For a marketing professional, exploring and shaping this kind of newly tailored consumer experience calls for much more than was ever required by conventional selection and purchasing decisions. To develop, deliver, and promote the new formats — today, it is Massively Multiplayer Online Games and Internet Protocol Television; tomorrow, we can’t even begin to guess — marketers will have to reengineer and reimagine the relationships among all participants in the marketing chain. Alternatively, they will do it themselves. Companies as disparate as P&G and the electronics retailer Best Buy have already begun to bring the necessary capabilities in house. Either approach requires a new combination of commercial entrepreneurship, technological competence, strategy skills, and consumer sensitivity.
Undoubtedly the most salient features of electronic media are the diversity and differentiation they bring to the marketplace. Digital media excel in selecting the “audience of one” (or, to be more accurate, in allowing it to select itself) and tailoring offerings to these individual consumers. Thus, a precise and highly tailored implicit contract is evolving between the consumer, who grants access and time, and the marketer, who reciprocates the consumer’s interest with responsiveness and opportunities for more extensive dialogue, as well as with entertainment and information.
To conceive, evaluate, and invest in new commercial propositions that engage audiences across many dimensions, marketers will be called upon to make decisions that reflect broad marketing savvy, close awareness of the product’s or service’s current position in the marketplace, and in-depth knowledge of quantitative techniques and the capabilities of new technology. Thus, one of the new marketer’s key skills is the ability to marry fluency in higher mathematics and computer modeling to marketing flair and creativity. Just as mathematics has revolutionized finance, it will now invigorate the marketing field, as new models and algorithms are developed to extract value from consumer and business databases, and to allow more precise targeting of “hot” topics to each consumer.
The exploding availability of electronic consumer data makes marketing a new frontier application for business mathematics. It is no wonder that Booz Allen Hamilton’s ongoing research with the Association of National Advertisers has found that 66 percent of senior marketers believe their greatest need is to develop capabilities in consumer insights and return on investment (ROI) analytics. The leaders that are doing so are outcompeting their rivals. These leaders are not just Internet powerhouses such as Google and Yahoo; they include innovative number-crunchers in retailing, finance, and other industries as well.
Consider the capabilities that took the Capital One Financial Corporation from its position as a spin-off of Signet Banking Corporation in 1994 to being the 115th-largest company in the S&P 500 in 2005, with more than $10 billion in revenues and 50 million customer accounts. Its credit-card business is built on a foundation of minutely fine-tuned product development, market testing, and analysis, all of it resting on a bedrock of terabytes of customer data. “When we started this company,” Chairman and Chief Executive Officer Rich Fairbank once told Fast Company magazine, “we saw two revolutionary opportunities: We could use scientific methodology to help us make decisions, and we could use information technology to help us provide mass customization.”
Another leader — in an utterly different industry — is the global consumer goods retailer Tesco PLC. Mining scanner data and personal data captured through the company’s Clubcard program, Tesco’s marketers practice intensive information analysis, cross-tabulating purchase data against the information gleaned from customer responses and requests, and distinguishing the “signals” of genuine indicators of customer purchase potential from the “noise” all around them. Using this technology, Tesco’s marketers have redesigned their traditional tools, like direct mail and “mother-and-baby clubs,” tailoring hundreds of thousands of individual messages to customers. In a supermarket industry characterized by historically low margins and fierce competition, Tesco reported revenues in 2005 that rose more than 10 percent from the year before, to $46 billion, with profits up 19 percent. More than 150,000 orders now come in weekly via the Web.