Download OUT WITH THE OLD AND IN WITH THE NEW…

OUT WITH THE OLD AND IN WITH THE NEW….
TRADITIONAL STRATEGY FORMULATION IS NO LONGER APT FOR THE
DIGITAL AGE
Ethel Claffey
Trinity College - University of Dublin,
College Green,
Dublin 2,
Ireland.
Phone: 00353 87 7777560
Email: [email protected]
Track: Marketing
POSTGRADUATE PAPER
Supervisor: Dr Mairead Brady
WORKING PAPER
INTRODUCTION
There has been much discussion on everything ‘new’: new products, new consumers (Assael,
2004; Spero and Stone, 2004; Hawkins et al., 2004) new technologies (Goldenberg, 2005;
Vrechopoulos et al., 2005; European Commission, 2005), new services (Brady and Saren, 2005)
and even the new knowledge economy (Schewe and Meredith, 2004). While some may consider
it merely trendy to discuss such issues, and others may scorn this obsession with everything
‘new’, the fact remains that marketing managers ignore newness at their peril. Information and
Communication Technologies (ICTs) are described by many as always ‘new’ in that they are
constantly evolving, becoming faster, more useful, and more intelligent. ‘ICT technologies allow
marketers to perform traditional tasks in new ways, new tasks and augmented tasks, many of
which are starting to impact on and often transform marketing practice’ (Brady and Saren, 2005:
1). Naude and Holland (2004) describe developments in information technology as having
fundamentally changed how we conceptualise marketing tasks. New ICTs are constantly
emerging, altering business methods, and particularly, the relationship an organisation
establishes with its customers. It is argued that emerging technologies will revolutionise the
marketing world (Snyder and Edward, 2004; Tapscott, 1998; Spero and Stone, 2004). Next
generation technologies identified in the literature include Radio Frequency Identification (White
et al. 2006), pervasive communication services (Vrechopoulos et al., 2003; European
Commission, 2005) and biometrics (Shugan, 2004).
To survive and succeed in the complex business world all companies – from feisty upstarts to
established industry leaders – must develop a strategy that embraces and takes maximum
advantage of the latest trends in technology. Yet, many organisations have been slow to develop
and exploit an ICT-heavy strategy, and have certainly not yet considered the ramifications of
future and emerging technological developments.
This paper reviews the attributes of next generation ICTs, with a view to appreciating their
potential impact on the role of, and strategy to be developed by, the marketing manager. The
research forms a part of a wider PhD study currently being undertaken by the paper’s author.
This will make a necessary and timely empirical contribution, particularly in terms of new
consumer behaviour, providing marketing practitioners and students with a greater insight and
understanding of how best to integrate these technologies with existing marketing practices.
TRADITIONAL STRATEGY FORMULATION
Since the 1970s marketing managers have fervently embraced the processes and tools of
strategic marketing which have been variously defined as ‘forward-looking plans that anticipate
change and initiate actions to take advantage of opportunities that are integrated into the concept
of the company’ (Newman and Logan, 1971:8); ‘a market-driven process of strategy
development that takes into account a constantly changing business environment and the need to
deliver superior customer value’ (Cravens and Piercy, 2003:31); and as ‘the managerial process
of developing and maintaining a viable fit between the organisation’s objectives, skills, and
resources and its changing marketing opportunities’ (Kotler, 2004:65). In recent years, the
growth in the use of ICTs has presented special challenges and opportunities for marketing
managers (Assael, 2004). Moreover, in an era in which firms face an increasingly competitive
environment, it is essential that marketers explore the opportunities provided by next generation
ICTs. Brady and Saren (2005) argue that marketers need to have the skills to capitalise on
developments in ICTs not only for the benefit of the organisation but for the good of consumers
and society. In the future, expertise in emerging technologies will become crucial to the success
of an organisation (Struse, 2000). Experience worldwide shows that the effective use of ICTs is
now one of the most successful ways to increase sales, productivity and profits, if incorporated
effectively into the strategic planning process (Shiels et al., 2003). While much has been written
about the potential impact of the Internet on marketing strategies (Murray and Ko, 2002;
Deighton and Barwise, 2001; Smith and Chaffey, 2002; Constantinides, 2004 ) very little of the
debate has focused on the adoption of technologies and techniques that go above and beyond the
scope of today’s Internet.
As research and developments in ICTs forge ahead, they create significant change in the way
consumers behave, and by implication in how marketing strategy needs to be adapted to cater for
this change. It is argued that next generation ICTs have the potential to allow users to dismiss all
advertising materials (Doolin, 2006). A recent survey conducted by the Association of National
Advertisers (ANA) and Forrester Research, Inc. found that 78% of advertisers feel that
traditional television advertising has become less effective in the past two years. More
particularly, it determined that almost 70% of advertisers think that DVRs (Digital Video
Recorders) and video-on-demand will reduce or destroy the effectiveness of traditional 30second commercials. They believe technology gives consumers the power to watch or record
television without the necessity to watch any advertisements. As another example one only has
to consider the impact of consumer reviews for products in web sites such as Epinions
(www.epinions.com) where consumers provide their own insights and reviews for cars,
electronics, books, travel and so on. It is evident, therefore, the marketers need to reformulate
their product communication strategies in order to reach this new generation of consumer.
Why Focus on Technology Attributes?
This research concentrates on the emerging attributes of next generation ICTs that may have a
direct impact on consumer behaviour, and by implication on marketing practice. This has the
benefit of providing a generalised look at emerging ICTs rather than tying the research to set of
technologies which may never see a complete adoption in the marketplace. In general, previous
marketing and technology related studies have focused on specific new technologies in an
attempt to describe or predict their implications for marketing practice. For example, previous
studies have shown that the Internet has had and should continue to have a significant impact on
businesses and the way in which they interact with customers (Boyer and Hult, 2006; Chen and
Lee, 2005; Constantinides, 2004). Other technologies identified as having a significant impact on
consumer behaviour and by implication on marketing practice include mobile communications
(Mullins and Doolin, 2005) and databases (Desai et al., 1998; Fisher et al., 2000).
However,
time has proven that not all specific predictions have been completely accurate. For example,
McNair and May (1978), Rosenberg and Hirschman (1980), and Schneiderman (1980) shared the
belief that electronic shopping would become the dominant mode of shopping in the early 21st
century.
What Are These New Attributes?
There are many attributes for next generation ICTs which may be investigated as part of this
research such as convenience, information handling, biometric information processing, neural
marketing and pervasive communications. While it would be an onerous task to attempt to
categorise all the attributes of next generation ICTs that may impact on consumers, this research
will focus on a number of key emerging ICT characteristics.
Pervasive Communications
Doolin (2005) explained that when a technology becomes truly pervasive it displays
characteristics such as mobility, ubiquity, personalisation and context awareness, allowing a
consumer to access multiple media on multiple device types, e.g. wearable computers and
embedded sensors, in multiple locations.
Mobility
Vrechopoulos et al. (2005) indicated that the changing role of mobile communications is
reflected in the increasing use of mobile devices for e-commerce purposes. Through mobility
developments, and the introduction of the mobile device, marketers now have a means to access
globally located consumers, thus providing marketers with the opportunity to create a virtual
global advertising marketplace. It also provides a means for consumers to make rapid product
decisions and to purchase products from any location (Mullins and Doolin, 2005).
Ubiquity
Weiser (1991:94) stated that “the most profound technologies are those that disappear … they
weave themselves into the fabric of everyday life until they are indistinguishable from it”.
Sorensen and Gibson (2004) found that the vision of ubiquitous computing can be viewed as the
ultimate convergence of society and technology, where there is no longer any distinction
between the two.
In a truly ubiquitous technology society, consumers will have access to
mobile devices and computers every where they go, and at all times during their day-to-day
lives. This provides marketers with an audience for advertising information that is potentially
“always-on” as opposed to the current state of play whereby consumers are contactable
intermittently (Doolin et al. 2006).
The previous two attributes illustrate that in the near future marketers and consumers will be able
to interact from any location, on multiple device types (e.g. on a consumer’s personal mobile
device, or from a public kiosk etc). However, recent studies have shown that consumers want to
feel unique (Assael, 2004; Schewe and Meredith, 2004) and there are further characteristics of
pervasive communications that could allow marketers to harness this fact and should make the
opportunity to do this become less daunting i.e. context and personalisation (Venkatesh, 1998).
The importance of personalisation cannot be understated. Goldsmith (1999) suggests that
personalisation is so important to marketing strategy that it should become a key part of the
marketing mix. Another aspect of pervasive communications is the ability to provide
personalised marketing information to consumers (Barlow et al, 2004); this again raises many
questions in terms of future marketing strategy.
Context
Context refers to any piece of information that tells a system about a user’s status, for example
time, temperature, location (Pils, 2005; Doolin et al., 2005). With the evolution of technologies
such as wearable sensors, RFID (Radio Frequency Identification) and sensor networks, it will
become possible to infer key information about a consumer and so provide context-specific
marketing information to them (Albrecht, 2002) . An example of this could be an instant
message to a consumer’s mobile device to inform them about special offers in a store close to
their location.
Personalisation
Personalisation research allows service providers and marketers to create personalised
information for consumers. A simple example of this is the provision of advertising information
based on a consumer’s personal language preference, or based on a consumer’s price range
preferences (Goldsmith, 1999; Barlow et al, 2004). When combined with context information,
this presents marketing strategists with a very powerful communication tool.
CONCLUSION
‘Technological innovations ensure that, as soon as consumer behaviour in any field is on the
verge of stability and explainability, new products and services are introduced to destabilise the
consumer behaviour model so as to create competitive openings for challengers, niche players,
and other contenders’ (Firat et al., 1995:40).
It would seem essential that marketing managers must re-examine how best to integrate next
generation technologies with existing marketing channels and practices. From a theoretical
perspective, this study highlights the need for marketing academics to consider more fully the
importance of the attributes of next generation ICTs in a marketing context. This study should
drive marketing academic theory forward and challenge many of the underlying tenets of
marketing practice.
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