Sample Marketing Paper on Online and offline advertisements of a Chinese Supermarket, Jiadeli

2.1Introduction

According to Chao (2012), it’s only through communication that companies can have continuous interaction amongst themselves and with consumers. Organizations are therefore able to communicate and receive feedback in the shortest time possible. Communication can be online or offline depending on the circumstance (Liu, 2009). According to Chao (2012), all marketers are now well equipped with a wide range of advertising capabilities. However, due to global economic crisis, advertisers are shifting from the traditional forms of advertisements to digital forms of advertisements which are basically online. According to Fulgoni (2009), online advertisements are cheaper and the efficiency is so high and also easily measured. Those involved in marketing are adopting online advertisements due to the fact that the process is easily customized and high level of interaction with the consumers. This advantage ensures that there is enhanced interaction between the business and the customers. However, according to McCarthy (2013), the amount of money spent on online advertisement is so high as compared to offline advertisement. All over the world, online advertisement in 2012 topped $100 billion, with $ 40.7 billion spent on paid search, $ 33.7 billion on display ads and $ 11 billion on internet classifieds. (Lunden, 2013).

According to Kenneth and Donald (2002), because of the advertising design, television provides many chances for creativity. Visual images and sounds can be put together to gain the attention of consumers and then buy them. Products can be showed on television in a manner not possible in other medium such as radio or print. Radio is more difficult to attract consumers because it is not as glamorous as television and internet. But it can be a one-to-one message. Usually, it is produced locally and with small budgets. A good radio advertisement helps the listener remember it by creating a powerful image. The biggest problem is the time. Most radio advertisements last only 15 to 30 seconds. Listeners may not pay attention to it when doing other activities (Kenneth and Donald, 2002). Billboards along roads are the most common form of outdoor advertisement. One advantage of it is its long life. Usually, people use it to show local people services such as restaurants and hotels. It is a low-cost media outdoor (Kenneth and Donald, 2002).

Figure 1. – Forecast – China Interactive Marketing Spend, 2011 to 2016, (Research Interactive Marketing Forecasts, 2011).

2.2 Traditional (offline) vs. online advertising

According to Abraham (2010), the Internet provides platform for unlimited opportunities for new ad formats, broader audiences, cost reduction and optimization of ad performance. This is much better as compared to the traditional offline forms of advertisements. Table 1 illustrates the differences between traditional and online advertising.

Table 1: Differences between online and offline forms of advertisements

                                               Offline                        Online
Cost Very expensive Cheaper
Tracking options Not possible Possible
Measure performance Difficult Several tools
Learn consumer behavior limited Easy
Customization Mass production Different ads according target
Co-creation of value hard Possible
Reach, speed and flexibility entire population, fast but not flexible broad, fast and flexible

 

The main factor which affects the effectiveness of any form of advertisement is the characteristics of the content of the medium upon which the advert is being channeled. (De Pelsmacker, Geuens and Anckaert, 2002). Some forms may be more appropriate than others.  In addition, some specific contexts can speed up the whole process of advertisement (De Pelsmacker, Geuens and Anckaert, 2002).

When people responsible for creating awareness of a product are planning on how to do the advertisement, it is important that they consider the advertising effectiveness.  This is in fact more pronounced when it comes to cross channel advertisements. it is said that  there is a curvilinear  relationship  between  message  repetition  and  message  effectiveness  (Anand  and Sternthal, 1990). This implies that message effectiveness increases at low levels of repetition. (Berlyne, 1970). According to this theory, message repetition affects the recipient’s response to the message in two phases. In the first wear-in stage, the recipient experiences habituation to the unfamiliar message. The initial repetition of the message causes positive habituation and reduces negatives responses to the new stimulus leading to increased effectiveness (Cox  and  Cox,  1998).  In the second wear-out stage, the continuing repetition results in tedium caused for example by boredom and reduced opportunity to learn (Anand and Sternthal, 1990; Blair and Rabuck, 1998; Calder and Sternthal, 1980).

2.3  Integrating offline and online advertising media

According to Belch (2004). So as to have a coherent working environment among both the business people and the consumers, the marketers ought to send uniform information to all the interested parties.Consequently, the concept of Integrated Marketing Communications (IMC) is now gaining more prominence in the current world (Taylor, 2010). The marketers ought to integrate this concept in their marketing process. However, the marketers experience certain challenges especially in measuring the multiple channels outcome (Green and Estis, 2008).

From the management point of view, understanding the relationship between offline and online advertisement channel performance is so critical for all the stakeholders in that industry thus the advertiser, the affiliate network and the websites. From the advertiser’s point of view, as many companies embrace both the offline and online forms of marketing, it is very vital to understand how both processes interact with each other. By understanding this aspect, organizations can easily enhance their performance through improvement of the marketing strategy and advertisement efficiency. The main goal of the network is to realize the best results in terms of sales for both the marketer and the websites. The moment the advertised company’s sales revenues appreciates, the websites receive a lot of commission hence good earnings for the company (Papatla and Bhatnagar’s, 2001; 2002).

2.4 Unique characteristics of the internet

The Internet has changed the global communications over the past 15 or so years. It added words and terms that once seemed strange but today is common in conversations, such as blog, bandwidth, cookie, span and cyberspace. The Internet not only changed how we approach our businesses, but in particular it has also altered advertising, mainly because consumers have changed their behaviors (Doug, 2008).

No advertising medium is perfect for all purposes. Internet may sometimes represent a disadvantage rather than an advantage. The Internet user is goal driven and on a mission to get information. Many online advertisements are just an interruption to the user`s primary mission (Terence, 2010). Online advertising is the situation whereby commercial information is available on the internet transmitted by any channel so as to remind the consumers about a product in detail (Harker, 2008).despite the fact that internet is perceived as a single channel, online advertisement can be categorized into various groups. the categories include display advertising, search engine optimisation (SEO), search engine marketing (SEM), email marketing and affiliate marketing.

Bhatnagar and Papatla (2001) states that online advertisement ought to precisely target instead of being put on sites that attract more viewing.  As such, affiliate advertising is the best way to do the online advertisements. This is simply because it offers advantage to both the users and the affiliates. With affiliate advertisements there are no initial costs for the company doing the advertisement or the website. (Zeff and Aronson, 1997).

2.5 The development of offline and online advertising industry

According to the eMarketer (2012), online advertisement is the fastest growing industry with a rate of 528, 1% from 2000 to 2011. Internetworldstats (2012) states that the amount of money used on the advertisement have grown exponentially as compared to the print media. However, according to eMarketer (2012), the whole process has taken a while before reaching to its current status.

Online advertising capitalizes on its efficiency of bringing together both the buyers and the sellers hence reducing the need for the middle men. Evans (2009) urges all companies to copy all their content which is present offline to online due to the fact that all the consumers are now shifting to online channels to access any information about the market. However, according to Mulhern (2009), television and radio can still integrate the whole process of online advertisement through providing the same services through the internet.

Despite the fact that (Evans 2009) supports online advertisements, Mulhern (2009) feels that automated advertisements are more dangerous hence directly affect offline advertisements. This is mainly concerning the amount a company ought to allocate to offline and online advertisements. Therefore the most vital aspects that ought to be looked at are the audience who are targeted in the process of advertisement. This is simply because the marketers have no power to decide on the kind of audience to transmit their information to (Mulhern, 2009).

According to Group (2012), Traditional advertiser’s main interest was to bring together and deliver information to a large group of audiences through broadcasting. Mass production and mass communication depends mainly on brand awareness and its promotions.

 

RESEARCH METHODOLOGY

3.1 Introduction

This study investigates the difference between offline and online advertising methods and how they affect performance of Jiadeli Supermarket. The research questions will be assessed using multivariate regression analysis. Regression analysis is the preferred method over other data analysis methods since it is a quantitative method that allows the researcher to determine whether an independent variable describes a significant variation in the dependent variable and if there is a significant relationship between the variables. Multivariate regression analysis provides room for the inclusion of l different independent variables and the study of their effect on a dependent variable.  This method also assists to determine how much difference each of the independent variables can describe in the dependent variable. This is a deductive study. This is because the study is based on a theory and is guided by a research hypothesis

3.2 Data description

The data for the study consisted of three different parts; online information from the advertising agents concerning sales performance report and offline advertising campaign calendar, besides the employees on their perception of the advertisement.

The performance report included all the sales realized by the online channel from 1st January until 30th September 2014. The main information consisted of the number sales, total sales revenue, average conversion rate and average order value reduced into daily performance. The total number of days studied within that period was 273.

The advertising campaign calendar consisted of information of all the offline advertising campaigns carried out in 2014. The advertising processes consisted of both brand and promotional sale advertising using print and TV as channels of conveying the information.

Questionnaires were used to collect data since they provide data amenable to quantification, through the content analysis of written responses. In addition, Stratified sampling technique was the most appropriate as it addressed different view of staff at various categories.  Thus stratified sampling is a way of ensuring that particular strata or categories of individuals are represented in the process of sampling.

3.2 Research design

This study used descriptive design and specifically a case study design involving one firm. Case study enhances the understanding of organization by paying attention to specific variables. The case study was considered appropriate for the study as it gives detailed analysis of issues at hand.

The empirical part of this study is performed in two parts. The first part intends to investigate how the offline advertising activities affects the online performance measured by total sales revenue. In the second part, the effect of offline advertising activities on the important performance metrics is measured. These metrics consists of the number of sales, conversion rate and average order value.

Model    Independent variables                               Control variables  Dependent variable
Number of advertising campaigns (0-5)  Lagged sales (€)    Sales revenue €

1                                                                           Day of week

Number of TV (0-2) and print (0-4)        Lagged sales (€)    Sales revenue €

2         advertising campaigns                              Day of week

Number of sale (0-2) and brand (0-5)      Lagged sales (€)    Sales revenue €

3         advertising campaigns                              Day of week

Table 3. Variables in the regression models 1-3.

3.3 Target Population

The study sort information from a total of 215 employees of Jiadeli supermarket. The target population consisted of observable characteristics which is very important in geralising the result of the study.

3.4 Sample size

Stratified sampling technique was used to collect data from a representative sample.

The sample size was determined applying the following formula (Fisher et al, 1998).

n=   z2p(1-p)        Where

                      d2

n is the sample size.

z is the standard normal deviation at 95% confidence level.

p is the proportion in the targets population i.e. prevalence of alcohol consumption at

51.9%

d is the target margin of error put at 0.05.

3.6 Data Processing and Analysis

The filled questionnaires were examined on daily basis to ensure each question had been filled out correctly and that there were no areas that needed to be addressed further. The questionnaires were then given numbers and coded for ease of identification. Data from structured questionnaires were entered, proved, cleaned and analyzed using SPSS version 17.

Univarite analysis was carried out so as to come up with descriptive statistics. Proportions, means and standard deviations were determined. The results are reported in form of tables and charts.  Bivariate analysis was also carried out so as to examine relationship between the independent variables and alcohol behavior. The T-test was used to calculate statistical values for continuous variables whereas chi-square test was used for categorical variables in instances where we had relationship.

Measures of association were assumed to be statistically significant when p values are equal to or less than 0.05.

3.7 Validity and reliability

Consistency was ensured through issuance of one type of questionnaire to the respondents. Study trials were conducted before the real study so as to correct any flaws in the whole process. Questionnaires were tested so as to ascertain their validity. Trained personnel were used to collect the data so as to reduce on errors.

Initial study was conducted before developing of the questionnaires so as to ensure that they were giving a true picture of the whole population. The language used to design the questionnaires was so simple to enhance easy understanding.

3.8 Ethical Considerations

In order to ensure that the participants were not victimized in any way, various measures were put in place. The proposal was taken for approval by the university so as to ensure that no alarming questions were included. In addition, the researcher was given the go ahead by the management of the university to go ahead with the study. Similarly, all the respondents were informed in advance the goal of the study and their confidentiality was highly ensured.

 

RESULTS

4.1 Introduction

 Gender Distribution

Most of the respondents who work in Jiadeli supermarket were men.


Figure 2: Distribution of respondent by gender

From figure 3 below, it is very clear that most of the employees of Jiadeli supermarket prefer online advertisement. Despite the fact that there difference between those who preferred online (53%) and those who preferred offline advertisement (47%) was not so big, majority of those who participated felt that online advertisement was the most convenient form of advertisement.

Figure 3: Preferred form of advertisement

 

 

Part I Advertising Strategy

Figure 4 below illustrates a significant difference between those employees who thought the objective of advertisement was to make profits and those who felt it was to gain a share in the market. The analysis revealed that 76% of the respondent thought the objective was to make profits whereas 24% of the respondents said it was to gain a market share.

                   

                   Figure 4: Advertising objective

The objective of the study was to establish the extent to which the respondents were knowledgeable about advertising methods. The study therefore sought to establish from the respondents what they felt was the adverting method preferred by Jiadeli supermarket. It was very evident from the study that there is significant difference among the respondents on their level of knowledge concerning type of advertisement adopted by the supermarket.  There is no significant difference on those who thought the supermarket preferred target return pricing and those who felt the supermarket preferred received value pricing. A very insignificant group of the employees (20) felt that the supermarket preferred going rate pricing (Figure 4).

 

 

 

                    

Figure 5: Advertising method preferred

So as to establish the perception of the supermarket management pertaining e-commerce, the study sort from the respondents what they thought was the position of the management of Jiadeli supermarket. The study established that the respondents varied in their opinion concerning what the management of the supermarket felt concerning e-commerce. Majority of the respondents felt that the management of the supermarket thought that e commerce was very important since it increased and improved the value of doing business, another group of respondents said that e commerce increased both value and also lowered prices. However, some of the respondents knew nothing concerning e-commerce and how the management reacted to it.

                 Figure 5: Supermarket’s response to Ecommerce

Part II Factors affecting advertisement

Online and offline advertisement are the two main approaches adopted by different businesses. The study sought to establish whether the respondents had any knowledge concerning factors that affected these two forms of advertisement. In addition, the study sought to establish the preferred mode of advertisement by Jiadeli supermarket.

Figure 6 establishes that online advertisement is expensive hence not preferred by most businesses. Similarly, a significant number of the respondents were not aware of what affected online form of advertisement.

Figure 6: Factors affecting online advertisement

From figure 7 below, the respondents felt that both price and increased competition for offline form of advertisement was the main hindering factor. Demand is also a factor since the process is thought to reach majority of those people who can’t access online forms of advertisement.