Introduction
Gathering current market information is one of the factors that organizations should integrate in their strategic management processes. However; the process of gathering market information is complex and costly. Consequently, most organizations do not conduct marketing research but purchase market research reports from established market research companies.
However, the growth of information technology has led to significant transformation with regard to the process of gathering market information. Pride and Ferrell (2011) assert that organizations are increasingly utilizing social networking tools such as MySpace, Facebook and digital media in collecting useful market information.
The information gathered is utilised in designing business models that firms rely on in their quest to maximize profit (Morrison 2006). This trend has led to the emergence of numerous ethical issues. Some of the ethical issues that are of great concern relate to personal privacy, misuse of property right and fraud. Additionally, firms in different economic sectors are integrating social media as one of their new marketing channels.
In addition to utilising online services such as social media in gathering market information, emergence of ‘big data’ is another trend that presents organisations with an opportunity to maximise their level of profit.
According to a study conducted by McKinsey’s Business Technology Office in collaboration with MGI, ‘big data’ will form the basis of competition for firms in different economic sectors. For example, organisations will use big data in their innovation processes (O’Guinn, Allen & Semenik 2008).
Considering the above trends, it is important for marketers and consumers to develop adequate understanding regarding various ethical issues associated with gathering and using personal information from online sources. In the course of their operation, firms are increasingly utilising social media as an alternative marketing channel.
As a result, it is important for marketers to understand the value of social media as a new marketing channel. Some of the issues that have been analyzed relate to the role of social media in advertising, nurturing customer service and as a community building tool. Additionally, firms’ management teams should also evaluate the opportunities and challenges associated with ‘big data’ in their marketing processes.
Ethical issues associated with collecting data online
Privacy
Despite the benefits associated with internet technology, its growth has led to emergence of a new set of challenges. One of these challenges relates to the privacy of personal information. According to Worthington and Britton (2006) ethics are an important consideration with regard to digital media. This arises from the fact that most countries have not developed effective legislations to deal with online activities.
Consequently, this underscores the importance of ethics in the process of utilizing online services. The information that customers send over the internet passes through numerous computer systems before reaching the intended destination. As a result, the information may be monitored, captured and stored in other computer systems.
Currently, organisations can easily monitor their customers’ online activities. For example, firms can track the number of customers visiting their website hence improving the effectiveness with which they make optimal marketing decisions. By tracking customers who visit their website, firms can effective make market targeting decisions. This arises from the fact that the information generated can be used to profile customers.
Consequently, online services have provided firms’ management teams with an opportunity to develop a comprehensive understanding of their customers’ purchasing behaviour. This trend has been made possible by development of various online tracking technologies such as cookies.
Most online activities involving tracking individuals who visit certain websites occur without their knowledge which is unethical. According to Pride and Ferrell (2011), ‘one of the most significant privacy issues involves the use of personal information that companies collect from website visitors in their effort to foster long-term relationships with customers’ (p.304).
Using customers’ information without their knowledge is unethical because it violates their privacy. Moreover, hackers can take advantage of such websites by breaking into them and stealing confidential customer information. The information collected stolen by hackers may be used to perpetrate other cyber crime activities such as identity theft.
According to Pride and Ferrell (2011), most marketers and consumers are increasingly becoming concerned about identity theft. A study conducted by PGP Corporation revealed that organisations in different economic sectors incur approximately $ 6 million as a result of online security breaches (Pride & Ferrell 2011).
This cost arises from various reasons some of which include a decline in the level of employee productivity, loss of company reputation, the high cost of recovering the lost data, high cost of probing identity theft and the cost of improving the entire security system. Furthermore, a substantial amount of time is spent in the process of changing various customer information such as their personal identification numbers.
Despite the fact that hackers cause great loss to consumers by stealing their personal information, some companies that have adopted online services do not inform them of such attacks. This arises from the fact that it can discourage them from purchasing their products and services. However, this only encourages other hackers to take advantage of such information (Pickton & Broderick 2005).
To effectively utilise online services, it is important for organisations to ensure that they create and sustain adequate customer privacy in addition to developing a high level of trust amongst the target customers (Pickton & Broderick 2005). In the course of its operation, Hewlett Packard appreciates the fact that its success is dependent on the effectiveness with which it develops long-term relationships with its customers.
Consequently, the firm is committed to developing customers’ trust. One of the ways through which the firm has achieved this is by using its customers’ personal information in an honest, fair and respectful manner. This has significantly improved the effectiveness with which the firm respects its customers’ privacy.
Online fraud
Another ethical consideration that organisations have to consider relate to online fraud (Pickton & Broderick 2005). Online fraud is defined as any attempt to engage in dishonest activities online. In an effort to access personal consumer information, some organizations may mislead consumers into releasing such information.
Social networking sites such as Twitter and Facebook are ranked amongst the leading sites on which cyber criminals are propagating their fraudulent activities. One of the wyas through which cyber criminals achieve this is by creating profiles on these social networking tools under a particular company name.
The objective of such profiles is to either damage the company’s public image or to deceive the firm’s customers into providing their personal information (Pride & Ferrell 2011). Cyber criminals utilize the information gathered for their own monetary gain.
Alternatively fraudsters may copy a blog entry used by a particular company in selling its products online. This is done in such a way that upon accessing the blog, the information is redirected to the fraudsters’ site. This practice is well illustrated by the high rate at which fraudsters are using social networking sites of renowned charitable organisations to extort money from the public.
For example, during the Haitian Earthquake, numerous fake Faceboook accounts were created by fraudsters in an effort to deceive consumers into donating money that was purportedly to be used in helping the earthquake victims. According to Pride and Ferrell (2011), ‘the money donated was used by fraudsters for their financial gain’ (p.306).
In an effort to deal with the fraudulent online activities, most organisations that use social media in their marketing processes are liaising with social networking companies. The objective of such collaboration is to determine the actual authenticity of individuals accessing their sites.
Additionally, there has also been emergence of various brand-protection companies whose objective is to monitor various social networks in order to weed-out fraudulent accounts. Upon identifying such fraudulent accounts, the companies inform their clients and assist them in the process of removing such accounts.
Despite the efforts made by organisations to eliminate online fraud, it is critical for consumers to be vigilant when disclosing their personal information online. Customers should only divulge such information if they are certain that the site they have visited is genuine.
Misuse of intellectual property
The use of digital media to collect market information has also raised ethical issues with regard to intellectual property rights. Most organisations that use digitial media to market their products such as movies, software products, books and music have been affected by piracy.
According to Pride and Ferrell (2011), the software industry is the most affected by piracy as a result of increased rates of illegal file-sharing. A study conducted by The Business Software Alliance estimates that approximately $53 billion is lost annually as a result of piracy (Pride & Ferrell 2011).
Consumers are motivated by different reasons to engage in piracy. First, most consumers have developed a perception that they do not have enough money to purchase online products.
As a result, piracy becomes an option. Second, some consumers are influenced by their peers to engage in such activities. On the other hand, some engage in piracy because they belief that they cannot be caught to account for their actions. Finally, others consider piracy as a way of showing-off or proving their technological expertise.
Considering the high at which digital media is evolving, it is important for marketers to integrate effective measures that will enable them successfully counter piracy. Additionally, both marketers and consumers of digital media should ensure that they develop a comprehensive understanding of ethical practices and adhere to them. This will play a significant role in their quest to maximise the benefits associated with digital media.
Opportunities and challenges of ‘big data’
In the course of executing their duties, firm’s management teams are charged with the responsibility of ensuring that their actions generate sufficient value both for their business and customers. In order to achieve this, organisations are increasingly integrating information technology as one of the avenues that can enable them achieves their desired goal.
Currently, data is being considred as one of the most important factors of production. According to Pride and Ferrell (2011), ‘the increasing volume and detaile of information captured by enterprises, the rise of multimedia, social media and the internet of thins will fuel exponential growth in data for the foreseeable future’ (p.307).
Consequently, it is important for organisations to consider utilising the data available in order to generate value.
There are a number of ways through which organisations’ management teams can use big data to create value. Firstly, firms’ management teams can utilise the data by incorporating the element of transparency. This means that the data collected from the market regarding customers should be made accessible to all employees within the organisation.
Additionally, a high level of collaboration amongst employees should be ensured. This will contribute towards ensuring that employees are customer focused in the course of executing their duties. As a result, a high level of customer satisfaction will be developed.
Organisations can also use big data in ensuring that the products developed are tailored to meet specific customer needs. Consequently, one can assert that big data presents an opportunity to organisations in their market segmentation processes. This arises from the fact that big data allows organisations to undertake narrower market segmentation.
Currently, the business environment is undergoing significant transformation. One of the factors that is stimulating this change relates to growth in the intensity of competition. Surviving in such an environment will require businesses to integrate effective competitive strategies. One of the strategies that firms’ management teams should considere entails product development.
Big data can play a significant role in assisting organisations undertake effective product development. According to Pride and Ferrell (2011), ‘manufacturers are increasingly utilizing data obtained from sensors embedded in products to create innovative after-sales service offering such as proactive maintenance’ (p.301). Thus, organisations can use big data to enhance their competitive advantage.
Despite the benefits associated with using ‘big data’, there are numerous challenges that managers will have to deal with. One of these challenges relates to shortage of workforce with managerial expertise and analytical skills to adequately utilize big data. To effectively utilize the data collected from market research, organisations should have the capability to interpret such data.
However, the complexity of big data poses a major challenge to marketers. Another challenge associated with utilization of big data emanates from the fact that organisations must incorporate the necessary technology. Additionally, big data poses a challenge in that organisations have to deal with numerous privacy and security issues (Thorson & Duffy 2012).
Analysis on the value of social media in marketing on advertising, customer service and as a community building tool
Social media adds value to advertising in a number of ways. First, integrating social media in a firm’s advertising process makes the process to be more personalized. For example, an organisation can incorporate special advertising features in its social media site.
This provides the firm with an opportunity to capitalize on the amount of time that visitors spend on the site. Findings of a study conducted by Nielsen Online reveals that internet users spend approximately 5 hours and 46 minutes on social media (Elefant & Black 2011).
Second, social media adds value to advertising by providing a platform upon which organisations can interact with their customers. As a result, organisations are able to develop a comprehensive understanding of their customers purchasing behaviour hence improving the effectiveness with which they offer products that satisfy their customers’ needs (McAllister & West 2013).
Third, the effectiveness of social media in advertising is also evidenced by the fact that it enables organisations to reach a large number of potential customers.
In the 21st century, consumers are increasingly using social media in the process of searching product information. According to Okazaki and Black (2011), social media has become one of the most important mediums that organisations are integrating in their advertising processes.
Advertising is one of the major cost element that firms incur in their marketing processes. However, social media adds value to the advertising process by lowering the cost involved. Wollan, Smith and Zhou (2011), are of the opinion that social media is less costly compared to conventional advertising mediums.
Moreover, social media enable firms to be in control of the cost of advertising. For example, social media tools such as Facebook, LinkedIn and Google Ads provide organisations with an opportunity to set the monthly budget that they intend to spend on advertising.
According to Poore (2012) it is important for organisations to respond promptly to various customer issues. Emergence of social media has presented firms with an opportunity to achieve this. For example, social media enables organisations to listen and communicate directly with customers regarding issues associated with their products and services.
As a result, firms are able to improve the quality of products and services offered hence developing their competitiveness. Moreover, the support provided to customers through social media contributes to development of a high level of customer loyalty. This plays a fundamental role in enhancing brand image amongst the online community.
In time of crisis, most organisations use social media to respond to diverse customer complaints. An example of such firms is Southwest Airline which recently reached to more than three million Facebook fans in an effort to clarify an issue associated with overcharging. The firm successfully clarified the issue hence maintaining customer loyalty (Trehan & Trehan 2008).
According to Niven (2011), social media is one of the most effective tools that organisations can use to build online communities. This emanates from the fact that social media acts as a platform through which customers can interact hence developing a strong bond and cooperation amongst each other.
Conclusion
The above study emphasises the importance of marketers and consumers being conversant with ethical issues associated with collecting data and using personal data from online sources. Some of the ethical issues that have been discussed relate to privacy, misuse of intellectual property rights and online fraud. Collecting customer information from online mediums poses a serious threat to personal information. This arises from the fact that such websites may be hacked hence compromising the privacy of customer information.
On the other hand, marketers may lose digital products sent to customers over computer networks to pirates. Online fraud is another ethical issue that marketers and consumers have to be aware of in the course of engaging in online marketing.
The paper has also highlighted the challenges and opportunities associated with using big data in firms’ marketing processes. One of the opportunities that have been highlighted relates the fact that organisations can use big data to develop new products that appeal customer needs. As a result, firms may be able to achieve their profit maximisation objective.
However, using big data is a complex process that poses a serious challenge to most marketers. The value of social media with regard to advertising, customer service and as a community building tool has also been analyzed.
From the analysis conducted, it is evident that organisations should incorporate digital marketing in an effort to develop their competitive advantage. Digital marketing will provide organisations with an opportunity to maximise their profits. However, they have to incorporate effective strategies and mechanisms to deal with challenges associated with digital marketing.
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