To understand the term marketing we should understand the game of perception as in digital marketer. Just like a superhero movie, knowing that his powers are not real you believe in him and try to perceive that character. Now replace the movie with brand and superhero with the product. There you go!
I would suggest you watch the movie “People You May Know!” to get a better understanding of the concept.
In the process of data gathering and data analysis, they study the different verticals of customer’s buying patterns. The questions like, “Why they buy; When they buy; Where they buy; What they buy?” helps companies and governments to manipulate people’s future decisions. Which recently seen in the last US election. Over time everything changed but one thing remains the same which is the human mind. A customer back in the 20th century and present both are buying books the only difference is the change of source. With the changing of the source, the customer got the freedom of time, rapid comparison of price and features, access to a bigger network of Online Shops and they don’t have to move an inch. Thus, the journey of making a purchase decision also revolved. While electronic screens became the digital world, people started exploring the different channel of it. According to the survey, the highest amount of internet traffic was on social media channels like Facebook and Twitter. Eventually, social media channels became the home source for many of the eCommerce site. Following that most of the, cooperates and governments started using digital mail as their source of communication. And Multi-Media channels like YouTube, Netflix and Amazon Prime became their source of entertainment. By studying each consumer’s online footprints, companies can get their interests, beliefs, opinions and private data which can help the digital marketer to produce such content with very loud context. Triggering that multiple times where you spent most of your time can increase the probability of you ended up buying that.
This article breakdown in three part: Consumer behavior, Ubiquitous Digital Marketing and Identifying the potential of data in consumer behavior. It concludes with the debatable question on the ethical use of consumer data in digital marketing and why it needs more research on it?
2. Consumer Behaviour
The section is dedicated to reviewing different evidence on change in consumer behavior and affecting factors of it. Moreover, it discusses the liner, retail-focused model to today’s iterative, digital-centric model of consumer behavior. To construct the review, this also studies the Need Hierarchy Theory by Abraham Maslow (1943), Zero moments of truth by Jim Lecinski (2011) and summarizing McKinsey’s new consumer journey theory by David Edleman and Marc Singer (2015).
2.1. Paradigms of Shifts in Consumer Decision
Just 10 years ago, the majority of the consumer was still purchasing from retail store despite having online stores. Which drastically changed in the last few years. Advancements in industries like technology, logistics, finance and easy accessibility of internet and mobile in customer’s hand convinced businesses to change their marketing model from traditional shop-centric to customer-centric model (International, 2017). For retail shopping, “Moment of Truth” model proposed by Yanliu et al., 2012. The framework was capturing the customer’s purchase decision process when they are buying (First Moment of Truth), experiencing a product (Second Moment of Truth) and start engaging with the brand. That journey is a conceptual framework to understand the point-of-purchase behavior of a customer. The key data like shopper’s in-store travel distance, how many time they touched a product, how many products were displayed on the shelf and likewise (Silverthorne, 2012) helps to analyze their behavior. The results help businesses to encourage customer’s unplanned purchases (Silverthorne, 2012). This implies that having a customer’s data can help business to do more personalized marketing, leading more influence in customer’s purchase decision.
The shift in the consumer decision paradigms started changing when consumer’s key activities like communication, entertainment, finance and academics became more internet centric (Jerry and Vijan, 2002). Sharing more personalised information on digital channels help business to instantaneously customize the shopping experience(David and Marc, 2015). In particular, management consultancy firm McKinsey proposed a consumer decision funnel(Court et al., 2009). The McKinsey’s journey discusses the consumer taking advantage of technology to more actively evaluate the product and services(David and Marc, 2015). McKinsey’s Consumer funnel theory is showing the paradigm shifts from classic five-steps consumer decision model which is first introduced by John dewy (Dewey, 1910).
2.2. Understandings of Consumer Decision Making Models
In addition to understand the paradigm shifts of consumer decision, this article reviews some of the key theories and models which have been selected from relevant marketing studies and research article. Notably, people who do not always works as a consumer can be seen as capable of behaving in purposive, goal-directed and self-regulating ways (Lawson, 1997). Which gives the clear idea of consumer decision making, which defined as liner model (Dewey, 1910) changed with the customer-centric circular model (David and Marc, 2015). Though, it should be noted that conventional decision making models are the key to learn the new models.
Earliest Decision Making Model
A Century ago, the majority of researchers believes in two hypotheses of consumer behavior (Lee, 2005). Primary is that consumer behavior can be influenced and formed by multiple factors, which can be generalized as:
(Engel et al, 1993 cited in Lee, 2005).
The second believe is that consumers are intellectual decision maker who have the ability or skills to go through a sequential decision making process to reach the optimal choice among alternatives (Lee, 2005). In the 1950s, Herbert Simon suggested in his research on decision- making that because of the uncertainty about the future and the costs of getting information in now days, people’s rational decisions are limited to the extent that their decisions can only be “limited intellectuality” (Lee, 2005). Around all these assumptions, five decision process stages remains similar. (Mitchell and Boustani, 1993 cited in Lee 2005). This five stages are Need Recognitions, Information search, Alternative evaluations, Purchase and Post purchase decisions (John Dewey, 1910 cited in Lee 2005).
The first stage of the process is Need/Problem recognition which is very crucial stage for consumer decision because if the need not recognised then the purchase will not happen (Lee, 2005). Consumer decision making is the attempt to solve Need. In more studies, change in consumer’s actual state and desired state trigger the need recognition (Burner, 1988 cited in Lee, 2005). Actual state is the consumer’s status quo and the Desired state is what consumer want. According to Maslow’s need theory a complete individual has five level of need hierarchy which is outlined as phycological, safety, love, esteem, and self-actualization (A. H. Maslow, 1943). Lately, it got renovated by Kenrick et al., 2010. According to renovated theory, the biological framework of life-history affects various aspects of Need (Kenrick et al., 2010). After recognition of need, research shows the consumer leads to the pre-purchase process such as Information search (Lee, 2005).
Information Search Process is the second stage of the decision process. It can be categorized as an internal or external search. Internal search refers to the consumer search through recalled information about products from memory and it is determined by the existing product knowledge and the ability of the consumer to obtain relevant product information (Engel, Blackwell and Miniard, 1993, cited in Lee 2005). External searching is referred when the internal search is not sufficient to meet the needs of consumers and involves largely personal interaction by word of mouth (WOM) or mass communication( e.g. Television Ad) (Holbrook and Hirschman 1982, Ray 1973 as cited in Lee, 2005). Source of the information also shapes the decision process. In general, the information of search opens the path to alternative evaluations which is a competitive analysis of information given by companies to the consumer.
The third effect of consumer decision-making model is an alternative evaluation. It is the process by which an alternative is assessed and chosen to satisfy the needs of the consumer (Lee, 2005). Generally speaking, prices, brand name and country of origin are the most commonly cited criteria used by consumers for the alternative assessment. These three criteria often differ in their influence on the product selection of consumers and some dimensions will have a greater impact than others (Engel, Blackwell and Miniard, 1991 as cited in Lee, 2005).
The fourth and the last stages of the process is purchase and the outcome of the purchase. Studies identified three purchase decisions and it categorise as: fully-planned purchase (consumer made the decision, well aware of the need and then make the purchase), partially-planned purchase (need is already considered but the purchase decision deferred until shopping) and impulsive purchase decision (both product and purchase decision made in store) ( Engel, Blackwell, and Miniard, 1991 as cited in Lee, 2005). In spite of all, purchase type may change due to situational factors like product promotion, store atmosphere, product design, etc (Lee, 2005). Ultimately conventional consumer decision making model ends with the post purchase which is actual outcome of the purchase. The feedback of the purchase will make the concurrent effects to the similar purchase especially at the stages of need recognition and information search(Lee, 2005).
Engel et al posed a complete consumer behaviour model, in which environmental and individual differences are variables that influences the consumer decision process in all five stages (Engel, Blackwall and Miniard, 1993). Following these theories many brands made their fortune in late 90s, conversely it failed in the digital era. Though it has such a potential, making it the essential source for many researchers to understand the digital consumer decision making process.
Modern Consumer Decision Journey
The need of modern decision theory stands when consumer’s buying behaviour change because of digitization . In present time digital plays a critical role in every aspects of consumer journey (Salo, Alajoutsijärvi and Koivumäki, 2005). As discussed earlier in this article, on the reasons of increasing use of online platform by consumer makes it more easy for researchers to closely observes consumer journey and changing factors of it. As stated in KPMG’s global online consumer report (2017), the digital revolution hasn’t altered the fact that consumers still experience the same stages of awareness, consideration, conversion and evaluation, the journey itself has changed (KPMG, 2017).Instead of a path to purchase that is conventional linear model, it has become more of a circular or even a web. Consumers move through and back and forth between the stages, influenced by a myriad of both offline and online factors at every stage (KPMG, 2017). Hence the marketing is now more focused on open touch points where consumers left their digital footprints and marketers use it to make communication more personalised way (Boudet et al., 2017).
In the year 2016, KPMG conducted a survey on global online consumer behaviour (International, 2017). The survey was focused on the drivers, motivators and inhibitors affecting digital consumer decision journey. Considering the traditional method as a base they asked consumer to describe their behaviour during their most recent online purchase at each of four stages as — Awareness, Consideration, Conversion and Evaluation (International, ibid:16). They call these stages as, “Simplified path to purchase stages of the online purchase journey”. More illustrated in image.
In this journey, the stage starts with the Awareness: Triggers and Influencers. When comparing the impact of online versus offline touchpoints in creating the first trigger moment, it is interesting to observe that consumer cited more online channels comparing offline channels as a source of their initial awareness (International, ibid:15). In addition the report suggested when offline and online channels used together, becomes more effective in creating consumer demand and awareness (International, 2017). Stage two is quite similar to Information search stage in five-stage theory (Dewey, 1910). This stage focuses on Product consideration and company research. During the consideration stage customers are more likely to use online channels as their purchase research compare to offline channels (International, ibid:16). Overall research suggests that price and promotions presumably influenced consumer’s decision regarding which product or service to buy online. In last, decision of a product varied by category (International, ibid:18). For instance, while buying electronic products online consumers were most focused on product features, for luxury items brand reputation is highly in consideration (International, idbi: 18).
Stages three and four are trigger to the purchase and post-purchase consumer behaviour. Stage three is focusing on conversion and exercising two consumer decisions: when and where to buy a product (International, ibid:20). After convincing the consumer during first two stages gives far from guarantees to success in the third stage(International, 2017). When and Where are the priorities of consumer and understanding them can gives businesses the advantage to win the final sale. A purchase decision of Where to buy a product considers, two preferences website and the best price. In which, millennials are more likely to than the older generations to make purchase decision based price than website(International, ibid:20). Which draws attention to that trusted website will always be important but the competitive pricing is expected to continue to rise in importance during purchase decision. The final is inextricably connected with the awareness and consideration stages (International, ibid:22). Hence the purchase model is follows circular or web path to make purchase decision. In the era of social media voice of the consumer experience are critical in generating credibility and influence repeat purchase along with generating both positive and negative buying decision (International, ibid: 22). The unlike results shown in the percentage of positive and negative reviews given by online consumers. A significant amount of reviews were positive which leads to a serious discussion(International, ibid:22). How digital media is manipulating consumer behavior?
3. Ubiquitous Digital Marketing
The technology is revolutionizing, in order to satisfy the needs of generations. By reviewing the recent scenario the generation is entering the Web 4.0. It is widely defined as “Internet of things”. In one definition web 4.0 will brings together all aspects of the web 2.0 and 3.0 to become truly ubiquitous (Davis 2010, as cited in Almeida, 2017). Along with the adaption of revolutionising technology marketing becomes more depth and customer oriented. Previously advertisers focused customer purchase journey which is now transfers to customer’s journey (Court et al., 2009). The study behind why customer’s journey becomes more valuable is Google’s Zero Moment of Truth (Lecinski, 2011). As stated by Jim (2011) when a consumer respond to the real world problem by searching solution on virtual world, that is the little decision making moment where marketing rule book change. It is the moment where marketing happens, where consumer makes choices and affects the every brand in the world (Lecinski, 2011). However to apply Zero Moment of Truth companies need large data sets of consumer’s online and offline activity (Provost and Fawcett, 2013). For instance, an athlete ran his first 10 mile marathon. A week later he got a mail from nike congratulating on race. This happen using a common digital marketing term called “Retargeting” (Julien et al., 2017). In the core of this strategy, data industry plays significant role.
3.1. Shaping the Consumer’s Journey
As stated by David and Marc (2015), that today brands can not only reacts to customer in their purchasing decision but also actively shapes those decision journeys (David and Marc, 2015). In addition, they come up with the four interconnected capabilities for marketers which can make customer journey more stickier to grab the attention and permanently capture customers (David and Marc, 2015). And although the capabilities are highly cooperated with sophisticated technology and equally on creative thinking and novel managerial approaches (David and Marc, 2015).
It involves the digitization and streamlining of steps in the customer journey which were formerly done manually (Edelman and Singer, 2015). Automation Streamlining involves condition based activities on the top of Artificial intelligence and Natural Level Processing. By studying the formal complex consumer journey, automation makes it more easy, effective and creates the essential foundation for sticky journey (Edelman and Singer, 2015). The process of turning highly complex back-end algorithms into simple, engaging, and user friendly front-end called “Superior Automation”. Consider how amazon changes your life From selling online electronics (e.g. amazon.com) to offline groceries (e.g. Amazon Go). By collecting your digital and real world footprints amazon gives you more personalised purchasing triggers.
In a simplified way, understanding of consumer’s past interactions and give them a better customize shopping experience. Such as Google Ads, which show you only those advertisements which is relevant to your past activities on internet. Many companies are now using proactive personalization to study the consumer behavioural pattern by tracking them across multiple channels & blending data from multiple sources (Edelman and Singer, 2015). The process helps companies to create single view of what customers are doing and what they will do next (Edelman and Singer, 2015).
Another key capability which is actually plays a big role in shaping customer journey. Marketer use this method to enables series of interaction that further shape and influence the consumer journey experience(David and Marc, 2015).
The idea of circular customer-centric journey starts with the where traditional theories left. The ongoing innovation in technology gives an opportunity to extend the relationship between a customer and brand (Edelman and Singer, 2015).
4. Identifying the potential of Data in Digital Marketing
As Clive Humbly (2006) puts it, “Data is the new oil.” Which states directly to the power. According to study conducted by Erik Brynjolfsson and his colleagues from MIT and Penn’s Wharton School on how Data Driven Decision Model changes the company’s performance. The results shows companies got 4–6% increase in work efficiency. DDD is also helps companies to gain higher return on investment, asset utilisation and the relationship between two entities seems casual (Provost and Fawcett, 2013). The similar view is held by Lisa Gevelber, “Data beats opinions. The key rule of digital marketing campaigns. Try something unique, track results of each activity; then crank up what works and delete what does not. That is what makes online marketing remarkable. Marketer can control the campaign and it can be change and fix in moments”(Lecinski, 2011). Hence, Data Driven Marketing model is ongoing process, it is not one-way path.
Earlier in 2018, Facebook and Data-Driven Marketing company called Cambridge Analytica comes with the classic example of misusing the power of data analysis (Chang, 2018). It drives our focus to the ethical use of consumer data. Despite many countries started changing online data protection law, it needs more research on the understanding behaviour of consumer manipulation due to online marketing.
5. Conclusion and Limitation
In this research article, a literature review in the field of digital marketing and how it affects the consumer behavior presented. The article discussed the understanding of different consumer decision journey, marketing approaches and pointing the question on the ethical use of consumer’s data in digital marketing.
Many academic research has been provided to understand the change in consumer decision journey. However, the results after changing behavior make a significant impact on the societies. And because of global digital reach, it becomes a very critical time to secure data and use it only as tool to make the consumer’s journey better rather spreading false news or manipulating countries election. Agreeing to the fact that data analysis and data processing has substantial power to understand any individual, helping them, suggesting them and in a bigger picture letting them use “Data-Driven Decision Model” as the tool.
Marketing in this digital age gives a responsibility, to use the power of data and utilize it to join those disconnected dots between consumer and brand. Moreover, consumer behaviour is still in a constant changing state. A recent example of Amazon buying Whole Foods and opening human-free, tech-supported store in America gives a new glance to digital marketing.