Powerful insights into the revolutionary changes redefining marketing as it exists today are spelled out in a new book, Mastering Marketing, authored by more than 50 leading marketing experts from the University of Pennsylvania’s
Powerful insights into the revolutionary changes redefining marketing as it exists today are spelled out in a new book, Mastering Marketing, authored by more than 50 leading marketing experts from the University of Pennsylvania’sWharton School, the J.L. Kellogg Graduate School of Management at Northwestern University, the London Business School, and INSEAD, the European institute for management education. Earlier versions of these articles first appeared in the Financial Times, which has now published the book with Prentice Hall as part of its FT Mastering series.
This is the first of three reports on the authors’ analysis of the forces changing the fundamentals of marketing, the new strategies needed to deal with these changes, and the ways to win and retain customers in today’s global economy which in recent years has shifted dramatically from products to services. And services, notes Dawn Iacobucci, professor of marketing at Kellogg, "…tend to be intangible, produced and consumed simultaneously, and heterogeneous."
Companies today can still capitalize on successful old brands like Ivory Soap by extending their appeal to new ones like Ivory Shampoo, or team up with another company to create a more attractive product as Kellogg’s did when it added Smucker’s fruit fillings to its Pop-Tarts.
But as markets mature and a "have it your way" mindset moves to center stage, well-tested competitive strategies begin to recede and new ones emerge, says George Day, professor of marketing at Wharton and Director of its Huntsman Center for Global Competition. "This can range," says Day, "from tailoring messages to micro-segments such as the binding of Parents magazine in the U.S., which is customized according to the age of the buyer’s children, to Nordstrom‘s allowing its clerks to range through the entire store to put together clothing ensembles for their customers."
But the single most important development examined in Mastering Marketing is the coming of the Internet, which is overturning centuries-old marketing beliefs and opening up more cost-effective ways to attract and keep profitable customers through the assumption-shattering reality of electronic commerce.
Cisco Systems sold 64% of its products, 90% of its software upgrades, and 70% of its customer support queries over the Internet, resulting in annual savings of $385 million, says Mohanbir Sawhney, professor of marketing at Kellogg , and that was back in 1997. "Increasingly," says Arvind Sahay, assistant professor of marketing and international business at the London School of Economics, "companies are competing in a marketplace that is information-based and electronically mediated," thereby lowering their costs which can be passed along to consumers.
"These information assets," says David Schmittlein, professor of marketing at Wharton and chairman of its marketing department, "will allow us to develop economic databases that capture detailed, yet easy to use, customer information. What this means is that in the years ahead we will have to spend as much time defining customers’ needs and devising communications strategies as to selling itself."
The arrival of the information revolution in the late 1970s, says David Soberman, assistant professor of marketing at INSEAD, "… has turned society ‘upside down’ and promises to reverse many of the social trends that characterized the 20th century. ‘Unconventional’ jobs will be more common, as telecommuting enables people to work away from big cities, consumers will increasingly demand customized products; and the mass media ‘global village’ will fragment into a multi-tude of smaller communities." This diverse market," says Soberman, means that marketers must become skilled at gathering the data needed to target smaller groups of consumers, and in using this information to more efficiently tailor their offerings to suit today’s consumer needs.
In doing this, marketers are right to be both nervous and excited about the prospects for digital media powered by state-of-the-art electronics, say Patrick Barwise, professor and chairman of the Future Media Research Department at the London School of Economics, and John Deighton, professor of business administration at the Harvard Business School, whose research centers on how digital technologies are shaping the practice of marketing.
"Some of the more revolutionary changes predicted by techno-enthusiasts, such as the end of passive television watching," says Barwise and Deighton, "look wide of the mark but print, radio, direct mail and the telephone will all need to adapt to survive. Display advertising will evolve, while classified advertising is likely quite quickly to go ‘bi-media,’ with both print and digital access to ads. The main opportunities to exploit growing consumer access to digital media will fall to direct marketers–that is, those who have historically addressed consumers individually via the telephone and mail."
Just how far-reaching these changes could be is examined by Philip Kotler, distinguished professor of international marketing at Kellogg. In the year 2005, he says, "Virtually all products are now available without going to a shop. The customer can access pictures of any product on the Internet, read the specification, shop among online vendors for the best prices and terms, and click order and payment over the Internet. Expensively printed catalogs have disappeared," he notes, and "Shop-based retailers find shop traffic highly diminished."
The next edition of Knowledge@Wharton will look at the new strategies needed to capitalize on the forces changing the fundamentals of marketing as discussed in Mastering Marketing.