Some thoughts from the Chalkface.
I’ve spent most of the Autumn teaching various flavours of Marketing at the Business School in Southampton. Introduction to, Entrepreneurial, Digital and above all the use of metrics.
One of the big ideas floating around at present is the difference between value and worth and how co-creation changes the type of offers possible in the digital world.
Here’s an attempt to get some of these ideas into a digestible form – let me know if I succeeded.
Exchange and Value
The fundamentals of business and marketing is the idea of exchange with all other things being equal the choice going to the company that adds most value.
However in the digital world value is much harder to define than in more traditional sales and marketing environments
The buying nexus
In the networked economy it is the use to which the item is put in the context of what the person wants to do that is important.
It’s long been a truism that the only reason people buy electric drills is that they want holes – but for some reason these are not available in the hardware store – mainly because although they could in theory be offered pre-sized, they can’t be pre-located. To provide the location the user needs the drill.
So the product is bought but to achieve the value that the customer is looking for he has to bring some activity of his own to the party. And it’s also true that the context is important. Drilling a few holes to put up a shelf is part of it. But if the shelf is part of the life support system an invalid member of the family, the importance of the context and the emotional value of the drill to the purchaser has ratcheted up even though the worth – what is actually paid has not changed.
The importance of Context
It’s also true that we don’t live as individual atomised consumers despite the way economic and marketing theorists look at the world. We are part of communities and we feel a connection to other people who are part of our tribe. And if we are happy or unhappy with our purchase we’ll tell other people about it.
If the drill manufacturer recognises that this “tribe” is a valuable market segment that can be catered for specifically then it can proceed to enrich its offer and create more value for its client base.
It depends also on the individual’s relationship to their community and to the connections that they have made with their cyber chums.
You see what constitutes “value” is partly made up of the purchasers motivations, partly made up of how “relational” rather than “transactional” the interaction becomes and how many additional layers of value can be added.
The Offer Spectrum
Our drill under normal circumstances would be at the rational /transactional end of the spectrum. But if the right levels of support, service and online access to experiential help such as chat advice or instructional videos can be constructed and made available to an online “support” community, then the vendor has the opportunity to engage in a deeper way with the purchasers motivations and start to build some goodwill and associations which will make them the manufacturer of choice for the future.
In case you think this kind of emotional allegiance is far fetched consider the case of Coke.
This is a product that consists of sugar syrup, flavouring and fizzy water. In blind tests it’s well documented that consumers prefer the taste of their main rival – and yet. When people know what they’re drinking they vastly prefer Coke because of the associations of “cokeness” in their mind. Built on 150 years of brand building by association with “togetherness”, being American and sociability. To the extent that it has the largest intangible brand value on the planet – measured as the difference between the stock price valuation and the book value of the corporation’s assets. It’s like Sinatra’s singing. Even if you don’t like it you can still learn lots from their technique.
In the digital world it’s also true that who sees what the use is may be part of the value. This can be the rest of the user’s community in an organic way or it can be the marketplace, the search engine or the social media environment in which the interaction takes place.
Because in its own way the online world is quite Orwellian in that every transaction or interaction is tracked – by government, by the interactive space’s owner or by companies using cookies to retarget advertising to people who visited their site but failed to complete the online sales pipeline.
Thomas Power, late of Ecademy, always used to remark that when the game is over, the one who has all the names will have won. The digital world has allowed the kind of market concentration that Geoffrey Moore addressed in “inside the Tornado” to happen much faster and go further. We truly are already living in a Winner Takes All world.
This process is analysed in depth in a presentation to a conference by Activate.com
Here’s a slide from the presentation that demonstrates the degree of concentration in online music.
Concentration in the Audio Market
You can access the entire presentation here http://www.slideshare.net/ActivateInc/activate-tech-and-media-outlook-2016?ref=http://activate.com/
So our task as marketers is how to construct a marketing mix and set of activities that allows us to develop offers and product/service sets by interacting with our customers both online and offline and then find ways of making them useful, enticing and compelling to the needs, motivations and aspirations of our customers.
If it was easy everyone would be doing it.
Till next time.