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Digital Marketing in Retail

What are the Benefits a Swiss Premium Department Store Could Reap When Adapting to the Changing Environment of Digitization? A Maturity Model

Written by P. Schöni

Paper category

Bachelor Thesis


Business Administration>Marketing & Sales




Bachelor Thesis: Retail digitalization Since the industrial revolution, technological progress has led to a paradigm shift, which is today called the "industrial revolution" (Lasi & Kemper, 2014). These include the invention of water and steam-powered mechanical production in the 18th century (The Economist, 2012)-the so-called first industrial revolution, in addition to the invention of mobile assembly lines, the production of machines used a lot of electricity and internal combustion engines. . Mass production (Lasi & Kemper, 2014; The Economist, 2012)—the so-called second industrial revolution, and widespread digitalization driven by electronics, IT, and robotics (PwC, 2016)— -The so-called third industrial revolution. The term "digital" is simply "the conversion of analog to digital information" (Ernst and Young, 2011). Computers, cell phones, and cameras are all digital devices because they process data in digital form. With the advancement of digitalization, all aspects of life can be captured and stored in some digital form (ibid.). Today, we are closer to achieving greater network interconnection, which includes every device, customer, employee, and activity. This process is often referred to as "digitizing everything" (ibid.). This leads to a real-time global information exchange between a large number of connected objects and devices (ibid.). Enticed by this development, the term "Industry 4.0" came into being. Although the term is related to "industry", which is part of the economy that produces material products (Lasi & Kemper, 2014), digitalization affects the entire economy, leisure, and education at every step of the value chain and other areas such as family life. And liquidity. Therefore, it has an equally important impact on the retail industry, customers, and the art of successful marketing. In July 1995, Jeff Bezos launched an online bookstore named after Amazon, the world's second largest river, and the retail industry entered a new "digital" era. It is seen as a sincere effort to provide products directly to customers via the Internet for the first time (Entrepreneur Media Inc., 2008). By 1999, the stock market valued at a higher value than the entire traditional book retail and publishing industry combined, even though Amazon was not yet profitable (Harvard Business Review, 1999). With the launch of the first commercial website, an online store was born, and its potential was quickly recognized globally, just like the Amazon example. The development of "online" is characterized by easy access to a wide range of products worldwide and enables customers to access a wealth of information, attracting loyal and disloyal customers to use online services. As a result, customer loyalty, customer flow, and sales related to online decline. 2.3. Digital Marketing According to the definition of Kotler & Armstrong (2013), marketing is defined as “the process by which a company creates value for customers and establishes a strong customer relationship to obtain value from customer returns”. However, the definition does not mention the concept of value co-creation at all, which was first proposed by Levitt (1960) and revived through the emergence of new technologies that promote customer participation (GfK, 2016). Today, many experts agree that co-creating value is an integral part of current marketing, so the definition should tend to create value for and with customers (Rüeger, 2015). Based on the above theory, a widely accepted marketing process model of Kotler & Armstrong (2013) suggests integrating customers into the center of the company's marketing strategy. Customers should directly participate in strategy development from the beginning. To understand the needs and wishes of customers, and to formulate customer-oriented marketing strategies, it is vital to the research of customers and the market. Therefore, it is necessary to collect and analyze marketing information and customer data. Once a customer-oriented marketing strategy is developed and a marketing plan that provides excellent value to selected customers is constructed, they suggest that building profitable customer relationships and creating customer satisfaction will help capture the value that leads to increased customer assets (Kotler and Armstrong, 2015)). Customer equity is the sum of the lifetime value of all current and future customers, as the sum of the net profit attributable to each relationship (Rust, Lemon, and Zeithaml, 2004). Surprisingly, in the vast history of research on digital marketing, only one definition of the term itself rarely appears. A definition can be found in many research papers, and SAS Institute Inc. (2017) also uses this definition, which defines digital marketing as “promoting a product or brand through one or more forms of electronic media”. However, this definition either ignores the widely accepted shift from product to customer-centric marketing or runs counter to what Kotler & Arm-strong calls "customer-driven marketing strategies." Similarly, this definition also ignores the widely recognized concept of current marketing. This is the first proposed by Peter Drucker (1973) that "the goal [...] makes sales redundant. [This is] knows and understands customers, products very well Or the service is suitable for him and self-promotion", which tends to put the customer at the center of the marketing strategy. Therefore, the core of this definition lacks completeness. Marketing guru Kotler & Armstrong (2015) proposed a more accurate way to define digital and social marketing. They did not miss the ongoing digitalization in marketing. Read Less