(InternetWeek Online, September 15, 1998)
Electronic Commerce (eCommerce)
There's a hidden danger with the gold rush to the Internet. Thinking either "We're there" or "We're lost," many companies simply speed onto the Web under the impression that they will evolve their presence -- and their business -- as the information superhighway reshapes the global marketplace. Not true.
As a marketing phenomenon, the Web is a new twist on a painful old theme. Time and again, marketers have tried to expand their businesses by creating new markets and conquering new delivery channels, only to scratch their heads when the initial sales burst flattens.
The real problem? They haven't identified, valued and nurtured the true core of their businesses: the underlying needs satisfied by the actual experience of their products and services. Lacking in core esteem -- believing that "what we got isn't it" -- they see new territories and delivery channels as the key to the growth of their brands.
In truth, seizing hold of their brand's core will identify room for profitable expansion -- and the right way to use the Internet.
The traditional premise, "If I put my product in a new place, I will sell more of it," is flawed. The old theory only works when the product creates a need-satisfying experience and the company communicates the promise clearly to people who have that need. All too often, failure to discover, engineer, deliver and communicate need satisfaction is what drives marketers beyond their core territory in the first place. Look at McDonald's Corp. and the broadcast networks. McDonald's, thinking it's in the fast food business only, is copying the success of others as a way to jump-start a stalled growth engine. So, the company spent more than $1 billion to create custom-ordering kitchens and launch "me-too" products such as the frozen McFlurry (a copy of Dairy Queen's Blizzard), the failed Arch Deluxe (a Whopper-topper attempt) and the new McWraps.
The broadcast networks are lunging in every copycat direction, too -- trying all the techniques that have worked on cable to combat audience erosion. They're following the classic business-school operating model: When the category gets crowded and growth stops, find another customer base, territory or delivery channel.
The Web may intensify and accelerate this syndrome. We live in a world of overcrowded markets. By letting start-up and brand-extension marketers leapfrog traditional channels to get higher margins, the Web is expanding competition and increasing the noise level.
The flaw beneath the surface of many site-based marketing attempts is the site's inability to identify and serve the core needs of consumers -- a company's brand differentiation gives way to standard site structure and price discounting.
For example, Barnesandnoble.com bears direct resemblance to Amazon.com. Barnes & Noble invested hundreds of millions of dollars to turn bookstores into experience destinations but has surrendered its essence to standardized Web formatting and a 40-percent-off policy. With Junglee Corp. attracting price-conscious shoppers to a service that locates the lowest price for any book sold on the Web, both Barnes & Noble and Amazon.com can only set themselves apart and above by engineering a superior consumer experience at its site -- something neither company has done yet.
By contrast, Saturn Corp.'s Web marketing honors the unique experience that is Saturn by taking the hassle out of ordering a car. Although the site itself does not replace the physical experience of going to the dealer, it does answer lingering questions during post-visit evaluation and allow for simple ordering once a decision has been made.
So what should you do to lead your company in the right Web direction? Here are some tips to consider:
- Treat the Web business as a start-up -- not an extension of your core franchise -- and build it in incremental steps. First, find the community that has grown up around your brand. Then, determine the common needs your products can best satisfy. Build and deepen the relationship by satisfying those particular needs. You will grow your business base in two ways: by attracting more people within the community and by appealing to a broader group of people who share the same need.
- Take a fresh approach to research. Determining how, when and why your products uniquely satisfy people's needs requires an unconventional approach to information gathering. Instead of asking people about your products, your Web site or your competitors' Web sites, ask them about their lives. Look for where your brands and the Web fit within their worlds.
- Recognize that your brand won't necessarily be a magnet as a Web site. Consumers shop at Barnes & Noble for books by type; they don't distinguish between Random House, Knopf and Penguin books. Similarly, consumers go to CompUSA every day looking for the best computer in their price range; salespeople will attest that shoppers faced with comparable products are buying by price, not brand.
- Create an experience that satisfies a need while engaging, intriguing and connecting people. Remember, your site is a surrogate for the physical retail experience, and just as with retail, consumers have to have a compelling reason to enter.
- Consult or partner with retailers and resellers that understand and are recognized by your consumers. They can offer clues to creating experiences that satisfy needs in the Web environment. While some people will have bigger screens or faster browsing capabilities than others, they all operate in the same physical environment. They're on a computer, with no retail-space surroundings to color their experience and no salespeople to counteract flaws in store layout or holes in communication.
- Market your Web site as a needs-based business. The true source of your business is the needs you serve, not the products you offer. Successful Web marketers are serving needs that fit the Web environment best. The greatest lesson from Saturn's Web success is that the carmaker uses the Internet to make car purchasing a private matter -- one that restores a pivotal sense of control to the consumer.
Used well, the Internet can actually take a company back to its core fundamentals and help it build a network of experiences that enrich and expand its brands.
Pam Murtaugh is president of Murtaugh/Match Associates Inc., a business-redefinition firm based in Madison, Wisconsin. Clients include Kraft, MasterCard and Mead-Johnson. Ryan Zerwer, president of Internet software provider Ambassador Catalog Systems, contributed to this article.
Pamela H. Murtaugh
President and Founder
Murtaugh/Match Associates, Inc.
6515 Grand Teton Plaza, Suite 241
Madison, Wisconsin 53719
Voice: 608.829.2122 -- Facsimile: 608.829.2022
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