Management Chapter 13 Digital Marketing Can Enhance Products Value Providing Extra Benefits Like Service Information

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Instructor’s Manual – Chapter 13

Chapter 13: Digital Marketing and Social

Networking

Use this Instructor’s Manual to facilitate class discussion and incorporate the unique features of the text’s

highlights. Follow-up via the Connect exercises is then encouraged to provide a holistic understanding of the

chapter.

C H A P T E R F O R E C A S T

The Internet and information technology have dramatically changed the environment for business. Marketers’

new ability to convert all types of communications into digital media has created efficient, inexpensive ways of

connecting businesses and consumers and has improved the flow and the usefulness of information. In this

chapter, we first provide some key definitions related to digital marketing and social networking. Next, we

discuss using digital media in business and digital marketing. We look at marketing mix considerations when

L E A R N I N G O B J E C T I V E S

LO 13-2 Demonstrate the role of digital marketing and social networking in today’s business environment.

LO 13-4 Define social networking, and illustrate how businesses can use different types of social

networking media.

LO 13-6 Evaluate a marketer’s dilemma and propose recommendations.

L E A R N T H E T E R M S

blog 401

e-business 392

identity theft 411

social network 397

viral marketing 402

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K E Y T E R M S A N D D E F I N I T I O N S

blog

A web-based journal in which a writer can editorialize and interact

with other Internet users.

digital marketing

Uses all digital media, including the Internet and mobile and

interactive channels, to develop communication and exchanges with

customers.

digital media

Electronic media that function using digital codes via computers,

cellular phones, smartphones, and other digital devices that have

been released in recent years.

e-business

Carrying out the goals of business through utilization of the Internet.

identity theft

When criminals obtain personal information that allows them to

impersonate someone else in order to use their credit to access

financial accounts and make purchases.

online fraud

Any attempt to conduct fraudulent activities online.

podcast

An audio or video file that can be downloaded from the Internet with

a subscription that automatically delivers new content to listening

devices or personal computers.

social network

A website where users can create a profile and interact with other

users, post information, and engage in other forms of web-based

communication.

viral marketing

A marketing tool that uses the Internet, particularly social networking

and video sharing sites, to spread a message and create brand

awareness.

wiki

Software that creates an interface that enables users to add or edit

the content of some types of websites.

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Instructor’s Manual – Chapter 13

C O N T E N T O U T L I N E

The following section provides the flow of information using the LEARNING OBJECTIVES as a guide, KEY TERMS

learners will need to take away from the course and a notation of when to use POWERPOINT SLIDES with

LECTURE NOTES to drive home teaching points. There is also a reminder on when CONNECT activities can be

used. This is created so that you can facilitate in–class or online discussion effectively.

LO 13-1

Define digital media and digital marketing, and recognize their

increasing value in strategic planning.

• Introduction

• Growth and Benefits of Digital Communication

Key Terms:

• E-business

• Digital media

• Digital marketing

PowerPoint Slides

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Lecture Outline and Notes:

I. Growth and Benefits of Digital Communication

A. An e-business involves carrying out the goals of business through the

use of the Internet

computers, cellular phones, smart phones, and other digital devices that

have been released in recent years.

C. Digital marketing uses digital media to develop communications and

1. For instance, the website Nextag puts power in the hands of

consumers by allowing them to compare prices of products at

different stores before buying.

F. The Internet also facilitates business transactions, allowing companies to

marketing research, exchange information, and advertise.

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Instructor’s Manual – Chapter 13

LO 13-2

Demonstrate the role of digital marketing and social networking

in today’s business environment.

• Using Digital Media in Business

Key Terms:

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II. Using Digital Media in Business

A. Digital media have created new ways of doing business and shopping.

1. Fast communication

2. Real-time exchanges

3. More interactive

4. Comparison shopping easier

5. Easier to conduct marketing research and advertise

B. Digital markets are more similar to traditional markets than they are

different.

worker productivity.

1. One unique way Benjamin Moore has used digital media is by

creating an app on your phone to help you pick out the perfect paint

1. Industries where the cost of business and customer transactions

were traditionally high have benefitted the most from the Internet.

1. Yet controlling employee access to digital media is becoming a

media.

LO 13-3

Show how digital media affect the marketing mix.

• Digital Media and the Marketing Mix

Key Terms:

1. Communications are richer, faster, and more interactive

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B. Digital media let marketers and customers easily share information

through e-mail, mobile phones, social networking, wikis, video sharing,

podcasts, blogs, videoconferencing, and other technologies. (Figure

13.1)

C. Achieving the right marketing mix remains essential.

1. Product considerations

a. Connectivity of digital media creates opportunities for

businesses to add services and to enhance product benefits.

c. The Internet can make it easier to anticipate consumer needs—

but competition makes quality products and service offerings

more important than ever.

2. Distribution considerations

d. Walmart and other retailers now offer “site to store” services

that allow customers to eliminate paying for shipping and pick

up orders in the nearest store.

3) Thanks to online promotion, consumers can be more

informed now than ever, including reading consumer-

generated content before making purchasing decisions.

b. Consumer consumption patterns are changing and marketers

must adapt their promotional efforts to meet them

brand awareness and provide fans with updates.

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4. Pricing considerations

a. Price is the most flexible element of the marketing mix.

b. Digital marketing can enhance products’ value by providing extra

benefits like service, information, and convenience.

c. Discounts and promotions can be quickly communicated using

digital media.

d. Deal websites allow consumers to compare prices of products.

LO 13-4

Define social networking, and illustrate how businesses can use

different types of social networking media.

o Social Networks

o Blogs and Wikis

o Media Sharing

o Virtual Worlds

o Mobile Marketing

o Applications and Widgets

• Using Digital Media to Reach Consumers

• Using Digital Media to Learn about Consumers

Key Terms:

• Social network

• Blog

• Wiki

• Viral marketing

• Podcast

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D. A social network is a web-based meeting place for friends, family, co-

workers, and peers that lets users create a profile and connect with

other users for a variety of purposes.

1. Are valuable to marketers as a means of building relationships with

customers, providing product information, and learning about

consumer needs.

2. As online social networking expands in popularity, marketers are

3. An important question is how social media are adding value to the

economy. However, it may be too early to assess the exact economic

III. Types of Consumer-Generated Marketing and Digital Media

A. Digital media are more consumer-driven than traditional media. Two

factors have sparked the increase in consumer-generated information.

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B. Social Networks

1. It is estimated that today’s adults spend one of every five minutes

online on social networking sites.

2. As social networks evolve both marketers and the owners of social

networking sites are realizing the opportunities such networks offer.

3. Facebook

a. Became the largest social networking site in the world in 2008.

b. Facebook users create profiles, which they can make public or

private, and then search the network for people with whom to

c. Appeals to a broad demographic, making it a great resource for

marketers.

1) The fastest growing demographic on Facebook is women

e. Companies are utilizing relationship marketing through

Facebook to help consumers feel more connected to their

products and gain publicity.

and to post updates.

d. Can help build or rebuild customer relationships.

e. Marketers can use Twitter to gain a competitive advantage.

Marketers can pay Twitter to highlight advertisements or

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5. Google+

a. Social media site intended to rival Facebook and identify users

across Google’s various services

b. CEO Larry Page initiated a move to get more people to use

Google+ by requiring those that use Google services to have a

Google+ account

c. Integration between the social network and its other services

means that users that post are not anonymous, they are now

tied to a person’s Google+ account

b. Blogs give consumers power because companies cannot control

what bloggers write.

1) Negative blog posts can damage a company’s reputation,

but positive blog posts can enhance it.

1) Smart companies are using blogs to build enthusiasm for

their products and create relationships with consumers.

consumers feel about their company or products.

c. Some organizations use wikis as an internal tool for complex

projects.

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D. Media Sharing

1. Media sharing sites are more limited in scope in how companies can

interact with consumers and tend to be more promotional than

reactive.

2. Their popularity provides the potential to reach a global audience of

consumers.

3. Video sharing sites

sharing sites exist.

c. Viral marketing is a marketing tool that utilizes the Internet,

especially video sharing and social networking sites, to spread a

message and create brand awareness. Campaigns that

campaigns, rather than hiring ad executives.

4. Photo Sharing

a. Podcasts are audio or video files that can be downloaded from

the Internet via a subscription that delivers content to listening

1) Podcasts are convenient, giving users the ability to listen or

view content when and where they choose.

b. Podcasts are a good tool for reaching the 18-29 year old

1) Podcasts are becoming extremely popular and can be

viewed on tablets, laptops, and smartphones.

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E. Virtual Worlds

1. Allow users to select an avatar and live out an alternative life online.

2. Some, like Second Life, allow users to buy and sell goods, services,

and even real estate in the virtual realm.

3. Businesses have set up virtual stores in order to take advantage of

the trend. Companies can use virtual worlds to reach out to

consumers in ways that are creative and fun.

4. Firms have even used virtual technologies for recruiting purposes.

5. Firms are not only creating brand loyalty by connecting with Second

Life residents, they are also using consumer knowledge and money

to earn virtual and real-world profits.

mobile devices and smart phones.

b. The most important feature of apps is the convenience and cost

savings they offer the consumer.

2. Some of the more common marketing tools on mobile devices

d. Mobile websites

e. Location-based networks (e.g. Foursquare)

f. Mobile applications

users have applications on their mobile devices.

a. Certain apps allow consumers to scan a product’s barcode and

then compare it with the prices of identical products in other

3. To remain competitive, companies are beginning to use mobile

marketing to offer additional incentives to consumers (QR scanning

app)

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4. Mobile payments are gaining traction.

a. The Google Wallet and Apple Pay apps allow shoppers to tap

their phones at the point of sale for the transaction to be

registered.

b. The popularity of mobile payments will depend largely on

whether companies will adopt this payment system.

5. Widgets are small bits of software on a website, desktop, or mobile

device that enables users “to interface with the application and

b. Widgets downloaded to a user’s desktop can update the user on

the latest company or product information, enhancing

relationship marketing between companies and their fans.

products.

6. Bitcoin is virtual peer-to-peer currency that can be used to make a

transmission laws

c. MtGox lost Bitcoins amounting to $620 million in value

work to constantly adapt to new technologies and changing

consumption patterns.

C. While consumers use digital media to access more product information,

marketers can use the same sites to get better and more targeted

information about the consumer—often more than they could gather

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E. Forrester Research developed a classification system to help marketers

segment Internet users based on how they use digital media. (Table

13.2)

1. They group consumers into seven groups:

a. Creators: Consumers who create their own media outlets, such

as blogs, podcasts, consumer-generated videos, and wikis.

b. Conversationalists: Regularly update their Twitter feeds or status

updates on social networking sites.

c. Critics: People who comment on blogs or post ratings and

reviews on review websites such as Yelp.

d. Collectors: Collect information and organize content generated

g. Inactives: Online users who do not participate in any digital

online media; this segment is shrinking.

h. Marketers who want to capitalize on social and digital media

marketing need to consider what proportion of online

B. Crowdsourcing involves using communities of interested consumers to

gather input and feedback for marketing purposes.

C. Online forums can be a good place to gather consumer feedback

1. 25 percent of the U.S. online population reads ratings and reviews,

3. Despite the ease and obvious importance of online feedback, many

companies do not yet take full advantage of the digital tools at their

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Instructor’s Manual – Chapter 13

LO 13-5

Identify legal and ethical considerations in digital media.

• Legal and Social Issues in Internet Marketing

o Privacy

o Identity Theft

o Online Fraud

o Intellectual Property

• Digital Media’s Impact on Marketing

Key Terms:

• Identity theft

• Online fraud

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VI. Legal and Social Issues in Internet Marketing

A. The extraordinary growth of information technology, the Internet, and

social networks has generated many legal and social issues for

consumers.

1. The U.S. Federal Trade Commission (FTC) compiles an annual list of

consumer complaints related to the Internet and digital media.

B. Privacy

1. Shopping on the Internet allows companies to track consumers on a

personal level without their knowledge (something that is not as

much of a problem in stores).

a. Can be used in a positive way to customize services

b. Consumers have the option of turning off cookies on their

3. Another Internet privacy issue is “scraping,” an activity where

companies offer to collect personal information from social

networking sites and other forums.

protect consumer privacy by limiting the amount of consumer

information that businesses can gather online.

b. Web advertisers see the potential for additional Internet

regulation as a threat. They are attempting to engage in self–

regulation, such as a do-not-track icon, to stave off unfavorable

Internet regulation.

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C. Identity theft occurs when criminals obtain personal information that

allows them to impersonate someone else in order to access financial

accounts and make purchases. (Figure 13.3)

1. Security breaches are a serious threat to organizations and

individuals.

2. Phishing is using a familiar website to deceive people into divulging

private information.

3. The National Fraud Center wants financial institutions to implement

new technologies such as digital certificates, digital signatures, and

D. Online fraud includes any attempt to conduct fraudulent activities

online, such as by deceiving consumers into releasing personal

information.

1. Cybercriminals are increasingly using online social networking sites

company’s reputation or to gather private information from

consumers.

a. Some criminals have used typosquatting sites based on common

misspellings of search engines or social networks to trick users

into releasing their personal information.

b. Criminals even use social networking sites to pose as charities in

the wake of natural disasters in order to siphon off donations.

1. Can be ideas and creative materials, songs, movies, books,

electronics, etc.

hard to enforce in a global marketplace.

a. IP theft is a problem that has grown in the digital age with sites

like YouTube and illegal software downloads on the rise.

b. The U.S. Copyright Group recently obtained the IP addresses of

users who downloaded specific movies using BitTorrent

technology and is taking action against thousands of BitTorrent

users for illegally downloading protected content.

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3. The U.S. government proposed legislation—the Stop Online Piracy

Act and the Protect Intellectual Property Act—that would enable the

government to shut down sites that appear to violate another’s

intellectual property.

intellectual property protection.

4. Many consumers rationalize the illegal sharing of digital content.

a. Piracy and illegal sharing cost the industry billions annually.

VII. Digital Media’s Impact on Marketing

A. To be successful in business, you need to develop a strategic

understanding of how digital marketing can make your business more

efficient and productive.

B. Businesses accustomed to traditional marketing media can find the

transition to digital marketing challenging, but it is necessary to remain

competitive.

in computer science, entered the job market during a slow point in the

economy

charge in exchange for revenue generated later

2. Paul did research and learned from an article the enormous

potential of freeware