|
The New Rules for Digital Marketing
- Target segments of one and create virtual communities
- Design for customer-led positioning
- Expand the role of branding in the global portfolio
- Leverage consumers as co-producers through customization
- Use creative pricing in the priceline.com world
- Create anytime-anyplace distribution and integrated supply chain
- Redesign advertising as interactive and integrated marketing communication, education and entertainment
- Reinvent marketing research and modeling as knowledge creation and dissemination engine
- Use adaptive experimentation
- Redesign the strategy process and supporting organizational architecture
|
If you’ve picked up a business publication in the last three years, you’ve probably encountered one of the many lists of “new rules for the new economy.” Some of these make for insightful reading, but many have all the staying power of last year’s dot.coms.
It is a pleasure, therefore, to showcase some new rules that have depth and insight, and that will survive not only the next few dips in the NASDAQ, but possibly the first several decades of the digital age.
Rather than propose rules for the entire economy, Professors Vijay Mahajan (McCombs) and Jerry Wind (Wharton) focus their proposals on marketing. Marketing scholars of global stature, Wind and Mahajan are also pioneers in the new field of digital marketing. As contributing editors of the forthcoming book, Digital Marketing: Global Strategies from the World’s Leading Experts, Mahajan and Wind are out to reshape their discipline. The challenge is not purely academic, but a practical effort “to provide management with useful new conceptual and methodological tools.”
What follows are key points paraphrased from Mahajan’s and Wind’s new rules for digital marketing, with selected excerpts from their essay. Readers can access the complete text of the essay on our Website, at www.mccombs.utexas.edu/news, or by ordering the book through Amazon.com.
The Website includes a bulletin board where you can voice opinions on digital marketing and glean those of Ross Garber, Chairman and Co-Founder of Vignette. A special guest will join Mahajan for a live online chat on Friday, December 8, from 12 noon – 1 p.m. CST. Sign up now on our Website for an email reminder, so you don’t miss this exciting opportunity to share ideas with some of the country’s leading e-marketing visionaries.
|
Key points and excerpts from Digital Marketing
by Jerry Wind and Vijay Mahajan
From the Introduction:
“Lastminute.com, priceline.com, Amazon.com – a revolution has taken place in the marketplace with consumers being offered greater transparency and often even the chance to dictate the price…. These new realities of the business environment have led a number of authors to develop new rules for the new economy. While some of these ‘rules’ encompass some marketing perspectives, companies need to focus more explicitly on a new set of ‘principles’ for marketing in a digital age. Although these ‘rules’, as summarized, are still emerging, they are beginning to shape the new discipline of marketing.”
Target segments of one and create virtual communities.
Key points:
- Target customers individually, not as broader segments
- Use interaction to make customers partners
- Design virtual communities to complement ‘one on one’ segmentation
In their own words:
“Managers need to determine how to design this process of interaction rather than focusing only on designing specific products and communications. They need to develop effective strategies for giving customers options without overwhelming them.”
Design for customer-led positioning
Key points:
- Online, customers decide what matters about a product
- Positioning must be built on customer involvement
- Let customers co-determine a product’s benefits
In their own words:
“How do companies position their products in an environment in which customers can obtain almost perfect information instantaneously on the performance of the product and its competitors? …. [It] is critical to focus not just on the benefits of the products offered by the firm (and its immediate competitors) but on the benefits sought from the entire range of products and services considered by the consumer.”
Expand the role of branding in the global portfolio
Key points:
- Branding is more important than ever in the online world
- Global brands are key on the borderless Web
- Emerging markers offer huge potential
In their own words:
“With many options to choose from and so with “less” personal relationships online, customers may turn to trusted and trustworthy brands as an indication of more intangible qualities.”
Leverage consumers as co-producers through customization
Key points:
- Mass customization allows consumers to help companies design new products
- Companies need to present options without overwhelming consumers
- Product design must allow concurrent development of new products, services, and business models
In their own words:
“Customerization is taking this concept further …. In effect, customerization redefines the relationship between the firm and its customers. It empowers the customer to design the product and service while the firm ‘rents’ out to the customer its manufacturing logistics and other resources.”
Use creative pricing in the priceline.com world
Key points:
- Pricing power has shifted from companies to consumers
- Customers will sometimes pay a premium for ease and value of customization
- Try creative options, like value-based pricing
In their own words:
“Hewlett-Packard is using value-based pricing in a $500 million contract to supply computer equipment to Qwest Communications Intl. Qwest pays only on the revenues it generates and if it achieves its objectives HP will get $1 billion in three years.”
Create anytime-anyplace distribution and integrated supply chain
Key points:
- Companies need to redesign supply chains
- The right balance of digital and material distribution will vary for each firm
In their own words:
“The use of technology on the business-to-business side can help integrate the supply networks, reduce product inventory, streamline processes and as a result cut costs and speed up the development, manufacturing and delivery of products and services.”
Redesign advertising as interactive and integrated marketing communication, education and entertainment
Key points:
- Traditional advertising has been shaped by mass media
- New media are more addressable and responsive, interactive not broadcast
- Captivating, engaging Websites build better customer relationships
In their own words:
“Customers are no longer the passive recipients of ads and commercial information, but are active participants in an interactive ‘edutainment’ process seeking the tools to learn about the products and services (education) while being entertained and inspired. Media advertising, Internet communication, public relations, packaging, customer service and any other points of contact between the firm and its customers and prospects have to be integrated.”
Reinvent marketing research and modeling as knowledge creation and dissemination engine
Key points:
- Technology makes tacit knowledge more accessible
- Avalanche of new information requires new approaches
- Marketing research needs reinvention as the knowledge engine of a firm
In their own words:
“Some of the most important knowledge about customers is tacit knowledge, such as their shopping patterns, interest and activities profiles, payment transactions and chatroom discussions. These can all be captured online. But companies need to find ways to get customers to part with the knowledge and they also need to be able to capture and use the knowledge once they obtain it.”
Use adaptive experimentation
Key points:
- Learning while doing allows firms to optimize strategy over time
- This creates a culture of experimentation and learning, critical for digital environment
In their own words:
“The major benefits of adaptive experimentation – ability to continuously learn, added incentive to develop and test innovative strategies, making it harder for the competition to figure out what your strategy is and creating a culture of experimentation and learning – are even more critical in the changing and turbulent digital marketing environment.”
Redesign the strategy process and supporting organizational architecture
Key points for management focus:
- Vision combining the company’s aspirations with the type of firm that will succeed in the changing environment
- Vision for e-business, with explicit e-business objectives
- Creative strategies reflecting the new rules of marketing
- New organizational designs
- New supporting organizational structures that keep pace with information technologies.
In their own words:
“As the digital revolution has taken place, companies have tended to look at the technology itself while paying too little attention to its implications for marketing. Yet as the world shifts from physical to virtual, as value moves from the greasy gears and hard steel of the industrial age to the high concepts of a knowledge economy, what could be more important to companies than the relationships with customers and other external constituencies, knowing their needs and how to communicate with them and meeting their changing needs and building sustainable relationship and loyalty?”
For information on specific programs at the McCombs School, consult our contacts page. For media information, contact the Communications Director by phone at 512-471-3314 or by email at CommunicationsDirector@mccombs.utexas.edu.
