February 23, 2015

Interactive Marketing - Philip Kotler's (Keller) Chapter Topic Summary

Planned Revision schedule for marketing chapters is in February and March

Interactive Marketing - Introduction

Kotler recognizes the rising role digital media use in marketing. He terms it interactive marketing as quick, easy and low cost conversation is possible between the firm and the customers as well as potential customers.

Interactive Marketing - The New Options and Issues

Tailored messages possible
Easy to track responsiveness
Contextual ad placement possible
Search engine advertising possible
Subject to click fraud
Consumers develop selective attention

Companies are increasing their marketing expenditure allocations to interactive marketing.  Pepsi spent between 5% and 10% of its overall ad budget online in 2006, compared to just 1% in 2001, because of its cost effectiveness.

Online Promotional Opportunities

Web Sites
Search ads
Display ads
Internet-specific ads and videos
Alliances and affiliate programs
Online communities
Mobile marketing

Web Sites

Visitors will visit sites based on their need and judge a site's performance on ease of use and physical attractiveness. The physical attractiveness depends on typefaces, fonts and good use of color and sound. The statistics of visitors to various sites are collected by some agencies.

People have to be aware of the web site of an organization to visit it. For facilitating it, companies advertise their web site in all their communications. But the general practice now, is for people to use search engines to find the specific web site or web sites related to topics they want to visit. Hence search engine optimization has to be done by the company to get its web site included in the search results for more number of search terms. Search engine optimization (SEO) has become an important area in interactive marketing.

Key Design Elements of Effective Web Sites

Rayport and Jaworski propose that effective sites feature seven design elements they call 7Cs.

Context: Layout and design
Content: Text, pictures, sound, video
Community: User-to-user communication
Customization: Site’s personalization ability
Communication: Site-user communication
Connection: Links to other sites
Commerce: Ability to conduct transactions


Microsite is a site within the site of another related organization. For example, a vehicle insurance company can have a microsite on the website of a vehicle seller. Microsites can be sites paid for by an external advertiser/company. This explanation was given in the 13th Edition. In the goods/products classification, there is a category of unsought products. People do not visit websites of unsought products. Therefore microsites of unsought products can be hosted on websites of products in demand to gain the attention of the consumer.

Online Advertisements

The two major categories are Search Ads and Display Ads.

Search Ads
Search ads has a dominating marketing share today.Along with the general search results, search engines show some sites which pay money for it. This is the search ad feature. The average click through rates for search ads is estimated to be 2% and marketers are happy with this response and the cost of search advertising which is given as 35 cents per click. Google adwords is search ads program and people are specializing in finding out and bidding for key words that have better consumer responses.

Display Ads
In the early days of internet, banner ads had click rates of 2 to 3 percent. But very quickly the click through rates plummeted. Kotler and Keller give the opinion that display ads still hold great promise. But ads need to be more attention-getting.

YouTube Video Marketing

YouTube videos are popular as internet specific videos.
Many brands are using YouTube to post videos having advertisement content and they are having very good number of views sometimes in millions.

Internet content can be sponsored.

Alliances and Affiliate Programmes
The most popular ones are Google Adsense and Amazon affiliate programe

Online Communities
Nestle has 750 facebook pages covering its various brands.

Email Marketing
e-Marketing Guidelines

Give the customer a reason to respond
Personalize the content of your emails
Offer something the customer could not get via direct mail
Make it easy for customers to unsubscribe

Mobile Marketing

Mobile is being now used to access internet and do transactions like booking tickets and online shopping. There are more than twice as many mobile phones in the world as personal computers. Mobile presents an opportunity to marketers to reach a big audience and also to reach them at more opportune time. Mobile advertising has already crossed $1 billion level and established itself as a viable advertising option. But the screen size being small, advertisers have to develop designs that are appealing and ease to users.

Word of Mouth/Word of Mouse

Word of Mouth becomes Word of Mouse in the online media.

Earned Media

The media coverage that a firm or its brand gets is earned by its services to users. Highly satisfied customers or reviewers become brand ambassadors and provide greater media coverage in the social media. Hence it is called earned media.

Positive word of mouth or its online version word of mouse happens voluntarily as satisfied customers talks about it. But now it clear that, it can also be facilitated and managed. A product producer or service provider can request a user to talk about his product or service in media. It does happen in sales presentations offline also. Satisfied customers give testimonials and they are made part of advertisement and brochures. Similar efforts are made in digital media and these efforts are being termed as word of mouth marketing.

Two forms of Word of Mouse (Mouth)- Buzz and Viral Marketing

Buzz is excitement and publicity created for a brand through new relevant brand-related information created and transmitted by social media participants.

Viral marketing is passing along company-developed products and services or audio, video or written information to others online.

Platforms of Social Media

Online Communities and Forums
YouTube and Other Video Sharing Platforms
Social Networks

How to Start Buzz

Identify influential individuals and companies and devote extra effort to them
Supply key people with product samples
Work through community influentials
Develop word-of-mouth referral channels to build business
Provide compelling information that customers want to pass along

Creating Viral Opportunity

A viral opportunity must have an entertainment value.

References for Interactive Marketing

Jeffrey F. Rayport and Bernard J. Jaworski, e-commerce (New York: McGraw Hill 2001)

Cases in E Commerce, Jeffrey F. Rayport and Bernard J. Jaworski

Online Word of Mouth - Research Papers

What We Know and Don't Know About Online Word-of-Mouth: A Review and Synthesis of the Literature

Robert Allen Kinga, Pradeep Racherlab, Victoria D. Busha,
Journal of Interactive Marketing
Volume 28, Issue 3, August 2014, Pages 167–183
Electronic word-of mouth (eWOM) has attracted considerable interest from researchers in the past decade. But no attempt has been made to consolidate and synthesize this stream of research. The authors have attempted to fill the gap.  Based on a  review of 190 studies, they have undertaken  a multi-dimensional analysis of eWOM communication. The key issues developed and tested so far are outlined and important questions for future research are highlighted.


What drives consumers to spread electronic word of mouth in online consumer-opinion platforms

Christy M.K. Cheunga, and Matthew K.O. Lee
Decision Support Systems
Volume 53, Issue 1, April 2012, Pages 218–225

The relatively new form of word-of-mouth communication, electronic word-of-mouth (eWOM) communication, influences consumer purchasing decisions.  In this paper, the focus is on the factors that drive consumers to spread positive eWOM in online consumer-opinion platforms. The approach is based on the social psychology literature and the authors identified a number of key motives of consumers' eWOM intention and developed an associated model. The model was empirically tested with a sample of 203 members of a consumer review community, OpenRice.com. The model explains 69% of the variance, with reputation, sense of belonging and enjoyment of helping other consumers significantly related to consumers' eWOM intention.

Online Social Interactions: A Natural Experiment on Word of Mouth Versus Observational Learning

Yubo Chen, Qi Wang, Jinhong Xie (2011) Online Social Interactions: A Natural Experiment on Word of Mouth Versus Observational Learning. Journal of Marketing Research: April 2011, Vol. 48, No. 2, pp. 238-254.
Consumers' purchase decisions can be influenced by others' opinions, or word of mouth (WOM), and/or others' actions, or observational learning (OL).

Information technologies are creating increasing opportunities for firms to facilitate and manage these two types of sales facilitators. To date, researchers have provided only limited insights into how these two social influences might differ from and interact with each other. Using a unique natural experimental setting resulting from information policy shifts at the online seller Amazon.com, the authors designed three longitudinal, quasi-experimental field studies to examine three issues regarding the two types of social interaction: (1) their differential impact on product sales, (2) their lifetime effects, and (3) their interaction effects.

The findings are negative WOM is more influential than positive WOM.

Positive OL information significantly increases sales, but negative OL information has no effect. This suggests that reporting consumer purchase statistics can help mass-market products which will have high sales and it does not hurt niche products with lower sales figures.

The results also reveal that the sales impact of OL increases with WOM volume.

Networked Narratives: Understanding Word-of-Mouth Marketing in Online Communities

Robert V. Kozinets, Kristine de Valck, Andrea C. Wojnicki, & Sarah J.S. Wilner
Journal of Marketing, Vol. 74 (March 2010), 71–89
Word-of-mouth (WOM) marketing—firms’ intentional influencing of consumer-to-consumer communications—is an increasingly important technique. The paper Reviews and synthesizes extant WOM theory.  It then presents a study of a marketing campaign in which  prominent bloggers participated. Eightythree blogs were followed for six months.The findings indicate that the network of communications offers four social media communication strategies—evaluation, embracing, endorsement, and explanation. Each is influenced by character narrative, communications forum, communal norms, and the nature of the marketing promotion.The study shows that communal WOM does not simply increase or amplify marketing messages; rather, marketing messages and meanings are systematically altered in the process of embedding them in their communications by bloggers or WOM participants. 

The dynamics of online word-of-mouth and product sales—An empirical investigation of the movie industry

Wenjing Duana, Bin Gub, and Andrew B. Whinstonb
Journal of Retailing
Volume 84, Issue 2, June 2008, Pages 233–242

A unique aspect of the word-of-mouth (WOM) effect is the presence of a positive feedback mechanism between WOM and retail sales. The authors characterize the process through a dynamic simultaneous equation system, in which online WOM is  both a precursor to and an outcome of retail sales. The approach is applied to the movie industry, showing that both a movie's box office revenue and WOM valence significantly influence WOM volume. WOM volume in turn leads to higher box office performance. This positive feedback mechanism highlights the importance of WOM in generating and sustaining retail revenue.

Interactive Marketing -Books

Interactive Marketing: Revolution or Rhetoric? (Google eBook)

Christopher Miles
Routledge, Sep 13, 2010 - 256 pages
This author investigates the constructions and reconstructions of discourse that surround the uses of interactivity in contemporary advertising, public relations, and ‘guerrilla marketing.’ In doing so, he offers a radical new theory of marketing communication based upon approaching persuasion as a dynamic, endless negotiation between distinction-making systems.

Updated:  23 Feb 2015,  29 Jan 2015, 3 July 2014


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