Summary Power shift in digital markets Consumer behavior in overchoice environments Customer branding and big data Online Branding: Inbound Marketing and Thought Leadership Amazon, Twitter, Flashstock, SAP Online Retailing and Fluid Markets Virden and High Tech marketing New Orders Customer Adoption a la Moore* Who influences whom? Who references whom? Who buys for what reason? What is the whole product? What is the minimum product? Which partner helps bridge the gap? What is the minimum customer base? What are optimal price points? Moore’s Chasm Visionaries Pragmatists Skeptics Conservatives Time Innovators/ Early Adopters Early Majority * Moore (1991), Crossing the Chasm Late Majority Laggards Long Tail (Chris Anderson) Fragmented Demand Niches are Riches What is “Natural Demand”? The “Head” of the Demand Curve: Pre-Internet, old economy firms turned out a small number of “hits” or blockbuster products The “Tail” of the Demand Curve: Internet-era, digital marketing firms offer a broader range of niche products. The Long Tail: Key Claims In the long tail model, these forces allow online businesses to greatly increase the variety of their products. Anderson argues that 98 percent of a long tail business’s products sell at least one unit in a quarter on a cumulative basis, these small numbers of sales of large numbers of niche products generate enormous revenues and profits. Is there a Long Tail? www.rogerebert.com hosts more than ten thousand reviews and its Web traffic statistics show that even the most popular film represents less than 1 percent of their business. In June 15, 2006, "The Da Vinci Code" and "Brokeback Mountain" were tied at 0.8 % of page views the next most requested reviews in 2006 were for "V for Vendetta" (0.7) "X-Men: The Last Stand" (0.6) "An Inconvenient Truth" (0.5). The lesson: People are curious about a lot of different movies." Is there a Long Tail? The Long Tail of Holiday Music. eMusic had 1,226 holiday albums in the catalog 1,128 had been downloaded over the Christmas season. That's 92% of the catalog! Source: Digital Audio Insider, 2007 Is there a Long Tail? To Summarize: In virtually all markets, there are far more niche goods than hits The cost of reaching those niches is now falling dramatically. Simply offering more variety does not shift demand by itself. Consumers must be given ways to find niches that suit their particular needs and interests. A range of tools and techniques—from recommendations to rankings—are effective at doing this. To summarize con’d All the niches add up. the natural shape of demand is revealed. Network Products in Networked Markets The last decade has witnessed a shift from a focus on the value created by a single product to an examination of the value created by networks of products (product ecosystems or NETWORKED PRODUCT). Network products emerge at the intersection of three types of networks: User network Complements network Producer network Key Claims: Any or all of these networks add value or enhance the attractiveness of the associated focal product. Consumers allocate resources among competing products based on the perceived value added of any or all of these networks. The Networked Product: Complements network Services that permit consumption Focal Product User network Other consumers Producer network Other companies producing the same or similar product or service Linux as Networked Product: Complements network •Application developers •Maintenance and Repair •Service Companies Ex.: Linux Operating System User network number of other companies that are using Linux (moderated by size, reputation, industry, etc. of these companies) Producer network Other companies producing the same or similar product or service Remember: If you are dealing with a focal product that is a networked product Consumers allocate resources not only based on the objective and perceived quality of the focal product but based on the perceived value added to the focal product by the networks it has. Marketing of a networked product therefore is no longer limited to developing a marketing mix and a strategic position for the focal product. Rather, marketing needs to support network strength as well. Examples? Complements network Services that permit consumption Focal Product User network Other consumers Producer network Video game market Satellite Radio HDTV Electric Cars? Other companies producing the same or similar product or service