
Two customers in the same segment are likely to have different tastes, attitudes and purchasing behavior. Advances in information technology have enabled marketers to gather large amounts of data on consumer behaviour and use that data to segment customers based on such variables as product usage, loyalty, purchasing patterns and benefits sought.
The increasing use of electronic point-of-sale information is providing companies with detailed information by individual customer. In the retailing industry, product purchasing information gathered through systems is combined with personal information that customers provide when they sign up for loyalty schemes, giving the retailers a deep understanding of how their customers buy products from their stores and how those purchasing patterns change over time.
Direct marketing can help win back that brand loyalty by keeping a particular product or service in the customer’s mind on a regular basis.
Not all customers are profitable. And those who are often only become so after the company has recouped the costs of recruiting them in the first place. Companies are beginning to understand the desirability of retaining customers and maintaining their royalty. Regular communication, via direct marketing, can help.
Application at DellPC Company
Dell computer corporation is the world’s largest direct seller of computer system. Today, nearly half of all Dell computer product are purchased via the internet. (Slywotzky, et al., 2000).
Dell has made excellent use of online applications to get consumer input about its products prior to launch (Adamson, 2009).
In the late 1990s, customer readiness to use the Web for buying had increased to the point where selling via the Internet was the logical next step – especially for a PC company. By definition, everyone on the Web was part of the target audience for Dell’s product. (Slywotzky, et al., 2000).
Dell’s transition to digital was not an overnight event. This transition to a hybrid business model is typical of smart organisations that are in the process of going digital. Dell drove the mix to evolve toward digital very, very quickly. The key step was the creation of Dell’s on-line configurator, a digital system for designing a customer’s own PC and one of the world’s first Choiceboards.
Its unique value proposition for customers includes fast response and high customization through its configurator system. It also includes ease of interaction, self-service (in numerous functions, form price checking to order-status checking to PC design), and the bility to provide corporate customers with extensive and accurate information about purchase patterns and usage.
Because of its direct connection to customers, Dell enjoyed real-time feedback about product offerings, service, and the competition. This feedback helped Dell avoid some of the more serious missteps of its competitors.
When faced with uncertainty and incomplete information, buying from Dell is a safe choice that the customer is unlikely to regret. It produced not only by Dell’s word-of-mouth reputation and history but also by the ease, speed, efficiency, and accuracy of Dell’s Choiceboard and other digital service. Turst is to expanding the customer relationship. Beyond the product customization offered by its PC configurator, Dell offers an additional layer of customization through its Premier Pages – customized Web pages that Dell has created for over 40,000 corporate clients. These pages, which are connected to the client’s intranet, permit client-authorized personnel to configure their own PC systems. Place order for equipment, and check the status of those orders electronically. The pages also provide direct access to Dell technical support and, when necessary, help from a dedicated account executive. It offers a powerful combination of sales, service, and technical support in digital form.
Conclusion
Despite the considerable efforts in both business and technology aspects, lack of trust is still a major barrier for the development in this digital age. Trust involves very complex and dynamic issues. Incorporation of the identified trust issues into development is an area that developers or managers need to consider for future developments and innovations. It should be well understood that although there is a broad and deep set of technology problems that need to be addressed, trust building needs a joint effort from social, business and technology aspects. To be successful, trust-related services must be developed from the three aspects and take account of existing infrastructure.