Internet communications mix development for FMCG companies


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Internet communications mix development for FMCG companies

  1. 1. Table of contents<br />Introduction<br />The theoretical aspects of an internet communications<br />An essence and types of an internet communications<br />The role and position of the internet communications in a company’s marketing communication policy<br />A strategic approach to internet communication management in FMCG companies<br />The specific of internet communications in FMCG companies<br />The marketing analysis of Visit (PC) marketing activities<br />The development of internet communications strategic plan <br />The development trends of internet communications promotion program for Visit (PC)<br />An integrated approach to development of company’s product promotion plan <br />The development of the ‘Beloff’ beer promotion plan in the Moscow region<br />Conclusion<br />Bibliography <br />Introduction<br />Changing terms of interaction between customers and businesses imprint different types of B2C communications. Continuing virtualization of human lives considering as interaction with information of other people has to be reflected in business practices. Companies, which understand importance and promise of such behavior, have to exploit opportunities Internet has opened to them. Nowadays Internet has ceased to be a means of communication with friends – virtual space has become a marketplace suited for personalized transactions.<br />The main issue company faces is how to differentiate its offer from competitors’ one. In commodification more attention is paid to high-level attributes (generally emotional and symbolical ones) which are in focus of marketing communication. <br />Expansion of internet-communication lets companies to interact with consumers in the environment convenient them by creating and sustaining positioning desired by a company and by better targeting. Emergence of new environment influences consumer behavior to a large degree. Unlike traditional media Internet imposes peer-communication with consumer and involvement in communication with brand.<br />We can see now that internet communications are being institutionalized as a part of marketing management what permits us to consider them as a marketing tool not an experimental method.<br />Goal of this thesis is to describe a process of creation Internet communication mix for FMCG-companies.<br />In appliance with the goal the following tasks are set:<br />To define and classify Internet communications <br />To define position of Internet communications in a company’s marketing communications policy<br />To describe specific of Internet communications in FMCG companies<br />To analyze marketing in Visit, PC<br />To construct a strategic marketing plan of Visit’s internet communications <br />To develop a promotion program for one of the company’s product (Beloff beer)<br />Topicality of the thesis is caused by necessity of development Internet communication mix for Visit by way of increasing competitiveness of company’s products so as development of a scheme introducing Internet communications into company’s business practices. Theoretical topicality is related to necessity of comprehensive understanding Internet communications phenomenon in environment of changing interaction of consumers and businesses.<br />The object of thesis is FMCG companies.<br />The subject of thesis is internet communications as a part of a company’s marketing communications policy.<br />Originality of the thesis is in shift of the focus on internet communications from ‘interruption marketing’ to ‘permission marketing’ concept which is characterized by high level of involvement into communication and description of new means of customer communication with a subsequent integration into strategic marketing communications scheme. <br />Scientific elaboration of the thesis topic. Topic of Internet communications was covered in the works of many domestic and foreign scientists. Internet communications issues were elaborated by P. Kotler, P. Doyle, G. Bagiev etc. We can certainly declare that classic internet communications issues related to usage of traditional advertising models were thoroughly covered. Consideration of Internet communications in social media aspects is reflected in empirical works and haven’t been yet theorized.<br />Thesis consists of 101 pages, 5 tables and 10 figures.<br />The theoretical aspects of an internet communications<br />An essence and types of an internet communications<br />The Internet has become an integral part of human lives and one of the powerful tools companies can use in their marketing. Internal environmental changes influence on companies’ marketing dramatically.<br />The paradigm of interaction with consumer has being changed. According to Peter Doyle “in the 20th century marketing was primarily considered as a distribution, then as sale support process and finally as brand management. Nowadays we face a new stage of marketing evolution – marketing as customer relationship management – influenced by Internet development.<br />The main distinctions of this new paradigm are covered in Table 1.<br />In the basis of personalized marketing the next principle appears to be underlying: Leveraging of interactive communications and establishment and development by them such kind of customer relationship that is based on customization and high-level service.<br />Kotler (Kotler, Kartajaya, Setiawan, 2010) defines this stage of marketing theory and practice development as Marketing 3.0, which appears to be a particular development of the Societal marketing concept. Internet leveraging allows companies to achieve the goals declared by this concept. “Over the past 60 years, marketing has moved from being product-centric (Marketing 1.0) to being consumer-centric (Marketing 2.0). Today we see marketing as transforming once<br />again in response to the new dynamics in the environment. We see companies expanding their focus from products to consumers to humankind issues. Marketing 3.0 is the stage when companies shift from consumer-centricity to human-centricity and where profitability is balanced with corporate responsibility.”<br />Marketing has been heavily affected by the emergence and development of social media (and social networks in particular) that can be considered as attractive realm for the next reasons:<br />Information obtaining (including discovering services) from other members of a social network;<br />Ideas verification via interaction in a social network;<br />Social benefit from contacts (complicity, self-identification, social identification, social acceptance etc.);<br />Recreation (rest, leisure time).<br />Table 1. Changing technologies and evolution of marketing management philosophies<br />Marketing management philosophyDistributionSalesBrand managementCustomer relationshipProductsSingle productFewA lotA lot, CustomizedSize of the marketAs big as possibleFrom national to globalTarget audiencesIndividualsCompetition setPrice, costAdvertising, SalesPositioning, segmentationDialogue, customizationKey technologyMass productionTV, mediaMarket researchInternetKey performance indicators Cost of production, outputMarket share, profitBrand capitalCustomer lifetime value<br />The biggest changings are related to FMCG companies’ penetration into this environment because they apply a wide range of Internet applications for customer strengthening purpose.<br />The Internet allows companies to interact with their customers directly so as gather data about customers behavior and preferences much more conveniently than traditional market research. For instance, monitoring system of customer’s behavior on daily basis now has become possible, providing company with all information about monitored topic.<br />Issue of internet communications usage by Russian companies has become vital due to growing volume of the internet audience and structural shifts in media consumption.<br />Aforementioned factors force Internet communications to be an integral part of marketing communication mix.<br />Internet communications appear to be a realm of a company’s marketing activity on the Internet designed for establishing customer relationship that allows solving a number of communication tasks outlined below.<br />Need for Internet communication classification caused by requirement of clear understanding the differences between different aspects of communication means: their applicability, relative efficacy, coverage and level of engagement.<br />The bases of the classification of Internet communications are listed below:<br />Channel of communication<br />Web site – an integrated communication channel consisted of number of web pages that contain pieces of information. It verifies company existence in virtual space forcing customers to trust company. Web sites are classified as follows:<br />Corporate web site contains full range of information about products, company itself, events etc. This type of web site also contains tools for content management (search and filters, events calendar, photos, corporate blogs, forums etc.). It can be integrated with in-house information systems (Marketing Information System, CRM system, ERP system) and can contain private sections for particular groups of users – staff, intermediaries etc.<br />Promotion web site is a web site developed for specific product’s promotion sake. It can be subsequently devoted to a specific product or a product category. This type of web sites is used by companies with a wide range of products for segregating a company information from product one.<br />Community web site is a web site on the basis of which community is developed; community is devoted to communication between customers and company’s representatives. This type of a web site is a transitional form between web site and social media model.<br />Online store is a web site designed for selling product via the Internet. This type of web site is rarely used for FMCG companies because of the limited applicability to few business models only.<br />Advertising channels<br />Online media advertising. Inside this type of advertising we differentiate display ads, pop-ups and pop-unders and rich-media. There is a duplication of traditional advertising with its interruption traits.<br />Contextual advertising appears to be an ad placing into web site’s texts relevant to the ad theme. Nowadays contextual ads appear inside online-video (i.e.,<br />Search advertising is an ad placement based on user’s search queries. The main companies providing such type of advertising are the search engines (Google, Yandex etc.)<br />Online video advertising is presented with video display ads (on mouse activated ads) and ads embodiment into online video (pre-rolls and post-rolls)<br />Social media marketing is a broad domain of customer engagement that covers all tools of the marketing mix with focus on communications. Social media marketing can be implemented via following channels:<br />Blog is a frequently updated web site which shows updates in reverse-chronological order. These updates contain texts, photos, videos, links and can be commented. <br />Social networks are the web sites developed for purpose of communication among users. Users create profiles that include their bio, interests, photos and videos, notes and even blogs; user can participate in discussions and be a member of groups.<br />Generally, definition of social network with respect to its internet meaning implies web resource allows users to create communities based on their professional activity (LinkedIn), interests (Facebook, Vkontakte), residence and education place (Odnoklassniki, Classmates) or other relevant attribute, create their own profile, write messages, pictures, links etc. with other users.<br />Microblogs provide short status updates restricted to a specific number of symbols (140 symbols for Twitter). There updates relate to work, leisure time, relevant piece of information, etc.<br />Photosharing and videosharing web sites. These web sites allow user to upload their photos and videos and share them with friends and other users. Users can perform searches on these web sites, rate, like (or dislike), comment content so as share it though other social media channels (i.e. post link to video on their Facebook profile), etc. The most popular site for video sharing is; for photosharing there are several great web sites – Flikr, Instragram, Picasa.<br />Social news. Social news web sites (, collect links to news published on the Internet, which are then rated by user; so the most interesting stories go to the homepage.<br />Social bookmarks can cope with remembering and remote access to favorite web sites and interesting web pages. In addition these sites allow users to share links with other users thereby creating their own rating of favorite web sites with specific topics which not depends on search engine optimization activity. There are a lot of social bookmarking web sites; we can distinguish, StumbleUpon.con etc. Current trends of social bookmarking are about its integration into main social networks (i.e., Google+).<br />Podcasts are the audio and video records shared online. Users can subscribe to the specific topics and download new podcast automatically as it has been realized. Also there are audio and video translations via web cameras. <br />Webinars are a type of regular workshops transferred to online. They are based on a presentation being shown remotely on participants’ computers and a presenter explaining specific statements. Webinars are the low-cost instrument that is characterized by the interaction capacity (i.e. voting during webinar) and by high level of conversion from visitors to customers. They are used in B2B communications and in-house training.<br />Online-forums are the oldest form of social media appears web sites with general or niche orientation where people are gathered to discuss specific topics.<br />Geosocial (or local-based) services. This type of social media appears to be a pretty new one. The main idea of them is that users check-in different locations (food spot, shop, mall etc.) by their mobile devices and also post comments and photos related to these locations. The most popular services are Foursquare, Gowalla, Altergeo.<br />Group buying services are the new trend reflecting changed consumer behavior which has the great potential. The essence of these services is that defined number of people has to buy a virtual coupon which enables them to buy a product or service with a specific discount. This is a social equivalent to volume discount that allows customers to save their money and businesses to decrease their costs by the way of economies of scale, increase of turnover and trial and repeated purchases. The most popular services of that type are Groupon, Living Social etc.<br />Ratings and reviews web sites. They allow consumers to share their opinion as well as to rate goods and services based on their perception and consumption experiences. Generally such system is used in many online stores but there are special web sites contain ‘collective, or tribal, knowledge’ about brands and companies. Also so-called ‘social plug-ins’ should be mentioned which appear to be the general social networks’ pieces of code that can be embedded into any web site to comment and share something without leaving the web site. There are stand-alone web services maintaining rating and reviewing practices, i.e. Yelp! and IMHOnet.<br />Social games can be implemented as browser games and separated applications. Virtual games are varied from casual ones to virtual worlds (Second Life), but their essence is a social component that is interaction between users. Communications with companies are realized through product placement and active interaction with a brand (Mazda’s project on Facebook).<br />Content sharing is a type of social media allowing users to check-in to a piece of content they consumer (i.e. TV show, piece of music, book etc.) and share this fact with their friends (GetGlue).<br />Special projects contain:<br />Viral marketing is a spreading of message by the power of intrinsic social recommendation via the Internet. The message is spread via different channel exponentially.<br />Virtual promo games. Gamified communications are used to persuade prospects in something. They allow explaining how to use a product, which benefits it provides etc. by the means of game. Virtual promo games have to be distanced from social games because of short-term effect and absence of social component.<br />Email.<br />Degree of a customer’s engagement<br />An interruption model. It is characterized by traditional approach towards communication when a consumer receives a message without expressed willingness to receive it. Online advertising is one of the elements of this model. <br />An interaction (permission) model. A consumer permits to receive information either by subscribing to updates (news, blog posts etc.) or joining a community to interact with other users and company’s representatives. There are two elements of this model:<br />Personal interaction includes interaction with other users and company which allows getting non-standardized answers to asked questions so as be involved into dialogue.<br />Impersonal interaction appears that type of interaction with a brand or a company which allows contacting with information without immediate interaction with other people. It can be blog subscription, following, liking etc.<br />An involvement model appears an interaction with a brand within which a consumer identifies themselves with the brand values. Involvement becomes apparent through the development of user generated content (i.e. video clip, photo collage, crowdsourcing, etc.) To a considerable degree this model can be characterized by ‘brand evangelism’ that is about a consumer becoming the medium of the brand values. Consumer presents the brand online by blogging, group creation and its moderating or otherwise creating and spreading content continually on the social media.<br />Media used<br />Nowadays the Internet appears to be a type of communication media between consumers so as consumers and businesses. That’s why it’s to describe different types of media used: <br />Owned media. These include that type of media that company owns and manages – a web site, official community in the social network, blog, other official channels. This type of media can be characterized by high level of control over the content but relatively low level of trust to it.<br />Paid media. An advertising model is completely related to this type of media. Their main destination is the awareness increasing. They are characterized by wide coverage but low level of trust.<br />Earned media. These include user generated content, namely mentioning in the social media. They are characterized by high level of trust, but weak controllability.<br />It’s worth noting that use of one channel is not enough. As with IMC (Integrated marketing communications) ‘transmedia’ approach is required. It is characterized by a message spreading in every channel with synchronous ‘semi-automation’ of passing set by a company. So, an advertising campaign which has begun with a viral video can be developed in two directions: community building around relevant topic in the social media (via choosing from above mentioned alternatives) and traditional advertising placement (outdoor and indoor ads), leading consumers to a culminational TV-ad synchronous with the legitimized social media activities.<br />Table 2. Owned, paid and earned media.<br />Owned media — channels controlled by company. Examples: web site, blog, community, social network profile.Role for the company:Development of long term relationships with customersBenefits: — controllability; — low cost; — longevity; — flexibility; — accumulation of the audienceProblems: — absence of warranties by tool usage; — low confidence; — time consumingPaid media — company’s leased channelsExample: display advertising, contextual advertising, sponsorship.Role for the company:Changed from basis of communication to a catalyst feeding owned media and creating earned onesBenefits: — controllability; — scope; — availability; — immediacy; — measurabilityProblems: — high bounce rate; — low credibility; — adaptation of auditory to message format and its insensitivity Earned media — «consumer as a medium».Examples: WOM, viral effect.Role for the company:Is a result of well realized activities in owned and paid media Benefits: — high credibility; — key role in most sales efforts Problems: — absence of control; — possible negativity; — immeasurable<br />Transmedia approach is based on a presence of:<br />Nonline environment as an infrastructural and informational solution;<br />Mobile technologies as an technological solution;<br />Spreading of applications for mobile devices simplifying interaction with content;<br />Cloud approach towards information storage;<br />Sociality of internet communications.<br />Only by considering Internet communication as one of the modes of the general marketing communications strategy related to the communication goals and consisted of lower modes (depending on the promotion specific), company can reach the best effect from Internet promotion. By combining fore mentioned channels company can maximize coverage of the target audience that becomes more and more differentiated in their information consumption patterns.<br />The meaning and position of the internet communications in a company’s marketing communication policy<br />The internet communication is one of the elements of marketing communications mix, so the goals defined cannot exist separately from company’s corporate goals. An integrated approach towards the internet communications is needed because their effectiveness has nonfinancial basis (the specific communication metrics are considered), so that impedes a linkage with metrics traditional to effectiveness analysis. This limitation can be overcome by the clear corporate planning system exemplified in its best by balanced scorecard in which goals hierarchy and cause-and-effect relationships are clearly observed.<br />A scheme of integration internet communications with company’s goals and strategies are depicted below:<br />Figure 1. The position of Internet communications strategy in company’s general marketing and corporate strategy<br />As you can see in the scheme Internet communications appear to be a part of marketing communications policy, which, respectively, is connected with corporate and marketing goals. This integration follows the next logic: i.e. the corporate goal is to increase net profit by 10%, so marketing goal (related to operational and other goals) is to increase sales volume by 25%. This can be achieved by usage of different tools such as decisions on prices, distribution and communications. As with communications the goals can be set like these: ‘increase awareness by 50%, increase volume of trial purchases by 35%, and get the repeated purchase level of 15%’. These goals can be achieved by usage of different tools of IMC mix, the Internet communications ones in particular, which contribute to the goals achievement. I.e. the objectives of internet communications can be set as the following: reach 1M views of viral video, increase Net Promoter Score to 60%, get CTR equals 5%, acquire 1000 blog subscribes, etc.<br />As we can see in the last case objectives were differentiated by different channels of Internet communications, and we should emphasize on the social media as the most relevant tool of interaction with consumer in the Internet communications context.<br />Internet communications integration into marketing communications policy allows overcoming ‘experimental’ approach towards them and deploying their institutionalized usage. Also this allows coordinating company’s goals at all levels of management which leads to more controllability.<br />Internet communications can solve tasks as the following:<br />Awareness generation. It is generally realized by the way of online advertising. Online media advertising provides considerable coverage being placed on web sites with good attendance. High level of awareness can be reached via viral (WOM) mechanics, which provides heavy coverage in the short term through “social contagion”. Niche awareness generation can be achieved by an orientation on narrow search queries within contextual advertising program.<br />Consumer information support. It is realized by getting feedback and answering to the consumers’ questions. Consumer’s attitude can be changed based on how company responds to his or her question or other users’ questions. In circumstances of a low differentiation between offerings (due to severe competition) the great service and customer support appears to be a basis of a competitive advantage.<br />Providing information. The information about the company, its offerings or any relevant to consumer information is provided in a form convenient for them. Receiving information by consumer in the convenient form (remember: different types of consumers prefer different types of channels) increases their involvement into communication with brand and, therefore, leads to sales volume growing (mostly because of the regular customers). <br />Communication research. It is related to awareness and mentioning research so as mentioning semantic analysis. Identification of which activity is effective and which is not is a necessary step in the internet communications program. The peculiarity of the Internet is about high degree of quantification. <br />Reputation management. It is about favorable image creating and its sustaining, quick response to the emerging issues, which can lead the company to the reputation crisis. <br />Targeted sales promotion. It is based on the orientation toward specified target audience which is ready to communicate with company and meets the requirements set by the company. Behavioral targeting used within online adverting placement (including promotional one) allows covering the target audience without wasting money.<br />Personalized communication during sale. Non-standardized conversions with consumer (response to comments, virtual sales rep or consultant) enhance digital experience of interaction and reduce the perceived risk of purchase. Nowadays ‘social purchases’ aren’t widespread in Russia, however this phenomenon has to be considered as a future trend in Internet communications development, because purchase in the social media minimizes consumer’s transactional cost (including cognitive one).<br />Loyalty building. During the brand activities the loyal core customers are emerged. Internet communications are directed to maintain relationships with them. Moreover a company, oriented to continuous social media activity in particular and the Internet in whole not discrete promotion campaigns, induces consumers to become the loyal ones.<br />One should point out that Internet communications appears to be a constitutive part of the Internet-marketing. <br />Internet marketing is the company’s activities on the Internet related to all elements of marketing mix including:<br />Creation (and modification) of an offering and product management. This practice is called ‘crowdsourcing’ and intended to attract consumers of the product to idea generation and alternative selection. By this practice demand for new product can be predicted.<br />Pricing. A demand prediction and comprehensive cost analysis allow company to better predict sales volume while simultaneously adapt prices as on perceived product value to customer. The development of group buying services enables price and cost reduction, online auctions enables maximization of perceived values paid by customer.<br />Distribution. More and more products in the digital age has become digital too. And the Internet appears to be the unique environment for their distribution. But the Internet also directly influences on material goods distribution. EPR systems, working as Software as a Service, have emerged. In addition geographical distribution of preferences can be traced and then analyzed.<br />Market research. With the Internet evolution the market research process has changed. Lowering access cost to consumer and voluntary information providing via sharing (expanded trace analysis by tracking Internet behavior, i.e. search queries, behavior on web sites, time of their visiting, etc.), so as leveraging the Internet as a big focus group, all these premises enable better prediction power of marketing and better satisfaction of consumers’ needs.<br />Communication.<br />Leveraging Internet communications for achieving company’s goals is necessary due to increasing role of the Internet in people’s lives. Moreover, the Internet allows achieving goals that aren’t achievable via traditional channels. Interaction between a consumer and a company has been transforming into more personal one, so, therein, the traditional concept on B2C-interaction can be reformulated into B2P (Business-to-Peer), when companies treat consumers as their peers beginning from understanding consumers’ attitudes on the voluntary basis to the integration of the consumer into value creation process (thus ‘prosumers’ emerged – they are consumers playing an important role in the conceptual decision making about production).<br />The Internet helps companies to build relationships with their consumers but for the FMCG companies there is a low degree of purchase (and brand) involvement. To overcome this issue Internet communications (especially in the social media) have to be developed around catalyst themes and gamified aspects of communication to transmit the message to the consumer. For the achieving the same goals the learning and sales promotion can be used.<br />The communication aspect of social media marketing and its link to purchase decision-making process have to be considered separately. The goal of communications is to influence on every steps of the purchase decision-making process. The purchase decision-making process can be reduced to 4 main steps: awareness, decision making, purchase and post-purchase behavior.<br />The communication aspect of social media marketing is presented in the following scheme (Figure 2).<br />As outlined at the scheme, the main role of social media consists in influence on the purchase decision-making process which now is based on consumption experience of other people. As usual, consumers used to trust recommendations and reviews of their friends and other Internet users. <br />This peculiarity of the environment causes the importance of interaction on post-purchase behavior of consumers because generated information on consumption experience influences prospects not yet decides what brand to purchase. <br />5334042545AwarenessDecision makingPurchasePost-purchase behavior (consumption) Social media00AwarenessDecision makingPurchasePost-purchase behavior (consumption) Social media<br />Figure 2. The social media influence on the purchase decision-making process.<br />We should point out that general goals of big audience coverage in the social media aren’t appropriate so a social media strategy has to include the different tools of the internet communication mix, which have their own peculiarity and consumer response. <br />Quantification of interaction is a key characteristic of Internet communications (That’s why Internet marketing refers to broader Direct Marketing). With this quantification the concept of effectiveness evaluation is connected. <br />The issue concerning analysis of social media activities effectiveness is of vital importance. There are different opinions emerged from different understanding of the nature of social media. <br />So the main criterion of social media activity effectiveness is CTR (Click through rate – clicks to link demonstration ratio). Despite many marketers use this criterion it is too simplistic and doesn’t help with reliable evaluation of social media activity effectiveness. <br />There are three main (and still conventional) directions of evaluation of social media activity effectiveness. <br />Awareness<br />Reputation<br />ROI (Return on Investment) <br />The main metrics company should evaluate are as follows:<br />Mentions (good, bad, neutral) and their variations (comparisons with competitors mentions within these three dimensions of attitude);<br />Share of interest in the social media<br />Users’ actions (sharing, commenting, replying, making video response, writing on their own media channels about company/brand/campaign, following and friending)<br /> Set of traffic metrics (hits, duration, bounce rates, views, conversion)<br />Effectiveness metrics (ROI)<br />In evaluating the social media activities effectiveness, company has to follow these steps:<br />Reference point determination. The control value (parameter) has to be set to its further usage as base of comparison. Let’s assume it will be a sales volume. <br />Activities recording. There must be an elaborated social media marketing plan (who, when and where performs actions) to compare recorded social media activities with web analytics and social media monitoring data and determine correlation.<br />The parameter change tracking. With the sales volume example we should track how it has change over time.<br />The additional data evaluation. Company has to analyze immaterial benefits earned from campaign implementation.<br />Data comparison.<br /> Construction of the diagrams concerning correlation between activities and the monitored parameter alteration.<br />Determination of social media activity influence on monitored parameter. <br />Thus following the analysis of the essence and elements of Internet communications results we can posit that social media marketing application in modern company’s marketing can gain the possibility to achieve competitive advantage. Participating in a dialogue with a customer, a company can differentiate its offerings and help to interpret their positioning. <br />