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Phygital Marketing: Blending the Physical and Digital Worlds for ROI-Driven Customer Experience

As companies strive to keep pace with the rapidly changing landscape of customer engagement, a novel approach has emerged that blends the physical and digital worlds in a seamless and personalized experience. Phygital marketing, as it's known, is gaining ground as businesses look for ways to integrate traditional marketing techniques with the latest digital strategies. By leveraging the best of both worlds, companies can create a memorable and immersive customer experience that drives brand recognition and loyalty.

Phygital marketing is the art of merging physical and digital realms for a seamless customer experience that drives growth.




Customer experience is the next era of marketing

Because copyright matters. How to cite this article: American Institute of Business Experience Design (2023). Phygital marketing: Blending the physical and digital worlds for ROI-driven customer experience. Retrieved [date you accessed the article], from [copy and paste the URL of the article page].


Phygital (physical + digital) is a term that's picking up steam in the business world for good reason. Despite its buzzword-like connotations, it actually has a scientific definition and centers around the idea of breaking down the barriers between digital and physical spaces. Phygital marketing is a cutting-edge strategy that involves blending the physical and digital worlds to create a seamless experience for consumers and drive ROI.


In essence, phygital marketing aims to eliminate the boundaries between physical and digital spaces and offer consumers an interactive and immersive experience. In this article, we'll explore the origins of the phygital concept, explain what phygital marketing is, highlight its significance, and outline how businesses can leverage it to deliver exceptional customer experiences and achieve success. The article covers the following topics:



The confusion around phygital: why its potential as a marketing strategy is being overlooked


The term "Phygital" has been floating around the business world as a buzzword, but its definition has yet to be standardized. This has led to confusion and a limited application of the term to virtual and augmented reality tools, overlooking its potential as a powerful marketing strategy. Companies and brands are quick to refer to digital devices and extended reality technologies, while ignoring the marketing potential of phygital.


However, research indicates that when executed correctly, phygital can be a successful business strategy that bridges physical and digital experiences, creating a seamless customer journey from online to offline and vice versa. As digital technologies become more pervasive, companies must understand their impact on the customer experience, both online and offline.


The ability to engage customers across multiple platforms is essential for any marketer, entrepreneur, or business looking to drive revenue and growth. This is where phygital marketing comes into play. By combining physical and digital elements, phygital marketing has the potential to deliver exceptional experiences that can help businesses of all sizes and industries thrive. But before diving into phygital marketing, it is crucial to understand what phygital is and why it is significant.


According to Dr. Wided Batat, a pioneer in the field of "Phygital," the term refers to the fusion of the physical and digital worlds to create a new, seamless customer experience that combines the best of both worlds. Essentially, phygital represents a third realm where customer experience occurs, alongside physical and digital settings. As more and more businesses begin to embrace this approach, it is becoming increasingly evident that phygital as a comprehensive marketing strategy is a cost-effective and ROI-driven strategy that can help businesses improve customer engagement and conversion rates.


Phygital unpacked: the scientific definition of a fancy word


"What does the term 'phygital' mean?" is the question that arises when discussing the integration of various physical channels, such as in-store and offline, with digital channels.


The term "Phygital" has been making waves in the business sector since its inception as a tagline by a communication agency in 2013. Despite its common usage among business bloggers and journalists, it wasn't until 2016 that Dr. Wided Batat proposed the first scientific examination and definition of the concept. Dr. Batat's research, culminating in her best-selling book Strategies for the Digital Customer Experience: Connecting Customers with Brands in the Phygital Age, delves into the dynamics between online and offline offerings and introduces a new marketing framework called "blue sunflower marketing." This framework serves as a guide for companies aiming to create compelling phygital experiences.


"Phygital" refers to a comprehensive online-offline strategy that aims to optimize a physical point of sale and connecting it with online platforms by integrating digital methods and data. The approach enables companies to attract new customers and improve business turnover by digitizing the sales process. This involves the installation of touch terminals that offer interactive catalogs and real-time price verification, among other applications. The phygital approach has become increasingly vital for businesses looking to compete in today's digital landscape.

For example, by implementing the phygital approach, a beer brand can integrate digital technology into the traditional beer tap, allowing customers to order their favorite beer using a mobile app and receive personalized recommendations based on their previous orders. The tap can also feature a digital display that showcases the brand's history and brewing process, creating an immersive experience for customers. This innovative use of technology in a traditional setting can help the company attract new customers and retain existing ones, demonstrating the potential of the phygital approach across a range of industries.

Therefore, companies can use various technologies, like connected interactive terminals, to enhance the customer experience. These terminals enable customers to conduct more comprehensive online searches, simplify custom 3-D design, and provide new options that may not be available in stores yet. Per recent research, we offer a comprehensive definition as follows:

"Phygital is the merging of the physical and digital worlds to create a seamless customer experience. It's a cost-effective and ROI-driven strategy that helps improve customer engagement and conversion rates by optimizing a physical point of sale and connecting it with online platforms through the integration of digital methods and data. This approach uses various technologies, such as connected interactive terminals, to enhance the customer experience and create immersive experiences that attract and retain customers." – © American Institute of Business Experience Design, 2023.

The concept of "phygital" highlights three essential considerations that businesses must bear in mind when devising or executing a phygital strategy.

  • Phygital is not just an IT strategy, it goes beyond that. It is a human-centered approach that blends the physical and digital worlds to create a seamless and personalized experience for customers. Phygital creates a unique and memorable experience that can help businesses differentiate themselves in today's competitive market.

  • The goal of the phygital approach is to create a seamless customer experience by using various technologies, including connected interactive terminals. By doing so, businesses can attract and retain customers by providing immersive experiences that enhance the customer journey.

  • Phygital is a cost-effective and ROI-driven strategy that helps businesses improve their bottom line. By optimizing physical locations and integrating them with digital platforms, businesses can increase customer engagement and drive sales, leading to improved return on investment.


What is phygital marketing, and why does it matter?


Phygital marketing, a portmanteau of physical and digital marketing, is a novel and powerful approach to customer engagement. It involves the optimal integration of traditional marketing techniques - such as billboards, flyers, brochures, and product samples - with the latest digital marketing strategies, adapted for online platforms and virtual settings. The result is a seamless and engaging customer experience that drives brand recognition and loyalty. We define phygital marketing as follow:

"Phygital marketing is an innovative approach that blends traditional marketing techniques with the latest digital strategies to create a unique and immersive customer experience. The goal is to provide customers with a seamless and engaging journey that seamlessly integrates online platforms and virtual settings with physical experiences. By creating a highly interactive and personalized experience, companies can foster customer loyalty and drive sales, ultimately leading to long-term success." – © American Institute of Business Experience Design, 2023.

While digital marketing plays a significant role in reaching a wider audience, physical marketing still holds sway in the retail industry where customers can physically interact with products. A cosmetics brand, for example, may offer free samples at the mall to entice customers to try their products. Digital marketing, on the other hand, leverages channels such as social media, email, and search engines to create a cost-effective way to reach customers and drive sales. For instance, a clothing brand may use social media to showcase its latest collection and offer a discount code for online purchases.


When it comes to marketing strategy, it's imperative to prioritize customers and their experiences. When it comes to combining physical and digital worlds, businesses must be mindful of the different experiential values that can create the ultimate customer experience. Efficiency, emotions, excellence, status, play, aesthetics, and ethics are all critical components of a successful phygital marketing strategy. To achieve this, companies must have a deep understanding of the differences between physical, digital, and "phygital" (the intersection of physical and digital) customer experiences.


  • In the physical realm, businesses must create an emotional connection with customers to foster loyalty and drive sales. For example, a cosmetics brand can allow customers to touch, feel, and smell their products in-store to create a memorable experience.

  • In the digital world, businesses must use various technologies and channels to increase efficiencies and enhance the shopping experience. For instance, a clothing brand can leverage mobile applications to offer personalized recommendations and a seamless checkout experience.

However, the real opportunity lies in the phygital realm, where businesses can design a superior customer experience that is both efficient and emotionally charged. This type of experience offers businesses a chance to foster customer loyalty and drive sales by creating a seamless, immersive, and interactive experience for customers.


Customer experience is the next era of marketing


To implement an effective ROI-driven phygital marketing strategy, businesses must strike a well-balanced mix of physical and digital marketing techniques. This requires putting the human element first and offering a seamless experience from online to offline, and vice versa. To achieve this, various phygital marketing techniques can be employed, including phygital marketing via co-creation, phygital marketing through digital out-of-home (DOOH), phygital marketing via extended reality, and phygital marketing via staging.


Phygital marketing via co-creation


Phygital marketing via co-creation is a marketing strategy that involves joint production of goods and services between a company and its customers. This approach emphasizes customer participation in the co-design and co-production process with companies, leading to a direct dialogue and exchange between the two parties. The ultimate goal of this strategy is to create a positive impression of the company, build customer loyalty, and develop innovative products, brands, and services.

An example of phygital marketing via co-creation is the LEGO Ideas platform. This platform allows LEGO fans to submit their designs for new LEGO sets, and the company considers the most popular and feasible designs for production. This approach allows customers to become legitimate business partners in the co-design and co-production process with the company, leading to innovative products that meet customer needs.

To implement this strategy, companies must involve their customers in the pre-conception, co-creation, and co-production process. This involves taking advantage of the creative potential and ideas of customers, knowing their targets better, and building their loyalty in the long term. Companies also need to provide favorable conditions that allow the transformation of ideas into innovation and products that respond to existing needs.



Phygital marketing through digital out-of-home (DOOH)


Digital out-of-home (DOOH) is a form of advertising that uses digital displays to reach consumers outside of their homes. DOOH is an important tool for creating engaging phygital customer experiences because it allows businesses to deliver dynamic, interactive content that can be tailored to specific locations and audiences.

McDonald's has launched an innovative digital out-of-home (DOOH) campaign in Sweden using real-time data to display different menu items based on weather and time of day. The billboard had a live feed of local data, featuring current temperature, time of day, and location-specific information. This campaign aimed to personalize messaging to resonate better with the audience and create a more engaging experience. By displaying different menu items based on weather and time of day, McDonald's was able to effectively showcase its diverse menu and highlight items that may not typically be top-of-mind for customers.

By using DOOH, businesses can engage customers in real-time with personalized content and messaging that resonates with them. To implement DOOH, businesses can work with outdoor media companies to identify high-traffic locations and install digital displays.


Phygital marketing via extended reality


Extended reality (XR) is becoming an increasingly popular way for companies to create immersive experiences that bridge the gap between physical and digital settings. This innovative technology encompasses virtual reality (VR), augmented reality (AR), and mixed reality (MR), and enables digital objects to interact with the real world in new and exciting ways.


By leveraging XR in their phygital marketing efforts, businesses can offer customers an unparalleled level of engagement with their products and services, leading to improved customer experiences and increased sales. The benefits include:


  • One of the key benefits of using XR technology in phygital marketing is its ability to significantly improve the customer experience. For instance, automotive companies can leverage VR technology to offer virtual test drives to customers, right from the comfort of their homes. This not only saves time but also elevates the overall car buying experience by making it more enjoyable.

  • Moreover, XR can boost customer engagement substantially by creating interactive and highly personalized experiences. Retailers, for example, can leverage AR technology to enable customers to try on clothes virtually, aiding them in making informed purchase decisions.

  • Another crucial advantage of XR technology is that it allows companies to collect vital data on customer behavior. By tracking how customers interact with XR experiences, companies can gain valuable insights into customer preferences, which can be used to further improve their marketing strategies.

  • Lastly, XR can help companies save costs by reducing the need for physical retail spaces. By creating virtual stores, businesses can now reach customers in new locations without incurring the expense of building new physical stores.

A brand that has successfully used XR technology is Boursin Cheese. The French cheese company created a unique AR experience for their customers through their "Sensorium" campaign. By using the "Sensorium" app and scanning the Boursin Cheese packaging, customers were transported to a virtual world where they could explore a cheese cave and learn about the different types of cheese. This innovative campaign not only provided a fun and interactive experience for customers but also helped to educate them about the brand and its products.


In conclusion, XR technology as part of phygital marketing is a powerful tool that can be used by companies to create immersive, engaging, and highly personalized experiences for their customers. By leveraging the potential of VR and AR, companies can improve the customer experience, increase engagement, collect valuable data, and save money.


Phygital marketing via staging


Staging is a technique that can be used in phygital marketing strategy to connect physical and digital settings and enhance customer experience. Staging refers to the creation of immersive experiences that blend the real and virtual worlds. With staging, companies can engage consumers in both spaces and create memorable experiences that drive customer loyalty.


Staging involves both technology and physical elements to create an immersive experience. The use of technology such as projection mapping, lighting, sound, VR, and AR can help to create a virtual environment that engages customers. However, staging also involves the use of physical elements such as decor, design, or theming to create an emotional connection with customers.


For example, a retail store can create a themed environment that complements the products on display. This can help to create a unique experience for customers and make them feel more connected to the brand. Similarly, a restaurant can use staging to create a themed dining experience that immerses customers in a particular culture or setting.

An example of staging in a marketing campaign is the "Gif-iti" campaign by Adobe. In this campaign, Adobe created a unique experience that combined technology and physical elements to engage customers. Adobe created a tool that allowed users to create animated GIFs using their mobile devices. They then created a series of street art murals in New York City that featured the animated GIFs. The murals were designed to be interactive, with customers able to scan a QR code to access the animated GIFs on their mobile devices. The murals were also designed to be Instagrammable, with bold colors and eye-catching designs. The staging experience was a huge success, with customers lining up to take photos and create their own animated GIFs. The campaign generated significant buzz on social media, with customers sharing their photos and GIFs using the hashtag #Gifiti.


Overall, staging is a powerful technique that can help companies to create immersive experiences that connect physical and digital settings, and engage customers in new and exciting ways. By combining technology and physical elements, companies can create memorable experiences that drive customer loyalty and increase brand awareness.

Blueprint for mastering phygital marketing: exceptional customer experiences and high ROI


The world today is experiencing a shift in the way businesses interact with their customers. Traditional marketing methods are no longer enough to capture the attention of the modern-day consumer. To stay ahead of the competition, businesses need to adopt a new and innovative approach: phygital marketing.


By integrating physical and digital marketing techniques, businesses can create an exceptional customer experience that drives brand recognition, loyalty, and high ROI. Here's a blueprint to help you master phygital marketing for your business:


  1. Understand the concept of phygital marketing. This involves blending physical and digital marketing techniques to create a seamless and engaging experience for customers. It's not just an IT strategy but a human-centered approach that focuses on creating an emotional connection with customers. The goal is to create a unique and memorable customer experience that differentiates your business from the competition.

  2. Prioritize customer experience and not digital device integration. By understanding the different experiential values that customers seek, businesses can create a superior customer experience that fosters loyalty and drives sales. Efficiency, emotions, excellence, status, play, aesthetics, and ethics are all critical components of a successful phygital marketing strategy.

  3. Strike a balance between physical and digital marketing techniques. To achieve exceptional customer experiences and high ROI, businesses must strike a well-balanced mix of physical and digital marketing techniques. This requires putting the human element first and offering a seamless experience from online to offline, and vice versa.

  4. Leverage various phygital marketing techniques. Phygital marketing techniques can enhance the customer experience and drive revenue. Co-creation, DOOH advertising, extended reality, and staging are effective ways to engage with customers and create a memorable brand experience.

  5. Optimize physical locations and integrate them with digital platforms. By optimizing physical locations and integrating them with digital platforms, businesses can increase customer engagement and drive sales. Connected interactive terminals, for instance, can help businesses attract and retain customers by providing immersive experiences that enhance the customer journey.


In conclusion, phygital marketing is rapidly emerging as a powerful strategy for businesses to improve their bottom line. By combining physical and digital marketing techniques, this human-centered approach creates exceptional customer experiences that drive brand recognition, loyalty, and high ROI. As businesses continue to navigate the evolving marketing landscape, it is becoming increasingly important to adopt phygital marketing strategies to stay competitive.


To stay ahead of the curve, marketers, digital professionals, and businesses of all sizes and across various industries must prioritize their education on the latest trends and techniques in phygital marketing. Enrollment in comprehensive programs is essential to developing a deep understanding of this strategy and its applications.


Our phygital marketing and experience design strategy course programs at the American Institute of Business Experience Design offer a comprehensive education on phygital marketing, equipping participants with the necessary knowledge and skills to effectively implement this approach. In addition to these programs, our free blog, the "AIBXD Strawberry Experience Blog," provides up-to-date insights into the latest developments in the field. Don't miss out on this opportunity to update your marketing basics and take your business to the next level!


Customer experience is the next era of marketing


Whenever you're ready to get started, we invite you to explore our range of exclusive, certified course programs. Our programs are designed by top-tier experts from industry and academia to equip you with all the necessary tools and strategies to implement successful and cost-effective experience strategies that drive ROI and business growth. Join our elite global community of business experience experts and start your journey towards transforming your business today.


AIBXD offers comprehensive course programs on business experience design, strategy, and management that cater to all levels and profiles. Our portfolio includes our flagship executive education program for CMO, CXO, creative designers, and all C-level executives. We also offer diploma programs for entrepreneurs and project/product managers, as well as online course certificates. If you are unsure which program would be the best fit for you, try our fun and easy-to-use AIBXD Course Recommender. By answering just five quick questions, you can get a personalized course recommendation immediately.


Customer experience is the next era of marketing

If you're tired of wasting money, resources, and energy on traditional marketing techniques, we can help. Our AIBXD consulting and market research services can assist businesses in starting the experience and phygital transformation. Feel free to check them out and see how we can help you optimize your marketing strategy.


Cite this article as: American Institute of Business Experience Design (2023). Phygital marketing: Blending the physical and digital worlds for ROI-driven customer experience. Retrieved [date you accessed the article], from [copy and paste the URL of the article page].




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