A Strategic Framework Fordigital Marketing Management/Digital Transformation

A Strategic Framework Fordigital Marketing Management/Digital Transformation

A Strategic Framework forDigital Marketing Management/Digital Transformation


The purpose of this article is to develop a conceptual framework that further our understanding of the role that digital marketing can play within firms and specifically within business processes that create and capture customer value and, in turn, shareholder value. The framework highlights how digital marketing efforts must be ingrained as an input to business processes and how it results in output that build, sustain and deepen customer and shareholder value. In detail, the goals of the article are three-folded: First, to articulate the role of digital marketing as generator and integrator of market and customer inputs to the business processes. Second, to depict how digital marketing can affect cash flows positively (e.g. brand equity) and reduce risk. Third, to specify the role of digital marketing in the relationship among business processes and cash flows.

  1. Introduction

According to Srivasta, Shervani and Fahey (1999) the role of marketing in any organization can be seen either narrowly to customer view or broadly to marketing perspective to organization, in here we embrace the holistic view. Srivastava et al. (1999) present an organizationally embedded view of marketing as an entity that can be viewed as part of the three core business processes namely customer relationship management, supply chain management and product development management. In turn, these three core processes create value for the customer and eventually value for the shareholder.

Since the publication of Srivastava et al. (1999), marketing as function, practice and science has witnessed considerable shift from the use of traditional marketing strategy, programs and tools (TV, radio, newspaper, magazine, e-mail, static websites and trade events) to encompass ever increasingly amount of digital marketing tools (search engine marketing, website morphing. marketing automation, predictive algorithms, behavioral andmobile marketing, augmented reality, digital signage, social media, internet of things). Ad spending shift from late 1990s to today by Fortune 500 companies illustrates the change from traditional/analog to digital. Today, which was unheard of roughly 15 years ago, most of the big companies have created specific budgets for digital marketing and have created a digital marketing unit with Chief-of-Digital marketing (CMO)to take care of digital marketing activities within their organizations in cooperation with the CIO.

Digital marketing in here is understood broadly, reflecting the widespread definition of marketing developed by American Marketing Association (Italics added), to encompass “Digital marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large in digitized way.”

Due to the witnessed shift in the marketing activities and increasing focus on value based marketing activities the purpose of the article is to develop a conceptual framework that broadens our understanding of the role of digital marketing in general and specifically in relation to business processes that create the value. The intent of the framework is to highlight how digital marketing is linked to the three core business processes and how it may influence the outputs of those processes. Specifically the research aims to answer following research questions: Is and how is digital marketing influencing the three core business processes? And how subsequent value created and captured is changing?

A conceptual framework is presented that integrates digital marketing into three core business processes named here as customer experience management, supply chain management and innovation as an entity that is partly controlled and influenced by marketing actions. It is also shown how digital marketing creates value for both customers and shareholders in the customer relationship management. Moreover, it is also depicted how the digital marketing enhances the value created in the supply chain management. Additionally, it is illustrated how digital marketing influences innovation. More importantly, the traditional view of digital marketing as customer focused is expanded to encompass a more broad idea of market perspective to digital marketing with the developed strategic framework pinpointing to the digital marketing management.

  1. Methodology

We follow qualitative exploration research design. One of the researchers developed the digital marketing framework first as pedagogical tool based on the literature review and conceptual analysis. Pedagogically idea is to show the broader view of the digital marketing rather than the narrow view e.g. social media only focus or neglecting industrial marketing activities. After enactment it has been employed in numerous digital marketing classes from 2009 onwards. Main five iteration rounds with the students, executives, colleagues and the four expert interviews led to reanalysis and rewriting of the framework proposed.

The first iteration took place at the Helsinki School of Economic which is nowadays Aalto School of Business. The digital marketing framework has been utilized in the Aalto School of Business from 2009 onwards at the Master level digital marketing class that has been lectured sometimes twice a year due to its popularity. Altogether, the class has attracted over 1000 students. Each class has evaluated the overall teaching but also specifically provided comments on the digital marketing framework. Over the years the digital marketing framework has been clarified and improved based on the comments and discussions with the students (most of the students at Aalto School of Business work part-time while they study so they have also practical experience).

The second iteration started almost parallel to the first, as the digital marketing framework has been utilized also in the University of Oulu, Oulu Business School (AACSB) from 2010 to 2014 while teaching three day executive MBA course “Digital Marketing”. Altogether, the class has attracted over 100 executives (with academic qualifications). Over the five years the digital marketing framework has been clarified and improved based on the comments and discussions with the executives.

The third iteration involved international aspect as the digital marketing framework has also benefitted from other international student and executive exposure from Italy, Greece and Australia during the period of 2010-2015. Altogether over 150 students and executives have participated Digital Marketing or similar classes. Similarly, the digital marketing framework has benefitted from the comments received during several guest lectures given in Finland and abroad.

The fourth iteration is most recent one and the digital marketing framework has been utilized in the University of Cape Town, South Africa in 2016 while teaching “Digital Marketing” class. Altogether, class attracted over 30 bachelor students with divergent backgrounds. Based on the student feedback, comments, one workshop, and discussions the digital marketing framework has been further clarified and improved. Digital marketing framework has been also used at the DBA course “Digital Marketing Management” at the Aalto Executive Education and also at the doctoral course “Digital marketing” at the Oulu Business School.

The iterations from one to four mainly involved students, executives and those participating the guest lectures given at different institutions. The fifth iteration involves in-depth interviews. In 2013 four key-informant interviews (Kumar et al., 1993) lasting over one hour each were conducted to discuss digital marketing trends but also more specifically focus on the digital marketing framework. Key-informants were selected to reflect the areas of the three main business processes and idea was to use them to clarify and depend the understanding of each digital marketing technology and its relation to the business processes (value creation and capture).

First, key-informant (with over 10 years of experience in digital marketing) was selected from advertising industry that has been heavily influenced by digitalization of advertising. Second, key-informant chief-of-sales (of one of the fastest growing software companies in Finland, over 10 years of experience in digital marketing) was selected from the business-to-business industry selling digital marketing tools to the business-to-business industry. Third, key-informant, CEO, digital marketing consultant and software house owner (with over 10 years of experience in digital marketing) was selected from retailing industry. Fourth, key-informant (with over 10 years of experience in digital marketing) was selected from the consumer orientated industry (games and gamification).

Each iteration with the executives and students has brought small changes to the digital marketing framework especially to the sections dealing specifically with each business process and what digital marketing technologies could be aligned with that process and how. At first, the digital marketing framework was presented as integrative framework at the end of a course but as years followed it became clear that students and executives wanted to digital marketing framework to be presented during the first lecture to orient themselves to what was to unfold. More importantly, the feedback from the students from diverging backgrounds, executives, those participating guest lectures helped to fine grain the business process specific digital tool utilization and metrics related to their measurement. Also students provided ample of examples from their everyday life where they have encountered different types of digital marketing tools being used.

  1. Elements of the digital marketing framework

3.1 Digital marketing Strategy

First element is the strategy. Usually, the business strategy gives company the guidance on what business we are in and where we aim to be in the 3-4 years’ time. It gives general direction. Then, the other element is the customer strategy which says what type of customers we want to acquire and with what costs and then what type of customers we don’t need and with what cost we are going to defend our existing customer base. These two strategies give direction for the three core processes that create and hopefully also capture value for us.

3.2Value management (Value co-creation and capture)

3.3Customer experience management

Role of the digital marketing is to complement traditional marketing activities while in some rare case also to replace some marketing activities.

Process stage / Traditional tools / Digital tools / Example and metrics / Reference
Identifying potential new customers / Events (exhibitions), freebies, shopping mall exhibitions, buying potential customer lists and databases e.g. LSM data base in South Africa, surveys, interviews and polls, telemarketing / Trending searchers on search engines, big data crunching, social media activities (Facebook fans and Instagram – who follows?) app downloads, website visitor information (e.g. Google Analytics – who clicks?), gathering information from
online surveys, polls, and Online communities with nethograpy. / After looking at an item on e.g. Nike Facebook page potential customer is shown relevant ads and later contacted
Determining the needs of existing and potential new customers / Surveys, focus groups, in-store-out store observation while they are using existing products, mall intercepts, reviews and scores, complaints, suggestion boxes / Search engines advertising, cookie data, website browsing data, electronic newsletters, social media (tagged existing and potential customers from search engines that utilize social media e.g. Facebook)
email surveys (panels online focus groups), netnography (apple case on blogs and forums), blogs, crowdfunding, digital signage face recognition / -Search word e.g. waxing example
-loyalty program Customer reviews, opinions and feedback e.g. Uber and AirBnB
-BMW design a car competition
Nike design your own sneakers
Nosto website browsing / Roggeveen, Nordfalt, Grewal (2016)
Learning about product use and application / In-store demonstrations and workshops with customers, TV ads infomercials, general media, word of mouth, testing / Content marketing, online (brand) communities – recommendations, vlogs/blogs, podcasts, e-wom, social media and YouTube, Facebook and Instagram, blogs, virtual reality - worlds / TomTom GSP watch YouTube tutorial, review, use of product
Developing/executing advertising programs / TV, cinema, outdoors (billboards and signage?), Testing ads Radio, Newspapers and magazines (above the line , any paid as those above), flyers, pamphlets, posters / Websites (landing pages), search engine marketing (e.g. GoogleAdWords, AdSense, Baidu, Yahoo, Bing), social media (Facebook, Instagram, LinkedIn, Pinterest and Twitter), video content (YouTube, Vimeo,Vine), mobile apps, multichannel integration of these to achieve goals of the programs
Seeding strategies – viral, UGC, ewom –some campaign
Use of iBeacons within retail store
Use of digital displays – signage in retail stores, Mobile / Geo-location awareness, in-store location specific one category (iBeacons-bluetooth, RFID tagging warehouse), geocaching one, bigger picture heat maps, tracking. / Integrated advertising with messages – City of CT antidrug?
Some famous Superbowl campaign using digital
FB-analytics and YouTube campaigns
Dove campaigns, Redbull
Twitter sponsored messages
Foursquare – FB places
Developing/executing promotion programs / Flyers and coupons, loyalty programs
Instore coupons and advertising
Popup instore
Door to door sales
Testers – going into stores / Digital coupons and competitions (online and mobile), flyers, digital loyalty programs (e.g. mobile app based or customer online loyalty program, competitions, online advertising
Plus same as above in advertising
Native advertising - content
SMS email
Google AdSense? / Groupon sales announcements via email, Twitter, Facebook and Instagram
Facebook and Instagram competitions
Red bull parties
Snapscan / Zapper / JM Aspara Xueming
Venkatesan, R. and Farris, P.W., 2012. Measuring and managing returns from retailer-customized coupon campaigns. Journal of marketing, 76(1), pp.76-94.
Developing/executing service programs / ATM, self-service technology, phone calls, warranty, snail mail, complaint desk – hotlines
Instore promotions / Digital (mobile) service programs
SMS reminders, IoT reminders, email, UGC / Filling in online service order e.g. for car service, receiving notification via SMS in relation to service used
Twitter KLM
Uber rewards
Acquiring/leveraging information technology/system for customer contact / Phone, letter, Point-of-Sales data (POS), asking to fill in form in store, census?, call centers, loyalty cards / Digital (online web service) customer service systems or loyalty
Mobile service (apps, in app messages)
Email list subscription and lists , cookies, email signup on website
-Big data ?Competitions?
-mCRM / Customer serve themselves by altering customer contact information and other preferences e.g. in the airlines’ frequent customer online system.
Sign up website – self service
Travelstart has some competitions?
PnP smart shopper newsletters
FB/ LinkedIn / (JarvenpaaBalasubramanian JAMS)
Managing customer site visit teams / Face to Face physical site checks, weekly meetings, – log books / Registration, catering etc. via online system, digital log books
Robotization of service – service robots that are automated / Drones - CCTV
Enhancing trust and customer loyalty / Phone calls, door to door visits, events, fax, snail mail, press releases, return policy, service quality, product and process and other quality checks
Above the line advertising / Third party rust seals, verified by Visa, Master card in relation to online payments, Amazon automated payments.
Reputable buyer lists
Customer reviews and feedback visible online – eopinions – wom
Successful delivery – return policies
Following – engaging in social media – listening
Information on privacy policies and safety online
Customer control of privacy
Customer loyalty program / Visa and Master seals
EU law on online purchase return rights etc
Amazon – customer product evaluations
Instant message help service (also in Sales good many use in websites ebookers, autokauppa,com)
Than U W rewards card
Cross-selling and upselling of product service offerings / Customer database and salesforce selling activities (deals), bundling, bundle discount, / Automated electronic newsletter customized (based on last purchase and purchase history - cookies) for the individual customers. Landing page of the campaign is also customized to according to the content in the newsletter)
Website/ EC/ SC site, recommending similar products/services
Customer online loyalty program
Shopping cart abandonment recovery – emails
Browse to abandonment recovery – emails / Consumer received electronic newsletter tailored to last purchase
Amazon offering algorithm
Airlines selling transportation and accommodation
Accommodation selling transportation and airline tickets. Nosto
Superbalist, razor and blades and printer and ink

3.4 Supply chain management – demand chain management

Process stage / Traditional tools / Digital tools / Example and metrics / Reference
Selecting and qualifying desired suppliers / Trade events/fairs exhibitions, Catalogues, Trade newspapers,Phone, fax, Paper mail smth, Request for proposal, site visits and meetings, tender process and sales reps / Search engine (65% of 1000 professional buyer use SE)
Electronic Market places (+reverse auctions Jap JM)
Industry online databases / social media
Online wom
Online content marketing (Ponsse, Nokian renkaat) / Google, but how about hello Peter for negative issues – negative wom eliminating from a list
Online content marketing (Ponsse, Nokian renkaat) YouTube videos
Establishing and managing inbound logistics / Phone, fax, Paper, person with checklists, smth, email?, manual / Digital tracking, RFID tagging, ERP systems, logistic 3rd party/external? online services
EB tools, mobile systems? / Tagging of steel plates
Vehicle/product/parcel tracking
Automated QC (quality control) system
Designing and managing internal logistics / Phone, manually by person, fax, Paper smth, email?, audits / Integrated computer systems – ERP, Intranet, RFID tagging, ERP systems, logistic internal online services, CAD? / Tagging of steel plates
Company intranet / ERP
Establishing and managing outbound logistics / Phone, meetings, fax, Paper smth, email? / Extranet (call in truck)
Other integrated IS, Telematics/ web services (see trucks location in real-time)
RFID (identify truck arriving and leaving)
Mobile message (identify truck ready), B2B integration?. M2M – IoT, automated warehouses – robotization, Geo-location awareness, heat maps, tracking / Transportation of steel plates
ERP / other integrated IS, packaging systems – 3D codes augmented packages etc.
Designing work flow in product/solution assembly / Phone, fax, paper, CAM- assembly line MRP systems, email?, intercom system / CAM
3D design and illustration, ERP systems, robotization – digitized manufacturing / Using 3D scans to identify bottle necks in the work flow
Running batch manufacturing / Manual batch, CAM, Phone, fax, paper, MRP system, email? / ERP systems, embedded SW, M2M iot, prototyping, 3D printing / Machinery integrated IS, 3D printing
Acquiring, installing and maintaining process technology / Process dependent information seeking behavior (Paper, trade association and events, formal and informal discussions), R&D activities and education, manual labor / Process dependent digital information seeking behavior, R&D activities (3D or virtual worlds for developing and visualization of process solutions), and education (online learning environments, mobile applications for learning), online purchase of technology - extranets / Steelcase?
Order processing, pricing, billing, rebates and terms / Phone, fax, paper, mail, accounting books, writing an invoice – barcodes
Competitor analysis –relative pricing surveys / Website, extranet, email, electronic market places – auctions for order taking
Pricing software ERP – competitor analysis online, billing, rebates and terms (extranet for information sharing), mcrm? / ERP based pricing – Miilux
Managing (multiple) channels / Phone, fax, paper, mail, hierarchy - top down / Category management?, Vendor Managed Inventory (VMI), Efficient Consumer Response?. Collaborative planning and forecasting), EDI?, EFT, extranet / Office supply VMI system in Oulu Uni
Managing customer services such as installation and maintenance to enable product use / Phone, fax, paper, mail, salesforce, aftersales service, questionnaire, polls / Remote access to site (information gathering or direct involvement)
Salesforce? Aftersales service? Review forms online
Online tutorials, online chatroom – IRC, skype
M2M – IoTlaivojenetäohjaus / Remote access to power plants etc. processes in chemical e.g. wood processing industry
Website with FAQs
YouTube online tutorials
Skype session with technician

3.5 Innovation