Connected Economy (The Impact of E-business on Marketing and Marketers)
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About this Canon: What revolution?
We've all heard the hype - we all use the jargon. But how much do we really understand about the technological revolution?
This new report from the University of the West of England Business School concludes that there is a yawning gap between the capabilities of new technologies and the realities of life for the modern marketing manager.
A fantasy just a decade ago, many new media are now part of the consumer's day to day experience. But many senior marketers questioned for the study concurred that new technologies have not dramatically altered business practice. Theories of business change are largely ahead of what is happening on the ground, while much of the data now so easily accessible is rarely put to good use.
So how can marketing skills be coupled with an understanding of new technology? And what can today's marketing managers do to ensure that they remain key players in the game as the Internet era comes of age?
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Main aim:
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To highlight and analyse the impact of e-business on marketing.
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Executive summary
The University of the West of England Business School conducted a programme of research involving a trawl of the literature and qualitative research. For the qualitative research participants were drawn from senior marketing management in client companies, systems suppliers, management consultancies and marketing service agencies. The main insights are described below.
New technology is changing both the internal and external landscape of business. Specifically, there are two developments taking place that are acutely important for the marketing role. First, within companies, there is an evolution in the way the value chain is constructed. Electronic technology is acting as a lubricant, helping previously discrete functional areas to work in concert. Internally, 'e' is acting by 'oiling the wheels' and this, along with the accompanying senior management spotlight, will encourage functions to act in concert. Secondly, the Internet has lowered the costs and increased the ease of information gathering by customers, thus shifting market power slowly but inexorably their way.
These twin forces of change facilitated by new technology means the strategic emphasis of marketing must adapt. Whether this necessitates a radical new model of marketing is open to debate. Certainly two things need to happen. First, as power shifts to customers, the ability to sense what they want and to gain insights into how the firm solves their problems, will be vital. Marketers have appropriated the language, but not always the substance, of understanding customer needs. In a world with low levels of churn and high inertia, they may have got away with this, but the balance of power has shifted.
Secondly, the philosophy of marketing as a strategic way of doing business - putting customer value at the heart of internal debate - needs to be operationalised. Internally, enabled by new technology, functional areas are breaking down barriers between themselves. This is leading to important debates and decisions about the key processes that deliver customer value - operations, innovation, and service delivery. At the moment these debates are largely taking place in a 'marketing vacuum'. It is vital that marketing is at least part of, if not leading, that debate.
Given these imperatives for change, how are those responsible for marketing responding? Some of our research respondents highlighted major concerns about the willingness and ability of marketers to seize the leadership role that many companies are crying out for. Marketers seem to have distanced themselves from the internal changes, and the danger is they will get left behind as the firm moves forward. Respondents believe the marketing 'mid life crisis' is far from over - the realisation that marketing is still not leading in terms of corporate strategy. While marketers have taken on board the importance of new media in marketing communications, their role in driving forward the company-customer interface strategy is far from secure. A recent survey found marketers' influence over company web sites to be declining. Meanwhile, strategically, marketers just do not seem willing to act as facilitators in encouraging a company wide market orientation. This is a pity, because new technology is providing an impetus and an opportunity for different functional areas to work as teams to a greater extent than possible before.
More optimistically, many respondents saw e-business as a great opportunity for marketers to 'get back in the game' (improve their place in the political pecking order) but stressed that first marketers must re-invest in their skills in a number of areas. Naturally, the ability to think strategically came high up the list (marketers were collectively advised to 'do an MBA'), but right at the top of the list were decision-making skills. In the context of a working environment enabled nowadays by knowledge management systems, research and hi-tech measurement, marketers often exhibit shortcomings in their decision making processes. They were regarded as having a tendency to 'wing it' perhaps by reacting instinctively or through habit in making decisions. The culture was not to worry about the systematic gathering of information and the tapping of available knowledge and insight. Linked to this was an attitude that measurement and learning from the experiences came a poor second to running another campaign. All very well with the next quarter's targets coming up, but respondents emphasised that senior managers now increasingly expect resource allocation decisions to be made on the basis of sound measurement and intelligent analysis. Directors are increasingly asking themselves: with all this technology, are you telling me you still can't justify your spend?
Taken together with the shift in power to customers, the pressures on measurement imply that the future will require a different type of person to take up the reins of marketing. The new marketer will need stronger analytical skills to make the most of the increased volume and nature of data at his or her disposal. Quantitative skills will come to the fore; an ability to test, learn and re-test will be important. Just as important will be qualitative skills: it is hoped the new 'customer insight' departments springing up will reflect a genuine change rather than a cosmetic name change for traditional market research and that eclectism (the ability to examine phenomena from different perspectives), prosearch (the mindset that considers future scenarios rather than simply researches the past) and bricolage (genuine expertise in a wide range of both traditional and innovative research techniques) will be planned for in HR terms. It is essential that we do not lose sight of the customers' needs and their likely response to new types of contact via new media and attempts to manage them (CRM - Customer Relationship Management). We should also not lose sight of very real problems in fulfilment and customers concerns about privacy. Finally, the shift of power to customers has created the need to seriously consider the concept of Permission Marketing and in newly created Customer Insight functions the concept of 'Permission Customer Researching'.
Some respondents felt that knowledge management was a hugely important emerging culture in many sectors. To begin with, the new marketer will need to be proficient at using KM tools and techniques, and be comfortable with KM as a culture of working. More profoundly however, marketers can use this as a springboard to take a leading role in the supply of customer insights to the firm using company wide KM systems. It could be that internal KM systems, probably based on the intranet, will be a political battleground in the near future. IBM employees already regard their intranet as their second most important source of information behind the 'grapevine'. The struggle to manage their own tacit knowledge - their own core competences - will be a key growth area over the next decade or two.
The changes outlined so far put into perspective the much heralded 'paradigm shifts' and 'new models' that accompanied the launch of a thousand dot.coms. Eighteen months later the business world is a sadder and wiser place. In this research project we interviewed leading practitioners who confirmed that theories of business change espoused in recent editions of Harvard Business Review and elsewhere were, by and large, well ahead of practice. The simple web site model has at best a mixed track record, while the much hyped 'infomediary' concept, though still theoretically appealing, has yet to get off the ground. Equally appealing on paper is the notion that new technology will enable the formation of complex networks and alliances between enterprises, redefining value chains at bewildering speed. This was met with raised eyebrows and a weary smile in some quarters. Quite simply, large organisations rarely have the fluidity to move that quickly. One is reminded of the many claims (on a smaller scale) that accompanied the introduction of database and direct marketing into mainstream sectors in the late 1980s and early 1990s. We were told then that all marketing would be data driven within a decade but this has not happened. It is silly to predict that paradigm shifts driven by new technology will never happen, but it's perhaps sensible to assume that large-scale change will take time to show through.
Tactically too, things have changed for marketing. New media - web sites, e-mail, mobile media - are already quite well developed, and starting to be used regularly by customers. As channels, these media are providing added customer 'touch points' and added internal complexity for firms to manage. Executives are rightly excited by the continuing opportunities for new ways of doing business that new technology will bring, particularly in the mobile internet area.
Because it has enabled both external and internal change, new technology has presented companies with a situation of perhaps unprecedented complexity. At the time of writing, many firms are in the position of attempting to make sense of all these changes. Marketers need to be engaging with these debates, but they can only do so if they are listened to. This will only happen if they are prepared to re-invest in traditional skills and subsequently invest in new skills. In the face of change from e-business, marketers do not necessarily need to adopt a major new model of working, instead what many need to do is adapt and implement the existing model more effectively. Professor Merlin Stone will build on the findings of this report in a separate CIM paper that addresses the issue of new models, new disciplines, new responsibilities and new mindsets.
This report comprises a full description of the research and, in the Appendices, a number of case studies.
To purchase the full report simply select the Connected Economy category from the 'Select a category' drop down menu, at the top of this page, and then select Full Report from the 'sub-category' drop down menu.
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Contributors
Steering Group:
Jill Finney, Ernst & Young (Chair)
John Stubbs, FormerlyCIM
Ray Perry, Formerly CIM
Jenni Allen, Formerly CIM
Tess Harris, CIM
Project Group:
Professor Clive Nancarrow, The University of the West of England Business School
Professor Merlin Stone, The University of the West of England Business School
Professor Martin Evans, The University of the West of England Business School
Dr Alan Tapp, The University of the West of England Business School
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