22 Interactive Marketing

Dr. Puja Waalia Mann

 

1.0 Introduction

 

Services are typically characterized by the interaction between the customers and service providers. This is because the services are produced and consumed at the same time, hence the interaction cannot be avoided between provider and consumer of the services. Marketing of services have increasingly become interactive due to the consumer‘s access to technology driven modes, especially the Internet, for being in touch with service provider. Take the example of Banking services, where the consumer interacts with the Bank for procuring various information using Internet.

 

1.1 Learning Objectives

 

In this module, you will learn:

 

a)      Meaning of Interactive Marketing

b)      Levels of Interaction in Service Marketing

c)      Co-creation and Co-production

d)      Conceptual Model of Interactive Marketing

e)      Advantages of Interactive Marketing

f)       Limitations of Interactive Marketing.

 

1.2 Key Words:

 

Co-creation, Service Design, Innovation, Interactive marketing, Online, Participation, Relationship management, Self-service, Strategy, Technology

 

1.3 Interaction in Services

 

According to Solomon (1985), ―a Service interaction is a fusion of employees and customers, where the success of the service delivery depends upon how well both parties perform their roles.‖ Thus, the interactions in service marketing is considered to be reciprocal of the social, behavioural and business exchanges between the consumers and the service employees. The marketing interaction of consumers in services does not limit only to the service personnel but also extends to the technology being adopted for the service creation and delivery as well as the process of service creation and delivery.

 

According to Bolton and Saxena-Iyer (2009) ―Interactive services as services that have some form of customer–firm interaction in an environment characterized by any level of technology‖.

 

While almost all services will require an interaction between the service seller and a service consumer, there is a varied degree of interaction between the two. The level of this interaction greatly depends upon the type of service being observed and the level of technological exposure and availability of the level of technology.

 

The degree of interaction is also affected by the two dimensions of extent of participation of the consumer in the service delivery and consumption and the other dimension is that of extent of use of technology in the service delivery. Based on these two dimensions, Bolton and Iyer have proposed a Quadrant characterizing the levels of Interaction in Services. The following figure reflects the quadrant based on these two dimensions.

 

a) Highly Interactive Services:

 

This set of Services are marked with high level of Service interaction as the services are highly technology enabled and the extent of consumer participation is also high. The service marketing in this category is generally supported by customized softwares to facilitate the consumer interaction. There are services like Online banking and medical and information services which are typically marked by the high participation of the consumers as the information sought is unique to each consumer. Further, the level of technology that can be applied in the services are also of the high level for the purpose of completing a successful service support and delivery.

 

b)      Continuously provided Services:

 

The second set of services is the ones in which the participation of the consumer may not be very high but the level of technology utilized for delivery of the service is very high. Let us take the example of telecommunication services. Here the consumer may not be able to directly utilize these services with his participation, rather he only is a recipient and user of the services. At the same time for an organization to offer better services, they need to use high end technology for a better network, better coverage and better connectivity.

 

c)      Co-creation Services:

 

If the level of participation of the consumers in the service marketing is high but the level of technology application is low, this set of services are known as the Co-created services. Let us take the example of any adventure park like Disney Land or Imagica etc. The consumer will be able to consume a service with his own active participation in getting the rides and feeling the pleasure of the same. However, the rides may use a limited level of technology to operate the rides.

 

d)      Traditional Services:

 

The last set of services is marked with low level of consumer participation and also a low level of technology. The services like Retailing and offline banking may require a consumer to place an order or request for some task at the counter and the same is delivered to the consumer with a limited usage of the technology.

 

Hence, the above four are the categories of the services in which the interaction is of varying degree based on the two dimensions referred to as above. There are management practitioners who believe that the services falling in the first quadrant are the only interactive marketing services. But this may not be true given the high level of technology used in Quadrant two also can be interactive if the consumer using a mobile connection needs some help or clarification in the usage of any of the telecom services. The same is also reflected in the fact that such organizations have large call centers to interact with their consumers on a regular basis.

 

CHECK YOUR PROGRESS

 

1.      ―Interaction in Service Marketing is indispensable.‖ Do you agree? Why/ Why not?

 

2.      Define Service Interaction , with the help of an example.

 

3.      What are the different degrees of Interaction in Services ? Describe with the help of an example.

4.      From a consumer point of view, how far is Interaction desirable?

 

 

1.4 Interactive Marketing

 

The level of interaction of a consumer is directly dependent upon the level of participation of the consumers in the service creation and delivery. The participative behavior of the consumers results in the higher interactive marketing of the service organizations. For the purpose of explanation of Interactive Marketing, the following conceptual model is being used, in which the key roles of the consumer in the service consumption are highlighted along with the actions that the service organization takes to make the process interactive.

Fig 21.2 Conceptual Model of Service Marketing Interaction

Source : (Bolton and Iyer, 2009)

 

 

a)      Consumer

 

In the figure shown above, the consumer perception is considered for a participative consumer in terms of clarity and understanding of roles to be played by a consumer, the end goals that he seeks to satisfy at the end of the service consumption and the capabilities that a particular consumer possesses in context of the services being marketed.

 

The second aspect of the consumer relates to the active participative behavior which starts with the active search for the information, sharing of the relevant information and the purchase and usage of the service. Here the consumer may restrict himself only to the service production and thus performs the in-role; while his participation in the service co-creation and defining the basic structure of the service itself would be incorporated under Extra- role. (The distinction between Co-Production and Co-Creation is given in the subsequent points.)

 

b)     Service organization

 

The second player in the Interactive marketing is the service organization. The first aspect relates to the strategy of the service organization. This strategy may be related to the transparency, customers, competitors and collaborators or the risk and return involved in the same. For instance, a boutique owner installs an interactive kiosk in its showroom for the consumer to choose a product and customize it as per his / her preferences and then get it delivered to the customers place. The pricing strategy will be dependent upon the target consumers paying capacity, the direct and indirect competitors in the industry and the expected return on investment for marketing highly customized dresses.

 

The other aspect of the service interaction for an organization is Service innovation and design, channel and media used to promote or deliver the service, the pricing of the service, sharing of the relevant information and determination of the privacy policies.

 

c)      Service Infrastructure

 

The service organizations‘ strategies and the customer response is affected by the basic building blocks of the key ingredients of the service infrastructure i.e. People, Process and Technology. People refer to the employees of the service firm, Process refers to the series of actions taken by the service organisation in the creation and delivery of service and the technology that facilitates the service production and consumption.

 

d)     Service Co-production

 

Service co-production refers to the participation of the consumers in each of the steps of service creation and production. Here, a distinction may be dawn between Service Production and Service Co-creation. Co-production refers to the participation of the customers in the process of development of the service within the boundaries and parameters set by the organization. The customers participate and share the tasks of service production which would otherwise be done by organizational employees. This includes the consumer self service retail outlets or retail websites in which the consumers themselves choose from a range of Brands and products, proceed for payment and check out. An online retailer may also offer consumers to choose a baggage of products from the limited range offered at a discount. The consumers reason for such a participation may be perceived sense of control and choice of purchase which provides emotional satisfaction to the consumers. This process allows for mass-customization of services.

 

On the other hand Co-creation is a step backwards in the process of service purchase by the consumer. Here the consumer participates in choosing the basic design of the service which is beyond the pre defined parameters of the service provider. The level of flexibility in choosing the core service is very high for the consumer in Co-creation. For an end consumer, co-creation could be best explained in the virtual game a child plays in creating a world of his choice in which he plans to live and play the game in. Thus, Co-creation is a process which offers customization and unique offerings for each consumer. For example, assume that a consumer wants to buy a dress of her choice online. She specifies the color, shade, fabric and design of the dress. She may provide the measurement specifications along with the specifications of length, sleeves, collar and overall design etc. of the dress. When a consumer buys a customized dress online it is the example of high technology enabled service being delivered to the consumer with the final product being designed as per the instructions of the consumers.

 

Usually Co-creation is witnessed in the business to business buying situations where the consumer is directly involved in choosing the final shape of the product being ordered.

 

e)      Consumer Behaviour outcomes

 

The next step in the buying process of an interactive marketing would be related to consumers. The consumers may only try the service and do not go beyond it in terms of ownership or purchase of the service. The second outcome could be that of a satisfied consumer who goes for a repeat purchase of the service. A satisfied consumer may spread a positive word of mouth and a dissatisfied consumer may spread a negative word of mouth of a service co-produced or co-created. Often a satisfied consumer may also be involved in the community interaction which is a positive promotion for the service firm.

 

f)       Firm’s Outcomes

 

Having satisfied a consumer the objective of the organization is fulfilled. The consumer satisfaction results in the regular flow of revenues and eventually profits for which the firm aims. Thus, the outcomes of the service firm are related to the revenues and profits generated as a result of consumer satisfaction from the use of a service.

 

The above model clearly represents the various steps involved in Interactive Marketing from the view of Service organization as well as the service buyer.

 

 

CHECK YOUR PROGRESS

 

5. Draw the Consumer Interactive marketing model.

6. What are the possible consumer participative behaviours in an interactive Marketing?

7. Enumerate the consumers outcomes of Interactive Marketing.

8. Are the firm‘s outcomes of interactive marketing same as that of consumers outcomes? Illustrate with the help of an example.

 

1.5 Importance of Interactive Marketing

 

Interactive Marketing was a common marketing feature in the business to business marketing. However, it is being increasingly witnessed in the consumer marketing as well. There are a number of factors responsible for the growing application of interactive marketing in the consumer markets. Let us look at some of these in the following section:

 

a) Value conscious consumer– The twenty first century saw the world market shrinking into a global village. The consumer was suddenly bombarded with a number of marketing offers. This made the marketers create value for their services to attract the consumers. While the marketers used a number of strategies to face the global competition, one of the most attractive one for the consumer was the offering of Value to the consumer through their interaction in the marketing activities.

 

b) Feeling of control – The consumer‘s interaction with the service provider during the production or delivery of the services, gives a more satisfied feeling. Let us assume, while booking the movie tickets online, the consumer can choose not only the show timings but also the available seats in the hall. This interaction gives a feeling of higher control and satisfaction to the consumer.

 

c) Wider Choice– While interacting with the marketers in the process of buying, the consumer always feel that they can look for a wider choice. For instance, if given an option to book a hotel room on a vacation, the Interactive Marketer like ‗Travago‘ offers the consumers a wide variety of choice of hotels with varying facilities and price range. Thus, the consumer can decide to buy a service as per his suitability amongst a wide range of offerings.

 

d) Personalised Service- an interactive marketing always develops a USP that the services being given to the consumer are especially tailor made for the consumers. Since the consumer may be given a chance to be a co-creator or a co-producer, the service will be more personalised and thus would better satisfy the consumer. For example, while preparing a sandwich, SubWay ensures a high level of interaction in asking for the choice of the consumers for various ingredients. This Co-production activity convinces the consumer of a personalized sandwich as per his taste and flavour.

 

 

CHECK YOUR PROGRESS

 

9. Consumers prefer Interactive Marketing in services.‖ Do you agree?

 

10. Interactive Marketing has become more important due to rising competition.‖How far do you agree with this statement?

 

11. With the help of your personal example, describe how you were satisfied in an interactive Service Marketing situation?

 

1.6 Limitations of Interactive Marketing

 

Like any marketing tool, the Interactive Marketing can be very useful if the consumer feel the interaction as worth in the service production and delivery. However, if not implemented carefully, interactive marketing may be considered as a burden by the consumer. The following are some of the reasons when a consumer may not be happy with the interactive Marketing.

 

a) Bounded Choice- While asking the consumers for their preferred inputs in the service delivery, if the consumer is offered a very limited choice or options, it is likely to result in the consumer dissatisfaction. For example, while offering the consumers to choose from a range of hotels for a stay, if there are only a few hotel options available or if the type of hotels being offered are not upto the service expectations of the consumer, the interaction may result in a negative attitude about the service marketer.

 

b) Limitations in service offerings- There may be very limited flexibility offered to the consumer in the service interaction. For instance, let us assume that a consumer is interacting with the telecommunication service center over a voice mail. There is a particular issue that he needs to resolve by availing of the services, but he is not able to find the suitable option in the navigation of the voice mail. This will leave the consumer highly dissatisfied with the interaction.

 

c) Reason for dissatisfaction- The service organization offers core service in addition to interactive mode of marketing. The consumer would evaluate the service on quality of both these parameters. If the consumer is dissatisfied with Interactive aspect of the service offering, it may transfer to the dissatisfaction towards the core service provided by the marketer also, even if the core service was not substandard. Hence, the poor quality of value addition offered through interactive marketing may result in a negative perception towards the core service.

 

CHECK YOUR PROGRESS

 

  1.  Not all Interactive Marketing serves the Firms outcomes of revenue generation.‖ Is this statement true? Why/Why not?
  2. Is the Service organization always a beneficiary in adopting Interactive Marketing model of services? Explain with the help of an example.

 

Conclusion

 

Interactive marketing refers to the involvement of consumers in the process of marketing of services by an organization. The level of interaction may vary from a low level of interaction to a high level of interaction. This degree of interaction is a result of the technology being used in the production and delivery of the services and the interest of the consumers in participating in the consumption of service. Generally the web based services are the best examples of Interactive Marketing where with the use of technology the consumers are able to participate well in the process of service purchase. While the Interactive marketing offers benefits to the consumers by way of exerting higher control in the process of service consumption, it also offers benefits to the organization in terms of being perceived as user friendly. An organization which offers consumers involvement in production or creation of the services often develop an image of service providers offering higher service standards to take such a risk of consumer participation. However, if the service seller has not prepared a strong support system ready for the service Co-creation and C—production, the value addition offered by the organization may adversely affect the image of the service provider despite the fact that the core service is of a high quality standard. Hence, though Interactive marketing is increasingly being witnessed as a necessity in the elevated global competition, its use should be carefully done based upon the strong support system developed by the firm.

 

Summary

 

Due to increased competition every service provider aims to offer a unique benefit to the consumer to attract the awareness and preference of the consumer in its favour. Interactive Marketing is a relatively new tool utilized by the service providers for marketing the services by involving the consumers in its creation or production. Depending upon the strengths of the service organization the interaction with the consumers may be sought at any step of the value chain hierarchy. There can be varying degrees of participation of the consumers in Interactive Marketing on the continuum of high involvement to low involvement based on the twin dimensions of extent of technology enabled services and the extent of consumer participation in the service creation and delivery. While the consumers always prefer a higher level of interaction, the service seller may not be able to keep up the high expectations of the consumers at all service interactions. Hence the level of interaction should be carefully designed by the service marketer.

 

Learn More:

 

  1. a) Parasuraman, and Arvind Malhotra (2002), ―Service Quality Delivery Through Web Sites: A Critical Review of Extant Knowledge,‖ Journal of Academy of Marketing Science, 30 (4), 362–75.
  2. b) Leonard L. Berry, Ruth N. Bolton, Cheryl H. Bridges, Jeffrey Meyer, A. Parasuraman & Kathleen Seiders (2010), Opportunities for Innovation in the Delivery of Interactive Retail Services, Journal of Interactive Marketing 24 (2010) 155–167
  3. c) Ruth Bolton & Shruti Saxena-Iyer (2009), Interactive Services: A Framework, Synthesis and Research Directions , Journal of Interactive Marketing 23 (2009) 91–104
  4. d) Solomon, Michael R., Carol Surprenant, John A. Czepiel, and Evelyn G. Gutman (1985),―A Role Theory Perspective on Dyadic Interactions: The Service Encounter,‖ Journal of Marketing, 49 (1), 99–111.
  5. e) Tedeschi, Bob (2007), Awaiting Real Sales From Virtual Shoppers. New York: New York Times.