Marketing could be a tricky thing, especially if the marketer does not understand what the consumer wants. Most companies use advertisement to reach their customers and try to convince them to purchase their products. Companies rely on traditional advertising methods such as TV, radio, billboards, and newspapers. However, owing to the internet, the methods of advertisement have drastically changed. Companies now depend on the internet in placing their advertisements.
One of the beneficiaries of the search market is Google. As per 2010, Google dominated 80% of the search market share and made over $29 billion from the same. One would therefore wonder, “What made Google such a powerhouse in the internet marketing?” This case study discusses how Google managed to become such an influential unit in the internet advertisement. In addition, the paper analyzes the difference between a company’s micro- and macro- environment elements and the five stages of the consumer buying decision process.
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Company’s Micro- and Macro- Environment Elements
No business can operate as a sole entity, and any can be affected by factors within its environment and those outside its environment. Micro environment also known as internal environment includes the aspects that are in the firm or nearby the place it operates. External (macro) environment, on the other hand, is the general environment that surrounds the firm. The elements of the internal environment are different from those of the external one. Elements of the micro environment incorporate customers, suppliers, market intermediaries such as distributors, retailers and wholesalers, consumers, and the firm itself together with employees, stakeholders, and investors.
On the contrary, elements of macro environment comprise population, social cultural factors, technology, legal and political factors, demography, government policies, political stability as well as GDP (Gross Domestic Product) structure. An organization can control its micro environment easily, but external environment is quite difficult to manage (Kokemuller, 2016).
Five Stages of the Consumer Buying Decision Process
The first stage and the most important one is the demand awareness and the problem recognition. If there is no recognition, then there is no purchase. The demand can either be internal, for instance in case of hunger or thirst the customer will either drink or eat, or external, the one which stimulates external forces such as advertisement, smell of sweet things in a shop, or sight of a good dress. Once the consumer recognizes the need, the next stage involves searching for information. People usually search for information internally by remembering the previous experiences with some particular product or brand. External information is, in its turn, when the consumer gets the necessary knowledge about the product or brand from friends, family, or media (Perreau, 2013).
The thirds step is an alternative evaluation. At this stage the consumers evaluate the different information about the products and choose the most suitable ones. After evaluation they makes decision to purchase the product which leads us to the fourth stage. The decision of buying the product is attributed to the information consumers have gathered in the previous stages. Lastly, the fifth stage is a post-purchase behavior during which the consumer assess the adequacy of the product after having used it. They reckon whether it was the right decision to purchase the product. Consequently, this stage will influence the consumer when it comes to the future purchase (Perreau, 2013).
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Google, the King of Search
As mentioned earlier, by 2010 Google was getting an enormous revenue from internet marketing. It does not mean, however, that there were no other companies dealing with the same sphere. Thus, it is important to know how Google became so famous and successful in market searching and internet marketing.
Most of the search engines rely on banner ads and pop-ups to target their consumers. Nevertheless, banner ads and pop-ups are regarded as highly distractive and intrusive. Google, instead of applying the same, developed AdWords which сconsists of the simple text. The search was viewed as plain, user-friendly, and low-cost to the advertisers. Through the AdWords advertisers indicate which search terms could trigger the click of their advertisements by customers, and how much they can charge per click. This made it transparent as well as quite cheap to advertisers because they could easily get new and the most profitable customers (Huang, 2015).
In 2001, one year after Google introduced AdWords, it launched AdSense which provided even more space for advertisers to place their ads. The advantage of these two, as compared to the traditional media advertisements, is that advertisers are able to target specific market segment through the use of keywords. Ads were available not only to those who are more likely to be interested but also to the whole population. By 2004, Google was making billions of dollars through AdWords and AdSense, which both proved to be extremely profitable. Through advertising using AdWords and AdSense Google made $3.2 billion in one year only (2004) .
Due to its popularity in search engine, Google decided to expand its advertising revenue by acquiring new platforms. Some of these platforms include Google TV, Android, Gmail, Google Earth, Picnik, Picasa, Google Docs, YouTube (acquired by a stock of $1.65 billion in 2006), and Google Chrome. All of them attracted many customers providing them with more space, flexibility, and with less and less costs. In addition, Google also entered the traditional media and allowed advertisers to place their ads in prints, Google TV and radio, similarly to the placement of ads in AdWords. However, the traditional advertisement produced mixed results with Google dropping some of the ads like Google print Ads in 2009. As per 31st Dec 2008, 31st Dec 2009 and 31st Dec 2010, Google registered profits of 13,174,044, 8,844,000, and 10,417,000 (thousands of dollars) respectfully (Huang, 2015).
It is through these innovations of search market and other products that Google became the King of internet advertisement. It is argued that Google dominance on the search market makes it violate antitrust law by favoring its own products in search results. Nonetheless, Google market and search market seem to be two separate entities.
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Google search has dominated the world. This is the product of Google and, as a result, most of the products that are viewed by customers in search market are those of Google. I could not call it violation of antitrust law but an innovative way of marketing the products. Other companies need to create innovative products just like Google did with AdWords and AdSense. The only way that the enterprises can compete with Google on search market and actually overcome it is through innovation of new online search products that will attract both advertisers and consumers.
This, though, does not mean that Google has violated the antitrust law by placing most of its products on the search market. It has simply dominated the search market by providing materials and products that suit the customers. Furthermore, the way customers purchase a product will tell if they really enjoy the product. The fact is that most users of internet like Google products and keep constantly coming back to them. Google has, hence, mustered the art of capturing its customers in an innovative way.
Instead of claiming that Google may be violating the antitrust law, the solution for other companies would be to actively engage in search market and introduce innovative methods of attracting their consumers, simultaneously competing with Google. However, at this level Google will continue prevailing on the search market.
Google has dominated the search market and internet advertisement. Some argue that Google market favors its products violating the antitrust law. In spite of such claims, Google market dominated the search market through innovation of new products such as AdWords and AdSense. They are simple, user-friendly, and give the advertisers enough space for ads to meet the specific interested consumers. The products are also cost-friendly because payment is elaborated per click rather than word count as it is in the traditional media.
In addition, Google purchased other products such as Gmail, Picasa, Picnik, Google Earth, Google TV, and Google radio. These two (search market and Google products) have given Google the possibility to get a lot of revenue through advertisement. More than that, they transformed Google into the prevalent unit on the search market. Clearly, competitors have to present innovative methods of internet marketing in order two beat Google.