Structure and Constituents of Digital Marketing Systems

Abstract

The article addresses the study of digital marketing as a marketing system, the definition of its key elements, feeds and outputs, as well as levels of structure. At the moment, digital marketing is mostly considered at the micro level, while it is functioning at the level of the entire economy, and the systemic interaction between digital marketing and other social subsystems are not well understood. The result of the study is the conceptualization of the digital marketing model as a marketing system and the allocation of three levels of digital marketing. This opens up prospects for a better understanding of the processes of economic development, factors of influence and means to manage.

Full text

OLSZTYN ECONOMIC JOURNAL
2020, 15(1), 53–62
ISSN 1897-2721 e-ISSN 2083-4675 DOI: 10.31648/oej.49
ORIGINAL PAPER Received: 7.02.2020
Revised: 18.03.2020
Published: 31.03.2020
How to cite: Robul, Y. (2020). Structure and Constituents of Digital Marketing Systems. Olsztyn
Economic Journal, 15(1), 53–62, https://doi.org/10.31648/oej.
STRUCTURE AND CONSTITUENTS
OF DIGITAL MARKETING SYSTEMS
Yuriy Robul
Faculty of Economic and Law
Odesa I. Mechnikov National University, Ukraine
ORCID: https://orcid.org/0000-0002-7299-9648
e-mail: yrobul@onu.edu.ua
JEL Classification: M31, M39, L81.
Key words: marketing, macromarketing, marketing systems, digital economy, digital marketing.
Abstract
The article addresses the study of digital marketing as a marketing system, the definition of its
key elements, feeds and outputs, as well as levels of structure. At the moment, digital marketing
is mostly considered at the micro level, while it is functioning at the level of the entire economy,
and the systemic interaction between digital marketing and other social subsystems are not well
understood. The result of the study is the conceptualization of the digital marketing model as
a marketing system and the allocation of three levels of digital marketing. This opens up pros-
pects for a better understanding of the processes of economic development, factors of influence
and means to manage.
STRUKTURA I SKŁADNIKI CYFROWYCH SYSTEMÓW MARKETINGOWYCH
Jurij Robul
Wydział Ekonomii i Prawa
Uniwersytet Narodowy im. I. Miecznikowa w Odessie, Ukraina
Kody JEL: M31, M39, L81.
S ł o w a k l u c z o w e: marketing, macromarketing, systemy marketingowe, gospodarka cyfrowa,
marketing cyfrowy.

54 Yuriy Robul
Abstrakt
Artykuł dotyczy badań nad marketingiem cyf rowym jako systemem marketingow ym, definicji
jego najważniejszych elementów, kanałów i wyników, a także poziomów struktury. Obecnie mar-
keting cyfrowy jest rozpatrywany głównie na poziomie mikro, jego funkcjonowanie na poziomie
całej gospodarki, a systemowa interakcja między marketingiem cyfrowym a innymi podsystemami
społecznymi nie jest dobrze poznana. Rezultatem badania jest konceptualizacja modelu marke-
tingu cyfrowego jako systemu marketingowego oraz przydzielenie trzech poziomów marketingu
cyfrowego. Otwiera to perspektywy do lepszego zrozumienia procesów rozwoju gospodarczego,
czynników wpływów i środków zarządzania.
Introduction
Development of digital media and technologies, resulting in so far in arising
of industry 4.0 has introduced a revolution in many sectors and markets,
disrupting physical value chains, altering consumer behaviour, communications
channels and content, introducing digital products and services, enabling new
ways to access value and consumption, to which marketing is continuing to
adapt (Kotler et al., 2017 ).
Marketing is traditionally seen as a foundation for the interaction of a firm
with the buyers and consumers in a competitive economy. It outlines the tools
of interaction, encompasses strategy and directs the organisation’s mission and
vision, goals and development. However, marketing also has a significant impact
on society through economic, socio-cultural, technological, environmental and
other subsystems, and, in turn, is defined by their influence. Thus, the relation
between marketing and environmental macro-factors appears to be bilateral and
systemic. To embrace that systemic nature of the interaction on the macrolevel,
the concept of a marketing system was proposed, see (Alderson, 1964; Fisk, 1967;
Mittelstaedt et al., 2006; Layton, 2007). It is widely applied to explore, depict
and analyse a variety of multilevel interactions as well as to link marketing
to social development (Kadirov, 2011) and economic growth (Layton, 2009).
The study of bilateral relationships between economic development and marketing
systems as well as the systems themselves is defined and agreed by most scholars
as the scope of macromarketing (Hunt, 1981).
Exploring relations between digital marketing, social development and
economic growth requires a proper description of digital marketing as a system,
defining its elements and the means of interaction between them. It also seems
necessary to determine the extent to which digital marketing associates with
the processes driving the digital economy. The objective of this article is to
propose a framework for the description and understanding digital marketing
as a system at the macrolevel.

Structure and Constituents of Digital Marketing Systems 55
Research methodology
The paper presents secondary research, aimed at the development of a conceptu-
al framework for marketing systems emerging around digital media. The research
employs the macrosystemic approach, based on General System Theory and Social
Systems Theory. To meet the objective of the article, we first analyse the concept
and structure of the digital economy and briefly describe its constituent elements.
Then we discuss the overall impact of digital technology on changing and (or)
disrupting economic processes. Next, we scrutinise the structure and theoreti-
cal foundations of marketing systems as a central concept to macromarketing.
At the intersection of marketing systems and the digital economy, we will outline
the overall structure of digital marketing as a macrosystem, and describe major
elements and flows within it. Then we discuss the entire construct and outline
some directions for further research.
The Digital economy and its Structure
Transformation of the environment and ways of value creation and delivery
under the influence of digital technologies has led to the disruption of the
traditional economic processes in various industries and sectors of the economy.
This has changed the ways of interaction and purchasing behaviour, and has
caused the development of new economic models based mainly or exclusively on
the use of digitalization in creation, production and consumption. The notion
of the digital economy embraces economic flows, caused by digitalization.
The OECD defines the digital economy as an “amalgamation of several general-
purpose technologies (GPTs) and the range of economic and social activities
carried out by people over the Internet and related technologies. It encompasses
the physical infrastructure that digital technologies are based on (broadband
lines, routers), the devices that are used for access (computers, smartphones), the
applications they power (Google, Salesforce) and the functionality they provide
(IoT, data analytics, cloud computing)” (Dahlman et al., 2016). It is operated
primarily by online connections among people, businesses, devices, data, and
processes. The technological basis for the development of the digital economy
is the IT sector. It produces hardware, software, infrastructure for connectivity
and technologically enables data exchange and the production of content based
upon it. It also includes IT related consultancy and education. The impact
of digital technologies on economic processes is operationalized by its application
to value creation and delivery. There are sectors in which value creation emerged
exclusively due to ICT development: digital services and platforms are among
them. At the same time, a major impact of ICT can be traced to many other
sectors, which existed long before the digital revolution. Such sectors (e-business,
e-commerce, and precision agriculture) are the digitalised versions of traditional
business, commerce, and agriculture.

56 Yuriy Robul
Digital marketing is an obvious part of the digital economy, which determines
its place, functions and connections. Its primary task is to ensure the value
exchange process through customer choice and consumption. Due to virtualisation
being a close associate of the expansion of digital, outsourcing and out staffing
in production becomes widespread. Consequently, much more attention should
be paid to the coordination of sometimes many partners in value creation.
The digital economy is a network economy.
The Digital Marketing System
Digital marketing means the application of marketing in the digital economy.
The popular understanding of digital marketing has tied it to the functioning
of digital channels. For some time, the terms digital marketing, internet
marketing, and email marketing have all been used as synonyms and easily
interchanged. At the same time, the development of digital platforms and the
creation of digital products with value per se clearly show that the use of digital
technologies is significantly wider than the remaining crucial transfer of data.
Digital marketing does not necessarily mean the Internet; it is determined by
the use of digital technologies to engage with the market. E-books, SMS and
messaging, video games, and mobile applications are just as relevant to digital
marketing as online videos, social platforms, and emails. Digital marketing is
involved in any interaction, both micro and macro, in which digital media is used
to create and deliver value. Therefore, we consider the term digital marketing
as being more proper. Chaffey and Ellis-Chadwick (2019, p. 9) simply define
digital marketing as achieving marketing objectives through applying digital
media, data and technology (Kannan & Li, 2017). The adoption of broader and
more inclusive perspectives define digital marketing as “an adaptive, technology-
enabled process by which firms collaborate with customers and partners to
jointly create, communicate, deliver, and sustain value for all stakeholders”.
From these definitions, it follows that the digital marketing provides for the
presence of specific institutions and effects, including the indirect, arising from
the multiple interactions of many participants in digital channels, which are
inherent to marketing systems.
According to Layton (2007) “A marketing system is a network of individuals,
groups, and/or entities linked directly or indirectly through sequential or shared
participation in economic exchange that creates, assembles, transforms, and
makes available assortments of products, both tangible and intangible, provided
in response to customer demand”. Medeiros and Costa (2019) characterise
the concept of a marketing system by five aspects:
a) marketing systems go beyond simple economic exchange, since there are
social, behavioural, moral, legal and psychological factors other than economic
ones in the context of exchange;

Structure and Constituents of Digital Marketing Systems 57
b) marketing systems are directly linked to other systems;
c) marketing systems contain other subsystems, so it is necessary to consider
the levels of aggregation to determine its size and effectiveness;
d) each marketing system has specific features that make it unique when
compared to other systems;
e) each system has a certain level and limit of effectiveness, which is de-
termined considering all internal and external elements and circumstances.
to which we attach the following;
f) the marketing system is a dynamic entity and evolves over time.
The evolution of the marketing system over time is influenced by changes
in socio-economic conditions just as one of its subsystems, and changes can
be caused by endogenous factors. Every point from the list above is pertinent
to a digital marketing system. One can easily trace numerous sequences from
the constant use of digital media on consumption and wider human behaviour,
as well as a much deeper influence on moral, legal and psychological factors; see
for example (Bassiouni & Hackley, 2015). The universal application of digital
media stands for linking with other systems and subsystems (pp. 2–3 from
the list of features above), while at the same time there are specific features
of each field of activity requiring the application of specific tools. For instance,
the personalisation of marketing communication necessitates an extended
application of email marketing and big data while conversation and greater
engagement with a firm needs more accent to be put on social media platforms.
Digital systems also evolve over time, which reflects both technological
advancements, for instance the transition from Web 2.0 to semantic led Web
3.0 and higher, and societal developments, caused by behaviour patterns change
due to the increased use of digital media in consumption and production.
The functioning of the digital marketing system is conditioned by the influence
of other social subsystems and other marketing systems. Based on a process-
based approach, digital marketing can be thought of as a process that has
input and output, and where feedback exits. One the one hand, at the entrance
to the digital marketing system there are value propositions and, on the other
hand, there are customers, with needs and demands. The interaction between
them is ensured by ICT, used in the IT sector, with hardware and software,
capacities of storage and data transmission, engineering and the development
of knowledge and skills. The activity of the system is ensured by acts of search,
discussion, sharing, purchase and access. It is realised through marketing f lows
of ownership, possession, information, money, and risk (Fisk, 1967). The output
of the system results in added value, the satisfaction of needs, for which access,
quality and various assortment are crucial. This results in economic growth,
social development and an increased quality of life.
The operation of the entire system occurs under conditions created by external
factors, embodied by other societal (sub)systems and other marketing systems.
The overall structure of the digital marketing system is presented in Figure 1.

58 Yuriy Robul
Fig. 1. Structure of the digital marketing system
Source: own elaboration on the basis of Medeiros & Costa (2019).
Digital marketing not only communicates value through digital channels,
but is engaged in its creation and delivers via co-creation. Engagement with the
customer in digital channels requires them to be actively involved in exchanges,
taking a vital role in co-creating value. Such an engagement is critically dependent
on the sovereign desire of a customer, which is influenced by many factors,
in particular: a perceived need for the product; an assessment of its value;
the envisaged situation of use and the position in which the customer is located
in relation to the firm, other firms, other consumers and other people with whom
it is connected with social relations. Marketing systems imply a benevolent
nature in many connections, shaping the definite form and outcomes of any
iteration (Mittelstaedt et al., 2006). Changes in any of these elements can lead
to a significant and sometimes rapid change in the position, intentions and
desires of the customer, which is reflected in the purchasing intentions.
Using knowledge and skills to create products, consumers exchange a service
for a service, quid pro quo. The service from the consumer-seller is to sell the
product sought by another; the service from the consumer-buyer is to identify
interest, without which contact between them would not have taken place. These
types of exchanges are well described within the Service Dominant (S-D) logic
developed by Vargo and Lusch (2004). This means that the service is first and
the exchange of tangible assets is derived from the exchange of services, being
conditioned by the latter. The product itself is essentially just a separate element

Structure and Constituents of Digital Marketing Systems 59
in the broader context of value exchanges. In this regard, the product should
be regarded as nothing more than a value proposition, a service that provides
the exchange of a certain form and extends the service to the economic system.
Such a nature of exchange of values emphasizes their nature, very different
from the traditional understanding. At the heart of value in a digital channel
is service. As a rule, this exchange is not directly reciprocal: X supplies Y, but
Y does not necessarily supply X, rather transferring the interaction to further
agent Z. Ultimately, X also receives services, but specific to his (her) needs
and at other times, as needed. The amount of this value is determined by the
expectations of its usefulness and is changing, that is, the value-in-exchange.
In view of the above, the level of development of digital marketing should be
determined first of all by the content, scope, and variety of services consumers
can provide to each other. By assuming that the service is the primary product
and the embodiment of operational resources, it is recognized that these resources
are basically knowledge and skills, and it should be then recognized that the level
of digital marketing development should be determined directly by the nature
and the amount of them. These resources are then possessed by consumers
themselves, and indirectly by the factors from which skills and knowledge depend
on, or are accompanied with: the level and quality of life, which in turn affect
the range and nature of communication in an individual community, society and
social networks; the level of access to technology and infrastructure development,
including access to the necessary hardware and software, which is an essential
technical prerequisite for the creation and operation of exchanges. Furthermore,
the content of customer service needs to be defined when the technology itself
is in the essence of services provided by one consumer to another.
The depicted structure of the digital marketing system can be applied at all
levels of the digital economy. The functioning process and flows in the market
are accomplished through the numerous and diverse digital platforms that
are the focus of digital marketing operations. Thus, one can see three levels
of digital economy:
– the core IT sector;
– digital economy, meaning intensive application of digital technology and
developing digital platforms and sharing the economy;
– digitalised economy, standing for extensive use of digital expansion onto
various activities, not arisen from the digitalization itself.
At the heart of the system lays the activity of the IT sector that makes
it possible to share value within and with all ICT consumers. The IT-level
marketing process is aimed at generating and delivering innovation in shape,
form and service to the industry itself and its users.
At the wider level of the digital economy, the creation of digital goods and
services, the organization and provision of transactions and communications, the
organization of consumers and the provision of access to value require certain
mechanisms. These are mediated by technologies of interaction between users,

60 Yuriy Robul
user groups, owners and developers. These mechanisms are known as digital
platforms. They create and support certain forms of interaction, ensuring an
organized and stable nature of the system. Examples of digital platforms include
platforms and aggregators (eBay, OLX, Amazon), social networks (Facebook,
Twitter), crowdfunding platforms, training space (Coursera), information sharing,
storage platforms (Google Drive), and more. Alongside them, there are platforms
of a different kind, designed for group interaction aimed at creating innovative
products, such as a variety of creative spaces, and open source environments
for creating software products. After all, for the digitalized economy, digital
marketing is primarily about adapting to the new ways of interacting with
digital media and boosting productivity and efficiency. The threefold structure
of the digital economy defines the corresponding threefold structure of digital
marketing Thus, digital marketing appears as a multilevel concept (see Tab. 1).
Considering that digital marketing must provide both transactional and
innovation needs, one of the main indicators of digital system performance is to
support the diversity of value propositions in digital marketing and, accordingly,
the diversity of digital platforms.
Table 1
Principal tasks of different levels of digital marketing
Levels of digital economy Levels of digital marketing Principal tasks
IT sector IT ma rketing creating and delivering value to ICT
applicants
Digita l economy core digital marketing creating, developing, and promoting
digital platforms, transactional and
innovative
Digita lized economy digitalized marketing adapting to new ways of interacting
with digital media, communications,
boosting productivity and efficiency
Source: own elaboration on the basis of Bukht and Heeks (2017).
Conclusions
The article develops a systemic view on marketing as a process that progresses
within the marketing system – one of the central concepts of macromarketing.
The breakthrough of digital innovation has led to the emergence of the digital
economy. This paper uses the three-fold structure of the digital economy, which,
depending on the extent and purpose of digital technology, outlines the levels of:
– IT sector;
– digital economy;
– digitalized economy.

Structure and Constituents of Digital Marketing Systems 61
The digital revolution is so widespread that digital marketing needs to be
generalized at the level of the economy as a whole, considering macro perspectives.
From this point of view, a process shaped model of a digital marketing system is
proposed. The digital marketing system, analysed from the point of the customer
journey path is placed under the S-D logic model. Its core is digital platforms,
embodying actions and flows, which are specific for marketing in digital channels.
Departing from the tri-fold structure of the concept of the digital economy,
this paper proposes a threefold structure of digital marketing, consisting,
respectively, of:
– the marketing of the IT sector;
– core digital marketing;
– digitalized marketing.
This classification opens up conceptual room for a deeper study of the
conditions of operation, the efficiency and the effectiveness of digital marketing,
its connections with offline marketing, as well as its relationships with the
development and growth of the economy as a whole. In this context, it is likely that
IT marketing and digital marketing would largely contribute to the development
of macroeconomic figures such as GDP, GNI, and employment, while the impact
of core macromarketing should also be traced by measuring the level of diversity
of digital platforms. Such an impact involves the creation and dissemination not
only of media and technologies, but also highly specialised knowledge and skills
among consumers directly, as well as the development of skills, processes and
institutions that condition and facilitate consumer contact and communication
with one another within the economic system and with other economic systems.
Apparently, these skills include communication skills and emotional intelligence,
as well as trust as one of the most important institutions (Hunt, 2012).
New digital technologies are emerging constantly and outline many research
directions. As for their impact on marketing strategy elaboration, new forms
of customer behaviour and changes in the customer journey path are developing.
There are many tactical aspects of using specific digital enabled devices and
technology, like the criteria of choosing digital platforms, the impact of wearables
in decision making etc. There are also questions of how the development of digital
technology influences economic growth through the development of marketing
systems; to which extent digital marketing systems determine economic growth;
if digital marketing is determined by the development of the digital economy
or does it drive that development; and which is the mechanism of interaction
between the digital economy and digital marketing. How could digital marketing
system growth be regulated, programmed if ever, and institutionalised since
advances in technologies make obsolete many traditional regulations of market
and consumption? The need for more knowledge of digital marketing system
growth and change is widely recognized.
Translated by Author
Proofreading by Michael Thoene

62 Yuriy Robul
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