Changing the way we sell

Innovation minister Kim Carr has announced a review of what he terms the “bewildering array” of federal innovation programs, including greater attention to traditionally neglected areas of innovation, including marketing.

One of the common criticisms of marketing is that marketers spend too much time trying to foist new products on a public that may not really need another widget. Marketers will reply that they are only trying to satisfy needs, a central tenet of marketing. Yet if marketing is soundly based on research, why do so many new products fail?

The answer lies in the complexity of the human species and the fact that sometimes we don’t know what will satisfy, please or entertain us until we see it and use it. Indeed, novelty in a product or in an advertisement can be the source of appeal as much as changing wants and needs.

Another aspect of the challenge in product innovation is the fragmentation of markets into more and more segments and sub-segments. Take popular music. Within this market there any number of specialised sub-markets, or genres: hip-hop, house, drum and base, techno, indie dance, (heavy) metal, emo, punk, to name just a selection. Add to that the increasing sophistication of consumers and it’s easy to see that bringing innovation to them is never going to be easy.

But more importantly, innovation in marketing extends to the whole cycle of marketing. Understanding customers for example, has traditionally been done by using market research; asking people about their preferences or their satisfaction.

Now, the best marketers have realised that understanding at a very powerful level can be achieved by simply tracking customer purchase behaviour. The new technologies in data analytics, in conjunction with loyalty programs, enable marketing communications and marketing offers to small groups of customers that have similar buying patterns. Such offers are far more likely to resonate with the individual.

In the UK, the Tesco supermarket chain sends out a quarterly magazine containing direct marketing offers to its 10 million Clubcard holders. Such is the sophistication of this program that the 10 million item mail-out has 7.5 million variants to suit different customers! This innovative work is changing the face of marketing.

Finally there is considerable innovation taking place in marketing communications itself and the smartest marketers are quickly orienting to new ways of reaching consumers. Not just conventional internet sites, but the myriad of user-generated content sites such as social networks, offer both immense opportunities to innovate, but also pose real risks as users not only choose what they want to see, but also develop the material seen by others. This is an area that is still in considerable flux, but clearly one in which new ways of thinking will be required.

Support programs at a governmental level are welcome, and could be channelled through professional organisations such as the AMI. There are substantial potential benefits which could flow from developments in marketing innovation, by seizing and adopting new ways of thinking and communicating implicit in new technologies to collect and disseminate information.

Roger James is chairman of the Australian Marketing Institute. This story first appeared on BusinessSpectator.com.au