Introduction Marketing industry has always been a complex field

Introduction

Marketing industry has always been a complex field, that integrated marketers, distributors, advertisers, salespeople, PR-agents, marketing researchers, media and many more branches and professions (Kotler, 2003). The Internet has added new marketing possibilities and with them new professions, such as online marketers, search engine optimisation specialists, online advertising specialists, programmers, e-commerce and m-commerce marketers and advertisers.
In this study the question of the recent changes in marketing industry will be addressed. The various changes that took place due to the advancement of Internet technology will be considered and discussed. The study will show the new and evolved tools that emerged with the development of online and how they shape the new modernised marketing industry. The research describes the changes of the communication channels, the changes in the value chain and in many other industry specific factors.

Background

The development of technologies has pushed the boundaries of the way people communicate, the way the transactions occur and the way the advertising and promotion happen (Fill, 1999). The biggest technological shift of the recent past was the development and rapid growth of the Internet.
The Internet has been one of the major innovations that created a paradigm shift in many industries (Litan and Rivlan, 2001; Tapscott and Caston, 1993). Among the ones most affected were the retailing and the marketing. The Internet also became the source of many new instruments that marketers can adopt for the promotion of goods and services. Internet offers space to voice all kinds of information, news and updates thus opening new possibilities to the businesses to grow.
The Internet gives the businesses the unique ability to address the global market, and the businesses are no longer expected to be local (Chaffey et al., 2006). They are now expected to adapt to the needs of consumers around the world and to be able to cater for them.
Since the environment and instruments are changing radically the marketing industry also needs to change. It has been noted by the researchers that the development of Internet technologies pushed for the evolution of marketing management. Brannack (1997) discussed how the internet was changing the general logic of marketing, while Litan and Rivlan (2001) stipulated that the rising presence and use of the internet has changed the dynamics of various industries, including marketing, having both positive and negative effects on them.
The literature review follows the simple logic of the change. First of all, it describes how the Internet has grown in the past decades and how it has altered the communication between consumers and businesses. Secondly, it describes what its effects on marketing industry were.
Growth of Internet usage
As every new innovation the Internet took some time to become widely accepted and once it has become a major part of people’s everyday life. Internet is now part of people’s most basic needs, since it provides access to communication and information. According to the latest data published by Internet World Stats (2009) and Nielsen Online (2009) there are 48,755,000 Internet users in UK as of June 2009, which represents 79.8% of the UK population. According to Internet World Stats (2009) and Nielsen Online (2009), the number of Internet users has been continuously growing. In 2000 15,400,000 people used the Internet, which was a 26% share of the population. Later on in 2005 already 35,807,407 people were actively using the Internet or a 59% share of the population. The latest data shows that 2009 saw a growth to almost 50 mln people using the Internet. Since the number of the Internet users keeps dramatically increasing every year it obviously affects all of the industries (Litan and Rivlan, 2001) in different ways. Retailing industry quickly adapted to the change in consumer needs by also establishing online presence. Now most of the High Street brands can be found both online and offline. Furthermore, there are now purely online retailers who never used to sell offline, like amazon.com. The growth of amazon.com business has been so overwhelming that many more businesses tried to follow that path. The industry of leisure and travelling changed with the growing usage of the Internet. More and more Internet users flock to travel websites such as expedia.com in search of tickets, bookings and reservations instead of going to the next door travel agents. This has lead to closing down of many travel agencies and the establishment of more travel websites. One more example to mention is the banking industry. Since the number of users was growing and the consumers’ requirements for faster and more individual service were developing a whole new online banking industry emerged. In a couple clicks the users can now check their bank accounts, transfer money, buy products and services, find timetables, prices and all other information relevant to their needs.
Impact of Internet usage on marketing industry
The marketing industry is a complex mechanism that facilitates the communication of the businesses with their customers. The various elements of the mechanism constitute the major elements of the marketing management. As suggested by Bauer et al. (2001), Chaffey et al. (2006) and Mitchell (2007) among others the Internet has changed business relationships with consumers and the conventional arms-length relationships have been transformed into interactive forms of communication between marketers and customers (Fill, 1999). The following discussion critically analyses the changes that took place in the marketing industry due to the rise in the Internet usage.
Changes in the value chain
The marketing value chain as it was before the emergence of Internet technologies had a linear model. Within this model, every element was adding value and all of the elements were joined together. The model included the staff of the organisation, the distribution channels, sales force, advertising agencies and marketing researchers (Kotler, 2003). The efforts of the participants of this model resulted in the growth of the numbers of customers and in growth of sales. However, all the activities would be joined in a seemingly linear way, in which everybody’s input generated revenue for the company.
The Internet changed this model shifting it from a linear layout to a network system. The Internet permitted to use new technologies, new more varied distribution channels, include new CRM systems, and adopt new communication models (Greenberg, 2001). It added to the value chain the complexity of the proliferated channels that the businesses could now use. One business can now have established presences on High Street, on its own website, on Amazon marketplace and on eBay as well. The marketing for such company would therefore include a mass of instruments to be used both online and offline. It would no longer be limited to one particular type of advertising and the consumers would be targeted in a much more effective way than before (Chaffey et al., 2006).
Another option granted by the Internet advancement is virtualisation of the organisations and services (Chaffey et al., 2006). The networks organised by such giants as Dell and Amazon, allow different companies to offer services together under one recognised brand name. This offers the cost-reduction in terms of marketing expenses as well as lets the companies collaborate together in offering the products and services to the consumers (Kotler, 2003).
Changes in customer information collection
Every marketing strategy is based on marketing research that is carried out to establish the needs of the target customer groups (Kotler, 2003). Therefore one of the major aims of the marketing industry is to collect as much information as possible about the consumers. Before the active use of the Internet technologies the marketers followed the rule by building large data-bases about consumers including their demographics, product purchase and usage behaviour, geographic location and used it for direct targeting (Wyner, 2008).
Wyner (2008) suggest that instead of being static the information about customers has now become much more dynamic. The dynamic aspect relates to the events of exposure to advertising, word of mouth or other marketing stimuli (Kotler, 2003). The Internet allows the marketers not only to affect consumer behaviour by attracting and persuading potential buyers, it also allows to measure the effect of marketing campaigns, based on the clicks for advertising and banners, search and registration statistics and dynamics. So the innovation in Internet technologies and the rise of its usage by consumers has lead to the whole concept of customer information to be broadened and deepened (Greenberg, 2001).
Changes in communication channels
The communication channels evolved significantly as many researchers and business people have noticed. As Wyner (2008) suggests: “The generation and control of information, in many ways the lifeblood of marketing, is changing in important ways” (Wyner, 2008, p. 9). The mass media traditionally used for advertising have now partly lost their appeal to the marketers since the consumers spend more and more time online. The problem definition, search and evaluation of alternative stages in consumers’ decision making (Kotler, 2003) now increasingly happens online. As suggested in the article by Kimberly (2006):
“The Internet is killing off responsive press ads for retail brands, according to John Clare, chief executive of the Dixons Store Group, who says consumers now go online to gather price and product information” (Kimberely, 2006, p.1).
It is therefore becoming increasingly accepted that much of the marketing and advertising should be switching to the online environment, as that is where the consumers now look for information before making a purchase. Since the emergence of Internet technologies the whole concept and understanding of customer information and information addressed at the customers has evolved as well (Wyner, 2008). Modern marketers see every encounter with the customer as being potentially marketing relevant (Wyner, 2008), they now happen increasingly in an online environment. According to Kimberley (2006) the Dixons representative stated in his speech delivered at the IPA’s annual meeting:
“The combined effect of digital – the Internet, mobile phones, email and interactive TV – represents the most fundamental shift in the marketing industry since the launch of commercial television. Agencies must ensure they can translate their creative skills for this new era” (Kimberely, 2006, p.1).
The message of this business representative suggests that modern consumers need the information to be available online and that is why the marketing paradigm should be shifting (Tapscott and Caston, 1993; Mitchell, 2007). However, as mentioned before the Internet is much more interactive than the mass media. If mass media offered a one-way mode of communicating with the consumers, the Internet is a more interactive two-way communication channel. It allows consumers to express their own opinions, approval or disapproval of products and services by posting their own content on blogs, forums and social networking websites (Wathieu et al., 2002).
Wedgbury (2008) and Mitchell (2007) express the opinion that the definition of “media” has changed dramatically in the recent years and will continue to do so. YouTube and Facebook are increasingly becoming marketing tools alongside their initial goals of creating communication channels between users. Wedgbury (2008) argues that media will no longer be as local and well-defined as it used to be. According to Wedgbury (2008) and Andelman (1995) it will become less driven by the companies’ agenda and increasingly by the consumers and their need to create communities with common interests and shared likes and dislikes. Media will continue to be fragmented; however, with more effective targeting involved it will be much more powerful in delivering its messages (Wedgbury, 2008; Kimberley, 2006).
Also in terms of communication, the Internet allows businesses to interact with many more potential customers than ever before. Andelman (1995) suggested that “the Internet creates a tidal wave of sales opportunity” (Andelman, 1995, p.1). This is related to the understanding of the Internet as a global space that addresses everybody who is connected to it. The businesses have never been exposed to such an enormous audience as they became with the development of the Internet. The rise of Internet usage only stimulates this global exposure, providing businesses with more and more consumers. Wedgbury (2008) emphasises that the consumer needs changed together with the rise in Internet usage. Modern consumers are looking to engage in ongoing communications with brands rather than simply making a purchase (Wathieu et al., 2002). As Wedgbury (2008) suggests the consumers want to be listened to and want to get engaged in communication with the companies, whose products they purchase and use. The consumers also got their share of control of marketing activity by posting their own opinions and expressing likes and dislikes of brands and products (Wyner, 2008). Wedgbury (2008) and Wyner (2008) agree that the marketers are only starting to capitalise on the power of Internet technologies and social media.
Change in marketing industry
The marketing industry dynamics largely depend on a variety of factors. The distribution and communication channels are of utmost importance when it comes to marketing planning, strategy and management. Having discussed how the Internet changed the marketing value chain and the distribution and collection of marketing information, there is now enough grounding to discuss the changes that are currently taking place in the industry itself. Marketing Magazine published a series of interviews with marketing and advertising industry professionals from several marketing companies in 2008. They all suggested that there were many changes taking place in the industry due to the technological progress. The insight provided by those interviews and the information sourced from other publications were the basis for this discussion.
Viner (2008), the president and CEO of Rogera Media, suggested that the digitalisation is the recent development that will shape the industry’s future. His opinion is widely supported in other interview, he says:
“Digital is pointing to a brave new world on the web and on mobile. The vision is that of a mobile device enabling us to navigate a wondrous world of on-demand content. While traditional media is still very strong – and the most active web users are among the biggest consumers of traditional media – the digital universe has changed our industry forever. Media companies have to be agnostic about platform while building audiences” (Viner, 2008, p.1).
In the opinion of many of the industry’s representatives it is the change in the media that will engender the most significant change in marketing practice. Viner (2008) and Wathieu et al. (2002) note that consumption of content and advertising will become more personal than ever; clear, unequivocal presentation of content and advertising will become essential. According to Viner (2008) strong media brands will become the guide spots for navigating the emerging on-demand world.
As Wyner (2008), Mitchell (2007) and Chaffey et al. (2006) suggest the growth in the numbers of players in the industry has increased significantly in the past years, which lead to the fact that it is now not obvious who is in position of control today. Marketers work together with retailers and advertisers, which is why it is difficult to exert control over one or another.
The question of added value becomes increasingly important in the changing marketing industry. The main question that is being asked is how exactly each of the actors of the marketing chain creates value for the business. The answer to this question needs to be consistent with the company’s marketing strategy and marketing investment intentions (Wyner, 2008; Whitwell et al., 2003). Wyner (2008) also suggests that the actors should be providing a basis for evaluating the yield of having these different actors and players involved. The worth of each of the factors should therefore be measured in terms of the contribution to revenue generation so that the effective decision making takes place.
Even though together with Wedgbury (2008) Wyner (2008) accepts the unarguable benefits of the change, he also raises an important question of accountability. In the modern marketing industry a large number of teams and companies is responsible for the promotion of a product or service. Their efforts usually provide a combined effect and it is increasingly difficult for the company employing those teams to see the effect of their services (Wyner, 2008). Wyner (2008) stipulates:
“As complexity in the marketing process diffuses responsibility over more teams, it highlights a need to bring all the pieces together and maintain accountability” (Wyner, 2008, p.9).
Wedgbury (2008), the president of High Road Communication, suggests that the advertising and PR industries will be changing significantly in present and in future. With the mass media losing to social media, the consumer becomes increasingly in charge of the advertising’s power of persuasion. The consumers are now more likely to ignore the advertising messages and look for information elsewhere, including the opinions of their relatives and friends, the word of mouth on the Internet, the information posted by other users online (Wathieu et al., 2002). This change affects the role of the advertising agencies and creates an increasing need in social media marketing specialists capable of managing the brand identity through social networks (Mitchell, 2007). The advertising agencies will increasingly have to accommodate for online marketing departments, hiring professionals with online experience. As the marketing shifts online, the same would apply to PR professionals, who would have to establish brand presences and raise brand awareness both in the online and offline environments. Promotional activities would now have to take place in more than one dimension and a higher degree of creativity and innovation will be required to attract the attention of the increasingly demanding audience.