Digital Business: LEGO Company limited

Introduction

Digital business is the use of technological improvements to improve or create better value in experiences of the customer, models of business and internal capabilities that uphold the key activities (Chaffey, 2019). It goes hand in hand with marketing which is the process of identifying, acknowledging and meeting customers’ wants. E-commerce which is the purchasing and selling of commodities through the web and the transfer of data and money to execute the transactions is an essential of digital business.

In this case, I am going to base my work on LEGO Company limited which deals with movies and mobile games and applications. LEGO is currently appealing to today’s digital strategies to serve its customers (Kane et al., 2017). Its uses medial social models like LEGO boost, which is an app that enables children to code and encourage social networking. LEGO’s online community enables fans to submit their opinions. This paper entails analyzing digital business theories and application of marketing and e-commerce. Evaluating e-commerce and digital models of business with the opportunities and difficulties of marketing digital business and e-commerce and finally, identifying and analyzing barriers and problems that firms are adopting a digital model of the business face (Chaffey et al., 2019).

Identify and analyze various theories of digital business

The first is Social presence theory in marketing- this tries to show the connection between a channel of communication and online chatting (Beynon-Davies, 2018). It explains how marketers face or approach attributes of marketing online as well the opinion of customers towards online business transactions. Secondly, Viral loop marketing theory- this is a marketing theory where the consumers of the product are its essential marketers. Companies that use viral expansion loops like LEGO are just not trying to make accessible content that users can repost. With this expansion or improvement, the products’ fans assist in diversifying the information through continuous use and by motivating friends and colleagues to follow their steps in using them. A small firm that implements viral loop plan does not necessarily need to invest as much in advertising and sales though it will deserve a quality product that will draw the interest of the users (Ansong, 2019). Thirdly the commitment trust theory of relationship marketing- it is a theory of marketing that claims that two underlying factors, trust and commitment must be there for a relationship to prosper. Relationship marketing entails creating links and bonds with customers by satisfying their needs and respecting commitments. For instance, rather than focusing short term proceeds, firms following the principle of relationship marketing forge long-lasting links with the users of their products. As a result, the users trust these businesses and the mutual understanding helps both parties fulfil their needs and wants (Heavin, 2018). And finally, Relevant marketing consumer behaviour theory-this theory says that as a marketer, you need to spend excessive time analyzing how you can grab the consumers attention and there is no less of new approaches of marketing being introduced by scholars. That being stated, the languages may change hence the analogies may set new spins on old facts, but the reality is, consumer behaviour has not been altered a whole lot since marketers began tracking it and using it to sell products, ideas and occasional bridge.

Digital business frameworks

Digital capability framework- this is basically a digital transformation framework or strategy created and designed to assist firms to innovate and invent digitally enabled business transformation. It allows organizations to analyze their current situations and identify other business options enabled by technological trends (Park, 2020).

A framework for digital business transformation- this involves changing the firm’s culture and customs to embrace and cope with fully digital workplace.

Applications of marketing and e-commerce

E-commerce

Finance – e-commerce is applied to financial companies that trade online. It is used to purchase and sell products of the company and even in settling transactions. Another application is Auction-here; the e-commerce customer-customer is direct selling of products among users. Manufacturing- e-commerce is applied by companies and used in a chain of operations of the company. Many companies make electronic exchange (Yin, 2019). Retail and wholesale- there are several applications for retail and wholesale in the issue of e-commerce like online retailing. And lastly, it is applied in marketing- use of web and e-commerce, information gathering about the following are possible preferences, buying the pattern and behaviour needs.

Marketing

Delivering conversion-online business marketing products and online services helps measure prosperity by the percentage rates of incoming traffics are converted into; sales, leads and subscribers (Laudon, 2016). Generation of better revenues- this if facilitated by higher conversion rates created through effective digital marketing technique. This delivers loads of profits and benefits for the business and for you in terms of revenues. Facilitating interactions with the targeted audience- marketing is essential as it helps in interacting and providing your customers with better engagement that give you insight on what your target audience wants. Building brand reputation-delivering as per the promise helps the firm develop a unique relationship with your prospective audience (Verhoef, 2019). And finally to earn customers trust-digital marketing on social media signals, social proof and testimonies from actual consumers who have initially bought, joined or availed of a product marketed by a particular business.

Various digital business models

A digital business model is a way of creating value founded on the growth of customer benefits using digitalized technologies. Its aim is to create a reasonable advantage for which customers are willing and able to pay.

The first is Freemium model-Here customers receive digital service parts like limited functions of software freely. This operates to manage the onboard process with an as finite effort of sales as possible. This model follows the principle of standardization competence. Initially, intensive personal operations, like sales, were made efficient through automatic processes. The companies challenge is to correctly impact the upgrade from freemium version to payable one (Remane et al., 2017).

The second is the Marketplace model- Like Amazon, a digital platform acts as a link marketplace for services and products. Demand and supply are met together. The digital business model that follows this model gets their added value from the fact that a significant figure of independent players are active in the market place and usual transactions take place. The market place model can function alone or even represent the extension of the already existing company’s offer. A property management company which accepts service providers from external such as cleaning staff to be divided into a tenant app already got a digital model of business in the form of the marketplace (Gould, 2019).

Lastly is Using instead of buying- This digital model of business entails enabling another form of use of an asset like software, machine or automobile. It is not the possession but the usage of an asset that is monetarized. Digital technologies make it easy to measure usage. In the field of car-sharing, for instance, the return and rental, as well as miles and kilometres are driven, are billed. But in the issue of machines or automobiles, payments can be made, for instance, as per the operating time and units number produced or any other data resulted from the device. Digital models of the business founded on ‘use instead of buying’ the principal can enable firms to achieve new target groups like those who have been already reluctant in investing, or rather to remain competitive and provide the customer with an impressive digital model of business before capable competitors do that.

Challenges of digital business models

Staff training-monitoring of machines and other automobile devices require some precise training and skills. This training is costly and time-consuming. Groups of experts need to be on-site in every shift to work on the machines to help detect and correct issues on the devices (Bressanelli et al., 2018). Lack of skilled workers- time to come, customers or users of the products company will have more and many problems finding competent personnel to work on the machines and maintain them. Fluctuations of orders- the company must be capable of coping with the orders volatility. Sometimes the devices may not work in their total capacity, and at some other scenarios, the size of production will have to be improved.

Opportunities for the digital model of business and e-commerce

Direct sales-many firms and companies use e-commerce for selling goods and services directly online (Kreutzer et al., 2017). For other companies such as those dealing with software, music the delivery and sell of goods and services can be through online, but for many, the delivery progresses to be physical. If the firm plans to sell online, it may need to consider many of its activities and operations. It will basically alt the way in which it interacts with its customers. Pre-sales- here, you can use your websites to provide presales activities sales leads are generated (Silitonga et al., 2017).  This may mean having a version of online for your promotional production your site. Alternative options include search making, campaigns or online advertising to entice visitors to your web. Post-sales support- here you can use the internet to automate criteria of your consumers support to lessen the number of routine customer calls service. This is mainly achieved by the use of your web to respond to the frequently raised questions or by uploading technical data online. Ensuring success- though you can decide to use e-commerce, it is crucial to define your goals from the outset. What degree of sales do you wish to make? And how many leads or sales you are up to generating.

Issues and difficulties faced by firms adopting the digital business model

Digital transformation is a disruption that every organization, whether small or big, is striving to attain and coping with a more accelerated rate than ever (Kolbe et al., 2016). Consequently, these firms face a lot of issues and difficulties in adopting the digital transformation face.

Organizational culture- most firms have cultures that have existed since their establishment. They possess a unique way to operate and deliver that is commonly mechanical. The employees use these outlined methods in there day to day operations, and definitely, this culture can be a significant hindrance to transform digitally (Appel, 2020). Change being expensive is another challenge-just as how change is not easy; it is as well not free. Getting your firm to transform digitally requires amounts of cash and cost of innovation and can be a significant hindrance to digital transformation (Remane, 2018). Lacking strategy for a digital customer drive-occasionally the firm may launch its digital transformation but still require a vivid vision or strategy. Many questions like what they desire need, and they will remain unanswered, which is a significant barrier to digital transformation. The leader- this is the person who leads the firm forward, gives motivation and lead the firm to shared goals and objectives. He or she is the one formulating rules that govern the firm, if he/she is not competent, then definitely he/she may not lead to digital transformation. Resource availability-finding useful resources for those who are innovative and inventive and technologically sound are a primary challenge and obstacle when it comes to digital transformation (Karim, 2020).

Conclusion

In conclusion, the paper has covered details on the various theories of digital business like Social presence theory in marketing, the commitment trust theory of relationship marketing and the viral loop theory of marketing. The frameworks for a digital business like digital capability frameworks and framework for digital business transformation. I still analyzed the applications of marketing and e-commerce which include retail and wholesale, finance, marketing and auction, manufacturing, building brand reputation, creating better revenues and creation of interactions between the firm and its customers.

Various digital business models are also outlined like a freemium model, marketplace model and using instead of buying model together with their challenges which include lack qualified workers, high cost of training and time consuming during the workers training and order fluctuations. Their opportunities include direct-sales, post-sales, pre-sales, and ensuring success. And finally, the issues faced by firms adopting digital transformation which include, weak leaders, resource availability, lack of clear vision, change is expensive and organization culture. I would recommend every firm to strive to adapt to digital transformation as it brings a lot of benefits both to the business and to you.

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