By the end of 2022, 70% of the world’s population will access the Internet. This is a game-changer for companies, especially in terms of marketing.
The word that will have marked the last decade is undoubtedly the anglicism “business model,” which constitutes a fundamental subject for many successful books in the field of management (more than 300 references of management books on Amazon). The success of the University of St Gallen (in Switzerland) at the top of the Financial Times ranking of the best universities in the world is not far from the success of their “browser,” a variation in the form of a game of the 55 business models that govern the business world. The very idea of the business model is not new. Still, this question has taken a real turn since the end of the 1990s because the various changes, in particular related to digital, have allowed the emergence of new means to monetize invoice goods. And services. New models appear from the actual purchase – production/operation/transformation – sale model and offer new opportunities. The question of how to earn money for the business has therefore become more complex. The concept of the value chain, born of industrial procedures, taught to generations of business school students, is outdated because it no longer allows representing the richness and variety offered today. A simple micro-enterprise or start-up can become a giant in a few years when it took dozens for brands that have been established for a long time.
Switch From A Logic of Products To A Logic of Services
Digital is at the heart of these economic transformations. It disrupts traditional operations and changes how private and public institutions conduct their activities, regardless of their sector. It revolutionizes both the way of doing business, of communicating and the way of interacting with customers. For example, the automotive industry is moving from a logic of products (purchase of a car) to a logic of service offer(financing, security offers, etc.), and the distribution sector from a logic of relations between companies (B2B – the manufacturer sells through a distribution network) to ties with the general public (B2C – the manufacturer sells directly to the end customer). At the same time, companies with a hundred-year history in production tend to develop services. Now to sell a product, they must learn to charge for use through service, as illustrated in the case of the automobile.
Many companies have understood the fundamental nature of this development. They have already started to introduce digital technologies into their operations. So that the integration of digital technology can bring tangible improvements within the businesses, it is necessary to review its strategy to integrate this new component. Setting up an ecosystem makes it possible to manage all the activity flows of a company or a community: customers, suppliers, associated data, services, etc. Its potential is significant in terms of synergies, considering customer needs, speed of access to new markets, or even the capacity to deploy and size new offers.
The second industrial revolution saw the birth of industries (automobile, aeronautics) which were its spearhead. The outstanding question is to know the equivalent of these sectors in 2020, that is to say, the real economic sectors born of the new industrial revolution. The first industrial revolution had allowed the rapid and long-distance transport of goods, the second the transport of people, the third was to be that of the transportation of information. Over the past decade, several hypotheses have emerged to support that the famous “new model” had been found. After the explosion of the dot.com bubble in the early 2000s, the Internet made a comeback and returned to the heart of these new models with a natural mass effect this time around.
Undoubtedly, traditional management and the medium / long-term strategy of companies are affected. The MIT Initiative on the digital economy is overhauling part of the conceptual bases due to the impact of platforms. With an open, multi-sectoral approach, the classic concepts of “value chains,” even Porter’s “Five Forces,” which have been the alpha and omega of strategy for 30 years, need to be revisited. The platform economy brings up to date the approaches, which appeared in the 1990s. Competition can no longer be analyzed solely through the prism of Porter, who did not know the digital in the foundation of its matrix. The strategy no longer boils down to killing the competitor but instead making the pie more prominent (the market, the new consumer, the importance of the link with the customer, the network effect, etc.).
Adapt And Quickly
All the players have to gain or lose depending on their reaction time. Traditional players have not lost and can still come back by surfing the current waves (Nike and connected objects, Schneider Electric, and data to improve production). The actors born since 1994 (like Amazon) have taken a step ahead in a few years but can also be threatened, as in their time were the pioneers Altavista, Netscape, or myspace, by actors from other sectors coming in their field or by future start-ups. Governments and administrations must also move forward on the issue of their service offerings for citizens and the lot of regulation or the taking into account societal changes.
All of these transformations require thinking about market access differently, and therefore it is marketing that is impacted today. These innovations are forcing marketing practitioners to revisit traditional business models and think differently. A source of commercial innovation between 1950 and 1980, marketing had become, in the 1990s and the beginning of the 21st century. In this more routine profession, the same models of “brief” and “recommendations” were replicated in companies. Stars of the time. It is indeed new marketing which appears and makes old-fashioned that of the end of the 20th century ( see the 16th edition of Marketing Management, published in 2019and deeply revised to take into account these changes supported by three major trends: the role of digital and associated innovations (big data, internet of things), the development of CSR practices and the emergence in this field of Chinese companies). In fifteen years, these companies have lost their leadership on best marketing practices, to the benefit of companies confronted with these changes in economic models: marketing at Alibaba, Amazon Prime, SpaceX, Snapchat, or Facebook is now the benchmark (still in the 16th edition of Marketing Management, out of all the case studies, 20 concern digital platform marketing, 9 mass distribution, food and beverages, 5 luxury goods, 3 clothing, and cosmetics.). This new marketing is now structured around four fundamental challenges:
1- Building partner ecosystems by being able to offer offers intended for several players, or even competitors; open innovation (heresy in specific sectors where intellectual property seems to prohibit it), with the ability to work with start-ups, through the possibility of building offers with different actors (“bundle”), is playing the role of the constructor of these offers.
2- Continuously identify good use cases, that is to say, how customers will perceive the usefulness for them of taking such and such a service at such a cost for such an action. This requires being able to build new uses, monetizing them (which is often the most significant obstacle), and accelerating the frequency of the release of new offers (and therefore reducing the “time to market”). It’s also about using digital as a way to sell differently.
3- Meet customer expectations, even if it means changing your business model, if necessary. It is a question of going further than “the customer is at the center”… From now on, the customer is in control: greater transparency on the quality, on the price, on the activity, on his consumption of service offers, implementation of new combinations where we can help the customer to sell to his customers (B2B2C, that is to say, the sale at several levels, but also the development of C2C platform, from consumer to consumer ).
4- Being agile, a fashionable term but which underlies a new way of organizing, of breaking down silos, of being able to defend a holistic approach; these changes in “go to market” strategy and business models have an impact on the organization, which must adapt to openness to other players, to new models, to new modes of collaboration and through even working.