Digital Marketing

BUSI 558 Spring 2021

Prof. Fei Long

Lecture #2: Consumer Behavior in the Digital Age

Updates
§ Case pack:
https://hbsp.harvard.edu/import/783842

§ Send me an email if you need help finding

teammates

§ Office Hour: Friday 3:00 to 4:00pm, or by

appointments (See Canvas for Zoom links)

§ TA: Khimendra Singh, Khimendra_Singh@kenan-

flagler.unc.edu
3
Agenda
§ Digital Media Consumption
• Who are digital media users?
• How are they different from the general population?

§ Consumer Purchase Funnel

• How do digital media/technologies (e.g., Internet, social
media, mobile) affect consumer buying decisions?

4
Digital Media Consumption
Demographics Matter
§ Who should we target online?
• If a company spend money on online advertising,
what type of users it can reach?

§ Who should we target on social media?

• Suppose you work at Nike, vs you work at Sephora, will you
consider using the same type of social media?
• Even big companies have budget constraints

§ Who should we target on mobile devices?

• Suppose a U.S. company wants to go globally. Will you advise
them to spend more or less on mobile marketing?
6
Do You Know the Answer?
§ What % of the U.S. adults are still offline? Who are they?

§ What are the three most popular social network sites among US
adults?

§ How frequently does a typical US consumer check his/her phone

everyday?

7
Internet usage decreases with age

Internet usage increases with income

Internet usage increases with education

9
10
Do You Know the Answer?
§ What % of the US adults are still offline? Who are they?

§ What are the three most popular social network sites among US
adults?

11
13
Do You Know the Answer?
§ What % of the US adults are still offline? Who are they?

§ What are the three most popular social network sites among US
teens?

§ How frequently does a typical US consumer check his/her phone

everyday?

14
 Entertainment

Social

Information search

15
Consumer Purchase Funnel
Consumer Purchase Funnel

AWARENESS Create “top of mind” awareness

INTEREST Provide information, create favorable brand position

DESIRE Enter consideration set, create purchase intention

ACTION Call to action, make them purchase, repeat purchase

REPEAT

18
18
Consumer Purchase Funnel

Awareness Interest Desire Action Repeat

§ By traditional media such as TV ads

• Limitations? Limited reach, may not be relevant, may not be
effective
§ How do Internet and digital media help?

19
Via Targeted Online/Mobile Targeted Ads

20
Via Online User Generated Content (UGC)

Does it trigger your appetite?

Are you more likely to dine out
tonight?

21
Offline Still Matters a Lot!

22
Consumer Purchase Funnel

Awareness Interest Desire Action Repeat

§ How is search done in the offline world?

• Call/visit stores/friends/agents
• Problems? Asymmetric information and high search cost -> Large price
dispersion

§ How does Internet & digital technologies facilitate information search?

23
Lower Search Cost by Search Engines

24
Coupons and Codes Everywhere

Price discrimination is
getting more difficult

You might be the Showrooming

hidden influencer! 25
Firms are Getting Innovative at Product Development

Personalized product

Mass Customization
Free market research
26
Search Tools Enable Long Tail Discovery

Aggregate demand that are not profitable to sell them on the shelf
27
Consumer Purchase Funnel

Awareness Interest Desire Action Repeat

§ Implications of reduced search cost to firms?

• More price competition
• Less loyalty
• Less commitment

§ Will consumers always benefit from lower search cost?

• Increase product differentiation, even just perceived
• Increase switching cost (e.g., loyalty program)
• Price in traditional channel

28
Consumer Purchase Funnel

Awareness Interest Desire Action Repeat

§ Evaluate alternatives in consideration set

• Is the product performing as claimed?
• Are there any unobservable attributes?
• Does this product match my preference?

§ How does Internet & digital media facilitate evaluation?

29
User Generated Content (UGC)
§ Which restaurant will you
visit? Why?

§ Rating vs. Volume

• Do they affect your decision
the same?
• More useful on what types
of products, service or
physical product?

§ Implications to firms?
• Credibility is key
• Strong gets stronger
30
Consumer Purchase Funnel

Awareness Interest Desire Action Repeat

§ Purchase at an online store, offline store, or through a

mobile app

31
Ecommerce and Social Commerce

32
Disintermediation and Direct to Consumers
Guest speaker

33
Mobile Grocery Shopping

34
Consumer Purchase Funnel

Awareness Interest Desire Action Repeat

§ What does Internet & digital media add?

• WOM generation
§ Positive ones can be used as promotional content
§ Negative ones can be used as useful feedbacks
• Behavior-based recommendation
§ Customer purchase history becomes a piece of “Big Data”
35
When to Use Which
AWARENESS § Up-funnel: Reach (awareness, branding)
• Social media, display, TV, radio, print
INTEREST

§ Down-funnel: Depth (research, consideration,

DESIRE
preference)
• Search, email, print

ACTION § Ongoing (repurchase, two-way communication)

• Retargeted display, social media (two-way
communication)
REPEAT

36
Takeaways
§ Demographic data help firms profile digital media users
across devices and across different social media platforms
• Different targeting strategies may arise from such profiling

§ Digital marketing channels have different effectiveness in

different stages of consumer purchase process
• Awareness, interest, desire, action, repeat

37
Reminder
§ Form groups (4-5 each) before Feb. 1st (Monday), 9 pm
• Have a representative email me the group members (please
don’t change the group setting on Canvas)

§ Purchase the case pack from HBP:

• https://hbsp.harvard.edu/import/783842

§ Next class: Search Engine Marketing

38