Startups.ie

In this blog entry we will take a reflective look on how the digital revolution has impacted on what we know in marketing our products. The purpose of this entry is for you to get a better idea and education of how each of the 4 P’s have changed since digital became an integral part of business. Having been at recent conferences I’ve noticed that there is a few people out there that are unaware of how digital has affected marketing. Some seem to think Facebook’s/Twitter’s etc when the word ‘digital’ is thrown around and hopefully this post will make Start-ups think about the other areas digital can affect their business.

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Price:

The influence of the internet on global marketing strategies is principally seen in respect to price with the free movement of information from country to country. A large contributor to this is the advances in search technology and SEO/ SEM making prices easier to find online as well as the online irrelevance of previous competition issues such as location. This is also supported by the emergence of third party search engines which scan the international landscape for the best price: For example Skyscanner.com which searches for the most affordable flights between destinations. Previously national boundaries played an important role in the global marketing strategies whereby companies could exploit national differences in consumers’ price sensitivities by charging different prices across different national borders for the same product. Differential pricing strategies become more apparent and companies risk being exposed as exploiting customers in different countries.

These factors have all lead to greater transparency which results in a customer’s changing perception of value. The results of this, as is common in the legacy of Web 2.0’s is that the customer has increased control. Some companies have responded to this power shift by relinquishing further price control and allowing customers to haggle as seen on Enterpriseonline.com or EBay. Furthermore, pricing has become more dynamic and fluid as a result of the digital revolution. As successfully exploited by Ryanair pricing now has a significant response to Supply and demand which forces prices up and down with increasing speed. The only way companies will be able to stay ahead of the competition and keep up with the customer is to develop a flexible pricing structure that allows them to move with the dynamic digital pricing terrain.

Product:

However, the digital impact is not restricted to price. Products themselves have been altered as a result of digital’s imposing presence on the global marketing scene. Product strategies have been impacted by deconstruction whereby internet operations have become companies in their own right whereby the messenger has become more important than the message. It is difficult to imagine Ryanair without its internet offering. Similarly American Airlines internet wing “Sabre” is now worth twice that of the original business. American Airlines originally created its SABRE electronic ticketing system as a means of selling seats. Under legal and regulatory pressure, American Airlines was forced to partially spin off SABRE and operate it as an independent business. But this “navigator” business is now valued by the stock market at nearly twice the value of the airline it was originally created to support.

Mass customisation is also reshaping a company’s product strategy. Again, following Web 2.0’s placement of the customer at the centre of everything this now includes a customised product. Levi’s and Nike, two of the biggest mass producers ever, now have services for customers to have products customised specifically for them. Long gone are the days of Henry Ford’s “any colour as long as it’s black” to a specifically built personalised product. Customers are further invited into the production process as crowd sourcing becomes increasingly popular. A veritable global think tank is created by customers being invited to submit their ideas for t-shirts and (Threadless.com) to creating chocolate bars with new recipes to Cadbury’s.

Location Awareness technology has also reshaped product strategies. Facilitating layering of additional information based on location offering a heightened real time real place customer offering. Many products themselves have been altered through digitization with music mp3’s now being the common platform and books following suit. A company’s product strategy must be reviewed to see can production and cost saving opportunities be realised through digitization.

Place:

With the movement from physical offices to offices in the cloud, a company must review their distribution strategies almost annually at this stage. The digital revolution provides companies with the opportunity to augment traditional channels of distribution reshaping customers shopping habits. The Financial Times revealed a while back that Donatello’s Pizza orders are now 36% via mobile, online and social networking. The rapid development of app’s is facilitating this with Paddy Power similarly reporting 10% of their revenue comes via mobile, 50% of this number being attributed to the Paddy Power iPhone App.

Of course with the shifting boundaries of distribution channels becoming more streamlined this implies that some supply channel partners will fall victims to disintermediation. Ryanair and Dell are advocates of this removing travel agents and computer wholesalers alike via disintermediation and selling directly to the consumer.

Promotion:

Communication is central to the theme of Digital Media. The adoption rate of Social Media has seen a growth like no media before it. Facebook now has a global audience of 750m with 50% of users logging on every day and people spending over 700billion minutes per month on the site. This has dramatically changed the promotional strategies with 92% of businesses (2011 Social Media report) now employing a Facebook strategy, 84% on Twitter and 71% using ‘Linked In’ for digitally influenced promotional strategies. The rise of Geo-location promotional strategies is set to continue with companies now employing Facebook places and Foursquare to give Social Media promotion a real time, real place solution. Seth Godin, business guru, argues companies can no longer rely on “interruption media” to get a customer’s attention. Social Media has reframed the promotional landscape which implies permission needs to be sought to advertise to the customer. The customer can choose whether they receive a message which is the basis of Irish success Empathy Marketing company “Pigsback.com”.

However, companies’ promotional strategies must involve a contingency plan for to deal with the new voice that the consumer has and their new found power to amplify and broadcast their views. Social media has granted consumers power to dictate companies actions: P&G were recently embarrassed into recalling their Pampers Dry Max diapers due to mounting complaints over Twitter and Facebook. Social Media enables customers to communicate their anger, organise themselves more efficiently and recruit others to their cause however; similarly the digital media revolution has seen the implementation of derogatory websites. Sites such as Dell hell, Murderking and Mcspotlight have cast Dell, Burger King and McDonalds in a hugely unfavourable light demanding change to their operations.

Digital impact on Research:

As most start ups are aware the internet provides an efficient means of conducting market research. Now you can see what your competition is doing in just a click. But it doesn’t end there. Previously focus groups interviews and questionnaires need to be conducted to obtain such valuable research information but the internet has created communication links through emails and corporate websites facilitating collaboration with a range of customers from different national, regional or cross cultural backgrounds. The advantages of digital to the research sphere include increased cost effectiveness through online surveys, interviews and observational research. Digital media also allows greater access to secondary data online, CD ROMs and is more easily distributed if purchased or ordered. Consumers are giving out all kinds of information via Twitter, Facebook and Blogs if companies choose to listen to it.

The internet’s impact on the global marketing landscape has changed everything from companies’ relationships with their customers and even companies relationships with their competitors.

To conclude on a topical note former Global Media Giant Rupert Murdoch said

“The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”

Digital has helped make so many Irish start-ups successful, understand it and embrace it!