Modern Marketing - Blog by Collaborate PR & Marketing

More Consumer Power

The Observer, the UK Sunday newspaper, this weekend made reference to the consumer power this blog has discussed.

In an article talking about EMI possibly being bought by Bertlesmann, Richard Wachman, city correspondent made the following observation:

"Whoever ends up at the altar with whom, the industry can not escape the accusation that illegal downloading and piracy are punishments meted out by consumers who have long resented being overcharged for CDs."

"The firms must reach out to their customers by selling products at a price people are prepared to pay. Otherwise no amount of consolidation will help in the long-term."

Which will be the next industry to be 'punished' by modern consumer communities ?

How can modern marketing techniques prevent such corporate pain ?

Consumer Cartels

Are consumer communities mobilised through technology already dictating prices to corporates ?

The Yankee Group estimates that in 2001 more than 5bn files were downloaded rising to 7bn by 2005. The BPI, the UK music industry trade body, blames a 15 per cent year-on-year fall in it's members sale on file swapping.

This can be viewed as consumers working like cartels, through vehicles such as Kazaa, to influence market price. If so, it's working. Apple's I-Tunes and ID2 are direct responses to the new downloading community offering legal music at a fraction of its traditional cost and people are paying.

Steve Jobs and Peter Gabriel are super modern marketeers, recognising such fundamental change and responding with innovation.

Retailers R Us

The web not only empowers the individual consumer but allows them to organise themself on a massive scale. This blog has posed the question how powerful can such consumer groups become ? Powerful enough to dictate price to manufacturers ?

With such thoughts in mind, the quote below from Ebay's boss, Meg Whitman, is enlightening.

"Our sellers in Q2 on an annualized basis traded over $20 billion worth of product and so our sellers now are competing for consumer dollars vs. all other channels of distribution. For example, if you were looking for a fishing rod, you have the choice of going to your local retailer, going to a mass merchandiser, looking elsewhere online, or coming to eBay. At this scale, I think we are competing very broadly for customer dollars."

£20bn without a single retailer or manufacturer involved. Just a company allowing individuals to mobilise themselves and compete with all established retail outlets.

How does a retailer or manufacturer become involved in such a group ? This question lies at the heart of modern marketing.

Remind You of Anything ?

The Guardian New Media section reports today on the battle between mobile operators, like 3 and Vodaphone, about whether 2.5G or 3G technology is best and their battle for content to lure subscribers.

The scenario sounds highly reminiscent of that which erupted as the web exploded in 1999. Lots of descriptions of technical capability, audience growth figures foreacasted to 2008, Microsoft-are-involved-so-it must-be-good-commentary, and bidding for content like football and pornography.

Aside from the question of who is watching pornography on mobile phones, none of this seems to take into account what we learnt from the web experience. Old content models can not be directly translated to interactive technologies. The wider population is totally uninterested in bits and bytes. Interacting with other people in new ways is exciting. People don't want to pay for something they can get for free elsewhere.

The mobile operator market seems to be being driven by companies and investors seeking to claw back massive initial investments in £22.5bn licence fees. Sound familiar ?

Modern marketing demands up-to-date thinking not a reliance on the tried and trusted.

Mobile Media

While European mobile operators have been trying to work out why they paid the UK government £20bn each for a 3G licence, DoCoMo, the largest Japanese operator, is up and running. In fact, of the company's 46m Japanese subscribers a whopping 39.5m (86%) are fully signed up to its data service which gives users to access maps, restaurant reviews, games, gossip and almost anything else they may get on a PC internet connection.

In July, Vodaphone announced that it had signed up it's two millionth European customer to Vodaphone Live!, its flagship data service. However, slowly but surely i-mode has also been collecting 700,000 European subscribers, through partnerships with Telefonica and KPN.

To try and get into the valuable UK market DoCoMo is pressing 3, the new operator, for a partnership deal. But it seems Hutchinson Whampoa, the HK group that controls 3, think that they can do it all on their own.

This may all seem like a load of corporate power games but it could have fundamental implications for modern marketing. UK consumers have already developed a very close relationship with mobile phones. New services could deepen that relationship at the expense of other media, including TV.

Mini Feedback

Thanks to Scott for this. Interesting insight into a true example of modern marketing. Can anyone point me in the direction of background on the UK campaign ?

http://www.minimania.com/MM/Mini_marketing_chief_proves_them_wrong.htm

Is Service The New Advertising ?

If customers are becoming more powerful through a combination of technology and increasing choice (think banking) then how can they be engaged ?

One view circulating is that customers need to be offered a service that genuinely helps them in their lives.

Modem Media, the interactive consultancy, puts it like this: 'When the customer dictates the rules, companies can earn value to the extent that they deliver value to those same customers. Many interactive marketing campaigns -- not to mention internet based businesses -- have failed because there never was a compelling value exchange.' Bit jargon-filled but I think we get the point.

Fine in theory, difficult in practice. In my experience companies are still trapped in an advertising mentality (not surprising considering how long it has been around). This means they launch internet activity based on ideas that they think the customer SHOULD be interested in. Increasingly modern marketing requires something genuinely useful -- ie a service.

Consumer Power

A current theme in the world of marketing is how technology is empowering the consumer. Examples of this are markets created by consumers that don't involve retailers or manufacturers such as Amazon used book market, peer-to-peer music or the Ebay giant.

Companies used to identify groups of similar people to target with new products. Increasingly, like-minded people are grouping themselves together via the web. Some are doing so in quite sophisticated ways such as the anti-globalisation networks. But they are not all so radical.

Does this mean companies will need to target these new networks ? And if so how will they do it ? And how powerful could these consumer networks become ? Powerful enough to negotiate their own terms with companies ?

I'll be looking out for modern marketing examples of companies interacting with these networks.

Love Marks

Someone else trying to understand what drives modern marketing is Kevin Roberts CEO of Saatchi & Saatchi. He says that brands must now appeal to people on a heightened emotional level. For that reason he prefers the term Love Marks to brands.

I can't quite decide about this one. Haven't the most successful brands always had a strong emotional element (Hovis, Guinness ?). However, one thing I found interesting is his belief that we have moved into a new age where customers are in control of markets because of information technology. This is in contrast to previous times when firstly corporations and then retailers were in control.

Massive Mini

The marketing for the new Mini just gets better. First Madonna tells how much she loves hers on Saturday night TV and then it becomes the star of The New Italian Job, starring coool Mark Wahlberg in a film that is apparently better than the original.

OK the car starts with a pretty enviable image but it could so easily have been ruined. Instead modern marketing has made it the best selling car in the UK.

Who is responsible for all this brilliance ?