Business strategy and consumer insights
Challenge 1: Digital revolution and business models
Day (2011) described business models as tools that should showcase the methods an organisation can employ to can create value for customers and how the organisation is then able to capture economic profits. Leeflang et al. (2014) added that business models are specified systems of interdependent structures and processes that enable organisations to create value for customers and value appropriation for the organisation as well as its stakeholders. Many alterations to business models affect both value creation and value appropriation and the models’ underlying strategies . Although digital tools provide new, tempting options for communication, it is important to remember that technology is only a tool . As stated by Leeflang et al. (2014) information technology does not provide competitive advantage for companies. On the contrary, competitive advantage arises from a strategic understanding of the best way to use information technology. Market orientation is concerned with understanding both existing and dormant customer needs and, hence, can generate competitive advantage in a dynamic setting such as the digital environment. Additionally, Mulhern (2009) stated that customer service has evolved as these activities have come closer to the company core. Boundaries between internal and external company environments have been blurred and customers have become a part of the value creation process. Furthermore, this evolution has prompted the invention of the term customer centricity , which incorporates a market-oriented point of view to create competitive advantage and display the strategic requirements of interactivity and a customer focus influenced by digitisation.
Challenge 2: Customer Insights
Customer insight provides organisations the ability to improve customer segmentation and to target marketing campaigns more effectively. It is a data analysis process that aims to provide meaning to contrasting fields, for example: identifying potential clients, predicting responses or behaviours of existing customers, calculating the cost of maintaining a relationship and cross selling predictions . Organisations are therefore enabled to focus on the needs, wants and resources of customers as the starting point of the planning process . Companies investing in single customer view strategies through a multichannel marketing approach involving data integration and complex analysis to generate customer insight are reaping these benefits. Stone et al. (2013) and Leeflang et al. (2014) have however identified a concern in that, while the concept of the single customer view is seen as a useful aspiration, changes in technology and markets demonstrates that not all companies see it as completely achievable or desirable. Despite the increasing popularity of big data, these data also have intrinsic problems, for example size, volatility, lack of structure, missing data, as well as more . All researchers seem to be in agreement that the challenges include capturing, curation, storage, searching, sharing, transferring, analysing and visualisation of the data.
Challenge 3: Stifling creativity and innovation
The move towards digital media has greatly improved the availability of consumer databases by providing data in real time; it provides continuous streams of data that provides unending flow of information. There is a sense of general agreement that integrated marketing communication has distinguished itself as a practice that uses evidence –based decision making. The limitations in the availability of consumer databases have continued to diminish as a result of retail shopper databases. Big data is considered an important source of innovation as companies are striving towards developing new products or improve customer service processes using various data sources. In addition, there has been a lot of research conducted by businesses and academic groups that support the view, that predictive analytics or business intelligence can provide organisations with a deeper understanding of their customers. Combining this with accurate customer segmentation, companies will be guaranteed to develop and implement more targeted upsell and cross sell campaigns and ultimately boost customer lifetime value .
Challenge 4: Social media and brand health
Since its inception, social media has offered opportunities to initiate and measure social interrelations amongst customers . It has created a platform for consumers to publicise their personal evaluation of purchased products and therefore facilitating word of mouth communication . Additionally, social media has offered opportunities to create trust and to reach a large audience easily and at a lower cost and the effects of social networks on customer retention and adoption have been determined in multiple studies such as . Social media has been viewed as a way of creating value added content for customers and tool to monitor negative customer feedback, however one potential danger is when the company does not succeed in engaging customers and the customer will be enraged . Within the social media environment, customers can easily become value destroyers instead of value creators for the organisation . Despite concerns from all levels of society about the impact of such technologies and the behaviours they may cause as indicated by Kaplan et al. (2010) and Hennig-Thurau et al. (2013) the benefits to the customer of being connected through social media have been recognised. Especially the overcoming of distance and enablement of continuous and convenient interactions through connectivity and personal engagement.
Challenge 5: Online targeting
Traditionally internet users were the younger generation, as a result, many decision makers may feel that transitioning to more digital channels may instigate that older people may have Traditionally internet users were the younger generation, as a result, many decision makers may feel that transitioning to more digital channels may instigate that older people may have Self-efficacy is a strong predictor of behaviour . Moreover, it influences customer choices and behaviours, which often depends on how efficacious a customer feels towards an option. According to Chiu et al. (2011) self-efficacy is a person’s judgement of their capabilities to arrange and implement courses of action required to acquire designated types of performances. Furthermore, when a person’s perception is that they are unable to perform a task, they will not engage in the behaviour, even if they acknowledge that it is the better alternative . Additionally, successful previous experience results in the most influential factors in promoting a sense of personal selfefficacy . Therefore previous use of related technology increases perception confidence and capability, and people with more internet experience have lower barrier to learning how to use multiple channels effectively.