Marketing Classics (And they mostly came true)

Yes, Techno-Marketing, Ron said it in August 1995. This is a intriguing read, looking back at what Ron Burgess thought about the future of marketing. Funny part about “Techno-marketing” is I think Ron coined the word for the marketing industry. I searched the deeper web, found one post about the O.J. Simpson trial in 1995 that was in the context of giving up-to-the-minute information to the journalists. “As part of the techno-marketing under way at the trial…is supplying access to these almost-instant transcripts to the hordes of media covering the proceedings at no charge.”

This is part of our series of “Classic Marketing” posts, where we have pulled previously published articles and reposted them to our blog. Notice the double spaces and words that clearly didn’t catch on in the Internet age.

We’d love to hear your thoughts about what you thought would happen, Tweet us as @redfuisonmedia or @ronburgess and include #techno-marketing. You can see my comments to the right.

Techno-Marketing

by Ron Burgess 8/9/1995

High-tech  Marketing, Electronic Marketing, Techno-Marketing or what ever you call it; new technology may turn business marketing inside out.

The media is full of new words many of us have never heard of before.  So much of what is written we pass over out of ignorance. But some of this new technology will have a profound effect on business and shouldn’t be ignored.  Certainly some very big shots are committing very big money in the technologies that will enable these new vistas.  Microsoft has committed millions of dollars to its network.  Netscape (the hottest “net browser”) just went public after only 15 months in business, raising over one billion dollars.  Yes that is with a B.  This company hasn’t even made any profit yet!  In the Inland Empire we now have at least three new web access sites in just the last several months.  Many of you don’t even know what a web access site is let alone care.  If you are in business and have anything to do with marketing or communications, you’d better care.

I’ll try to sort all this out for you into bite size pieces.  Then we’ll discuss the possible impacts or fizzles and the effect on your business.

Interactive TV

Leading the way-Home shopping

By now we’ve all seen the diamond rings, and ceramic figurines on the Home Shopping Channels.  Whether you’ve stopped to watch or not, millions are watching. . . and buying.  Last year over 1.6 billion was spent on Barry Diller’s Home shopping channel.  Now merged with another large communications company,  I have seen estimates of nearly 3 Billion in sales for this year.  This may not be much of the overall market, but it could grow to 2% or 3 % very shortly from zero a few years ago.  In the worlds largest consumer market that’s not so bad.

The functional problem of this medium as a shopping tool is the sitting and waiting for something you may like or need.  It’s like going to a department store and sitting in the Lazy Boy department and having someone pitch each and every item in the store, one at a time.  As a result, only a small segment of shopping freaks will actually spend a lot of time buying this way.

“Stores” magazine, an industry trade journal published by the National Retail Federation,  reported that “… home shopping appeared to be on hold as illustrated by failed efforts by  Fingerhut and its S channel.”  Spiegal and Time Warner did not debut until Dec. 14, almost one year behind schedule.   “Some retailers are now wondering if this is the next Edsel” reported Stores Magazine, Susan Reda.

Now on demand

But when hundreds of channels and interactive TV come along this could change to a more departmentalized approach; one channel for small hand tools, one for women’s lingerie (an instant hit, I’m sure), one for skin care products.  Later, personal shoppers can retrieve merchandise for you. When and if this happens, the traditional retail store concept will change for ever.  Small retailers need to be very specialized to compete on selection, ( i.e.,  Green Cockatoos R Us).  Large retailers will definitely be involved in shopping channels.  Several have already spent millions on building their own networks.

While early forecasters may have been over zealous, heavies like Sears, JC Penny, Crate & Barrel, Williams-Sonoma, Sharper Image, and Land’s End  have recently been joined by Wal-Mart and Marshall’s indicating long term support for the idea.  This is not an opportunity to make money quickly.  There’s not golden pot at the end of the rainbow” states Arthur Anderson’s Fred Schnider, “Now is the time to learn about merchandising in a non-store fashion.”

Internet and World Wide Web

If interactive TV isn’t responsive, perhaps Internet is.

If  interactive TV is too far away, this new technology may fill the void before the Shopping Channels take control.

The Internet is a collection of computers and databases hooked together.  It is difficult to describe exactly, because it has a life of its own.  It has no central control point. A small entrepreneur can afford to set up a web site at home.  Then in turn he sell access time to you which hooks you into this ever expanding new network.  If you don’t think this is hot, just drop into a computer or book store and see how much space is devoted to this one subject.  A year ago you might find three books on the Internet.  Now its measured in feet of shelf space not titles.

Everything you can think of can be accessed.  The communication takes several shapes.  Electronic mail (E-Mail), On line chat groups, database access, and informational pages.

The Internet and its brother the World Wide Web (www) which is the graphical interface portion of the web, may have the greatest short term impact on marketing to most of us.  TV does provide relatively low cost infomercials, but the Internet is really low cost.  This means that the hundreds of thousands of  small businesses can use this new medium for the same cost as the big guys.

For this reason I think computer literate small businesses may embrace this new  medium as a way to “network”.  Some will figure out how to sell their services to markets that they would never have had access to before.  Others are building new products specifically to utilize this new medium.

The Internet is so broad we need to discuss the marketing functions separately. They generally fall into Internal and external communications, advertising and sales and information.

Communications

According the Yankee Group, 25 Million people and over 21,000 businesses have access to the Internet..  This is an increase of over 10 fold in only 5 years.  Today more than 75% of the users are log on over corporate connections. This is rapidly becoming a Business to Business network. According to a new survey by the Yankee Group published by Business Week, about 30% of the corporations that are on Internet  indicated they use the Internet for internal communication.  This is generally E-Mail among companies that have several locations.  Fourteen percent are planning to do so in the future.

Databases

I have recently gotten information on copy rights from the Library of congress, information on population growth rates form the Commerce Department, and everything you’d want to know about medical school application. I downloaded all of this from database access on the Internet.  For Info nuts like myself, this represents a real opportunity to climb right into the ”net” and never return.  I wonder if Tron is in there?

A friend of mine recently mentioned the “information neutral” business environment.  He explained that information used to be power, but if we all have access to the same information, that it is no longer an advantage. . . but a necessity.  Large businesses have always been able to buy whatever information they needed through consultants or research. Now even the smallest business has access to information.  While this may level the playing field between small and large business, it also raises the need for up to date information for all business.  Marketing will continue to use more and more information as a competitive advantage in the market place.  This access to information for market research is already causing a quiet revolution in finding customers, and shaping new product development.  The proliferation and falling prices of  mailing lists and database marketing products adds to a rapidly growing field of on-line information.

Sales

Purchase order processing

For years, manufacturers and vendors have been promoting EDI (Electronic Data Interface). This started as modems became popular, but now it seems the Internet has become a major link to this business.  According to the Yankee Group nearly 49% of corporations on the Internet, currently use it for the purpose of ordering or tracking inventory. Another 27% plan to use it for ordering and tracking functions in the future. Being unable to accommodate a buyer in the same way could put your business in a decidedly inferior position  from a customer service point of view.

Merchandise (services) selection

The direct selling aspects of venders are intriguing.  If a buyer of a department store sees strong sales activity on SKU #12345998 from your company, but can’t remember what it is, the likelihood that you will get the order is reduced.  If she logs on to your product description home page to place this weeks orders and you show a picture and description of the SKU, the decision is made.  For those of you who think buyers can look it up in your paper catalog, you’re right.  But as a former buyer of thousands of SKU’s weekly, I know how easy it is to forget about reorders on acceptably performing merchandise in favor of buying only the hot performers.

This application has consumer possibilities as well.  Currently hundreds of “Stores” sell merchandise on the network and private services such as Prodigy, CompuServe and America on Line.  It is possible to price shop a CD from your favorite blues band.  This may eventually provide consumers with quick price checking.  Recently Anderson Consulting developed an experimental software “agent” that checked prices of  the same product and listed comparative prices for the user.  This has the ramification of turning thousands of products into a strictly price business.

Run time movies

If you think this activity will be reserved for the basic merchandise of  the world, forget it.  The virtual store is upon us!  Currently short videos can view models on the runway or show a piece of equipment in operation.  Imagine the possibilities for merchandising.

3 D Views

If that’s not enough, imagine a rotating 3D view of  your product with a blow apart view of the inside.  You will be able to completely describe each function of even the most technically sophisticated product.

A walk through the store

Sure this stuff may not be for every shopper.  Only 1% of the country currently has access to the Internet.  As this number grows however the shopping gets very easy at some home pages.  Only last week Visa International and  software firm Worlds Inc. announce a new software system to enable Visa’s 20,000 member banks to create three-dimensional software representation of one of their branches on the Internet.

The system, which will make its debut later this fall, will allow bank customers “to roam the halls” on an on-line branch and conduct such transactions as transferring funds and applying for loans.  It is expected that the new Virtual Reality Modeling Language + will allow people to adopt persona’s for themselves and  “chat” with others on the Web such as bank officers.  You can nearly recreate the floor plan of the bank, and the people!

Visa International and Worlds Inc.. said last week that they will give away the VRML+ technology free to encourage widespread adoption.  IBM has said they will use the language to create virtual libraries for public and private institutions.

A walk through the store, examining items on the “shelf,” may not be so far away.

Computer Marketing (Desk top marketing)

We’ve discussed the hot new communication topics which will change the way de do marketing.  But while they may represent a large change at some point in the future, another change is under way now.  It is the use of personal computers for a wide range of marketing activities.  Most don’t really realize that the mail merge function of their word processor is a marketing function, but it is.  It enables a single person to communicate with hundreds or thousands more contacts that was possible only a dozen years ago.

When one takes a moment to gaze back over the development of categories of software, an interesting pattern appears.   We first used personal computers for dealing with numbers-accounting and spreadsheets.  It is simple computation, adding, subtracting  totaling numbers.  The use was obvious, business could automate routine functions like invoicing.

Later, word processing became the new technology.  Business easily saw the productivity in not having to retype each and every form letter.  Then came graphics which were fun to play with, but combining graphics with word processing created a huge new desktop publishing industry.  The database concept has been with us for years, but the new powerful and easy to use databases are only a couple of years old. Currently, communications technology are combining with computers to change the way and speed at which we can communicate.  New desktop power has brought geographic mapping technology to the PC in the last two or three years.  GIS, Geographic Information Systems is a technology that allow the spatial display and study of  information.  It can bring numbers in a data base to life the way charts can illustrate numbers and trends on a spread sheet.

In the last year or two, the nearly seamless integration of  Windows and Macintosh applications opens a completely new opportunity to change with fundamental way we market.

The simple desktop computer will be responsible for the greatest and fastest change in Techno-marketing, and it can be achieved by the smallest of businesses.  Along with access to information, this new technology will give the same tools to small business that have been used by large businesses for decades.

I believe the next major use of desktop computers will be Integrated Desktop Marketing  systems.  The art and science of marketing includes a broad base of disciplines; Research, Planning, Public Relations, Selling, Advertising and Channel Distribution.   This wide range of specialties can now work together to create completely integrated systems capable of revolutionizing marketing, bringing customers and businesses closer.

The Integrated Desktop Marketing System (IDMS) is centered around the database to gather and store information about a businesses’ prospects and customers.  This information is automatically updated with every transaction, or communication.  It will include broad scale information including profitability of each customer by department or cost center, to marketing surveys of customers and competitors.

Communications will occur as a result of the information gathered.  Just like traditional communications, they should be pertinent, personal, and communicated based on the niche market (i.e. focused on teenagers, seniors or other lifestyle interests).  However, the communications will be much more efficient as the ability to write letters, send brochures or respond to customer service complaints will happen semi-automatically.

Automated Communications

Simple mail merge has expanded the ability to write and send many letters.  But its power is just emerging as lists can now be filtered based on buying patterns, demographics or psychographics.  Today word processors have the ability to produce professional newsletters, postcards, brochures, E-mail and Fax’s.  They can merge more than names and addresses.  Products, purchases, or special interests can be referenced to personalize communications. More powerful software allows “database publishing”.  This technology can literally build professional catalogs and newsletters with variable data.

Variable data uses database information within a publication to customize it for small customer needs or niches.  Variable data can include text, charts, graphics, photos, video, and animation.

A simple newsletter from a hobby shop could include a general article for everyone, and specialized articles for specific interests. The model plane hobbyist gets the article on new radio controlled technology and specials on new plane engines.  The game player gets an article on Dragons and Castles strategy and prices on new game pieces.  Each customer has no interest in the other hobby.  The demographics and psychographics of each hobby group do not intersect, yet the hobby shop must have the volume of several types of hobbyists to make a profit.  The flexibility of this concept is endless and is only restricted by the imagination and marketing skills of the shop owner.  It is no longer money or information.

Routine communications can be set up to print or be transmitted automatically at predetermined times.  These are now most common as confirmations to orders, and thank you cards etc.  But some innovative companies are beginning to use variable data in the selling process.  The selling cycle requires different communications from phase to phase.  Long term sales can be facilitated by placing prospects on communication tracks that supplement a salespersons  efforts to close the sale.  Direct mailing pieces can be automated to follow up on everything from scheduled appointments to calculated next oil changes.  All qualified customers can be included in a list to automatically print a coupon or flier at night and be ready to drop in the mail the following day.

This approach builds the customer service relationship with the customer and extends the abilities of the marketing department dramatically.

Electronic catalogs

Automated communications will develop into very sophisticated effective “pieces” available on a variety of media; traditional print, short run color print, CD-ROM, Diskette,  Internet or in-house databases.  The layout and design function will be the same as advanced graphics shops do today, but the media will run the gamut. Paper will still serve us for years, but some applications and forms will be preferred not he new media.

With new large high resolution monitors and faster computers, some applications will actually be more efficient electronically.  One such application will be the catalog.   Quickly changing product lines and prices can be updated quickly, displayed by a publishing program, and linked to the database.  Orders can be written on-line and transmitted to the company quickly and easily.  This is particularly attractive for industrial and  business to business vendor relationships.

Marketing support

With the advent of small , powerful laptop computers, many company sales forces are already automated.  They can provide quick customer support and presentation activities.  Easy to use presentation packages provide quick and easy information on products and services.  Soon they will also integrate with purchase orders and home offices databases.  today large companies already use EDI to make, confirm and update orders for customers.  Wireless communications now link laptops to mainframes with out a traditional phone hookup.

Viewed as a novelty only couple of years ago,  if your competition is using computers for estimating or ordering now, you’ll look outdated very quickly.

Virtual marketing

All of the pieces are now available for companies to integrate their marketing activities. But one more piece will make all this work even better.  It is instant gathering of information from all areas of the business in real time.  Real time means now.  All activities are ordered, recorded and monitored as they happen.  This type of data provides an up to date look at exactly what has happened, and can provide the ability for instant  response.  I call it virtual marketing.

The old way of doing retail business was to count stock  every week or month and write up an order.  The new way is to record the transaction immediately at the point of sale (register) and recalculate the sales rate, lead time and profit.  The computer makes the decision based on known selling criteria.  If it is time to buy it calls the vendor and places an order.  At a predetermined time, say every Sunday, all merchandise is reviewed for performance and those items that fall below performance levels are marked down.  Communications immediately go to likely buying candidates.  The sales are reevaluated as the sales pick up and the sale is stopped as the stock levels are back to proper  performance levels.

This sounds like a dream to some of you, but the calculations to make the inventory decisions have already been proven.  The only piece left to integrate is the connection to the customer.  Only time and experience will be needed to write new decision models to accomplish this.

The Virtual Marketing concept will also include immediate responses to problems, complaints and other customer service issues.  They will be dealt with by predetermined, proven methods designed to salvage good customers and gracefully release poor ones.  Changes in customer service levels, survey responses and other critical marketing measures will automatically appear on high level executives monitors demanding the attention they deserve.

For years sophisticated computer modeling and analysis has been available for inventory and accounting .  Not so for customer service and marketing functions.   As the attitude about what makes business successful shifts back to the customer from the financial and operations emphasis of the 70’s and 80’s, a “virtual response approach” will heat up the marketing effort.  As product complaints go up, production is notified of each problem.  Resources are shifted to appropriate areas.  As sales go up and are measured against forecast, more personnel are shifted to the shipping department. New supplies are ordered as well to supply production.  Suggestions from continuous customer input over the Internet are incorporated into fast response new product development teams.   No more time for long term studies, companies must sample the audience continuously.

The Virtual corporation may be aways off, but parts of the Virtual Marketing Concept are being implemented now.  Smaller companies have the advantage here due to the shear size of large companies networks and operations, as well as mind sets.  Those small companies that begin to embrace the process now will have a temporary advantage over the larger competition.

Effect on Business

In 1985 I was developing systems for retailers to control an analyze inventory.  My company was ahead of the game looking toward PCs with 386 and someday 486 power. Applications were single functioned with little data flexibility.  Now its hard to remember not being able to and paste data from one application to another.  Yet, in a year or two, cut and paste functions my seem just as archaic.  With new data linking abilities one application seems to meld into another.  Word processing will join data seamlessly; graphs will be produced and transmitted to the sales field with no regard for the three to five applications used to accomplish the task.

It is precisely this seamless computing that allows the new integration of marketing to happen.  Before this new technology, each of the five or six separate marketing functions lived in different places.  Tomorrow they can move into the same house-or computer.

Opportunities

Who wins and who loses in the game?  There will probably never be an exact win / loss measure because the magnitude of the process.  Each company will have to prioritize which type of system to implement and in which order.  Consultants will rarely blame business failures on lack of an automated customer service program or less than the state of the art communications.  But the cumulative effect of  falling behind will lower customer efficiency, and cause loss of image and thus profits.

There is a strong body of evidence pointing to greater profits for companies that perform at higher service and quality level as seen by the customer. Techno-marking will provide the greatest opportunity to increase customer service and communications.  Techno-marketing, or what ever it will be called, provides the greatest opportunity to increase precise communications and service to customers.  Those businesses and institutions that make the commitment to move toward Techno-marketing and implement technology with a degree of fiscal responsibility will be the winners.

Ron Burgess is a marketing and merchandising consultant specialising in integrated marketing planning and marketing systems.  He is a founder of  STRATUS a full service marketing and graphics agency.  As a consultant for over 12 years (32+ Years now), Mr. Burgess has developed numerous automated marketing systems.

Don’t miss out, Subscribe to the Newsletter.