New Media Mania

The development of a marketing communications strategy, while it may draw from theory learned at universities, must be grounded in the situational and objective reality of the organization. However, there is only one guarantee in any “reality”, and that is change. The common thread in everything the University of Canberra has asked me to read so far is change. Adapt or die; the survival of the fittest. And for the marketing communications professional, the most critical agents for change are past, present and future customers. But even change itself is changeable. It can accelerate or hit the skids, outpace expectations or not move fast enough, incrementally shift or disruptively transform. In order to stay profitable, an organization must anticipate change or at least adapt to it.

Adapt or Die

According to Slywotzky & Morrison (1998), the scramble for market share supported by mass marketing campaigns, which served the post-World War II production-oriented manufacturers well for about two decades, is now a strategy destined to create “no-profit zones”. Going all out for market share entails investing in size, scale, and capacity and leaves an organisation vulnerable to subtle shifts in customers’ preferences and expectations and/or the emergence of disruptive technologies. Smaller, nimbler, or more adaptable competitors, or upstarts unburdened by entrenched cultures, may be better positioned to exploit these changes to make quick gains in more profitable areas. Slywotzky & Morrison identify companies in both high-growth and low-growth industries that have pursued market share at the expense of profitability. And they identify companies that have successfully adapted to remain high-growth, high-value, and highly profitable. Each case offers important lessons for marketers, the main one being: KNOW YOUR CUSTOMER!

From Mass to Me

To give them their due, the post-war production line manufacturers of radios and television sets, white goods and cars, contributed mightily to the rise of the suburban middle classes of the “West”. With efficiency as their watchword, they were able to push out affordable modern conveniences that previous generations couldn’t dream of. And for a significant grace period the suburbs where these masses resided were (or were perceived to be) dominated by the nuclear family of a male breadwinner, a dutiful wife, and two point something children. This was an easy market to target through one or a combination of the dominant broadcast and print media of the time. But the homogenous mass market, and the media industry that served up society’s daily mirror, started to crack and fragment.

And competition intensified, both from home and abroad. By the 1970s, commentators such as Jack Trout and Al Ries (as cited in Schultz 1994) were waking up to the fact that producers were not guaranteed sales simply by positioning their products in front of consumers. Consumers were in fact positioning in their minds certain products relative to an ever expanding range of competing products. Companies that came to understand this subtle but important shift in the concept of “positioning” were themselves well placed to thrive during the “explosion of social and economic experimentation” (Schultz 1994) that was to come.

History Repeating?

Fast forward to today. In the online social networking industry of the early 21st century, the race for market share, which was so derided by Slywotzky & Morrison, is very much on. This is the URL strategy – Ubiquity first, Revenue Later – that many big online social networks, such as Facebook and Twitter, have employed. They have pulled out all stops to expand their user bases rather than worry about where revenue comes from. According to The Economist (2010), this raises “a big question mark over their ability to make money”.

However, by their very nature, the most successful social networks are being developed with the needs of end user very much in mind. Indeed many also-rans in the race have fallen by the wayside already. Others, such as LinkedIn, a networking site for professionals, have found profitable zones by segmenting the market. LinkedIn recognised that professional and business users would be willing to pay for enhanced features.

Success in attracting and retaining users is not only a product of “network effects”, a term originally coined for the spread of the telephone, but also how positively the network is perceived in terms of relevance, functionality, ease-of-use, and, as Facebook has been learning, respect for privacy.

A New Great Divide?

The rise of the Internet since the mid 1990s, and the online social networks that it has spawned, is likely the biggest shake-up in the marketing communications environment in recent times. As Wheelan & Hunger (2008) assert, the Internet has “profoundly affected the basis of competition in many industries”.

Now it is possible to segment a “marketplace” to the level of the individual. Never before has it been more cost-effective to engage in one-to-one conversations with customers. It is a significant “demassification” event, as Toffler might call it. In an evolutionary sense, the preparedness and ability to adapt to this new communications environment will increasingly divide the strong from the weak.

Wheelan & Hunger identify seven ways the Internet is transforming business:-

1. Electronically networking customers, suppliers, and partners
2. The disintermediation of distribution channels
3. More power shifting to the consumer
4. New tech-driven firms and older adaptable firms are exploiting the medium to become more efficient and increase their rate of innovation
5. Planning horizons are shorter, reflecting the immediacy of the medium
6. Extranets are blurring the lines between suppliers, manufacturers, and customers
7. Knowledge is becoming a source of competitive advantage

During an online discussion hosted by my university, recent events were suggested as possible triggers for a similarly Drucker-esque “great divide” — a radical shift in how organizations must conduct themselves and communicate. Suggestions included 9/11, climate change, and the global financial crisis.

Rather than the trigger for a great divide, the horrific events of September 11, 2001 were “just” another terrorist attack in a long line of terrorist attacks. It had its short-term impacts, which meant businesses had to adjust. It resulted in a US-led decade-long “war on terror”, which may have contributed to a long-term rise in commodity prices, especially oil. But in terms of its impact on how most businesses conduct themselves and communicate, I wouldn’t rate it.

Climate change concerns as popularised by the Stern Report and Al Gore’s “Inconvenient Truth” (both released in 2006) were triggers for a new era of eco- and carbon-consciousness. But we’re already witnessing a bit of a backlash in the debate on climate change, and any change to the way most businesses conduct themselves and communicate are (so far) relatively marginal.

The 2008 global financial crisis was “just” another manifestation of the business/economic cycle, except perhaps for the financial services sector which should expect closer supervision. After the US and UK and others overspent their way through the good years of the late nineties and much of the noughties, the level of spending required to rescue banks and stabilise financial markets have left these economies in a serious debt situation. More saving and less spending will be required to rectify this over the next few years. That might be a problem if you’re focused in those markets. However, we now live in a global village and not everyone is bankrupt!

Long Live the Customer …

Aside from the odd monopolistic redoubt, today the customer reigns over the business world, with choice in one hand and multiple sources of information – including his/her mobile-enabled social network – in the other. In this environment, integrated marketing communications is vital – not only to sell to the customer, but also to learn from him/her. In fact an increasingly important but often neglected aspect of marketing communications is conversation, both with customers and between customers. Such dynamic communications flows, practically unheard of in the mass marketing era, give organisations the best chance of answering the question: “Exactly how is the customer changing?” Slywotzky & Morrison (1998) describe this question as the “single most powerful management weapon”. The implications for the business models and communications strategies of today’s profit-motivated organisations are significant: KNOW YOUR CUSTOMER!

… and the Marketing Communications Professional!

If you fail to consult your target market (your customers), over time your product may become a commodity, or a staple, or the dull standard taken for granted in the mind of your customers. Or worse, it might acquire an image problem for itself. Never fear! There is always the chance that a marketing communications professional will help reposition your product. First s/he must find out where the product is positioned now in the “mind” of the market – your target customers – and where it needs to be in order to raise its perceived value. Then s/he must develop an integrated marketing communications strategy and plan to achieve the new position.

Take toothbrushes as an example. Toothbrushes it seems are constantly evolving, with new ergonomic shapes and angled bristles. But they continue to do the same very ordinary job they have always done. (Regular trips to the dentist to scale and clean gnashers are still required!) Behind this strange phenomenon are marketers positioning their products to encourage people to spend good money on what is, essentially, a piece of plastic. Even food “staples” have benefited from repositioning at various times: Pork “the other white meat”, for example. And, in an irrational marketplace, the price for even the most basic commodity is influenced by perceptions/expectations seemingly unrelated to the actual demand/supply equation.

A bigger challenge arises if your product becomes obsolete (unneeded or unwanted) due to technological or social change. An in-house marketing communications professional that consults with the market and analyses the environment through regular SWOT (strengths, weaknesses, opportunities, threats) analyses should be able to anticipate such change. After the fact, however, a marcoms pro can still be brought in to save the day! In theory, s/he can contribute to reinventing your business by introducing a customer-centric business design process, such as that proposed by Slywotzky & Morrison (1998). This would start with the needs, wants, and expectations of the marketplace and work backwards to the capabilities and resources of your business. You may find that you’ve been taking aim at the wrong targets the whole time. And you will almost certainly be told that your organisation needs a cultural makeover.

Deliberation Demanded

That word “change” again! And change can be painful. Wheelan & Hunger (2008) argue that to adapt more quickly to change in a dynamic and complex environment, management, staff, and other critical stakeholders must collectively evolve to become a learning organization skilled at “creating, acquiring, and transferring knowledge and at modifying behaviour to reflect new knowledge and insights”. To successfully reposition itself and its products, the organization will need all of its stakeholders to adopt a shared and deliberate strategy. It will require careful thought and an adept strategic management approach to introduce a new customer-centric culture. What once worked may need to be discarded. However, Mintzberg (2003) reminds us that “once they are established, perspectives become difficult to change”. That would be great if they happened to be customer-centric perspectives.

Help Me Understand: What Do You Think?

Fill (2005) makes a distinction between marketing and marketing communications. What value is there in that distinction? Shouldn’t the strategic development process for marketing and that for the marketing communications strategy to be employed be one and the same?

References

Fill, C, 2005, Marketing Communications. Engagement, Strategies and Practice (4th ed), Prentice Hall, New York, Chapter 12

Mintzberg, H, 2003, writing on “Strategies”, Chapter 1 of: The strategy process: Concepts, contexts, cases (4th ed), New Jersey: Prentice-Hall, pp 2-29

‘Profiting from Friendship’, 2010, The Economist, A Special Report on Social Networking, January 30, p 9

Schultz, DE, Tannenbaum, SI, Lauterborn, RF, 1994, The new marketing paradigm: Integrated marketing communications, NTC Business Books, Lincolnwood, Illinois, Ch 1, ‘A History of Marketing Communications: Why is it Important Now?’ pp 1-16

Slywotzky, AJ & Morrison, DJ, 1998, The profit zone: how strategic business design will lead you to tomorrow’s profits, Times Business, New York, Chapters 1 & 2 pp 3-33

Wheelan, TL, & Hunger, DJ, 2008, “Basic concepts in strategic management”, Chapter 1 of: Strategic management and business policy (11th ed), New Jersey: Prentice-Hall. 1-33