c.
The new marketing realities
Major Societal Forces
Network information technology. The digital revolution has created an Information Age that
promises to lead to more accurate levels of production, more targeted communications, and
more relevant pricing.
Globalization. Technological advances in transportation, shipping, and communication have
made it easier for companies to market in, and consumers to buy from, almost any country in
the world. International travel has continued to grow as more people work and play in other
countries.
Deregulation. Many countries have deregulated industries to create greater competition and
growth opportunities.
Privatization. Many countries have converted public companies to private ownership and
management to increase their efficiency
Heightened competition. Intense competition among domestic and foreign brands raises
marketing costs and shrinks profit margins. Brand manufacturers are further buffeted by
powerful retailers that market their own store brands. Many strong brands have become
megabrands and extended into a wide variety of related product categories, presenting a
significant competitive threat.
Industry convergence. Industry boundaries are blurring as companies recognize new
opportunities at the intersection of two or more industries. The computing and consumer
electronics industries are converging.
Retail transformation. Store-based retailers face competition from catalog houses; direct mail
firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV; and e-
commerce. In response, entrepreneurial retailers are building entertainment into their stores
with coffee bars, demonstrations, and performances, marketing an “experience” rather than a
product assortment.
Disintermediation. The amazing success of early dot-coms such as AOL, Amazon.com, Yahoo!,
eBay, E*TRADE, and others created disintermediation in the delivery of products and services by
intervening in the traditional flow of goods through distribution channels. These firms struck
terror into the hearts of established manufacturers and retailers. In response, traditional
companies engaged in reintermediation and became “brick-and-click” retailers, adding online
services to their offerings. Some became stronger contenders than pure-click firms, because
they had a larger pool of resources to work with and established brand names.
Consumer buying power. In part, due to disintermediation via the Internet, consumers have
substantially increased their buying power. From the home, office, or mobile phone, they can
compare product prices and features and order goods online from anywhere in the world 24
hours a day, 7 days a week, bypassing limited local offerings and realizing significant price
savings. Even business buyers can run a reverse auction in which sellers compete to capture
their business. They can readily join others to aggregate their purchases and achieve deeper
volume discounts.
Consumer information. Consumers can collect information in as much breadth and depth as
they want about practically anything. They can access online encyclopedias, dictionaries,
medical information, movie ratings, consumer reports, newspapers, and other information
sources in many languages from anywhere in the world.
Consumer participation. Consumers have found an amplified voice to influence peer and public
opinion. In recognition, companies are inviting them to participate in designing and even
marketing offerings to heighten their sense of connection and ownership. Consumers see their
favorite companies as workshops from which they can draw out the offerings they want.
Consumer resistance. Many customers today feel there are fewer real product differences, so
they show less brand loyalty and become more price- and quality-sensitive in their search for
value, and less tolerant about undesired marketing.
New Company Capabilities
• Use the Internet as a powerful information and sales channel. The Internet augments marketers’
geographical reach to inform customers and promote products worldwide. A Web site can list products
and services, history, business philosophy, job opportunities, and other information of interest.
• Collect fuller and richer information about markets, customers, prospects, and competitors.
Marketers can conduct fresh marketing research by using the Internet to arrange focus groups, send out
questionnaires, and gather primary data in several other ways. They can assemble information about
individual customers’ purchases, preferences, demographics, and profitability.
• Tap into social media to amplify their brand message. Marketers can feed information and updates
to consumers via blogs and other postings, support online communities, and create their own stops on
the Internet superhighway.
• Facilitate and speed external communication among customers. Marketers can also create or benefit
from online and offline “buzz” through brand advocates and user communities
• Send ads, coupons, samples, and information to customers who have requested them or given the
company permission to send them. Micro-target marketing and two-way communication are easier
thanks to the proliferation of special-interest magazines, TV channels, and Internet newsgroups.
Extranets linking suppliers and distributors let firms send and receive information, place orders, and
make payments more efficiently. The company can also interact with each customer individually to
personalize messages, services, and the relationship.
• Reach consumers on the move with mobile marketing. Using GPS technology, marketers can pinpoint
consumers’ exact location and send them messages at the mall with coupons good only that day, a
reminder of an item on their wish list, and a relevant perk. Location-based advertising is attractive
because it reaches consumers closer to the point of sale.
• Make and sell individually differentiated goods. Thanks to advances in factory customization,
computer technology, and database marketing software, customers can buy products with their names
on them.
• Improve purchasing, recruiting, training, and internal and external communications. Firms can
recruit new employees online, and many have Internet training products for their employees, dealers,
and agents.
• Facilitate and speed up internal communication among their employees by using the Internet as a
private intranet. Employees can query one another, seek advice, and download or upload needed
information from and to the company’s main computer.
• Improve their cost efficiency by skillful use of the Internet. Corporate buyers can achieve substantial
savings by using the Internet to compare sellers’ prices and purchase materials at auction, or by posting
their own terms in reverse auctions. Companies can improve logistics and operations to reap substantial
cost savings while improving accuracy and service quality.
