Sunday, November 15, 2009

Dipak C. Jain Dean Emeritus Kellogg School of Management Northwestern University

By Dipak C. Jain
Dean Emeritus Kellogg School of Management Northwestern University

“Insights and agility are the keys for marketers as rules shift, forcing leaders to anticipate changes and embrace ambiguity while adapting to new circumstances in a world with fewer real boundaries.”

Conventional marketing wisdom says that companies must remain close to their customers to thrive. Such intimacy, which is a departure from earlier “make-and-sell” models, invites consumers to help refine offerings, sometimes even as co-creators.

Today, in competitive, technology-driven markets where customers are scarce, classic marketing models no longer function as well, as they once did. As a result, marketers must employ an integrated, holistic, “sense-and-respond” approach to achieve success, in partnership with their customers and leveraging the power of modern distribution and communication channels, most notably the Internet.

With proper cultivation, these relationships can spark breakthroughs, and customer engagement will remain crucial for firms in the years ahead. New scientific tools promise to shed more light on biological factors underlying motivation and behaviour, offering marketers additional resources. Meanwhile, advances in digital technology continue to impact consumer engagement too, putting more power into marketers’ hands, and into the hands of their customers. Old patterns of information asymmetry give rise to more level platforms where all parties have access to data.

The importance of engaging customers through channels like podcasts, Webcasts, blogs, viral marketing and other forms of social networking is difficult to overstate. Marketers must make smart use of these resources to communicate their brand and value proposition to the right audiences. These tools allow for better, cost-effective reach into markets, including niche ones, and let marketers deepen their relationships in those segments.

But these tools are a “two-way street,” with consumers also able to gather and disseminate information quickly about a brand, and they are prepared to share their impressions with anyone who is interested. So unless marketers are wise enough in to understand how they use these resources, technology alone is insufficient for success. Using technology to listen and gain insights that help you genuinely help your customers is the key to success.
True customer engagement means anticipating needs and working with consumers to solve their problems. Given the power of social networking, it’s essential that marketers develop relationships that will have customers talking (positively) about the brand. This word-of-mouth amplifies the brand message, but it is a relationship that requires constant attention — and enough mouths — to work.

Like technology, globalization is a powerful force that must be understood. While these forces have acted to remove many barriers and unite people, globalization has not obliterated all differences. It is still strategically important that marketers understand regional and national variations. In particular, marketers must appreciate the differences in laws, language, business objectives and supply systems that may confront them depending on where they are in the world.

In nations as vast and complex as India or China, for example, it would be a mistake to assume that marketers can simply impose a standard “Western” marketing model. At the same time, it would be an error to assume that there is no similarity between these countries and the U.S. or Western Europe. The truth is more complicated, and marketers must respect and respond to the opportunities and challenges presented by global markets. That said, most of us generally are trained to look for differences. I believe that we should spend more time seeking the common traits that unite us. We may then benefit from shared cultural wisdom, such as that offered by India and its traditions. Ancient knowledge may have much to offer the Western world; in particular, notions of compassion, morality, humility and moderation found in Buddhism, Jainism and other “Eastern” faiths may provide insights whose value enhances both personal and professional life.
For marketers, global competition in a world marked by complex geopolitical and cultural forces is pushing them to think outside their comfort zones as they identify and evaluate new market opportunities. Doing so requires that these practitioners possess several additional skills, including:
1. The ability to anticipate change
2. The courage to manage ambiguity
3. Willingness to adapt to new circumstances to capture value
These talents are central to what we may call the “new economy” that is built largely on managing information and information industries, where firms with the best knowledge are more likely to win, since they will be able to sense and respond to market needs sooner than their peers. As a result, they will have the chance to produce more original, technically superior products that meet customer demand — and do so profitably. With better information, firms have the opportunity to create higher value through customization; what’s more, technology is letting marketers achieve this level of personalization faster than ever before. While the “old economy” model, built around the idea of managing industries, has not disappeared — particularly in many parts of Asia, where manufacturing remains a very important part of the economy — marketers often will find themselves employing aspects of both older and newer models to keep up with rapidly changing commercial environments.
But to gain such insights also requires devising the right metrics to assess the impact of any marketing efforts. Whether focusing on measures like brand awareness, churn, net present value, customer lifetime value or word-of-mouth social media reach, it is important for marketers both to justify their expenditures and demonstrate how the marketing spend is impacting organizational success. While one might be expected to assume that all professional marketers use these kinds of measures, recent research by my colleague, Mark Jeffery, indicates that the vast majority (more than 80 percent) of organizations never adequately track or monitor marketing campaigns using data-driven marketing tools. In addition, some 55 percent of marketing managers reported that their staffs do not understand key metrics. These startling figures suggest that too many marketers are not fully utilizing the analytical tools to produce the information that can help them compete in a challenging global environment.
The ability to sense and respond to change and ambiguity will come to bear within a broader framework of product innovation, process innovation and business model innovation. Each element is integral for success, but marketing’s real future will require new ways to think about business models.

Corporate leaders must be able to think obliquely to determine potential threats and opportunities, and then take strategic action. For example, early in my tenure as a director on an airline’s board, I posed these questions: “Who is our true competition? Who could ultimately displace our company?” Yes, other airlines posed a direct immediate threat, and it was important to understand and respond to such competition. Yet, looking ahead it was clear to me that an entirely different threat existed too: video conferencing.
After all, this technology, as it matured, could result in significant cutbacks on business travel, even while the conferencing helped strengthen customer intimacy. A visionary airline could buy a teleconferencing company and leverage the acquisition, including by turning their airport “red carpet” lounges from cost centers to revenue centers by providing premium clients with a convenient way to enhance productivity.
Such innovation comes from dramatically rethinking one’s core business, just as Google Inc. did when it redefined its value proposition. Other search companies existed before Google, but while those firms regarded their customers as being people conducting a search, Google saw the potential for a business oriented around those being searched. One could cite similar innovations behind the success of Reliance and Wipro and many others.
Marketers looking to change the rules of the game will also find ways to harness the power of diversity. Innovation comes from people, and in global business we can expect the best ideas, regardless of geography, to rise to the top. In the next few decades, developing nations will play a larger role in bringing fresh thinking on many social problems. This is why marketing’s future also must adopt a truly “global perspective” while devising a new way of measuring value that extends “beyond business.” By this I mean embracing endeavors like social entrepreneurship — those ventures making a difference in various ways, from eradicating hunger, disease and pollution to providing better education.
In so doing, marketing secures its future by building on conventional success in the cultivation of a broader mission of social significance that unites the community.

1 comment:

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