The changing Face of the Marketplace (B)
Abstract: The earlier article the changing Face of the Marketplace (A) argued that the marketplace originally was a single place where trade was allowed to occur. Over time, the Government has replaced this geographical singularity with another singularity, i.e. control over trade by means of regulations within the framework of the law. This article argues that today's market is largely shaped by the Government, but that the Government is rapidly losing its grip and that it takes another mindset to be successful in future.
A. Today's Marketplace
Today's marketplace is often seen as a place where the grip of the Government is less manifest than in the public sector. Nevertheless, there are clearly many regulations that the Government enforces over the marketplace. Trading hours, trade practices, employment, contracts, banking and the use of money are just some of the things the Government likes to regulate. Advertising also falls into this category, as the Government enforces all kinds of rules, e.g. relating to censorship, fraud, defamation, etc.
In some markets, such as broadcasting, banking, postal services, telecommunications and airlines, there may be many players that regard themselves as part of the private sector. However, through its regulatory grip, the Government can, in many cases, hand-pick players in such markets.
B. Anticipated changes
As anticipated in Don Paragon's Vision of the Future, the Government's position will become ever less significant in future and its regulatory power will gradually fade away.
Many of the players in today's markets are shaped by the Government's regulations. As such regulations become ever less relevant, such players will either have to change their game or become history. The media, telecommunication carriers, postal authorities and banks are examples of dinosaurs that are not likely to survive in their current shape.
Prices will come down for many products and services, not only because of a reduction in tax and in regulations that restrict innovation, but also because of on-going gains in efficiency, quality improvements, increased performance, etc, that are so typical of innovative companies, be it in design, advertising, manufacturing, distribution or financial services.
Furthermore, the incremental cost of additional sales will drop in the case of selling over electronic networks. As prices will drop for many users, the cost of products and services will become a less important factor. Price is a typical mass-market factor. A global, mass-market focus may have been successful in the 20th century, but in the 21st century, individual factors will become more important. The best strategy therefore is to offer a more diverse range of products and services with many options.
C. Marketing in the Future
Imagine a world without government regulations, without mass media, without mass production in huge factories where thousands of human robots do their routines at the tredmill of the conveyer belt. Note that the media of today are products of this mass culture. The mass media are currently funded to a large extent by advertising. Changes in the media will therefore go hand in hand with the development of new marketing approaches.
In today's world, many companies separate marketing functions from other functions, both organizationally and in time. Often, an advertising agency is called in to promote a product long after the product was designed. Marketing usually targets mass markets. Mass media score high, so do billboards along highways and posters in railway stations. The focus is on the quantity of people reached by the ad. Such ads tell little about the product, as they aim at a mass public. After all, some people watch prices carefully, but others may be interested in specific features. As a consequence, mass advertising may decide to only show the face of a celebrity next to the product.
Such mass advertising techniques may work in today's world of mass production and mass media, but they are unlikely to be successful in future. Today, marketing is separated from the design phase, i.e. the creative dreaming about the product or service, the brainstorming, the ideas, the arguments about improvements, etc. But the improvements, the new features and other highlights focused on in the design phase are exactly the very selling points. Furthermore, there may be a number of different versions arising from the design phase, each of which may be attractive to a different user group.
The points is that marketing should be integrated with the design phase. When a product emerges that may be attractive for a specific group of users, the reasons why such users could be attracted to such a product should be instantly documented. These are the selling points, the best advertising for such a product. If users turn out to demand other features, then one cannot blame advertising for coming up with the wrong campaign. No, the product design was inadequate from the start. Design changes should be made as soon as it becomes apparent that users want other features. Interaction with early users may therefore be vital for the success of the product.
D. Optionality instead of Confrontation
Many advertisers still use the confrontation approach. They believe there is a mass market of passive customers who can all be reached by one ad and who subsequently all go out to buy one single product. They even apply this confrontation approach in direct mail advertising, in which specific customers are targeted and sent unsolicited mail. This confrontation approach is not only outdated, it may do suppliers substantial damage as far as their overall image is concerned.
Some of the worst examples of the confrontation approach are tele-marketing campaigns in which a computer selects targets who are called up to hear a computer-generated voice speak out an advertisement. The supplier may believe to use an innovative method to target specific customers, instead of sending an ad to the general public. But the approach used is still the confrontation approach that was so common in mass advertising.
As products and services become more individualized, more personalized, marketing will become more interactive. Customers will have a larger range of products and services to choose from, with a larger range of features available for each product and service as options, instead of one, standard product or service.
It becomes more important for both the customer and for the supplier to taylor products and services to the wishes and needs of the customer. This is an interactive process, rather than the one-way-street of mass advertising.
In many cases, the supplier will have to make assumptions as to what the specific needs and wishes of a specific customer are. But in many other cases, customers will be keen to indicate what they want. Offering a product or service will go hand in hand with offering the customer optionality.
E. Hyperlinks and Networking
Hyperlinks in WEBpages are common on the Internet. Hyperlinks are an example of such a new approach. Hyperlinks give existing and potential customers the opportunity to browse through products and services that are offered and to go into detail not just regarding price, but regarding all kinds of background information that may be important for the specific customer.
A company cannot expect to build up a single site and then get millions of interested visitors overnight. It may take years to build up a successful presence on the WEB. Success in many cases depends on how well such a site becomes linked to other sites.
A well-linked site is mentioned at many other sites that offer hyperlinks pointing to that site. A well-linked site also offers many hyperlinks to other sites. Networking and marketing go hand in hand. If a site is popular because that site offers many links to other interesting sites, many other sites will gladly mention that site.
It is important to carefully select sites to network with. Irrelevant links do more harm than good. A company that puts together a new product will use the services of all kinds of businesses in the process. Each of these businesses may have a site that could include a reference to the new product. If those businesses are proud to advertise their services, they may well be proud to advertise the results of their services.
Conversely, customers may be interested in all kinds of details about these businesses that helped to put the product together. Even if the product is a simple pencil, there may be many potential customers who want to check the ingredients to make sure there are no unhealthy side-effects in using the pencil. They may be allergic to certain kinds of wood, paint, ink, etc. Instead of hearing from the manufacturer of the pencil that the product is safe, they may want to check out the site of the supplier of the ink for details.
As customers become more individualized, such background information will become more and more important. Some customers may insist on environmental friendly suppliers, others may insist on suppliers of specific religious background. Such developments will encourage like-minded businesses to network with one another, quite likely based on a specific common cause. Quintessence loves to network around the concept that it predicts will play a key role in the new age of marketing, i.e. the concept optionality.
Appendix Networking based on a Common Cause
Background information on products and services will become crucial in marketing. One of the keys to success in this respect is relevance. There is little point in mentioning the name of the company car used by all executives. If there is no special reason to mention such a detail, the public will feel that it is not taken serious.
Similarly, if a chocolate bar is marketed on the basis that the manufacturer has donated large sums of money to charity, sport or community projects, potential customers may ask for relevance. If so much money is donated, does that mean the product is overpriced? Do all these sportstars really run faster because they eat chocolate bars? Where is the relevance? If customers feel this is just another case of deceit, the campaign will do substantial damage.
The way to go is to network around a specific cause or theme. As an example, a manufacturer may use ingredients that are all organically grown, then distribute the products not through retailers, but via groups that all share the same philosophy. The key to success in this respect is sincerity.
Take the case of a cereal product that is marketed around a figurine based on a popular cartoon. Young children may fall for such a trick. Young children may be lured into impulse buying. But their parents will buy cereal on grounds such as health, nutrition, convenience, environmental background. The parents' decision will be primarily a fundamental one.
Enclosing a figurine in a box of cereal is a typical mass marketing approach. Such a campaign requires a cartoon character that is universally known and loved. The cereal manufacturer must obtain exclusive rights to use this figurine. Without such exclusive rights, the figurine will simply be for sale anywhere, most likely at a lower price than the added cost of putting it in the cereal box and advertising this. Mass media and exclusive rights are products of the current legal system, creating negative associations with many customers and this will be even more the case in future.
It makes more sense to make background information available about the product or service itself, than to emphasize a link that is not real. Apart from specific details about the product or service, it is important to have general information available about the company, about suppliers to the company, about other products and services offered by the company, etc. Such information could be put both on packaging and on WEBsites. On the WEB, customers can fill in forms and receive newsletters by email. In the end, all this is part of a marketing strategy. The choice of materials and colors used in packaging, the way the product is distributed, its name, all this must fit into the picture that a specific customer can identify with.
Theoretically, the same product could be marketed in a number of different ways, thus creating, say, a nutrionally healthy, a convenient, respectively an environmentally friendly product. Such an approach is a good example of splitting up the marketing of a currently successful product. In practice, the content of the product will differentiate as well, leading to entirely different product lines. Furthermore, the various common causes around which such different products are marketed may very well turn out to be incompatible. This could therefore lead to a split-up of the company into a number of separate companies. In fact, that may well be the best approach for large companies that want to survive the end of mass marketing.