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Consultancy Project - Literature review Example

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The literature review discusses the role of online marketing communication in the Small and Medium sized Enterprises (SMEs) in general and the influence online advertising can have in their functioning, in particular. …
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?Consultancy Project: Literature Review The literature review discusses the role of online marketing communication in the Small and Medium sized Enterprises (SMEs) in general and the influence online advertising can have in their functioning, in particular. The review analyses whether it is essential for the SMEs to do online marketing communication and if yes, then how would they utilise online advertising effectively to improve the awareness of their offerings amongst target customers. The review seeks to indicate what forms and models of online advertising should be enacted to utilise online marketing communication. The literature review identifies the diverse range of opportunities that a SME can avail by the adoption of online advertising in their business and also the future potential of its implementation. The review discovers that for an effective online advertising, the SMEs should preferably own their individual websites, segment their target audience afresh and use innovative advertising tools. Company websites provide the prospect of presenting information targeted to a range of definite groups of segmented target customers and also to access feedback from them in real time. The review finds that though the utilisation of online advertising tools have benefitted the SMEs by augmenting the promotion of their companies even in the overseas markets at comparatively less expense, a large proportion of the SMEs are yet to employ the online marketing approach. Online advertising is a very new approach for many SMEs although it has been in use since a decade; and it has not been used it to its full potential yet. Table of Contents Abstract 2 1. Introduction 4 2.1 The Role of Online Marketing Communication in the SMEs 5 2.2 How Can SMEs Conduct Good Online Advertising 10 2.3 Future of Online Advertising in SME 14 3 Conclusion 16 References 18 1. Introduction The business organisations all over the world have undergone a remarkable and tremendous change in their functioning processes due to the application of internet. Experts feel that marketing is one of the segments of the business process that is most influenced by the evolution of internet (Krishnamuthy, 2006; Sheth & Arma, 2005; Krishnamurthy & Singh, 2005). Consequently, the promotional mix of most of the organisations today includes an important ingredient known as the online marketing communications (Jensen, 2008). Online Marketing Communication has provided larger possibilities to the Small and Medium Enterprises (SME) and has subsequently augmented their potential. In this literature review, answers to the following questions have been considered: 1) What is the role of online marketing communication in the SMEs? 2) Is it essential for SMEs to do online marketing communication? 3) How do SMEs conduct effective online advertising? Marketing communication is a significant and essential interceding process in a business that connects the offerings of an organisation to its target customers. Marketing communication is the promotional activity of the organisation and includes advertising, promotion, direct marketing, and public relational activities among many others (Kimmel, 2005). According to Lasswell, marketing communication process consists of the source or advertiser, the communication or the advertisement, the channel or medium of communication, the target audience who are the receivers of the communication and finally the response to the process (Koekemoer & Bird, 2004). The advertisement process is a way of making known or informing the already existing as well as the potential target customers about the products and services the firm wishes to sell or buy and persuade them to respond positively to the products. Advertising can be categorised by four important decisive factors, viz. rationale, target audience, geographical region and medium. Accordingly, it can be brand advertising, corporate image advertising, consumer advertising, national advertising, local advertising, electronic advertising and internet advertising among many others (Koekemoer & Bird, 2004; Varey, 2002). This review discusses the role online marketing communication plays in the functioning of SMEs and the effect of online advertising on the SMEs. The review goes on to discuss how the SMEs could improve the efficiency of online advertising in their businesses. The review further throws light on the future of online advertising in the Small and Medium Enterprises. 2.1 The Role of Online Marketing Communication in the SMEs The early initiation of online marketing started during the early 1990?s when simple websites were largely developed to communicate the products and services information of an organisation to its target audience spread worldwide. Online marketing communication enabled the Small and Medium Enterprises (SMEs) to transmit information through media connected to the internet. With the passage of time, these online communications gradually became interactive (Organisation for Economic Co-Operation and Development, n.d.) The traditional models of marketing communication considered mass communication to be a one-to-many process. These models considered the medium vital only as a means of expression from the organisation to each of the target customers and not the other way round. The customers were assumed to be homogenous in their choices and tastes with respect to the message being broadcasted and moreover, there was no interaction between the customers and the organisations (Hoffman & Novak, 1996). The online communication models provide many-to-many mediation opportunity where the customers can network and interact with the enterprises as well as with each other. In this case, information is not just broadcasted from the business enterprise to the recipient, but instead, an interactive atmosphere is created, where the consumers can provide their response directly to the organizations and also get to know other consumer’s response from the consumer review section (Hoffman & Novak, 1996). Various researchers had recognised the need to alter and modernise the process of marketing communication to suit the information intensive environments. The researchers conferred that the SMEs should reconstruct the advertising and marketing models for the interactive, many-to-many interface utilising the web. The researchers felt that the enterprises using the medium of online marketing communication should consider the fact that customers dynamically decide whether or not to advance towards an organisation through its website (Glazer, 1991; Blattberg. & Et. Al., 1994; Venkatesh & Et. Al. 1993; van Raaij, 1993). Advertising is a decisive constituent of the marketing communication process. Advertising builds awareness, notifies target markets, creates interest, gives credibility and builds image of a business enterprise among others (Koekemoer & Bird, 2004; Dyer, 1982). Efficient advertising can have a positive impact on the operation of an organisation and enables it to achieve internal competence and helps in cost reduction (East, 2003). Thus, in the present scenario, online advertising is a critical online marketing communication tool for the Small and Medium Enterprises analogous to any other form of organisation. The online advertising can potentially benefit the SMEs to achieve market penetration, market development, product improvement and diversification (Kiang & Et. Al., 2000). The enterprises could use the web to advertise and sell their presently existing products into the existing markets which they have already accessed. This can be accomplished by utilising the influence of the internet for advertising their products in order to amplify awareness of the offerings and the profile of the enterprise amongst potential consumers in an existing accessible market. This is a comparatively conventional use of the online advertising and aids in penetrating the existing market of the SME. The online advertising can be very beneficial for market development, where the SMEs can reach and then sell their offerings into new markets. SMEs can take benefit of the low advertising cost involved in the online marketing communication process. This is because online advertising has international reach without the requirement of any supporting sales infrastructure or set up in the consumers’ nation. Online advertising can also aid the SMEs in the process of product development. SMEs dealing with the development of certain new products or services, which can be delivered through the internet, can benefit from the online mode of advertising. These offerings could be characteristically information products such as market reports which can be procured by the consumers using electronic commerce. This could be a pioneering approach by the SME. The enterprises could also use online advertising for diversification of their business. The fresh and innovative products developed by the SMEs could be sold into new markets online (Kiang & Et. Al., 2000). The rise in business competition generally results in a reduction of product prices and even customer base. To overcome the effects of increasing competition, SMEs can develop their product and implement new online advertising channels to reach more consumers and make them aware of the product offerings (Kotelnikov, 2007). With the emergence of internet communications, online advertising has gained momentum amongst advertisers as it is the chief information channel for consumers. Internet or online advertising acts as an important device for business marketing communications because it is a useful medium that allows consumers to obtain brand information about the products (See Figure 1) (Huang & Tsang, 2010). Figure 1. Consumers' Main Information Channels Source: (Huang & Tsang, 2010). Thus, online advertising is a medium through which SMEs can reach highest number of consumers as compared to the other channels. The proper use of online advertising can result in improved fragmentation and segmentation of target markets, relationship marketing as well as direct marketing by the enterprises (Durkin & Lawlor, 2001; Eagle & Kitchen, 2000). The online mode would develop fresh communication technologies and hence bring about a new trend in information technology utilisation by the SMEs (Kitchen & Schultz, 1999; McGoon, 1999; Reich, 1998). Hence, the major change expected due to the development of online marketing communication in the SMEs is that their consumers would be further fragmented and very proactive. However, on the other side, the enterprises would have to possibly merge diverse modes and types of information in a multifaceted message. This would require the SMEs to restructure themselves dynamically because due the enhanced online interactivity demands for swift response from the organisations. The SMEs would have to set up a dedicated information system department for the management of the information flow amidst the online environment and the enterprises (Gurau, 2008). The obstacles to online marketing and advertising adoption for the SMEs are practical execution of the process and maintenance of the same while dealing with the financial constraints common to SMEs (Gilmore & Et. Al., 2007; Hornby & Et. Al., 2002). Thus, the SMEs would have to overcome these barriers to have the complete benefit of the online integrated marketing communication process. 2.2 How Can SMEs Conduct Good Online Advertising In the current uncertain economic condition, the business enterprises are aware that they have to achieve more with less outlay. The interactive online advertising approach presents the organizations the tools required by them to build profound and engaging relationships with their customers (McMahan & Et. Al., 2009). Organisations looking forward to implement online advertising model in their business should at first create an online friendly infrastructure and build an interactive environment for the consumers. They should be prepared to develop new and innovative marketing models. The efficacy of online advertising can be clearly understood from the customer response (Hoffman & Novak, 1996). In order to build a good online advertising plan, the SMEs should first focus on the type of their product related offering and the section of customers they are looking to target. Considering these two factors, the SMEs should segment their target customer group and then decide how to position their product offering amongst the different segments. Thus, the SMEs should initially develop a marketing plan so that they can avoid the advertising waste which might result due to ineffective advertising. A competent marketing plan should consist of an analysis of the situation, positioning of the product offering, identifying the core competencies of the organisation, pricing of the products, plans and approaches, market research, execution agenda and strategies to assess the efficiency of the advertising approach (Ogden & Rarick, 2009). The most commonly used online advertising tools which can be utilised by the SMEs are the company websites, web ads, pop-up windows, banners, interstitial advertisements, emails, and infomercials among many others (Janoschka, 2004; East, 2003). Websites themselves advertise and also additionally act as a conduit of advertising, carrying numerous advertisements such as web ads and pop-up windows in various parts of their pages. Websites of a particular company promotes the company and also advertise the offerings of the company and attempt to sell them. Moreover, company websites are generally part of the advertising message of all the web ads put up by the company. The organisations link all their web ads to their company websites. The web ad itself includes limited information and acts as the initial message of advertisement where as the linked website provides a comprehensive advertising message for the target customers. Organisations can put up various types of advertisements in the web, viz. static web ads, animated web ads and interactive web ads (Janoschka, 2004). The essential characteristic of the online advertising through the websites is the interactive potential, which allows consumer engagement as well as control over the information communication process. Moreover, the simplicity of controlling the content and the capacity to transmit information provides further control to the consumer and facilitates two-way communication. These capabilities were not accessible to the consumers through conventional media (Liu & Shrum 2002; McMahan & Et. Al., 2009). One of the major advantages of the company websites, in communicating information and messages to the target audience over conventional channels of communication, is the opportunity to provide information targeted to diverse and specific group of target audience and also to get hold of feedback from them (Biloslavo & Trnavcevic, 2009). In their review, “Organization of corporate web pages: publics and functions”, Esrock & Leichty (2000, p. 328) have mentioned that a solitary website can possess numerous sections where each section is targeted to a definite target audience in contrast to the conventional mass media channels. Thus, websites can be a very effective medium for communication of advertisements by the SMEs as it provides simple, economical and mass-targeted communication. Websites can be of three different types depending on their level of use, viz. ornamental, informative and relational (Geiger & Martin, 1999). SMEs focusing on online advertising through their websites should consider building a relational website. A relational website allows the enterprise to build and preserve steady and permanent relationships with its consumers. Such websites are easy-to-use and extremely interactive with a lot of information available. These websites constantly look for comments and views from the customer. These kinds of websites are ideal for the SMEs which are willing to promote online sales (Kuster & Vila, 2011). The SMEs would have to segment their market afresh for the online marketing efforts because customers differ in their capability to attain flow of information. The enterprises would have to segment their target customers accordingly and then design specific promotional and advertising activities for each segment. Thus, the online advertisement should be such that it facilitates the varied information flow state of different segments of customers. This is because proper facilitation would increase the repeat visits to a particular website which would lead to subsequent sale of the products advertised (Hoffman & Novak, 1996). Nowadays, consumer reviews have become very vital advertisement channel for product sales because customers pay much attention to them before making any purchase decision. It has been noticed that most of the customers who visit the company websites with consumer review postings believe that the consumer reviews are very important in their purchase decisions (Chen & Xie, 2008). Another very effective tool of online advertising communication that can be utilised by the SMEs is the direct e-mails. Direct e-mails are considered to have the maximum market penetration. The e-mail approach would allow a SME the opportunity to modify and personalise their message to niche target groups. Direct e-mails are simpler, quicker and comparatively cheaper option of online advertising (Jensen, 2008). SMEs could use interstitial advertisements as a mode of online communication. The interstitial ads and the pop-up ads are often mistakenly considered to be the same, but actually each one represents different formats. Interstitials are typically full-screen ads that run on their own amid two web pages. Whereas, the pop-ups emerge in a different break-up window on top of content that is being viewed by the user on his screen. Interstitials are preferable to pop-ups for various reasons. Foremost, interstitials do not disturb the user and disrupt his interactive experience. In contrast to pop-ups, the interstitial ads generally run while an individual waits for a webpage to download. The interstitials have no exit option to end or delete the advertisement; the exit option is a general feature of pop-ups. Thus, with interstitial ads, the audiences have to wait until the complete advertisement has run and hence it would have more impact on their memory. In general, the different advertisement formats have different impact on the Internet user. Advertisements such as pop-ups that disrupt an individual's flow of work are most likely to be perceived as less positive and more annoying to the individual than the interstitials. Furthermore, the interstitial advertisement takes up the whole computer screen, while a pop-up advertisement takes up perhaps one-tenth of the computer screen. Thus, an interstitial would have a greater effect on memory of the target customers of the SMEs if used ingeniously (Rodgers & Thorson, 2000). 2.3 Future of Online Advertising in SME The SMEs have rapidly increased the use of the internet for their marketing and advertising activities. This has also led to an increase in the number of SMEs owing their individual websites. With the help of online marketing system, information can be asked for and presented, orders can be placed and fulfilled, products distributed and services executed (Gilmore & Et. Al., 2007). It has also benefitted the SMEs to overcome the barriers to enter the export business. The online advertising has helped the SMEs to spread awareness about their offerings and build an image for themselves. This positive trend of online marketing tools, especially online advertising have provided hope for a bright prospect to thousands of small and medium sized enterprises (SMEs) all over the world. The online advertising tool aids the SMEs trying to enter the overseas markets by permitting them to correspond and spread their message globally as proficiently as any big business organisation (Hoffman & Novak, 1996; Herbig & Hale, 1997; Nguyen & Barrett, 2006). There are various factors that could have an impact on web advertising recall and identification. These factors comprise of the presentation style, time duration of webpage viewing by the consumer. The context of the web page, which includes the text and page backdrop intricacy in addition to the style of the advertisement, also has an effect on the customers (Danaher & Mullarkey, 2003). Thus, the business enterprises have to be very careful with the mentioned factors or they would face problems in their online advertising approach. The direct e-mail and the online banner advertisements though very useful also have some problems. The direct e-mail marketing approach functions effectively only in the higher and developed stages of relationship with the client. In general, the impact of the direct e-mails is at least partly diminished because of spamming. The new online banner ad formats are capable of building awareness amongst the customers in the early stages of a relationship with them. However, instead of building the brand value there is a threat of diminishing it in the long-term association with customers (Mandelli, 2005). Even though the utilisation of the internet and online advertising tools by the SMEs had started in general since a decade, it seems that its impact is not that attractive on the whole. The SMEs had generally considered that the benefit of online marketing was to augment company promotion. Online advertising had helped them to promote themselves in additional markets with comparatively less expenditure. The SMEs used e-mails as an online marketing tool which reduced the costs of publishing catalogues and sleek brochures (Gilmore & Et. Al., 2007). The SMEs often cannot develop good interactive websites due to lack of financial resources and skill. However, the SMEs have to realise that they can gain from the lower costs involved in information exchange, entering new and sometimes even overseas markets. Online advertising and marketing tools can aid them to achieve competitive advantage by enhancing customer relationships, rising sales and hence improving the business performance and competence. The SMEs can use the benefits hence earned to develop high quality websites which would solve all the limitations faced by them (Gilmore & Et. Al., 2007). 3 Conclusion Internet has provided a wide array of possibilities in the field of online marketing and communication. The SMEs should also utilise the various online advertising tools in order to maximise their potential and widen the possibilities available to them. Like any other form of communication, the process of online marketing communication also fundamentally requires a dispatcher (the SMEs), a message (the advertisement) and a recipient (the target audience). Since, here the medium of transfer or dispatch of the message is the internet, the researchers discussed the need for the SMEs to restructure their advertising models to suit the interactive, many-to-many web interface. The researchers felt that the business enterprises should constantly consider the fact that customers decide whether or not to advance towards an organisation through its website, while developing one (Glazer, 1991; Blattberg. & Et. Al., 1994; Venkatesh & Et. Al. 1993; van Raaij, 1993). The SMEs can significantly benefit from the operation of interactive relational websites in terms of advertising their offerings. The company websites should be so designed to cater to diverse segments of the company’s target audience. The websites should also have a dedicated section for customer reviews. This is because online customer review is a new and fresh product advertisement channel with rising recognition and significance, which could be used by the SMEs for effective online marketing communication. The appropriate utilisation and development of online marketing communication, especially in the form of online advertising, can bring about evolutionary trends in numerous areas of marketing employed in the SMEs. The utilisation of online advertising by SMEs has so far benefitted them to improve product promotions and relations with their consumers. The SMEs maintain a combined faith that the online marketing and advertising media is necessary in today’s commercial setting and will also be significant in the coming days (Gilmore & Et. Al., 2007). References Blattberg, R. C. & Et. Al., 1994. The Marketing Information Revolution. Boston: Harvard Business School Press. Biloslavo, R. & Trnavcevic, A., 2009. Web Sites as Tools of Communication of a “Green”Company. 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