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Total Access New Marketing Strategies Regis McKenna September 9, 2004 College of Engineering San Jose State University Total Access Regis McKenna ©2004 Total Access Marketing Evolves – Pushed by the Technology Mass Production: Age of Reach Marketing: Expansion of Infrastructure. A variety of corporate activities performed prior to selling or promotion. The role of consumer credit. “A highly refined system of thought and practice” necessary for the development of a market economy Age of Push: Mass media Television (Mass Media) is the premium brand building medium Marketing + behavioral research turn marketing into a creative social science Expanding middle class population & suburbs Marketing: Expanding distribution and mind share Total Access © Regis McKenna 2003 "The traditional marketing model is broken" Jim Stengel, Procter & Gamble's global marketing officer Source: FORTUNE/ Nightmare on Madison Avenue, By Devin Leonard, June 14, 2004 “George Murphy, senior vice president for global brand marketing for the Chrysler Group, complains that his company is spending too much on television ads. It galls him that the price of a 30-second commercial continues to rise at a time when the broadcast networks are steadily losing their audience—and when his own marketing budget is flat because the car industry hasn't been able to raise prices for five years.” Total Access The Laws of More (and cheaper) Information Average Price Per Megabyte $12 The performance & price curves of basic digital technologies: processing, memory, storage, bandwidth & software continue their trends and pace of progress absorbing more and more of the value of complex, costly labor intensive processes. 10 8 6 4 2 Rigid Disk Drives 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Year Source: 1999 Disk/Trend Report Total Access Building the Infrastructure for Access Worldwide Semiconductor Shipments Industry Transformation Worldwide Semiconductor Sales ($B) $220 Internet $200 Wireless $180 Win ‘95 $160 Servers & Storage 486 PCs $140 Windows 3.0 386 PCs $120 $100 Non-Computing Semiconductor Shipments $80 $60 $40 Mainframes Apple PC IBM PC Silicon Consumption by Computing Products $20 $0 19 70 Courtesy David N.K. Wang Executive Vice President Applied Materials 19 80 19 Total Access 90 20 00 20 02 Sources: WSTS, Applied Materials Corporate Marketing estimates, Dataquest, IDC Shifting Drivers of Growth Digital consumer/personal appliances Millions of Users 1,000 Personal Computing 100 Mainframes 10 1970 Courtesy David N.K. Wang Executive Vice President Applied Materials 1980 1990 2000 2010 . . . Source: IDC Directions Total Access Technology and Social Change 1875 – 1985 Technology Innovation Institutionalized Control Controlled Diffusion Social Acceptance and Change 1985 – 2004 + Technology Innovation Regis McKenna ©2004 Regis McKenna 2002 © Rapid Market Diffusion Social Acceptance and Change Total Access Traditional Institutions React Digital technologies provides enormous opportunity for redefining the meaning of “local presence” to a customer Technical Progress Market/Value Perspective o Moore’s Law Shift to value-added services o Metcalfe’s Law Everything is connected o Gilder’s Law Full Human expression via bits & bytes o The Law of Storage Consumable Data (Services) o The Law of Software Mass customization & personalization of services Total Access © Regis McKenna 2004 Age of Total Access Network Supplier Sales Human Resources Operations R&D The Enterprise Finance Retail Edge Devices Supplier Operations Support & Solution Partners Development Partner Solution Providers Information Technology Marketing User Advocates Point of Presence Partners Enterprise Services Ecosystem Outsourced Operations Government Financial Institutions Information Resources Information Partner Industry Analysts Financial & Media Partners Stockholders Total Access Co-Presence Operators Traditional Customer Stakeholder Research Institutions © Regis McKenna 2004 Customer Networks New Customer Content Supplier Consultants Information Distributors The Media (Hidden) Persuaders 24/7 Presence Constant Novelty Infinite Self Consumable Choice Service Data Temporary Perceptions Real Time Personal Adaptable Connected Ubiquitous Cheap Programmable Applications o Microprocessors o World-Wide Web o SS Memory/storage o Digital platforms o Software platforms o TCP/IP, Java, XML o Storage Networks o Satellites o Programmable tools o Wireless o CAE - Computer Aided Everything o Broadband Communications o Intelligent interface Digital Understructure Platforms Regis McKenna 2004 © New Realities Competition for customers, sustaining productivity and market uncertainties are forcing a restructuring of real time business models based on new value- creating information architectures, standards, interoperability, enterprise processes Access replace broadcast Real Time enterprise systems close the space-time service gap Digital information devices, networks and applications dynamically alter the supplier-producer-consumer dialogue Logistics manage efficient, dynamic information and physical goods distribution networks and define the leaders in every industry IT is is the fuel energizing service economies Marketing & IT converge Challenge: Preparing the enterprise for the technology-driven, real time global marketplace filled with uncertainties Total Access © Regis McKenna 2003 Marketing & IT Converge Redefining Its Functionality as a Learning Process Marketing is the continuous process of organizational learning and the subsequent adaptation to technological and market changes over time. It is a process rather than an event. It enables the enterprise (producer) to acquire and apply knowledge efficiently by interacting with customers and the marketplace (infrastructure) so as to innovate and respond, reliably, consistently and profitably. Regis McKenna ©2004 Total Access Consumable/Disposable Information Society 36 Billion Gigabytes - Total new information generated ’02 and ’03 Almost 800 MB of recorded information produced per person each year... Up from 250 MB in 2000.* Present human and machine access points growing exponentially ATM’s (US): 12B Transactions/year –doubling in last decade Wi-Fi explosion just getting started Identity thefts estimated by Justice Dept = 700,000/year Number of reported cyber-incidents doubling every 6 months – 78 % increase from 2001 Digital Networks defy past models of complexity, management models and value creation * UC Berkeley School of Information Management & Systems Total Access Regis McKenna ©2004 Marketing Evolves as it Involves The goal of Marketing is to build and sustain buyer & seller relationships and to expand and sustain those relationship over time. Technology isn’t doing away with that concept; it’s expanding the responsibility for developing & sustaining the value of the customer relationship across the enterprise and it’s network of value-adding, expanding resources. The new tools of marketing integrate the customer and are network-based, mass customized enterprise solutions that help foster a direct, engaging, sustained buyer-seller service relationship. “Loyalty” is transparent to both producer and consumer Marketing then becomes a process of integrating the customer as a collaborating partner in long-term value creation Total Access Regis McKenna ©2004 Customer Preferences Tuned to Suit the Time & Place Technology shapes behavior o o o o o o o o o o o o o Choice Price Novelty Trust Loyalty Service Simplicity Access Convenient Secure Presence Speed Brand Total Access © Regis McKenna 2003 Total Access Shifts Center of Marketing Gravity Customer now has the power to initiate the contact and make purchase decisions based on a whole new set of market-induced, constantly changing preferences. Access is an expectation of being conveniently connected to the marketplace anytime, anyway and any place Competitive leadership has an added dimension – deploying and maintaining the customer relationship 24/7 Service productivity will demand increased automation of marketing or all producer-consumer transactions that can be codified Marketing & IT converge enabling the enterprise to become an architecture of trusted services Marketing is the integration of all Network of Market-Driven Solutions & Services Total Access Regis McKenna 2004 © Moore’s Law applies to chips not people Total Access © Regis McKenna 2004 Creative Destruction Between 1960 and 1999, both manufacturing’s share in America’s GDP and its share of total employment roughly halved to around the 15% mark. In 1960, manufacturing was the center of the American economy, and of the economies of all other developed countries. By 2000, as a contributor to GDP it was easily outranked by the financial sector. The Economist 10.13.2001 Total Access Regis McKenna ©2004 Productivity and IT Services ERA Platform People to Machine Ratio 1960-1980 Mainframe 10:1 1970-1990 Minicomputer 1:1 1980- Workstation 1:10 1990- Enterprise Networks 1:100 + 2000- Real-Time Broadband secure networks 1:1000 + Source: Adapted from V. Khosla/Paul Johnson Total Access Regis McKenna 2004 © The Automation of Marketing As service transactions become more automated, marketing will increasingly be integrated and customized to the time and place and specific nature of the transaction. Demand for increasing IT and service productivity will hasten self-service automation. The reliability and responsiveness of both the products and the information generated, although seemingly mechanical, are critical to the long-term customer relationship. Human involvement in many of the traditional functions of marketing is already diminishing. IT architectures are better at most aspects of marketing than humans: 24/7 access and service, choice, real time customer history, comparison shopping, price, feedback, monitoring and control Total Access © Regis McKenna 2004 Customer Satisfaction: Automation & Synchronization of All Service Access Points/Presence Home Partners Factory Services Anywhere/Anytime Regis McKenna 2004 © Marketing Architecture On line Total Access Office Mobile Marketing Functions Replaced By o Product Definition o Direct Customer Feedback o Distribution o Logistics o Pricing o Market-Mediated o Forecasting o Simulation o Segmentation o Data Mining o Research o Transaction Feedback o Service o Self-Service Networks o One-way communications o Dialog Web Services o Competitive Analysis o Context Search Engines o Customer Management o CRM Total Access Regis McKenna 2004 © Market Architecture A network of services inside & outside Automate processes customer services Self-sustaining & self-learning Scaleable Real Time Enterprise Platform Presentation interface & transparent services Application flexible, adaptable Real time - persistent presence (brand) Information & presentation synchronized to all support & customer touch points Integration of end to end processes with existing IT assets Total Access © Regis McKenna 2004 Communications is More than Information Total Access Interactive Marketing Evolution High New Dimensions of Interactive Multimedia High Touch Bandwidth Experience Media Broadband Services Internet Online Services Computer Radio Static Media Digital Broadcast Television Newspaper Low Low High Information Richness Total Access Regis McKenna ©2004 Closed-Loop Marketing Architecture Real Time Customer Consistent Coordinated Intelligent Interactions ATM Self Service Channels Adaptive Applications Branch Agent Assisted Service Channels Marketing Sales & Service Enterprise Platform RT Process Integration Leveraged IT Assets Call Dealer Center Phone WWW Kiosk Relational Databases Transaction Systems CT Sources External Data Sources Chordiant Software Systems Total Access Regis McKenna 2004 © Other Applications Goal: Customer Life-cycle Relationships Real Time Single View of Customer/client Quickly identify potential issues & opportunities Integrated Extended Enterprise Knowledge exchanged real time via diverse media types Intelligent Consistent Customer Interactions Improved Marketing Effectiveness –closed loop Reduced Operating Costs -productivity Access multiple & diverse databases & locations Interface & superior customer (Brand) Experience Source: Chordiant/Regis Total Access Regis McKenna ©2004 IT Foundation for Sustaining Brand Loyalty Trust (Responsive, secure Information Architecture) Reliability (Customer communications is Mission Critical) Customer knowledge & service (Self service and feedback loop) Innovation/novelty (R&D direct dialogue with infrastructure & customers) Quality of support services (Synchronized Operations and communications) Presence/ Brand Experience (Total Access: personalization, Intuitive Interface) Sustained, reliable experience (Productivity, investment, knowledge and evolving market ecosystem) Innovation (Monitoring customer patterns, preempting competitors and enterprise-wide response) Regis McKenna 2004 © New Media & Marketplace Call for Creativity Caution: use of “tyranny of best practices” in changing times Marketing and brand have are meaningless terms unless customer experience fosters long-term loyalty Marketing success requires sustaining presence over customer life-cycle needs & wants All business and enterprise functions are services Applied marketing is not generic Use other people’s assets Creativity & innovation must become an essential enterprise-wide asset Total Access Regis McKenna ©2004 Regis McKenna 2004 © This presentation is copyrighted by Regis McKenna, Inc. It may be used for noncommercial, personal use only. It cannot be modified, reproduced or used for commercial purposes without written permission of the author. For more information, please contact Ingrid Mifflin, Regis McKenna, Inc. 2109 Landings Drive, Mountain View, CA 94043, [email protected] Total Access