The Redo,Alchemy and Transfiguration of Marketing

-A Collage,Pastiche and Potpourri of Trends and Paradigm Shifts

Professor Luiz Moutinho

Foundation Chair of Marketing

Adam Smith Business School

University of Glasgow,

Scotland

Reinventing the Business Ecosystem

The era of super-mobility: people are talking less, yet communicating more than ever. The average length of the phone call has halved since 2007. Meanwhile, the world has seen a dramatic increase in the use of text, social networking and email.

By 2015, mobile internet will connect 15 billion devices and 2.5 billion people around the world and an estimated .3 billion mobile workers will work remotely. We are now in an era of super-mobility and mobile working is increasingly becoming a normal trend.

Do Not Call Them Consumers. They Make and Share.

• People are consuming less. Deconsumption. Instead, they are

using marketplaces to re-use and recycle.

• Those that can make, will build and share.

• People can now re-use goods using Nextdoor.com and

Yerdle.com to gift friends.

• Techshop enables people to become makers of their own

products.

• The crowd functions like a company.

The Robots are Coming

Robots are changing our world faster than we think. Exponential shifts in innovation from sensors to computers to mobile are enabling robots to emerge in entirely new forms. Expect mobile autonomous bots, from tiny handheld drones that fly to those that work in factories to robo synergies.

Other Trends for Now and the Future

• Semantic Web Entrenched

• Artificial Intelligence

• Attention Economy in full swing

• Sophisticated Personalisation of content

• Location-based / mapping services common and

mobile

• Virtualisation (i.e., Amazon’s simple storage

services (S3), online cloud; elastic compute cloud

(EC2))

• Web 14.0???......

NEW PROBLEMS DEMAND NEW VISION

That is, there is simply no way to create /build tomorrow’s

key/critical organisational capabilities – resilience,

innovation and employee engagement-atop the scaffolding

of past century management principles.

• 20.20 VISION:Future Trends in Leadership and Management

• A Flexible workforce.

• The Power of Relationships.

• Core competency required.

• The need to think differently and outside-in thinking,

connective thinking.

• The transition from function to leader.

• There are no “sacred cows”. Companies need to look at

everything that needs to be changed.

• The toxic effects of the industrial age management beliefs

are still predominant in most companies.

• FUTURE TRENDS IN MANAGEMENT

• Business Stepping Up From Profit to Purpose.

• Focused on Alignment.

• Collaborative Environment.

• Purpose-driven Culture.

• Empowered Teamwork.

• Green Shoots-2/3 agree that companies should be penalised for failing to care for the environment.

• “Old” Outsourcing story nearly over.

• Compliance is dead as a defensive strategy.

• Employee Passion/Engagement.

• The organisational design must contribute maximum value to the

accomplishment of the organisational strategy

• Activities in organisations do not move up and down the hierarchy

steps – they flow through the organisation in various directions,

obtaining the changing shapes of variable business processes.

• It is not enough to optimise one dimension (product, geography or

functional performance) of the business.

• Organisations have to optimise multiple dimensions in order

to compete effectively.

The classic marketing department’s functions are being dispersed

across the organisation, and marketers are having to prove their

value in new and different ways.

• Elements of the marketing function are migrating elsewhere (e.g.

some of the most powerful research tools are by-products of operations, not

marketing: POS scanner, for example).

• The responsibility for finding new ways to add value is being

dispersed, too (e.g., corporate branding). A large element of the

“VALUE” experienced by customers does not come just from

products, but from the quality of the customer/company interface

• PEOPLE and PROCESSES.

• PBM2

• Process-based management is a management approach that

governs the mindset and actions in an organisation. It is a

philosophy of how an organisation manages its operations,

aligned with, and supported by the vision, mission and values of

the organisation. It is the basis on which decisions are made and

actions are taken.

Process-based management is oriented towards achieving results rather than

targeting specific activities and tasks of individual functions.

…..say goodbye to the old, dry, inward-looking distinctions…..

…..say hello to the rich and fascinating world of….

New PBM²

Demand chain management Customer acquisition

Brand experience delivery Strategic brand management

Innovation management Order-generation and order-fulfilment

Time to market Solutions design

Reputation management and CIC Market to collection

Business intelligence and security Strategic corporate knowledge

Financial appropriation and return

Innovation Management

Improvement Critical Processes

Order-generation and Order-

Fulfilment

Today’s consumers are value -conscious, interactive,

multicultural, health-driven, socially responsible and always

connected. In developed markets, conspicuous consumption

is out, with personal appearance and wellbeing talking

priority over the accumulation of material possessions.

EMOTIONAL VALUES

The challenge for marketers is that consumers want less not

more,they want sense (CSM), not nonsense, and above all,

they want companies to “inject” Simplicity Marketing! This

means repositioning brands to survive in an environment of

savvy, cynical marketing literate consumers no longer seeking

solace in false brand gods, hype and spin. Ironically, this may

mean a return to classical marketing: solving people’s problems

at a Profit. Period.

Consumer Generated Marketing (CGM)

Consumer content is already having a huge impact on certain

sectors (i.e., entertainment business). The concept of the

influential consumer has taken on a whole new level of

importance. Consumer generated marketing is a fact of life to

which all of us will have to adapt. This is the most

revolutionary concept in marketing to come along in a long

time. Emerging customers and disruptive technologies.

As consumers grow less and less passive, are more ED2, KWLBB, are more savvy about marketing and the commercial realism, brands must modify their approach. Reading consumers is becoming more complex and is multidimensional, contradictory and evolves around a contingency mentality (e.g., TRANSUMERS). Brands are losing control over their own image but also, can take advantage of the content creation (PROSUMPTION) and associated buzz generated by consumers (e.g., TWINSUMERS).

It is now, BRAIN VALUE (BR2BR and CSM), not BRAND VALUE….!

Sacred Cows in MR that will become obsolete quicker than you can imagine…

1. In -Person Focus Group

2. Online Surveys. Micro-surveys. Modular data – fusion techniques. Geofence-driven in- the- moment mobile feedback. Indirect Measurement. Facial sentiment recognition. Mobile neurofeedbackthat’s the future.

3. The Quant / Qual Duality .Sequential and compartmentalised. Time compression. The words will collide. Both will occur simultaneously. Reset: Deeper, Faster and more insightful research.

4. The Rational Frame. Respondents forced to use rating scales to explain behaviour.This is not the way humans operate.Behaviouraleconomics. Creative disruption.

The New Era of Expressive Research

Shift from Reflexive to Expressive Models. Expressive Research is

Real Time Research.

Research and

Subject

Reflexive Research

Circular relationship of

cause and effect

confirmation

Networks

Expressive Research

Revealing the structure and

mechanics of meaning

Portable Place-Based Research Tools

Wearable motion sensors. These small, comfortable, and low-

cost accelerometer devices can be easily worn for days or

weeks and used to collect data on what people are doing. MIT

algorithms have been developed to automatically detect

specific activities, such as walking, moderate physical activity,

and body posture. In combination with a mobile computing

device (e.g. PDA or phone), the sensors can be used to detect

specific activities of a person in real-time and provide or collect

context-specific information.

Are we entering the Golden Age of Marketing Research

Technologies?

…..Oh, can anyone recognise the Marketing Research

Industry anymore? Are they technologists or researchers?

We have data collection automation, social media listening

platforms, facial coding technologies, panel platforms,

routers, online communities, text analytics and sentiment

analysis technologies, big data, dynamic dashboards, mobile

research platforms, …… and the list does not end.

EVOLUTION OF PRODUCT MANAGEMENT

Predictive Product Management – to predict market problems,

customer values, business opportunities, competitive advantages and

technical solutions.

Product Configuration Planning – is the process of creating demand

plans for product combinations and configured product overall. Parent

items and attach rates. Multidimensionality . Statistical Bill of Materials

(SBOM).

Product Commitment Management.

Resources and Channel Synergies – parallel cost and differentiation

advantages. Re-use R&D / C&D costs.

Product Flow Optimizer (PFO) (i.e., IBM).

20

Innovation does not start with idea generation

A Fallacy. Idea generation is at best the “mid point” of an innovation process, because by the time you start generating ideas you need to have:

• a good sense of the strategic goals and direction of the organisation.

• a good sense of trends and the unfolding future.

• an understanding of unmet or unarticulated needs.

IDEATING in Context

QL Exercises – VOC, observation, in-situ research, shadowing, lead users, ethnographic research, etc.

Innovation is both a process and an ecosystem.21

Trends in Innovation Management

Unfortunately, most organisations suffer from “Chronic Sameness”

1. – The innovation – restricting disease in where commonality is

valued above individuality.

2. Taking care of leap-frog innovations. Managing the innovation funnel.

Stage gate processes. (e.g., BASF’s, Future Business Unit).

3. Networked and Borderless Innovation. Expertise tagging. “Facebook

of Innovation”.

4. Intra-company crowdsourcing. Collective intelligence. Consumer co-

creation. Open Innovation, outside in.

5. Measurement of the Innovation Growth Gap (i.e. Procter and

Gamble).22

Pricing/Profitability Optimization (PPO)

Sustainable Results with a Closed-Loop Approach (CLA)

• Smarter pricing drives higher net income than cost reductions.

• To reduce pricing cycle times.

• More market agility to respond faster to demand volatility and

competitive threats.

• To price dynamically across PLCs to optimize yield.

• The avoidance of panic pricing decisions.

• Sustainable pricing strategy.

Meaningful Brands

According to the Meaningful Brand Index survey of 132,000 consumers globally, only 20% of brands are perceived to have a notable positive impact on consumers’ sense of well-being and quality of life. (In the UK –5%)

Most people would not care if 91% of brands did not exist.

24

In most cases, advertising spending bears an inverse

relationship to a product’s actual value to consumers.

Lacking competitive advantage, they seek a psychological

advantage. For valueless offerings, branding is everything.

The simple truth about brands has been completely missed.

You can fool some of the people all of the time, but brands are

built through customer experience, not fancy marketing. And

great brands are destroyed by customer experience, not

competition.

• Brands are formed through customer experience.

• Clever advertising can fool all of the people some of the time, but

word of mouth/word of net remains the most trustworthy and

powerful of all forms of marketing.

• Poor customer service, arrogant management and misplaced

values will eventually destroy even the most powerful brands.

• Mass-marketers may like to think they can build “relationships”,

but to most customers it’s just more marketing noise.

• Only 13% cited frequent interactions with the brand as a reason

for having a relationship(HBR ).

26

Living Brands

What are living brands? These are brands that need more than

clever promotional gimmicks and guerrilla marketing – they

must adopt a Market Sensing, Value-Based Marketing and

Prosumption approach.

What companies have to do to thrive in today’s and in the future

business environment is to weave in consumer communities,

socialise their marketing and equalise communications rather

than sermonize...

27

Emotion-Recognition Software –

Near Field Communication (NFC)

RAPID PROTOTYPE PRINTING

3D printing, silicone technology

DirectSatellite Broadcasting

Systems (DBS)

Mobile Information Technology –

Wireless Motion Sensors/Location

Beacons

NeuroScience, Biometrics,

PsychoPhysics – Polymeasures,

Voice Prints

SMART PACKAGING – self-

destructing packages, shrinking

packages, chatty packages

BIG DATA/ MASSIVE DATA

Terabytes – Granularity. Grid

Computing – Support Vector Machine

Vertical Search Engines, Visual

Search Engines, Semantic Web

FRAGVERGENCE Widget Economy

– Liquid Media, Transmedia Planning,

Wearable Tech

TECHNOLOGICAL INNOVATION AND

TRANSFORMATION

FROM

TO

INNOVATION AND THE FUTURE• The key to future success lies in reducing complexity.

• Using creative future scenario planning and futures research.

• Be investigative. Explore the places where future already

happens.

• Be Multifunctional – Do not think in product categories, think in

usage scenarios.

• Business Ecosystems, Economic webs and C&D. The

economic and cultural palette needs to be broader.

• Efficiency Innovation, Evolutionary Innovation and

Revolutionary Innovation.

• The Seeds of Innovation: Creative Thinking, Strategic

Thinking and Transformational Thinking.

• Innovation as Market Disruption.

• Innovation by Co-creation. Community – Based Innovation.

THE FUTURE OF INNOVATION IS

P-2-P

• Collaborative, customised, and self-

expanded: Individual wikipedic

knowledge knows no barriers, no

borders.

• The future of innovation is

Kaleidoscopical, hybrid, mobile,

connected, distributed, articulated,

flexible and begins now.

• The human being again is in the

spotlight, can be heard and seen as

confident and creative in such a new

Renaissance.

The new Marketing Innovation agenda is concerned with:

overcoming resistance to change; reinventing marketing strategy

for a new market environment; prioritising market sensing;

innovating radically in product strategy; re-thinking marketing

communications; developing value-based competitive

advantage; and replacing damaged value chain relationships.

The challenge is to prepare for the post-recession environment

by re-examining the fundamentals of business models and core

capabilities to deliver the superior value which will be demanded

by post-recession customers.

• Now consumers will challenge brands to put their money

where their mouth is. After all, if brands really do care, then

there is a simple way to prove it.

• Amid their deep skepticism, consumers still yearn for

HUMAN BRANDS.

• Now, they are embracing the few brands that are already

trying a bold new approach in the quest to become more

HUMAN. One that is visible, straightforward ,and directed

at a truly meaningful target: PRICING.

• An interesting new concept:Sympathetic Pricing.

• Get ready for a wave of imaginative discounts that relieve

lifestyle pain points, offer a helping hand in difficult times, or

support a shared value.

• More than just…sympvertising.

• OTHER PRICING INNOVATIONS

• Painkiller Pricing(Discounts that target lifestyle pain points).

• Compassionate Pricing (Discounts that offer a helping hand at a

difficult time).

• Purposeful Pricing (Discounts in support of a shared value or

belief).

Paradigm Shifts in Advertising

From To

Likability Linkability

Display Search

Attention Recommendation

Mentions Meaning

Simple Complex

Legacy Leverage

Device – Centred Person – Centred Media (liquid media)

Meaningful Media is Growing – Charting New Communication Styles

Product – Based

to

Story and Back story

Storied Products

Visual Storytelling

Consumer to Participant

Mainstream Media Meltdown (M3)

From Broadcasting to MyCasting

Social Interactive

Segmented Message to

Invitation, CGA and

Voluntary Advertising

EARNED MEDIA

• We are increasing seeing earned media outperform paid media

and becoming the main driver of traffic to marketing initiatives.

• Earned Media is earned, which means, it finds and links to

something this is valuable.

• If the marketing is valuable, then the media channel needs to offer

the space for where the content resides.

• No advertising……

• …….the joy of not being sold anything.

GLADVERTISING

• Advertisements that adapt to our

moods (Gladverts)

• Emotion Recognition Software

(ERS) – H-C-Interface technology

• A System which can work out a

person’s gender, estimate their

age, and serve up adverts that suit

to that demographic profile (NEC-

Japan)

CONTENT IS COMMODITY

• You have to provide more than content.

• Organising and filtering content will become big business.

• Social networks constructed from semantic similarity

captures actual friendship.

• Folksonomies – social classification, social indexing, social

tagging. Digital object tagging. Collected intelligence.

• The Democratisation of Meta Data.

• Social media begins to look less social. Networks could begin to

feel more “exclusive”. Networks begin to fill with noise.

• People are beginning to get bored with social networks.

• The “user engagement” is dropping off (page impression growth

is slowing).

• People are not attracted by useful and relevant information, but

by intrusive time-wasting opportunities.

• Facebook behaviour: join, accumulate dozens of semi-friends,

spy on a few exes for a bit, get bored, then get on with your

life…..

T/P ratio

The New Advertising Metrics –

• The next -generation metrics

• The biggest change that will happen in the next few years in

metrics also ties into what is happening in “targeting” and real

time bidding. The social graph – the connections we all have

with others will drive massive change. The ability to

understand which people (represented by a node in the graph)

are really “nexus points” – influencers, change drivers – means

that we can be much more thoughtful about how we influence

and who we contact to achieve maximum effect.

Social Media is about the

people. Not about your

business. Provide for the

people and the people will

provide for you.

• TRENDS IN SALES MANAGEMENT

• Salespeople are being replaced by the Internet because they

fail to add value.

• As a result there are fewer opportunities for salespeople and

customers to meet, requiring relationships to be built on

added value and not personal contacts.

• Value co-creation.

• Ecosystems of partners and customers.

• A truly customer-centric mindset.

• The sales organisation of the future will be a matrix

organisation combining product and customer experts.

• TRENDS IN SALES MANAGEMENT

• Skyrocketing costs of chasing an opportunity.

• A move from solution presenters and problem solvers to

ethical business consultants.

• The service becomes the value proposition.

• One process does no longer fit all customers. One

salesperson can no longer have all the knowledge

required.

• There are less sales jobs and more sales support jobs.

• Buyers are making decisions without human help.

• Interactive video will become ubiquitous.

• TRENDS IN SALES MANAGEMENT

• Lean Selling.

• Sales Velocity.

• Customer-designed sales force.

• Salespeople are too expensive to deploy as a simple personal

selling channel.

• The death of F2F transactional selling.

• Unsustainable hybrid sales force.

• Ever extending sales life cycle.

• The decline of RFP/RFQ selling. Value creation opportunity is

limited (80% of the decision has been made).

• TRENDS IN SALES MANAGEMENT

• Values rather than just results-driven.

• Ethical behaviour.

• Cold calling will become impossible.

• Creativity: the spark that grows business.

• Honesty, genuine concern for customers, and strong ethics and

values will be rewarded.

• Prospecting for new business will get more difficult.

• Increased personal attention.

• The best sales leaders are trend hunters.

TOP TRENDS IN RETAIL

1.Self-serve(i.e., intelligent vending machines and robots).

2.Cost polarisation. Middle class disappears taking with them mid-

price retailers.

3.Blurring of sectors (i.e., Ralph Lauren selling white paint).

4.High Speed Retail (i.e., people sleeping less. Shopturnals.”Pop-Up

Retail.”Limited time only”.”Vacant shop”.”ZARA effect”. ).

5.Brand Experience (i.e., Temples of Brand Experience. Flagship

Retail. Women Factor).

TOP TRENDS IN RETAIL

6.RFID (Glorified barcodes. Tiny microchips with antenna. Promotional

messages. PRADA.).

7. Brand Politics(Consumers interrogating brands on ethical policy.

Ethically-based retail concepts-wind farms, carbon-free menus, etc.).

8.Generational Crossover(Bipolar dynamos swapping. Demographic shift.).

9.Women (Biggest market on earth. Feminisation of markets. Female

Fever. Evenomics).

10.Mass Customisation(Moving out of the era of mass and cheap into the

age of luxury and “made for me”. Bespoke. Limited run products.).

TOTAL RETAIL

Some read the last rites over the corpse of multichannel marketing in

retail which they dismiss as a fruitless diversion .They argue that

multichannel’s key problem is the concentration on channel and

the logistics of the delivery mechanism-the website ,payment

processes ,etc.-which often result in duplication of effort in areas

like supply chain and marketing .Instead ,they advance the claims

of Total Retail-one central brand ,a consistent customer

experience and an integrated back office. In short, organising the

business around the customer not the channel and making it

easier for customers to buy how they want.

• FUTURE OF RETAIL-MAJOR TRENDS

• 1.World as a Retail Experience.

• 2.Pre-View Shopping.

• 3.Tablet Enabled Service.

• 4.Selling the Ideal.

• 5.Every Store as a Flagship.

• 6. Complementary Curation.

• 7.Revolving Decors.

• 8.Taking the Store to the Customer.

• 9. Instant Show and Tell.

• 10.Group Clout.

• Experimental Store Atmospheres.

• Telemetric measures for electrodermal activity.

• Second use shopper.

• Rise of retail showcases.

• Mobile shopping-bluetooth-GSM.

• QR-codes and RFID.

• Shopping Comparison engines. Shopping Engine Marketing.

• Pop-Up Retail.

• Storemediagration-the merging of online and offline.

• Holographic and augmented reality displays to help shoppers.

• Capability to pay with your mobile phone using near field communication (NFC).

NEW ECONOMY

• Social Capital. Voluntary Simplicity. Benefit Corporations.

• Attention Economy. Emotionomics.

• Consumers in Control: Made of/ by / for consumers.

• Glocal. Deglobalisation. Not made in China. Locavores.

• New Business Ecosystems.

• Sense and Respond Models.

• Evenomics.

PARADIGM SHIFTS (1)FFROM TOTo

• Economic Egoism Multi Lateral Consideration

• Walling of Separation Sharing and Collaboration

• Secretive Business Trust and Consumer Generation

• Control Economy Transparent and Cooperation

• Display Search

• Attention Attention Economy and the age of

• recommendation

• Mentions Meaning

• Simple Structures Complex Platforms

• Device – Centred Person – Centred

• Interruption, Intervention, Intrusion, Insistence Engagement

• Directing Connecting

• Shouting Delivering Content

• RO Investment RO Involvement

PARADIGM SHIFTS (2)

From To

• Reacting Interacting

• Big Promises Intimate Gestures

• Explaining Revealing

• Linear Non-Linear

• Separateness Relatedness

• Component thinking Thinking in Wholes

• Task Analysis Complex Adaptive Systems

• Problem Solving Butterfly Effect

• Structure Creates Process Self-organising patterns, shapes & structures

• Forecasting through Data Analysis Foresight through synthesis

• Collecting Perceiving Patterns

• Sequential Models Simultaneous Happening

EXPERIMENTATION IS THE NEW PLANNING

Let’s be honest: You have no idea what’s going to happen to your industry. That’s why you build your organisation into an engine of possibility.

Technology is chaotic. It affects every industry, often in ways that are difficult (if not impossible) to anticipate.

An evolving portfolio of strategic experiments.

Emergent strategy is an organic approach to growth that lets companies learn and continually develop new strategies over time based on an ongoing culture of hypothesis and experimentation.

•TRADITIONAL INDICATORS

•Most financial indicators are backward looking

•Financial performance tends to be measured over the short

term and induce short term “fixes”

•Necessary, but not enough

•Three important reasons why financial measures alone are not

enough:

•They may not capture all of a company’s strategic objectives

•Bottom-line measures are after the fact

•They are not very diagnostic

Thinking about profitability is not

easy. The profit zone, the arena

in which high profit is possible,

keeps changing and keeps

moving. The customer does not

stand still, and the business

design must respond, even better,

anticipate!

In this new economic order,

characterized not by equilibrium

but by fluidity, customers and

profit zones always shift.

•MARKETING METRICS –TRENDS

•Correspondence Data.

•Leading-indicator Metrics enable you to capture directional data.

•Statistical modelling will follow (e.g., predictive GLM models).

These statistical models become the basis for predictive metrics.

•It is amazing how many people think of value as a checklist. The

checklist are almost worthless…

• Build linkages between the key metrics

• Metrics drive behaviour

• Drive value, do not just measure it!

IS MARKET SHARE DEAD?

Where is the profit zone today? Where will it be tomorrow? The profit zone is the area of your economic, societal and human neighbourhood where you are allowed to earn a profit through value delivery!

As a manager, you were schooled in how your pursuit of market share and growth automatically places you on a direct route to business success.

The “Parallel Lines” Test

Value in my life

Personal Productivity

“Solutions

Assembly”

Family, Friends and

Community

Emotional Authenticity

Passion Partnership

Earnings per

Share (EPS)

Shareholder

Value

“Customers”

Profitability

Growth

Companies focus onIndividual focus on

+ …

Stakeholder Metrics

• Engagement Metrics

• Change Management

• Expectations Management

• Humanity of the Project

• Share of Needs Models

• Memetics Research

• Engagement Index ( e.g., Involvement +

Interaction + Intimacy + Influence)

• Transparency Index

• ( True) Relationship Index

ROI

ROInsight

ROInvolvement

ROExperience

ROEmotion

ROEngagement

ROIntegrity

ROEthos

ROI does not mean what you

think it does…

SHARE OF NEEDS MODELS

From Company-Driven Metrics

• Cost per lead (CPL)

• Cost per click (CPC)

• Customer Behaviour Maps (Recency)

• Visual Customer Maps

•Return on Ad spend (ROAS)

•The Drilling Down Method

•Life Cycle Metrics

•Mapping Visitor Conversion

•CRM Analytics: Micro vs Macro

•Customer Model: Recent Repeaters

•Keyword Effectiveness Index (KEI) (SEO)...to Consumer-Driven Intermediate

Measures

• Cost per involved reader/viewer/listener

• Cost per earned attention

• Cost per touch

•Cost per touching

• Share of Needs Models for

Marketing Performance

• The voyage of discovery is not in seeking new

landscapes but in having new eyes.

• (Marcel Proust)