W7 replies David q1 The four sales compensation elements are the following: Salary-Paying your sales reps a low enough salary allowing for incentives and motivation yet high enough leaving some breathing room for future financial obligations. Commission- one option is foregoing a salary and paying sales reps a commission. This type of compensation is based on the performance of the salesperson. This can backfire as potential outstanding salespersons may fear joining your organization or company. Bonuses-bonuses can help salespersons to aim high and reach new levels. These are usually paid at the end of the year to salespersons who meet or exceed sales goals. Other Incentives-Company benefits other than monetary. Trips or gifts associated with office contests. There are many ways that these compensation elements can be combined to achieve the company's marketing objectives. Bonuses can be combined with the salaries. One example is the average salary can be doubled at the end of the year based on performance. Give the salespersons an option at the end of the year. All expense paid vacation or money, or both. This all depends on the profits and the success of the company. Free with purchase is one short term promotion. The most popular one is Buy one get one free, or Buy one get one half off. Furniture stores love to have the buy one get one half off promotions. These are usually at end of the year or early in the year to get rid of previous years inventory. Blogs or Vlogs, videos streaming online have had a tremendous effect on the increase of sales and promotions. So called influencers help promote products in a way free advertising. Not exactly free but cheaper than what the networks charge per 30 second spots. Matthew q1 The four sales compensation elements are: Fixed Amount- Is deemed as stable income of the salesperson. Variable Amount- Is deemed as income of salesperson that has come from bonuses or commissions in a variable amount. Expenses-Is considered as income that is spent in efforts of salesperson for generating revenue. Fringe benefits-Is deemed as income of salesperson that is issued by an employer to an employee in congruity to taxexempt. Different compensation plan combinations include: Payout formula determines how the organization will pay them in terms of their commission for sales or compensation. Rules and regulations determines rules and regulations on the basis of which all the conflict sales compensation can be solved. Measures of performance is used for measuring performance and helps guide the salesforce in terms of their focus on work. Business sales goals and strategy helps achieve organizational goals. Companies can use consumer promotions as short term sales incentives. These tools are used to boost short-term customer buying. They include samples, coupons, refunds, premiums, sweepstakes and event sponsorships. Technology has allowed companies like Walgreens to use smart phones for their customers to download coupons instantly on different products. Point of purchase promotions include displays and demonstrations that take place at the point of sale. Most of these involve people in real time that are selling goods through tasting or trying out products. Technology has replaced actual people with videos and testable displays. Reply to Thread Samuel q1 The four compensation elements are a fixed amount, variable amount, expenses and fringe benefits (Armstrong, 2020). Fixed amount provides the sales professional with a stable income, often in the form of a base salary. Variable amount is based on performance in forms of commission or bonuses. Often times there is a combination of the fixed amount and the ability for the employee to earn a bonus based on performance. Sales promotion is short-term incentives to encourage the purchase or sale of a product or service (Armstrong, 2020). Some types of sales promotion include consumer promotions, trade promotions and business promotions. Consumer promotions includes things like coupons, samples, refunds and sweepstakes. Trade promotion includes encourages re sellers to continue to make shelf space for the products. Lastly, business promotion generate business leads, partnerships, and motivate salespeople. Technology has made it easier for consumer promotions to reach more consumers whether it is through email, apps, text messages or social media. It also makes it easier for the business to communicate with current and future partners to continue to spread the visibility of the products. Samuels q2 Direct and digital marketing involves engaging directly with carefully targeted individual consumers and consumer communities to both obtain an immediate response and build a lasting customer relationship (Armstrong, 2020). Some benefits of this includes the interaction between the buyer and the seller. It can help build the relationship between the two and gives the consumer the service they may need to continue to come back. For buyer direct and digital marketing is easy, efficient and not time consuming. An example of this is the ability to order something online, such as from Amazon and it be delivered within a short period of time. Another benefit is it can be done almost everywhere as long as the consumer has a internet connection. Similarly, direct digital marketing is cheap, and easy for the companies to reach their consumers and also adding the ability to work one on one with consumers. Aaron q2 Direct and digital marketing is beneficial to buyers and sellers. For buyers, this creates an avenue where they have ease of access to just about any product or service that they could want. It is right there on your phone or tablet and the buyer usually has direct access to the seller to ask questions, etc. For sellers, direct and digital marketing can offer a low-cost way to promote a product to a targeted audience. The company can also offer great customer service through direct contact. The sellers can also make real-time adjustments to their direct and digital marketing as needed. This is what a lot of companies have gone to. Some of the drawbacks for buyers include not being able to see the product in person unless you go showrooming in conjunction with online shopping. For companies, digital marketing can be tricky if they target the wrong audience by not having the correct marketing ploy. Matthew q2 Benefits to Buyers: Private transactions, transactions can be done anywhere and at anytime without a third party, easily available product information, more selection of products, and easier product comparisons. Benefits to Sellers: Reduces the cost of sales calls, more efficient; less expensive sales process, helps build the relationship between a buyer and seller, and helps the seller target a specific market with more accuracy. Drawbacks to direct and digital marketing can be spam emails, fraudulent transactions, little control over where viral messages end up, social media being taken out of context and also impersonal at times Why trade shows are important: Why trade shows are important The long trail The Long Tail Discuss 408 Part 3: Designing a Customer Value-Driven Strategy and Mix to make sales training more efficient and sometimes even more fun. For example, Bayer Many companies are now using imaginative and sophisticated e-learning techniques HealthCare Pharmaceuticals worked with Concentric Pharma Advertising, a health-care marketing agency, to create a role-playing simulation video game to train its sales force on a new drug marketing program: 14 Most people don't usually associate fast-paced rock music and flashy graphics with online sales training tools. But Concentric Pharma Advertising's innovative role-playing video game-Rep Race: The Battle for Office Supremacy-has all that and a lot more. Rep Race gives Bayer sales reps far more entertainment than the staid old multiple-choice skills tests it replaces. The game was created to help breathe new life into a mature Bayer product-Betaseron, an 18-year-old multiple sclerosis (MS) therapy treatment. The aim was to find a fresh, more active way to help Bayer sales reps apply the in-depth information they learned about Betaseron to actual selling and objections-handling situations. Bayer also wanted to increase rep engagement through interactive learning and feedback through real-time results. Bayer reps liked Rep Race from the start. According to Bayer, when the game was first launched, reps played it as many as 30 times. In addition to its educational and motivational value, Rep Race allowed Bayer to mea- sure sales reps' individual and collective performance. In the end, Bayer calculated that the Rep Race simulation helped improve the Betaseron sales team's effectiveness by 20 percent. Compensating Salespeople To attract good salespeople, a company must have an appealing compensation plan. Compensation consists of four elements: a fixed amount, a variable amount, expenses, and fringe benefits. The fixed amount, usually a salary, gives the salesperson some stable income. The variable amount, which might be commissions or bonuses based on sales per- formance, rewards the salesperson for greater effort and success. 15 A sales force compensation plan can both motivate salespeople and direct their activities. >> Compensation should direct salespeople toward activities that are consis- tent with the overall sales force and marketing objectives. ¹5 For example, if the strategy is to acquire new business, grow rapidly, and gain market share, the compensation plan might include a larger commission component, coupled with a new-account bonus to encourage high sales performance and new account development. In contrast, if the goal is to maximize current account profitability, the compensation plan might contain a larger base-salary component with additional incentives for current account sales or customer satisfaction. >> Sales force compensation: A good compensation plan both motivates salespeople and directs their activities. Amble Design/Shutterstock In fact, more and more companies are moving away from high-commission plans that may drive salespeople to make short-term grabs for business. They worry that a salesperson who is pushing too hard to close a deal may ruin the customer relationship. Instead, companies are designing compensation plans that reward salespeople for building customer relation- ships and growing the long-run value of each customer. When times get tough economically, some com- panies are tempted to cut costs by reducing sales compensation. However, although some cost-cutting measures make sense when business is sluggish, cutting sales force compensation across the board is are usually an action of last resort. Top salespeople a always in demand, and paying them less might mean losing them at a time when they are most needed. Thus, short-changing key salespeople can result in short-changing important customer relationships. If the company must reduce its compensation expenses, rather than making across-the-board cuts, companies should continue to pay top performers well while turning loose low performers. 13 The 1 >> Figure 13.2 How Salespeople Spend Their Time Source: "2014 Sales Performance Optimization Study," CSO Insights,www.csoinsights.com. Used with permission. Supervising and Motivating Salespeople New salespeople need more than a territory, compensation, and training they need supervision and motivation. The goal of supervision is to help salespeople "work smart" by doing the right things in the right ways. The goal of motivation is to encourage sales- people to "work hard" and energetically toward sales force goals. If salespeople work smart and work hard, they will realize their full potential to their own and the com- pany's benefit. Chapter 13: Personal Selling and Sales Promotion Supervising Salespeople Companies vary in how closely they supervise their salespeople. Many help salespeople identify target customers and set call objectives. Some may also specify how much time the sales force should spend prospecting for new accounts and set other time management priorities. One tool is the weekly, monthly, or annual call plan that shows which customers and prospects to call on and which activities to carry out. Another tool is time-and-duty analysis. In addition to time spent selling, the salesperson spends time traveling, waiting, taking breaks, and doing administrative chores. 16 >>Figure 13.2 shows how salespeople spend their time. On average, active selling time accounts for only 37 percent of total working time. ¹6 Companies are always looking for ways to save time-simplifying administrative duties, developing better sales-call and routing plans, supplying more and better customer information, and using phone, email, online, or mobile conferencing instead of traveling. Many firms have adopted sales force automation systems: computerized, digitized sales force operations that let salespeople work more effectively anytime, anywhere. Companies now routinely equip their salespeople with laptops or tablets, smartphones, wireless connections, videoconferencing technologies, and customer-contact and relation- ship management software. Armed with these technologies, salespeople can more effec- tively and efficiently profile customers and prospects, analyze and forecast sales, engage customers, make presentations, prepare sales and expense reports, and manage account relationships. The result is better time management, improved customer service, lower sales costs, and higher sales performance. In all, technology has reshaped the ways in which salespeople carry out their duties and engage customers. Motivating Salespeople Beyond directing salespeople, sales managers must also motivate them. Some salespeople will do their best without any special urging from management. To them, selling may be the most fascinating job in the world. But selling can also be frustrating. Salespeople often work alone, and they must sometimes travel away from home. They may also face aggres- sive competing salespeople and difficult customers. Therefore, salespeople often need special encouragement to do their best. 13.9% 17.1% Meetings, administrative Post-sales tasks 10% Travel, training 409 21.7% Researching accounts, pursuing leads Management can boost sales force morale and performance through its organizational climate, sales quotas, and positive incen- tives. Organizational climate describes the feeling that salespeople have about their opportunities, value, and rewards for a good performance. Some companies treat salespeople as if they are not very important, so performance suf- fers accordingly. Other companies treat their 37.1% Active selling (face to face or phone) This is far too little. Companies need to free up salespeople to spend much more face-to-face time with customers and prospects. For example, GE wants its salespeople to "spend four days a week in front of the customer and one day a week for all the admin stuff."V A JUAL S advocates for value. Almagami/123rf SUPP P POR Author Comment Sales promotion is the most short-term of the promotion mix tools. Whereas advertising or personal selling says "buy," sales promotions say "buy now." P SERVICE T 40 LOYALTY ALTY Sales promotion Short-term incentives to encourage the purchase or sale of a product or a service. RT ch Value selling: Sales management's challenge is to transform salespeople from customer advocates for price cuts into company HOE 417 Chapter 13: Personal Selling and Sales Promotion Policicchio quickly put his finger on the major problem: Production was suffering because of down time due to poorly performing pumps on the customer's 32 large condiment tanks. Quickly gather- ing cost and usage data, Policicchio used his Rockwell Automation laptop value-assessment tool to develop an effective solution for the customer's pump problem. The next day, as he and competing reps presented their cost-reduction proposals to plant management, Policicchio offered the following value proposition: "With this Rockwell Automation pump solution, through less downtime, reduced administrative costs in procurement, and lower spending on repair parts, your company will save at least $16,268 per pump-on up to 32 pumps-relative to our best competitor's solution." Compared with competitors' pro- posals, Policicchio's solution carried a higher initial price. However, no competing rep offered more than fuzzy promises about possible cost savings. Most simply lowered their prices. Impressed by Policicchio's value proposition-despite its higher initial price-the plant managers opted to buy and try one Rockwell Automation pump. When the pump performed even better than predicted, the customer ordered all of the remaining pumps. By demonstrating tangible value rather than simply selling on price, Policicchio not only landed the initial sale but also earned a loyal future customer. Thus, value selling requires listening to customers, understanding their needs, and carefully coordinating the whole company's efforts to create lasting relationships based on customer value. Sales Promotion Personal selling and advertising often work closely with another promotion tool: sales promotion. Sales promotion consists of short-term incentives to encourage the purchase or sales of a product or service. Whereas advertising offers reasons to buy a product or service, sales promotion offers reasons to buy now. >>Examples of sales promotions are found everywhere. A freestanding insert in the Sunday newspaper contains a coupon offering $1 off Meow Mix Tender Centers food for your cat. A Sunday newspaper ad from your local Orange Leaf frozen yogurt store offers "Buy 1 Get 1 Free" and "20% off your next purchase." The end-of-the-aisle display in the local supermarket tempts impulse buyers with a wall of Coca-Cola cases-four 12-packs for $12. Buy a new Samsung tablet and get a free memory upgrade. A hardware store chain receives a 10 percent discount on selected Stihl power lawn and garden tools if it agrees to advertise them in local newspapers. Sales promotion includes a wide variety of promotion tools designed to stimulate earlier or stronger market response. The Rapid Growth of Sales Promotion Sales promotion tools are used by most organizations, including manufacturers, dis- tributors, retailers, and not-for-profit institutions. They are targeted toward final buyers (consumer promotions), retailers and wholesalers (trade promotions), business customers (business promotions), and members of the sales force (sales force promotions). Today, in the average consumer packaged-goods company, sales promotion accounts for 60 percent of all marketing budgets. 22 Several factors have contributed to the rapid growth of sales promotion, particularly in consumer markets. First, inside the company, product managers face greater pressures to increase current sales, and they view promotion as an effective short-run sales tool. Second, externally, the company faces more competition, and competing brands are less differentiated. Increasingly, competitors are using sales promotion to help differentiate their offers. Third, advertising efficiency has declined because of rising costs, media clutter, and legal restraints.418 Part 3: Designing a Customer Value-Driven Strategy and Mix life is better with orange leaf Orange Leaf Oklahoma City 1234 Street, Oklahoma City, OK 123.456.7890 BUY 1 CUP OF YOGURT GET 1 FREE orange leaf Ploso presand this coupon for discount, valid at the Oklahoma location only, Cannnot be combined with any other offer Expires 12/12/14 C orange leaf >>> Sales promotions are found everywhere. For example, your Sunday newspaper or favorite magazine is loaded with offers like this one that promote a strong and immediate response. Orange Leaf Frozen Yogurt 20%OFF YOUR NEXT PURCHASE orange leaf Please present this coupon for discount. Valid at the Oldahoma location only. Cannnot be combined with any other offer. Expires 12/12/14 loyallist Finally, consumers have become more deal oriented. demanding In the current economy, consumers are lower prices and better deals. Sales promotions help attract today's more thrift-oriented consumers. The growing use of sales promotion has resulted in promotion clutter, which is similar to advertising clutter. With so many products being sold on deal these days, a given promotion runs the risk of being lost in a sea of other promotions, weakening its abil- ity to trigger an immediate purchase. Manufacturers are now searching for ways to rise above the clutter, such as offering larger coupon values, creating dramatic point-of-purchase displays, or delivering promotions through new digital media—such as the Internet or mobile phones. According to one study, 88 percent of retailers now see digital promotions— such as mobile coupons, shopper emails, and online deals as an important part of their shopper market- ing efforts.23 In developing a sales promotion program, a company must first set sales promotion objectives and then select the best tools for accomplishing these objectives. bloomingdale's >> Customer loyalty programs: Bloomingdale's Loyallist program works well because of its simplicity. "Become a Loyallist," says the company. "It's better on the list." Bloomingdale's, Inc. can Sales Promotion Objectives Sales promotion objectives vary widely. Sellers may use consumer promotions to urge short-term customer buying or boost customer-brand engagement. Objectives for trade promotions include getting retailers to carry new items and more inventory, buy ahead, or promote the company's products and give them more shelf space. Business promotions are used to generate business leads, stimulate purchases, reward customers, and motivate salespeople. For the sales force, objectives include getting more sales force support for current or new products and getting salespeople to sign up new accounts. Sales promotions are usually used together with advertising, personal selling, direct marketing, or other promotion mix tools. Consumer promotions must usually be adver- tised and can add excitement and pulling power to ads and other marketing content. Trade and business sales promotions support the firm's personal selling process. When the economy tightens and sales lag, it's tempting to offer deep promotional discounts to spur consumer spending. In general, however, rather than creating only short-term sales or temporary brand switching, sales promotions should help to reinforce the product's position and build long-term customer relationships. If properly designed, every sales promotion tool has the potential to build both short-term excitement and long-term consumer engage- ment and relationships. Marketers should avoid "quick fix," price- only promotions in favor of promotions that are designed to build brand equity. Examples include the various frequency marketing programs and loyalty cards that have mushroomed in popularity in recent years. Most hotels, supermarkets, and airlines offer frequent- guest/buyer/flier programs that give rewards to regular customers to keep them coming back. Such promotional programs can build loyalty through added value rather than discounted prices. »For example, department store Bloomingdale's offers its Loyallist program for loyal shoppers. Loyallist members earn points for every dollar they spend, in-store or online, no matter how they pay. They also receive special opportunities to earn double, triple, o even quadruple points at special times, along with free shipping and a more Consumer promotions Sales promotion tools used to boost short-term customer buying and engagement or enhance long-term customer relationships. AT&T Back 11:57 AM Coupons Deal Alerts Walgreens Mobile Coupon Instant In-store Savings $1 off 2 Mars Minis or Fun Size SNICKERS Present this mobile coupon to the cashier at checkout. Valid 6/3/12 to 6/9/12 Limit one use per customer. >>Coupons: Drugstore chain Walgreens makes coupons available to customers through numerous channels, including its weekly ads, Web site, and mobile app. Courtesy of Walgreen Co. 419 Chapter 13: Personal Selling and Sales Promotion $25 Bloomingdale's gift card every time they reach 5,000 points. Loyallists can use any of a variety of apps to access their cards and balances wherever they are. The Loyallist program's success lies in its simplicity. According to one analyst, the program "is winning because it delivers well on the main goal of all loyalty programs: when members spend money, they are rewarded by points that they can turn around and use like money, which incentivizes future purchases for happy shoppers to spend-you guessed it more money." 9924 Major Sales Promotion Tools Many tools can be used to accomplish sales promotion objectives. Descriptions of the main consumer, trade, and business promotion tools follow. Consumer Promotions Consumer promotions include a wide range of tools-from samples, coupons, refunds, premiums, and point-of-purchase displays to contests, sweepstakes, and event sponsorships. Samples are offers of a trial amount of a product. Sampling is the most effective-but most expensive-way to introduce a new product or create new excitement for an exist- ing one. Some samples are free; for others, the company charges a small amount to offset its cost. The sample might be sent by mail, handed out in a store or at a kiosk, attached to another product, or featured in an ad, email, or mobile offer. Samples are sometimes combined into sample packs, which can then be used to promote other products and ser- vices. Sampling can be a powerful promotional tool. For example, a bevy of big-name food marketers-from Papa John's Pizza and Pizza Hut to Campbell Soup and PepsiCo- descended upon Super Bowl XLVIII-related events in New York and New Jersey, handing out free samples. Pizza Hut handed out more than 10,000 slices of its hand-tossed pizza. "It's a massive opportunity to sample our new product," said a Pizza Hut marketer.25 26 Coupons are certificates that save buyers money when they purchase specified prod- ucts. Most consumers love coupons. U.S. consumer packaged goods companies distributed 310 billion coupons with an average face value of $1.72 last year. Consumers redeemed more than 2.75 billion of them for a total savings of about $3.6 billion.20 Coupons can pro- mote early trial of a new brand or stimulate sales of a mature brand. However, to combat the increase in coupon clutter, most major consumer goods companies are issuing fewer coupons and targeting them more carefully. Marketers are also cultivating new outlets for distributing coupons, such as super- market shelf dispensers, electronic point-of-sale coupon printers, and online and mobile coupon programs. Digital coupons represent today's fastest-growing coupon segment. Digital coupons can be individually targeted and personalized in ways that print coupons can't. Digital coupons accounted for nearly 11 percent of all coupons redeemed last year; about 7 percent were printed from a computer at home, and 4 percent were redeemed via smartphone or other mobile devices. According to one study, an estimate 40 percent of smartphone users will redeem a mobile coupon this year. 27 As mobile phones become appendages that many people can't live without, busi- nesses are increasingly eyeing them as prime real estate for coupons, offers, and other For example, drugstore chain Walgreens makes coupons available marketing messages. to its customers through several mobile channels:28 Using the Walgreens smartphone app, customers can instantly download coupons ranging in value from 50 cents to $5, good toward anything from health and beauty products to everyday essentials such as diapers. The coupons are conveniently scannable—no clipping or printing required. Customers simply pull up the coupons on the Walgreens app and cashiers scan them straight from the customer's phone. Walgreens also Tweets mobile coupons to customers who check in to any of its 8,100 stores nationwide using check-in apps such as Foursquare, Yelp, or Shopkick. Walgreens has mobile scanning capabilities available at all of its stores, giving it the nation's largest retail mobile coupon program. Through its mobile app, "Walgreens is using technology to go above and beyond," says one analyst. "They're thinking about the customer." Rebates (or cash refunds) are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet. The customer sends proof of purchase to theAmazon Marketplace sellers worldwide, accounting for 40 percent of Amazon's unit sales. Amazon also makes the order delivery experience a whiz with its Amazon Prime service. For $99 a year, Prime members can receive free two-day shipping for all eligible purchases plus unlimited stream- ing of movies and TV shows with Prime Instant Video and access to borrowing e-books from the Kindle Owners' Lending Library. Amazon is moving rapidly toward same-day delivery. It recently launched Prime Now, which offers speedy two-hour free delivery of tens of thousands of items in several large metropolitan areas (or one-hour delivery for a $7.99 fee). "In the past six weeks my husband and I have made an embarrassing number of orders through Amazon Prime Now," says one excited customer. "It's cheap, easy, and insanely fast." More than just a place to buy things, Amazon.com has become a kind of online community in which customers can browse for prod- ucts, research purchase alternatives, share opinions and reviews with other visitors, and chat online with authors and experts. In this way, Amazon does much more than just sell goods online. It engages customers and creates direct, personalized customer relationships and satisfying online experiences. Year after year, Amazon places Author Comment For most companies, direct and digital marketing are supplemental channels or media. But for many other companies today- such as Amazon, GEICO, or Priceline- direct marketing is a complete way of doing business. 430 Direct and digital marketing Engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships. at or near the top of almost every customer satisfaction ranking, Based on its powerful growth, many analysts have speculated that Amazon will become the Walmart of the Web. In fact, some argue, it already is. Although Walmart's total sales of $487 billion dwarf Ama- zon's $89 billion in sales, Amazon's online sales are 7.5 times greater than Walmart's. So online, it's Walmart that's chasing Amazon. Put another way, Walmart wants to become the Amazon of the Web, not the other way around. However, despite its mammoth proportions, to catch Amazon online, Walmart will have to match the superb Amazon .com online customer experience, and that won't be easy. Thus, Amazon has become the poster child for direct and digital marketing. "The reason I'm so obsessed with ... the customer expe- rience is that I believe [our success] has been driven exclusively by that experience," says Jeff Bezos. It all starts with customer value. If Amazon creates superior value for customers, it will earn their busi- ness and loyalty, and success will follow in terms of company sales and returns. As Bezos puts it, "When things get complicated, we sim- plify them by asking, 'What's best for the customer?' We believe that if we do that, things will work out in the long term."1 M any of the marketing and promotion tools that we've examined in previous chapters were developed in the context of mass marketing: targeting broad markets with stan- dardized messages and offers distributed through intermediaries. Today, however, with the trend toward narrower targeting and the surge in digital and social media technolo- gies, many companies are adopting direct marketing, either as a primary marketing approach or as a supplement to other approaches. In this section, we explore the exploding world of direct marketing and its fastest-growing form-digital marketing using online, social media, and mobile marketing channels. Direct and Digital Marketing Direct and digital marketing involve engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships. Companies use direct marketing to tailor their offers and content to the needs and interests of narrowly defined segments or individual buyers. In this way, they build customer engagement, brand community, and sales. For example, Amazon.com interacts directly with customers via its Web site or mobile app to help them discover and buy almost anything and everything online. Similarly, GEICO interacts directly with customers-by telephone, through its Web site or smartphone app, or on its Facebook, Twitter, and YouTube pages to build individual brand relationships, give insurance quotes, sell policies, or service customer accounts. The New Direct Marketing Model Early direct marketers-catalog companies, direct mailers, and telemarketers-gathered the surge in Internet usage and buying, and by rapid advances in digital technologies-from customer names and sold goods mainly by mail and telephone. Today, however, spurred by smartphones, tablets, and other digital devices to the spate of online social and mobile media direct marketing has undergone a dramatic transformation. In previous chapters, we discussed direct marketing as direct distribution-as marketing channels that contain no intermediaries. We also included direct and digital marketing ele- ments of the promotion mix-as an approach for engaging consumers directly and creating brand community. In actuality, direct marketing is both of these things and much more. priceline.com Hotels Cars Hotels Flights Cars Check-in Choose Date Flights Search Hotels Vacation Packages Search and Save on Hotels Where are you going? City Airport, Point of Interest, Hotel Name or U.S. Zip Code Chapter 14: Direct, Online, Social Media, and Mobile Marketing Most companies still use direct marketing as a supplementary channel or medium. Thus, most department stores, such as Sears or Macy's, sell the majority of their merchan- dise off their store shelves, but they also sell through direct mail, online catalogs, and social media pages. Pepsi's Mountain Dew brand markets heavily through mass-media advertis- ing and its retail partners' channels. However, it also supplements these channels with a heavy dose of direct marketing. Mountain Dew's marketing mix consists of 55 percent television advertising and 45 percent digital. It uses its several brand Web sites and a long list of social media to engage its digitally connected customer community in everything from designing their own Mountain Dew lifestyle pages to deciding which limited-edition flavors should be launched or retired. Through such direct interactions, Mountain Dew has created one of the most passionately loyal fan bases of any brand, who in turn have made it the nation's fourth-largest soft drink brand.² Vacation Packages langilibenT Check-out Express Deals-Save up to 60% on Hotels Get exclusive savings on your hotel with Priceline's Express Deals Save time and money with no bidding required! Search Express Deals Choose Date Gruses Cruises More Rooms 1 Room SALE My Trips For Deeper Discounts Name Your Own Price Bld Flow-> Help THE GREAT ESCAPE HOTEL SALE Savings up to 25% off Search Hotels >> The new direct marketing model: Online travel agency Priceline.com sells its services exclusively through online, mobile, and social media channels. Along with other online competitors, Priceline.com has pretty much driven traditional offline travel agencies to extinction. Priceline.com paitoshe Rapid Growth of Direct and Digital Marketing 431 However, for many companies today, direct and digital marketing are more than just supplementary channels or advertising media-they constitute a complete model for doing business. Firms employ- ing this direct model use it as the only approach. Companies such as Amazon, Google, Facebook, eBay, Netflix, GEICO, and Priceline.com have suc- cessfully built their entire approach to the market- place around direct and digital marketing.>>>For example, Priceline.com, the online travel company, sells its services exclusively through online, mobile, and social media channels. Priceline.com and other online travel agency competitors such as Expedia and Orbitz have pretty much driven traditional offline travel agencies to extinction.³ Direct and digital marketing have become the fastest-growing form of marketing. According to one source, U.S. companies spent an estimated $157 billion on direct and digital marketing last year, up more than 11 percent over the previous year. As a result, direct-marketing-driven sales now amount to more than $2 trillion, accounting for 12 percent of the U.S. economy.+ 4 Direct marketing continues to become more Internet-based, and digital direct mar- keting is claiming a surging share of marketing spending and sales. For example, U.S. marketers spent an estimated $64 billion on digital advertising alone last year, up a blis- tering 26 percent over the previous year. Total digital advertising spending including online display and search advertising, social media, mobile, video, email, and other now accounts for the second-largest share of media spending, behind only television, which it's expected to overtake by 2018. And as consumers spend more and more time on their tablets and smartphones, spending on mobile advertising is exploding. Next year alone, mobile ad spending is expected to grow by 50 percent, and by 2018 it will account for an expected 25 percent of all U.S. ad spending.5 Benefits of Direct and Digital Marketing to Buyers and Sellers For buyers, direct and digital marketing are convenient, easy, and private. They give buyers anywhere, anytime access to an almost unlimited assortment of goods and a wealth of product and buying information. For example, on its Web site and mobile app, Amazon.com offers more information than most of us can digest, ranging from top 10 product lists, extensive product descriptions, and expert and user product reviews to recommendations based on customers' previous searches and purchases. Through direct marketing, buyers can interact with sellers by phone or on the seller's Web site or mobile436 Part 3: Designing a Customer Value-Driven Strategy and Mix Fusion PROGLIDE INCREDIBLE ON SENSITIVE SKIN. WITH A BRILLANT NEW SILVER LOOK AND THINDER, FINER BLADES FOR LESS TUG AND PULL, FUSION PROGUDE GUIDES EFFORTLESSLY THROUGH HAIR, PROVIDING INCREDIBLE COMFORT, EVEN IF YOU SHAVE EVERY DAY Fusion PROGLIDE 30 Email marketing Sending highly targeted, tightly personalized, relationship-building marketing messages via email. browsing sports-related content on your laptop, tablet, or phone, you might see a bright blue and green banner ad for Gillette Fusion PROGLIDE razors floating at the bottom of the page, with the provocative headline "Our Gentlest Shave." » A click on the banner expands it into a full interac- tive display ad, complete with an embedded 15-second demonstration video plus click- throughs to the Gillette Fusion PROGLIDE microsite and a buy-now link. Similarly, while perusing your favorite backpacking site, you might see an attention-grabbing video ad from The North Face. Roll over the brand logo and up pops an interactive ad panel, with the video continuing in the upper right corner alongside information on featured products and real-time links to The North Face Web site and a store loca- tor. Such dynamic ads can engage consum- ers and deliver substantial impact.¹1 Using search-related ads (or contextual advertising), text- and image-based ads and links appear atop or alongside search engine results on sites such as Google, Yahoo!, and Bing. For example, search Google for "LCD TVs." At the top and side of the resulting search list, you'll see inconspicuous ads for 10 or more advertisers, ranging from Samsung and Panasonic to Best Buy, Amazon.com, Walmart.com, Crutchfield, and CDW. Almost 90 percent of Google's $66 billion in revenues last year came from ad sales. Search is an always-on kind of medium, and the results are easily measured. ¹2 A search advertiser buys search terms from the search site and pays only if consum- ers click through to its site. For instance, type "Coke" or "Coca-Cola" or even just "soft drinks" or "rewards" into your search engine and almost without fail "My Coke Rewards" comes up as one of the top options, perhaps along with a display ad and link to Coca- Cola's official Google+ page. This is no coincidence. Coca-Cola supports its popular online loyalty program largely through search buys. The soft drink giant started first with traditional TV and print advertising but quickly learned that search was the most effective way to bring consumers to its www.mycokerewards.com Web site to register. Now, any of dozens of purchased search terms will return mycokerewards.com at or near the top of the search list. LOGIST ENDED COMMINDO Fusion PROGLIDE FOR SENSITIVE SKIN. OUR GENTLEST SHAVE 1 1 BUY NOW Gillette close slider Online display advertising: Today's dynamic rich media ads incorporate animation, video, sound, and interactivity, engaging consumers and moving them along the path to purchase. The Procter & Gamble Company Email Marketing Email marketing remains an important and growing digital marketing tool. “Social media is the hot new thing," says one observer, "but email is still the king."13 By one estimate, 91 percent of all U.S. consumers use email every day. What's more, email is no longer limited to PCs and workstations; 66 percent of all emails are now opened on mobile devices. Not surprisingly, then, a recent study found that email is 40 times more effective at capturing customers than Facebook and Twitter combined. According to one recent survey, during the latest holiday season, 90 percent of mar- keters said that their holiday campaigns included email marketing. U.S. companies spent $2.3 billion on email marketing last year, up from only $243 million 12 years earlier. Despite all the email clutter, thanks to its low costs, email marketing still brings one of the highest marketing returns on investment. According to the Direct Marketing Association, marketers get a return of $42 on every $1 they spend on email. 14 When used properly, email can be the ultimate direct marketing medium. Email lets these marketers send highly targeted, tightly personalized, relationship-building mes- sages. And today's emails are anything but the staid, text-only messages of the past. Instead, they are colorful, inviting, personalized, and interactive. >>For example, one recent CVS Pharmacy email, sent to the chain's ExtraCare Rewards Program members CVS pharmacy ExtraCare DoubleBucks Member Coupon valid to card ending in: 0877 | My Information your % 30% OFF in-store purchase. Pharmacy Get Coupon CVS pharmacy Available through Sunday, 10/27/13. Excludes sale items. Other exclusions apply. SHE H 295 ENTICKERS SOEVERY Shop 2/15 Deals extracare ExtraCare 否 Your Weekly Ad. Just Better! Spam Unsolicited, unwanted commercial email messages. Get personalized deals on the things you buy most. See weekly store specials, too. View myWeekly Ad Available through Saturday, 10/26/13.** Email marketing: Today's emails are colorful, inviting, personalized, and interactive, like the CVS Pharmacy "Prepare for the Scare" email coupon offer. CVS Caremark Corporation Viral marketing The digital version of word-of-mouth marketing: videos, ads, and other marketing content that is so infectious that customers will seek it out or pass it along to friends. Chapter 14: Direct, Online, Social Media, and Mobile Marketing prior to Halloween, contained a colorful, attention-getting coupon offering 30 percent off an in-store purchase. Clicking the "Get Coupon" button gave customers a choice of printing the coupon or simply having it zapped onto their loyalty cards for later automatic redemption. The CVS "Prepare for the Scare" email also contained a "View myWeekly Ad" button, by which ExtraCare members could link through to a Web page loaded with personalized deals based on things they buy most. Thus, the much-viewed email pro- moted both immediate store visits and customer loyalty. 437 But there's a dark side to the growing use of email marketing. The explosion of spam-unsolicited, unwanted commercial email messages that clog up our email boxes-has produced consumer irritation and frustration. According to one research company, spam now accounts for 64 percent of the billions of emails sent worldwide each day, almost two out of every three emails. Workers in American businesses send and receive nearly 109 billion emails per day and spend nearly one-third of their workweek managing email.¹5 Email marketers walk a fine line between adding value for consumers and being intrusive and annoying. 15 To address these concerns, most legitimate marketers now prac- tice permission-based email marketing, sending email pitches only to customers who "opt in." Many companies use configurable email sys- tems that let customers choose what they want to get. Amazon.com targets opt-in customers with a limited number of helpful "we thought you'd like to know" messages based on their expressed preferences and previous purchases. Few customers object, and many actually welcome such promotional messages. Amazon.com benefits through higher return rates and by avoiding alienating customers with emails they don't want. Online Videos Another form of online marketing is posting digital video content on brand Web sites or on social media sites such as YouTube, Facebook, Vine, and others. Some videos are made specifically for the Web and social media. Such videos range from "how-to" instructional videos and public relations (PR) pieces to brand promotions and brand- related entertainment. Other videos are ads that a company makes primarily for TV and other media but posts online before or after an advertising campaign to extend their reach and impact. 16 ers by the tens of millions. The online video Good online videos can engage consumers audience is soaring, with more than 60 percent of the U.S. population now streaming video. ¹6 Marketers hope that some of their videos will go viral. Viral marketing, the digital version of word-of-mouth marketing, involves creating videos, ads, and other mar- keting content that are so infectious that customers will seek them out or pass them along to their friends. Because customers find and pass along the message or promotion, viral marketing can be very inexpensive. And when a video or other information comes from a friend, the recipient is much more likely to view or read it. All kinds of videos can go viral, producing engagement and positive exposure for a brand. For example, in one simple but honest McDonald's video, the director of market- ing at McDonald's Canada answered an online viewer's question about why McDonald's products look better in ads than in real life by conducting a behind-the-scenes tour of almost 15 million views and 15,000 shares, earning the company praise for its honesty and how a McDonald's ad is made. The award-winning three-and-a-half-minute video pulled transparency. As another example, P&G's Always brand launched an inspiring #LikeAGirl video campaign, which set out to replace the negative connotations of what it means "to do something like a girl" with the message "Let's make #LikeAGirl mean amazing things." The initial three-minute video was an instant viral hit, garnering 8 million YouTube views in the first week alone and more than 57 million views to date. 17432 "HAND HOLDING ROBOT" @AYMUH 22 SATELLITE RADIO Part 3: Designing a Customer Value-Driven Strategy and Mix HEAT RADIATING GEL-FILLED HUGGABLE MIDSECTION VELVET SOFT HANDS IN THREE GRIP TYPES: GOOD FRIEND GREAT FRIEND BEST FRIEND VENTS FOR NICE SCENTS We'll begin with the exciting new digital forms of direct marketing. But remember that the traditional forms are still heavily used and that the new and old GE Direct and digital marketing lets brands create immediate and timely customer engagement, as when GE celebrated last year's National Inventors' Day by asking Twitter followers for offbeat invention ideas, then created illustrations of the best ones. GE Author Comment Direct marketing is rich in tools, from traditional favorites such as direct mail and catalogs to dazzling new digital tools-online, mobile, and social media. must be integrated for maximum impact. ALL TERRAIN WHEELS SPEAKERS FOR COMFORTING MUSIC #IWantTolnvent NATIONAL INVENTORS' DAY FEB 11 app to create exactly the configuration of information, products, or services they want and then order them on the a sense of spot. Finally, for consumers wa wadat, digital marketing through online, mobile, and social media provides a brand engagement and community-a place to share brand information and experiences with other brand fans. com- For sellers, direct marketing often provides a low-cost, efficient, speedy alternative for reaching their markets. Today's direct marketers can target small groups or individual custom- ers. Because of the one-to-one nature of direct marketing, c panies can interact with customers by phone or online, learn more about their needs, and personalize products and services to specific customer tastes. In turn, customers can ask ques- tions and volunteer feedback. Especially in today's digital environment, direct market- ing provides opportunities for real-time marketing that links brands to important moments and trending events in customers' lives. It is a powerful tool for moving customers through the buying process and for building customer engagement, com- munity, and personalized relationships. Digital and social media marketing Online marketing (Web sites, online advertising, email, online videos, blogs) Social media marketing Mobile marketing Direct and digital marketing also offer sellers greater flexibility. They let marketers make ongoing adjustments to prices and programs or create immediate, timely, and per- sonal engagement and offers. For example, last Fourth of July, home-improvement retailer Lowe's issued a stop-motion "Happy 4th of July" Vine video showing tools exploding into fireworks, a nice supplement to its ongoing Vine series of "Fix in Six" do-it-yourself videos. GE celebrated last year's National Inventors' Day by asking its Twitter followers for offbeat invention ideas, then created illustrations of the best ones, such as a "hand-holding robot." Forms of Direct and Digital Marketing The major forms of direct and digital marketing are shown in Figure 14.1. Traditional direct marketing tools include face-to-face selling, direct-mail marketing, catalog market- ing, telemarketing, direct-response television marketing, and kiosk marketing. In recent years, however, a dazzling new set of digital direct marketing tools has burst onto the marketing scene, including online marketing (Web sites, online ads and promotions, email, online videos, and blogs), social media marketing, and mobile marketing. We'll begin by examining the new direct digital and social media marketing tools that have received so much attention lately. Then we'll look at the still heavily used and very important tradi- tional direct marketing tools. As always, however, it's important to remember that all of these tools-both the new digital and the more traditional forms-must be blended into a fully integrated marketing communications program. > Figure 14.1 Forms of Direct and Digital Marketing Build direct customer engagement and community Traditional direct marketing Face-to-face selling Direct-mail marketing Catalog marketing Telemarketing Direct-response TV marketing Kiosk marketing & moi Author Comment Direct digital and social media marketing is surging and grabbing all the headlines these days, so we'll start with it. But the traditional direct marketing tools are still heavily used. We'll dig into them later in the chapter. Digital and social media marketing Using digital marketing tools such as Web sites, social media, mobile apps and ads, online video, email, and blogs to engage consumers anywhere, anytime via the digital devices. om brs. boia dsW Chapter 14: Direct, Online, Social Media, and Mobile Marketing LINKING THE CONCEPTS CO Hold up a moment and think about the impact of direct and digital marketing on your life. • When was last time that you bought something via direct or digital marketing? What did you buy, and why did you buy it direct? When was the last time that you rejected a direct or digital market- ing offer? Why did you reject it? Based on these experiences, what advice would you give to direct marketers? 433 • For the next week, keep track of all the direct and digital marketing offers that come your way via direct mail and catalogs, email and mobile ads, online and social media marketing offers, and oth- ers. Then analyze the offers by type, source, and what you liked or disliked about each offer and the way it was delivered. Which offer best hit its target (you)? Which missed by the widest margin? Digital and Social Media Marketing As noted earlier, digital and social media marketing is the fastest-growing form of direct marketing. It uses digital marketing tools such as Web sites, online video, email, blogs, social media, mobile ads and apps, and other digital platforms to directly engage consum- ers anywhere, anytime via their computers, smartphones, tablets, Internet-ready TVs, and other digital devices. The widespread use of the Internet and digital technologies is having a dramatic impact on both buyers and the marketers who serve them. Marketing, the Internet, and the Digital Age Much of the world's business today is carried out over digital networks that connect people and companies. These days, people connect digitally with information, brands, and each other at almost any time and from almost anywhere. The digital age has fundamen- tally changed customers' notions of convenience, speed, price, product information, ser- vice, and brand interactions. As a result, it has given marketers a whole new way to create customer value, engage customers, and build customer relationships. Digital usage and impact continues to grow steadily. More than 87 percent of all U.S. adults use the Internet, and the average U.S. Internet user spends almost six hours a day using digital media, primarily via mobile devices. Worldwide, 40 percent of the popula- tion has Internet access. And 23 percent has access to the mobile Internet, a number that's expected to double over the next five years as mobile becomes an ever-more-popular way to get online.6 150/ As a result, more than half of all U.S. households now regularly shop online, and digi- tal buying continues to grow at a healthy double-digit rate. U.S. online retail sales were an estimated $305 billion last year, 6.5 percent of total retail sales. By 2018 as consumers continue to shift their spending from physical to digital stores, that number is expected to grow to almost $500 billion (8.9 percent of total retail sales). Perhaps even more impor- ar slidom bitant, it's estimated that nearly half of all U.S. retail sales were either transacted directly online or influenced by Internet research. As today's omni-channel consumers become more and more adept at blending online and in-store shopping, digital channels will come into play for an ever-larger proportion of their purchases. To reach this burgeoning market, most companies now market online. Some com- panies operate only online. They include a wide array of firms, from e-tailers such as Amazon and Expedia.com that sell products and services directly to final buyers via the Internet to search engines and portals (such as Google, Yahoo!, Bing, and DuckDuckGo), transaction sites (eBay, Craigslist), content sites (the New York Times on the Web, ESPN.com, and Encyclopædia Britannica), and online social media (Facebook, Twitter, YouTube, Pinterest, Instragram, and Snapchat). Today, however, it's hard to find a company that doesn't have a substantial online pres- ence. Even companies that have traditionally operated offline have now created their own432 "HAND HOLDING ROBOT" @AYMUH 22 SATELLITE RADIO Part 3: Designing a Customer Value-Driven Strategy and Mix HEAT RADIATING GEL-FILLED HUGGABLE MIDSECTION VELVET SOFT HANDS IN THREE GRIP TYPES: GOOD FRIEND GREAT FRIEND BEST FRIEND VENTS FOR NICE SCENTS We'll begin with the exciting new digital forms of direct marketing. But remember that the traditional forms are still heavily used and that the new and old GE Direct and digital marketing lets brands create immediate and timely customer engagement, as when GE celebrated last year's National Inventors' Day by asking Twitter followers for offbeat invention ideas, then created illustrations of the best ones. GE Author Comment Direct marketing is rich in tools, from traditional favorites such as direct mail and catalogs to dazzling new digital tools-online, mobile, and social media. must be integrated for maximum impact. ALL TERRAIN WHEELS SPEAKERS FOR COMFORTING MUSIC #IWantTolnvent NATIONAL INVENTORS' DAY FEB 11 app to create exactly the configuration of information, products, or services they want and then order them on the a sense of for through online, mobile, and social media provides a brand engagement and community-a place to share brand information and experiences with other brand fans. com- For sellers, direct marketing often provides a low-cost, efficient, speedy alternative for reaching their markets. Today's direct marketers can target small groups or individual custom- ers. Because of the one-to-one nature of direct marketing, c panies can interact with customers by phone or online, learn more about their needs, and personalize products and services to specific customer tastes. In turn, customers can ask ques- tions and volunteer feedback. Especially in today's digital environment, direct market- ing provides opportunities for real-time marketing that links brands to important moments and trending events in customers' lives. It is a powerful tool for moving customers through the buying process and for building customer engagement, com- munity, and personalized relationships. Digital and social media marketing Online marketing (Web sites, online advertising, email, online videos, blogs) Social media marketing Mobile marketing Direct and digital marketing also offer sellers greater flexibility. They let marketers make ongoing adjustments to prices and programs or create immediate, timely, and per- sonal engagement and offers. For example, last Fourth of July, home-improvement retailer Lowe's issued a stop-motion "Happy 4th of July" Vine video showing tools exploding into fireworks, a nice supplement to its ongoing Vine series of "Fix in Six" do-it-yourself videos. GE celebrated last year's National Inventors' Day by asking its Twitter followers for offbeat invention ideas, then created illustrations of the best ones, such as a "hand-holding robot." Forms of Direct and Digital Marketing The major forms of direct and digital marketing are shown in Figure 14.1. Traditional direct marketing tools include face-to-face selling, direct-mail marketing, catalog market- ing, telemarketing, direct-response television marketing, and kiosk marketing. In recent years, however, a dazzling new set of digital direct marketing tools has burst onto the marketing scene, including online marketing (Web sites, online ads and promotions, email, online videos, and blogs), social media marketing, and mobile marketing. We'll begin by examining the new direct digital and social media marketing tools that have received so much attention lately. Then we'll look at the still heavily used and very important tradi- tional direct marketing tools. As always, however, it's important to remember that all of these tools-both the new digital and the more traditional forms-must be blended into a fully integrated marketing communications program. > Figure 14.1 Forms of Direct and Digital Marketing Build direct customer engagement and community Traditional direct marketing Face-to-face selling Direct-mail marketing Catalog marketing Telemarketing Direct-response TV marketing Kiosk marketing & moi Author Comment Direct digital and social media marketing is surging and grabbing all the headlines these days, so we'll start with it. But the traditional direct marketing tools are still heavily used. We'll dig into them later in the chapter. Digital and social media marketing Using digital marketing tools such as Web sites, social media, mobile apps and ads, online video, email, and blogs to engage consumers anywhere, anytime via the digital devices. om brs. horia doW Chapter 14: Direct, Online, Social Media, and Mobile Marketing LINKING THE CONCEPTS CO Hold up a moment and think about the impact of direct and digital marketing on your life. • When was last time that you bought something via direct or digital marketing? What did you buy, and why did you buy it direct? When was the last time that you rejected a direct or digital market- ing offer? Why did you reject it? Based on these experiences, what advice would you give to direct marketers? 433 • For the next week, keep track of all the direct and digital marketing offers that come your way via direct mail and catalogs, email and mobile ads, online and social media marketing offers, and oth- ers. Then analyze the offers by type, source, and what you liked or disliked about each offer and the way it was delivered. Which offer best hit its target (you)? Which missed by the widest margin? Digital and Social Media Marketing As noted earlier, digital and social media marketing is the fastest-growing form of direct marketing. It uses digital marketing tools such as Web sites, online video, email, blogs, social media, mobile ads and apps, and other digital platforms to directly engage consum- ers anywhere, anytime via their computers, smartphones, tablets, Internet-ready TVs, and other digital devices. The widespread use of the Internet and digital technologies is having a dramatic impact on both buyers and the marketers who serve them. Marketing, the Internet, and the Digital Age Much of the world's business today is carried out over digital networks that connect people and companies. These days, people connect digitally with information, brands, and each other at almost any time and from almost anywhere. The digital age has fundamen- tally changed customers' notions of convenience, speed, price, product information, ser- vice, and brand interactions. As a result, it has given marketers a whole new way to create customer value, engage customers, and build customer relationships. Digital usage and impact continues to grow steadily. More than 87 percent of all U.S. adults use the Internet, and the average U.S. Internet user spends almost six hours a day using digital media, primarily via mobile devices. Worldwide, 40 percent of the popula- tion has Internet access. And 23 percent has access to the mobile Internet, a number that's expected to double over the next five years as mobile becomes an ever-more-popular way to get online.6 150/ As a result, more than half of all U.S. households now regularly shop online, and digi- tal buying continues to grow at a healthy double-digit rate. U.S. online retail sales were an estimated $305 billion last year, 6.5 percent of total retail sales. By 2018 as consumers continue to shift their spending from physical to digital stores, that number is expected to grow to almost $500 billion (8.9 percent of total retail sales). Perhaps even more impor- ar slinom bi tant, it's estimated that nearly half of all U.S. retail sales were either transacted directly online or influenced by Internet research. As today's omni-channel consumers become more and more adept at blending online and in-store shopping, digital channels will come into play for an ever-larger proportion of their purchases. To reach this burgeoning market, most companies now market online. Some com- panies operate only online. They include a wide array of firms, from e-tailers such as Amazon and Expedia.com that sell products and services directly to final buyers via the Internet to search engines and portals (such as Google, Yahoo!, Bing, and DuckDuckGo), transaction sites (eBay, Craigslist), content sites (the New York Times on the Web, ESPN.com, and Encyclopædia Britannica), and online social media (Facebook, Twitter, YouTube, Pinterest, Instragram, and Snapchat). Today, however, it's hard to find a company that doesn't have a substantial online pres- ence. Even companies that have traditionally operated offline have now created their own
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