A business can develop its online marketing strategy for very little cost and can potentially replace costly advertising channels such as Yellow Pages, television, radio and magazine and other conventional marketing strategies that can be expensive and time consuming. The essence of this approach is to leverage the excitement around a company idea via free/low-cost platforms and to interact with consumers in a more effective way. Examples of how digital marketing and certain technology can reduce overheads involve techniques such as website-to-back office system integration, allowing users to personally update their profiles and linking to their CRM. In turn, this reduces any off-site administration costs.

The above is just one example. There are many ways that using the internet can save on overall company costs. For instance, switching from printed newspapers to online versions, or getting rid of direct mail and opting for email marketing.

According to Chaffey and Ellis-Chadwick (2010), this benefit is delivered and achieved through online e-mail communications, sales and services transactions to reduce staff, print and postage costs. Saving also accrue through web self service where customers answer queries through online content.  Some typical strategies mentioned by Chaffey are:

-Generates 10% more sales for same communication budget

-Reduce cost of direct marketing by 15% through email

-Increase web self-service to 40% of all services enquires and reduce overall cost-to-serve by 10%

The Airlines industry:

The airline industry is taking advantage of lowering cost by the use of digital marketing, especially low-cost airlines which are always seeking to offer the best price to their customers and keep to the minimum all possible operating costs. For example, low cost airlines practice direct sales of air ticket or through online reservation and buying. A cost cutting strategy would be implementing by low cost airlines to keep their cost low and to have cost advantages.In the airlines industry, the application of digital marketing is very easy to perceive since they show how organisations can use online communications such as their website, third party websites and email marketing in the following way:

-Direct response medium: Airlines use sponsored links when a user is researching a flight using a search engine to prompt them to directly visiting the airline website site by clicking through it.

-Platform for sales transactions: online booking.

Relationship building: Medium where the airline can interact with its customers to better understand their needs and publicise relevant products and offers. For example: Easyjet uses its email newsletter and tailored alerts about special deals to help keep its customers and engage them in dialogue to understand their needs through completing surveys and polls.

Another Example is Ryanair. This is Europe’s favourite airline committed to offer the lowest fare by following its operations in a the lowest cost model possible. Ryanair distributes accommodation travel insurance and most of its services through its official website. This enables Ryanair to increase sales while reducing unit costs. Ryanair encourages passengers to do a online check-in with no charge as they charge extra for doing the check-in at the airport and as result, internet bookings account for 99% of all reservations. It also offers discounts on its website on pre-assigned seats, extra bags, boarding card issue and so on. (O’Higgins, 2010)

Adopting these online services allow Ryanair to reduce its staff number to the minimum and to save €50 million per year.

To conclude, a well-implemented digital marketing strategy can enable companies to reduce costs, improve interaction with customers and increase sales. In the case of the airline industry these strategies are growing its adaprtion and are crucial for low-cost airlines as they are always trying to minimize cost and offer the lowest fares for their customers.

References

Business 2 Community, (2016). 5 Ingredients for Airline Online Marketing Success. [online] Available at: http://www.business2community.com/online-marketing/5-ingredients-for-airline-online-marketing-success-0301240#8vsw3q3BAYcrU6di.97 [Accessed 1 Feb. 2016].

BusinessZone, (2013). 10 Benefits of Digital Marketing v. Traditional Marketing. [online] Available at: http://www.businesszone.co.uk/community-voice/blogs/robbo75/10-benefits-of-digital-marketing-v-traditional-marketing [Accessed 1 Feb. 2016].

Chaffey, D., Ellis-Chadwick, F. and Chaffey, D. (2012). Digital marketing. Harlow: Pearson.

Marketingmagazine.co.uk, (2016). Low cost airlines rise above low-fares marketing focus. [online] Available at: http://www.marketingmagazine.co.uk/article/1089343/low-cost-airlines-rise-above-low-fares-marketing-focus [Accessed 1 Feb. 2016].

O’Higgins, E. (2010). Ryanair: the low fares airline-future destinations? Case Study. [online] Staffordshire University. Available at: http://www.staffs.ac.uk/sgc1/faculty/blb10089-3/documents/RyanAirCase.pdf [Accessed 23 Jan. 2016].

Smart Insights, (2015). Marketing a start up company on a low budget. [online] Available at: http://www.smartinsights.com/digital-marketing-strategy/marketing-a-start-up-company/ [Accessed 1 Feb. 2016].