Traditional Marketing Categories are Dead
Kodak, Twinkies, General Motors, American Airlines, Friendly’s Ice Cream and, Filene’s basement are examples of traditionally strong companies that filed for bankruptcy in recent years. There are all kinds of proposed reasons, but, basically, they could not change. I.B.M. and Samsung are probably the best examples of companies that have dramatically changed and are experiencing renewed growth and profitability.
My argument is that rational structures, marketing, and even products are dead or slowly dying. Start-Ups and small businesses have unique opportunities to capitalize on the changes. Larger companies simply refuse to acknowledge the changes and are frequently unable to move fast enough.
For example, I have over 30 years experience in the apparel and textile industries, and we simply could not adapt fast enough to the move to China, which mostly happened in a five year period. In contrast, importers were able to establish organizations with virtually no overhead and market better products with lower prices, greater efficiencies, and lower investment to capture these markets.
Similarly, MacKenzie reports (Ian MacKenzie, Chris Meyer and Steve Noble in MacKinsey Reports 2013):
- Retail competition just keeps getting tougher. Consider the ongoing blurring of lines between formats and sectors as retailers try to steal shopping trips and share from one another.
- Players across the value chain are encroaching on what used to be the exclusive turf of retailers. More manufacturers are selling directly to consumers; examples include Apple, Nike, and—via Vitacost.com—several consumer-product manufacturers.
- Google offers more than one billion products for sale on Google Shopping, and may soon open retail stores.
- Additionally, companies such as Craigslist, eBay, and Etsy (home to almost a million small businesses) are creating marketplaces where individuals and entrepreneurs can sell their wares to the masses.
- Finally, rental and aftermarket-circulation models, such as Chegg for textbooks or Rent the Runway for designer fashion, are eating into traditional demand for retail goods.
While technology and market changes are having dramatic impacts, there are also critical cultural dimensions that are creating challenges and opportunities. In many cases we simply analyze our markets and customers is in terms of outdated parameters. This results are we miss allocate resources, underestimate the need for change and avoid potential solutions. For example
- We all know the traditional family with 2 parents, 2 kids and the dog are a minority. Families are frequently single or with kids and a single a parent, divorced etc.
- We still think of a white dominated population. However, over 50 % of current births and about 45 % of the population are non-white.
- America lost over 12 million manufacturing jobs, the work force is dominated by service and technical jobs and union membership is at the lowest level in decades.
- The female work force has grown from 39% in 1973 to 47% in 2009.
- Between 2010 and 2030 the over 45 population will grow from 39% to 45%.
- 70% of the world and 90% of the U.S. population have mobile phones. In addition there between 1 and 2 billion P.C.s in the world from a few hundred thousand in the 1970’s.
In short, markets need to be described as spectrums or segments involving products, technology, demographics, etc. Programs need to include new definitions of operations, customers, competition, marketing, etc. In addition they need to offer integrated solutions to recognize changing demand, consumers and opportunities. For example the decline of print advertising and the availability of other detailed marketing information like price require new marketing strategies and approaches. A few examples illustrate how organizations are using new paradigms in their efforts:
- Retail stores illustrate the new complexity. While stores like Best Buy, Penney’s and Sears have uncertain futures, retailers like Wal-Mart, Target, Amazon, Costco, Macys, and Nordstrom’s seem to be thriving. However they each have quite different models and strategies to succeed. For example, their marketing, pricing, margin and inventory practices are all significantly different. What is important is to recognize is that the same consumer frequently shops all of these outlets with varying expectations and results. In addition it is the development and execution of the strategy that causes success rather than determining which one is best.
- The iPhone and its Android competitors are probably the best example of the new paradigms. It is not really an i-“Phone.” Rather it is a phone, map, shopping vehicle, game board, search vehicle, e-mail and texting tool, camera, and who knows how many other uses. I did an informal survey of how people use these devices and found 80-90% of the use is for things other than a traditional phone.
- Ideo is an award winning global design firm that takes human-centered design based approach to helping organizations in public and private settings innovate and grow. Their new simple philosophy is what they call “Creative Confidence.” They identify new ways to serve and support people by uncovering latent needs, behaviors and desires. The design thinking process is best thought of as a system of overlapping spaces, rather than a sequence of orderly steps. There are three spaces to keep in mind: inspiration, ideation and implementation.
While experience, best practices, reputation, etc. are still critical determinants of success, “we have always done it that way and maybe even last month” is dead. However, these changes create opportunities by focusing on innovation, feedback, research, and measurement. We simply need to accept that paradigms and traditions are changing faster than ever, and that individuals and organizations need to react to those changes.
The statement by John F. Kennedy, “some people see things as they are and I see them as they could be” represents a concise statement on the dynamics of change and innovation.