Effectiveness examination of various marketing channels

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Content page
1. Introduction of various marketing channels 2
2. Effectiveness examination 2
2.1 Overall effectiveness 2
2.2 Regular mail 5
2.3 Raising social networking and phone marketing channels 6
2.4 Text message 8
2.5 Instant messaging 8
2.6 Messaging via RSS 8
3. Concluding remarks 9
Reference 10
Appendix 11

1. Introduction of various marketing channels

Promotion is the most known marketing mix in the 4Ps marketing model, it could be defined as the attempt by marketers to inform, persuade, or remind customers and industrial users to influence their opinion or elicit a response (Gitman& McDaniel 2009, p328). A typical promotional mix usually includes media advertising, sales promotion, internet advertising, personal selling and public relations. And the distribution of the promotional information could be achieved by various marketing channels and this study will focus on the analysis of the effectiveness of the seven marketing channels: regular mail, E-mail, phone calls, text messaging, messaging via social networking website, instant messaging, messaging via RSS.

2. Effectiveness examination

2.1 Overall effectiveness

Table 1.0 Purchased behavior survey on US internet users

According to an online survey done to the US internet users in 2008 who have been grouped in seven age groups to investigate their channel preference through which they may get the promotion information which leads to purchase behaviors, in total regular mail E-mail and telephone call have been ranked as the most influential marketing channels as displayed in the figure below. Except these three marketing channels, the other channels do not show enough of effectiveness in persuading potential customers into substantial purchasing behaviors as less than 10 percent participants will get attracted by the promotional information through these channels.

Chart 1.0 Effectiveness of marketing methods by channel
Source: ExactTarget, 2008 Channel Preference Survey, May 23, 2008

As the chart above show, with the increases of the customers’ ages, the most early and traditional “big three” marketing channel gradually dominated the customers’ access to information for guidance to purchase. And because of the young people represents the future’s trend while the old age group consumers will exit the market in the future. So in the long term the other minority marketing channels will be more influential and effective than they are now. This judgment corresponds with the analysis and prediction in a recent report to anticipate the investment surge in mobile apps and social media which has been set to triple last year with most marketers know (Emarketer.com 2010) as shown in the chart 3.0 below.

Chart 2.0 Effectiveness of marketing methods by age groups and types
Source: ExactTarget, 2008 Channel Preference Survey, May 23, 2008

Chart 3.0 Emerging channel spending in US (Source: Emarketer.com 2010)

2.2 Regular mail

As mentioned above regular mail and E-mail are the two most effective marketing channels among the selected marketing initiatives in persuading potential customers into purchasing behaviors, as shows in the table below postal mail is more costly and time consuming than electronic mail as one thousand postal mail cost 500 dollar compared to 30 dollar in the E-mail channel. So E-mail enjoy a high return on investment(ROI) ratio than the regular mail. What’s more postal mail takes more time to execute and respond to the customers’ feedback and request.

Table 2.0 Metrics for E-mail and regular mail

One critical problem surrounding that reduces the effectiveness of the mailing system is the low click-through rate and customer conversion rate. One solution to tackle this problem that is also widely used by many marketers is to gain permission from the targeted consumers which is also described as permission marketing. According a survey, 88 percent of the participants have made a purchase after receiving permission Email and 40 percent of the participants even become loyal to the online retailer through the regular permission E-mail (Bidgoli 2004, p568).

Another commonly used technique to increase the click-through rate is to customize the advertisement with according to the interest and needs of the recipients as it is believed that whether the original advertisement contains valuable information will largely influence the tendency to click the new advertisements (Shenoy 1997). This technique has been widely used by many website marketers in term of providing options to received advertisements relative to their interests.

2.3 Raising social networking and phone marketing channels

Chart 4.0 Mobile and social networking usage by marketers in North America

From the marketers’ side, an increasing focus and fund has been invested in the social networking marketing channel. According to a report earlier this year, among the fewer than half of marketers who have used the mobile or social apps in 2009, social networking is leading the marketing channels usage.Below let’s focus on the number 1 social networking platform, the fastest growing Facebook. According to the statistics released by Facebook official website (2010), the number of the registered users has reached 500 million as demonstrated in the chart below, but the more valuable data that make it probably the best social networking platform for marketers is that 400 million of the total users at least visit their own Facebook profile once a month and 50 percent of the total users visit the website everyday leading to approximately 11.7 billion hours spend on the web globally.

Chart 5.0 Face book user number growth

Another popular marketing channel as illustrated above is mobile phone which has been witnessing a faster growth rate in term of investment than the social networking marketing channel and reasons are illustrated in the chart below.

Chart 6.0 Mobile apps development by publishers and marketers

2.4 Text message

Text messaging or SMS refers to short message service which is becoming more popular as a marketing channel because of its flexibility to serve from a few to millions customers in a short period of time (Applegate & Johnsen 2007). There are several principle in using text messaging as an effective marketing channel. First of all, messages must be send on a permission based as mentioned just now, messaging without permission could lead to low click-through rate as various studies have indicated the fact that consumers are not necessarily interested in receiving text advertisements, especially the if they do not permit it. Secondly, messages must be written in an attractive and directly get to the point as there is limitation on the number of words in a single message. Thirdly, the timing is another key factor to increase the effectiveness of the text messaging.

2.5 Instant messaging

Instant messaging is becoming a standard part of many people’s conversational repertoire particularly among those less than 25 as the 2004 Pew Internet & American Life Project poll suggests that more than 40% of the grow up American internet users uses use instant messaging in their social life (Belk 2006, p140). And some researcher even argued that there is an ongoing trend that instant messaging will replace the E-mail and hand phone by creating its own unique social networks.

2.6 Messaging via RSS

RSS (Really simple syndication) is an XML-based format which is used for web content sharing and distributing (Tomalia, Naylor & Goddard 1990). As mentioned earlier in the beginning, messaging via RSS one of the raising marketing channels which had not gained enough of attention from the marketers. But RSS marketing by providing powerful information-management toll which bypasses the increasing jam and busy E-mail channel has been witnessing an growth trend and some studies even believe that the RSS has the potentials to overtake the E-mail marketing. An increasing websites such as BBC provide RSS services to millions of subscribers directly to their desktops.

3. Concluding remarks

According to the analysis we have above, several conclusion could be made regarding the effectiveness of the selected online and mobile phone relative marketing channels. On one hand, in general traditional “big three” marketing channels still dominate the most effective marketing channel positions due to its large user base especially among the grow up age groups while the young consumers tend to use less traditional marketing channels and use more new channels instead. On the other hand, the effectiveness could be measured under different standards such as cost, focus and promptness and different conclusions could be made using different standards.  
Reference

Applegate, E. & Johnsen, A. 2007, Cases in advertising and marketing management: real situations for tomorrow, London: Rowman & Littlefield Publishers, Inc

Belk, R. W. 2006, Handbook of qualitative research methods in marketing, Edward Massachusetts: Elgar Publishing Limited

Bidgoli, H. 2004 The Internet encyclopedia, Volume 2, New Jersey: John Wiley & Sons, p568
Emarketer.com 2010, App Usage to Soar in 2010, accessed on 25th Nov 2010 [online] available: http://www.emarketer.com/Article.aspx?R=1007473

Facebook.com 2010, Facebook Statics, accessed on 26 Nov 2010 [online] available: http://www.facebook.com/press/info.php?statistics

Gitman& McDaniel 2009, The Future of Business: The Essentials, Student Edition, Mason: South-Western Cengage Learning, p328

Shenoy, D. 1997, Measuring Effectiveness and Value of Email Advertisements in Relationship-Oriented Email Message, accessed on 26 Nov 2010 [online] available: http://dspace.mit.edu/bitstream/handle/1721.1/42931/251512028.pdf?sequence=1

Tomalia D., Naylor, A. M. & Goddard, P. W. 1990, Starburst Dendrimers: Molecular-Level Control of Size, Shape, Surface Chemistry, Topology, and Flexibility from Atoms to Macroscopic Matter, accessed on 26 Nov 2010[online] available: http://onlinelibrary.wiley.com/doi/10.1002/anie.199001381/abstract