New Company Capabilities

These major societal forces create complex challenges for marketers, but they have also generated a
new set of capabilities to help companies cope and respond.
• Marketers can use the Internet as a powerful information and sales channel.
The Internet augments marketers’ geographical reach to inform customers and promote products worldwide. A Web site can list products and services, history, business philosophy, job opportunities, and other information of interest. In 2006, a Montgomery, Alabama, flea market gained national popularity when owner Sammy Stephens’s rap-style advertisement spread virally through the Internet. Created for $1,500, the advertisement was viewed more than 100,000 times on YouTube and landed Stephens on The Ellen DeGeneres Show. Stephens now sells T-shirts, ring tones, and other branded merchandise through his Web
site, advises retailers about advertising, and hosts hundreds of visitors from all over the
world at his store each month.
• Marketers can collect fuller and richer information about markets, customers, prospects,
and competitors.
Marketers can conduct fresh marketing research by using the Internet to arrange focus groups, send out questionnaires, and gather primary data in several other ways. They can assemble information about individual customers’ purchases, preferences, demographics, and profitability. The drugstore chain CVS uses loyalty-card data to better understand what consumers purchase, the frequency of store visits, and other buying preferences. Its
ExtraCare program netted an extra 30 million shoppers and $12 billion a year in revenue
across 4,000 stores.
• Marketers can tap into social media to amplify their brand message.
Marketers can feed information and updates to consumers via blogs and other postings, support online communities, and create their own stops on the Internet superhighway. Dell Corporation’s@Dell Outlet Twitter account has more than 600,000 followers. Between 2007 and June 2009, Dell took in more than $2 million in revenue from coupons provided through Twitter, and another $1 million from people who started at Twitter and went on to buy a new computer on the company’s Web site.
• Marketers can facilitate and speed external communication among customers.
Marketers can also create or benefit from on-line and offline “buzz” through brand advocates and user communities. Word-of-mouth marketing agency BzzAgent has assembled a nationwide
volunteer army of 600,000 consumers who join promotional programs for products and
services they deem worth talking about.
In 2005, Dunkin’ Donuts hired BzzAgent to help launch a new espresso beverage, Latte Lite. Three thousand trained volunteers (called BzzAgents) in 12 test markets experienced the Latte Lite, formed their opinions, engaged in natural conversations about the product, and reported back to BzzAgent via the company’s reporting interface. After four weeks, product sales had increased by more than 15 percent
in test markets.
• Marketers can send ads, coupons, samples, and information to customers who have requested them or given the company permission to send them.
Micro-target marketing and two-way communication are easier thanks to the proliferation of special-interest magazines, TV channels, and Internet newsgroups. Extranets linking suppliers and distributors let firms
send and receive information, place orders, and make payments more efficiently. The company can also interact with each customer individually to personalize messages, services, and the relationship.
• Marketers can reach consumers on the move with mobile marketing.
Using GPS technology, marketers can pinpoint consumers’ exact location and send them messages at the mall with coupons good only that day, a reminder of an item on their wish list, and a relevant
perk (buy this book today and get a free coffee at the bookstore’s coffee shop). Locationbased advertising is attractive because it reaches consumers closer to the point of sale. Firms
can also advertise on video iPods and reach consumers on their cell phones through mobile marketing.
• Companies can make and sell individually differentiated goods.
Thanks to advances in factory customization, computer technology, and database marketing software, customers can buy M&M candies, TABASCO jugs, or Maker’s Mark bottles with their names on them;
Wheaties boxes or Jones soda cans with their picture on the front; and Heinz ketchup bottles with customized messages. BMW’s technology allows buyers to design their own car models from among 350 variations, with 500 options, 90 exterior colours, and 170 trims. The company claims that 80 percent of the cars bought in Europe and up to 30 percent bought in the United
States are built to order.
• Companies can improve purchasing, recruiting, training, and internal and external
communications.
Firms can recruit new employees online, and many have Internet training products for their employees, dealers, and agents. Retailer Patagonia has joined Walt Disney, General Motors, and McDonald’s in embracing corporate blogging to communicate with the public and employees. Patagonia’s The Cleanest Line posts environmental news, reports the results of its sponsored athletes, and posts pictures and
descriptions of employees’ favorite outdoor locations.
• Companies can facilitate and speed up internal communication among
their employees by using the Internet as a private intranet.
Employees can query one another, seek advice, and download or upload needed information from and to the company’s main computer. Seeking a single online employee portal that transcended business units, General Motors launched a platform called my Socrates in 2006 consisting of announcements, news, links, and historical information. GM credits the portal with $17.4 million in cost  savings to date.
• Companies can improve their cost efficiency by skillful use of the Internet.
Corporate buyers can achieve substantial savings by using the Internet to compare sellers’ prices and purchase materials at auction, or by posting their own terms in reverse auctions. Companies can improve logistics and operations to reap substantial cost savings while improving accuracy and service quality.

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• Consumer information:
Consumers can collect information in as much breadth and depth as they want about practically anything. They can access on-line encyclopaedia, 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),
Delicious (links), Digg (news stories), Wikipedia (encyclopaedia articles), and YouTube (video). Social networking sites—such as Dogster for dog lovers, TripAdvisor for ardenttravelers, 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.
• 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 favourite companies as workshops from which they can draw out the
offerings they want.
• Consumer resistance:
Many customers today feel there are fewer real product differences, so they show less brand loyalty and become more price- and quality-sensitive in their search for value, and less tolerant about undesired marketing. A Yankelovich study found record levels of marketing resistance from consumers; a majority reported negative opinions about marketing and advertising and said they avoid products they feel are overmarketed

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• 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.
• 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 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.
• Disintermediation:
The amazing success of early dot-coms such as AOL, Amazon.com,
Yahoo!, eBay, E*TRADE, and others created disintermediationin 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 reintermediationand became “brick-and-click”
retailers, adding on-line 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 auctionin which sellers compete to capture
their business. They can readily join others to aggregate their purchases and achieve deeper
volume discounts.

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 behaviours,
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 Telefonica 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
mega brands and extended into a wide variety of related product categories, presenting a significant competitive threat.

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