Platt Perspective on Business and Technology

Channel and cross-channel marketing when everyone is connected everywhere all the time – 2

Posted in strategy and planning by Timothy Platt on May 7, 2012

This is my second installment in a series on channel and cross-channel marketing in a globally interconnected context, with all of the complexities that arise when marketing is moved from the local, to this wider context (see Part 1.) And the first area of distinction that I would address here is the dual shift in available marketplace scale and diversity.

• The larger the available marketplace for participating members, the larger any niche within it would be for specific and even specialty-interest products and services – the more people there would be, on average for any given potential offering.
• And given this, the larger the available marketplace, the more distinct products and services can be profitably, sustainably offered there.

I frequently write of business ecosystems and note here that this is not simply metaphor. Consider this a direct and immediately valid application of one of the core principles of the ecology subspecialty of island biogeography that the larger the island (or other isolated and size-limited habitat area) the more distinct species it can stably support and sustain. The larger the marketplace and the more people and groups are actively participating in it, with all of their needs and interests diversity, the more products and services that marketplace can sustain, and with each fitting within the purchasing needs and priorities of a sufficient customer base for those products and services to be stably economical for businesses to provide. (See also my series Global Marketplace Diversity as Business Ecosystem Niche Space at Business Strategy and Operations, posting 172, 174, 179 and 181 – a separable set of postings within a larger series there.)

And as a starting point to this discussion I note that going online in a business at least potentially opens up whole new worlds of opportunity to profitably expand into niches that for any local market, would be ineffectively marginal for sales opportunities. But that statement, simply taken as-is, masks over some crucial complicating and modulating factors and that is where consideration of competition and marketing come in. And I begin this part of the discussion by briefly and selectively considering competition, and from the perspective of a very specific dichotomous distinction:

Direct competition from businesses offering very similar and even identical products and services: Here, scale of marketplace and any edge that distribution systems location or other factors might offer can make seemingly competing businesses in even the most direct competition context mutually successful with none of the businesses involved there able to, or even interested in trying to take over the whole market for their particular niche product or service offerings. This allowance for success in the face of direct competition particularly applies, of course, for products and services that address very widespread and consistent needs for very large and openly defined target demographics – where scale exceeds the realistic capacity of most any individual business.
Indirect competition coming from similar products and services, that while different in detail could be seen as offering overlapping value opportunity to what you would offer: These are products and services that competitively provide some, many or even all of the core features that your products or services would offer, at least from the consumer perspective, but perhaps in different ways or as packaged differently – and perhaps while doing other things as well that from consumer perspective would look like extra-value added.

The immediate impact of direct head to head competition with an effective competitor is obvious in reducing market share potential and return on investments for both, and under most situations. But picking up on a detail I ended that second bullet point with, indirect competition can be a significant and even dominant factor in driving the elaboration and complexity of product and service features, in a race to provide that novel extra value added as a key market differentiator. And this can and does lead to feature overload and other problems. And at least in principle this tendency would be balanced against, in the marketplace, by consumer-driven selective counter-pressures where consumers would favor products and services that were simpler and more easily learned and used and without the clutter of extraneous functions and details. And this pressure would come in from sales patterns and increasingly from the publically shared online consumer conversation and the forces of viral marketing and crowd sourced consumer insight.

I, of course, gloss over a complex story here and simply offer this as a rough outline of more complex processes. Note that when I describe this balance of factors with the term “selective” when noting consumer-driven selection processes and pressures I specifically refer to processes contained within the concept of natural selection and selection of the fittest, and in a manner that is closely analogous to what is found in biological evolutionary systems.

But for purposes of this discussion, I leave off that area of discussion simply noting that:

• Larger marketplaces can carry wider selections of products and services, and
• Customers with their buying patterns and with their online ratings and marketplace experience-directed conversations determine which product and service offerings are going to succeed and at what levels and which will succeed most effectively at what price points.

That is where marketing enters this story. And I begin with a phrase that I just used: “consumer-valued features” and with that I bring in the complexities of conveying a marketing message that offers products and services, and in the right way and to the right people and through channels and combinations of channels that will effectively increase likelihood of completed sales to them. And online, at least potentially every community and every marketplace, local and geographically diffused can be available for sales and to all competing businesses.

Competition can and will come from anywhere and everywhere in this expanded marketplace and any business operating online has to be prepared to compete against an essentially open-ended range of competing products and services – including what amounts to an open ended range of indirectly competing product and service alternatives, and with many of them coming from places where payroll and personnel costs, and other operating expenses are lower so businesses from there can afford to sell to a lower price point and still bring in the same margin of profit and for anything that can be mass produced or volume-provided. How do you adapt a more local-marketing channel and cross-channel marketing approach to this new context?

I will finish this posting by adding in one more crucial complexity that I have raised a number of times in the online context in other blog postings. Business online follows the Pareto principle, but generally in an extreme form in which 90% and even more of the business for any market niche for products or services sold online goes to 10% or even less of the businesses competing for those sales.

With that I have just started noting potential opportunity, and what could in principle be marketplace success with a global reach. I then touched upon a whole series of complexities that can get in the way of that success, and that in fact do for many businesses. I have been outlining something of the basic challenge here in this posting and I will turn in my next series installment to look into some of the basic parameters that would go into any effective strategy for meeting them. And I would begin that with what at least in principle might sound facile: success online, and certainly for businesses that seek to develop significant market share and dominance means marketing your business in ways that would tap into the fullness of “interactive” in the online community’s interactive online experience – to prompt and encourage the community around you to help you find and positively connect with the people who would buy products and services of the type that you offer.

You can find this and related postings at Business Strategy and Operations – 2 (and also see Business Strategy and Operations.)

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