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Running head: MARKETING IN THE 21ST CENTURY
Marketing in the 21st Century
Melissa Berrier
Walden University
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Abstract
The Internet has changed how companies and consumers create, sell, market, and engage with
products and services. The Internet affects the individual marketing mix variables through nine
identified factors. The factors are personalized marketing, dynamic pricing, advertising methods,
products and price information, e-commerce, mass advertising versus personalized marketing,
word-of-mouth advertising, globalization, and user-generated products. Companies use
technology to research consumers and provide personalized marketing messages. Dynamic
pricing is affected as consumers have access to company pricing and competitive pricing.
Information on products and pricing is available to consumers on the internet, and traditional
stores are no longer necessary for purchases. E-commerce allows businesses to sell product and
consumers to buy products anytime and anywhere which removes geographic and time barriers to
purchasing. Mass advertising and personalized marketing both contribute value but firms weigh
the costs of each. Word-of-mouth advertising places emphasis on consumer feedback and
interaction. Companies can expand sales and market share by selling products globally. The
internet facilitates the sharing of user-generated products, forcing companies to integrate these
products into their business models and engage with consumers. These major factors of
changing marketing mix variables affect future growth. Companies must recognize and then
integrate these factors into the marketing plan for sustainable and long-term company growth.
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Marketing in the 21st21st Century
The individual marketing mix variables are changing in the 21st Century with the
increased usage of the Internet. The factors include personalized marketing, dynamic pricing,
advertising methods, products and price information, e-commerce, mass advertising versus
personalized marketing, word-of-mouth advertising, globalization, and user generated products.
Marketers should review and adapt their marketing plans to account for each of these factors.
Companies that integrate the Internet and technologies into current marketing plans will achieve
competitive advantage.
Personalized Marketing
As the cost of technology for personalized marketing decreases, companies have the
opportunity to develop and implement personalized marketing strategies. Companies can
individually tailor the marketing mix down to the smallest target segment, the individual (Arora
et al., 2008). Personalized marketing is a strategy and differentiator within competitive
industries, such as banking, apparel, and restaurants (Arora et al., 2008). Personalized marketing
will be profitable when the marketer generates more sales for customer engagement than the
implementation costs (Vesanen, 2007). Before implementing personalized marketing strategies,
marketers should weigh the benefits and costs for the company and its consumers.
The company benefits of personalized marketing are higher product price, better response
rates, customer loyalty, customer satisfaction, and product differentiation (Arora et al., 2008;
Vesanen, 2007). When benefits exceed costs, personalization creates value for the customer
(Vesanen, 2007). Marketers identify these value opportunities to engage with the consumers
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through the preferred marketing channel using the ideal message. Consumers benefit from the
personalized marketing strategies with products chosen based on past purchases for preference
match, individualized communications, and the targeted experience (Vesanen, 2007).
Company costs to implement personalized marketing strategies are the technology
investments, education of technology and new processes, risk of irritating customers, and brand
conflict (Vesanen, 2007). Since personalization means something different to every business,
each company will determine its best personalization strategy, which can be from promotion,
product or service, price, delivery, or any combination (Vesanen, 2007). Potential costs for
consumers are privacy risks, spam risks, spent time, extra fees, and waiting times (Vesanen,
2007). Two companies overcame these risks to their competitive advantage.
Portola Plaza Hotel and Amazon.com utilized personalized marketing to increase revenue
and greater customer satisfaction (Arora et al., 2008). Portola Plaza Hotel sent personalized
email invitations to loyal customers, which resulted in increased revenue, profits, customer
satisfaction, and customer retention (Arora et al., 2008). Amazon.com recommends books and
music to consumers (Arora et al., 2008). These examples illustrate how companies use
technology to create individualized customer service experiences.
Dynamic Pricing
A second factor of future changes in the marketing mix variables is pricing. Dynamic
pricing is the adjustment of prices based on supply and demand conditions (Garbarino & Lee,
2003). The available pricing information to consumers places pricing strategy as a critical factor
in the marketing mix (Garbarino & Lee, 2003). When considering pricing strategies, companies
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need to consider the information available to consumers, socially accepted circumstances of
dynamic pricing, and consumer trust based on individual dynamic pricing.
Company pricing processes and consumer reactions are changing because of the internet
and technology. Companies use technology and the Internet to freely change prices at the
individual-level for profitability and capture consumer surplus (Garbarino & Lee, 2003). With
the Internet, consumers have transparent pricing information and can spot price differences easily
(Garbarino & Lee, 2003). Price comparison websites, blog reviews, and smartphone applications
allow consumers to price compare (Hong, 2012). Companies must carefully balance this shift in
knowledge from company control to complete consumer accessibility to mitigate any negative
publicity.
Consumers allow for price discriminations in certain circumstances, such as special group
pricing, valued-customer discounts, and geographic price difference at an aggregate marketsegment level (Garbarino & Lee, 2003). However, price discrimination can turn to distrust and
outweigh expected profits in other circumstances (Garbarino & Lee, 2003). In 2000, Amazon
consumers reacted negatively upon learning the company engaged in dynamic pricing (Garbarino
& Lee, 2003). Irate consumers and bad publicity led to Amazon removing dynamic pricing
(Garbarino & Lee, 2003).
To maintain consumer trust, companies can consider dynamic pricing strategies in price
insensitive markets, new product launches, and economic downturns. Consumer may allow
dynamic pricing in markets where consumers are not price sensitive (Garbarino & Lee, 2003).
Consumers allow for dynamic pricing in new product launches, as companies may have not
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priced products appropriately (Calantone & Di Benedetto, 2007). Finally, companies should
lower overall prices to budget-constrained consumers during a recession (Hong, 2012).
Advertising Methods
The advertising methods are the third factor affecting changes to the marketing mix
variables. New media channels are replacing traditional marketing methods (Griffiths &
Howard, 2008). The Internet allows consumers to interact with companies through text, chat,
blogs, videos, customer ratings, discussion boards, and social media (Griffiths & Howard, 2008).
To react to the increased communications channels with consumers, companies must meet
consumers at all communication channels. The new media creates challenges for marketers, as
they must extend their brand presence on all new media (Kotler & Keller, 2012). Marketers must
learn the technologies, and implement these channels into the marketing plan.
Retailers that speak to their customers can maximize the relationship to promote
individualized products and services (Griffiths & Howard, 2008). Consumers control their social
media habits and their role in the market (Riegner, 2007). Companies can strategically interact
directly with individuals through the channels to promote additional products and services with
the result of securing lifetime customers. Social media shifts the communication flow from
traditional one-way flow to two-way flow (Kotler & Keller, 2012). Social media allows
consumers and companies to open dialogues about the brands, prompting companies to embrace
the new media channels to engage consumers and build brand loyalty.
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Product and Price Information
The fourth factor in future changes in the marketing mix is the shift of product and price
information from companies to consumers. Companies and competitors place information on the
internet, flowing to and from consumers. Companies are losing power as it shifts to the
consumer (Griffiths & Howard, 2008). Consumers use the Internet to compare product quality
and prices easily, shifting the control of information from retailers to consumers (Griffiths &
Howard, 2008; Nelson, Cohen, & Rasmussen, 2007). Consumers use Internet searches on
products, prices, and benefits before making the purchase (Hong, 2012). Consumers can identify
multiple sellers through search engines to locate the lowest prices for goods (Nelson et al., 2007).
To create a competitive advantage over competitors, companies need to clearly state
product features on the Internet (Griffiths & Howard, 2008). Consumers use the Internet as a
research tool in purchase decisions. The future strategy for marketers is to provide adequate
product information, benefits, photos, and prices to prompt the consumer search into an
immediate sale.
E-Commerce
Electronic commerce, known as e-commerce, is the fifth marketing mix that will change
in the future. E-commerce provides strategic advantages over brick and mortar stores, allows
consumers to purchase from the Internet, and extends the consumer base globally. A company’s
benefits by adding additional marketing channels, more market coverage, lower channel cost, and
customized selling (Kotler & Keller, 2012).
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The advantages of brick and mortar stores over pure-click retailers are consumers can
examine the physical product and private information is more secure (Griffiths & Howard, 2008).
Consumers prefer to see the product in person prior to purchasing (Griffiths & Howard, 2008).
Brick and mortar stores with online presence can strategize to capture sales by placing kiosks in
stores, offering Internet incentives to loyal customers, and creating customer-shopping lists.
Companies gain competitive advantage against pure-click competitors by using the same strategy
in traditional stores and online to create a seamless brand presence (Griffiths & Howard, 2008).
E-commerce allows consumers to purchase products through the Internet, at any location
they can login. Mobile commerce is the future of e-commerce where consumers connect to the
brands through smartphones (Kotler & Keller, 2012). Companies can use emails, texts, and GPS
to drive consumers into physical stores or purchase on smartphones (Kotler & Keller, 2012).
Mobile commerce is the next channel that companies should integrate into the current marketing
channels. As companies add e-commerce to the marketing mix, marketers define goals for each
channel, eliminate dilution and cannibalization, and establish long-term relationships with
retailers for highest sales (Kotler & Keller, 2012).
The Internet extends the sales market to a global consumer base, no longer restricted to
physical stores or country borders. As a result, marketing adaptations include catering to local
consumers’ shopping habits, translating the website in multiple languages, and offering more
products. A global consumer base provides growth opportunities for companies that can drive
traffic to the Internet sites. For example, Coach sells its luxury products via Internet, catalog, and
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company stores in North America, Japan, Hong Kong, and China (Kotler & Keller, 2012).
Coach expands its global reach as consumers with Internet access can now shop the luxury brand.
Mass Advertising versus Personalized Marketing
The sixth marketing issue to consider is mass advertising versus personalized marketing.
An analysis of mass marketing and personalized marketing reveals both advantages and
disadvantages for companies. The advantages of mass advertising are building brand preference
and awareness, educating consumers on product benefits, and shifting consumers’ perceptions
about the product (Havlena et al., 2007; Kotler & Keller, 2012;). Another advantage of mass
media is the stimulation of personal communication (Kotler & Keller, 2012). For example,
consumers can view a popular television commercial, extend its viewership by watching
repeatedly on YouTube, and share with friends on Facebook.
The disadvantages of mass media are the rising advertising costs and the broad market
reach. Marketing executives spent 40% of their advertising dollars on television in 2007 even
though recall was only 6% (Nunes & Merrihue, 2007). Online companies, such as 1800Flowers.com Inc., spend marketing dollars on mass media (Nunes & Merrihue, 2007).
Marketers use multiple medium to convey messages, reinforce brands, and engage consumers
(Havlena, Cardarelli, & deMontigny, 2007). Despite the disadvantages of mass media,
companies use the broad reach of mass media to drive consumers to the Internet and solidify
brand awareness and sales.
The advantages of personal marketing are its effectiveness in reaching the target market
and the increasing consumer time spent on the Internet. Personal communication is more
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effective than mass communication since consumers inundated with advertising block out nonrelevant communications (Havlena et al., 2007; Kotler & Keller, 2012). Personalized marketing
targets the product message to each consumer by providing relevant information. Consumers
spend 25% of media time on the Internet (Kotler & Keller, 2012). As a dominant medium,
companies should use the Internet to personalize marketing messages through the dominant
channel where the consumer spends time.
The disadvantages of personalized marketing are the rising advertising costs, upfront
investment in technology, software applications, and time to personalize marketing messages
(Nunes & Merrihue, 2007). Search engine companies charged 13% for cost per click advertising
from 2005 to 2006 (Nunes & Merrihue, 2007). Personalized marketing is no longer the cheap
advertising channel; however, the Internet still provides cost-effective potential for effective
personalized marketing. Companies should determine an overall marketing strategy and
determine whether mass advertising, personalized marketing, or a combination will reach the
target market with the fewest advertising dollars.
Word-of-Mouth Advertising
Word-of-mouth advertising is the seventh factor changing the future marketing mix.
Companies can use the Internet as a word-of-mouth (WOM) advertising medium to influence
personal relationships in a timely manner (Kotler & Keller, 2012). WOM is an effective channel
for companies to reach consumers, whether through social media, online communities and
forums, and blogs (Kotler & Keller, 2012). WOM is the most important factor in the consumer
decision-making process because trust exists in the personal relationships between the two
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parties (Keller, 2007). Consumers trust friends over companies. WOM’s potential to create
consumer engagement outranks other forms of advertising (Keller, 2007). Companies can use
WOM advertising to strengthen relationships with current customers, release new products, and
reach new consumers through social media. Examples include increasing followers on
Facebook, email marketing, and Twitter through positive interactions.
Marketers can shape and control the advertising message to its target market to influence
WOM conversations (Keller, 2007). WOM can positively influences’ consumers’ attitudes and
brand preference as consumers are more trustworthy that companies (Shang, Chen, & Liao,
2006). Consumers question the source for trustworthiness, credibility and likability (Kotler &
Keller, 2012). However, trusted companies use WOM advertising to generate conversation,
engage with consumers, and drive purchase intent (Keller, 2007). Trusted companies control the
conversations about their brands and companies in social media where consumers typically have
control. For example, companies ask consumers to create and post homemade commercials on
YouTube. Companies can add WOM advertising as an effective marketing channel to the
traditional marketing channels to increase overall market saturation.
Globalization
Companies should consider global expansion for strategic marketing reasons as an
increased consumer base, innovative product development, and stronger brand loyalty. One
appealing target segment if the bottom-of-the-pyramid (BOP) market segment for its growth and
market potential.
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If a company reaches saturation in the domestic market, then the company should
consider expansion into a neighboring country with similar cultural, economic, and social factors
(Douglas & Craig, 2011). Emerging markets such as India, China, and Brazil are ideal since the
growth rates are faster than the U.S. (Douglas & Craig, 2011). Product innovation may be
necessary to adapt to local preferences such as colors, scents, and flavors (Kotler & Keller,
2012). Traditional marketing communications channels may not be effective, and require
adaptation to the local buyer (Majumder, 2012). Therefore, marketers should create a broader
marketing strategy to include a global focus (Douglas & Craig, 2011).
Marketers can create strong brand loyalty within a country through manufacturing within
the new country. Besides gaining access to the foreign market, global companies manufacture
products locally at lower costs and creating goodwill through job creation (Pecotich & Ward,
2007). Consumers’ overall preference for domestic products is greater than imported products,
(Pecotich & Ward, 2007). Job creation in local communities increases company and brand
loyalty.
One possible target segment to consider is the BOP market. The BOP market may be
dismissed due to low income and marketing and distribution challenges (Majumder, 2012).
However, this market is important for long-term growth since 90% of future population growth
will occur in less developed countries (Kotler & Keller, 2012). In 2002, the spending power of
the 20 largest emerging economies was $1.7 trillion (Anderson & Billou, 2007). BOP consumers
are brand conscious, value-driven, and innovative, and have low disposable incomes with daily
salaries (Anderson & Billou, 2007; Majumder, 2012). Companies can tap into the BOP market
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by selling products in smaller packages, where consumers are in the small towns, at lower costs
for future growth. The companies that can execute marketing strategies in the emerging markets
will have competitive advantage over other similar companies.
User Generated Products
Companies must contend with user-generated content by incorporating customers into the
new product development process. Users are creating content and products without
manufacturing assistance to serve their own needs. Lead users of the innovation develop their
own solutions to problems before companies can create products to solve the problem (von
Hippel, 2007). Companies can capture this market by selling adjunct products and support
services (von Hippel, 2007). In reaction to the user-generated products and services, companies
can sponsor think tanks, events, conferences that gather the target market. Companies can
enhance the user-generated products and services and make them better before selling
commercially. Companies can mass customize products more efficiently than individual users
(von Hippel, 2007). As a result, companies can mainstream the product to create more sales,
reach a broader audience, and build a customer base.
The Internet allows consumers to create virtual communities to seek product information,
exchange information, and learn from other consumers (Shang, Chen, & Liao, 2006).
Companies should manage the advantages and disadvantages of these communities as part of the
long-term marketing plan. The advantages of consumer communities are sharing information
and feelings about the brand, continue company traditions and rituals, and provide assistance and
credibility about the brand (Shang, Chen, & Liao, 2006). Consumers can share easily and often
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their opinions on social media channels such as LinkedIn, Facebook, Twitter, and Instagram.
Therefore, companies can use these consumer communities to their advantage by engaging
consumers through social media and creating contests for brand loyalists.
The disadvantages of consumer communities are lack of control over consumer content
on the Internet, and the instant information dissemination. Consumer communities threaten
companies due to lack of control of negative messages from unsatisfied customers (Shang, Chen,
& Liao, 2006). Companies must manage each channel daily to react to consumers, and shift
control back to the companies.
Conclusion
The marketing mix has changed and will continue to change as companies and consumers
use the Internet. There are nine factors that affect the future marketing mix: personalized
marketing, dynamic pricing, advertising methods, products and price information, e-commerce,
mass advertising versus personalized marketing, word-of-mouth advertising, globalization, and
user generated products. Consumers have more power to purchase products when they want,
where they want, and state their opinions. Companies that integrate these factors into their
marketing mix can create competitive advantage to ensure long-term growth strategies.
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