Kotler, M - 2017 - Marketing Strategy in The Digital Age Applying Kotler's Strategies To Digital Marketing
Kotler, M - 2017 - Marketing Strategy in The Digital Age Applying Kotler's Strategies To Digital Marketing
Milton Kotler, Tiger Cao, Sam Wang, Collen Qiao, KMG China ; translated by Yuheng Zhang.
Other titles: 880-01 Shu zi shi dai de ying xiao zhan lüe. English
Description: Singapore ; Hackensack, NJ : World Scientific Publishing Co. Pte. Ltd., 2020. |
“Originally published in Chinese by China Machine Press,
copyright © China Machine Press, 2017”--Title page verso.
Identifiers: LCCN 2020007588 | ISBN 9789811216978 (hardcover) |
ISBN 9789811216985 (ebook)
Subjects: LCSH: Internet marketing. | Marketing--Technological innovations.
Classification: LCC HF5415.1265 .C3613 2020 | DDC 658.8/72--dc23
LC record available at https://lccn.loc.gov/2020007588
〈〈数字时代的营销战略〉〉
Originally published in Chinese by China Machine Press
Copyright © China Machine Press, 2017
For photocopying of material in this volume, please pay a copying fee through the Copyright Clearance
Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, USA. In this case permission to photocopy
is not required from the publisher.
Printed in Singapore
Nicole - 11737 - Kotler Marketing Strategy in the Digital Age.indd 1 12/8/2020 2:19:58 PM
9”x6” b3902 Marketing Strategy in the Digital Age
Endorsements
“Every generation needs a breakthrough, and it is also true for marketing.
I recommend the book Marketing Strategy in the Digital Age written by my
partners and friends to you.”
— Philip Kotler (U.S.), the Father of Modern Marketing, and
Chief Consultant of KMG
“It is a book that reveals the ‘emperor’s new clothes’ in digital marketing.
Clear and pragmatic, it helps readers know what moves can drive the
growth of enterprises in the digital age.”
— David C. Edelman (U.S.), the Global Co-leader of McKinsey Digital
“This book, the ‘NewArts of War’, is a must for enterprises with an ambi-
tion to win a place in the digital age, whether it is ‘Internet +’ or ‘+ Internet’
in the future.”
— Charles Tsu (U.S.), member of MIT’s board of trustees,
CEO of EBO Fund, Taiwan
“It is the most systematic and pragmatic book about digital marketing
strategy in the Chinese market for senior executives. It is very inspiring.”
— XieShaoyi, Global VP of Hewlett Packard Enterprise and General
Manager of the Corporate Service Group, China
“Marketing has entered the digital age driven by big data, where individ-
uals are connected with each other. The basic idea of the authors is that we
must have a marketing mind adapted to the new age and embrace new
marketing technology. It is a rare excellent work.”
— Dai Yaohua, Managing Partner of Deloitte Consulting, Greater China
“Excellent! For a long time, people have been holding different views on
digital transition, but this book presents a practical and comprehensive
guideline for readers from the perspective of world-class experts.
I especially recommend the book to people who work in traditional
industries.”
— Min-Cheol Shin (Korea), Head of Corporate Development of MCM
Group, and Co-founder of Kings Bay
Endorsements . vii
“It is a good book that gives a comprehensive view on how the Internet
drives marketing innovation. It is a must-read for enterprises to innovate
in marketing in the age of big data.”
— Ramachandran (India), Professor of Business Administration at ISB
Acknowledgement
I joked with Philip Kotler that, though our talents are limited, we are, how-
ever, trying to imitate his ambition and efforts when he built the frame-
work of “Modern Marketing Management” half a century ago. The
successful construction of our strategic paradigm of digital marketing is
attributed to the practices and verifications of different layers we have
obtained through dealing with many leading enterprises in the past
5 years. Consulting covers theories and practices. Consulting projects and
workshops to address clients’ problems have won us research opportuni-
ties “guided by problems of entrepreneurs” through in-depth interactions
with clients, based on which we review, examine and polish our paradigm
of digital marketing methodology on a theoretical level.
Many world-class marketing masters and top counselors have contrib-
uted to this book. For example, we have been inspired and enlightened by
the in-depth communications with Philip Kotler, David Aaker, Kevin
Keller and others. Of course, in this process, outstanding colleagues from
KMG have given enormous efforts and support for this book. Hereby, I
would like to give special thanks to the brilliant and talented consultants
including Deng Linfeng, Yuan Chuanliu, Lu Yuehao and Li Fudong. My
heartfelt thanks also go to our teachers and friends, including Prof. Zhu
Wuxiang from Tsinghua University, Prof. Ren Jianbiao from Shanghai
Jiaotong University, Barnard Fernandez from Paris University and Bao Tan
from the Cheung Kong Graduate School of Business. Lastly, I would like
to show my gratitude to Yuan Lu, Head of the Department of Economy
and Management books, China Machine Press, who has imbued this book
with wisdom, effort and friendship.
Dr. Sam Wang
Partner at KMG
General Manager of Kotler Digital
[email protected]
ix
xi
Dr. Wang provides in-depth digital marketing growth strategy con-
sulting for Global 500 companies including but not limited to P&G,
Huawei, Baidu, Hanergy, Haier, AVIC International, Poly, Baosteel,
Yonyou Group, and China Merchants Group. As a best-selling author, he
has written The Chief Officer of Growth: From the CMO to CGO and
Marketing Strategy in the Digital Era with Marketing Revolution 4.0: From
Traditional to Digital translated. He is also a contributing writer for CEIBS
Business Review, Tsinghua Business Review and China Management
Magazine. He earned his doctorate at Université Paris-Dauphine and pre-
viously studied at Harvard Business School and HEC Business School.
Collen Qiao is a partner at KMG China and Head
of Corporate Marketing and Branding strategy. He
graduated with an MSc degree from the University
of Wageningen in Netherland and completed a lead-
ership course of professional service firms in
Harvard Business School. Mr. Qiao actively engages
in integrating marketing and branding as a strategy
in practicality. During his 13 years of service at
KMG, he has provided consulting services in mar-
ket strategy, business models, and brand strategy for many leading Chinese
firms, and has been invited to serve as an independent management con-
sultant for a number of enterprises. He is also a contributor to several
renowned business magazines in China.
xv
Foreword
Rebuilding Marketing Strategies in the Digital Age
The four authors of this book are all my students, friends, consulting part-
ners and sources of inspiration. It is a real pleasure to see their new work.
As a cross-disciplinary branch of management and economics, mar-
keting has been increasingly tied to psychology, computer science, data
science and sociology in the last decade, which corresponds to my point
that “marketing is both a science and an art”. Marketing plays an increas-
ingly important part in corporate strategy planning: from product posi-
tioning to corporate positioning, from business brands to corporate
brands, from channel to business model transformation and from brand
asset to client asset management. Undoubtedly, marketing is the most
important driving force for companies and CEOs to bring about strategic
transformation. All business leaders with whom I have had contact, such
as Louis Gerstner, Jeff Bezos, Mark Zuckerberg, Richard Branson and Alan
G. Lafley, are excellent CEOs and also extraordinary marketing directors.
The strategic and social role of marketing is growing exponentially. That is
also the reason why Dr. Hermawan, another partner of mine, has success-
fully persuaded the Indonesian President to sponsor the construction of
the world’s first marketing museum in Bali.
Different from the time when I wrote the first edition of Marketing
Management in 1965, we are now in a “digital society”. This round of rev-
olution took place in America, Europe, China and even Africa, signifi-
cantly transforming infrastructure and social mentality. Then the concept
of “digital transformation” was proposed as many enterprises were eager to
find a way to integrate with the Internet. However, as the writers stated in
the book, the Internet and mobile Internet build the “connections”
between “individuals and things, individuals and information, as well as
individuals and individuals”. Therefore, how to change strategies, improve
the role of marketing and adopt emerging technological and data tools in
xvii
Preface
Every Generation Needs a New Revolution
About 5 years ago, I started to notice that when Philip Kotler gave lectures
to senior executives from the Fortune Global 500 companies around the
globe, he always showed two slides at the beginning and at the end: the
first slide stated, “Market changes faster than Marketing,” while the sec-
ond stated, “Within five years, if you’re in the same business you are in
now, you’re going to be out of business.” These statements have been
proven to be true after 5 years, as many enterprises, losing their compet-
itive edges in the digital era, have been squeezed out of the profit zone.
This is a time in which revolutionary marketing patterns have upgraded
and overturned the original ones and in which players who used to lead
the market have lost their edge and brilliance. Even P&G, the “King of
Consumer Marketing” in the age of traditional marketing, is now lacking
an innovation force.
It is a time of transition and revolution. In the discourse of Michael E.
Porter, “competitive edge” seems to have become a theoretical mirage.
Anxiety caused by the popular Internet keeps many entrepreneurs awake
at night. With new concepts, theories and scientific applications such as
the Internet+, social media, big data, community groups and VR popping
up, we need to change our thinking pattern and have access to practical
tools and weapons. In terms of digital transition, we have to think about
what to change, where to change and how to change, and in terms of
Internet+, what to add, what to subtract and how to calculate.
Always interested in the area of “competitive strategy,” I found that
many factors could lead to a company falling behind or being replaced. It
may be due to the fact that rivals have seized customer resources or that
enterprises suffer from low operating efficiency; however, another factor,
more critical and irreversible, is that a market “turning point” has occurred.
And this reason can be subdivided into three scenarios — reshuffle among
xix
Preface . xxi
more importantly, 58% of the enterprises claim that digital marketing per-
formance has not achieved its due expectations. Just like what has been
written in Good Strategy, Bad Strategy by Richard Rumelt, perhaps no one
would deny not having strategies, but one’s strategies may not be good.
When we spoke with the marketing decision-makers, we found that the
core problem is a lack of strategic thinking or a lack of good strategic
thinking. Digital marketing is definitely not the low-level combination or
a simple composition of different tools such as WeChat, microblog,
Facebook, demand-side platforms (DSP) and location-based services
(LBS). In the field of human conflict, firearms have always been the “tools”
of generals. The more critical is the “art of military” on the battlefield rec-
ognized at home and abroad, from The Art of War by Sun Tzu in the
Spring and Autumn Period to On War by Carl von Clausewitz in Prussia.
From our consulting experience, CEOs, CMOs and other senior exec-
utives pondered over the following questions:
Preface . xxiii
share and achieved cross- and up-selling. Now, SCVM has addressed these
marketing challenges: by setting up a CMO-led marketing organization of
“customer value center” and by making use of marketing collaboration plat-
forms and centralized data warehouses of customers, enterprises can man-
age and analyze scattered customer knowledge and data at the organization
level, and all brands and channels, based on needs, can obtain and analyze
data to support its marketing activities. The integration framework of
SCVM is simplified as follows: customer data platform — digging business
opportunities — contact management — insight engines — customized
content — interaction and distribution — multimodal collaboration —
marketing control board. In the SCVM marketing system, enterprises, in a
centralized and flexible way, can identify and further explore customers’
value across departments, channels and brands.
• Recognize is the first step. In the pre-digital age, we talked about the
overall analysis of target consumers by sample estimation and quali-
tative study. In the digital age, the biggest change lies in the capability
of tracking network behaviors using big data, such as tracing cook-
The above 4Rs form a cycle of operation which is good for CEOs and
CMOs to understand, apply, implement and give feedback. On the basis of
the 4Rs, we discuss the supporting system of digital marketing in
Preface . xxv
Chapter 3. We believe that digital marketing should embrace data, embrace
big data and apply big data to make marketing decisions. For example, for
real estate and retailing, consumers’ offline behaviors can be tracked by
SDK; what apps have been downloaded in clients’ cell phones can be
known by SDK; users can be profiled by modeling and machine learning.
Media channels were purchased in the past, but now, thanks to disinter-
mediation, they can be independently set up and launched by a person.
Therefore, “content” becomes unprecedentedly important, and “content
marketing” becomes another hot topic. We say in China that “a good con-
tent editor equals 1,000 salespersons”. Therefore, we would discuss how to
undertake “content marketing” in this chapter. Additionally, “disinterme-
diation” and “decentralization” make organizations change. Platform
organization and starfish organizations start to emerge. How to adapt to
the strategic and organizational changes at the company level and how to
maintain resilience and keep “unified will” are discussed in Chapter 9. Last
but not least, all marketing investment cannot be made without key per-
formance indicators (KPI) or return on investment (ROI). How to meas-
ure and evaluate these components has been an issue. The digital era turns
“consumer behaviors into bits”. The dimensions that could not be meas-
ured in the past can now be measured. However, evaluation has to be
coordinated with strategy, which is discussed in Chapter 10 of this book.
Contents
Endorsements v
Acknowledgement ix
About the Authors xi
About the Translator xv
Foreword xvii
Preface xix
Chapter 1: Marketing Environment in the Digital Transformation 3
This is an era when the world embraces digitalization. We have more
access to the Internet, share more information online and are more likely
to obtain information from the Internet. We switch our life to online activ-
ities, like social interactions and shopping, as if we were digital mammals.
Against such a background, marketing digitalization is an inevitable trend.
We need to know the digitized marketing environment, understand the
behavioral characteristics of consumers and learn from leading digital
marketing enterprises. We also need to evaluate the maturity of the current
digital marketing strategies. This is the first step for us to carry out digital
reform.
Many CEOs and CMOs ask the following questions: How is marketing
strategy in the digital era different from that in traditional times? What
has changed in each step of a marketing strategy in the digital era and
what has been preserved? Only by starting with the mindset and frame-
work and thinking as that of a CEO and CMO can we make good top-
down designs and plans. We need to know the nature of marketing, the
most prominent features of marketing in the digital era, the latest devel-
opments in segmentation, target market, position and brand strategy
with digital technologies and the strategic platform of digital marketing
established as such development takes place.
Contents . xxix
Digital Marketing Strategy Model and the Application
Framework of the 4R 126
What is Consumer Profiling 128
Advantages/Features of Big Data Consumer Profiling 140
Converting Customer Profiles into Business Value 144
Customer Journey Map 154
Chapter 4: Reach in the 4Rs: Coverage and Arrival of Digital
Information 163
To reach your consumers is the second step in digital marketing and also
the first step for enterprises that engage in the digital marketing game.
After having a clear digital profile of consumers, we need to reach and
connect to our customers, which we hereby call “coverage and delivery of
digital information”. In this process, enterprises need to analyze them-
selves: How can they have a digital plan and layout in a systematic and
scientific way rather than in a passive, scattered and random way? We
divide the coverage and delivery of digital information into four catego-
ries: Initiative-push, initiative-present, trust-agent and asset-exchange.
Also, the tools of digital marketing have been presented in this chapter.
To realize return is the fourth step in digital marketing, which corre-
sponds to the idea that “marketing is not only an investment but helps to
realize direct returns”. Many enterprises build online communities to
attract brand followers, but how to cash in the assets is the issue that is
going to be explored in this chapter. We put forward a number of
approaches, including turning community membership into a good,
turning community values into a good, running community as a media
network, expanding community members as channels and marketing
community trust.
Returns 242
Methods for Realizing Returns 243
Turning Community Membership into a Good 243
Turning Community Values into Goods 246
Expanding Community as Media Network 249
Expand Community Members as Channels 252
Attract Talents Using the Current Community Base 255
Marketizing Community Trust 256
Digitizing Community Information 258
Chapter 7: Big Data Marketing Platforms: Applications
of Big Data in Marketing 265
Online tracking of customers enables data to inject enormous vigor into
marketing. How to digitalize marketing activities? How to combine big
data and marketing? Does big data overturn the logic of marketing?
Contents . xxxi
Marketing in the future combines ideas, technologies and data together;
based on current technologies, what technologies can be applied in mar-
keting activities to directly upgrade your ‘weapons’? We have put forward
different ways that could be flexibly applied to help enterprises base their
marketing on data.
The focus of marketing competition in the digital era is how to attract and
acquire continuous attention from customers by posting content worth
reading which possesses practical and social value. Content creation used
to be unidirectional and was produced only by enterprises, but has now
turned to a co-creating and co-sharing model among members of the
brand community. Enterprises should be more concerned that in the dig-
ital era, content is neither simply an advertorial nor a cost-based activity.
In the future, what enterprises should firmly believe is that content has
economic value in and of itself, and they should regard themselves as “con-
tent creators”, participating in the production of seen materials and the
operation of content-sharing platforms.
Part I
An Overview
of Digitalization
Chapter 1
Marketing Environment in
the Digital Transformation
Figure 1.2. Multi-screen interactions of consumers.
Source: Google, The New Multi-Screen World, 8/2012).
of people use multiple screens like personal computers, tablet computers,
cell phones and TVs and jump from one node of the Internet to another.
Around 65% of people shop online, which has led to the tremendous sales
of Ali and JD, both being legends of IPO. About 61% of the people use
social media on their cell phones and digital media like WeChat,
Microblog, etc., which play a vital role in people’s social life. A total of 59%
of the people attempted to manage wealth on smartphones: since Yu’E Bao
in Alipay is bounded with Tianhong Asset Management, it instantly turns
Tianhong from a small fund management into one of the largest players in
China in asset management. Around 58% of the people use search engines
when making personal wealth management decisions. As digital technol-
ogies have intruded and integrated into different industries and levels of
consumers, tech and Internet have become as critical as “water and power”
to business rather than a commercial tool or channel. Not to talk about
them will take you away from consumers and away from the future.
Under the current digital age, new technologies emerge one after the
other. Many upgraded technologies are seen in information exchange,
client information and data storage, which have caused a new impact on
traditional business environment. We conclude this as three key trends:
digitalization of information exchange, digitalization of client interaction
and digitalization of data storage (Figure 1.4).
understand a personal problem, it can offer personalized results. In con-
clusion, a search engine is starting to think and act like human beings.
The development of cloud computing, semantic searching technolo-
gies and data collection enable the learning capacities of computers to
grow by leaps and bounds. Computers understand users’ intentions better,
deeper and faster. In some cases, computers can even estimate the search-
ing requirements of users without further user information.
Mobile technologies, voice recognition and big data can help comput-
ers retrieve a mass of the Internet, social media and geo-location data.
Based on the filtration and categorization of the data, computers can more
accurately predict the future requirements and behaviors of users.
1.1.1.3 E-commerce
As an extension and supplement to the brand’s website (official website of
a company), e-commerce is an important function furthering the digital
revolution of enterprises. It provides clients with a very convenient way of
knowing, comparing and purchasing goods and obtaining services. In the
past, perhaps many enterprises regarded e-commerce as just a supporting
channel, but with the booms in recent years and new business giant Ali
Group riding the e-commerce wave, enterprises can hardly ignore a fact:
e-commerce has subverted the traditional business model, representing an
upgraded version of the traditional model.
virtual worlds and encourages online and offline integration, leading to a
highly integrated, omni-channel shopping experience.
1.1.1.6 SoLoMo
In traditional models, social marketing, local marketing and mobile mar-
keting are basically independent. The social marketing department is only
responsible for online social marketing. Teams from different regions com-
plete regional marketing together and hold a large number of marketing
activities. As for mobile marketing, it is more likely to be SMS marketing,
developing the business by sending short texts. The popularity of smart-
phones and tablet computers changes the picture. These mobile devices
give consumers many more new functions and choices, which enable them
to get any product and service they need at anytime and at anyplace.
SoLoMo is a mixed concept that combines Social, Local and Mobile.
An example of SoLoMo is a smartphone app such as dianping.com that
can position users, provide the comments and ratings of nearby shops, and
allow users to publish their feedback, upload photos and have social
interactions.
SoLoMo is an increasingly growing marketing trend. According to the
current location, consumers get the relevant content or promotion infor-
mation and share them through the social website. A 2013 Adobe survey
shows that 71% of cell phone users visit social websites by mobile ends. A
total of 70% of the respondents search for information, map and com-
ments on nearby shops using mobile devices, among which one-third of
them opine that they are encouraged by promotions from the merchants.
Also, a 2012 Nelson study report demonstrates that 78% of respondents
discover the shops they are interested in by cell phones, 63% of people
learn the price through cell phones and 22% of people read the comments
of merchants. According to the statistics above, the application function of
SoLoMo has been extremely critical for the geographical comments of
consumers.
When potential consumers show up nearby, businesses need to make
sure that consumers can reach you easily by cell phones. Businesses also
need to spur consumers to come into the shop and experience by any pos-
sible means such as SMS, regional SEO, regional discount or trading infor-
mation. These marketing technologies, based on positioning marketing,
have a good effect under SoLoMo.
Geofeedia is a US social media company, which specializes in social
positioning and geo-fencing technology. It has developed a series of tools,
allowing developers to mark and trace the geographic information from an
individual’s social media. By using complex positioning and geo-fencing
technology, it shows what social media content has been published in a
certain area, like a stadium or a public place. The business can use its tech-
nology to obtain social media information that has been publicly released,
helping them to conduct market research and data collection.
1.1.1.7 App
The surge in the number of smart mobile devices has increasingly made
users rely on mobile search functions. According to Google’s data, 94% of
the users look up the address of physical retail stores. In addition to social
· Around 27% of the time, Internet users have been active on social
media;
· Around 70% of B2C companies say that they obtain new clients via
social media channels;
exponential growth rate. Social media can help enterprises to amplify the
brand influence and obtain better outcomes by more effectively using their
own marketing content. When a company launches marketing content on
an official account, followers will forward or comment on the content.
Once the content has been forwarded many times, even non-subscribers
can also receive the information shared by these followers. By such means,
social media can help brands obtain unimaginable attention. We also dis-
cuss methods on how to “go viral” on social media in the later chapters of
the book.
However, being seen or having many followers is not enough.
Enterprises need to encourage users to participate. Digital technologies
provide an unprecedented chance, which enables enterprises to have
deeper communication with the existing clients and potential clients and
build closer brand relations. Enterprises should master a richer range of
interactions to foster brand affinity. To improve the level of participation,
Google’s research team has made a research project. Research results show
that the full process includes four steps: user choice, interactions, sharing
and conversion. And the research team believes that the key method for
improving the participation of clients is “during the information boom,
those enterprises who attach importance to social participation are more
likely to succeed compared with the enterprises that only concern about
exposure. For example, in terms of investment in Chinese social media,
investment in microblog is to reach more users; that in WeChat is to focus
on depth. The traditional way of marketing makes a lot of advertising work
to a target group, but these enterprises adopt the completely opposite
approach. They give priority to the most critical and important people
who can amplify brand influence by their opinions and suggestions”. The
research team suggests that the former mode of transmission that spreads
on a large scale based on sales funnel needs upgrading. Enterprises need
to attach the most importance to brand opinion leaders, spend majority of
the resources to maintain this group and cover other clients by this group’s
influence and social media accounts. Enterprises with strong social media
marketing capability such as Starbucks, Amazon, Xiaomi and Tesla adopt
this method.
For marketers, this means that the major part of the role shifts from
publishing and dissemination to operations. In customer service, there are
The special feature of social media is that it is the result of the sponta-
neous and endogenous behavior of the user and is not the result of external
imposition. Brands can adapt to this truly customer-centered approach.
Product extremes, customer service, user-generated content (UGC), cus-
tomer loyalty management and corporate fan management have changed
the traditional approach to brand marketing. Social media gives consum-
ers the ability to influence the branding preferences of those around them,
which would not have been possible with traditional marketing practices.
1.1.2.2 Crowdsourcing/Crowdfunding
Crowdsourcing is similar in principle to cloud computing technology, but
it focuses on gathering many people to address challenges more effectively
or complex problems via the Internet rather than servers. Whether to pro-
duce a new solution by brainstorming or to raise funds (also known as
crowdfunding) for a specific project, crowdsourcing has already become a
non-negligible social phenomenon and a business tool. Crowdsourcing in
nature has pushed new business models to grow, by which individuals or
organizations create new ideas and produce more competitive products
and services in a more effective and low-cost way.
Crowdsourcing has even left an impact on the publishing industry.
The industry used to be a typical vertical production system, from writing
to ISBN, from publishing to marketing. But now these vertical systems can
operate in a “flat” way, which means that marketing for the 4Ps (products,
price, placement, promotion) can be done in the meantime. Now many
chapters of a book can be made available on the Internet for reading, com-
menting and criticizing. During this process, fans can be attracted and
works can be improved. By digital means, crowdsourcing is a tool with
infinite potential since the focus of the public can be detected and efficient
solutions can be provided at low costs.
Massive online open courses (MOOCs) are changing the business
model of higher education by crowdsourcing education. The traditional
model of higher education is highly crammed and students need to pay
increasingly higher cost to learn rigid lessons. The new way of online
learning encourages free interactions and an open exchange of informa-
tion. It is students who have the freedom to choose courses rather than
schools. MOOCs provides better education that is more efficient, more
cooperative and cheaper. Besides its influence on education, MOOCs also
influence businesses. For example, organizations can obtain a wide range
of high-quality online training courses by remote access, offering constant
training for their employees at a more reasonable cost. Using MOOCs,
with only a computer, an employee can access the courses and services of
a renowned university professor. Enterprises and staff should co-draft the
most efficient curricular plans to realize both personal and organizational
goals. Many leading MOOC platforms encourage students to socialize and
have a deeper understanding by digital cultures. In the foreseeable future,
online education platforms can help colleges and universities to focus on
their educational areas of expertise in clear and concise ways.
1.1.2.3 VR/AR
Nowadays, marketing people have started to examine ways to improve the
digital experience. Augmented reality (AR) can empower marketing peo-
ple with digital capabilities to improve the user experience and apply
In August 2010, Google’s Eric Schmidt provided the following insights,
which perfectly summed up the challenges of data and its exponential
growth: “Since the birth of the world to the year of 2003, humans created
five-exabyte of information. But now, we can create five exabytes every two
days. So, you can understand how painful the information market is.” Data
scientist Jack Yamuka said that “Data science is not just about digital com-
puting, but about humans. Data comes from human behavior. Big data
scientists have the ability to understand people. The most ideal result is
that big data can help people.” In the age of data, the biggest challenge for
companies and marketing CMOs is not the data itself, but how to make
meaningful data interpretations.
Advances in technology and data handsets enable marketers to track,
review and improve all aspects of digital activities. The ability to quickly
compare campaigns with real-world results can help companies continue to
refine their brand information and marketing campaigns and better con-
nect with existing customers and prospective customers through marketing
content. If we consider big data as mine and oil, then big data marketing is
one of the commercial applications of mines and oil. Digital marketing is
“(content platform + digital platform) × big data operation × upgraded
marketing strategy thinking”. Customers, data and technology need to be
integrated and there is a chapter devoted to this issue later on in this book.
pictures, videos and other data. They can store the data in the network
hard disk provided by cloud service companies, such as Google, Amazon,
Baidu Cloud and so on.
the capacity of the North American railway and its commercial potential
and began to provide goods to farmers and other people who could not
easily reach the city; ultimately, his vision helped him create the famous
Sears Retail.
The increase in the number of TV commercials has stimulated and
shaped people’s shopping behavior. In China alone, note how many enter-
prises, 20 years ago, made a fortune through TV advertisements and sold
their products across the nation overnight. Transportation, TV networks
and shopping centers is a three-in-one working model. The TV network
stimulates the desires and the group behavior of branding. The wide layout
of the shopping center enables massive purchases. In essence, all three are
to eliminate the distance between goods and consumers through connec-
tions and to facilitate the completion of transactions.
What is the difference in the business model of the 21st century? John
Dayton also attributed it to three other forces: mobile search, social net-
working and e-commerce. Mobile search solves the consumer’s initiative
to capture information, accessing resources that were previously unavaila-
ble and comparable at any time and place; social networks enable consum-
ers to evaluate goods and services and consumers no longer rely on
original TV ads. More from word-of-mouth effect, community effect and
more accurate information from connected groups; e-commerce realizes
the separation between goods and people. People can compare prices, read
comments and read the opinions posted online. The three power restruc-
tures the business model of the 21st century (Figure 1.5).
Automation Capability: Automation refers to operating the customer
journey which used to be manual in an automatic and concise way. For
example, in the past, clients had to go to the bank or the ATM to deposit
a check, but with data digitalization, you can deposit it via an app by taking
a picture of the check using your cell phone. Kantar used to build a big
sample bank consisting of millions of samples scattered over the world and
asked customers to mail their shopping receipts of retail stores to Kantar
while nowadays the receipts can be scanned by an app and accessed in real
time, which lays a solid basis for a stickier journey. Excellent automation
tools can make complex back-end operations simple and provide an inter-
active front-end experience based on the app.
Forward-looking Customization: Based on automation, enterprises
should search for information from their interactions with users in the past
and today and customize instant user experience in a forward-looking way.
Two familiar examples are Amazon’s search engine and smart algorithm of
reordering. But please keep in mind that knowing user preference is just
the start; the customization capability must extend to the next step of the
customer’s journey. When uses are considered, companies must analyze
user behaviors and customize their next interaction based on their analy-
sis. Companies like Pega and ClickFox provided apps to trace user moves
across multiple channels and mix data from several sources (like bank
transfer, browsing history, interactions with customer service and product
use) together for understanding more about user behavior and its conse-
quences. These tools help enterprises manage and analyze user behaviors
at any moment, find the moment that can influence users, realize custom-
ized functions and push customized information (i.e. upgrading the class
for a valuable passenger). Kenneth Cole, a retailer, redesigned their website
based on the long-term browsing history of their users: Some users prefer
to read production introductions, some for pictures, videos or promotions.
The website constantly adjusts content and allocation of the page in
response to every user and updates pages for users on a real-time basis.
Scenario Interactions: Information obtained during the purchase journey
like the physical location (entering a hotel) or virtual location (reading
production introductions) is used to attract users to engage in interactions
as the next step. For example, a piece of relevant information is provided
based on the current scenario. To be more specific, an airline app may
Figure 1.7. Traditional marketing funnel.
Source: I. Kaufman and C. Horton, Digital Marketing.
· The target of the sales funnel is driven by short-term goals and orders;
the goals of the digital engagement cycle are driven by long-term goals
and customer values.
Figure 1.10. The beauty board of Sephora.
Source: Sephora.
Figure 1.12. Volvo’s digital transformation strategy.
Source: M. Tannou and G. Westerman, Volvo: From B2B to B2B+B2C Company.
At the mobile end, Volvo has developed two unique functions: remote
control system and calling service. Users can have access to both tools
by cell phone.
Remote Control: Volvo clients can remotely control the function of the
car via mobile phones, such as starting the air conditioner, controlling
the door lock, checking the dashboard, locating the car and so on. This
significantly betters the user experience.
Volvo Calling Service: Volvo provides emergency services on motor-
ways through a local call center and Volvo customers can access the
Volvo call center directly via the first aid button on the car or the mobile
app. Through the GPS in the car, the call center can provide a full selec-
tion of package services: reaching the distributor nearby, calling a
trailer or giving out an alarm. Once a traffic accident occurs, the calling
service is initiated automatically.
Source: Volvo.
b3902_Ch-01.indd 34 17-08-2020 10.09.08 AM
9”x6” b3902 Marketing Strategy in the Digital Age
Laying emphasis on value-added service also increases the stickiness
and loyalty of the clients of Volvo and creates more opportunities for
distributors and clients to contact each other. Value-added services
help to know the needs of clients in different regions and better meet
their demand.
Digital capabilities at the global level: Collect and aggregate global
customer data and upgrade CRM systems to be global. Volvo creates a
unified storage database, integrates existing data (mostly from regional
agents) and sets up a digital process to continuously enrich and update
the data. “‘We got numerous data from our dealers,’ said Paulsson, Vol-
vo’s senior brand manager. ‘If we can collect the data of our products,
our distributors and our customers, we can have an overall understand-
ing of the business. Analyzing the data can help us find the way forward.
We have achieved very significant results and we have already known
who our customers are, what products they buy from us, how often
they buy as well as have after-sales service and how big their budgets
are. Unlike using the conventional product segmentation, we already
have the ability to segment the market in response to different groups of
customers. In this way, we have the ability to turn mass marketing into
personalized marketing.’”
can send the products to the customer’s designated address regularly based
on customers’ use frequency. This whole process, thanks to a strong data
system, is automated.
· Not many enterprises are capable enough to pay for big consulting
firms — many SMEs need consulting as well.
· Not every project needs a full consulting service — many small demands
are not satisfied, such as pricing for single products.
· Expenses by enterprises on consulting are never enough — but Hourly-
Nerd saves them 90% of the fees.
Dissemination
Dissemination refers to content placement through digital channels to
maximize visits. Attention should now be paid to how to realize effective
Figure 1.16. Digital maturity.
Source: KMG Research.
content creation and duplication, while we push them via multiple digital
channels for the best results. At the moment, it is not necessary to design
different content for different channels, while it is permissible to duplicate
contents on different channels. Another focus at this stage is the introduc-
tion and integration of basic socializing, for example, by adding the shar-
ing function, allowing visitors to share or like to help further disseminate
information.
Giga Circle from Taiwan learns from their direct sales, allowing users
to make profits while posting contents on the website and sharing them on
other social media. This whole population-based strategy prompted by
profits helps realize an explosive increase in traffic.
At the same time, all efforts should be made to improve, enhance
and reinforce. Constant consideration should be given to what attrib-
utes or elements can help realize higher user participation in daily
operations.
Besides, another crucial element of success is the establishment of user
communities. We need to know who our users are, ensure the connection
between the community and the marketing organization and that among
the community and eventually use observations of user community trends
as feedback to improve the strategy of the organization.
Sometimes we should use the best opportunity in a short period of
time to realize customized contents, for example: categorizing users by
keywords through data analysis and provide customized services based on
these keywords, like customized recommendation of music on Pandora,
news on toutiao.com and books on BookLamp.
When this period is over, marketing organizations ought to have had
a better understanding of user behaviors as well as what testing environ-
ment/elements could lead to the best conversion rate.
Lifelong clients
Lifelong clients are the dream of a company and also the crest of mature
digital marketing. But this will be a continuous phase, where the control
and decisions regarding long-term interests will be paramount. At this
time, big data has formed and has pending projection and judgment is
done through analysis.
Sensitivity to digital marketing gives the organization a fast response
to market changes. Through testing and individualization, automatic data
analysis will provide the best marketing advice, while decision-makers will
determine what marketing events to pay attention to based on the pro-
jected revenue.
These phases are defined based on KMG’s understanding of corporate
marketing activities. Purpose is behind the activities, while the under-
standing of essence is behind the purpose. The above tools are what are
being considered. Tools are only the means of realization, to “enable an
idea to happen”, whereas we need to further acknowledge the upgrading of
strategic thinking for marketing in the digital era. Compared with tradi-
tional marketing, how do our CEOs and CMOs need to upgrade conven-
tional views? How do the traditional and digital marketing amalgamate on
the strategic level? These are the questions that need to be answered in
Chapter 2.
Part II
Upgrading Digital
Marketing Strategy
Chapter 2
Upgrading Digital
Marketing Strategy:
Strategic Platform for
Digital Marketing
49
forward, such as terms that we are familiar with, like market segmentation,
target market selection, positioning, marketing portfolio or the 4Ps, ser-
vice marketing, marketing ROI, customer relationship management, and
terms that have popped up recently, including social marketing, big data
marketing and marketing 3.0.
In terms of the path of the evolution of marketing, we see it plays an
increasingly important role with strategic significance and gradually
develops into the most important and core part of business development,
namely, the market competition strategy. It helps to establish the continu-
ous customer base, build a differentiated competitive advantage and make
the business profitable. Around 50 years of marketing development also
shows that the value of customers is moving forward. In the past, custom-
ers’ value was exploited to help clients get sales revenue and profits; but
nowadays, gradually becoming the most important asset, they create value
together with clients and thus form an interactive brand. Through further
digitization of assets, enterprises, consumers and clients have become an
ecosystem. Moreover, marketing connects technology and data, thus
bringing them increasingly closer to each other. Positions like marketing
technology officer and digital marketing officer show how such talent is
favored on the market. These executives need to not only understand mar-
keting but also know how to process data, apply data, have an insight on
data and understand how to apply emerging technology to upgrade tradi-
tional marketing.
Figure 2.3. History of the evolution of marketing.
Source: Philip Kotler’s Speech at the 2015 World Marketing Summit, Tokyo.
2.0 Era
1.0 Era Product Customer 3.0 Era 4.0 Era
Center Positioning Value-Driven Co-Creation-
Marketing Marketing Marketing Driven Marketing
Target Products Meet and Make World a Realize Self-Value
Selling Maintain Better Place
Customer
Needs
Propulsion Industrial Information New Wave of Community Group,
Revolution Technology Technology Big Data,
Connection
Analyzing
Skills, Values
The Way Ordinary Clients Smart Complete Customers and
Enterprises with Customers Individuals Clients are the
see the Physiological with Ideas with Entities of the
Market Needs and Options Independent Enterprises
Ideas,
Minds, and
Souls
Marketing Product Difference Value Community Group
Concept Development and Big Data
(Continued )
b3902_Ch-02.indd 53 17-08-2020 10.10.28 AM
9”x6”
b3902 Marketing Strategy in the Digital Age
Comprehensive Comparison of Marketing 1.0, 2.0, 3.0, and 4.0
2.0 Era
1.0 Era Product Customer 3.0 Era 4.0 Era
Center Positioning Value-Driven Co-Creation-
Marketing Marketing Marketing Driven Marketing
Marketng Policy Product Enterprise and Mission, Comprehensive
Segmentation Product Vision, and Digital
Positioning Values of Technologies +
the Community
Enterprise Group Building
Capability
Value Functional Functional and Functional, Cocreation,
Preposition Value Emotional Emotional Realization of
Value and Mental Self-
Value Actualization
Interactions with One-To-Many One-On-One Many-To-Many Online
Customers Trading Relationship Relationship Engagement
and Integration
Source: KMG Research, Handout of Philip Kotler at KGSM.
meet the mass needs of the market. In such cases, enterprises were able to
expand the scale, standardize the product and lower the costs to attract
customers with a lower price. The typical example was the Ford Model T —
“Any customer can have a car painted any color that he wants so long as it
is black”.
Marketing 2.0 is customer oriented with information technologies as
the core. Enterprises started to build brand image and find emotional
attachment with customers. In 1970s, customers had easier access to prod-
ucts as well as service information, which means that they can compare
similar products easily with the gradual popularity of information tech-
nologies in advanced western economies. Marketing 2.0 aimed to satisfy
and maintain customers as well as the golden principle of enterprises.
“The customer is always right” motto helps enterprises succeed in the
market. In this era, the market, in the eyes of the enterprises, has been full
of smart customers with ideas and options; therefore, enterprises attract
customers by satisfying the particular needs of customers. For example,
FMCG companies like Procter & Gamble (P&G) and Unilever developed
over thousands of daily-use products at different levels to meet the
requirement of different individuals.
Marketing 3.0 is cooperative, cultural, spiritual and value-driven mar-
keting. Similar to customer-centered marketing 2.0, marketing 3.0 is also
committed to meeting customers’ needs. However, in the new era, enter-
prises must uphold greater missions, visions and values that serve the
world and should be committed to addressing problems in the current
society. In other words, marketing 3.0 has upgraded the marketing con-
cepts to a new high that attaches concerns to human expectations, value
and spirit. When world economy was volatile, marketing 3.0 and custom-
ers’ lives were tied-up more closely because of the rising influence of the
fast-changing society, economy and environment on customers. Enterprises
in the marketing 3.0 era were dedicated to seeking answers for those peo-
ple who were suffering from problems and brought them hope, and thus,
the enterprise could resonate with customers more easily. Also, enterprises
differentiated their positions by promising various values, which work well
especially during times of economic turmoil. Thus, Kotler also calls mar-
keting 3.0 as value-driven marketing.
Marketing 4.0, which was raised by Kotler recently, takes a further step
forward since it aims to realize self-value in marketing. In an abundant
society, Maslow’s hierarchy of needs including “physiological”, “safety”,
“belonging and love” or “esteem” can be satisfied more easily; hence,
self-fulfillment has become the main need, which is exactly the issue
addressed by marketing 4.0. With the emergence of the mobile Internet
and new communication technologies, clients can have easier access to the
required products or services and communicate with people who have
similar needs. In this way, social media came into being, so did the com-
munity groups of clients. The essence of marketing has now shifted to how
to have positive interactions with customers and respect customers’ values
as individuals, which enable more customers to create the value of market-
ing. In the course of client-to-client and client-to-enterprise communica-
tion, due to the “connectivity dividend” brought by mobile Internet and
IoT, a large number of customer behaviors and tracks are traced and data
are generated. We call it “bit-consumer”. The data of behaviors are actually
demand) and the overall demand. Marketing management aims to stimulate,
create, adapt to and influence customer demand. For over a century, P&G
in fact has only focused on one thing, that is, to discover the essential
demand of customers and create innovative products to satisfy customers’
demand with constant improvement. P&G has also set up an in-house customer-
learning center where real-life scenarios, including mini-supermarkets,
living rooms, and bedrooms, are simulated. Customers come here nearly
every day and participate in all kinds of investigations and tests. In its
Research and Development Center, there is a pilot workshop, where trial
products for customers are produced for fast customer feedback. All these
meticulous insights have been inscribed into the genes of P&G products.
Demand gives birth to products and channels and defines positioning.
Demand management, differentiated values and a base for continuous
deals are the core of marketing. In either traditional times or the digital
era, they remain the essence of effective and sustainable marketing.
Rumelt, an expert on strategies, pointed out in his book Good Strategy/Bad
Strategy: The Difference and Why It Matters that although everyone claims
having a strategy, it is not necessarily a good one. He also stated in his
book that the strategy is to “select the path to promote innovation and
realize ambition as well as decide what do the leadership and determina-
tion serve for, how to serve for it, and why.”
A good strategy usually adopts the following structure: The first step
is to diagnose, namely, to explain the nature of challenges, define the key
points in the situation and simplify the extremely complicated reality. The
next step is to decide the guiding principles for coping with the challenges.
The last step is to take organized actions; coordinated steps to implement
the guiding principles.
For digital marketing strategies, there are good ones as well as bad
ones. Similar digital tools might lead to completely different results
because sometimes the tools have not been accurately applied to hit the
“essence” of our target. From our perspective, the following five factors
help to know whether “digitalized” marketing strategies are realized or not,
namely, connection, bit-consumer, data talking, engagement and dynamic
improvement (Figure 2.5).
faster and think deeper: anytime, anywhere. Anything can be connected in
this path of evolution that goes beyond the boundaries of time and space
and characterizes the whole human existence.
“Connection” is the quintessence of Internet, Internet+ and digital
age as well as the fundamental law of all characteristics of the age.
Things such as “free business mode”, “communities”, “disintermediation”,
“fan economy” or “platform strategy” cannot exist without connection
because in the new economy based on the Internet, only when all things
are connected can the innovation of business mode or operation be real-
ized. In light of this, Hilmi Ozguc, the founder of an online video web-
site, Maven Networks, said that the Internet liberated time and space
and gave us freedom to make choices. Both resulted from connection
(Figure 2.6).
Internet, in the future, is about connecting everything. Connected
companies aim to create more connections to form an open platform
around which a long ecological chain will be established. Tencent said that
it connected individuals to individuals or individuals to services in the age
of traditional Internet. But in the era of mobile Internet, connection
becomes more complicated — it is not just about connecting individuals or
services but also integrating individuals-to-offline and online-to-offline, as
well as others. CEOs and CMOs need to think about whether your digital
marketing strategies have effectively “connected” these factors.
“Data Archeology” in the near future for our later generations to know
what is happening in our age by excavating and explaining the digital
assets of the study object and the data considering the online connection
with others instead of by shovels or C14.
Data and related content worldwide will increase by 44 times in less
than 10 years. In the booming big data age, big data collection, analysis
and decision-making will lead to transparent marketing, and it is of great
significance to transform customers and clients into bytes so as to track
and analyze their data. Many retail stores have started the transformation
and are upgrading to interpret their customers and related consumption
behaviors in 0s and 1s. One example is that retail stores of Prada attach
new bar code labels to all their clothes to record moments when customers
pick up, put down and try on the clothes and send the data to the back-
stage management system. By analyzing the number of clothes tried on or
the number of times certain clothes are picked up and put down, the
apparel industry can further develop and design new products and replen-
ish its stock more precisely.
• Around 60% WeChat users are young people (15–29 years old);
• Each young user has 128 WeChat friends on average, and the number
of friends on WeChat increases by 20% after entering labor force;
2.1.5.4 Engagement
Customer engagement is indispensable in corporate marketing strategy. In
the digital age, collecting data about customers is the most important step
in making marketing strategies, which endows customers with a greater
say in marketing. Not employed by enterprises, customers can be regarded
as external staff members who guarantee regular and efficient running of
the company, promote decision-making process and engage in the activi-
ties such as product design, brand promotion, event planning and channel
preference, which give them a sense of belonging to companies. In this
way, enterprises offer products and services that better meet customer
demand and gain more trust and market shares.
The birth of Wikipedia is a typical case of customer engagement. Up
to now, there have been 3.85 million entries in its English version, over 21
million entries in its independently operated websites in all 282 languages,
over 32 million registered users and over 1.2 billion edited versions of
entries in Wikipedia. It ranks fifth among the world’s top 50 websites and
is the only one run by a non-profit organization. With over 19 billion
monthly average page reviews, its operating budget is much lower than
others.
Engagement within the organization is also possible by contribution
from in-house members and other circles. One example is IBM’s biennial
Innovation Jam. In the first 3 days, senior managers define the issues for
discussion and hold online meetings to brainstorm new ideas. Later, the
innovative ideas are uploaded online for discussion and development in
America and Asia. In its Innovation Jam held in October 2008, 55,000 IBM
employees and 5,000 specially invited customers and employees’ family
members participated in the event for new creative ideas and solutions. In
the second stage, feasibility analysis was pitched in. In the end, IBM
invested US$100 million to support the 10 best ideas, which will also be
the top priorities for IBM. These include smart medical payment system,
smart infrastructure network, integrated mass transit information system,
digital self, 3D Internet, etc.
• According to the shopping list containing more than one million pieces
of credit card data, members are classified in accordance with the pref-
erence into different categories and brands and are then fed personal-
ized promotion information.
• Chaoyang Joy City has installed some 200 traffic-monitoring devices at
different locations in the mall to learn customer visit frequency through
the login status of the Wi-Fi site. By the coupons tied to membership
cards, offers favored by consumers are identified.
• After the tracking analysis of the passenger flow system, solutions were
provided to change the activity route of consumers. As another deeper
part on the 4th floor was open to the public, guests who were not famil-
“3C” is the basis of strategic analysis: Corporation, Customer and
Competition. Corporations should utilize their comparative advantage to
the maximum, to better meet customers’ needs and have diversified com-
petition with their rivals. A good strategy must deal with the relations
among corporations, customers and competitors and manage their
dynamics. Only corporations who can handle all of these factors have the
chance to win the battle (Figure 2.7).
STP refers to the three elements of marketing strategy. In modern
marketing strategy theory, Market Segmentation, Market Targeting and
Market Positioning constitute the three essential factors of marketing
strategy, which is called STP marketing.
Figure 2.8. Increased overlap between marketing and technology.
Source: KMG Research.
• product upgrades rely on “boundary expansion” and become
“product + community”;
• from Big Idea to big data;
• product service: from owning to sharing.
(4) Upgrade of price and channel strategy in the digital age
• from fee to free; subsidy strategy;
• from indifferent pricing to dynamic and scenario pricing;
• from single channel and multiple channels, to online-to-offline
(O2O) and offline-to-mobile (O2M);
• the combination of contacts and channels.
(5) Upgrade of brand strategy in the digital age
• from value orientation to values orientation;
• from persuaders to interlocutors and enablers;
• from hard advertising to content and data marketing;
• brand personality is more important: charm economy.
(6) Upgrade of customer service strategy in the digital age
• from customer relationship management to social customer rela-
tionship management (SCRM);
• from customer service representatives to full employee participation;
• from process oriented to conversation oriented: experience
management;
• from customer-tier management to core-tier and community
management.
Figure 2.9. Market research enters the digital era.
Source: KMG Research.
industries, location data and audio recognition technology can help enter-
prises better understand the real needs of users.
Retailers know what their customers have purchased and where they
have browsed in the store, while they have no access to what their custom-
ers are doing outside the store. However, knowing the behavior of custom-
ers in other places is of crucial importance to change the way of marketing
for enterprises. It is the data used by Placed, a Seattle startup, to provide
retailers with a variety of business services.
For applications and mobile retail websites, the first product launched
by Placed tells customers their application scenario. Unsatisfied, the com-
pany turns to Panels, who enable companies to track their app users’ all-
weather geographical locations (often with a small reward). Knowing this
information can tell you which department stores are most popular with
those people, which types of stores are seeing the biggest increase in traffic
growth and in which groups of stores exist the strongest or weakest corre-
lation (for example, people who visit one store will visit another). Placed
has created marketing data based on location, business type, demograph-
ics and so on. A high-end retailer, for example, found that many young
women came into its stores, but they rarely bought anything. The next
Figure 2.10. Sketch map of crowdsourcing.
Source: KMG Research.
for about 40,000 stores in 80 cities across the country can be collected in
3 weeks, and its authenticity can be guaranteed by GPS positioning.
Crowdsourcing is extremely efficient, less costly and constantly evolving.
In the US, crowdsourcing has already reshaped some of the industries:
a professional picture that used to cost hundreds of dollars can now be
bought for a dollar. A multibillion-dollar R&D challenge that a multina-
tional company could not work out before can now be solved by a small
team in 2 weeks. In China, crowdsourcing is secretly changing the market
research industry.
PPZ, a mobile self-service platform, provides part-time labor support
to business checks, customer research, data collection and product promo-
tion in O2O business by crowdsourcing. Corporate clients release tasks on
PC, while members receive notifications, perform tasks and submit status
report on mobile Apps. Meanwhile, clients can check the progress of tasks
at any time and then give a bonus through Alipay to those who finish the
tasks. Through the crowdsourcing platform, the needs of both members
and enterprises are effectively satisfied (Figure 2.10).
platforms like 12seconds.tv, Twitter, Facebook and YouTube were involved
in the process. This second online campaign involving 4,000 “Dew” lab
members selected three tastes through network vote, each having their
own fan clubs. After the launch of these three tastes, the fan clubs would
promote their taste in the official online community and various online
media platforms for it to be added to the permanent product of Mountain
Dew.
This multi-stage network marketing strategy makes enterprises’ pro-
cess of product innovation open. Every procedure, from name picking for
a specific taste to advertising creativity, has engagement from the public.
Each individual has a say in marketing strategy, which gives the consumers
a strong sense of belonging. As a result, these products have won the hearts
of many potential customers even before hitting the market.
brands through the detection of word frequency to help enterprises in case
of a public relations crisis.
Figure 2.11. Segmentation of users in the digital Era.
Source: KMG Research.
once dominated the mainstream and the mass market are gradually disap-
pearing. We are actually observing an increasingly diversified and tribal
society, causing changes in target market selection. For example, niche
marketing is on the rise.
The marketing strategy of a niche market is another new system and
KMG developed its implementation framework (Figure 2.12). We believe
that the strategy of targeting niche market requires a combination of “deep
diving” and “imagination”. “Deep diving” indicates to be closer to consum-
ers than before, by which enterprises become “owners of customers” to cut
costs. Customers now help companies expand market and create more
insightful content through mutual dialogue and engagement. “Imagination”
means to supplement the vertical thinking of deep dive with horizontal
thinking to increase the creativity of marketing. On the basis of a success-
ful deep dive, the niche market should be further opened through imagi-
nation. As for the implementation framework for the strategy of niche
marketing, we divide it into seven steps: particular customer groups, quick
connection, crowd innovation of products, promotion of layers, spread
among groups, derivation and additional profits.
year after year. Thus, he developed a “gift card network” via a website
which brings exquisite shops and gift senders together through online
transactions. It is easy for gift givers to obtain unique gift services for their
beloved ones, friends and partners on Giftwell. For example, the gift card
could allow them to enjoy a delicious meal in The Principal and The Press
Room. Giftwell has developed rapidly since its launch and now boasts of a
wide range of services from food and catering to spas and customized
travels.
Spread among groups: As we have discussed above, not all niche products
need to be accepted by the mass market, but many corporate deci-
sion-makers still have such ambitions. Coke Life, a drink with lower sugar
levels launched by Coca-Cola in 2013 had a green can with a logo of a
small leaf. The company promises that it is healthier than standard cola.
Designed as a niche product, Coke Life became its best-selling new prod-
uct in North America in 2013 among an increasingly health-conscious
modern population. Another typical case is On the Road, which was first
filmed by Zhang Xinyu and then spread among adventure lovers. Then it
was spread among different communities of YOUKU, with over 100 mil-
lion clicks at present. Jonah Berger, Professor at Wharton School of the
University of Pennsylvania, wrote the famous book Widely Spread which
discussed the conditions of spreading. KMG proposed five other elements
of spread among groups from different perspectives, which helped enter-
prises transform from niche influence to mass influence:
Additional profit: Additional profit follows derivation and is also the final
step in the strategic ecosystem of niche marketing strategy. On the basis of
connection, additional profits are gained by offering derivative products or
establishing a wider ecosystem. Such profits are based on the niche ecosys-
tem instead of the existing products or services. For example, the APP
Variflight.com began as a monitor of the punctuality of flights. Later, it
Figure 2.13 Matric for the influences of social media.
Source: KLOUT’s study on influence matrix.
the wine and food industry, including guest tasters, winemakers and
those who bring sake to China. The four elements that are vital to an
e-commerce player, including traffic, supply chain, marketing strategy
and brand, could be obtained through working with these KOLs.
• Innovators make up 2.5% of the purchasers and they are risk takers in
consumption.
• Early adopters account for 13.5% of the purchasers, and they are often
opinion leaders.
• Early majority, who calculate risks and make good use of social net-
work, account for 34% of purchasers.
• Late majority, who account for 34% of the purchasers, are average con-
sumers who are suspicious, conservative and price sensitive.
• Laggards account for 16% of the purchasers. They are laggards, but fear
the ridicule of the majority mentioned above.
2.4.6 Positioning: Logic of strategy, category and link
The term “positioning” is currently one of the most frequently used words
in marketing, but it is also one that is misused the most. According to
KMG, the concept of “positioning” in the marketing warfare involves con-
notation in three dimensions, including resource positioning, business
positioning and brand positioning in the mind of target market. However,
most CEOs and CMOs are not talking about the same thing. In the digital
era when positioning still matters, changes also take place. We capture the
three most important aspects of positioning. The logic of strategy is to help
the CEO and CMO know “what we are talking about when it comes to
positioning.” Category logic is the essence of positioning and the upgrad-
ing the positioning theory by Ries in his later years, which is still of vital
importance in the digital era. Link logic is an updated strategy in the dig-
ital era. After categories are built and success is made in the market, itera-
tion, extension and ecosystem could be realized where neglected and
denied in traditional theory.
First of all, we talk about the “logic strategy” of positioning. In our
strategy, positioning = positioning of value chains + positioning of busi-
ness modes + brand positioning perceived by the target market, whereas
Trout and Ries only referred to the last part.
is to become a category representative in the minds of potential customers
by keeping pace with the trend of business development, finding category
opportunities, becoming a category representative in the mind and pro-
moting the development of categories with continuous evolution so as to
lead the category to create an extraordinary brand.
Logic of category still works in the digital era. Now we move to the
logic of link, an upgrade based on category.
Logic of link: If logic of category is a deep dive vertically, then logic of link
refers to growth on a horizontal dimension. Under the vertical thinking of
deep dive, it supplements with horizontal thinking to increase marketing
creativity and open new market space through imagination. For example,
Douban is the base camp for “young people who love culture and arts in
China” thanks to its focus on the mediums of “books, films and music.” In
the era of the mobile Internet, several imaginative actions of Douban have
effectively expanded its product boundary horizontally. For example,
“Dongxi Douban” has entered e-commerce with creative shopping guides,
and “Moment Douban” is a form of media that intends to occupy the frag-
mented time of mass users. As discussed in Chapter 2, in the digital era,
“connection dividend” is realized. Category is the first step to success, but
it can be upgraded and expanded on the basis of links and even becomes
an eco-based enterprise. Of course, this is a higher level of strategic
thinking.
2.5.2 Boundary expansion to “product + community”
Mobile Internet is bringing us into an era of social dividend. With massive
homogeneous products coexisting, upgrading alone can no longer effec-
tively enhance user stickiness. Only by making use of the product devel-
opment community and then aggregating it can we make sustained profits.
Through the association of pictures and the pronunciation of sentences,
Baicizhan mobilizes all the senses of users to help memorize words and
gather English learners of all ages to form an English-learning community.
Then they sell English-learning books and might offer new English train-
ing. Logic Show built China’s largest community of knowledge, used its
product viscosity to influence and gather fans with the same interests,
established communities based on shared values and then offered cooper-
ation of socialized promotion for brand community by the connection of
merchants based on communities. As can be seen from these examples,
traditional marketing products have gone far beyond the boundaries of
products themselves and become a mode of “offering + community”. In
addition, the rise of digital technology and the Internet of Things make the
products diversified in more aspects. The blurred boundary between orig-
inal products and services enables the product’s strength to rise beyond the
boundaries of industries and imaginations. For example, Google can enter
into the automotive industry, Nike and Apple can develop a new genera-
tion of running shoes, and Pfizer pill also boasts of built-in programs.
possible. Third, the dynamic feedback mechanism supports management.
The sharing economy platform offers a dynamic pricing mechanism and
an evaluation mechanism by which the supply and demand sides can rate
each other, which becomes the best reason for the potential of a sharing
economy. As a fruit of the mobile Internet, the platform enables the supply
and demand sides to do business through mobile LBS application,
dynamic algorithm and pricing and mutual evaluation system.
Globally, Uber and Airbnb, players in the travel and accommodation
industry, are still typical successful cases in “sharing economy”, based on
which we believe there should be more chances of strategic innovation in
many other sectors. The shared resources can be divided into five catego-
ries: equipment, space, skill, brand, credit and time.
The first is equipment sharing, and people naturally think of Uber, a
car-sharing company. In fact, high-end photography equipment, yachts
and even private planes can all be shared. One of our friends owns a chain
of gyms. Customers with a card issued by his company can work out in in
any of his gym branches, maximizing the use of idle resources.
The second is space sharing. With Airbnb dominating the market in
hotel-type leasing, the sharing economy is also penetrating in office rental,
which meets the demand of short-term rental of offices. WeWork, an
office-leasing company, has just raised US$355 million in financing with a
valuation of roughly US$5 billion. WeWork rents an entire office building
at a discounted price and then transforms it into smaller offices and com-
mon areas for rent. In addition to space leasing, WeWork also provides
office facilities, collaboration services and other amenities for small
startups.
The third is skill sharing. The app “ZaiHang” is one example of the
sharing economy being applied in training service. Individuals who have
special skills can register on this platform on which they work like free-
lancers, rather than being attached to any training institution. Those who
want to improve their skills or get advice in a certain field can pick the best
expert to speak with, while experts can sell their skills and experience in
their spare time. Also, the skill-based consulting industry is also facing
disruption from the sharing economy. In Chapter 1, we have discussed
HourlyNerd, a Boston-based global online marketplace for consulting
services that connects companies of varying sizes with independent
2.6.1 From charging to free of charge and subsidies
A large number of Internet technology companies in Silicon Valley had
already practiced the concept of “free of charge” in the 1990s before Chris
Anderson raised this concept in his Long Tail Theory. In his book,
Anderson proposed six models of “free of charge” strategy: “freemium,
advertisement, cross-subsidies, zero marginal cost, labor exchange, and
gift economy,” which can be further classified into three groups. The most
typical enterprise employing “freemium” strategy is 360 Antivirus
Software, which is free to all customers but charges them for value-added
services. Companies employing “advertisement” strategy are Google,
Baidu and Tencent who charge people for their attention and clicks. An
example of a player that employs “cross-subsidies” strategy is Gillette,
who sells razor handles nearly at the cost price but profits from the sales
of blades.
Anderson only proposed the models but did not reveal the nature of
free strategy. What is its nature? We concluded that it can be understood
as “the innovation of business mode on the basis of customer equity.”
Customer equity is the discounted value of potential future revenue gen-
erated by a company’s customers in lifetime, which includes not only the
current value from customers but also the future value provided to a com-
pany during the entire lifespan of their relationship. Based on customer
equity, enterprises can cash the value by ways like deep digging, reselling,
cooperation, and trading, among which there are freemium, advertise-
ment and cross-subsidies.
The Internet age is featured by “integrated economy” in which the
boundary between industries and enterprises is increasingly blurred.
Against such a backdrop, enterprises with customer equity can infiltrate
into other industries via in-house expansion and cooperation with oth-
ers — Tencent into e-commerce and Ali into finance. Following such
strategy, providing free services or products is a good way to take in cus-
tomer equity. With a large customer pool, enterprises can profit from
business model innovation, such as attracting long-tail customers or
adopting “customer lock in”, wherein customers can only make deals with
them, like Gillette’s blade.
Dimension Two: Can we turn ourselves into a platform or port after pro-
viding free services or products?
Competitions in business throughout history are centered on “ports”
or “platforms”. What commercial real estate sells is essentially “flow of
people”, and the key point gradually transits to “clicks” in the PC Internet
and “user time” in the mobile Internet or wearable devices. Once a
“platform” or “port” is built successfully, various business activities can be
organized to increase customer value. For example, to drive economic
growth in Yunnan province, its government has first targeted people in
seven provinces as target customers and subsidized group tours, after
which they almost enjoyed free flight; but it is this strategy that has
brought 244 million tourism visits and over 200 billion RMB to the local
economy. During a recent visit to a well-known budget chain hotel group,
we also discussed whether it was possible to improve the value of its target
customers and transform hotels into “ports of life business circle” by con-
necting neighboring retail stores, catering service and tourist activities
whose profit can offset room price and have win–win outcomes.
Uber Surge Pricing is defined as follows on its official website: when
taxi demand is higher than the number of drivers on platform, the Uber
fare rates automatically increase to ensure readability and availability.
Also, it encourages more drivers to get back on the road and be able to
earn more. Behind this pricing mode is the supply-and-demand curve
in economics: the demand and supply are always in a relative balance,
but the balance point is in constant change under the influence of space,
time, region and even certain demands of a few people. All pricing strat-
egies are made to guarantee the balance between supply and demand,
and it is the imbalance between the two that generates business
opportunities.
From another perspective, Uber’s pricing rule is unique in that
through a large amount of data extraction, high-speed data processing and
the establishment of large-scale econometric models and database, the
price is adjusted according to the change in time, space, weather and road
conditions. The price is custom made based on different scenarios.
Business intelligence integration: With the highly developed network
information technology, business intelligence integration appeared and
cut costs for communicating information between enterprises and cus-
tomers and data sharing. In this case, not only enterprises but also custom-
ers can initiate sales by sending the demand information to corresponding
enterprises through various channels and having the enterprises produce
the products demanded or by sharing information for enterprises to cus-
tomize products according to the demands of specific groups. Customers
and enterprises are mutually selected and the initiative will be further
tilted toward customers.
The design of cross-channel and omni-channel strategies is a great
challenge for CMO’s channel management. In KMG’s consulting practice,
most enterprises said that the real difficulty was not in the design of
omni-channel and multi-channel approaches but in the accommodation
of interests between different channels, especially the enterprises with
franchisers and dealers because they faced the dilemma of whether they
should get rid of intermediaries or not.
Gone are the days when online and offline sales did not conflict with
each other. With the prevalence of retail stores being the “showrooms” where
customers can select products before buying them online, e-commerce has
become a threat for traditional retail business. It is a dilemma for the tradi-
tional offline retail industry to coexist with e-commerce because refusing the
latter means going against the trend, but embracing it might be attracting
enemies. Here we suggest four ways as follows:
Service-added value
Apple computers are sold 5–8% cheaper in online stores than in offline
stores, but its offline store is still a robust sales channel thanks to its sup-
porting services. Sephora integrates online and offline shopping
experience by the Skincare IQ service in physical stores to test skin condi-
tion and help customers select the best products according to their skin
type and concerns. In addition, Sephora worked with Pantone and created
a device called Sephora + Pantone Color IQ which employs Pantone’s color
capture and measurement technology to scan the surface of a person’s
skin, assign it an official Pantone SkinTone number and then find the
product that suits customers best among thousands of Sephora founda-
tions. By providing these services, Sephora makes its offline stores consult-
ant centers, and the excellent offline instant experience of the service can
motivate customers to purchase the items immediately, which makes up
for the price disadvantage of offline stores.
Scan-and-go
Online stores are cheap and convenient, while offline physical stores must
improve their shopping convenience to compete with their online coun-
terparts. The retail giant Walmart has optimized its mobile application by
designing an “in-store mode” for the offline shopping scenario and applied
“scan-and-go” in some chained stores by which customers can scan prod-
ucts with mobile phones and save the time for checking out.
Shopping by scanning the QR code with smartphones caters to the
busy lifestyle of white-collar workers, and this technology also integrates
the two Ps of “Promotion” and “Place” in marketing. Tesco and
Cencosud, two traditional retailers, set up virtual shelves in subway sta-
tions in South Korea and Chile. By scanning the QR codes on these vir-
tual shelves, customers can add the products they need to their virtual
shopping trolleys and pay with their smartphones. If customers complete
the payment before 7 pm, the goods can be delivered to certain areas of
the city on the same day. Peapod, an online grocery market in the United
States, has rapidly developed due to its first-class home deliveries. At the
end of 2012, the Internet grocer launched its QR codes for purchases by
which shoppers download the grocer’s smartphone app on the display by
code and browsing thousands of items featured in the app. Other players
like Walmart and P&G also improve the convenience of sales by QR
codes.
Retailers like Target, Suning and BestBuy have launched the same-
price strategy in online and offline stores, which is easier to be realized for
these players because they invest and control their physical channels
directly. If this strategy does not work, another approach is to share bene-
fits across parties. In Europe, C&A encourages staff in offline stores to
register customer contacts and then their online shopping consumption is
included into the sales of the offline store while the offline store gives
commission to online channels as well. This model, known as offline affil-
iates or “Offline to Online”, benefits multiple parties by sharing profits and
works in cases when customers make online deals by scanning the QR
code offline. Only when the interests of online and offline stores are well
adjusted will the enterprise transformation and the co-existence of online
and offline sales start.
in breast cancer awareness month and greatly promoted its influence. Its
target customers are females who are concerned about breast cancer, and
therefore, Campbell Soup’s selling directed at females was a great success.
The social brand ranking in 2013 has covered a wide range of indus-
tries, the top 10 of which are well-known organizations, such as American
Airlines and Tesco, and some innovation companies like the fruit juice
industry. According to their experience, companies can figure out how to
pursue the digital path in their own organizations.
Liu Shengyi, the SVP of Tencent, thought that as the mobile Internet
connected humans with everything, brands should transform from being
Figrue 2.16 The illustration of enterprise personality archetype.
Source: Peter Walshe.
and data alone. Now, as big data is given full access to display advertising,
while real-time bidding (RTB), private marketplaces (PMP) and demand-
side platforms (DSP) emerge, machine learning and data algorithm have
already replaced experience in buying ads. Marketers can create models,
make forecast by logistic regression and upgrade parameters by machine
learning. When data management platforms (DMP) and DSP are established
and the information for advertising purposes and budget are entered, the
advertising spaces are automatically purchased by the system. However, since
such programmatic media buying based on big data just emerged in China,
its algorithm and advertising effectiveness need to be further optimized.
there are archetypes in the collective consciousness of the human brain.
Archetypes, fixed in the unconsciousness, are present in the human mind
from birth. They arouse people’s deeper feelings and reflect the eternal
pursuit of the meaning of life.
According to the research on the interrelation between the archetype
and the enterprise personality, Peter Walshe has classified archetypes of
organization personalities into 10 types including friend, mother, king, the
wise, hero, rebel, sexy lady, the fun, dreamer and the maid based on
“well-being — challenge” and “stability — change”. For example, LV and
Cartier have been building the character of a “king” in everything they
communicate on; brands like Nike and SEVEN present themselves as
“heroes”; P&G turned to “mum” in 2011; Virgin and Apple under the age
of Steve Jobs were typical rebels, which is displayed by either his famous
1984 ad or his vision of “Changing the World again” when he returned to
Apple.
Things that appeal to the audience in the digital age are different from
those in the traditional age. In the past, most enterprises try to build a
charming image under the dimension of “stability” and “well-being”, such
as Mars, Unilever and Coca-Cola going for a “friendly” personality, and
LV, Cartier and Microsoft for a “king-like” image, which are not “vivid”
enough since people nowadays desire for “a real human character with
weakness”. In such cases, the corporate image is switching to the other
dimension of “challenge” and “change”. Only when both dimensions are
taken into account will an enterprise present endless charm. Luoji Siwei
(Logical thinking) and Tesla just correspond to the two characteristics of
“jester” and “rebel” that are a cross of these two dimensions.
Figure 2.17 Customer relationship management vs. social customer relationship
management.
Source: KMG Research.
• If the problem is about price and service, the customers are four times
more likely to turn to the competitors.
• About 55% of customers are willing to pay for better customer service.
• A 10% higher rate in customer retention rate brings a 30% increase in
company value.
• Accessibility: Is it easy for customers to reach a product or a service?
• Feeling: Is customer experience meaningful?
• Expectation: Can enterprises deliver the promises in relation to their
rivals?
• Consistency: Can the enterprise provide consistent and reliable value?
• Staff Interaction: Can after-sales customer service reach or go beyond
expectation?
transformation of marketing roles from “influencing customers” to
“helping customers express themselves”, and from “brand generated
content” to “users generated content”. According to many field trips to
companies, we have found that their social media is nothing more than
opening a Weibo account and posting fixed content every day, which
brought little result due to the lack of communication between customer
service and brand information.
Chapter 3
125
Figure 3.1. 4Rs of KMG digital marketing.
Source: KMG Research.
aiming and reaching but not that of using marketing input to turn into
customer assets. One critical step is to ask whether your marketing has
“established a basis for continuous relationship”. Many communities
could ensure direct and deep connections, interactions, and partic-
ipation between enterprises and clients in an environment of disin-
termediation. This is the Enterprise 2.0; this is also what Philip Kotler
mentioned at the Tokyo meeting when he said that “marketing 4.0 is
helping clients to fulfill themselves”.
· Step 4 — Return: It helps to ensure that marketing is not only an invest-
ment but also a means for direct returns. Many enterprises have com-
munities and fans but it leaves the problem of cashing these resources.
We have proposed many ways by which customer assets can be capital-
ized on.
The four Rs form a loop and are easy for CEOs and CMOs to under-
stand, apply, use and receive feedback.
3.2.1 Origin
For a long time now, marketers have been pursuing various methods to
better understand clients in order to maintain sustainable sales and to keep
their brands alive. Consumer profiling is the result of such a pursuit. From
the concept of user profile (persona) to customer profile by big data, mar-
keters never stopped exploring their clients’ mindset (both consumer
profiles and persona have been translated as user profiles, but for the sake
of argument, in the book, persona refers to user profiling alongside cus-
tomer profiling).
The idea of a persona was put forward by Alan Cooper, the father of
interactive design in the 1980s, and indicates features or attributes that
come from real user activities that can be used to form user models. They
represent similar attitudes or actions that different user types have, and
these are virtual user images. Persona divides people into different groups,
with each having the same or similar purchases. Because they share values
or preferences, they demonstrate similar attitudes regarding a brand, prod-
uct or service. Hence, persona describes the most salient differences
among the different user groups. At first, personae were based on the
behavioral data of few users; with the development of data and technology,
the number of users as targets of analysis increases. Now personae are
widely applied in online business, marketing and advertisement.
Personae can be easy or complex, depending on the purpose of using
such personae. That notwithstanding, the core use of personae is to help
enterprises understand what elements drive different client groups to buy
or use products and services that they provide. In marketing, personae are
often used together with market segmentation, representing the typical
Figure 3.2. Examples of basic information contained in a persona.
Source: KMG Research.
Figure 3.3. The big data consumer personae.
The definition of dimensions of a profile varies with purposes, but a
typical consumer profile usually contains the following, which can be
overlapping as perspectives differ:
Figure 3.5. Thermodynamic chart of people who are trying to lose weight in Shanghai
during weekends.
Source: TalkingData.
Figure 3.6. Preferences of online apps of young mothers in November 2015.
Source: TalkingData.
shows part of the offline profiles of people who diet in Shanghai. Big data
profiling technology can be used to derive working locations, residence
and consuming places based on the geographical movement of targets.
Enterprises can determine more precisely where to place their advertise-
ment based on these thermodynamic charts. Figure 3.6 shows the prefer-
ences for online apps for different mobile mother-and-child care users,
whose use preference can be relied on to deduce the demand patterns of
such a group. And enterprises can use these analyses to determine the
different types of contents and apps that can be shown to them.
In the current scenario where nothing is unconnected, the huge
volume of data and the myriad types of data permeate the whole society.
If we regard customer profiles as an upgraded version of personae, then
the evolution of big data customer profiling is shown in the following
aspects:
Table 3.1.
Comparison of conventional customer profile and big-data customer
profile.
Conventional Profiles Big-data Profiles
Nature Description of typical Full image
features after abstraction
Data amount Random sampling with All-around and full sample
limited samples
Source Limited, largely sampling, Also include behavioral data
operation and market and third-party ones
Collection Direct contact with customer Direct contact not required
Key demonstration Behavioral motives (why) Actions (what)
Dynamics Static Dynamic
Focus Designing communications Determining target groups and
for better experience estimate marketing results
Source: KMG Research.
Figure 3.7. Generation of profiles.
Source: KMG Research.
Establish tags and weight systems: Tagging in the common sense
means the categorization and summarization of people, things,
events or important features of scenarios. Tagging is the precondi-
tion for precise or individualized marketing that helps us to observe
and understand consumer needs and actions in a better manner.
With the tagging system, myriads of data in the past can be turned
into realizable digital marketing plans. Tagging primarily uses IT to
allow computers to automatically pick out features of subjects. As a
probability, weight indicates the possibility of a specific type of cus-
tomer behavior that may occur or the customers’ level of demand or
preference. The weight of one behavior may create a different weight
at a different place or a different time, whereas different reactions to
one good or event will create different weights.
· Rules deduction or modeling: Clustering and correlation rules and
logical regression are used to analyze data to discover the correlation
between data. For example, analysis shows that client A often buys milk
from one website or that 90% of the time he buys from the same web-
site. One user data may create multiple or even dozens of correlation
rules. Hence, big data may be able to reveal thousands of such rules.
This step can also be called as modeling, which means data models
are created based on the behaviors of customers. Consider e-commerce
merchants as an example. Modeling will show which user takes what
action online at what time and on what website.
· Verification: Testing the validity of correlation rules or models discov-
ered to ensure that such rules or models capture user characteristics,
as only verified models can allow accurate prediction of the marketing
results. If analysis shows that client A dines in an expensive restaurant
over the weekends (assuming 70% probability over the past 3 years),
then we must verify that such a rule is not random. There are many
ways of verification which we will not discuss here.
· Profile generation: After verification winnows out random discovery
or models that cannot accurately reflect the reality, the rest of the mod-
els become customer profiles, whereas enterprises could tag custom-
ers, know what channels and products are liked by clients and then use
them in marketing decision-making.
Figure 3.10. Sampling and full sample.
Source: KMG Research.
big data customer profiling does not have such a problem. For example, a
company wishes to analyze the needs for leatherware in the national mar-
ket, to choose product and marketing strategy facing the different regions.
There will be many dimensions: region is the first one, hence, every region
will have three categories of customers with an annual income of RMB
100–200k, RMB 200–300k and RMB 300–400k. The third dimension
could be gender and the fourth may be different types of leatherware. And
there will be a fifth, a sixth and so on. Traditional sampling may struggle
to meet the needs of the analysis in one single time. Suppose there are
5,000 samples nationwide, then at the regional dimensional there could be
only 1,000 samples per category. The number of samples could drop to
several dozens at the fourth or fifth level. Hence, the results at deeper lev-
els based on such numbers of samples are not going to be accurate. But big
data customer profiling is like a high-definition picture with its sufficiently
huge samples: however, blown up, the details will always be clear.
best to meet these people (channels) and when they would appear (place-
ment time), so that they can stage a surprise meeting, say the right thing
(communication content), do the right thing (design of promotion activi-
ties), send gifts that touch the heart of customers (product/service) and
help the ties bloom and grow (management of customer value). This is the
process in which customer profiles turn into business values.
3.4.1.3 Choice of channels and placement time: Good ideas are valuable
only if channels and moments are right
For a carefully planned customer encounter, enterprises first need to be
aware of what places their customer frequents. Finding these places means
finding the channels. The huge volume of data that big data customer pro-
filing collects are behavioral data, including movement data, like places
frequented; net data, like webpages most often viewed; and app use data,
like what apps are most frequently used or which mailbox is being logged
onto; even what programs customers like to watch at what time and
through what terminals. All these data can help us know how customers
are distributed in terms of information channels and purchase channels,
thus allowing us to choose the most efficient strategy. We have found that
most enterprises concentrate most of the energy on how to make the
content more eye-catching when they plan promotions. Ideas are revisited
time and again and scrutinized word by word, whereas comparatively
speaking the choice of communication channels is too carelessly made.
This may be because we were not able to obtain detailed information about
our viewers from media or channels; hence, we could only use general
concepts like coverage or reach, or whether it is high-end, mid-end or low-
end people who view these channels. However, with big data, today we can
accurately know the habits and preferences of each and every user, rather
than just having an ambiguous and conceptual description. While we
know how customers are distributed across information and purchase
channels, our advertisements can become really target-oriented, saving
resources as much as possible. At the same time, as we could learn of the
accurate time when customers come in contact with such channels, cus-
tomer profiles could also enable us to choose the precise moment for
placement, at a right time and at a right place.
think (thoughts and feelings), hear (information channels), see (website,
products, experience), say and do (behavioral data), pain points and sweet
points. They match profiles with products, so that they know what prod-
ucts customers intend to need, avoiding recommending advanced prod-
ucts to entry-level product users. On such basis, Roland wrote a manual for
guiding communication called Bible for Customer Profiling to guide the
enterprise in writing communication contents and releasing new products.
Roland UK discovered that with the guidance of this manual, they could
quickly seize the demands and expectations of customers, know what lan-
guage, style and image to use when they design their promotional events,
establishing real links with customers. This manual has been widely used
among Roland UK and has become the main basis for designing commu-
nication contents and website. This has changed Roland UK’s marketing
results: their KPI surged, bounce rate dropped and conversion rate
increased. More and more customers spent more time viewing Roland’s
website, and with more viewing, its place in core product ranking and key-
word search rose, garnering more positive feedback from customers.
Customer profiling can provide values that traditional sampling can-
not: accurately placed customized advertisement. Customers used to
appear as a collective image, whereas in the age of big data, customers have
more detailed features, and customer profiles can reflect individual cus-
tomers to the fullest. Take customized recommendation in e-commerce as
an example. Enterprises know what goods each and every user has viewed;
how long have they stayed on and what have they bought. Therefore, pro-
files can reveal what type of consumer each user is and what might be the
other relevant needs they may also generate. Based on their purchasing
and browsing records, more accurate customized recommendation can be
suggested, which can be about upstream or downstream goods on the use
chain or be products of the same category. For example, if user A buys a
sewing machine, then recommendations could be about upstream goods
such as manuals that teach clothes-making or handicraft or downstream
goods such as cloth and other supplementary materials, or related prod-
ucts such as feet; if customer B buys essence, then the merchant would
recommend essence lamps or other essence. Another recommendation is
based on the correlation revealed by customer profiles, for example sup-
pose the merchant finds out that many who bought A also bought B, in
Table 3.2. Content preference of education app users in first-tier cities.
Beijing Shanghai Guangzhou Shenzhen
Early education 106 73 88 115
K12 102 99 98 97
Higher education 116 101 99 61
Vocational/Skill training 96 83 107 114
Language learning 103 117 89 91
Teaching tool 99 113 91 94
Source: TalkingData.
3.4.2 Make marketing more anticipating: Looking at the present
from the future
3.4.2.1 Accurately assessing the market and reasonably distributing
the resources to increase ROMI
The big volume, multiple dimensions and high precision that characterize
big data consumer profiles may help us identify the trend of new demands
or new potential customers. Similarly, customer profile analysis helps
identify where the potential customers who are most likely to be converted
are located and how likely it is to realize cross-sales and continuous sales
among old customers. Hence, we are more capable than before to estimate
the size of the target market. Accurate estimates allow enterprises to make
more anticipatory marketing strategies and plan in a scientific way
resource allocation in marketing, avoiding wasting resources and opportu-
nities by overly optimistic or pessimistic estimates, thus increasing the
ROMI.
competitiveness of enterprises. As a result, enterprises that place special
attention on user experience often tend to build brands as an experience
and to communicate their values through customer experience.
But understanding is a matter, and practicing it is quite another, as
there are many reasons that can contribute to differences between concept
and actions: the attention of the decision-makers is often diverted in rou-
tine work and may result in the omission of the real needs and experiences
of customers when they make decisions; not all employers have the aware-
ness to serve customers as their marketing team and CEO do; and cus-
tomer profiles or other customer insight may not be well known across the
company even if they exist; some personnel who come in contact with
customers may not clearly understand customer needs and motivations;
difficulty in cross-departmental cooperation in a big enterprise often acts
as an obstacle to improving user experience. In the Customer Experience
Index Survey 2010 carried out by Forrester Research, there are only 13 out
of 133 big Northern American Enterprises highly recognized by custom-
ers, and 45 of them are rated as bad. Therefore, there is always room for
closing the gap between the customer demand that enterprises understand
and the real experience of customers.
A common flowchart often centers on enterprises and designers, pri-
marily representing the process and relevant variables. If the demands of a
customer are not well reflected, it is less likely that customer sentiment will
be reflected. The customer journey map, however, helps enterprises reex-
amine from the perspective of customers whether customer needs are
correctly understood and satisfied at every check point, rather than
designing products, services or interactions based on its own understand-
ing. Customer journey maps provide an “inside-out” approach to enter-
prises, treating customers as the center while letting them participate in
the design of corporate activities. Such an approach embodies the way in
which enterprises treat customers in the marketing 4.0 age: customers and
clients play a crucial role in corporate decision-making.
Customer experience is important, not only because good experience
can make purchasing activities happen but also because it engenders cus-
tomer confidence in enterprises. Such confidence is the adhesive between
customers and enterprises and helps customers stick to and support enter-
prises even when they make small mistakes. This is the ultimate purpose
of enterprises using the customer journey map to improve customer expe-
rience. Under that objective, the customer journey map is significant for
the daily operations of enterprises in the following three aspects:
Now that the customer journey map can detail customer needs and
feelings, does it overlap with customer profiles? The answer is “No.”
Customer profiles or personae show the overall needs and the tendencies
of a customer, a process from zero to one, whereas the customer journey
map breaks down the customer demand in customer profiles in every
interaction with enterprises so that they are more easily understood and
recognized, which is a process from one to zero. Customer profiles or per-
sonae are the basis for the customer journey map. First, there is a general
understanding of the customers, then such understanding is broken down
to create the journey map, correctly understanding the customer needs and
feelings from the customer’s perspective. Different types of personae may
have different journeys that create different steps, MOTs or touchpoints. If
an enterprise wishes to provide better customer profiles, then it must com-
bine customer profiles or personae and the customer journey map. Still,
not all enterprises that need to make the customer journey maps have
defined customer profiles. While mapping out the customer’s journey, an
enterprise may have sorted out customer personae regarding a certain
product, service or online experience (but not big data customer profiles).
· Need: What does a customer want to get from the enterprise, what does
a customer desire to realize in each interaction, what assistance does
a customer require to help realize his/her targets, what treatment and
feeling does a customer expect to get and if there are needs that cus-
tomers themselves have not yet realized.
· Do: What are the steps and actions taken to realize the objectives of
target customers, what are the interaction points or touchpoints in each
step and how does a customer interact with enterprises.
Table 3.3. Three core elements.
Core
Elements Content Definition
Need Overall need What do customers want from a company
Breakdown needs What objective do they want to achieve in every
interaction
Conditions to be met What help do they need to achieve the objective
Expectations What treatment and experience do they expect
Hidden needs Whether there are needs they are unaware of
Do Steps Steps that must be taken to achieve the objective,
breaking the journey into small actions
Interactions What interactions are there in each step
Touchpoints What touchpoints are there in each step
Way of interaction How clients interact with businesses
Channels How do customers interact with company
Services Channels through which each step and touchpoint
happens
Key persons or What department provides the services and what
departments key figures affect customer experience in that
touchpoint
Key triggers What are the elements that trigger interactions,
feelings and moving on to the next stage
Interactions and What improvements can be made to better meet
touchpoints to be customer needs
improved
Feel MOT Most important MOT in the journey, such as
moments of pleasure and satisfaction, or of
setback, disappointment, anger and frustration
Satisfied or not Whether customers think their needs are satisfied
and recognize the values of these interactions at
each stage, interaction or touchpoint
· Feel: How does a customer feel before, during and after the interaction
with the enterprise, if a customer feels that their needs have been sat-
isfied, whether customers are satisfied and whether customers believe
that these interactions are valuable.
Source: Forrester Research.
Apart from these, the three elements can branch into other specific
elements, such as customer profiles, which the enterprises can add accord-
ing to real conditions.
The process of making a customer journey map is divided into 10, 5
or even 3 steps. However they are divided, the approach remains largely
the same. Here, we primarily use the five-step process of Forrester to
demonstrate how customer journey maps are made (Figure 3.15):
· Step One: Sorting internal understanding. First, one must collect all
the customer studies that one has made, like customer profiles and
other documents, and give a chance to all the stakeholders (including
interested persons and pioneers that are spread across functions and
channels) for them to provide feedback from their perspective on cus-
tomers; centralize all dossiers and internal insights to create a “superfi-
cial knowledge” of customers. If there are no existing customer profiles
or personae, then more data collection and mining may be needed at
this stage.
· Step Two: Establish an internal hypothesis. At this stage, organizers need
to further consolidate the understanding made by all the parties regard-
ing their customers, including categories, needs, behaviors, feelings and
advantages and chances for improvement in customer experience. Based
on this internal understanding and hypothesis, an enterprise forms a
draft for the customer journey map. At this stage, the organizers also
need to find out what cognitive gap there may exist in existing customer
studies, which will be an important lead in studies to come.
· Step Three: Studying what customers need, do and feel. At this step,
multiple research approaches are needed to understand the journey
from the customer’s perspective, like using social media or contextual
observations and interviews to evaluate the mood of customers and
what problems they have encountered in the journey. An external (cli-
ent) perspective is formed through observations and research, through
which an enterprise can understand the sentiments of the customers
and the problems they encounter during the journey. An external angle
can help enterprises understand customer experience and issue on
every touchpoint and close the cognitive gap found in the next step.
· Step Four: Summarize research results. In this step, organizers need
to consolidate internal and external cognition and verify whether the
related hypothesis about customers in step two is correct, which would
finally lead to the three core elements of customer journey map: what
customers need (what they wish to obtain from each interaction), what
customers do (how they interact with the enterprise) and how do cus-
tomers feel (feelings about each interaction). Enterprises that have not
yet had customer profiles can now develop definitive ones based on the
results of the previous steps.
· Step Five: Drawing customer journey maps. Enterprises visualize the
above results. Enterprises first map out all the stages of the entire cus-
tomer journey noting all the touchpoints. Then they clarify what are
the customer needs on each touchpoint and what and how many needs
have been satisfied and then mark the most enjoyable and most disap-
pointing moments in MOT. They then draw a few more if one customer
journey map cannot be applied to all customer profiles.
Once the map has been drawn, the enterprises can also draw the cor-
responding flowcharts for backstage support or services to materialize the
application of the map.
It can be seen from the constituents and the drafting process of a
customer map that while the clear line is the timeline, behind the line are
connections for each scenario. It is the good experience in each scenario
that allows the timeline to be continued. Hence, creating customer experi-
ence is creating more interaction and more enjoyable experiences, so that
customers may have more positive MOTs while interacting with the enter-
prises. Enterprises can clean up barriers between each stage through the
study of customer journeys, leading customers on to the next stage, finish-
ing the whole journey and starting a new one with the enterprise.
Chapter 4
163
· Faster reach: The rapid spread of information in the digital age can no
longer surprise us. Having knowledge about the speed with which digi-
tal communication can be made, information sent by enterprises can be
shared with the digital users in just a split second via digital channels.
· Oriented by target audience: Traditional communication consists of
“transmission and spread”, which means a process of information trans-
mission is required before the audience receive messages. Information
sender — the company — has a strong influence on what information is
transmitted, in what way and to whom. However, the way digital infor-
mation is transmitted is more like “spread and transmission”. A limited
number of audience know the information first-hand, actively transmit
it based on their own preferences and ways and spread it to the whole
network in a short time. Enterprises cannot completely control this
process. In many cases, the scope of communication and the degree of
information distortion can hardly be imagined by enterprises.
· Multi-way interaction: It is difficult for traditional information send-
ers to understand the opinion of information recipients, which further
increases the arrogance of information owners and their contempt
for the market. Many failed market activities were ruined by a lack of
in-depth knowledge of the information recipients, such as the launch of
Coca-Cola’s new flavor products and the rebranding of Toyota’s Prado.
In the digital age, information receivers have acquired voice-making
capabilities. In such an environment, information dissemination activ-
ities are no longer a one-way communication, but multi-directional
information interactions.
· Hypertextuality: Traditional communication has adopted a variety of
information methods, but its essence is still text-based information.
Digital communication, going far beyond the text, allows recipients
of the information to have access to richer, easily digested and better
experienced information by organizing information in various forms,
including videos, interactive applications and even virtual reality (VR).
effects. KMG divides digital information coverage and delivery into four
categories (see Figure 4.1).
method mainly referred to search engine optimization (SEO), which aims
to increase the visibility of corporate information in search results. The
advances in digital technologies add more variants to this form, and there-
fore, enterprises can attract, influence and lead clients to make favorable
decisions by diversified experience, like social media marketing, SoLoMo
and App marketing.
There are a number of ways for the coverage and reach of digital infor-
mation, and new tools will emerge as digital technology advances. In
Figure 4.2, we demonstrate scenarios covered by the various digital mar-
keting approaches. Considering that too many details will make the book
look too technical, we hereby only screen out some important methods or
some with successful cases for further discussion.
of search result rankings, and it should be integrated as a key element in
website development.
· Customized search: Every individual is different. Labeled by different
tags via machine learning with data collected on the Internet, users
receive disparate search results.
· Community search: It helps companies in niche marketing to quickly pick
out the community, build an effective connection and even make a deal.
Figure 4.4. Netflix’s online film service.
Source: Netflix.
4.2.3.3 Stage three: The era of user
With the increasingly diversified content, forms and experiences on the
Internet, the way users access the Internet is more personalized and frag-
mented. The more ways to drive traffic to the Internet, the better we know
our users. Based on technologies such as cookies on PC Internet and SDK
on mobile Internet, customer profiles are becoming increasingly clearer
and behaviors are being better predicted. As a result, digital advertising
has also been user centered. Through the in-depth exploration of user
behavior and personal attributes, brand owners can purchase ad place-
ments on the page at the moment when target clients show up, and then
dynamic ads will appear in their feed. Thanks to the various tools of the
digital advertising technology (such as data management platform (DMP),
private market place (PMP), and real-time bidding (RTB), advertisers only
pay to reach the most valuable potential customers, greatly improving the
accuracy and efficiency of digital advertising.
In order to better target ads, advertisers need to have insights about
their target clients, which can be acquired by the following methods:
methods may vary, and here, we mainly introduce both real-time bidding
(RTB) and PMP.
(3) Real-time bidding
RTB, namely real-time bidding, is a means to purchase digital advertising.
When a user is browsing the website or performing a digital activity (such
as tweeting), advertising inventory in real time is presented on a trading
platform where with instantaneous auction, advertisers bid on an impres-
sion. If the bid is won, the buyer’s ad is instantly displayed on the publish-
er’s site. It takes only 30 milliseconds for a complete process, which means
that the winning bid is selected and the ad is displayed to the user, while
the requested page is loading.
The significance of RTB is to greatly improve the accuracy of digital
advertising. Compared with traditional PPC (charging based on the num-
ber of users), CPM (charging per thousand views), CPC (charging per ad
click), Monthly Flat (charging per month), Daily Flat (charging per day),
etc., RTB greatly reduces invalid exposure.
(4) Private Market Place
PMP, also known as a private trading market, bridges traditional direct
sales and programmatic purchasing. Advertisers purchase target ad place-
ments in advance to obtain premium inventory and then manage the
placements through programmatic purchasing, by which target customers
only see the advertisement they are interested in. Unlike RTB, ad inventory
is traded in advance; therefore, enterprises can manage the advertising
space with full power and display different contents according to the types
of customers. Take health care product manufacturers as an example.
When the elderly are browsing the website, commercials of their interest
are displayed according to the preset. When a female user is online, hair-
dressing and anti-aging products might be in her feed. Because of uncer-
tainty in ad placements, time and price, RTB bring advertisers a lot of
concerns which could be addressed by the PMP approach, offering adver-
tisers a “customized” service.
When HUAWEI Mate7 just hit the market, HUAWEI made a round of
digital advertisements through the iClick XMO platform to attract the
user group of HUAWEI and its rivals. According to data analysis, the tar-
get audience of HUAWEI Mate7 is male users, aged between 26 and 40,
who are interested in fashion, automobile, films and television, IT, sports
and finance. iClick labeled such a group by different tags and immediately
purchased ad placements associated with the groups. By displaying
numerous M7 commercials, results far exceeded the expected results with
the total click volume, exposure, average click rate, crowd coverage and
other monitoring indicators improving to varying degrees. Mate7 has also
become one of HUAWEI’s most successful products. Its popularity has led
to a long-term stock out after launching.
Figure 4.6. Strategy of content marketing.
Source: KMG research.
· Grounded on its brand value, the marketing theme is very clear and
gradually reinforces it in users’ mind. Content is not developed at
random or blindly but is rooted in the core value of companies and
brands, by which, brand image and awareness is set up and strength-
ened among the public. For example, Lego has been strengthening the
idea that “Regardless of age, anyone can pick up Lego pieces and let
their imagination run wild” in its product philosophy, IP film The Lego
Movie, and community building.
· Circle awareness: Such content represents an exclusive “circle/tribal
identity” usually only limited among professionals from a certain
industry or higher degree holders. Thanks to contentment from such
privilege, content can be widely shared within a community.
· Visual content: According to a CMO Council study in the second
quarter of 2015 in North America, two-thirds of the senior marketers
Customers visit the corporate website to gather information about the
details of the products and obtain service support.
(3) Social media: It aims to build a social media community, the key
of which is to involve the customers in need through content,
entertainment, contests or services.
(4) Mobile devices: They build a variety of available connections to inte-
grate the above-mentioned three digital contacts and increase the
function of location-based connection and instant communication.
E-mail marketing has long been applied, and it is still a great way to
stay in touch with customers and an effective word-of-mouth marketing
tool through which brand owners can best recommend their products or
services to users.
While contacting the four digital contacts, the objectives of e-mail
marketing shall be determined (see Figure 4.6):
9”x6”
Stages of e-mail A. Set Goals / B. Liaison C. Market Segmentation, D. Integration &
Marketing Evaluation Strategy and Target Selection & Management of e-mail E. Test &
Growth Criterion Policy Personalized Design Marketing Learning
Stage1. / /; e-journal/ sales No segmentation Limited integration of Limited
Source: AMA.
17-08-2020 10.12.24 AM
9”x6”
b3902 Marketing Strategy in the Digital Age
Figure 4.8. Evolution of social media platform.
Source: KMG Research.
Figure 4.9. Examples of L’Oreal’s marketing strategy on WeChat and Weibo.
Source: L’Oreal
smartphones. Mobile phones, weakening PC’s Internet surfing function,
have become the most common terminal since mobile phones play an
indispensable part in people’s work life and entertainment. Take video
websites as an example. More than 50% of the traffic of Youku and Tudou
comes from mobile terminals, which is why Walmart, a traditional retail
giant, has also invested in the development of a mobile online shopping
app “Sugoo” to attract customers on the mobile end. The key to successful
mobile marketing lies in understanding the dimensionality of the screens,
which are just a few inches wide, that are lying in the hands of consumers
with appropriate information.
smartphones, SNS. Apps bridge enterprises and users anytime and any-
where, and app marketing turns this connection into consumption, offer-
ing a new path for O2O. At the initial stages, an app only played a role of
third-party application in Internet marketing activities. With the continu-
ous development of the Internet, app has gradually accumulated various
types of network audiences in digital marketing and can obtain users’ data
by itself at the same time.
According to a survey conducted between 2011 and 2013, mobile
Internet users spent 87% of their time using apps, up from 73%. In 2013,
Chief Marketer conducted a survey among 666 advertisers, and 48% of
the respondents have had or planned to develop more than one app.
Among the world’s top 50 brands, 96% have developed their own market-
ing apps. The mobile functions of apps such as mobile brand communi-
cation, mobile sales/service, mobile customer management, mobile
product development, mobile internal brand building and mobile product
portfolio can provide more practical values for the application of mobile
marketing and become the means for advertisers to be fully involved in
mobile terminals. For example, P&G’s Tide has introduced an app called
“Tide Stain Brain” which provides users with 85 different methods of stain
removal. Consumers can follow the steps indicated in the app in terms of
their actual situations, thus achieving the best result of stain removal.
After several years of development, app marketing has shifted from a
contact between enterprises, products, services and consumers to a plat-
form offering extended services. For example, an app named “Catlam”
(Xiachufang), originally positioned as a recipe-sharing community, has
now parlayed into a one-stop solution provider in cooking supplies that
sells tableware, vegetables, condiments, cooking utensils, etc. As another
example, “Xiao En’ai”, a famous app for couples in China, was originally
positioned as an online platform for communication and exchange
between couples. Recently, it has explored commercial expansion, working
with partners to provide users with accessories, products and services
related to couples such as jewelry, food, clothes and family planning.
But at the same time, we should note that the number of apps in the
market is on the increase and there may be dozens of apps for a certain func-
tion, which brings troubles to both enterprises and users when providing
users with various choices. For enterprises, although the cost of making an
app is becoming more and more stably affordable for most of them, not all
Figure 4.12. MyApp’S data acquisition.
Source: MyApp.
4.2.9 SoLoMo
John Doerr, a well-known American venture capitalist and partner of
Kleiner Perkins Caufield & Byers, came up with the concept of SoLoMo
for the first time in February 2011, by combining three popular keywords:
Social, Local and Mobile. Since then, SoLoMo has been universally recog-
nized all over the world and unanimously considered as the trend of the
Internet’s development in the future. SoLoMo, short for Social, Local,
Mobile, indicates a mode of socialization, localization and mobility.
Regarded as one of the most important results of the Internet in our
era, “Social” gives Internet a human face since it adds relationships that
only exist in human society into this information-based Internet. “Local”
is considered as a bridge between the virtual and the real worlds. Through
location technology, people’s location in the real world is converted into
digital information in the virtual world. “Mobile” brings the latest revolu-
tion in the Internet era. Based on the popularity of smartphones, the
Internet is no longer a digital world connected by fixed access points but a
world where users spend a major part of their time on various emerging
access devices. As a convergence of the collective elements, SoLoMo allows
customers to have access to and share location information, as well as
short-term customer flow at the expense of profits. Accordingly, from the
perspective of retailers, they are more willing to enter into a partnership
with Dianping, as a reason of which Dianping has actually disrupted the
group-buying industry. Dianping has become a top choice for consumers
as a review and advice tool, and it has become a standard for group buys
to reach customers via SoLoMo.
provided for users to scan; word-of-mouth reputation is spread
offline to drive online information search by potential consum-
ers; coupons are offered offline for online consumption; purchas-
ing behaviors at offline stores can be directly copied on the online
platform.
· From online to offline
It implies an online trigger that prompts offline practices. Traffic
is driven to a retailer’s platform by other platforms or links. Then
customers have access to discounts for offline consumption by
following its online official account, scanning the QR code online
and offering free gifts offline by online lottery.
(2) Conversion and consumption
Online platform provides consumers with information for decision-
making and drives them to generate consumption behavior, which com-
pletes a closed circle of service.
(3) Feedback and retention
Consumers can evaluate and give feedback online, which makes an influ-
ence and generates data about consumer demand. By improving the
offline business database, more consumers are attracted to the online plat-
form. It is essential to set up online and offline channels to maintain con-
sumer relations.
Next, we review successful cases of O2O model in different times.
marketing has received more attention from brand owners and has become
an indispensable means of network marketing.
Generally speaking, digital video marketing can be classified into the
following types.
It can be divided into in-stream video and out-of-stream video.
In-stream videos are those that are in the video player itself: pictures, vid-
eos and flashes appear before, during or after Internet videos, TV or live
stream, such as cut-ins, pre-rolls, pause ads. Out-of-stream videos are
usually short in time and exist outside the online video content. They play
in social media, news and outdoor advertising such as Moment and
Weibo. In addition, We Media is also a kind of out-of-stream video, repre-
sented by Papi Jiang, a self-media platform. Videos, according to their
carriers, can also be divided into TV video, mobile video, PC video, out-
door video, cross-screen/multi-screen video and VR video.
Video marketing is divided into six types according to its content. The
first is demo, which shows what problems can be addressed by product or
service. The second is training, which displays details in application sce-
narios. The third is video about customer experience where existing cus-
tomers make personal examples to convince others. The fourth is video
about leadership in which you are respected and trusted in a field. The
fifth is to arouse user interests by creating suspense. Last but not least, you
make videos about brand story, told by staff or ordinary consumers.
In China, digital marketing of online video is similar to traditional TV
marketing in its content and means to gain revenue. In content, 60% of the
user traffic of online videos is contributed by top TV series, according to
AdReaction made by marketing research firm Millward Brown. The total
number of views of its top 30 TV series is as high as 8.413 billion views,
according to Tencent Video. This shows that online video is a substitute for
traditional TV dramas for many consumers. In operation, the revenue
mode of the online video platforms is quite similar to that of traditional
players. Generally, online video platforms earn revenues by in-stream ads,
title sponsorships and product placements, which have already been
adopted in TV commercials. Regular advertising still takes up a large pro-
portion of revenue despite the fact that video platforms also provide
advertisers with more diversified marketing methods such as the recom-
mendation and transmission of virus video, audience insight based on big
data and content customization.
In the past, the market for video marketing on mobile ends remained
sluggish, largely because users had a poor experience in watching videos on
mobile ends. For example, slow network contributes to unsuccessful load-
ing or costly data packages. But now, with the popularity of smartphones
and 4G technologies, the user experience has been greatly improved with
reduced cost. In addition, short video, which has been very popular recently,
creates a sound external environment for mobile video marketing.
Dove has conducted numerous studies and found that half of the
women worldwide are dissatisfied with their appearance, after which,
Dove created a 6-minute video showing the differences in the way women
see themselves and how others see them. Women were asked to describe
themselves to an FBI-trained forensic artist (invited by Dove) from behind
a mysterious curtain. The artist then drew a portrait of them based on
their description. A random stranger was then asked to describe the same
woman to the FBI expert, to see how their descriptions would differ. The
result, when the portraits were compared, was that the one based on the
stranger’s portrayal was more beautiful. The video, which was forwarded
3.8 million times in a month, touched a lot of consumers and inspired
them to reconsider themselves.
4.3 From Owned Media, Paid Media and Earned Media to Mixture
We have discussed about the various channels of “Reach” and their under-
lying methodologies. Of course, there is another way to classify these
channels. In response to the ever-changing trend, marketers have recently
divided media into three categories, including paid media, earned media
and owned media, each of which boasts of its own benefits, application
scenarios and challenges (see Table 4.2 and Figure 4.12).
Paid media could be in any form and brands must pay the media owners
to spread their information on this media platform. The key reason for choos-
ing this type is that brand owners trust that the media platforms can attract
audience and can connect to brands; in addition, brand owners are willing to
pay. Paid media include radio ads, billboards, display ads and paid search.
Though the media covers a wide range of topics, it has low credibility.
Earned media, also known as free media, usually refers to publicity gained
through influential people or communication channels like articles or com-
ments on social media. It is “organic” and highly credible but less controllable.
Owned media is a channel created by brands owners. Examples of
owned media include branded websites, e-books, blogs, or a company’s
Facebook and Google+ pages. Though it doesn’t cost much, the effect can-
not be guaranteed.
In the digital era, each type plays an important part of the whole and
all of them contribute to a complete digital marketing strategy; as a result,
marketers are trying to figure out the best marketing mix to maximize
efficiency.
Media mix can effectively eliminate silo marketing and develop opti-
mized content strategies that cover various media channels. Altimeter
Group, a firm for market research and consultancy, defines integrated
media as follows:
“Media mix consists of two or more communication channels of paid
media, owned media and earned media. The mix is to convey a consistent
brand narrative, image and feeling. No matter what media the customer
uses, online or offline, the brand information can be transmitted to the
customer through the coordination of all media channels”.
Nancy Barr, Intel’s Vice President of Sales and Marketing, said, “I’ve
merged the company’s and global media team to work with our partners
to drive cross-media operations and think about how to make innovations
for paid media. We have found that communication is not unique to social
media. Our partners of paid media are experimenting with new ways to
increase customer engagement and dialogue, and our social media
partners are particularly willing to offer new product ideas and participate
in testing.”
Integrated media is emerging as businesses seek seamless integration
of two or more types of media. Broadcasters of news and sports are inte-
grating livestreams on Weibo into their TV shows, where viewers are
guided to discuss topics via Weibo. When integrating marketing commu-
nication, bloggers and publicists use earned media to educate the audience
about the story of the brand and direct them to paid media and owned
media at the same time.
The New York Giants was the first professional team to integrate lives-
treams on Weibo into those of the games. They combined Weibo’s lives-
treams with TV live broadcasting of the games. The result was beyond
expectations, with the giants’ Twitter followers rising by 122% to more
than 3 million in less than 2 months. Soon after, the giants rose to the third
spot on the NFL’s Twitter list.
Chapter 5
204
5.1 Digitalizing: The Basis for Sustained Relationship
The basis for sustained digital relationship is summarized as “relationship”.
In Chapter 2, we mentioned that however the means and tools of market-
ing change, its essence remains the same. One of the key criteria is whether
a base for continuous business can be established. This is the strategic core
to measure whether marketing is sustainable. From another angle, the
basis for continuous business warrants deeper relationship with the clients.
The establishment of such relations is largely reflected by the preference
for brands if it means “emotional ties with clients”; the capacity to build
channels if it means the accessibility of terminals; customer loyalty or net
promoter score (NPS) if it means performance evaluation. But in general,
they boil down to relationship or the base for continuing relationship.
The core in business operation is to create and retain customers. The
former lays the basis for business existence, while the latter determines
whether businesses can operate sustainably. On the marketing level, from
the 1970s, Scandinavian enterprises and experts started to advocate mar-
keting based on managing and establishing a relationship from their long-
term practice. They believe that enterprise operation should consist of
establishing, maintaining and promoting long-term relations with cus-
tomers on the basis of profitability to satisfy the needs of all parties to the
transaction. The purpose of enterprise operation is to create long-term
mutually dependent relations, form a community for interaction with cus-
tomers, develop continuous interactions between customers and enter-
prises/products, increase loyalty and consolidate the market.
For air, hotel and most B2B industries, improving client relations and
the appropriate management of relations are key to improving profitabil-
ity. During the 1980s, various airlines in the US started to implement what
has now become the standard of airline companies today — loyalty plans.
At the same time, hotels started to manage customer relations in-depth,
with IHG being the frontrunner. They set up a membership plan in all
their branches worldwide, maintaining good relationships with old cus-
tomers through professional advisory teams established under the plan.
Membership brings huge word-of-mouth recommendation to IHG, pro-
viding continuous customer experience report to the hotel. Thus far,
membership consumption accounts for a huge proportion of IHG’s sales.
such evolution of customers and enterprises “prosumer”, a word created by
combining producer and consumer, referring to the fact that producers
and consumers become one.
For companies, continuous interaction means the former enclosed
internal activities will lead to cooperation between customers and compa-
nies. Customer interaction also evolves from “sales techniques” in the past
to other internal value-creating activities. Such in-depth collaboration is
hugely significant for enterprises.
Anthony Williams stated that company leaders need to learn to use
cooperation as a leverage to reduce cost, so that companies and customers
can create together, innovate faster and lead enterprises to better adapt to
the business environment in the 21st century. Of course, enterprises will
evaluate the returns and criteria of different ways to establish and maintain
customer relationship from the angle of cost efficiency, so that there can
be a virtuous circle between sustained input and sustained returns.
types of information, deploy in a holistic way and cover all the information
needs of clients in all scenarios.
The last relationship is the one between consumers and market offerings.
Consumers do not just buy, use and consume products. If previous consumer
behaviors are seen as a line, then the line becomes longer or even curved in
the digital era. In the era of mobile Internet, the use of products can be the
entry point, based on which all application data are stored, creating all possi-
ble social scenarios for clients. At the same time, traditional products are
starting to add data storage and social functions, enhancing the continuity of
the relationship between a brand and its customers through enriched social
values. For example, Nike has developed a series of health-tracking apps
and wearable equipment, such as mobile phone apps Nike+Running,
Nike+iPod, Nike+Move, Nike+Training and Nike+Basketball, as well as
wearables such as Nike+Sportwatch, Nike+Fuelband and Nike+Sportband,
enabling consumers to share their sport results with friends on social media
while using Nike’s products. In addition, we have seen that many electronic
body scales have developed related apps, on which one can check one’s
weight and body fat percentage. Another interaction is to cooperate with
clients in internal value chains. Customers are not only buyers of products
but also the creators and promoters. New partnerships are formed during the
creation of the products. Core customers will then become loyal promoters.
In practice, the enterprises would start various public promotion activities to
achieve that (Figure 5.1).
customers. Higher communication intensity allows customers to be able to
search corporate information and all external comments at any time in
24 hours by way of mobile communication technologies and digital tools.
Customers can also communicate with people with the same needs, inter-
est and values through the Internet across the world, including with opin-
ion leaders who have used the products, people with the same interests
and personified enterprises. Through smart terminals, customers can
interact with enterprises on multiple channels and platforms, including
social media, info and video-sharing platforms and information search
tools. Hence, in the era of the mobile Internet, relationship between enter-
prises and customers does not end with the transaction, is not limited
between customers and marketing personnel and shall certainly not be
limited to pure release of business information and after-sales support.
Competition between enterprises will be competition between differ-
ent networks of relationship. Henley Centre pointed out that customers
are inclined to make decisions by trusting and relying on the people they
are familiar with. Around 90% of the people trust their spouse, 82% trust
their friends and 69% trust their colleagues; however, only 27% trust pro-
ducers or retailers and 14% trust advertisers and celebrities. Customers are
more accustomed to relying on the advice of people with whom they have
a relationship. Even in B2B, professional buyers would seek more neutral
advice on online platforms, whereas mobile Internet provides more expert
resources and more convenient ways and scenarios by which one can
acquire information for these buyers.
In terms of industrial competition, the competition between enter-
prises reflects the competition between networks of different values. In
this era of full connection, the direct or indirect relationship between
enterprises and customers or relations in real or virtual scenarios together
weaves a net of relationship. Whether the net is weak or strong, how the
interaction goes and how it relates with the surrounding communities are
all factors of the extent to which enterprises can influence customers’
future purchase decisions. This network is a sustained process, meaning
that the acquisition of new customers, maintenance of old customers and
even the direct deal-making are done at all times. If the enterprise fails to
effectively establish such a network, then it would have lost the ground for
competition the moment the customer decides to make a purchase.
Figure 5.3. Case study: Volvo — based on core value combination.
Source: KMG Research.
is to help clients analyze data from their own companies and deduce
reports therefrom. To help customers address the problems that they
encounter, Cognos established the Cognos BI community, which began
only with applications of Cognos products but gradually expanded to
multiple applications, BI system building, BI system operation, big
data BI applications, allowing its own technicians or veteran users to
help solve the problems faced by customers.
4. Transaction function: To realize customer purchases through rela-
tionship interactions is the necessary economic basis for continued
growth of relations and also the basic requirement for sustainable
development for any enterprise. In the digital era, such a function
could well be replaced by online ways such as e-commerce and O2O.
Transaction functions can be realized more naturally, smoothly and
continuously on the basis of full functioning of brand, product and
services. Take Watson’s e-membership card as an example. After fol-
lowing the public account of Watson’s on WeChat, the client will get an
e-membership card, and Watson’s will push promotions and discounts
with partners through WeChat on a regular basis to members, thus
raising the chance of second consumption by consumers.
groups organize various member activities, giving exclusive badges, mag-
azines and travel brochures. Members of the group share their love for
Harley and get to know friends with the same passion, which significantly
increased the stability of Harley’s clientele.
Social values: The digital era is an era when customers are fully empow-
ered. The booming of the mobile Internet provides technical support for
massive assistance. “Self-organization” creates the new model of direct
connection between people. Under the guidance of clear objectives and
values, the direct connection of people forms communities, allowing all
resources to be integrated for the realization of more socially influential
targets. This is totally different from the traditional industries and society
in which people must join organizations to participate in social activities.
Enterprises must pay attention to the following two points when creating
social values of a relationship:
Figure 5.4. Three steps in creating digital relationship.
Source: KMG Research.
Vitality has developed a bottle of pills, which automatically sends a mes-
sage to the producer and hospital when the bottle is opened or closed.
Based on such data, the hospital and family members could effectively
monitor and urge the patient to take the pills on time, improving their
convalescence and reducing the cost of health care.
relationship between enterprises and customers or other core stakeholders
is a network that is formed by interactions among different connection
points. The core of the network is to target clients of the enterprise, who
should take into consideration customers and digital information as well
as social connections among products to establish a network of relation-
ship that is richer in content and customer values.
A relationship network that enterprises need to construct is formed by
communities, information and market offering. Market offering refers to
products or services or the combination of both completed by the
enterprise.
From the perspective of enterprises, market offerings are the basis of
the relationship network. Communities that are based on market offerings
are a community of brands, which differ from and overlap with the pure
social type of communities that are formed surrounding social tools and
platforms. Brand communities are consumers and producers of informa-
tion. Information is the important reason for the formation of brand com-
munities; it is also an important component of market offerings for which
the enterprise is responsible, one that enriches and spreads as the relation-
ship network grows.
In the digital era, market offerings are the key to establishing relation-
ship networks but not the end. Typically, the establishment of the relation-
ship network is based on the market offerings of enterprises and how
products or services that satisfy customer value needs trigger customer
needs for all products and information. On this basis, the customers will
have needs for different social or sociable values the products represent,
which is translated into the sustainable demand of enterprises for brand
communities and content marketing. The successful and sustained devel-
opment would allow enterprises to expand product lines to provide more
offerings and combinations thereof with more values so as to realize the
sustainable development propped by customer assets. Established in April
2010, Xiaomi has seen its core product idea of “alive for passion” extending
from MIUI, Xiaomi phones to routers, television boxes, Xiaomi televisions
and smart furniture. Good interaction between these products allows
Xiaomi to better engage in a smart ecosystem in the future. Phones with
MIUI system could tap into the Internet through Xiaomi routers, by which
the users could remote control air-conditioners, televisions or even electric
lamps, allowing for closer links between Xiaomi products and users’ lives.
information driven by the desire to share self-fulfillment. The process of
customers creating information itself is an important way to strengthen
brand groups.
ward, with data on big social platforms being connected, we will
be able to realize the assessment of market promotion that is really
based on performance. We will discuss in further detail about how
to evaluate digital marketing in Chapter 10.
(c) Budget and talent preparations for customer relation interactions
In the digital era, the establishment of brand groups is contingent
upon institutional and other support. It requires the addition of web
technologists, data analyzers, writers of information and contents,
communications and media management experts, and the integra-
tion of original product and technology experts and other service
persons. We will discuss the establishment of marketing organiza-
tions in the digital era in more detail in Chapter 9.
for obtaining new members. The event venue could attract a lot of
attention, including that of potential group members.
· Sales exposure: Promotion and experience of new products,
strengthening of conversion of customer flows through offline sales
channels, in particular accumulation and maintenance of buyers
through online and offline groups, and combining sales and cus-
tomer retention are few methods of sales exposure.
· Offline recommendation: Word-of-mouth recommendation could
be coupled with online group members’ reviews to expand the size
of the group, like giving gifts that are related to the enterprise’s
industry and to potential brand group members.
incentive plans to encourage their engagement. Every participant in the
forum has an individual web page, which could be customized to show
one’s background, technique and interests. For every posting, it shows the
grade and points of the participants, which are given by the other partici-
pants. Each time a question is solved, the person will get 10 points, and for
every helpful answer, 5 points are rewarded. In such a system, there may
or may not be recompense, but for many participants, high points or the
badges that come with high grades are enough. For Apple, the self-service
community significantly reduces the burden of customer service the com-
pany has regarding its products as the customers help each other regarding
questions, configuration, requirements or even faults of the products. In
fact, the discussions in the forum would help answer the first person to
raise the question as well as those who may have the same questions, form-
ing a database over time that will increase customer satisfaction.
Participants being able to share knowledge and get recognition also
become more loyal to and passionate about Apple.
should not distinguish between traditional and digital interfaces. First,
they should not regard digital ones as cost, but rather as a necessary
component of realizing higher profitability; second, combining online
and offline interfaces would be more powerful and third, online and
offline functions should be managed together to avoid fighting for
responsibility and resources in decision-making. It is advisable to plan in
a holistic way when developing the performance criteria for online and
offline activities.
information, customer contact history and demographic information.
User data often come from direct communications with customers, such
as sales, whereas SCRM allows contact with customers and gives enter-
prises access to customer’s public social information. This also enables
enterprises to interact thoroughly with customers on social platforms in all
aspects, acquiring data on more dimensions than could be acquired
through direct contacts. This helps enterprises get a panoramic customer
profile and allows them to review the interactions with customers at any
time.
The purpose of SCRM is also different from that of traditional cus-
tomer relationship management. The core of CRM is to increase cus-
tomer satisfaction through customer care plans and then the lifelong
values of each customer, while regarding customers as the most impor-
tant assets of enterprises. Some enterprises pay attention to the custom-
er’s consumption needs, evaluating values according to their purchase
behaviors, anticipating their consumptions, and categorizing and prior-
itizing customers according to their values. In the digital era, to better
increase customer assets, SCRM should extend before purchases. The key
move to increase customer assets is to keep good customer relations, and
hence, enterprises need to put more energy into establishing customer
relations.
In order to establish customer relations before purchases occur, con-
tent marketing becomes important in SCRM. Enterprises need to create or
share marketing content on multiple social platforms and media to contact
and influence the existing and potential consumers. Different from cus-
tomer relations after purchase which could be maintained on the basis of
products and after-sales services, in the pre-purchase period, content mar-
keting is almost the only choice for enterprises to influence customers and
establish relations. Some enterprises that are further apart from terminal
users consider the maintenance of channels as the essence of building cus-
tomer relations in the traditional business environment, but the social age
gives them the ability to directly contact end users at a low cost, and there-
fore long-term close partnership with end users naturally became a choice
for enterprises.
To sum up, the digital age brings more opportunities for CRM. SCRM
will bring better results on a larger scale and also help enterprises find a
· Marketing module
(a) Digital marketing materials
The digitalization of marketing materials is a necessary tool for
SCRM. Customers’ attention on social media is very easily diverted
by other information; therefore, to first attract customers out of
traditional channels on social platforms and then supply them
the necessary marketing materials tends to be less successful.
A more appropriate method is to provide digital marketing materi-
als according to the characteristics of social platforms, for example,
links to official websites on WeChat public accounts, introduction
pages that fit mobile equipment, streamlined e-commerce sys-
tem and interfaces for registration and participation in marketing
events.
(b) Management of marketing activities
There are very few pure offline marketing activities, while all
marketing proposals include activities on social media, which
could help increase the marketing performance in two ways: first,
increase the number of potential participants before increasing the
number of activities. Diverting target customers on social platforms
into offline marketing activities is the most direct way, for instance,
activities published on social platforms and incentives to encourage
online users to participate in offline activities. Second, increase the
coverage of activities through social platforms during or after the
activities. Sometimes the offline part of an event is not its primary
objective; all the participants of online and offline activities are just
part of the performance. The true goal is the widespread coverage of
the message across social platforms. For example, Durex organized
50 pairs of lovers to test new products and broadcast the process
live on the online platform. It looked like only a trial of new prod-
ucts but it was in fact aimed to create a viral content. Today, many
marketing activities are held online, guiding participants into the
e-commerce system to fulfill the objectives through the activities.
(c) Monitoring of Media
Through social platforms such as corporate accounts and keyword
searches, enterprises could obtain social media information related
to itself. Categorizing and analyzing this information could turn
them into a list of potential customers, sales clues or cases for better
service. Enterprises could continue to improve user data, sales data
and service data on that basis. Enterprises could also obtain cus-
tomer assessment and development related to the brand or differ-
ence of views on competing brands that would help the positioning
and monitoring of brands.
(d) Sales Interface
Enterprises should start building interfaces that lead from social
platforms to the sales system, turning fans into clients from online-
to-offline, or directly from social platforms to e-commerce plat-
forms, and SCRM must have that function in order to consummate
its own functions. Without social platforms, there are so many fac-
tors that would affect purchase decisions. They would also destroy
the completeness of customer experience ranging from information
searches and comparison of plans to confirmation of purchases.
· Content module
(a) Management of multiple accounts
The diversity of social platforms requires of SCRM an ability to
manage multiple accounts. Enterprises should know which social
platforms to invest in. It is important to cover all mainstream social
media; however, it is also necessary to assess the characteristics and
user styles of all social platforms. Enterprises determine what con-
tent is suitable for publishing on what platforms through manage-
ment of multiple accounts and eventually establish uniform image
and experience on all platforms.
(b) Content marketing
Chapter 8 of the book deals with content marketing which we will
not repeat here. It is worth noting that SCRM has a strong market-
ing content, whereas information that goes viral does not mean the
attention and forwards could turn into sales orders. Hence, when
setting KPIs for SCRM, it is necessary to add sales conversion or
buyers, multiple-time buyers and silent buyers. For customer groups
of different levels of buying, enterprises need different incentives to
activate customer assets.
(d) Service interface
In the digital era, more customers choose to publish their com-
plaints on social networks. Given the rapid communicating capac-
ity of social platforms as well as user-guiding capacity, enterprises
should act swiftly through the customer service module in SCRM
while crises have not yet developed and lead complainers into nor-
mal after-sales management processes. This requires an ability to
monitor negative information as well as to react quickly. Including
star staff and senior management’s social accounts into the service
management is also necessary, because many service requests would
go into the personal accounts of members of the enterprise. Com-
plaints to these accounts should be dealt with swiftly and diverted
into after-sales processes.
· Data Module
(a) Management of data
It is very important to build knowledge bases in the service system.
In traditional work, the knowledge base relies on the one hand on
the experience of service personnel and on the other hand on the
accumulation of service cases. Based on SCRM, enterprises could
quickly accumulate service cases through keyword captures and
online services with considerably shortened time. At the same time,
with the help of a smart response system (service robots), standard-
ized questions can be efficiently dealt with to reduce the burden of
service centers.
(b) Data Dashboard
Social platforms facilitate the collection of marketing data and
demonstrate the enterprise’s performance in marketing. Data on
brand monitoring, competitor monitoring, client satisfaction, com-
munication evaluation, marketing activities and services could be
obtained from social platforms. Hence, data dashboard needs to
be added to the SCRM system to help marketing staff understand
more directly the progress that is happening in the current work.
Chapter 6
241
driver of profits rather than “unprofitable activities” in the past. Enterprises
can commercialize the community membership, community information
and trust accumulated in communities by running brand communities on
their own or by co-developing customer assets accumulated with a third
party. One example is that Logic Show considers its core members as an
important source of return in its initial stage. In this book, we discuss how
enterprises obtain returns and achieve their business goals based on
network.
First of all, we define “Return”, or “returns on transaction”.
their social circle. For example, the American Express Centurion Card,
known informally as the Amex Black Card, is an invitation-only card
issued by American Express. The cardholders pay incredibly high
annual fees while enjoying ultra-exclusive benefits, which has made the
card a symbol of status and wealth.
· Membership fees help to select the core members at the initial stage for a
community. Customers who take money from their pocket are the group
who show recognition and support to a brand community. Charging
membership is a way to select determined members with whom the
company could work together to contribute to the community.
· Membership fees lock in customer relationship since they raise the
costs for customers to opt for another platform and stickiness to and
activity in the current brand community.
· Communities can run independently by turning community member-
ship into a good and not relying on external support. Membership fees
encourage community runners to develop higher value and ongoing
content for members in a more professional way so as to make the com-
munity more active and sticky, which makes it a healthy cycle. Turning
community membership into a good helps to bring high-end brand
activities or even make profits.
· Membership fees relieve enterprises of cash flow pressure because sub-
scription fees are collected before the delivery of products or services
and the money becomes the advance received for enterprises to cover the
costs of various activities. Additionally, compared with external funds,
membership fees have lower funding costs and have a clear use cycle.
· Initiation fee
Initiation fee refers to what customers pay for being able to buy products
or services, though they would still have to pay for actually getting them.
It is a way to draw the customers’ attention to value and strengthen their
relations with the club. For example, membership fees consist of part of the
revenue structure of Sam’s Club, he world’s largest membership-only retail
warehouse club, helping to select core customers and increase user sticki-
ness. Particularly, members who pay for the subscription fees need to go
shopping at the club regularly; otherwise, the fees would be “wasted”.
· Membership fee for products or services
Service providers provide free access to customers by meeting their basic
needs; meanwhile, if they desire for more value-added services, they need
members of the community. However, similar to the challenges that enter-
prises met in traditional marketing, the product line cannot be extended
forever without being limited by the scope of brand assets. Also, excessive
sales in rigid ways will take a toll on the healthy development of the com-
munity. Therefore, sales methods, range and community unity should be
considered carefully when products are sold within a community. The
“buy” button has been embedded in the social media platforms — Twitter
and Facebook since 2014. Beside, Xiaomi is operated through a typical busi-
ness mode which blurs the boundary between communities and products.
Brand communities can directly boost the sales of products and ser-
vices by the following approaches:
Selling owned-product mix in brand communities: It is the most direct
and classic method of gaining returns through running communities.
When Xiaomi was established in 2010, it used its MIUI community to
enhance the customer base and did not bring its mobile phones to the
market until 2 years later. With the support of these loyal customer groups,
Xiaomi mobile phones made a good debut. Even though Xiaomi claimed
that it did not profit from products, the sales did offer sufficient cash flow
for corporate operation. Later, as its business extended to other fields, the
loyal members in MIUI communities started to buy other Xiaomi prod-
ucts, as a result of which Xiaomi stretched its product line at a low cost but
with high efficiency (Figure 6.2).
fans’ ideas are posted on the Cuusoo homepage, which are typically sold
out as soon as they are released.
“Specific community + Vertical e-commerce”: As the economy of the
community develops, the boundary between community and e-commerce
is gradually blurred. In particular, Etsy, an e-commerce website focused on
handmade items and craft supplies, has 30 million members, connects
1 million sellers to buyers on the platform and ranks in the Top 50 in the
US in online traffic. EY Art, an online art interpretation community, pub-
lishes a talk show, Is Art Difficult, on many social platforms to introduce
art to the public and aims to nurture its own community base and build it
into a global online marketplace through content. Currently, EY Art has
received 13 million in Series A fundraising.
Community crowdfunding: Compared with crowdfunding without
threshold or boundary in traditional marketing, community crowdfund-
ing is more persuasive and spreadable because of the trust system and
common values shared by members. The equity-based crowdfunding
requires the support of a stable elite community where participants have
capital and cognitive surplus and efficient division of labor and collabo-
ration can be realized as soon as the program starts. For this reason,
communities of elite entrepreneurs like Niu Tou, VC Share and Dark
Horse Developing Camp have become incubators for equity-based
crowdfunding.
From online-to-offline: In addition to leading offline retail business
through online traffic, communities can attract users and build commu-
nity influence online and host activities like training sessions, forums,
summits and competitions offline for second growth. For example, The
Founder, based on the Dark Horse Developing Camp, hosts a Black Horse
Competition for entry ticket fees. Other revenues come from tuitions of
Black Horse learners, commissions from agencies, etc.
Media Attributes of
Community Media Attributes Media Value
Attention of community Attracting attention on a new Direct objects of
members platform marks the birth of a information
new media channel. spreading
Social influence of Amplify information by word of “Relay station” and
community members mouth, information sharing and “amplifier” of
forwarding based on the trust information
and recognition accumulated by spreading
members in their own networks
Information Produce information by members, Producer and
productivity of or develop original information second-developer
community members of enterprises on second time. of media content
Source: KMG Research.
platforms in the mobile Internet, such as via creating official accounts in
WeChat and verified accounts in Weibo, with which their brand commu-
nities can share information and organize activities.
Content developing and sharing are basic activities in communities:
Thanks to distinctive and valuable content, potential community members
usually join a community, after which they share the premium content and
further develop the original content. In 2010, a series of slogans featuring
the personality and positive spirit of “VANCL” became a hit on the Internet
and Smartisan cell phone under Hammer Technology (Their boss Luo said
it’s “too beautiful to be powerful”) 5 years later also led to user-generated
content (UGC) battles in social networks and caused UGC creations to go
viral, helping to promote the brand.
“Community–Community” mode of information spreading: In the age
of mobile Internet, information disseminates by inter-infiltration between
communities. Community members share new pieces of information in
other communities he or she is engaged in, which is the fission of informa-
tion, the dissemination of information at an exponential rate or the com-
monly called “viral spreading”.
The expansion of brand community helps in the following ways
(Figure 6.3):
1. Content production
As the digital age evolves from Web2.0 (represented by Bulletin Board System
and blog) to Web3.0 (represented by social media platform and microblog),
UGC gradually becomes the main driver for content production. As the
members invite newcomers to join, which injects new vigor into the
community.
6.7 Attract Talents Using the Current Community Base
In the traditional age, it was hard to reach people who share similar inter-
ests due to ineffective communication. Therefore, an employee recruit-
ment strategy of “trawling” was applied. The HR department found it
challenging to discover the right candidate in a pool of talent on numerous
job-hunting websites. But it is not always about the number of candidates
who apply; the best way to hire the right person is often from a smaller
pipeline of more qualified talent who also show great interest in the
employer. In the digital marketing era, with the flourishing of online com-
munities, the hiring process can be improved because all the members of
the community are at least interested in the service or products offered by
the employer. What the employer can do is to select the best person in the
pool of their member candidates for the vacancy. Such an effective
approach is increasingly adopted by recruiters. According to statistics
from Lumesse, a global talent management and acquisition company, 61%
of enterprises find new candidates via social media, 55% of enterprises
connect with potential candidates on social media even though they do
not plan to change their jobs currently, and 42% of enterprises use social
media to find candidates for special posts.
In most cases, enterprises apply the following ways for community
recruitment via social media:
Weibo: Enterprises favor Weibo in recruitment since it is targeted,
affordable and covers a wide range of users. For example, Kai-fu Lee’s
Sinovation Ventures usually recruits engineers through Weibo, and enter-
prises like Alibaba and China Business Network also recruit media talents
via Weibo.
WeChat: The strengths of WeChat include rapid spreading of information
and ease with which candidates can be contacted. With the exponential
growth of WeChat users, an increasing number of enterprises have set up
their recruitment platform on WeChat; for example, “Tencent Jobs” has set
its recruitment platform on WeChat, where talents can see quite a few job
openings at Tencent. WeChat offers a more socialized recruitment
approach that also works well on mobile ends and it becomes another
favorable recruitment platform after Weibo.
Figure 6.4. Top Gear’s evolvement from TV program to community relation network.
Source: Top Gear Official Website.
· The Internet of things of a company: Sociometric Solutions is an
American solution provider for socioeconomics. The company unveiled
a type of smart badge in which multiple sensors are installed to record
the employee’s communication, such as his or her tone, gesture and
body language. These data can also reflect the relationship between
employees. For instance, two employees who lean forward while talking
to each other usually cooperate well.
comprehensive method of enabling an enterprise to link all its critical
data to a common point of reference. It improves data quality, while
boosting data sharing across personnel and departments. Furthermore,
it brings a systematic approach to data integration that combines the
data from various platforms and ensures consistency, which helps
enterprises to know customer behaviors, build one-on-one relations
with customers and achieve their marketing goals more precisely
through market segmentation.
Part III
Implementation Systems for
Digital Marketing
Chapter 7
265
application result when marketing and data technology (DT) are embraced;
digital marketing is the top-level design, methodology, framework and
manual for the marketing revolution in the digital era.
Big data is a disruptive element to a company’s original business oper-
ations. Data collection, sorting and analysis have become some of the most
important edges that a company can have. In one sense, valuation by data
will be possible in the future, which means the value of a company can be
determined by the scale of its data, its data storage capability and its ability
to analyze and apply data. With the maturing of various big data technol-
ogies and infrastructure, companies have access to a large volume of data
across multiple dimensions. Through data mining, companies are able to
find new business opportunities and understand clients on a larger basis
as well as in greater depth. Therefore, they can cater to smaller customer
groups by offering more resources and provide custom-made products
and services at the right time via the right channel. Big data marketing
pushes companies to reach new heights in their efficiency.
data. The latter takes up 75% of all data on the Internet and comes in as
pictures, videos, audio, etc. From the perspective of data sources, big data is
the combination, agglomeration and integration of data across all dimen-
sions. They include the digitalization of offline data (databases, words and
pictures), data traces on the Internet and the mobile Internet (web page data,
user behavior records and digital pictures), sensors (surveillance tapes, intel-
ligent furniture and cameras), data about humans and of the physical world,
Internet big data, industry/government big data, machine big data, company
data, consumer data and supply chain data.
Following Gartner’s technological innovation curve, with commer-
cialization, big data will stay on the track of rapid exponential growth. Like
Columbus’ great navigation of the seas and the Gold Rush in California, its
commercialization has started a new era for the discovery of gold from
“mines and oil” in the digital age, where the amount of data is important.
But how these data are used has become the commanding high ground in
the latest round of competition. Margaret Breya, Executive Vice President
and Chief Marketing Officer of Informatica, pointed out that the position
of Chief Data-driven Marketing Officer would soon show up, and compa-
nies processing big data with self-help business intelligence tools will stand
out. Like all other industries, big data also has its industrial chain as shown
in the picture above, including data creation, data collection, information
processing and business monetization.
7.1.2 The five features of big data
Doug Lenny, an analyst at Gartner, pointed out in 2001 that data growth
faced challenges and opportunities in three aspects: Volume, i.e. the vast
volume of data; Velocity, i.e. the rapid input and output of data and Variety,
i.e. the various and complex categories of data. These three aspects are
called the 3V Model of big data. Afterward, IBM proposed a fourth “V” for
“Veracity”, based on Lenny’s theory. Other features were also proposed
from other dimensions. We believe the most valuable of these features are
the “4V+1O”.
Figure 7.2. The value of big data.
Source: KMG Research.
push notifications about special offers. By installing customer traffic
monitoring systems, the functions of different areas can be rearranged.
Areas with less customer traffic are given other functions, such as being
turned into Water Bars and Exotic Streets, improving the utilization
efficiency of the mall space.
(real-time). These features of the big data customer profile make marketing
plans more targeted and effective, with measurable results. Precise predic-
tions make it possible for companies to formulate more forward-thinking
marketing strategies and properly plan their resource distribution in mar-
keting, avoiding a waste of resources and opportunities caused by overop-
timistic or pessimistic evaluations of the market and sales prospects, thus
improving their returns on investment. As long as enough user data are
accumulated, a more in-depth understanding of customers is possible with
regard to their preferences, values and behavioral habits. This is the prem-
ise and goal of big data marketing in many cases. The big data customer
profile can be commercialized through the following applications.
· The big data customer profile can help companies precisely select target
clients, channels and their timing as well as to design communication
content and achieve a seamless connection in the above four areas so as
to provide a consistent, full-cycle and complete purchasing experience
at lower costs.
· It can also help in the discovery of new trends for demand, as well as
potential markets; and it can provide more precise and comprehensive
customer insights and market predictions as companies expand their
markets.
· It can help with the value management of customers, activate customer
and fan assets, convert fans into users, convert low-value customers into
high-value ones and improve the ratio of high-value customers.
· It can also help improve the performance of backlog management and
inventory management through precise demand prediction, improving
inventory turnover rates and maintaining a good cash flow.
· Multidimensional and dynamic big data profiles are extensive, as one
profile can address multiple problems, thus reducing the number of
investigations, time spent and marketing costs. Since Chapter 4 is solely
focused on customer profiles, we will not elaborate them here.
7.2.4 KOL management
We explained the concept of the key opinion leader (KOL) in Chapter 2.
They have a great deal of impact on the vast majority of consumers. By
influencing KOLs, we can influence KOL impact groups. Two aspects
should be considered in selecting KOLs: (1) whether their temperament,
character and values match the requirements of the brand. Brand owners
need to select KOLs that are in line with their style. (2) Complexity of
products: The more complex the products are, the more reliant target cus-
tomers are on KOLs (Figure 7.5).
The value of KOLs in marketing comes from three aspects:
For marketers, the difficulty in getting perfect KOLs has two aspects:
(1) how should the individuals with the biggest impact on the target audi-
ence be identified; and (2) how should a KOL’s influence group be identi-
fied. These problems are well solved in the big data era. Data can provide
all the answers.
· Which KOLs will customer groups with a certain tag or tags follow?
· What tags will the fans of a certain KOL have?
· What qualities do people believe a certain KOL has, and is there any-
thing in common between these qualities and the company’s value
commitment?
· Does a certain KOL have professional influence on consumers, or is he
or she just for entertainment?
makeup” and understand how the nodes interact by mining data from
network information. This expands the reach of the promotion the
farthest.
· What content interests the target audience? What are the hot topics on
the Internet?
· How can content be constructed to attract and move the target
audience?
· How can content be made to go viral within the target audience?
· Is the selected content in alignment with the character of the brand?
Can it generate positive feedback from the target audience?
· What progress has been achieved in the content-based marketing activ-
ities currently being executed? How do you evaluate the effects of these
activities?
7.2.8 Accurate advertising
Big Data technology is naturally suitable for targeted advertising. The mul-
tidimensional sources of big data make it possible to provide a more com-
prehensive description of a user’s data trail. From online browsing data,
social data and transaction data to offline user location data, this informa-
tion can almost describe all the behaviors of individual customers in both
the real and digital worlds. Companies can push consistent advertising
information anytime when a customer is looking at a smartphone, watch-
ing Internet TV or posting social content on a computer. Companies can
even display such advertisements offline on bus or subway billboards,
outdoor billboards or as even elevator displays. The timeliness of big data
ensures that in a very short period of time, the customer is being pushed
advertising information about the product he is currently considering to
buy. The high precision of big data can help companies push the advertise-
ment that best fits the customers’ needs.
Since geographically tracking consumers is possible in the mobile
Internet era, the precise delivery of advertising can be further imple-
mented by combining geographical locations and user profiles. Companies
can obtain a user’s attribute tags, such as gender, age, occupation, income,
hobbies, with the user’s mobile phone data to understand “what kind of
person he is” and “where he is and what he is doing” through Geofence
technology and location data. Because of the retention of data, companies
can even track consumers’ time-effective behavioral data, including recent
active apps and the places they visited, helping them to understand “what
users have been interested in recently”. With these three types of data, the
use-cases of marketing and big data are perfectly combined, realizing pre-
cise and setting-specific advertising.
Lytics is a customer data platform that helps marketers put customers
at the center of their digital marketing, which addresses the following
points.
It collects data related to each customer, which includes the behavioral
data of mobile users, browsing data on the Internet, online shopping data,
customer service support or CRM and social media data, etc. As discussed
in the book, one problem is how should consumer behavior data be col-
lected, and, more importantly, how should the data be integrated to create
a customer profile, i.e. the issue of ID integration. Lytics can aggregate data
advertising and information release will become more accurate — all of
which points to higher sales conversion rates.
· Internal editing and release within a company, the manual input of reg-
ular documents or the automatic collection and storage of files on the
system.
· E-mail acquisition: establishing internal data plug-ins and automati-
cally importing e-mail information into the management platform.
· Web monitoring and mining: monitoring and collecting information
on external websites, competitors, industry news, etc., with the built-in
web information radar.
· Other sources: accessing externally created libraries, knowledge bases
and industry library data.
· Automatic data clustering, making it easy to find similar articles and
relevant knowledge.
· Building a “multimedia database” that stores and manages a variety
of mainstream documents and unstructured data (such as audio and
video).
There are many ways of obtaining data, and therefore, you need to
discern the quality of your data source. Data can be likened to a dressed-up
girl, which means that users select and present the data they would like
others to see. Thus, to ensure the authenticity of your data, two points are
important: whether the source of the data is credible and whether the
choice of data is reasonable.
The Internet itself is a huge database. All web pages, visits and content,
since the Internet was established, have been piling up bytes to this data-
base every day. As long as you have web crawler technology, you can cap-
ture the public data on the Internet according to certain rules. Combined
with semantic mining techniques, these data can be translated into insights
on customer behaviors and ideas. This is the model for how we commer-
cialize the big data in use. Cookies, stored on client computers, are
encrypted identity files applied by some sites to identify user IDs and
pursue tracking. Companies can learn about users’ visiting habits with this
tool, such as what pages were visited when, and how much time was spent
on various pages. In theory, a website can only obtain relevant cookie
information, but browser manufacturers can obtain all of a user’s cookie
data via illegal means. SDKs, built into different apps, are cookies on
smartphones. All of the data concerning user behavior are collected and
uploaded. Third-party data companies work with developers to place their
own SDKs into other apps to get critical data on a user’s complete smart-
phone behavior.
Companies can obtain data by collaborating with companies that have
external data sources. We can actually divide these companies with data
sources into three categories.
The first type are big data-rich companies, which are very rare. These
include Apple, Amazon, Facebook and Google abroad, as well as Baidu,
Alibaba, Taobao and Jingdong in China. Usually, this kind of company not
only boasts of powerful data sources but also has data expertise in related
dimensions due to the fact that they are adept in different business sectors.
For example, Taobao’s data are based on user transactions on the platform,
by which you can discover what products are popular across categories,
how competitive different brands are under the same category and the
correlation between promotions and sales in quantitative measurements.
Baidu’s data are based on information search, via which you can get a
broader sense of what entries people are interested in and what concepts
get more clicks. And from its data sources, an “emerging future” of demand
can be revealed. Tencent’s data are more based on people’s social data,
which cover aspects like entertainment, finance, transactions, education,
etc. When choosing to work with big data-rich companies, we should first
consider if their data types match your business goals. Additionally, since
can open hotel room doors in the park, enter into the theme park and
complete all payments for meals, games and transportation. Thus, visitors
are very happy to use this convenient device. From Disney’s point of view,
this is a typical case of a self-built big data acquisition source.
Companies build a data platform from scratch in three steps as
follows:
Figure 7.6. Before vs. after cross-screen interaction.
Source: KMG Research.
Chapter 8
Content Strategy of
Digital Marketing
293
to meet the demand for such knowledge of customers at an early stage
of the buyer’s journey. When they would like to learn more about air
purifiers, manufacturers can push articles that compare different mod-
els as well as working principles of different players and then intro-
duce the detailed content and advantages of their own products. At
this time, customers may intend to purchase the product but tend to
refer to user feedback first; it is when manufacturers can provide user
cases, as “last push” to attract customers, showing their advantages by
word of mouth, after-sales services and others. Since customers vary in
purchase journeys and concerns, content series designed for different
groups of customers may also differ. Content marketing can be com-
bined with consumer profile for preliminary research as an important
reference for content design.
· Content marketing targets business returns: Content marketing still
aims at generating purchasing behavior to boost revenues. To attract
the attention of customers, enterprises sometimes forward hot issues
that seem to be irrelevant to their business on social media, but that
move would be part of a well-planned strategy. Though strongly pur-
pose oriented, the purpose of content marketing may not be as explicit
as that of advertising and even less so than PR advertorials. Good con-
tent marketing can unconsciously guide customers, which is possible
because planners of content marketing develop contents based on a
thorough understanding of the target customers. Starting with a pur-
pose in mind, content marketing organically integrates brands and
products into the content for the value, friendliness and interest pro-
vided by content, thus reducing the sense of incongruity and achiev-
ing the same purpose of brand communication while still maintaining
good acceptance by and communication with the intended audience.
· Self-owned media assets need to be built: Due to its specificity and
continuity, content marketing in most cases is released on its own media
platforms, rather than through a paid media channel as is the case in
advertisements. Therefore, owned media need to be operated as an asset
in content marketing, which greatly reduces the cost of marketing, helps
understand how customers respond to contents in a timely and more
accurate manner through their online comments and feedbacks and
strengthens the relationship between businesses and customers. These
practice and failing to share and spread contents across more platforms.
However, it also reflects two major traps that digital marketing personnel
often fall into, for which senior managers fail to figure out the key to roll
out content marketing and the role played by such strategy.
upload pictures of the ice cream in their hands in various scenarios. The
results of this marketing campaign were excellent.
Content also needs to be customer based. The digital era is character-
ized by an information overload as customers are surrounded by excessive
information anytime and anywhere. Therefore, brand owners should put
themselves in customers’ shoes, invest resources and, together with cus-
tomers, create content that has both use value and communication value.
In an era when individualism prevails and information booms, simple soft
advertisements and one-sided information pushes are doomed to be
neglected immediately.
external expert networks and customers. In the early planning of con-
tent marketing, the coverage of target customers should be defined, and
the focuses, interests, preferences in consumption and behaviors and
the demand motives of different target customers should be analyzed
by user profile. In this manner, it provides an important proof for theme
planning and contents style selecting and avoids the content marketing
strategy potentially failing to attract customers due to demand mis-
match or unfit content style. In addition, brand owners also need to put
themselves in the audience’s shoes to know the true feelings of different
groups at various stages of the purchase journey, so as to create custom-
ized contents to provide reference or answers for customers in response
to their needs at different stages.
· Brand strategy input: Marketing activities not only directly or indi-
rectly promote sales but also leave an impact on brands, positively or
negatively. Therefore, content marketing needs to be rolled out under
a framework decided by brand strategy, which determines the core
value, positioning and vision of the brand. The core value is usually
the brand’s value commitment to its core external stakeholders; the
positioning can lead a top-level theme of content marketing, which is
an important reference for building the structure of content; brand’s
vision not only states the brand’s long-term goal for its future but also
describes its expectations and goals from the perspective of external
stakeholders, especially customers, which is a lighthouse of content
planning. Therefore, taking brand strategy into account in content
marketing helps to explain and interpret brand strategy in a compre-
hensive and personalized way using content creation and communica-
tion activities.
· Goal planning: It includes the following steps:
Make key products and brands attractive: Catch the attention of
customers and nurture their preference as well as tendency through
the continuous release of related and valuable contents.
Intercepting potential customers in searches: For example,
potential customers are obtained on search engines through creat-
ing and continuously releasing themed contents when they search
keywords.
A case in point is the mission statement of Northface. That is, for out-
door enthusiasts, “PlanetExplore” should be the first place for those who
love nature and are keen on challenging human potential through close
engagement with nature to discuss, obtain and share related contents, with
which they can explore outdoors and challenge themselves in a more com-
fortable and safer manner (Figure 8.2).
Figure 8.2. The community of Northface.
Source: Official Website of Northface.
Planning of Content Under
Stage of Purchasing a Certain Topic Results
Early Stage Introduce designer Lemaire Increase products recognition,
and why Uniqlo and arouse the interest in
cooperates with him this limited edition
Middle Stage Introduce the limited-edition Dispaly product details,
and purchase information stimulate purchase will and
choices
Later Stage
VIP presales and Accumulate many online and
sharing of relevant offline customers who
topics on social media bought on offering day
Source: KMG Research.
Table 8.4. Styles of Ben & Jerry’s.
We are the Smartest Active Member in Representation of Values How to
the World and Know What We Want Talk About Sensitive Topics
We are pioneers but not arrogant; Express tersely, for example “Take
a Chance On Love“
We are fashion but not crazy about the trend; Express our standpoint without an
explanation;
We express our ideas profoundly; Stress the bright side of things;
We have bright ideas but we don’t indulge fantasy; Make discussion interesting;
We enjoy personal independence of conduct Express our ideas by visual
but are not hippies; contents instead of long articles;
We are nostalgic but are not obsessed with
the past;
We are funny guys but frank;
We have causal manner but we are also
professional;
Source: J. Curley, M. Hayes and Ben & Jerry’s, Translating Brand Values into Social Content &
Community.
At the same time, Emerson also set up connections about certain busi-
nesses and solutions, so that customers interested in them could learn
more about its business after reading the story. Such content planning
passes on brand values and indirectly promotes the generation of sales at
the same time (Table 8.4).
communities. It can also be presented through interviews where
key opinion leaders in the industry, experts and employees or exec-
utives at key posts talk about their knowledge of the corporate,
brand and product from their perspectives to attract customers and
spread value propositions.
Content authorized by a third party: It is considered more
authoritative and credible in the eyes of customers, an opinion
shared among over 80% of marketers. After all, it is hard to release
high-quality original content on a regular basis. Therefore, for-
warding the content authorized by a third party is also an import-
ant source by which the credibility of the contents is secured,
frequency is maintained and more traffic is attracted. Pepsi has
developed an application called “Pepsi Pulse” on which both orig-
inal and authorized third-party content, including latest trends
on music, sports, entertainment, are published to appeal to more
young people. Users of this platform receive information relating
to currently trending topics earlier than others and are able to for-
ward the content on other social media platforms like Facebook,
Twitter, Pinterest.
Contents created by consumers: It is essential to encourage brand
lovers to contribute to content development, which is also a vital
means of building a sustained relationship with customers. An
important feature of the marketing 4.0 era is user engagement in
corporate growth, which is not only a trend but also driven by the
human nature that everyone wants to make comments, express
themselves and share with others. The reason why social media,
BBS and Tieba are so popular is precisely due to the fact that they
meet such human desire. Therefore, in the age of marketing 4.0,
every user has a chance to be a brand ambassador.
There are many ways to attract consumers to create content, such as
discovering hot topics through search engines and the Baidu search
index related to businesses, products or value propositions. Discus-
sions can be guided and carried out over such topics to attract fans
to participate in the review, forward incisive comments, etc. Another
example is to organize the activity of showcasing your products.
Industry content: Written by companies, it consists of critical
comments or a study on industrial trend and dynamics, for exam-
ple, reports that integrate analysis from professional institutions
and experts and research on the industry trend, of which the key
is to interpret the corporate strategy and share viewpoints. Also,
reviewing and studying previously published articles is another
option. Industry content is mainly a corporate behavior, but third
parties are also involved in content development.
After a theme is agreed upon, specific content can be completed by com-
panies (brand owners), third parties or customers. However, regardless of
whoever develops content, companies should play a leading role from start
to end, including co-developing content, practicing values and co-organizing
activities. Even in the digital age, content created by customers cannot be
produced continuously without assistance. Companies must support cus-
tomers and external experts to give them access to materials, platforms and
tools. Only in this way can we ensure the continuous output of high-quality
content and the creation of an active brand community. Thus, it is essential
to encourage brand lovers to contribute to content development.
Regarding content as an essential part in deliverables to customers, corpo-
rates, relying on the “supply chain” approach, can integrate in-house and
external resources and enable cross-department coordination for content
development. In practice, content is an important factor for brand com-
munity and a driving force for its sustainability.
should not rely too much on external partners, but “prepare for war”
proactively, or at least hold the reins of social media and community
operation and maintenance. For another thing, they should cooperate with
external partners with strengths in creative content development, etc., to
save time while striving to set standards, optimize content, study strategy
and analyze user needs and preferences.
campaign celebrating its 125 Anniversary, Coca-Cola has set up a
“Hug Me” vending machine that dispenses free coke for a hugging
gesture. The original intention of Ogilvy, the campaign planner,
was to help people pass on happiness with such a warm and simple
move. Pictures and videos about Coca-Cola “Hug Me” were widely
spread on major social platforms such as Facebook and Twitter in
just one single day.
· Grafting: It is no longer a new buzz term to increase self-exposure
by newsjacking. Breaking news stories, including the World Cup,
the Winter Olympics, Kobe Bryant’s retirement, hot showing
of Mr. Six and the incident in the Uniqlo of Sanlitun, were all
taken advantage of by social media, especially by many corporate
accounts. Undeniably, grafting helps you to get media attention
with little effort, but there is also a risk of blindly following the
trend and fatigue of content. Therefore, recreating and extend-
ing the connotation based on the current news story is the key
to the success of grafting. Durex is recognized as a grafting mas-
ter whose bestselling cases are too many to be counted in digital
marketing, from New Years’ wishes to Chinese football, headline
stories in entertainment, “Touch the sexy world”, “stock market
ending below 3000”, to Beijing’s successful bidding for holding the
2022 Winter Olympics in Zhangjiakou in 2015. When breaking
news happens, Durex is first to come to people’s mind who expect
more creative ideas from it. As a result, Durex was even in the top
search of Weibo for not doing anything about the Uniqlo Incident
in Sanlitun.
· Unclose: It means to disclose the inside story of companies or the
industry. Dove, Unilever’s female cosmetic brand, wants to sell
“beauty”. Unlike some traditional practices, Dove has launched
the disruptive “Real Beauty Campaign” and “Dove Self-Esteem
Project” to encourage women to find their own unique beauty
and share the value that “You are more beautiful than you think”
through a series of videos, articles and activities since 2004. For
example, “Evolution”, a viral advertisement in 2006, showed
how an ordinary-looking girl becomes a “supermodel” through
Chapter 9
Organizational Platform
for Digital Marketing
317
information asymmetry. Also, the typical characteristics of the Internet
age — decentralization, de-islanding and disintermediation — have bro-
ken down the original theory of organizational bureaucracy put forward
by Max Weber and significantly reduced management coordination costs.
The development of the Internet, digital technology and social media
makes the boundary of enterprises indefinite and effects a change in the
way enterprises integrate resources.
Firms have adopted three approaches in organizing resources: the
dendritic structure, the network structure and the Rubik’s cube structure.
The dendritic structure, a typical method in the industrial age, organ-
izes resources through hierarchy, division of labor and regularization. The
use of resources in this structure is mainly completed through internal
organization and coordination. According to Max Weber, only “compul-
sory coordination” can contribute to totality and enterprises can have a
unified will by connecting access to internal and external resources in
hierarchy. General Motors in Sloan’s age is a typical example of enterprises
employing the dendritic structure.
The network structure emerged after the development of the Internet.
Enterprises employing the network structure do not depend on a strong
central nervous system, namely the CEOs in the dendritic structure.
Instead, the process of obtaining and organizing resources is more distrib-
uted. Such an organizational structure is more employed in the IT industry
in which horizontal connection and resource exchange remain in each
node.
The Rubik’s cube structure in resource organization, as its name sug-
gests, resembles a Rubik’s cube. The organization of a cube varies com-
pletely when one block moves. For traditional enterprises employing the
dendritic structure, it is quite impossible to transform into the network
structure of the Internet industry overnight, but it is possible and effective
to make use of the connections to reconstruct and upgrade the enterprise’s
previous methods of resource access, exchange and organization.
The so-called theory of competitive advantage ends with the idea of
the Rubik’s cube structure. The original theory of competitive advantage
in Michael Porter’s age was established on the basis of a clear industry
boundary within which an enterprise’s competitive advantage comes from
its resistance to various stresses, including defending the threat from its
Figure 9.1. Characteristics of exponential organizations.
Source: Exponential Organizations.
subversive changes to the whole business world, whereby the old will be
replaced by the new at an increasingly fast pace. It is the case not only for
industries and companies but also for professions. David Rose, an angel
investor, once predicted that all the professions that we can enumerate are
experiencing fundamental shifts, and the problems in the linear thinking
of traditional companies create devastating challenges as follows (Figure
9.1):
· Leveraged Assets: to replace real assets. Leveraged assets here mean
leasing, sharing or borrowing assets, as opposed to possession.
· Engagement: to fully engage users. Many enterprises connect and
interact with their users in the form of games. For example, Domino’s
Pizza launched a name called Pizza Hero that invites users to design
their original pizza; those who design excellent pizzas may be given the
opportunity to work at Domino’s.
· In marketing 1.0, the core of the enterprises’ value creation lies in “stan-
dardized products and mass distribution”. It is an age of sellers’ market
when customers outnumber products, so that only the enterprises with
rapid mass production and efficient nationwide distribution power can
succeed, whose marketing organizations center on efficient execution.
China’s household appliances industry in the 1990s and today’s iron
and steel industry are typical examples.
· In marketing 2.0, the core of enterprises’ value creation lies in “differen-
tiation”. In this age, products outnumber customers, who find it difficult
to choose what they need from highly similar products, so that the key
to successful marketing is “to build the brand and offer differentiated
experience”, and enterprises’ marketing organizations center on creat-
ing differentiated convenience. Fast-moving consumer goods such as
mineral water or mobile phones and other digital devices are examples.
· In marketing 3.0, the core of the enterprises’ value creation lies in
“the maximization of lifetime value”. It is an age with rising mistrust
and social presence. With new media and social networks providing
customers with more access to products and brands information, cus-
tomers’ focus shifts from superficial brand differentiation to whether
products and enterprises resonate with their values. The key to success-
ful marketing in this age is “to build group brands with customers”, and
enterprises’ marketing organizations center on connecting and com-
municating with customers. Finance, food and real estate industry are
examples.
right of procurement to its purchasing department, headed by a team with
marketing experience.
Except for P&G, many enterprises such as Unilever, GE and Red Bull
have adopted a mixed-structure organization model in response to rapid
changes brought by digital marketing.
In addition to fast-changing digital marketing, enterprises in the 21st
century are also facing the challenges of inadequate demand, excess sup-
ply, consumers’ hesitation in choosing products or services and inefficient
cost strategy. Therefore, both Fortune 500 multinationals and local brands
have to consider starting a new growth curve and realize sustained reve-
nue growth. In order to solve the dilemma, many enterprises launched a
growth strategy driven by market opportunities around their core busi-
nesses, exploring opportunities to increase revenue from multiple dimen-
sions (such as attracting new customers, discovering new regional markets,
developing new applications, seeking new value chain chances, developing
new brands, launching new products and integrating the existing products
into new business models). Although it brings revenue growth, due to an
increasing number of business divisions, regions, brands and products,
enterprises must deal with unprecedented complexity and low efficiency
in management and organization. At this moment, their marketing organ-
ization, asking for a revolution rather than following the previous mode,
will become more agile, flexible, custom-made and pay more attention to
performance growth and synergy. We had once provided our consulting
services to a Chinese multinational with seven business groups covering
financial service, infrastructure, real estate, high-end retail, high-tech
manufacturing, international trade, hotel tourism and other industries.
Led by the goal of doubling the performance of the company, all its busi-
ness groups strived to expand their innovative business into new markets
and upgrade existing customers — but one problem emerged. Different
business groups did repetitive work in marketing and some of the market-
ing plans even contradicted each other. For example, the real estate, infra-
structure and hotel tourism business groups would usually tell the brand
story in their own ways when contacting the same local government
clients. Once, the marketing directors from three business groups visited
the same governmental departments but without any coordination or
communication among each other, resulting in the waste of marketing
9.3.2 Principle two: A process-oriented organization — switching
the focus from function to process
A case in point is a global LED lighting manufacturer who sells a wide
range of LED energy-saving headlamps to a variety of enterprises and
contractors. Their sales channel works as follows: the direct-sales team of
the company focuses on key customers and more complex projects, while
their local agents are responsible for selling products to other enterprise
clients, ensuring supply and giving support at the local level. In the past,
customers had limited idea in product type, design or installation, but
relied on the guidance from the manufacturer who usually provided a
package of services with higher profits to clients. However, business is
getting harder because customers have become very clear about what they
need and even have their own design plans. This has decreased the manu-
facturer’s influence on clients and increased price competition. Being
extremely confused, the company studied how customers bought LED
products by interviewing customers and conducting field visits. They were
surprised by the following research results:
The function of LED products has been greatly changed in that
besides the traditional function of lighting, these energy-saving lamps are
being more and more used in creating luminal art and in atmosphere
creation.
Designers start to play an increasingly important role in customers’
purchases and customers would consult designers before they go to the
manufacturers.
Therefore, it is important to engage in the customers’ purchase funnel
starting from the design process. However, how can we know and influ-
ence customer design? And how can we connect with designers and have
an insight into customers’ demand? Besides visiting customers and design-
ers, our manufacturers can also build connections with them through
semantic analysis of the Internet and closely following social media, as
they found that LED art designers usually gathered in several professional
bulletin board systems (BBS) or interest groups on Facebook to discuss
new designs, new trends and new programs. Also, the manufacturer noted
that no industry peer had shown up in the discussions in those BBS or
interest groups yet. Afterward, it decided to rebuild its marketing strategy
strategies and activities. In-depth customer insight requires that enterprises
break the boundaries between departments and their functions, joining their
ability to analyze comprehensive, multilevel and innovative data. Different
from the previous customer information access completely depending on
questionnaires and focus groups, enterprises can now obtain different cus-
tomer data from diversified channels and methods. Enterprises can obtain
customer data based on location and scene from mobile terminals, including
data about customers’ purchasing behaviors and combination from online
e-commerce platforms, data from social media, offline marketing activities,
supermarket sales, advertising and demographic structure. To process and
analyze these data, it is required that personnel in marketing organizations
have the ability to conduct marketing strategy analysis and business analysis,
hence many leading enterprises have set up new marketing organizations
and teams around this process. Two key conditions should be considered in
the implementation of this process, which are as follows:
· Set up new collaborative leadership organizations such as the Process
Committee.
· Establish new reporting systems that directly or indirectly report to
CMO.
· Create new performance assess standard involving overall client satis-
faction and sales increase.
9.4 Reorganizing Marketing Structures
Marketing in the digital age is no longer an isolated and silo approach, but
integrates and penetrates the whole organization. The structure of each
organization essentially determines the way the organization makes deci-
sions, communicates and innovates and ultimately, the speed and depth of
its digital integration. John Kotter, an expert in leadership and strategy at
Harvard Business School, once said that almost all company management
structures follow the pyramid hierarchical model as a product of the last
century. Its standardized process makes it precisely efficient to solve short-
term problems. However, its strengths in maintenance and optimization
conflict with the requirement of transformation and change in new oppor-
tunities, which inevitably leads to the failure in seizing new opportunities.
For example, potential new opportunities in the tablet market are more of
a disturbance for hierarchical large PC manufacturers whose focus of work
is the quarterly revenue target.
(3) Setting up a digitalization expert panel, in which members of the
digitalization innovation team are involved, to develop and realize all
the digital infrastructures for the organization and satisfy the demands
of the clients and business. The panel is authorized to influence
the operation of the entire company and is fully responsible for its
performance target as a business unit. One of the panel’s work focus is
to enable employees unfamiliar with digitalization to advance business
with digitalized tools. When this is initially completed, the team
members can be reassigned to other departments of the organization
to further assist in the integration of digitalization.
(4) Integrate the online and offline functions in a specific field. For
example, the client group deals with problems with phone calls, e-mails
and social media, while the retailer and purchase group should manage
products through both online and offline stores. The ultimate ideal state
is that the enterprise sets up its organizational structure organically
with different stages of relations around customers.
(5) The most advanced organizations will employ the network organiza
tional design which distributes employees capable of digitalization
to various core departments of the organization and has the experts
in digitalization lead key practices. The business department and
digitalization innovation unit will cooperate in completing the
digitalization projects. The model of distributed leadership is shown in
Figure 9.3.
once again verifies the necessity in redefining the relationship between
marketing and IT in the digital age. Enterprises need to pay attention to
the cooperation of different functions within an organization regardless of
whether it is necessary to set a specific position.
· Be an “engineer”: able to cooperate with the team to launch new
products and schemes and to solve problems.
Now, as a senior executive, you and your team have established an
organization platform of digital marketing in your business. On the basis
of strategy awareness, digital platform functions and 4R operations that we
have built together in previous chapters, the next step is to establish an
evaluation system of performance and digital marketing. Now, let us move
onto Chapter 10.
Chapter 10
Management and
Measurement of the
Performance of Digital
Marketing
344
10.1 What is to Measure in Digital Marketing?
10.1.1 Digital index 50:50 digital indices
Digital marketing can be adopted to carry out “precise marketing analy-
sis and management.” CMOs and CEOs could clearly calculate the return
on investment (ROI) of the marketing resources when they prepare the
budget. However, the measurement of digital marketing is still under
development in the industry. Most enterprises focus merely on “num-
bers” without knowing the significance of numbers in marketing or even
how to reasonably evaluate digital marketing by numbers. However,
some enterprises realize it is necessary to adopt a systematic approach to
measure or evaluate these overloaded numbers and then process these
data into “good numbers” contributing to strategic and organizational
goals.
First of all, let’s take a look at the 50 most popular indicators in digital
marketing, which is called Digital Index 50. In practice, not all indicators
are used in digital marketing. Later, we will talk about how to simplify the
indicators and target the one(s) that can control the marketing results in
dynamics.
CVR — Conversion rate: Measures the influence of your website.
Referral traffic growth: Refers to the traffic generated by links on
third-party websites, excluding the page view or direct page view
caused by users through search engines. For example, traffic that is
created through navigation websites, friend links on other sites or links
on social media are all recommended traffic. The growth of the recom-
mended traffic not only increases the exposure rate of the website but
also helps to optimize the search ranking, thus increasing page views.
CTR — Click-through rate: Google takes CTR into account when
determining the lowest click price and ad ranking. Google considers
CTR and the time that users stay to determine the ranking of the web-
site. Therefore, CTR measures the marketer’s grasp of advertising con-
tents and helps such contents to be successfully propagated.
Inbound link: Also called “incoming link”, refers to the number of links
to a certain website available on other sites. It refers to the number of
links a website has to its own website on other websites. It measures the
width of links and is sometimes regarded as a reference for the optimi-
zation of search engine.
Social media publishing volume: Includes the total volume, the aver-
age number and frequency. Now that people have to memorize you
from piles of information, too much information will numb their minds
while fewer details will make them forget the reasonable control and
use of social media.
Highest trafficked pages: Highlight the pages viewed most and ensures
that these pages can lead to conversion.
It knows which pages visitors like to visit the most and ensures that
these pages can lead to conversion.
Traffic by device: Demonstrates the habit of user’s viewing and it varies
from one device to another. It underscores the key points of marketing and
is the reason responsive websites have been emerging in the recent few years.
Total website conversions: An overall indicator that reflects the value
of visitors for a website.
makes it clear whether the keywords in the present marketing activities
take effect for further improvement of marketing.
Drop-off rate: Indicates the part in the presales that is going to stop and
usually points out a weakness in a strategy.
Customer sentiment: Is of vital importance because you will lose the
golden chance of attracting consumer and establishing brand viscosity
if you neglect the negative or positive feelings of customers.
Subscribers: A group of people who want to receive your information.
Most of them are your potential customers or customers-to-be.
Media tone: Minimizes the influence of any negative coverage though
most media could keep neutral.
Data quality: The key to successful automated marketing, and the key
to customer satisfaction.
Visitor demographics: Helps to create content specifically for a region
or in a language, by showing the regions and countries readers come
from.
Marketing-influenced sales pipeline: Measures whether marketing
activities are effective to generate more sales.
Acquisition rate: Provides the influence of your information and con-
tents. The higher it is, the more profound the influence is.
Seeing so many indices, you may get confused and not know what to
measure at first. How many have you remembered? What do you think
most deserves the attention of the CMO? Why? What should be measured
in the future? What is not included in the above-mentioned indices?
Every enterprise has its own ideas about these problems. What’s more,
problems in companies’ behavior are often caused by such opinions and
they have trouble finding what results in such problems. Therefore, it is of
vital importance to verify enterprises or organizations, precisely measure
all kinds of methods and tools and evaluate the ROI of marketing.
Taking the deeper meaning of indicators for granted is one of the
reasons why “Vanity Metrics” exist. Many companies like to highlight
how much they have grown and the press is keen on going after such
statistics. We often say things like “Our tool kit has been downloaded a
million times, we have nine million registered users and we push 100
million messages”. We mention such indicators because we believe that
they can indicate something of value, but they often have no actual
meaning. Thus, there is a deep gap between real indicators and the
so-called ones.
Vanity metrics such as registered users, downloads and original page
views can easily be manipulated and are not necessarily the numbers that
really matter — active users, the cost of new customers’ participating and
being obtained and the ultimate revenue and profit. Real data can be
retained and reused; thus, focusing on real metrics can help deliver better
products and attract more customers.
Tracking only vanity metrics creates the illusion of success. You can
only arrive at the real results after deeper analysis. When measuring some-
thing, instead of focusing on how precise the standard is, you should ask
yourself what you need and what your strategic goal is.
10.2 Metrics for Evaluating Digital Marketing: How to
Avoid “Vanity”?
10.2.1 Types of digital metrics
Metrics can be divided into company-centered metrics and customer-
centered ones. Company-centered marketing metrics are mostly related
to the performance of business production. According to the manage-
ment logic of the balanced scorecard, metrics of performance can be
foreseen through customer realization, including customer loyalty, cus-
tomer lifetime value as well as customer’s satisfaction and recommenda-
tion (Figures 10.1 and 10.2).
Company-centered marketing metrics: Sales volume, sales growth rate,
profit margin, brand value and market share.
Customer-centered marketing: Share of category requirement, share of
wallet and customer lifetime value.
Company-centered digital marketing metrics: Number of posts, number
of fans, number of KOLs and popularity (number of visits, views, forward,
comments, downloads and thumb-ups).
have been produced. Even if 100% customer interaction can be realized,
vanity metrics without conversion rate and sales volume will arise. Many
potential customers and customers-to-be will establish unconventional
customer relations digitally and customer value in the digital mode
should be added to original customer lifetime value. Digital customer
marketing can promote companies to create new demands through mass
actual data.
· Performance-oriented digital marketing
A relatively complete method of marketing evaluation has been formed,
which definitely shows the change in companies’ performance and covers the
return on investment through a digital funnel. However, we also need to
obtain the results that can be reused through actual data analysis instead of
merely focusing on metrics. After all, just like in the Wooden Bucket Theory,
ignoring the importance of customers is like the shortest plank of a bucket
while the number of fans and popularity are probably vanity metrics that
have no real effects. This is a good choice for traditional companies in the
process of transitioning to Internet companies.
· Customer-oriented digital marketing
Successful cases are densely distributed in this mode which focuses on
more refined positive metrics. Therefore, it is a totally different story from
traditional performance-oriented marketing. It responds quickly to cus-
tomers’ demands and evolves rapidly. Also, marketing efficiency is boosted
with big data that pushes almost flawless products and services. Real suc-
cessful marketing realizes the perfect integration of traditional and digital
modes, and digital thoughts and customer-oriented characteristics are
fully reflected throughout the process.
The design of marketing metrics can be assessed from another per-
spective: namely, three distinct metrics — financial metric, customer-based
metric and implementation metric — that measure the performance of
digital marketing in different aspects.
Financial metrics mainly assess the most basic marketing perfor-
mance of enterprises which focuses only on profit and cost.
Customer-based metrics measure the condition of customer assets of
enterprises.
Implementation metrics demonstrate the ways for enterprises to effec-
tively increase and consolidate customers and their financial performances.
Figure 10.3. Evaluation indices.
Source: Models of Digital Marketing and its Measurement by Avinash Kaushik.
Such a model was developed based on the digital marketing and meas-
urement models developed by Avinash Kaushik, who put forward the five-
step approach by combining and improving the actual demands and
situation of digital marketing (Figure 10.3).
Stage of participation: Time spent, pages viewed, activities attended, con-
tents downloaded and even problems and opinions put forward.
Stage of commitment: The conversion to be actual customers, times of
conversion (registration, shopping online/offline).
Customer loyalty: Post-purchase experience, return visits, recent visits,
duration and frequency of visits, grade of satisfaction, ratio of positive
comments to negative ones.
Sharing and propagating: Content aggregation, willing to mention
related information, recommendation, exerting influences.
Champion: Spontaneously elected by customers, made public by social
media, customers’ comments and other contents are supported and
recommended.
Step 5: Business value metrics
Whether the results of digital marketing activities satisfy stakeholders can
be measured from the following perspectives:
It has been mentioned that CMO should deduct from results when
setting goals and you should evaluate what you want to realize. Only
goal-oriented metrics could be adopted in the digital marketing strategy.
Now, such measurement will be applied to some typical perspectives.
· Aware: It is the first step for consumers to be exposed to certain new
products or brands. They have established an intuitive perception of the
product or brand, but no emotions are attached to it.
· Appeal: Appeals come from demands. Once the product or brand
meets the consumers’ demand or interests them, the appeal forms.
· Ask: When the desire to purchase something is aroused, consumers
would set about researching the product or brand and analyzing the
information they have collected and eventually they would have their
own assessment and final decision of whether to buy it or not.
· Act: If the analysis supports the idea of purchasing, the initial desire of
purchasing would lead to the act of purchasing.
· Advocate: This is the ideal after-sale result, since one consumer’s advo-
cation would spread and be magnified through the interaction of com-
munity members and eventually prompts the other 4A.
Figure 10.5. The 5A growth path of consumers in the era of social media.
Source: KMG Research.
The excavator discipline at China’s Shandong Lanxiang Technician
College, the ALS Ice Bucket Challenge, and Blendtec’s Will It Blend video
are all examples. All these contents went viral on social media platforms
overnight. The result which previously could only be made possible with
loads of money and advertisements can now be easily achieved within a
short period of time and for free as well.
(5) Commitment index = Act/Ask
The key to a high commitment index is to better manage the channels and
salespeople. Though the “channels” we talk about today not only refer to
the brick-and-mortar ones but also online ones, offline channels still
undoubtedly occupy an important position. Take Xiaomi as an example,
though a pioneer of Internet thinking, 70% of its sales come from offline
channels. The fight over “one last mile” among Alibaba, SF Express and
JD.com, the O2O layout co-designed by Tencent, Wanda Group and
Baidu… These cases highlight the importance of offline channels in the
implementation of a company’s O2O strategy.
(6) Affinity index = Advocate/Act
Service blueprint, customer service/care, and loyalty plan are three key
words of the affinity index. More brands are creating mutual benefits with
their customers and turning new customers into frequent ones through
ways such as adding credit accumulation, credit exchange and level-up
bonus functions to their membership benefits.
The membership card was once one of the most frequently seen forms
of a brand’s loyalty plan. Nowadays, in the era of mobile networks, mem-
bership cards, coupons and credit systems are all integrated into apps.
FiveStars, a startup, makes everything even easier — it puts both member-
ship qualifications and management system into the POS, and customers’
cell phone numbers replace the old membership cards, thus sparing the
entity cards and even the applications.
The butterfly effect of social media exerts an influence on the growth
path of its consumers.
In the social media era, the ideal growth path of consumers is sup-
posed to be in a “bow-tie” shape, as shown in the above picture. Significantly
different from the traditional “funnel” shape which shows progressive
The evolution of consumers’ relations in the traditional era was
linear: Awareness–Knowledge–Attitude–Purchase intent–Purchase–Post-
purchase–Loyalty. We used to describe this process by which the number
of customers declined as a “funnel”, and each phase was measured by the
corresponding indices, such as “repeated purchasing rate” and “share of
wallet” for evaluating loyalty.
There are three characteristics for the seven evolution phases of con-
sumer relations: continuous, linear and top-down. Brands may influence
consumers in each phase.
As “Awareness” and “Knowledge” are the necessary start to the whole
evolution path, the whole process is therefore mainly driven by marketing
efforts such as traditional advertisement and promotion activities, with
broadcasting advertisement as its core driving efforts. Brand campaign,
mass media, medium plan and purchasing are the key words of the tradi-
tional marketing promotion model, with coverage rate, audience rating
and reach as its key evaluation indices. Hence, the essential task for brand
owners is to publicize the brand as widely as possible.
However, communication at the same time is one-sided, which means
the consumers in this relation and process intend to receive information
passively (Figure 10.7).
how to reduce the loss of customers and keep the customers acquired in
the “loop” by increasing customer’s lifelong value and capitalizing the
assets. Under the influence of social media, merely keep the customers’
loyalty is far from being enough. More importantly, a virtuous circle of
sharing, interact and advocate should be established, because in this way,
customers become part of the branding. Therefore, the corresponding
indices in this phase include customer churn rate, NPS, customer satis-
faction and semantic analysis of customer’s emotions based on social
media.
10.3.4 Investment feedback
Investment feedback has always been seen as a challenge, as there are no
established measures or criteria. The effectiveness of the process and
return on investment can only be evaluated by knowing whether the
required targets are met. The following best practices can be a reference:
Clear target: Marketing personnel would set two sets of evaluation results for
the outcome of digital marketing: some are not easily quantified, such as
brand affinity, but some others such as sales indicators are easier to calculate.
Causality analysis of first clicks: According to Adobe, regarding ROI of
social media, first clicks bring twice the value of last clicks. Numerous but
ineffective social media will decrease ROI.
Locating purchases: When purchases are located through data or analysis,
it means regional patterns can be established on the distribution of dots.
This is the excellent time to use leverages.
UGC map: UGC map is the important directional data in the interactive
era, which has been talked about and used for a long time but is still sig-
nificant. The most direct link is that higher UGC figures will help ROI
increase.
Measuring the effectiveness of channel KPI: Every webpage and social
channel is a dynamic system and continues to change. Using different KPIs
to measure the effectiveness of different channels creates a virtuous circle
for ROI.
Status of each stage in the circle: Using related data and strategy in each
stage in the digital participation cycle to continuously evaluate market
ROI.
Index
A converged competition, 58
accessibility of terminals, 205 conversion rate, 37, 40, 43, 149, 151,
account-based marketing, 282, 283, 169, 170, 174, 214, 226, 283, 311,
332, 333 347, 350, 353, 364, 365
amplification rate, 345 corporate core values, 298
augmented reality (AR), 17, 18, 126, cost-per-click, 346
190 cost-per-lead, 345
automatic marketing, 43 cross-sales, 136, 153, 246
crowd innovation, 4, 85, 86
B crowd promotion, 4
BAR, 360 crowdfunding, 16, 17, 248
bit-consumer, 24, 55, 61, 62, 64 crowdsourcing, 16, 17, 76, 77, 248,
brand core values, 214 249
customer decision journey, 24
C customer equity, 99, 100, 116
channel-specific assortments, 105, 106 customer journey map, 154–161
Chief Marketing Data Officer, 266 customer lock in, 99, 101, 102
Chief Marketing Technology Officer, customer loyalty, 16, 32, 121, 205, 206,
266, 291 351, 357, 365
circle promotion, 86 customer relationship management,
click-through rate, 347 51, 73, 118, 119, 210–212, 233–235,
Cobweb Cognition Diagram, 276 272
community crowdfunding, 295 customer values, 29, 52, 56, 101, 151,
community effect, 23, 250 152, 214–215, 223–224, 326, 353
competitive advantage theory, 319, customer-centered marketing,
320 351–354
connection, 61–63, 70, 102, 116
connectivity dividend, 55 D
consumer profiling, 128–140 dark data, 95
content marketing, 178–180, 235, 237, data integration, 261, 290, 340
238, 279, 294–302, 311–316, 326 data management platform, 115,
convenient accessibility, 108 175–177
369
Index . 371
PAR, 359–360 strategic marketing orientation, 51
parallel operating system, 335 strategy fragmentia, 60
platform strategy, 63 structural holes, 278
platform-based company, 92, 93 supply chain of content, 300, 310–313
positioning map, 276 surge pricing, 102, 103
professionally generated content, 88,
252 T
targeted marketing, 272
R think big and think small, 217
real-time age, 4, 5 Touchpoint Map, 155
real-time bidding, 115, 150, 175, 177 traffic by device, 347
referral traffic growth, 347 Truth Map, 155
relation interfaces, 231
Rubik’s cube structure, 318–320 U
ultimate distributing unit, 57
S user-generated content (UGC), 16,
sales funnel, 15, 24, 26, 28, 29 251
scan-and-go, 108–109
search engine optimization (SEO), 8, V
167, 168–171, 228 value visualized, 5
share of voice, 345 value-driven marketing, 55
showrooms, 105 vanity metrics, 349, 350, 353
social customer relationship vertical e-commerce, 249, 261
management, 73, 118–119, 233–240 virtual reality (VR), 18, 126, 165
social media marketing, 15, 78, 167,
184–187, 266, 296, 360 W
SoLoMo, 12, 13, 167, 193–195, 284 word-of-mouth effect, 23