Marketing: Space and Place
The marketing mix for using digital vs. physical channels varies significantly by the type of products being sold, the intended audiences and customer segments, and whether the industry is B2B versus B2C-focused. The marketing mix of each of these approaches to selling varies significantly as each approach must support entirely different value propositions, pricing, product feature differentiation and customer perception of value (Martin-Herran, Sigue, 2011). The intent of this analysis is to evaluate how the marketing mix varies between digital and physical selling strategies, analyzing the marketing implications of reaching respective marketing segments, and also discuss how customers can move from one channel to another. Companies including Apple, Best Buy and Disney are evaluated as examples of companies who successfully manage space and place-based strategies.
Analysis
Digital marketing is well suited for products and services that are commoditized in nature in addition to those brands that have attained a very high level of trust with customers (Edelman, 2010). Digital channels that sell commoditized products thrive on customer loyalty and the habitual nature of buying through channels that are the most trusted. This fact changes the nature of the marketing mix, and redefines the marketing implications of this specific channel and the products sold. Digital marketing is also inherently measurable and can be quantified very quickly to determine overall performance of programs and strategies while “place’ based strategies cannot as easily be measured (Grandon, Nasco, Mykytyn, 2011). Digital channels also attract a different demographic and type of consumer than their retail or “place” based counterparts. Consumers often move between channels when they are shopping for the best price on a major purchase, including a new laptop, PC or car, as the combination of digital and retail channels together deliver significantly more information than any previous series of channels (Grandon, Nasco, Mykytyn, 2011).
In devising a selling strategy for digital vs. retail channels, the criteria of how differentiated the products being sold are and how much support is needed to make them successful needs to be taken into account (Martin-Herran, Sigue, 2011). The greater the level of support and information a customer needs to make a decision on which product to buy, the more likely a retail channel will be the best approach. Conversely if a product is by nature highly commoditized or is so popular it has strong customer trust, digital channels are the best approach, as they will drop the cost per transaction (Edelman, 2010).
Companies who are excelling at bridging both strategies include Apple and BestBuy. Apple has both their walk-in stores for managing the demonstration of their latest products and also delivering excellent personalized service at their Genius Bars. They also have one of the best websites and digital channels for selling their products online as well. The balance of digital and retail or space and place, is excellent, and supports the Apple brand overall. BestBuy is another company who has successfully defined a strong mix of space and place strategies, concentrating on their website as a source of information for customers, and also integrating the website and digital channels with pick-up options in stores. The stores are used as the channel for selling high-end products that require intensive consultative selling including the Magnolia Series stories, which sell high-end television and stereo equipment. Both of these companies excel at managing multiple channels as their product strategies, services strategies and promotional programs are all orientated to the strengths of each respective channel they are selling through.
References
Edelman, D.. (2010). Gaining an edge through digital marketing. The McKinsey Quarterly,(3), 129.
Grandon, E., Nasco, S., & Mykytyn, P.. (2011). Comparing theories to explain e-commerce adoption. Journal of Business Research, 64(3), 292.
Martin-Herran, G., & Sigue, S.. (2011). Prices, promotions, and channel profitability: Was the conventional wisdom mistaken? European Journal of Operational Research, 211(2), 415.
