Transcript Regis McKenna 2004 © Market Architecture - Home

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New Marketing Strategies
Regis McKenna
September 9, 2004
College of Engineering
San Jose State University
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Regis McKenna ©2004
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Marketing Evolves – Pushed by the Technology
Mass Production: Age of Reach
 Marketing: Expansion of Infrastructure.
 A variety of corporate activities performed prior to selling or
promotion.
 The role of consumer credit.
 “A highly refined system of thought and practice”
necessary for the development of a market economy
Age of Push: Mass media
 Television (Mass Media) is the premium brand building medium
 Marketing + behavioral research turn marketing into a creative social
science
 Expanding middle class population & suburbs
 Marketing: Expanding distribution and mind share
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"The traditional marketing model is broken"
Jim Stengel, Procter & Gamble's global marketing officer
Source: FORTUNE/ Nightmare on Madison Avenue,
By Devin Leonard, June 14, 2004
“George Murphy, senior vice president for global brand
marketing for the Chrysler Group, complains that his
company is spending too much on television ads. It galls him
that the price of a 30-second commercial continues to rise at a
time when the broadcast networks are steadily losing their
audience—and when his own marketing budget is flat because
the car industry hasn't been able to raise prices for five years.”
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The Laws of More (and cheaper) Information
Average Price Per Megabyte
$12
The performance & price curves of basic
digital technologies: processing,
memory, storage, bandwidth & software
continue their trends and pace of
progress absorbing more and more of
the value of complex, costly labor
intensive processes.
10
8
6
4
2
Rigid Disk Drives
0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Year
Source: 1999 Disk/Trend Report
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Building the Infrastructure for Access
Worldwide Semiconductor Shipments
Industry Transformation
Worldwide Semiconductor Sales ($B)
$220
Internet
$200
Wireless
$180
Win ‘95
$160
Servers & Storage
486 PCs
$140
Windows
3.0
386
PCs
$120
$100
Non-Computing
Semiconductor
Shipments
$80
$60
$40
Mainframes
Apple
PC
IBM
PC
Silicon Consumption
by Computing Products
$20
$0
19
70
Courtesy David N.K. Wang
Executive Vice President
Applied Materials
19
80
19
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90
20
00
20
02
Sources: WSTS, Applied Materials Corporate
Marketing estimates, Dataquest, IDC
Shifting Drivers of Growth
Digital
consumer/personal
appliances
Millions of Users
1,000
Personal
Computing
100
Mainframes
10
1970
Courtesy David N.K. Wang
Executive Vice President
Applied Materials
1980
1990
2000
2010 . . .
Source: IDC Directions
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Technology and Social Change
1875 – 1985
Technology
Innovation
Institutionalized
Control
Controlled
Diffusion
Social Acceptance
and Change
1985 – 2004 +
Technology
Innovation
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Regis
McKenna 2002 ©
Rapid Market
Diffusion
Social Acceptance
and Change
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Traditional
Institutions
React
Digital technologies provides enormous opportunity for
redefining the meaning of “local presence” to a customer
Technical Progress
Market/Value Perspective
o Moore’s Law
Shift to value-added services
o Metcalfe’s Law
Everything is connected
o Gilder’s Law
Full Human expression via bits & bytes
o The Law of Storage
Consumable Data (Services)
o The Law of Software
Mass customization & personalization of
services
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Age of Total Access
Network
Supplier
Sales
Human
Resources
Operations
R&D
The
Enterprise
Finance
Retail
Edge
Devices
Supplier
Operations
Support &
Solution
Partners
Development
Partner
Solution
Providers
Information
Technology
Marketing
User
Advocates
Point of
Presence
Partners
Enterprise
Services
Ecosystem
Outsourced
Operations
Government
Financial
Institutions
Information
Resources
Information
Partner
Industry
Analysts
Financial
& Media
Partners
Stockholders
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Co-Presence
Operators
Traditional
Customer
Stakeholder
Research
Institutions
© Regis McKenna 2004
Customer
Networks
New
Customer
Content
Supplier
Consultants
Information
Distributors
The Media
(Hidden) Persuaders
24/7
Presence
Constant
Novelty
Infinite
Self Consumable
Choice Service
Data
Temporary
Perceptions
Real Time Personal Adaptable Connected Ubiquitous Cheap
Programmable Applications
o
Microprocessors
o
World-Wide Web
o
SS Memory/storage
o
Digital platforms
o
Software platforms
o
TCP/IP, Java, XML
o
Storage Networks
o
Satellites
o
Programmable tools
o
Wireless
o
CAE - Computer Aided
Everything
o
Broadband Communications
o
Intelligent interface
Digital Understructure Platforms
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New Realities
 Competition for customers, sustaining productivity and market
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uncertainties are forcing a restructuring of real time business models
based on new value- creating information architectures, standards,
interoperability, enterprise processes
Access replace broadcast
Real Time enterprise systems close the space-time service gap
Digital information devices, networks and applications dynamically alter
the supplier-producer-consumer dialogue
Logistics manage efficient, dynamic information and physical goods
distribution networks and define the leaders in every industry
IT is is the fuel energizing service economies
Marketing & IT converge
Challenge: Preparing the enterprise for the technology-driven, real time
global marketplace filled with uncertainties
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Marketing & IT Converge Redefining Its
Functionality as a Learning Process
Marketing is the continuous process of
organizational learning and the subsequent
adaptation to technological and market
changes over time. It is a process rather than
an event. It enables the enterprise (producer) to
acquire and apply knowledge efficiently by
interacting with customers and the marketplace
(infrastructure) so as to innovate and respond,
reliably, consistently and profitably.
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Consumable/Disposable Information Society
 36 Billion Gigabytes - Total new information generated ’02 and ’03
 Almost 800 MB of recorded information produced per person each
year... Up from 250 MB in 2000.*
 Present human and machine access points growing exponentially
 ATM’s (US): 12B Transactions/year –doubling in last decade
 Wi-Fi explosion just getting started
 Identity thefts estimated by Justice Dept = 700,000/year
 Number of reported cyber-incidents doubling every 6 months – 78 %
increase from 2001
 Digital Networks defy past models of complexity, management
models and value creation
*
UC Berkeley School of Information Management & Systems
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Marketing Evolves as it Involves

The goal of Marketing is to build and sustain buyer & seller
relationships and to expand and sustain those relationship over
time.

Technology isn’t doing away with that concept; it’s
expanding the responsibility for developing & sustaining the value of
the customer relationship across the enterprise and it’s network of
value-adding, expanding resources.

The new tools of marketing integrate the customer and are
network-based, mass customized enterprise solutions that help
foster a direct, engaging, sustained buyer-seller service
relationship.
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“Loyalty” is transparent to both producer and consumer

Marketing then becomes a process of integrating the customer as a
collaborating partner in long-term value creation
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Customer Preferences Tuned to Suit the Time & Place
Technology shapes behavior
o
o
o
o
o
o
o
o
o
o
o
o
o
Choice
Price
Novelty
Trust
Loyalty
Service
Simplicity
Access
Convenient
Secure
Presence
Speed
Brand
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Total Access Shifts Center of Marketing Gravity
 Customer now has the power to initiate the contact and make
purchase decisions based on a whole new set of market-induced,
constantly changing preferences.
 Access is an expectation of being conveniently connected to the
marketplace anytime, anyway and any place
 Competitive leadership has an added dimension – deploying and
maintaining the customer relationship 24/7
 Service productivity will demand increased automation of marketing
or all producer-consumer transactions that can be codified
 Marketing & IT converge enabling the enterprise to become an
architecture of trusted services
 Marketing is the integration of all Network of Market-Driven Solutions
& Services
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Moore’s Law applies to chips not people
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Creative Destruction
Between 1960 and 1999, both manufacturing’s share
in America’s GDP and its share of total employment
roughly halved to around the 15% mark.
In 1960, manufacturing was the center of the
American economy, and of the economies of all other
developed countries. By 2000, as a contributor to
GDP it was easily outranked by the financial sector.
The Economist 10.13.2001
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Productivity and IT Services
ERA
Platform
People to Machine Ratio
1960-1980
Mainframe
10:1
1970-1990
Minicomputer
1:1
1980-
Workstation
1:10
1990-
Enterprise Networks
1:100 +
2000-
Real-Time
Broadband secure
networks
1:1000 +
Source: Adapted from V. Khosla/Paul Johnson
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The Automation of Marketing
 As service transactions become more automated, marketing will increasingly
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be integrated and customized to the time and place and specific nature of
the transaction.
Demand for increasing IT and service productivity will hasten self-service
automation.
The reliability and responsiveness of both the products and the
information generated, although seemingly mechanical, are critical to the
long-term customer relationship.
Human involvement in many of the traditional functions of marketing is
already diminishing.
IT architectures are better at most aspects of marketing than humans: 24/7
access and service, choice, real time customer history, comparison
shopping, price, feedback, monitoring and control
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Customer Satisfaction: Automation & Synchronization
of All Service Access Points/Presence
Home
Partners
Factory
Services
Anywhere/Anytime
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Marketing Architecture
On line
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Office
Mobile
Marketing Functions
Replaced By
o Product Definition
o Direct Customer Feedback
o Distribution
o Logistics
o Pricing
o Market-Mediated
o Forecasting
o Simulation
o Segmentation
o Data Mining
o Research
o Transaction Feedback
o Service
o Self-Service Networks
o One-way communications
o Dialog Web Services
o Competitive Analysis
o Context Search Engines
o Customer Management
o CRM
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Market Architecture
 A network of services inside & outside
 Automate processes customer services
 Self-sustaining & self-learning
 Scaleable
 Real Time Enterprise Platform
 Presentation interface & transparent services
 Application flexible, adaptable
 Real time - persistent presence (brand)
 Information & presentation synchronized to all support & customer
touch points
 Integration of end to end processes with existing IT assets
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Communications is More than Information
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Interactive Marketing Evolution
High
New Dimensions of
Interactive Multimedia
High
Touch
Bandwidth
Experience
Media
Broadband Services
Internet Online
Services
Computer
Radio
Static
Media
Digital Broadcast
Television
Newspaper
Low
Low
High
Information Richness
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Closed-Loop Marketing Architecture
Real Time
Customer
Consistent
Coordinated
Intelligent
Interactions
ATM
Self Service Channels
Adaptive
Applications
Branch
Agent
Assisted Service Channels
Marketing Sales & Service
Enterprise Platform
RT Process
Integration
Leveraged
IT Assets
Call
Dealer
Center
Phone WWW Kiosk
Relational
Databases
Transaction
Systems
CT Sources
External
Data Sources
Chordiant Software Systems
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Other
Applications
Goal: Customer Life-cycle Relationships
 Real Time Single View of Customer/client
 Quickly identify potential issues & opportunities
 Integrated Extended Enterprise
 Knowledge exchanged real time via diverse media types
 Intelligent Consistent Customer Interactions
 Improved Marketing Effectiveness –closed loop
 Reduced Operating Costs -productivity
 Access multiple & diverse databases & locations
 Interface & superior customer (Brand) Experience
Source: Chordiant/Regis
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IT Foundation for Sustaining Brand Loyalty
 Trust (Responsive, secure Information Architecture)
 Reliability (Customer communications is Mission Critical)
 Customer knowledge & service (Self service and feedback
loop)
 Innovation/novelty (R&D direct dialogue with infrastructure
& customers)
 Quality of support services (Synchronized Operations and
communications)
 Presence/ Brand Experience (Total Access: personalization,
Intuitive Interface)
 Sustained, reliable experience (Productivity, investment,
knowledge and evolving market ecosystem)
 Innovation (Monitoring customer patterns, preempting
competitors and enterprise-wide response)
Regis McKenna 2004 ©
New Media & Marketplace Call for
Creativity
 Caution: use of “tyranny of best practices” in changing
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times
Marketing and brand have are meaningless terms unless
customer experience fosters long-term loyalty
Marketing success requires sustaining presence over
customer life-cycle needs & wants
All business and enterprise functions are services
Applied marketing is not generic
Use other people’s assets
Creativity & innovation must become an essential
enterprise-wide asset
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Regis McKenna ©2004
Regis McKenna 2004 ©
This presentation is copyrighted by Regis McKenna, Inc. It may
be used for noncommercial, personal use only. It cannot be
modified, reproduced or used for commercial purposes without
written permission of the author. For more information, please
contact Ingrid Mifflin, Regis McKenna, Inc. 2109 Landings Drive,
Mountain View, CA 94043, [email protected]
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