Apr 112011
 

What is Marketing? Marketing is discovering what people want and need, and telling them a story about how they can get it from you.

In Meatball Sundae, Seth Godin describes how the marketing landscape has changed over the years and how some organizations have aligned themselves to new changes and are successful, while others failed to do so. He emphasizes that Organization and Revenue Model should match new marketing.

There have been four stages of Industrial Revolution:

First (1760-1840) Second (1840-1950) Third (1950-2000) Fourth (2000 Onwards)
  • Concept of employee originated
  • Josiah Wedgwood was one of the poster-child CEO of the era
  • Era of Henry Ford – assembly lines
  • Factories got more efficient, more employees and more training
  • Items could be delivered around the region, if not the world
  • Mass marketing and newly enriched customers
  • Employees paid more, people buy more
  • Factories produced what people wanted, not needed
  • Era of Jack Welch
  • Coordination and Communication were key components – Retailers to Suppliers to Consumers communication
  • People get what they want, when they want
  • So much income and assets, that consumers demand anything, anytime and control attention of marketers
  • Trends of new Marketing requires a new way of doing business

The current business is based on the following factors:

  1. Online is the name of the game
    • cafepress.com sells millions of dollars worth of imprinted items every month. They do so without a store. Instead, they have many people running their own store with their own inventory.
    • audible.com offers far more books on tape than any library or bookstore ever can. None of them is sold in physical store. They took advantage of infinite shelf space of the web.
    • 800ceoread.com is independent bookstore and the most influential seller of business books in the country.
    • threadless.com entrepreneurs built a T-shirt business and earn more than $20 million in revenue without any artist or staff.
    • techcrunch.com is a blog that generates a million dollar in revenue each year.
    • kiva.org is a non-profit organization that raises money in Kansas and funds Craft People in India without any office.
  2. Give lots of choice to customer
    Google means that a user can find something if it is out there. Online environment supports permission marketing. Idea of Long Tail has been around forever but only now it matters more. If both the hits (the short head) and the long tail are equal contributors to the business, why focus all your efforts on the former. Consumers want to buy it all with one click.

    • Why did not Amex buy Paypal? Paypal connected one customer to other while Amex wanted to have more conrol. AmEx is based on top-down, centralized, Old Marketing Model and idea of connecting customers made no sense to them.
    • Why is BarnesandNoble.com not as successful as Amazon.com even though Amazon is like Barnes and Nobles (except that Amazon is just online). Amazon embraced the new marketing model very well. Amazon regularly gets thirty times as much web traffic as the world’s largest retailer does. Amazon sell much more variety online than Barnes and Nobles do. Online shopping gives the retailer the ability to carry a hundred times the inventory of a typical retail store. Amazon gives every single item available for purchase at the same time in the same place.
    • Every time marketers create new varieties, sizes, price points and niche products, sales go up. starbucks.com offers nineteen thousand beverages. Why? Because their customers like that.
    • You can choose from 3.5 million songs on itunes.
  3. Connect people
    Most people, most of the time, want to be like most people, most of the time. Online, we are seeing voices synchronized and thus, amplified. Each voice is a little louder and a little more important. That means rest of us can see what’s hot.

    • If your organization has ever issued a press release, you need to rethink that strategy in light of Digg and other social news sites online. With press release, you are alerting a small group of consumers who have given you permission. Digg does more than put numbers on a phenomenon that has been around forever (word of mouth) and dramatically amplifies it.
    • boingboing.net: Just by reading different RSS feeds, Cory and his peers filled the entire blog.
    • Story of Facebook is not unknown to us.
  4. Customers decide, design and build their product
    • About 1 percent of the people in every community are the givers. For example, in Wikipedia about 1% of the users create and edit articles. Same math works for reddit.com, youtube.com and digg.com (Digg gets 8 million unique visitors every month. 80,000 geeks created pages and articles, and millions of people responded to them).
    • Fundamental Shift: Blogs convert readers into writers and YouTube turns them into directors.
    • A magazine makes far more money than a typical book publisher. Why? Magazine publisher commissions article for his existing readers. Book Publishers always seeks new readers for his new writers.
  5. Small is the new big
    • Plenty of studies show that 7 percent is a high number for the percentage of consumers who can even remember your ad. Never mind the number who actually take action because they saw it.
    • It is possible to buy carefully targeted TV advertising for a few hundred dollars. It is easy to buy extremely targeted online advertising for ten cents a click. Translation: You can buy tiny slices of attention for a fraction of what it cost just a decade ago.
    • Youtube carries million of videos. Average length of a video is about 5 minutes, but most videos are watched for 10 seconds. Ten seconds is all you get to prove yourself.
    • In new marketing we have Short Books, Short Shows, Short Commercial, and Short Ideas.
    •   1960 2006
      Typical stay for a book on NY Times Bestseller List 22 weeks 2 Weeks
      Number of pages in Best Seller Books Advise and Consent: 640 Pages Bullshit: 68 Pages
      Duration of Commercial 1-2 Minutes < 3 Seconds

Summary

    Old Marketing Model New Marketing Model
    Command and control approach to create and spread ideas Fashion, Promises, Stories, Permission
    Limited Number of Media Outlets Countless Media Outlets
    Limited Physical Retail Stores Countless Online Retail Stores
    Marketer to Consumer connection Consumer to Consumer connection
    Advertising is a major expense Innovation is a major expense
    Customer Support Community Support
    Focus on Market share, get big by controlling the conversation Create Stories that spread because people want to spread them
    Interrupt Subscribers with Ads Connect Subscribers to each other
    Create average stuff for average people at low prices to defeat competition Organization and Revenue model should match new marketing
    Mass marketers ignored individual consumers. They had marketing dollars, distribution channels and factories. A few malcontents is no big deal Individual Customer feedback is very important. Every interaction with critic can influence product directly
    Big response rate matter when you run mass ads Small response rate is fine when you deliver powerful messages with permission

Comments, feedback and praises are welcome.

  One Response to “How Marketing has changed over years?”

  1. [...] have been taking advantage of India’s increasing internet population. Refer to my article on how marketing has changed over years with various stages of Industrial revolution and how business model has changed in Web 2.0. Similar [...]

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