E-MARKETING DILEMMAS


We hope to show that some organizations have been brilliant and intuitive in solving several key marketing dilemmas facing their businesses that the Internet has exposed. It is the quality of these reconciliations that have elevated organizations to their present powerful positions in global sales. Let's consider the following exemplar dilemmas:

  • Global versus local approaches.

  • Broad spectra of customers versus deep, personalized customer relationships.

  • Face-to-face versus internet selling.

  • Uniting inner and outer orientations.

  • Premier Pages: the bridge between gift and sale.

Dilemma 1: Global versus Local Approaches

This global/local dilemma manifests in many ways throughout this book, but here we'll consider the Internet version of it. One good reason that the Internet will not sweep all before it, simply by communicating data, is that every customer is different (or perhaps we should say will become different because of what the Internet will bring). As far as investors go, for example, some want high risk, others low risk; some want growth stocks, others dividends ; some have specialized interests in technology, media, energy, engineering, etc., while some have ethical concerns about tobacco or armaments.

In E-Shock, Michael de Kare Silver (2000) has identified six consumer categories, based on earlier work by A C Nielsen.

  1. Value shoppers - basically "mercenaries" who will purchase through the Internet whenever this offers greatest value.

  2. Convenience and last minute shoppers - responsive to things that save time or make life easier (e.g., single parents of young children who work during the day).

  3. Experimenters - ready to try new things and new ways of purchasing.

  4. Ethical - will purchase provided it is honest and politically correct, and hence will surf to find suppliers and products that are both.

  5. Die-hards - will be the last to change, preferring to use traditional means of shopping. They will come on board when the technology is simple to use and much more convenient than their existing modes.

  6. Social shoppers - these are customers who just enjoy shopping. Now customers surf the Net for the fun of it. Some websites provide a chat room for shoppers to talk about potential purchases like holidays, to swap stories and experiences just as they would do in the store or shopping mall.

But within these categories, customers are also different.

Let's considers investors again. Some would say "I don't keep a dog and bark myself ." They employ professionals to do what they do not personally want to do, or are not qualified to do. Some investors want to participate in or influence the professional's decision, and others want professional advice on choosing for themselves . Just as there are degrees of participation, there are degrees of transparency versus privacy. Some customers would like other people to know just how wealthy and successful they are, while others use professionals to keep their affairs private. They believe it boastful or dangerous to flaunt their wealth.

Whichever way you look at it, customers vary in myriad ways and may treat their broker as being anything from a Buddha to a butler . It is because customers are so individually diverse that it takes a global community to bring satisfaction to each person. It requires deep relationships of mutual respect to find, amidst that community, just those people and resources that the client requires most.

There has been a lot of discussion recently on whether the Internet can help suppliers cross borders more effectively by either ignoring cultural differences or by taking particular account of them.

Some studies indicate that marketers make too much of cultural differences and their effect on marketing, usually to the exclusion of more important issues such as "What does the customer want and need from my company and my product? What possible reason would they have to choose us over our competition?" (Flikkema, 1998). In Flikkema's study consumer and business surveys were conducted in five countries around the world: the United States, Britain, France, Australia, and Japan. It was found that cultural differences had essentially no effect on the attitudes, motivators, and needs involved in purchasing technology. A first-time PC buyer in Japan was more similar to a first-time buyer in France than to a repeat buyer in Japan. An "enthusiast" buyer was an enthusiast buyer around the world. Although regional differences were found, they didn't make any appreciable difference to the purchase process.

The main argument to explain this homogeneity is that technology is new and has given us not only common reference points, but common status and aspiration points as well. To be upscale anywhere in the industrialized world, you need a house, a car, a mobile phone, a plasma TV with DVD player, a sound system, and a sophisticated home computer. People have an innate need to believe they and their cultures are unique, and, in spiritual terms, they argue. In marketing terms, however, the world is becoming increasingly homogenous. And the use of the Internet is just making it all the more global and culturally insensitive.

On the other hand there are other research findings that conclude the opposite . They cite the US-centric approach as one of the main reasons why the Internet has not boosted overall sales worldwide, given that 65 percent of total Internet sales come from outside the US (Jastrow, 1999). Once upon a time, it was just one great, glorious space - borderless, unfettered by rules, a great virtual community. The Americans were so awestruck when developing the Web that they overlooked the fact that this was really a worldwide media platform and not just a US network. Little things - such as requiring visitors to identify themselves as "Mr," "Mrs," or " Miss " - may seem innocent, but could be perceived as insults in certain countries, as well as by certain groups of (potential) customers.

We may be seeing the end of the Web's freewheeling ways as more governments take increasingly aggressive positions on the legality (and possible taxation ) of the bytes that flow across their borders. That means you could get a friendly (or not so friendly) email message from some government official telling you that you can't say or do or sell something on your website because it's being viewed in a particular country. Even buying a Dell PC online is preceded by various questions such as whether the PC will be exported to other countries and whether it is to be used for weapons of mass-destruction ...In same vein, the UK Inland Revenue - the tax-collecting arm of the Treasury - is looking at ways of monitoring transactions as a means of cross-referencing declarations of income and expenditure in tax returns, and of identifying money laundering.

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Fons and AOL

Fons changed the credit card with which he paid his monthly bills on his AOL account. There was a way to change payment details through AOL's site; however, he was asked for his zip code and his Dutch address was immediately rejected. Fortunately there was a 1-800 telephone number for contacting AOL; unfortunately , it wouldn't work outside the US.

Fons' account and email address stopped functioning. Ludicrously, he had to call a colleague who lived in the States in order to get his account unblocked. This was the only way it was possible.

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This may come as a surprise to some who believe that because they're moving at "web speed," the traditional rules somehow don't apply. Perhaps the most widely known example is the clothing company Lands End's recent run-in with the German government, which declared the company's "lifetime" guarantee on its products to be illegal within Germany (14 days is the maximum there). Another example concerns legal mandates , such as those in French-speaking Canada, which state that French should not only be available, but also be the dominant language on all publications and signage (Peek, 2000).

However it's not just conforming to local laws and language but to local customs that should concern contemporary web publishers. Many traditional publishers are already aware of the necessity of creating separate editions for global markets, and even though English is the language of the Web, that doesn't mean that readers will stay if an alternative is available. Forrester Research recently reported that people are twice as likely to stay at a website if it was written in their native language. While language translation programs might be adequate (an 80-90% accuracy rate is generally reported), most serious web publishers are discovering that that content must be completely rewritten in the native language of the surfing consumer.

Unfortunately, there is no simple way to translate graphics and visual elements and to ensure that they will represent the same meaning in other cultures. In the US, for example, orange is considered a warm color , but in Japan it's cool. In some cultures it may be more appropriate to show the product owned by a single individual, to emphasize individualism and individual choice. In others, it may be more effective to show a group of people enjoying or surrounding the product to emphasize collective appreciation . Here the message is to buy the product because then you can stay part of the group, or join it.

Allowing content to be controlled locally can help ensure that viewers get a cogent message (which is the whole point of publishing). But this has the potential to raise havoc with establishing or maintaining a clear corporate image or message. In addition, the integrity of data may not be maintained consistently. Information may be released in the US on Monday, but not translated for one country until Tuesday or for another until Thursday. On the other hand, it's a competitive world out there and the website that best gets the message across first wins.

Despite all the problems it will introduce, it seems inevitable that we are facing a customized future. Let's look briefly at Dell here. Dell Computer is now the world's number two. How did it achieve this? How did it bulldoze its way into a mature market, with retail outlets already stuffed with rival products?

It used a direct selling model. It first approached major corporations who would buy computers and IT in bulk, but it concentrated on discovering a corporations' particular strategy (bottom right in Figure 8.3). It then offered to assemble components accordingly (top right in the same Figure).

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Figure 8.3: Dell - from product to solution

But what business is Dell in? Dell is an assembler, not a manufacturer. It orders key components in massive volumes , thus getting costs way down through near-universal purchasing. Finally Dell shows each unique customer how their chosen business strategy can be monitored , recorded, and expressed in terms of information technology. While components of any solution are standardized, the solution itself remains unique and customized with "Premier Pages" on the Internet for each customer.

Davis and Pine have called this process mass customization, first introduced by the Japanese automobile industry and now widely imitated (Davis and Pine, 1999). By delivering components just in time to a central assembly line, thirty to forty varieties of automobiles come off at the end, with little loss of speed or momentum. Information systems define and describe each configuration in advance and components are dispatched to make their rendezvous with the vehicle in the process of assembly. This is a long way from Henry Ford's "any color provided it's black."

In short, one could say that by its very technical nature the Internet could help marketers go global with universal approaches easily. However, many private and corporate clients remain local. Solutions are not found in a choice between the two. The beauty of the sophistication of the Net is that it allows you to combine local data with global approaches and vice versa.

Take the very popular websites of BOL (A European-based web retailer), Amazon, and Google. When visiting their sites you are automatically rerouted to the closest localized version. For example, if the server detects that you are based in the Netherlands, it redirects you there. The language changes automatically, and the service localizes as well. However, the main philosophy remains global.

This is even more obvious with shops like BOL and Amazon. When you look for a book on Amazon.co.uk you are offered different categories of books for your perusal, as you are with Amazon.com or Amazon.de. Again the overall (global) philosophy remains the same and the local user can always choose to visit other Amazon sites as well.

Customer identification (and identifying their needs) has always been a fundamental requirement for presenting the right offer to the right customer at the right time. Internet marketing forces the transition of this capability from a back-office batch routine to real time in order to optimize the offer process and apply closed-loop marketing techniques. This process requires careful thinking to achieve best practice (Cameron, 2001).

Amazon has successfully used the two-way communication interactionist model (described briefly above) to learn a significant amount from local buying patterns. After five years of being successful in their market, the surfer can now see an increase in the differentiation of the items that the top-level menu offers on the home page. In addition to the core business of books, in the US this emphasizes apparel and accessories, toys and games , top sellers and today's deals, which you won't find on the French, German, and British Amazon sites. The French have "cadeaux" ( presents ), while the Germans have "Kueche & Haushalt" (kitchen and household) as an option on their menu. The British site had Harry Potter as a separate item.

Amazon has learned continually from local use and adjusted the universal system to fit. Furthermore, by tracking individual buyers and search pattern requests they create a client's private "box" for deals and are able to make other types of recommendations to suit the unique taste of the particular user. In this way the universal and global offering is reconciled with particular local needs.

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Your personal calendar

A simpler example is an unsolicited email from Hewlett-Packard inviting recipients to "make your own unique calendar." HP offers a way to make your own personalized printed calendar completely unique by importing your own choice of pictures or photographs - either your own or those from a library provided by HP. In this way the Internet is used to offer a combination of modules that can be combined in a unique way - hence your "personal" calendar. Calendar... obviously this encourages you to use a lot of ink on your HP printer!

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Let's draw from the experiences of our own organization, THT, and consider the following case, concerning a learning system across cultures delivered via the Internet.

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The Culture Compass

In 2001 Trompenaars Hampden-Turner launched a new web-based tool. The Culture Compass OnLine is used for standalone or blended learning - that is, in combination with in-company training workshops. It is a country-specific , interactive multimedia Internet application for international managers, business travellers, expatriates , and others who regularly deal with different cultures.

A multicountry module facilitates self-paced learning through direct feedback on the user's scores and preferences. Users can match their own personal Intercultural Awareness Profile against the country profile of their choice. Business cases, anecdotes, personalized feedback, and recommendations are all part of the basic module and differ by country for each individual's scores. Apart from business topics such as meetings, management, marketing, and negotiations, users also acquire knowledge about important issues relating to a culture's history, social norms, and religion. The Culture Compass presently provides specific in-depth feedback for 12 countries, namely the US, UK, Japan, Germany, France, Netherlands, Korea, Taiwan, Singapore, Ireland, Israel, and China. Country profiles from some further 80 countries are also accessible online.

It forms part of the training kit for our workshops at THT. All workshop participants receive an access password before the workshop commences, allowing them to complete the preparatory work. Thus they work through the first modules in preparation, for the workshop.

The Culture Compass OnLine consists of a number of interactive modules:

  • An introduction to culture: How does culture influence our lives? This discusses the three steps of awareness, respect, and reconciliation.

  • Layers of culture: This module gives an overview of the THT model that explores the layers of culture.

  • Questionnaire and dimensions of culture: Introducing the seven dimensions model and then linking to the online Intercultural, Awareness Profiler (IAP), THT's cross-cultural questionnaire.

  • Interpreting your own personal cross-cultural profile: Receive an personalized interpretation of your profile.

  • Choose a country to compare with your own profile: Receive feedback on what this means to you in doing business and managing in that culture.

  • Follow further country-specific advice and information about what this means for business topics including marketing, meetings, negotiations, etc.

Stage 1

After testing this application to market their own country-specific products through the Internet in six countries (US, France, UK, Germany, the Netherlands, and Japan), THT reviewed some interesting feedback. The Americans and British asked for more critical incidents and self-tests; the Japanese requested that the system be made more specific to Japanese needs, finding it too Europe-centric; the French asked for more rigor in the way we presented the models of culture and its dimensions. We took all this advice seriously and adapted our Culture Compass OnLine to accommodate the feedback.

Stage 2

After the launch of the updated Culture Compass OnLine, the same participants were asked to give THT further feedback. Criticism on content changed toward criticism on process. The French liked the order: After completing the questionnaire the system gave feedback on the generic model of culture and the seven dimensions, following which you could test yourself through some cases (particular to your country of interest) in applied areas of negotiations, meetings, marketing, management, etc. The Americans had an objection about the flow of information. They suggested that the tool should start by showing some very concrete cases and critical incidents; only thereafter would the participants be willing to go for the "harder" stuff. The Japanese would rather leave the choice to the customer while the Germans would prefer to leave out the choice. The Dutch complained about increasing development costs...

Our consultants at THT were now facing a crucial dilemma: would they prefer to go for one global system with similar content or customize the application to local cultural needs? The technical people confirmed that technically speaking, the sky was the limit and lots of solutions were possible. In view of the above information, how would you have advised THT to develop the Culture Compass to the next level?

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This case shows very clearly the first dilemma of the use of Internet: do we approach the client in a customized manner or do we benefit from economies of scale from having a universal system applied globally? If were to opt for the latter approach, the French might like it because of their love affair with deductive logic. They could start with a sound model and explore the specific applications in meetings, marketing, and management. The American learning style goes through a similar cycle but has a different starting point. They want to start with cases, to get a feel, and then see how it works in theory. This latter, inductive style is typical of American learning preferences, where you try to generalize from concrete cases; otherwise you might loose your audience too quickly. The Japanese would like to be able to give choice to the customer, while the Germans would rather go for the best system with not too many options.

That's all very well, but how can you best market this product through the Internet when in one company some (national) groups prefer this or the other style? Producing a system for every potential learning style in every country is prohibitive because of excessive development costs.

This dilemma is shown in Figure 8.4.

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Figure 8.4: Customized versus global

We considered two approaches at THT. First of all the system could be modularized so that clients could pick and choose. But that wouldn't suffice and, in our terminology, this would only be a compromise solution.

So we accessed country-specific learning style preferences from our research database and followed the advice described above for specific nationalities. Another approach was to assess, as quickly as possible, the learning style of the individual user; we used a short, ten-item, online, interactive questionnaire. Then, depending on the assessment, the universal modules are offered in a particular sequence appropriate to that individual user. The beauty of internet technology is that it can guide the individual participant through the system in a unique way.

In either case, economies of scale were fully achieved in terms of software development, and the "local" user was given a particular structure of generalized modules. The ultimate dream we are currently exploring is one of a heuristic self-learning system that automatically adapts to a particular user's interests based on how they interact with the system from our collection of available standardized modules.

Dilemma 2: A broad Spectra of Customers versus Deep, Personalized Customer Relationships

The Internet obviously creates a very inexpensive way to reach millions if not billions of potential clients with the punch of one button or a single mouse click. You can do a "shotgun" broadcast to as many as possible (a.k.a. "spam"), broadly distributed across the field, or you can aim for just a few clients, with complex problems and specialized needs, who desire deep, ongoing relationships of service. The first strategy is cheap but rather superficial and may be problematic in other ways. The second strategy is intimate and personal but typically niche-oriented and expensive, because of the detailed attention necessary. The dilemma is illustrated in Figure 8.5.

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Figure 8.5: Broad spectra versus deep relationships

Spam has become a battleground between ISPs, filtering out unwanted emails and pop-up messages, and spammers, using increasingly innovative approaches to break through the filters. A typical way of doing the latter is to auto-generate email subject lines at random so as to appear unique and thus not be recognized by the ISP's filter.

A reconciliation that cleverly addresses this tension is based on the concept of viral marketing (see, for example, Wilson, 2000). Viral marketing describes any strategy that encourages individuals to pass on a marketing message to others, creating the potential for exponential growth in the message's exposure and influence. Like viruses, such strategies take advantage of rapid multiplication to explode the message to thousands, and on to millions. Away from the Internet, viral marketing has been referred to as "word-of-mouth," "creating a buzz," "leveraging the media," and "network marketing." But on the Internet, for better or worse , it's called viral marketing.

The classic example of viral marketing was Hotmail.com, one of the first free web-based email services. The strategy was simple: Give away free email addresses and services, attach a simple directional tag at the bottom of every free message sent out and then stand back while people emailed their own networks of friends and associates. The people who saw the message then signed up for their own free email service, and propelled the message still wider, to ever-increasing circles of friends and associates . Like tiny waves spreading ever farther from a single pebble dropped into a pond, a carefully designed viral marketing strategy ripples outward extremely rapidly .

The genius of direct selling via the Internet is that you can reach an ever-increasing spectrum of customers and you can use the net to give personalized, detailed, information-rich services to them.

So long as you assume that distributors are necessary, you are stuck with the fact that existing channels are full and that no intermediary's brain is capacious enough to hold all the details and information about several rival products and their accompanying instructions. It is only when you let go of the whole idea of using distributors that the processes of direct selling via the Internet commends itself. The Internet is uniquely suited to information-rich products, which can be embedded in an ongoing community and woven around with dialogs on details and special opportunities. You can serve the whole spectrum of net users and you can go deeply into any specific problems. This dilemma is close to the dilemma or dimension of specific versus diffuse. You can reach down to each customer's problems in specific detail, and you can serve a diffuse array or spectrum.

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Hello, Peter, did your order arrive ?

When you dial some call centers, you hear may hear three rings before your call is answered . On the first ring the system checks to find out who is calling (is the calling number in the database for an existing customer or client?). The second ring looks up the database to see which customer service operator spoke to you the last time you called. If this customer service agent is not on another call, your details and your past purchases and customer record is displayed on their computer screen. The third ring is routed to this particular customer service agent, who answers. The agent can then, immediately say "Hello Peter, this is Jane, I am your personal account representative, I spoke to you last week. Did your order arrive OK last Tuesday?"

Using a system that retrieves customer-specific data is perceived by the customer as personal service. The technology is programmed to reconcile the specific with the diffuse customer needs.

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Let's return to Dell. Dell had to get to grips with the dilemma of selling to a broad array or to a special group with whom deep relationships were developed. This dilemma was exacerbated by Michael Dell's youth, which made him a latecomer in a maturing industry who faced the prospect of pushing into a crowded field, full of existing attachments, many well established. Could Dell push entrenched competitors out of their trenches? It turned out to be unnecessary.

In fact his newly developed direct selling model had the advantage of being simultaneously very broad and at the same time deep, personal, and customized (Trompenaars and Hampden-Turner, 2001). He broke with the conventional wisdom that you either aim for many customers or you aim for just a few with complex problems and specialized needs who need high-end service. The first strategy is cheap but rather superficial; the second is intimate and personal but typically niche-oriented and attracts premium prices. The reconciliation he created was as powerful as it was simple. By direct sales via face-to-face interaction, telephone, and the Internet he reconciled breadth with depth and complexity. Dell reconciled both this degree of involvement dilemma and the global/local dilemma through the same thinking.

Dilemma 3: High Tech versus High Touch: Face-to-Face versus Internet Selling

The financial services in particular are facing a major dilemma in this arena. The struggle to integrate the specific culture of Internet-based business activity with the diffuse and deep relationships that financial consultants have developed with their clients is still ongoing, but we are confident that it will lead to success. How can it be done?

The challenge to financial service companies has come, in part, from the unbundling of services into specific pieces. You can buy information, research, trading facilities, and advice from separate sources and the combined fees may be less than those paid to six- and seven-figure professionals. While the Internet is overflowing with data, this is not the same as knowledge or information. We are informed by facts relevant to our questions and concerns. We "know" when we get answers to our propositions and hypotheses. The larger the Internet becomes, the more customers will need a guide to what is relevant to them.

The dilemma can be analyzed as follows . On one hand we find low-cost specific data and transactions on the Internet. The risk here is that you create a high-tech solution where brokers are bypassed by technology. On the other hand, we can see the rich, meaningful, diffuse personal relationships that brokers have developed with their clients. This maintains a high-touch environment where people are (over)paying for their dependencies.

It is obvious that in specific cultures like the US and Northwest Europe, the Internet can take a lot away from traditional face-to-face business. This is true for financial services, but also for buying a dishwasher, a CD, a book, and even a car. However, people from more diffuse cultures - like Arabs, Latins, and most Asians - see the relationship as so crucial that no one would ever give it up for an anonymous service that they might get through a click.

One American Merrill Lynch consultant was working in Saudi Arabia, a country that didn't easily take to the Internet. Saudis love to have their consultant with them. However this consultant's American colleagues said that you couldn't ignore the fact that their more internet-driven competitors were gradually taking market share away. This was best pictured as the situation in Figure 8.6.

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Figure 8.6: The unaffordable relationship

Merrill Lynch had a situation where Charles Schwab was eating away at their market share through high-level online services. Their answer was close to brilliant. They understood that instead of relationships being eclipsed by the Internet, they actually got more and more important in interpreting the possible meanings of data flows. What was available was growing ever larger, much more than was relevant to each particular client.

Charles Schwab's appeal goes beyond discounted fees. Indeed, compared with rival discount brokers, it is not among the cheapest. Schwab's appeal is that it transfers its own professional expertise to customers. It is that rarity among professionals, a company who educates customers in its own secrets so that they can in time, if they wish, become fully independent. This could be a losing strategy if it were not for an ever-increasing number of "pupils" eager to be taught who replace those who have " graduated ." Schwab is in the "customer mentoring" business as opposed to the financial services business, but existing "graduate customers" keep coming back for more because both their needs and the market keep changing.

For many older Americans and people between jobs, managing their own share portfolios is their "last and most meaningful employment," providing funds they can leave to their families to ensure their continuing influence. Schwab was helping customers to help themselves in time-honored American tradition.

Merrill Lynch saw that this challenge would have to be met; yet they could not risk alienating their own army of professional brokers. Increasingly, however, financial services were being unbundled. You could buy top information and research and then pay as little as $5 per trade on the Internet. This was far less than the brokers' inclusive fee. Nor are brokers' judgments infallible. Given the exigencies of markets, it is not unknown for the Dow Jones average to out-perform professionally managed portfolios. Luck is quite a leveler in this game.

Merrill Lynch's response to its dilemma was to refocus its efforts on reconciling new technology with customer service. John Steffens at Forrester Conference announced its strategy in May 1999: "By combining technology with skilled advisors, clients are given the convenience of interacting when, how and where they want."

Dave Komansky, their CEO, clarified the policy. "Anyone, anywhere, anytime , can log onto the Internet to get free quotes, market data, and stock picks from a variety of chat rooms. Yet at Merrill Lynch we are confidently making unparalleled billion dollar investments in our Financial Consultants, research analysts, and in our technology and products. We're doing this because we know success in the online world - as it was in the offline world - will be defined by meaningful content for the individual. Hence in this phase we will discover that intelligent dialog about the bewildering complexity of financial markets is a formative influence on the Internet influencing the financial markets" (Steffens, 1999).

You need high tech but also high touch. The more numbers rain down upon you, the more you need to talk to someone about them. Merrill Lynch is using the Internet to give better personal service (using high technology) to its high-touch customers, but is also using it to identify those high-tech customers for whom it makes good business sense to offer high touch.

We have no hesitation in referring to Dell again as the exemplar of reconciling marketing dilemmas in internet commerce. Dell Computers had a similar high tech versus high touch dilemma. Let's look at this in more detail now.

Dell came late to the fray, as we have seen, and so had to do something entirely different, something that would distinguish the company from its competitors and something that would get around the fact that distributors were packed with rival products. It was not simply that channels of distribution were blocked. The seas of information, service, and support surrounding computing technology were ever more expansive. Even if distributors could make room for Dell products physically, could they absorb the additional information, service and support, master it and pass it on?

So Michael Dell decided to bypass distributors entirely. He would sell direct to customers, thereby establishing a unique position over other computer vendors and creating his own ecosystem apart from theirs. Direct selling had some crucial advantages.

  • By manufacturing to order, capital sunk into inventory would be minimized, as would stock that became unsaleable as a consequence of technological advances.

  • By speaking directly with customers instead of using intermediaries, information on changing customer needs reached the company more quickly and with greater clarity and urgency. It was possible to learn at first hand the strategic aims of major corporate customers.

  • With inventory turning over every six days, innovative technologies could be introduced very swiftly, along with any needed refinements to new models. The quicker this feedback loop, the finer the adjustments to the detail of customer requirements.

  • A process of mass customization became possible by which standard components were assembled in the unique configurations that customers demanded. In this way economies of scope were combined with economies of scale.

  • The model of direct selling received a welcome and powerful boost from the Internet, which was first used to sell a Dell computer in June 1996. Today there are more than 40,000 customized home pages, called Premier Pages, especially for corporate customers. These contain not only the details of customized configurations and instructions, but a total record of past and current transactions between Dell and each customer. One consequence of this direct link is that Dell becomes privy to far more information about its customer than would otherwise be the case. When configuring a customized package you need to know why it is wanted and how it will be used.

Dell's direct business model preceded their use of the Internet by several years, so that the almost limitless opportunities supplied by the Net came as a very welcome surprise and challenged Dell's capacity for quick adaptation.

Their salesforce initially felt threatened by the Internet. Since it was capable of creating dynamic and complete customer-client relationships, down to the purchasing of a computer, sales teams felt that their role would be drastically minimized. Field-based account managers, who "own" customer relations, were especially sensitive to how the Internet could supplant their role. Dell's management knew they had to educate their salesforce to work alongside the Internet and seize a new kind of initiative. The Internet was an inevitable and incredible development. Rather than fight it, sales representatives would need to know how to use the power of speeded-up information channels to gather better information and further enhance valuable customer relationships. And so Dell invested heavily in education and training. Michael Dell explained: "Not only did we teach them to use the Net, but we jointly invented ways to make them more effective by managing more relationships while providing value added services for the customer as well" (Trompenaars and Hampden-Turner, 2001).

The most crucial change was to start valuing and rewarding the communication of knowledge, rather than the simple registering of sales. It wasn't that sales were unimportant, but rather that knowledge applied successfully to customers was the origin of any subsequent sales. The first is prior to the second. Under the original face-to-face system in the industry, knowledge of customers' needs tended to be hoarded by the local agent and the field office. Sharing this information with others would put your own office at a competitive disadvantage . You reported your sales, not the reasons for them or the changing patterns of customer demand discovered in your territory; knowledge was considered as proprietary. After all, you had visited the customer personally and gained rare insights into how computers might be used to advance a new strategy; such knowledge is hard earned.

Sales teams were now rewarded for capturing this knowledge in machine-readable formats, accessible to all other sales teams. The more potentially valuable the information was, the more the team was rewarded. For example, a new use of software could spread rapidly through particular industries. If Dell was alerted from the moment this process started it could help spearhead the new trend elsewhere. In addition, customers are not usually confined to single sales regions . To know that District 7 of Company X has tried a new approach successfully allows you to spread the same system to all company sites. In these and many other ways, knowledge of what customers are strategizing can be systematically computerized.

Sales representatives soon stopped seeing the Internet as an adversary. They found that it could be a source of highly qualified leads, as a result of which they could close a deal with fewer calls, and have greater reach within existing accounts. Rather than being intimidated by the competition provided by the Internet, they could use it to add a dynamic dimension to unique customer relationships. The Internet became a key part of the entire business system. Dell wanted to make the Internet the first point of contact for every customer and prospect. Their information technology perspective was - and still is - to reduce obstacles to the origin and flow of information and to simplify the systems in an effort to really maximize their processes.

Brushing aside fears that employees would make "improper" use of the Net, Dell encouraged browsing and information collecting. You could make much better use of face-time if you were properly briefed (on a computer) before a meeting and if you kept careful track of the success of previous initiatives. "If you are preoccupied with the ways in which your staff might abuse technology, you're going to miss out on the benefits, while your competitors run away with the future. For us, the issue wasn't whether people would waste time on the Internet but whether they would use the Internet enough. Not to become completely familiar with a transformative business tool like the Internet is just foolish - especially when it is an integral part of the company's strategy and competitive advantage," said Michael Dell (Trompenaars and Hampden-Turner, 2001).

The dilemma Dell solved was to make personal, face-to-face knowledge, which had earlier been confined and hoarded by single sales agents, into highly relevant, networked knowledge in which the deep, personal insights of local agents become the potential inspiration for the entire community. The dilemma is set out in Figure 8.7.

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Figure 8.7: Face-to-face versus Internet selling

At top left in Figure 8.7 we have the old, competitive system where agents compete on sales but refuse to share their secrets. At bottom right we have the Internet's overload of superficial and even "improper" data. Dell was unafraid of this since his people had much important information to communicate and he was rewarding them for sharing it.

Thanks to training and education, and thanks to the emphasis given to the knowledge contexts in which sales occurred, Dell has succeeded in sharing networked knowledge, all of which was vital to at least one customer and might be generalizable to some or all customers. E-relations do not substitute for personal relationships, but record what was communicated, agreed, and planned, so that later understandings could be built on earlier ones.

In this way Dell overcame the problem identified as the basic knowledge management problem, described first by Snowden (2002), of converting from tacit sales knowledge known by "one" to explicit knowledge available to all. This is shown in the following table.

 

Where the knowledge is located

 

Explicit

Captured in salespeople's PC database

Distributed database across th Dell Corporation

Tacit

The individual salesperson's head

Salesperson's immediate colleagues

Retail banking has similar dilemmas to those of Merrill Lynch and Dell. Let's note the typical costs of transactions. The banking industry's average cost per transaction:

  • at a branch, $1.07;

  • on the phone, 54 cents ;

  • at an ATM, 27 cents;

  • on the Internet, 01 cents.

Figure 8.8 illustrates the upward oscillation between high tech and high touch in marketing financial services and how these can be reconciled using the same philosophy that Merril Lynch and Dell were able to use.

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Figure 8.8: High tech and high touch in financial services

Dilemma 4: Uniting Inner and Outer Orientation

Of crucial importance to marketing through the use of the Internet is bringing the "outside" of the company into the "inside" and letting the "inside" go "out." This perhaps exemplifies the essence of the whole marketing process.

It is a characteristic of modern business that information is increasingly stored in relationships, but where are these relationships located? Amazon's relationship with a publisher or record company is neither "inside" Amazon nor is it "inside" the supplier, but is carried via electronic impulses between the two. It is simultaneously accessible by interested parties from any point in the system. It is everywhere, yet nowhere in particular.

The real magic behind Amazon's resurgence is a bold bet by its founder and Chief Executive Officer Jeff Bezos. After all the doubts and criticism, Bezos has proved that his empire has staying power. As he states: "We're also constantly working on the website portion of the customer experience. There's still tremendous opportunity for improvement there - making it easier for customers to discover products and for products to discover customers."

And he's not limiting himself to selling Amazon's "own" goods. Bezos formed a unit to help more retailers sell to Amazon's 33 million customers, as the likes of Target and Toys 'R' Us already do. Some 19 percent of items sold on Amazon, in fact, are from other sellers. Says Bezos: "We know how to develop world-class technology to make the customer experience in e-commerce really good. It's a rapidly growing part of our business. And that goes from [large] companies that are customers all the way down to individuals using our web services to tap into the fundamental platform that is Amazon.com. They can build their own applications very effectively. It's almost closer to an ecosystem" (Bezos, 2003).

One of our champions in reconciling inner and outer direction is again Michael Dell. He observed in this respect: "One of the things that makes the Internet so exciting is that it brings the outside in. In today's market place you cannot afford to become insulated in your own activities" (Trompenaars and Hampden-Turner, 2001).

Dell's relationship with a supplier is neither "inside" Dell nor "inside" the supplier. What the Internet can do is host an entire ecosystem of suppliers, customers, partners , and subcontractors . Instead of ordering spare parts from its suppliers Dell allows them to discover for themselves the current state of inventories, by how many units and new orders from customers will draw down those inventories and make sure that Dell never runs out of components, while minimizing its carrying costs. Suppliers have the information to deliver "just in time" as their supply contracts specify. All elements in the ecosystem adjust themselves in coevolutionary patterns of mutuality.

"By virtually integrating with our suppliers in this way, we literally bring them into our business. And because our entire production is built to customer order, it requires dynamic and tight inventory control. By working virtually with our company, we challenge our suppliers to reach new heights of quality and efficiency. This improves their process and their inventory control, which creates greater value for them as well as for us and our customers," Dell explains (ibid.).

Instead of Amazon.com and Dell instructing their partners, suppliers, and subcontractors what to do, they provide and share with them the knowledge on which those instructions would have been based. The partner can then combine sources of information to make even more intelligent decisions. The ideal is to cooperate seamlessly, to use knowledge from the whole system to enable each node to behave autonomously.

Once again, both Amazon and Dell manage this cooperation with a high degree of sophistication. At Dell metrics of supplier/partner performance are agreed upon jointly every year, and these can be reviewed through Dell's secure web portal for suppliers. Through this portal each major supplier has its own equivalent of a customer's Premier Page. The portal also allows suppliers to link into Dell's own procurement orders, factory flow, etc.

At Amazon readers have an opportunity to write a review of a book and other readers can tell others how helpful the review was. "The idea of a merchant getting to know customers, introducing customers to each other, and making recommendations is, in a sense, a return to yesterday ," Bezos was quoted saying in PC World in 2000. "In a sense, what technology has taken away from us is the ability for small-town merchants to make recommendations. But I think that what technology has taken away, maybe over time, technology can return."

Amazon.com's site currently uses two different methods :

  1. Personalization, by tracking buyers' patterns and behavior to deliver recommendations for other books, and

  2. Customization, by allowing users to rate different books to further refine recommendations. In using customization, Amazon's goal was to correct the misinterpretation of user behavior. Let's say you decided to buy a book for a friend. After that purchase, Amazon would base its recommendation list on your most recent buys and browsing habits - not necessarily now reflecting your taste and needs since it would be distorted by the book you had bought as a gift. Registered users might find it annoying to see books that didn't match their own interests in their recommendation lists, and being able to refine the list and remove items from it would make users more confident in checking Amazon's automated recommendations in the future.

Amazon also uses collaborative filtering data mining techniques to recommend products to return visitors based on the purchases of other customers who have bought the same or similar products.

Moreover, new levels of mutual understanding and greater joint intelligence are achieved where you and your partners share the same body of information and can follow each other's reasoning. Everyone has the same "inside information" and can draw the attention of either party to something the other may have missed. This dilemma is shown in Figure 8.9.

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Figure 8.9: Uniting inner and outer

Economic value in this model stems from speed, effectiveness, and complexity. Instead of arguing about who is right or wrong, each party cites the information that has informed its decision. In this way mental models are shared, and conveyed to the minds of other players, in a process where decisions are mutually qualifying.

For Amazon's customers, more and more data - such as reviews - is thrust before their eyes, often promoting opposite opinions . This is now more than caveat emptor (let the buyer beware). On the Internet that has been replaced by a new paradigm - caveat lector (let the reader beware).

Dilemma 5: Premier Pages: The Bridge between Gift and Sale

Romeo said to Juliet "The more I give you the more I have." This has always been the case of relationships based on true love, but only recently has it become more and more true of relationships between business partners. We are not talking here of well-springs of positive emotions, but of sharing important information and allowing the combinations of that information to procreate new knowledge and new synergies, usable by all parties in the interaction. Again we'll go back to Dell.

Michael Dell is typically eloquent on this topic. "The real potential of the Internet lies in its ability to transform relationships within the traditional supplier vendor customer chain. We are using the Internet to share our own applications openly with suppliers and customers, creating true information partnerships. We are developing applications internally, with an Internet browser at the front end, giving them to our customers and suppliers" (Trompenaars and Hampden-Turner, 2001).

Since Dell computers are an integral part of the information and knowledge communicated, as well as a means of storing, receiving, retrieving, and sending knowledge, the more this knowledge is "given away" the more necessary it becomes to purchase the computers to which this knowledge refers and by which it is organized. Several web entrepreneurs made their fortune by giving away programs, browsers, tools, etc. and asking users to make a donation if they found the gift useful. Their subsequent enrichment was largely or entirely the result of voluntary reciprocity. Similarly if Dell supplies you with vital information then buying their computers is a rational response and a means of keeping that information coming.

Instead of arguing whether this is "really" a gift or "really" a sale, we need to understand that co-generating knowledge on the Internet transcends this dichotomy and that gifts and sales facilitate one another. The bridge that Michael Dell has built between Dell, its customers, its suppliers, partners, and subcontractors, etc. are the Premier Pages which we've already mentioned. As described earlier, these are password-protected web pages, serving the special information needs of business customers and technology partners. There are over 40,000 of them and they serve as a dynamic interface for customers and partners to access relevant information. For a corporate customer this could include information on global accounting, preapproved pricing and configurations, technical papers, product road maps, and so on. At the click of a mouse, corporate clients have immediate access to a complete picture of their purchasing channels. For a particular client this could be the number of computer systems bought at its European operation, details of standing orders, or preapproved configurations and discounts . Of course, customers had to be willing to share information with Dell and its suppliers in the first place in order to benefit from better-informed relationships. Many purchasing departments are secretive by habit, but they learn that being more transparent can lead to more attractive and better-customized deals. What Dell does is to model the transparency it seeks from others and waits for them to reciprocate, so that confidences are mutual.

Michael Dell explains: "Driving change in your own organization is hard enough; driving change in other organizations is nearly impossible . But we believed and still believe that the Internet will become as pervasive as the phone. We know it was too important to our business and potentially to our customers' businesses to wait for them to figure it out for themselves. What teaches parties to reveal more about themselves is experience, the more that is known about your needs, the better others can serve you" (ibid.).

But the value of Premier Pages soon became evident. Companies no longer had to work through their purchasing channels every time they needed to purchase a computer. Dell made it a point to have this kind of information up and ready from the very beginning. Dell's Premier Pages have resulted in massive savings; companies have told Dell that they are saving millions of dollars by ordering their products and getting support in this way.

Michael Dell is persuasive about the economies achieved. "Early on, Ford Motor Company estimated that it saved $2 million in initial procurement costs placing orders through its Premier Page and Shell Oil saved 15 percent of its total purchasing cost. Premier Pages also allows us to deliver critical service and support information directly to our customers, based on the specific products they buy and use. This information is drawn from the same databases our own technicians and engineers use. This doesn't necessarily result in major cost savings for Dell. But it has resulted in significant cost savings for our customers, enriching their relationship with Dell."

Premier Pages are also a bridge to research and development between Dell and its partners: "The Internet is also changing the way we work with our technology partners. We are moving to truly collaborative research and development models, using the Internet to share information openly and work together in real time. We can also engage our customers in our product development, giving them the same level of access to critical information as our own people have. For example, we were able to develop and introduce an award-winning line of notebook computers, using the Internet to keep a common set of records by engineers in the United States and Asia. By making the same information available to critical partners we were able to close the information loop. A traditional, vertically integrated company would have spent months, if not years, designing parts and building them" (ibid.).

Dell has built supplier web pages for its top 20 suppliers, covering 90 percent of its procurement needs. These pages allow Dell suppliers to provide Dell with rapid information on its capacities , upside capabilities, inventories in their supply lines, component quality as measured by Dell's own metrics, and current cost structures.

Dell passes on to the supplier direct and immediate customer feedback, gathered in part through its customer Premier Pages. This covers such areas as quality in the field, current forecasts and future demand, special technical requirements, and end-user market pricing.

This type of collaborative partnership is a starting point, or a portal, for future innovation. Any innovative process will have to begin from a point where time and distance have been shrunk and where development speed is unimpeded. The quality and directness of the relationship, the speed with which you can channel information, and the dynamic forces that you thereby create will determine the long- term sustainability of your position in an industry with notoriously short life cycles. Like Dell, you will have blurred the traditional boundaries between buyer, seller, and supplier, and you will have created a radically new creative enterprise.

The process by which Premier Pages becomes the bridge between the gift and the sale is depicted in Figure 8.10.

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Figure 8.10: Premier Pages - the bridge between gift and sale

What Dell has done is left behind the hard sell of hardware, and by gifting to all members of its network the relevant information, it promotes the computers and the relationships which convey that knowledge. The computers are the text within the context, helping to structure and move information across the bridges of knowledge, which join all members of Dell's ecosystem. In the progressive, mutual revelation of deep needs these bridges become preferable to all others. The wealth of knowledge that ties together members of this network would be very hard to duplicate or reconstitute. The Net binds its members by hundreds of threads.

In 2000, Victor Keegan wrote in the Guardian that it was difficult to move without hearing the sound of crashing dot-com companies. The expression "dot-com" had become, in itself, a sassy suffix for coolness in business. Any company that didn't embrace the Web for selling (and purchasing), would be smothered by those that did. "So what went wrong?" asked Keegan. Nearly all the early claims of the Internet were, and still are, true. Yes, it is an all-embracing change that will transform the way we do business, the way we are educated , and the way we are entertained. What the preppy-preneurs forgot , however, was the importance of two rules of the old economy and one of the new. As well as the usual problems facing start-up companies, the first generation of dot-coms failed to understand the nature of the beast they had embraced: on the Internet the consumer, not the producer, is king.

Our research and analysis of the success of organizations like Dell shows that it is essential for marketers to understand the significance of the new marketing paradigms based on the interactionist model, for them to then elicit the tensions and dilemmas that result for their own business, and to then seek creative reconcilations for each dilemma. In this way, new innovative solutions and new ways of doing business will result from the extraordinary potentialities of the Internet in marketing.




Marketing Across Cultures
Marketing Across Cultures (Culture for Business Series)
ISBN: 1841124710
EAN: 2147483647
Year: 2004
Pages: 82

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