IT and Marketing: Grow the Bond

The pressures facing the marketer today extend beyond rapidly changing customer preferences. But these are easily tackled by allying with IT



“The market is very dynamic,” is an oft-heard lament, especially from the marketer. And why not, 20 years ago, 80% of a target audience could be reached with one 30-second off-peak television ad. Today, reaching the same audience often requires 200 to 300 prime-time spots spread across 70 odd channels. The response to direct mail solicitations for credit cards has dropped from 2.8% in 1992 to less than half a percent today. And in wake of all this marketing expenditures are ballooning like there is no tomorrow. According to an Accenture estimate the marketing spend by the Global 1000 rose to $1 trillion in 2003 from $825 billion in 1998 (Our GDP is a little more than half of that!)Samsung alone spends a billion dollars a year on marketing!!

The result of all this is simple, boards across the world are questioning the return on investment that the companies are getting form their marketing investments and the heat under the marketer’s collar is getting unbearable.

Pressures aplenty
And it is time to ponder and think as to what are the dimensions of this change. The list that I propose is definitely not all encompassing and is debatable, yet I am of the firm belief that these changes are causing ripples that every marketer can feel.

The first is the way consumers buy and interact with the manufacturer. Reams have been filled about the Direct Dell model. What started off in a dorm room changed the very landscape of the PC industry. I will not therefore spend too much time on this one. Over and above the fact that the manufacturer has the alternative of going direct to the customer, the customer enjoys the benefits of price transparency. “The vast sea of information about prices, competition, and features that is readily
available on the Internet helps buyers ‘see through’ the costs of products and services,” says Indrajit Sinha in an article in that appeared in the HBR aptly titled Cost Transparency: The Net’s Real Threat to Prices and Brands. The better price phenomenon is affecting every company in nearly all industries.

The second is about the way competition comes at existing companies. The Encarta CD-ROM came from nowhere and was instrumental in putting the Benton Foundation owned Britannica on the block. Offers of sale to Microsoft were promptly rejected and finally when the 200-year-old brand was sold, it went for less than half of its book value.

The third is the way society mutates to handle pressures. Lack of belongingness to groups and causes is the root cause of a number of forces that impact the marketer today. Fewer young adults today are a part of the boy scouts and girl guides. I see this everywhere around me. And in many parts the ease of access to electronic channels of communication, the cellular phone or the Internet, can be blamed. As Robert Putnam, professor of public policy at Harvard puts it, we are experiencing a lack of belonging that stems from a decline in social capital.

And finally, customers’ rapidly changing preferences. The top five preferences today are choice, price, novelty, simplicity and speed (in no particular order). Therefore the average customer today is demanding and wants a lot more for every penny that he spends (You have probably heard this before and know it well!) In 1980 however the top preferences were brand, quality, convenience, price and references.


What’s the point?
At this juncture the one question that’s running through your mind is what’s the point, wise guy? Its very simple, the common thread weaving itself through these and most other pressures that are facing the marketer today is the impact of technology. To explain to you, what I mean I will take the help of the man who is often referred to as the marketing guru of the information age, Regis McKenna. Says he, “Technology is the greatest catalyst for change in marketing. This shouldn’t surprise us; technology has always been the driver of change in marketing. From railroads to automobiles, from radio to TV to computers, marketing takes advantage of new technology and applies it to new methods of marketing. Although technology changes, its role never does. Its always the agent of economic and social change.”

This agent of economic and social change has now taken the form of information technology. And it is time for the marketer to make peace with the technocrat in the house. The geek can do what was unthinkable till a few years ago. Lets look at an example. An average customer in a retail store in the US today is getting lost in the aisles and is therefore spending less. The Solution: A smart cart that is being built
by the Big Blue comes with built-in scanners and LCD screens. The cart displays maps, runs tabs and offers special discounts and offers on products related to the ones placed in the cart. And it would take no rocket scientist to guess what the outcome is likely to be.

The silver bullet is right there, the panacea is well within reach of most marketers today. Technology is one ally that will not only make marketers understand their customers and prospects better (more on that some time later!), but also help address their latent needs.

And in signing off, I would like to again seek help from some one wiser than me (I have taken more than my share today!). I quote Prof. Harold J. Leavitt, Kilpatrick Professor Emeritus at the Stanford Graduate School of Business. Says he, “Regardless of other economic trends, technology itself has no brakes nor an OFF button, so the new world is unlikely either to slow down or to level off. Information technology
has a long way to go before it comes into full flower, and other world changing technologies are ripening close behind.”

I wrote this a year and a half ago, actually ghost wrote! This is a topic close to my heart and I have used this theme for my lectures as well in both the marketing and the IT classes.