Traditional Marketing and New Age Marketing: Striking The Right Balance: From slack waters to tsunami!

True to the maxim by Philip Kotler- “Marketing takes a day to learn. Unfortunately, it takes a lifetime to master�; all the companies try to achieve the best of the marketing practices in this vicious world. If one looks at marketing approaches adopted by firms in particular, they are going through a phase of rapid changes. Though the Traditional Marketing channels like TV, print media, radio, outdoor etc. are still active and prominent in marketing communications, the presence of the Internet and more specifically, Social Media Networking has revolutionized the way individuals and business enterprises communicate.

While relatively newer channels do work and have the potential of increasing a company’s customer base, the replacement of traditional marketing with the latest marketing channels can prove to be a wrong decision altogether. Traditional methods are tried and tested models which have a higher probability of being successful. If we look at newer marketing techniques for e.g., Internet: The usage of internet is limited to those who have access to an online medium. By the use of traditional marketing, anyone who possesses a Radio/TV or has a subscription of a newspaper, mail service can be aware of your product/service offerings. Comparing the various traditional media used, one could find the trends in the same over the recent years.

Television: The revenue model of the television industry is the advertising one. The industry was predicted to be INR 306.5 billion in 2010 exhibiting a growth of 15.4% over 2009. We see that the broadcasters are rebranding themselves in order to establish greater connect with younger audiences. The regional channels are increasing their share in TV advertising too. The issues in the television industry are: The complete digitization is still a distant dream for stakeholders. There is a high cost of production of content. We do not have substantially good enough measurement tools for measuring viewership.

Print: The industry was projected to be INR 178.7 billion in 2010 manifesting a growth of 10.7% over 2009 numbers. There is a growing trend of hyper localization in the print media, thus considering a more targeted approach. This is because the consumers have shorter attention spans and are bombarded with ads across multiple channels.
We also see unbundling of products by the major players to increase profitability. The issues in print industry include high and fluctuating newsprint costs. The higher ad: edit ratio in newspapers order to make higher profits, which is not liked by the consumers. The online format of newspaper is expected to continue to increase. Magazines continue to suffer from lack of measurement tools. There is lack in measurement of “response� from print ads as well. There is no measurement tool by which we can measure the response from print ads, making it more difficult for publishers.

Radio: The industry was predicted to be INR 10.8 billion in 2010 displaying a growth of 20.0% over 2009. We see an increase in advertising spend on radio by telecom players and handset manufacturers like Samsung. An increase in FM-enabled mobile handsets is driving radio growth in India. The issues in this industry is similar to that of print and TV, lack of measurement tools. And the major one being, the royalty payment between music companies and the radio industry.

Outdoor: The outdoor industry, which is highly unorganized, was approximated to be INR 14 billion in 2010 manifesting a growth of 12.0% over 2009. The major advertisers for outdoor media include Telecom, BFSI, E&M and FMCG. Digital outdoor screen, focusing on quality, is the upcoming innovation in the industry. We still see lack of quality in this medium, and a lack of measurement mechanism remains a challenge. Innovations such as digital screens and customization are the keys to outdoor industry growth in India.

Internet: The industry was projected to be INR 7.7 billion in 2009 exhibiting a growth of 28.3% over 2008. We see an increase in internet users in rural India. The usage of social media, which is an important form of online advertising, is increasing too. “Pay Per Click� and similar other models coming up for advertising. There are good amount of measurement tools in online industry but a lack of trust exists regarding online transactions. There exists ‘Indian wariness’ in online shopping.

Let we delve into the fact that what do we exactly want from our ad, whether it is by traditional methods or by newer marketing methods. We, as business owners, want a “Response� from the ad from our existing/potential customers. Segmentation, Targeting and positioning become important to elicit response. Going through this process of STP allows a business owner to formulate a marketing strategy that connects company, brand and product benefits to specific customer market segments. Response can be elicited by giving offers/coupons/schemes- direct response, and response can also be in terms of brand equity. By building a brand image/equity, we expect an indirect/intangible form of response from our clients/customers. If one compares different traditional media, Print and Radio are generally used for the category -direct response driven ads- to convey some offers/schemes and similar things. This “calls for an action� by the customers. Sales promotions and discounts, referrals are used as a “pull� strategy by companies. Using these strategies, the business owner tries to create a demand for that particular product and thus retailers would be inclined to seek out the product and stock it on their shelves and thus increasing the revenue for the owner.

Television and outdoor media is generally used to create brand equity i.e. for eliciting indirect response. This classification is due to the fact that the market is segmented according to the customers, who go for sales due to offers and other segment, which is driven by brand equity. Brand awareness is a “push� strategy, which places the brand/product in front of the customer, via a form of an advertisement so as to make sure the consumer is aware of the existence of the product.

The changes in government regulation, privatization, globalization, internationalization, advances in IT, and the role of manufacturers as service providers have modified the face of marketing. A question to ponder here is why do we see the skewed growth towards the e-marketing approaches/service marketing? Wish to keep a secret? I bet you can’t. In an era of IT enabled processes, you cannot keep confidentiality intact, there is always leaking out of information. We need to be quick and efficient both at the same time. This is the sole agenda of doing business, now be it in marketing, operations or finance. Traditional marketing concentrated on the 4P’s i.e. Price, Product, Place and Promotion, though this adapted into 7P’s gradually with time. People, Process, Physical Evidence were added to the list. Let us examine what lead to the need of 7P’s. This is probably due to the fact that services are somewhere different w.r.t to the products. This is one of the reasons which calls for new techniques of marketing.

We see an upcoming trend of service marketing. If I were to draw a line between products and services, the first thing which is the most important is the timing. The real time nature of delivery of services is unique to itself. Either one takes the physical presence of the person into account or the speedy process people want to see in services, both are novel to services. For example, repairing a dysfunctional gadget, financial services from a bank, or preparing a legal document. If this takes more than the expected time, this causes ‘consumer dissonance’, which is an uncomfortable feeling and usually leads to the customer take his money elsewhere or experiencing remorse over the purchase. The post purchase services form an important part of customer relationship management. For example, many auto dealers have service outlets to repair vehicle and offer free safety inspections of vehicles purchased through the dealerships for the entire life of the cars.

Let’s take an example of a bank. To enhance its service delivery, it wants to contact its customers via email, internet, phone, ATMs rather than the customers physically coming to the bank. For this, the bank wants to know why people don’t use certain delivery option for certain tasks. Suppose people would withdraw money from an ATM but would not like to deposit money at an ATM. For depositing the money, one would want the “physical evidence� of the 7P’s. With this idea in mind, we can see a lot of adaptation in the service industry especially food, where customers can have a peek at the backstage activities. One example is Mad Over Donuts, where one could see his/her favorite donut being prepared. Similarly, this can be extended to car repair facilities where the service operations are fully visible through glass windows. However, many of these backstage activities could be boring for some customers. Still, to have an impact upon the customer, this seems a viable option catering to the 7th P.
The aforesaid points have been discussed with respect to customer. The other half with complements the entire services process is ‘people’ i.e. the employees providing the service. If you are into a hospitality business, tourism industry, banking, employees in your organization and their behavior towards the customers defines you. Relationship with the seller is a major driver for purchase as the products is intangible.

If we have a look at the purchasing decision process for a customer, we see there is a difference between the traditional approach of marketing and the new age marketing. For traditional advertising methods, a basic purchase decision has four typical stages: awareness, interest, desire and action (AIDA Model) Awareness: With the space full of advertisements, your ad needs to be quick to snap up people’s attention. Using different fonts, images, cartoons that will catch the reader’s attention and make him stop and read what you have to say next. Interest: After getting the attention from your target audience, you need to engage them so that they’ll want go into more detail. Desire: As you’re building the interest of the reader, you need to help them too understand how what you’re offering can help them in a real way. Their basic need should be fulfilled. The main way of doing this is by appealing to their personal needs and wants. Action: Finally, be very clear about what action you want your readers to take. However in the light of modern Marketing Communication, it has much broader scope, i.e. short and precise communication style, heavy involvement of social communication, greater ability and keenness to gain product/services information. Customer involvement has increased a lot due to this new trend showing up. The customers are now able to peer through corporate walls. As a result, the relationship between the firm and its customers is changing dramatically. Expectations of the end customer are increasing. He wants better products and services, more options and worthy products, more value for money.

This raises the question: Does the traditional marketing mix no longer apply in the modern digital age? It is true that the digital marketing helps small enterprises to participate in global markets as it is an economical and viable option of marketing. Lowering of inventory by JIT production, IT enabled processes, reduced paper work and reduced costs are some of the clear benefits of new age marketing. Applying porter’s five force model to online industry:

1. Threat of New entrants: Social media has almost negligible entry barriers, making it unattractive for the incumbent. Score: 2

2. Threat of Substitutes: The threat of substitutes is weak. Substitutes in this industry are considered as the more traditional marketing channels like, print and TV. So, attractiveness for incumbent is more. Score: 4

3. Bargaining power of buyers: There is a moderate amount of buyer power in this industry. With switching costs of buyers as really low, buyers have good bargaining power. Revenue is generated by their advertisements. This business model gives control to the buyers who use those services and “click� on those advertisements. Score: 2

4. Bargaining power of suppliers: Supplier power in this industry is strong. Servers are a main component of companies that work in the internet and services business and they rely heavily on suppliers to provide them with good quality, great speed, reliable, and energy efficient machines. This makes it attractive for incumbent, giving it an attractiveness of 4.

5. Threat of Rivalry: Rivalry in this industry is moderate. With technology always changing, new products are being introduced and it is creating a more competitive landscape with rivalry increasing. Score: 3

Analyzing the Online marketing from the Porter’s five forces model we see that the attractiveness for the incumbent is Moderate (3). (1 means highly unattractive for incumbent and 5 being the highly attractive for the incumbent.)

Let’s see this from the eyes of the customer, online shopping is perceived to be relatively convenient and efficient than traditional shopping. Easier access to a good amount of information about price and product offerings of alternative suppliers makes the shopping experience of the customers enriching. Moreover, their search costs of obtaining the information decreases drastically. Switching costs for these customers is almost zero, as participation in electronic marketplaces does not require large investments of time or skill. This reduces the market power of sellers even more.
Though the digital revolution has taken place, barriers to electronic marketplaces still persist. Due to these barriers, the e market space hasn’t appealed the masses.

Many Internet users still perceive higher risk associated with making payments through credit card over the Internet. When we visit a retail outlet./showroom/mall for shopping, we look for a kind of socialization which is lacking in the e-market place. Other facilities like easy return, alterations, customizations, alteration issues cannot be dealt with during online shopping. We cannot ignore that the fact that the Indian customer is still uncomfortable with shopping online because of the ‘Indianism’ attached with shopping, i.e. having the look and feel of the product before purchase.

I believe that the digital revolution is not the only right option at hand, there has to be an appropriate mix of both digital and traditional marketing approach. If we have a closer look at the upcoming trend of using data analytics and technology to solve business problems, although this seems to be a good solution but isn’t always the feasible one. There is a “digital ocean� which we see in terms of huge data, which possibly is not the only solution. This “big data� has given the firms immense opportunities in terms of email, phone number, and other internet options to contact the customer. This “big data� can be helpful in a number of ways for the firms, provided the firms interpret this huge quantity of data in a meaningful sense. Navigating through this digital ocean to get a clear picture of customers is very difficult indeed because of the volume and variety being too high. This has made the job of the managers even tougher. They have to analyze more data, make sense of such a data and engage with more demanding customers, while following organization’s culture. This reminds me of an example- Harrah’s entertainment Case, in which Harrah’s has 26 casinos in 13 states, makes $4 billion in sales in 2000 and it is one of hundreds of casinos on the Vegas strip but the problem is: How to attract visitors to come and spend money at your casino, and have them come again and again? The possible solution could be: CRM (Customer Relationship Management) using Customer Databases. Each visitor gets a smart card and swipes their card at every game, restaurant, gift shop etc. In return for logging activities, they get free hotel rooms, dinners etc. We are essentially looking for patterns in the data to find out what visitors do, when, how long, etc. Data Access & Analysis in this case could led to information & knowledge like- Who are best customers (age)? Game played most often? Do they stay in the hotels? Prefer chips or free room with steak dinner? Data analysis can have a big payoff in such a case. Data analysis involves: Collecting vast amounts of data, Organizing/Storing vast amounts of data, Access/Analysis of the data for better marketing and corporate decisions, Continuous collection of fresh data (because people, environments, culture changes)

Inculcating unconventional marketing techniques along with the traditional ones is an effective way to grow in business. There should be a promotion mix instead of sticking to one medium in order to have the maximum coverage. Integrated Marketing Communication (IMC) is to be used.

Whether it is traditional or new age marketing, one needs to be careful about: The Target Group, Have a Compelling feature about your product/offering. You should have either of the two strategies in order to succeed, either a differentiation strategy or a low cost leadership so as to capture the market. Although it is difficult to implement both the strategies at the same time, but if done it carves into the best cost strategy, which can be of great help. Ideally, there should be a mix of online and traditional media for marketing because there are always some products, where the touch, look, feel is more important than anything else. High involvement products like vehicles, property, need a lot of time in decision making about buying them or not. So, new age marketing should complement and not replace traditional marketing. Nevertheless, traditional marketing is here to stay.

Blog by:- Seerat Jangda

*** The views expressed here are the views of the contest participants and myRosys takes no responsibility for any views expressed here in the blog. The ownership of the blog lies with the contest participant and no third party is allowed to use this blog. ***