When I was invited to talk to a group of executives on the topic of ‘Digital Marketing’, my first question was: ‘What do you mean by “marketing”?’.

Admittedly, this may seem a very weird question, specially coming from someone who teaches marketing for a living. Yet, those that work and teach in the field know all too well that perceptions about what marketing is and what marketers do vary widely (and they aren’t always positive ones, either).

At one end of the spectrum, marketing is perceived to be about coming up with catchy names and memorable slogans to promote goods and services some other department in the organisation created. At the other end of the spectrum, marketers are deemed to have incredible powers of manipulation and deception to control consumers’ behaviours and lead them to act against their own interests.

If the first view of marketing is reductionist and does not do justice to the range of issues studied in the discipline or the value that marketers can bring to organisations, the second one is not helpful, either. It leads to marketing being blamed for many social problems, from child obesity to consumer debt. And it leads to unrealistic expectations being placed on marketers regarding their ability to increase sales, generate brand loyalty, etc…

What is this thing called marketing, then?
The definition I usually refer to is the one developed by the Chartered Institute of Marketing. It describes marketing as…

‘The management process responsible for identifying, anticipating and satisfying customer requirements profitably.’

The fact that marketing is a management process means that it needs to be systematic, guided by goals and subject to monitoring and performance assessment. It should also be supported by relevant documentation – a marketing plan, for instance, though others may also apply.

In order to be able to identify customer requirements organisations need to conduct market research. Unless marketers understand what customers think, feel and do, they will not be able to offer propositions that address their needs. I am talking about addressing needs, instead of creating them, because I believe that needs are inherent to humans, not created by marketers. For instance, nobody needs an iPad and Apple certainly did not create the need for one. However, there are several needs that the iPad fulfils better than the existing alternatives (see figure), such as convenience, portability, ease of use and so on. If it didn’t, it would not succeed. What marketing does, therefore, is to create solutions for existing (sometimes unconscious) needs.

Source: Wired

To anticipate needs, marketers need to understand customer behaviour – for instance, how consumers experience brands, what they buy and why. This branch of marketing science draws on insights from psychology, sociology, anthropology and other fields. In terms of marketing practice, Customer Relationship Management programmes can provide insight into unmet customer needs.

Organisations supply customer requirements by offering a product, delivered in a way that meets the customer’s preferences and priced in order to maximise the value obtained by both parties. Communication with customers is another way of creating value, for instance by disclosing useful information.

The last part of the definition above mentions ‘profit’. Increasingly, marketers recognise the importance of monitoring the outcomes of their decisions and assessing the contribution of marketing activities towards the financial and non-financial outcomes of the firm.

In summary, marketing is much broader than simply promoting products. It is important, however, to distinguish marketing as a discipline or activity from marketing as a function. Obtaining marketing insight, creating value, monitoring outcomes, etc… may be performed by more than one department in the organisation, or even be outsourced (as is often the case with market research). All these activities belong to marketing, even if they are performed by other departments.

Does this view of marketing surprise you? Does it sound familiar?

What other definitions do you find useful?

My 9 year old looks at me, excitedly. ‘Mum, guess what happened in school today. Something amazing!’.

‘Er… you were the fastest swimmer’, I venture.

She shakes her head.

I try again: ‘You did really well in the spelling test’.

‘Mum…’ she interrupts, impatiently. ‘I said “something amazing” ’.

I open my arms. ‘Sorry. I have no clue. What was it?’

‘Mrs. W [science teacher’s name] received a letter from David Attenborough. He needs our help to save the Cross River gorilla from extinction’, she reveals.

As she proceeds to tell me about all the ‘brilliant ideas’ her class had come up with to ‘help’ Sir David Attenborough, I can not help but think: what a simple and, yet, clever way to get these children involved in a cause.

First, the children are given a goal: to raise funds and awareness for the cause. Yet, they are free to follow their own process to reach that goal. This means that the cause becomes the children’s own project and, so, they are engaged with the process and motivated to see the cause succeed.

Second, by handing over the decision regarding the process to the children, the number and the range of possible solutions increases. For instance, rather than focusing on traditional fundraising methods such as mufti days, their list included a parade, a talent show and a ticketed event.

The reason why I am mentioning this letter, here, is that this small example reminded me of two important business strategies particularly relevant in the digital environment: co-creation and open innovation.

Co-creation
Co-creation is a competitive strategy identified by Prahalad and Ramaswamy in which customers engage in active and explicit dialogue with producers of products and services. This dialogue marks a shift from customers as passive players in the market who ‘merely’ consume what the firm offers, to active counterparts who collaborate in the development of the product.

Such active customers benefit from highly personalised and unique experiences that fit their needs and preferences better than a traditional offer would. For instance, Nike fans can buy highly customised trainers and other accessories, in store or online; while Scion allows buyers to design and modify their cars, thus managing to create excitement in a very mature industry.

Source: Project Vehicles

Engaging the customer in the design of the product has numerous benefits for the organisation, from speeding the development process, to improving research productivity and fostering customer loyalty – benefits that are extremely valuable to organisations operating in today’s hyper competitive environment. Yet, how many times customer ideas and suggestions are dismissed or altogether ignored?

Open innovation
Open innovation is an approach to product development whereby the firm actively engages with the external community – e.g., suppliers, academics and other stakeholders – to identify development opportunities or overcome specific problems.

Lego actively taps into the open source community for beta testing and product development of its Mindstorms product line. When Lego launched the programmable construction toys, hackers quickly deciphered the code and started writing their own software. Rather than fighting this development, Lego embraced it – the company released a developer’s kit, encouraged the sharing of designs and programming techniques, created contests and incorporated the best ideas in selected versions of Lego Mindstorms. By leveraging the creative and technical potential of the open source community, Lego has developed Mindstorms much further than initially envisaged.

Source: Picture of a Kit of Lego Robotics used under the creative commons licence

Open innovation is particularly relevant in a competitive environment with increasing availability and mobility of skilled workers, relatively easy access to venture capital to enable good ideas to get off the ground, increasing capabilities of external suppliers and decreasing barriers to entry.

Whether my daughter and her friends will manage to raise significant funds to the Cross River gorilla cause remains to be seen. But the potential of co-creation and open-innovation for businesses is clear, in consumer as well as industrial markets.

Skills and technology to succeed in the connected market place

The post below was first published as a guest article in the March 2011 issue of Powerchex’s newsletter. A direct link to the original article is available here.

Once upon a time, sellers and buyers would meet in marketplaces and have conversations with each other about the product, the user’s needs, other offers on the market, and so on. To succeed in this market, managers needed to understand the local customers’ needs, and optimise their offer given the limited resources available.

Then came industrialisation, leading to mass production and standardisation. The distance between sellers and buyers increased, and communication between the seller and the buyer was mostly one directional and done through advertisements in mass media. Some markets still operate this way, either naturally, or because governments put artificial limits on competition and customers’ access to information. Such markets are a minority, however – and a rapidly shrinking one.

For all other organisations, the market is now a very different place. It is characterised by numerous and strong interactions between sellers and buyers, as well as within each group. In this market place, customers are empowered by choice and access to information. A study by mobile phone operators looking at trends in text messaging, calls and internet searches identified hot spots around store changing rooms as shoppers go online to check out prices or even send pictures to their friends for feedback.

Today, markets are conversation places, where customers talk with each other, asking and offering referrals, and connecting about problems they have with products or companies. They post videos about their negative experiences, compose songs about their frustration with big corporations, and tweet about what they perceive to be unsatisfactory practices. More than 130 million blogs have been indexed since 2002, with bloggers posting over 900 thousand updates per day and noticeable peaks of activity around significant events.

If markets are conversations, how can organisations succeed?

It has long been established that customer-facing employees play a key role in customer satisfaction levels and influence customer loyalty and positive word of mouth. This is particularly important in the context of service encounters, where the member of staff is the key contact point before, during and after the purchase. The role of frontline employees in service perception has been the subject of considerable research in marketing (for instance, this paper), resulting in the identification of five dimensions of employee behaviour that influence customer perception of service delivery. They are:
- Mutual understanding
- Authenticity
- Extra attention
- Competence, and
- Meeting minimum standards.

To tap into the on-going conversations in the market, organisations need employees with a hybrid skills set. Specifically, they need employees with business skills, as well as ‘e-skills’ – that is, the skills needed to work across cultural borders in network-based teams, and to engage with consumers and suppliers to share knowledge and information. Once specialist skills, these are now cascading down, and quickly becoming part of the expected levels of digital business literacy.

A research team at INSEAD conducted an audit of the level of e-skills among Europe’s workforce. The researchers concluded that there is a growing gap between the skills needed by European firms and the ability to generate or acquire such skills. This gap started in the Information and Communication Technology (ICT) sector but is now spreading to many others. It is particularly high in Poland and Romania, but also visible in traditionally highly networked countries like Denmark, Sweden, Finland or the United Kingdom.

Where the difference between e-skills supply and demand is only a matter of skills shortage, it can be solved through outsourcing selected functions and processes, or recruiting people with the right skills set. At times, however, the gap is more profound and there is a competence shortfall that can only be overcome through training and staff development. In the extreme case, the mismatch between the skills on offer and those needed can only be overcome through changes in the schools’ curriculum, which take a long time to develop, get accredited and implement, and even longer to produce the desired results.

Who are these employees?

The new breed of employees uses technology creatively. According to Forrester:
- 27% use login-required websites that the company doesn’t sanction for work purposes
- 12% download and use their own apps
- 8% use personal smartphones for work purposes

Increasingly, these employees expect flexible working patterns and autonomy, even in the early stages of their careers. Moreover, they are motivated by intrinsic as well as extrinsic motivations. That is why Google emphasises to its prospective employees that they ‘created a fun and inspiring workspace you’ll be glad to be a part of, including on-site doctor and dentist; massage and yoga; professional development opportunities; shoreline running trails; and plenty of snacks to get you through the day.’

These employees develop their own professional identities independently of their employers’, including their own blogs and twitter feeds. At times, the two identities build on each other. Padmasree Warrior, Cisco’s CTO, is one such case – with more than 1.3 million followers on Twitter, she writes about her movie nights with friends and family, as well as Cisco’s product launches or public engagements. On other occasions, however, the two identities clash, as Connor Riley found out when she tweeted ‘Cisco just offered me a job!  Now I have to weigh the utility of a fatty paycheck against the daily commute and hating the work’. Unsurprisingly, a Cisco employee quickly picked up the post, and passed it on to her hiring manager.

What is the role of technology in the new workplace?

To engage with customers in the conversational market place, and maximise the productivity of networked employees, organisations need to develop a conversational work place, too. Specifically, in addition to recruiting and developing e-skilled individuals, organisations need to foster conversations among their employees.

Today, small and large organisations, commercial as well as not for profit ones, can use a vast array of tools and technologies to facilitate communication among its members. Executive blogs can be used to express personal identities online, as well as become a source of running commentary on issues of relevance to the organisation. Sandy Ogg’s blog is an example of how these online journals can improve communication and transparency even in a large, multinational corporation like Unilever. Micro-blogging services like Yammer, in turn, can speed up decision-making. Web-based file sharing technology offers versatile solutions for document management, and discussion forums are fertile ground for new ideas and problem solving. Intranets make it easier for staff to work remotely and manage resources, while helping build culture and create engagement.

Joining the conversation

We have, in a way, returned to a market place where sellers and buyers can interact directly to each other, on a more personalised basis. The main differences between this new market place and the one described at the beginning of this article is the scale of the interactions on the one side, and the role of technology on the other. The changes in technology and its use means that a disgruntled customer’s blog post, video or status update may reach viral status rapidly, and remain available for other current or potential customers to access well past the original problem has been rectified.

In response to customers’ changing behaviour, many firms invested considerable resources in monitoring and responding to comments on blogs, social networks and other outlets. This requires a new set of skills – a mixture of business as well as technical acumen. The technology supporting this new, highly connected market place is still evolving and, so, too, the skills set required to successfully join the conversation are in flux. We are likely to see some volatility, still, but the overall trend towards connection and conversation is clear and should not be ignored.