Marketing Realities...

The New Marketing Realities
We can say with some confidence that the marketplace isn’t what it used to be. It is dramatically different
from what it was even 10 years ago.
Major Societal Forces
Today, major, and sometimes interlinking, societal forces have created new marketing behaviors,
opportunities, and challenges. Here are 12 key ones.
• 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. In the United States, laws restricting financial services,
telecommunications, and electric utilities have all been loosened in the spirit of greater
competition.
• Privatization. Many countries have converted public companies to private ownership and
management to increase their efficiency, such as the massive telecom company Telefónica CTC
in Chile and the international airline British Airways in the United Kingdom.
• 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, for example, as Apple, Sony, and Samsung release a
stream of entertainment devices from MP3 players to plasma TVs and camcorders. Digital
technology fuels this massive convergence.21
• Retail transformation. Store-based retailers face competition from catalog houses; directmail
firms; newspaper, magazine, and TV direct-to-customer ads; home shopping TV;
and e-commerce. In response, entrepreneurial retailers are building entertainment into
Allrecipes.com
DEFINING MARKETING FOR THE 21ST CENTURY | CHAPTER 1 13
their stores with coffee bars, demonstrations, and performances, marketing an “experience”
rather than a product assortment. Dick’s Sporting Goods has grown from a single bait-andtackle
store in Binghamton, New York, into a 300-store sporting goods retailer in 30 states.
Part of its success springs from the interactive features of its stores. Customers can test golf
clubs in indoor ranges, sample shoes on its footwear track, and shoot bows in its archery
range.22
• 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. Personal connections
and user-generated content thrive on social media such as Facebook, Flickr (photos),
Del.icio.us (links), Digg (news stories), Wikipedia (encyclopedia articles), and YouTube
(video).23 Social networking sites—such as Dogster for dog lovers, TripAdvisor for ardent
travelers, and Moterus for bikers—bring together consumers with a common interest. At
CarSpace.com auto enthusiasts talk about chrome rims, the latest BMW model, and where
to find a great local mechanic.24
• 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.