individual assignment how digital tools are changing marketing mix 4ps

To change the operating method, leadership,implementation process, and culture of the enterprise.Through digital transformation, businesses can reduce operating costs and reach customers

Name: Do Thu Giang

Student ID: HS170656

Ha Noi, 29 May 2023th

TABLE OF CONTENTS

1 Introduction

1.1 Overview

1.2 Definition of marketing

1.3 Definition of the marketing mix

2 How digital tools are changing the marketing mix (in detail)

1.1 Overview

In today's social era, almost everyone is no longer unfamiliar with the phrase "digitaltransformation" We all know that in the past 2-3 years, digital transformation has beenmentioned a lot in the mass media For Vietnam, this is the process of changing the businessmodel from traditional to digital Based on new technology applications (Big Data), Internet ofThings (IoT), cloud computing (Cloud)… To change the operating method, leadership,implementation process, and culture of the enterprise

Through digital transformation, businesses can reduce operating costs and reach customers in thelong run, management can report timely and optimize work productivity for employees increase work efficiency and business rankings also become higher

Along with digital transformation, the way of communication and marketing is also changingday by day In the period of strong development of information technology and the internet,small and medium-sized enterprises face many difficulties in competing with large corporationswhen they always follow the direction of traditional business and are at risk of being eliminatedfrom the industry Thus, relying on information technology and digital marketing is somethingeveryone has, has, and will do right now

Looking back at the process of media formation and development, starting with the firstadvertising medium such as TV, radio, flyers, newspapers, billboards, etc Now, businesses havemany ways to approach customers such as Websites, email, mobile messaging, or socialnetworks Many new marketing tools have appeared, which means higher accessibility tocustomers, stronger messaging, and increased interaction between Marketers and customers.Marketing must be based on the market base, in which markets and customer tastes changeconstantly Therefore, each different period has different forms of communication and at present,Marketing Online is the most optimal way to make you successful

Digital marketing is gradually replacing traditional marketing!

Online marketing is vital for a business today as the Internet is becoming one of the most usedtools More and more people are logging on to the web to perform their daily activities, including

global population On average, people spend 6 hours and 42 minutes online every day By 2021,

it is expected that 73% of all eCommerce sales will come from mobile devices.” Therefore,businesses need to be well-prepared to adapt to the changes brought about by digital devices

1.2 Definition of marketing

- Marketing refers to the processes and activities involved in creating, communicating,delivering, and exchanging offerings that are beneficial to customers, clients, partners, and thecommunity as a whole It necessitates comprehending the desires and requirements of customersand then producing and advertising commodities or services to fulfill those needs or wants, whilealso taking into account profitability and maintaining long-term relationships with customers

1.3 Definition of the marketing mix

- The marketing mix is a collection of controllable marketing tactics that a company employs toachieve its marketing goals in the target market It includes 4 primary components, known as the4Ps: product, price, promotion, and place By modifying and integrating these elements, amarketing plan can be developed that fits with the target market and customer needs

2 How digital tools are changing the marketing mix?

2.1 Product

Definition: A product can be defined as anything that satisfies a customer’s needs orwants It can be a physical item, a service, or even an idea, but it must possess uniquecharacteristics that make it appealing to consumers, whether they are tangible orintangible

How do digital tools change products? (In general):“The utilization of digital tools istransforming the process of product design, development, and promotion By leveragingdigital tools, businesses can produce personalized products that fulfill the uniquerequirements of their clients Digital tools such as 3D printing, computer-aided design(CAD), and virtual reality (VR) enable companies to construct prototypes and evaluateproducts before their actual production This approach helps to minimize expenses andoptimize productivity Moreover, digital marketing tools such as social media and email

product advertising.”

2.1.1 Customer Co-Creation

Definition: The concept of customer co-creation entails engaging customers in the stages

of product development, innovation, and customization This approach acknowledges thefact that customers have valuable perspectives and offers them the opportunity to take anactive role in designing products that are more aligned with their preferences andrequirements

Example: “Nike By You” program, which allows customers to design their own customNike shoes Customers can choose from a variety of colors, materials, and designs tocreate a unique pair of shoes that reflects their style This program not only allowscustomers to co-create their products but also provides Nike with valuable insights intocustomer preferences and trends

Characteristics:

o Customer co-creation is the contributions that are commonly submitted via anonline platform and frequently take the form of digital content

o 2 steps involved in the co creation process- :

First, contribution The company needs to encourage its clients to providecontributions

Second, selection It must select through a vast array of ideas, most ofwhich are not particularly useful, to identify a handful of feasiblecontributions

Issues:

Companies are confronted with the challenging duty of refusing customer proposals,which could potentially lead to negative feelings from their most devoted customers andpersuade their customers to share their ideas Many researchers have suggested that thereare 2 key ways to encourage customers to engage in the co-creation process: socialrecognition and financial incentives The majority of successful firms employ both types

of rewards, typically given to customers whose contributions have been chosen As anillustration, Threadless grants a portion of the profits from the sales of any merchandise

advantage of being recognized as a winner and having their name and design showcased

on the Threadless website

4 types of customer co-creation differ based on the level of authority that companies exertover the contribution and selection process: collaborating, co-designing, tinkering, andsubmitting

Collaborating: open contribution, customer-led, give firms the least

amount of control Customers collaborate with a company to improve aproduct For example, Nike's NikeiD platform allows customers tocustomize their shoes by selecting colors, materials, and other designelements

Tinkering: open contribution, firm-led Customers experiment with a

product to create new uses or features For example, Google's Androidoperating system is open source, which allows developers to tinker withthe code and create new apps or features

Submitting: fixed contribution, firm-led, give firms the greatest amount

of control Customers submit content to a company that is used inmarketing or advertising For example, Doritos' "Crash the Super Bowl"campaign invited customers to submit their commercials for the chance tohave them aired during the Super Bowl

company to design a new product or service For example, Procter &Gamble's Connect + Develop program invites customers to submit ideasfor new products or technologies that the company can develop.

The findings demonstrate that the utilization of design crowdsourcing has

a favorable influence on the sales of new products that lack customerappeal but does not impact the sales of products that are already popularwith customers Additionally, the study revealed that companies are moreinclined to employ design crowdsourcing for products that possess ahigher level of technological complexity In conclusion, this researchindicates that design crowdsourcing can serve as a useful instrument forbusinesses in specific circumstances, particularly for those offeringintricate technological products with minimal initial customer interest.Example: a company launching a logo design contest on a platform like99designs or DesignCrowd The company sets a prize amount anddesigners from around the world submit their logo designs The companythen selects the winning design and awards the prize to the designer Thisallows the company to receive a variety of design options from a largepool of designers, without having to hire a single designer or design firm

o “Consumers’ response to other consumers’ participation in new product

development” (Liljedal & Dahlen, 2018, Journal of Marketing Communications)

The focus of this research is to analyze the perception of customerstowards the involvement of customers in the process of ideation andselection of new products

The experiment involved 400 participants in Sweden who were asked toreact to scenarios involving customers giving or selecting ideas for a new

had a more favorable impression of the product and restaurant whencontributing ideas for an incongruent product (pizza), but had a morefavorable impression when selecting ideas for a congruent product(hamburger).

It is suggested by the study's findings that companies should seek input fromcustomers for new product ideas that are distinct from their current offerings but rely

on customers to choose ideas for products that are similar to what they alreadyprovide

First, the Rule of One: During the process of new productdevelopment, companies conduct thorough testing to ensure that theirconcepts and ideas are appealing to a wide range of customers.However, when customers offer their product ideas, they do notundergo this same rigorous process Consequently, many of these ideasare unique to the individual and may not have widespread appeal Forinstance, as someone who prefers tea over coffee, if Starbucks were toask for my input, I would suggest offering more tea and less coffee.However, this suggestion may not be practical as the majority ofStarbucks' customers prefer coffee Due to such personal preferences,only about one percent of customer contributions are deemed suitablefor implementation To make co-creation effective, companies mustincentivize customers to provide numerous ideas

Second, authenticity is critical: In the era of technology, authenticity

is gaining more significance, and clients are becoming more doubtfuland discerning of businesses Consequently, clients are more inclined

to offer their suggestions, time, and effort to companies that genuinelyrequire their assistance, rather than those who are solely seeking tobenefit commercially from their contributions As an illustration,Threadless can easily obtain T-shirt designs from its customersbecause its co-creation process is perceived as very genuine.Threadless was initially established to focus on co-creation, which is

would offer T-shirt ideas to a conventional manufacturer with asignificant number of internal designers.

Third, patches and badges People enjoy being rewarded for theirhard work, and customers who participate in co-creation are nodifferent Therefore, many successful co-creation projects not onlyoffer financial rewards but also provide visible symbols of recognitionsuch as patches and badges NASA, the US Space Agency, provides aunique patch to co-creators as recognition for their contributions.Surprisingly, this patch is a more effective motivator than a monetaryreward

Finally, don’t be a bad guy: As previously mentioned, customer creation can lead to the potential risk of alienating customers if theirideas are rejected To mitigate this risk, involving a wider customercommunity to assess, vote and choose these contributions can beeffective For instance, Dell, a computer manufacturer in the US, hasbeen soliciting customer ideas for product improvement through itsIdeaStorm initiative for several years This initiative heavily relies onthe customer community to evaluate the ideas, making it seem like therejected ideas came from the community rather than from Dell itself.This approach helps to reduce the negative impact of rejection andprevents Dell from being perceived as the antagonist

co-Conditions where you can apply the concept:

o Industries where a customer base is actively involved in the co-creation process

o Businesses that offer products that can be customized or personalized to thecustomer's wishes

o Companies are always willing and eager to listen to customer reviews and ideas

to improve product quality

2.1.2 Sharing economy

corporations employing staff and vending commodities to customers as it involves amethod of dispensing goods and services.

Example: Airbnb is a platform that allows people to rent out their homes or apartments

to travelers This platform has disrupted the traditional hotel industry by providing analternative option for travelers to find affordable and unique accommodations Hosts canearn extra income by renting out their unused space, while travelers can experience localculture by staying in a local's home Airbnb's sharing economy model has been successfuland has expanded to include experiences and restaurants, further promoting local tourismand economic growth

Issues: Due to its recent emergence, there are numerous inquiries that have yet to be

addressed regarding the sharing economy

o The profitability of the new business model is uncertain, as most sharingplatforms currently appear to be operating at a loss

o There is a limited understanding of how this emerging economy will affecttraditional businesses and how they should respond to potential threats

o The social impact of the sharing economy is a highly debated topic, with someviewing it as a positive force for the environment by optimizing existingresources, while others criticize the low wages and lack of benefits offered toproviders

Characteristics:

o Sharing economy firms: platforms that utilize technology to offer users

temporary access to resources that may have been sourced from a crowd

o Sharing economy companies operate on digital platforms and provide temporaryaccess rather than permanent ownership The resources accessed through thesecompanies are typically owned by external individuals, although this is notalways the case

o Three characteristics of sharing economy:

First, two-sided platform: The business model of shared economynecessitates firms to not only acquire customers but also providers,unlike traditional firms that solely focus on attracting customers as they

must promote themselves to generate both demand and supply.Example: Airbnb is a vacation rental platform that connects hosts(accommodation providers) and guests (accommodationseekers) Both parties benefit from using Airbnb:

Hosts: They can register an account, and list their property withdetailed descriptions, pricing, and relevant policies They canearn money by renting out their property to guests throughAirbnb

Guests: They can search, compare, and book accommodationsthat suit their needs through Airbnb They can save time andeffort in finding accommodations while having more optionsthan booking through traditional channels

Airbnb operates as an intermediary between both parties,charging fees to both hosts and guests This platform helps toreduce transaction costs, increase transparency, and build trustfor both parties

Second, crowdsource supply: Crowdsourced supply is a type of

crowdsourcing that involves the use of a crowd to source goods or services It

is a way for companies to leverage the power of the crowd to help them meettheir supply chain needs Sharing platforms have limited control overindividuals as they are not considered employees Compared to a traditionalcompany, it is typically more difficult to maintain and regulate the quality of asharing economy service If you have ever used a ride-sharing service likeGrab, you may have encountered some great drivers and also a few that arenot To address this issue, sharing platforms have implemented threestrategies The first involves meticulous selection through comprehensivebackground checks The second approach involves training providers withguidelines and protocols to follow Finally, a rating system is in place tomotivate customers to rate their providers and to remove those who receivelow ratings

of giving permanent ownership Customers are given the chance to test outproducts and services they may not want or be able to own through temporaryaccess According to sharing economy experts, brands that are accessedtemporarily rather than owned hold less significance in our self-identity,resulting in lower levels of brand attachment Therefore, brands may not holdthe same importance in the sharing economy as they do in the traditionaleconomy For instance, Uber riders are not in control of the brand of vehiclethat picks them up and tend to prioritize the driver over the car itself.

Sharing Economy Topology (Parren & Kozinets, 2018, Journal of Marketing): The

authors conducted an investigation that involved interviewing people who use differentplatforms, reading news articles and press releases, and carefully examining the websites.From the gathered data, they were able to categorize the platforms into a two-by-twomatrix The matrix comprises two dimensions:

o Consociality : measures the level of social interaction among platform members.The network of bike-sharers in Hanoi city, for instance This network was built byseveral communities that love bicycles and want to help others use bicycles in amore sustainable way

o Platform intermediation : measures the extent to which transactions are facilitated

by a platform provider An example of platform intermediation is Uber Uber acts

as an intermediary between riders and drivers, providing a platform for them toconnect and conduct business The Uber platform handles tasks such as paymentprocessing, ride scheduling, and driver background checks This allows riders anddrivers to easily connect and conduct transactions without having to worry aboutthe administrative details of the transaction

From these two dimensions, the authors suggest that there are four distinct categories ofsharing economy platforms: enablers, forums, matchmakers, and hubs

o Enablers: Organizations or individuals that provide resources or support to helpentrepreneurs start and grow their businesses Examples of enablers include

o Forums: Online communities where entrepreneurs can connect with each other,share ideas, and get feedback Examples of forums include Reddit's Entrepreneursubreddit and LinkedIn Groups

o Matchmakers : Platforms or individuals that connect entrepreneurs with potentialcustomers, partners, or investors Examples of matchmakers includecrowdfunding platforms like Kickstarter, business matchmaking events, and angelinvestors who provide funding and mentorship

o Hubs : Physical spaces where entrepreneurs can work, collaborate, and network.Examples of hubs include co-working spaces, innovation centers, and makerspaces

Practical Recommendations:

o Leverage your prosumers: As mentioned in the three characteristics of sharingeconomy, this new sharing platforms rely upon crowdsourcing A prosumer is aterm used to describe a consumer who is also a producer of goods or services Inother words, a prosumer is an individual who both consumes and producesproducts or services This can include individuals who create their products, such

as artists or craftspeople, or those who contribute to the production of products orservices through crowdsourcing or other means Uber, for instance, employsprosumers not solely for offering cars, but also for interacting with passengers

o Employ reverse ratings: Sharing economy is a two-sided platform whereproviders are not the only ones being rated by customers, but also allowsproviders to rate their customers as well It separates from the traditional systemwhere only customers rate providers For example, Grab allows drivers to give alow rating to a disrespectful passenger, damage their vehicle, or engage in anyother inappropriate behavior during the ride This ensures that both drivers andpassengers are held accountable for their actions and encourages respectfulbehavior during rides

o Ride the surge: Matching supply and demand is one of the primary tasks thatsharing platforms must accomplish The surge pricing method utilizes an

when demand is high This is an effective way to balance supply and demand bydecreasing the number of customers who choose to use a shared service whilesimultaneously increasing the number of providers available to serve thesecustomers.

o Position on price: Position on price: lower price, greater value is a pricingstrategy that aims to offer customers a product or service with a lower price thancompetitors while providing greater value This strategy is often used bycompanies that want to capture market share and appeal to price-sensitivecustomers A practical example of this strategy is Walmart's pricing of itsproducts Walmart positions itself as a low-cost retailer, offering products at lowerprices than many of its competitors However, Walmart also emphasizes thequality and value of its products, such as its Great Value brand, which offersproducts at a lower price point than name-brand alternatives while maintainingquality

Conditions where can apply:

o Industries that have not made efficient use of available resources or have allowedresources to become redundant

o Services, products, or “idle” assets that can be shared or rented

o Customers focus on the degree of access to the product or service rather than fullyowning it

2.2 Promotion

Definition: The promotion aspect of marketing involves utilizing various communicationmethods to convey information about a product This information, which can be in theform of both verbal and visual messages, aims to persuade potential customers byappealing to their emotions or intellect and ultimately convince them to choose yourproduct over that of your competitors

Two fundamental concepts of promotion:

o Advertising: Although digital advertising has surpassed traditional advertising,

the dominance is not significant Nevertheless, television advertising remains a

launching a campaign, firms often rely on marketing research companies to trackits effectiveness and determine when to develop a new one Ultimately, the mainobjective of most promotional campaigns is to persuade customers to choose thefirm's products over those of its competitors.

o Persuasion: Marketers view promotion as a means of persuasion and use various

tactics such as celebrity endorsements, humor, or scientific claims TheElaboration Likelihood Model (ELM) is the most widely accepted theory ofpersuasion, which proposes two routes to persuasion: the cognitive central routeand the emotional peripheral route The central route is effective when customershave the ability and motivation to process a persuasive message and find theinformation to be credible and newsworthy On the other hand, the peripheralroute is more effective when customers lack the ability and motivation to process

a message

2.2.1 User-Generated Content (UGC)

Definition: The content made by users It can be text, comments, reviews, posts on social

networks, or forums related to products or services of the business These contents arenot created by businesses but leveraged to increase the spread and credibility of the brand

to consumers or reduce their promotional costs

Example: Doritos, instead of creating content at zero cost, Doritos awards a special

award for images and videos posted on the Doritos Legions of Creator website In returnfor the cost is quality, unique, sustainable (evergreen), and attention-grabbing content

Three key characteristics:

o The contribution comes from product users, not the selling firm

o It involves creativity and the addition of something new

o It is also shared online and can be accessed by others

Usually, user-generated content (UGC) is not commercial and does not include any directadvertising messages Therefore, it is a very authentic and subtle way to promoteproducts

o “What are the different types of UGC?”: The most common forms of UGC areblog posts, reviews of products, and different types of submissions made tocompanies.

o “What motivates users to contribute?”: The primary driving force seems to be thedesire for social recognition For certain individuals, participating actively on asocial media site like Facebook or Twitter can bring about a level of notoriety anddistinction Apart from receiving social recognition, certain users are driven byfinancial incentives Today, companies attempt to stimulate UGC creation byorganizing competitions that offer cash prizes, gift vouchers, or other forms ofconcrete incentives to the winners

o “What are the benefits of UGC?”:

UGC is generally inexpensive as the material is contributed by customersfree of charge

UGC has been shown to have a positive impact on product sales Studiesindicate that customers tend to place greater trust in UGC compared topaid advertising and other conventional promotional methods

UGC assists in keeping a company's content up-to-date and enhances theappeal of its websites Consequently, websites that incorporate UGC enjoyincreased traffic and longer page views, resulting in numerous benefits

“Motivating UGC with performance feedback” (by Liang Wang, 2019): There are

three different types of feedback:

o Cooperation: The impact of UGC on others

o Individualistic: Feedback about the quality of the individual’s ideas.

o Competition: Feedback about how much better your UGC was compared to

others

individual’s gender With women, cooperation was the strongest motivator, whilecompetition was the best for providing UGC with men

“Selective emotional” (Melumad, Inman & Pham, 2019, Journal of Marketing): This

research stands out by investigating the variations in UGC between smartphones andpersonal computers According to the research, UGC produced on smartphones is brieferand less intricate compared to UGC created on personal computers Additionally, UGCgenerated on smartphones tends to be more sentimental and optimistic As a result, thestudy implies that the nature of UGC is influenced by the digital device utilized toproduce it, and businesses should promote the creation of UGC on smartphones instead

of computers

Ways to use UGC effectively

o Ask to share: Previous studies suggest that firms that are present on social media

and promote customer participation are likely to receive positive feedback Butnow, many large companies have Facebook and Twitter accounts, and only asmall number of them encourage customer engagement Because they consideredthat social media is often used as a platform for one-way communication ratherthan a two-way conversation Promotional activities should facilitatecommunication between firms and customers And the easiest way is to ask thecustomers to share their ideas

o Be responsive: Once a company requests input from its clientele and receives

feedback, it must follow up by being attentive Dell, for instance, has dedicatedteams that keep track of their online forums and reply to customer commentspromptly

o Remember the Pareto Principle: Also known as the 80/20 principle, is

applicable to various phenomena Around 20% of the world's population controls80% of its income Similarly, in UGC, only 10% of contributors create 90% of thecontent This means that not all contributors have equal influence Firms need to