Intracommerce—unlocking the digital marketplace
L
ook around and you'll find a flood of communications about how to market in the digital media: About push, pull, broadcasting,
netvertising, buttons, malls—you name it.
But when you think about it, it's somewhat of an exaggeration to talk about digital marketing as bleeding-edge news, as so
many articles do. Because, chances are, in the real world you can't even buy the shirt you'd like to wear.
When green shirts happen to be in vogue, green is what you get. Never mind that you want to wear pink shirts. They're not
available. In view of this state of affairs it's a little premature to be talking about global online trade and the consumer's total
freedom of choice.
The other day—just before one of my talks about online marketing—a friend of mine (a sales type) stopped by to ask me if I hadn't gotten the word yet that pink shirts are really out. And what did my personal preference about fashion have to do with online marketing anyway?
The answer is, everything!
Once I've realized that pink shirts suit me and green ones don't—you guessed it—I'm going to shop for pink shirts! Green won’t do.
And since I can’t be the only one with this predilection, companies that persist in applying a top-down approach to marketing are bound to find it increasingly difficult to deal with customers. Because these customers now have a worldwide selection.
Why does marketing work like that? Because it evolved in sync with a certain business structure. Prior to Henry Ford,
automobiles were the hand-made playthings of a few of the very rich. To allow the use of cars and other industrial products by
the broad public, these goods had to be produced at lower prices, which required making large quantities of identical
products.
Traditional marketing is a communications-filter
And that's how traditional marketing developed its role as a communications-filter: Market research is conducted. Simply put,
this means distilling the wants and needs of tens of thousands of individuals into a statistically averaged standard product.
Businesses don’t ask an individual what he or she wants. Instead, they create a standardized phantom person—and produce a standardized product to suit that hypothetical human.
Expensive manufacturing facilities are then established to produce this product—designed for a phantom—in enormous
quantities. Meanwhile, the few real people subjected to the standardized market survey have forgotten they were ever asked,
or have developed entirely different interests.
Now another powerful communications filter is introduced to distort the facts even more: advertising! Advertising serves to
impress upon people that a terrific new product exists and that they absolutely have to have it—even if it bears only a remote resemblance to what they really want.
And now we've come full circle to the green shirt: What would happen to businesses if their customers were to actually get
what they want? A lot of people would buy pink shirts, and the stores would be stuck with oodles of green ones—because,
well, somebody had produced them.
Today's entire business process is attuned to this interplay of mass production and broadcast marketing: Invent a market,
make guesstimates of requirements, design and then produce a product, pitch it over the wall that separates the business from
the market, then hope and pray. The market—that strange entity, ever elusive…
Today just as in the past (only with ever greater precision) we continue to pursue the ever elusive target. You think the Internet
is chaotic? Just look at the foggy shoals the average marketing manager has to navigate! Markets don’t have search engines. And if you're wrong, your inventory turns into scrap.
Don't let electronic commerce fool you
Enter electronic commerce, universally acclaimed. Sounds impressive too, very business-like and efficient. But don’t let that you! The term "electronic commerce" originated in an MIT study and it signified nothing more than that communications among businesses was (and is) more important than communications within the business. Electronic commerce is the established venue of global VANs, of EDI, of automated inventory management and Just-in-time. Electronic networking and
process optimization among businesses are the objectives of traditional electronic commerce.
It's true that journalists and consultants are using the term somewhat more loosely nowadays for anything that sends dollars
over the net (or fails to). But, fundamentally, electronic commerce only defines how communications among businesses can be
structured more efficiently and economically—not how we can really plug into the market!
A well-informed advocate of electronic commerce would point out immediately that the business has a realtime interface to the
market in its scanner-based cash registers and in systems that convert sales into stock replenishment. But it would be an
illusion to think that this really helps define the market: If you want to buy a pink shirt but you're only offered a choice between
green and blue, you might buy the blue one out of sheer frustration. Now the sales system reports: "Blue shirts are in demand" and automatically reorders. The company never learns what you really wanted. There's no direct contact between the market and the business. Instead, a solid barrier separates the business from the customer. So the "Extranet" (for example) remains a technical term devoid of real meaning, which fails to bring the marketplace closer to the business. What's lacking is access to—and by—the customer!
But digital technology is changing the ground rules: It's reestablishing direct contact between the business and the market for
the first time since the medieval guilds—without communication-filters, and worldwide! Only when we grasp this can we
experience truly revolutionary changes in businesses, rather than merely speeding up existing processes through digital
automation.
A new breed of market participant—the user
The crux of the matter is that for some time now online services and the Internet have created a new breed of market
participant—the user. And it's no longer quite certain whether the user happens to be inside or outside the company. You
might encounter him (or her) in a technical forum. And you really can't tell whether your respondent is a company expert or a
knowledgeable outsider. Nor do you really care. What matters is that you get the help you need.
People "inside" and people "outside" the company are doing remarkably similar things: During the day, the employee works with a team through the workflow system, using a PC and a browser as interface. At night the same employee uses a PC and a browser to chat on a forum. The communications are so similar that it gets difficult to distinguish among employees and customers: They coalesce into users. This breakdown of the barrier between the business and the market unleashes an enormous resource.
Meanwhile, the direct-marketing folks are telling their clients quite a different story: That the era of traditional advertising isn't
over by a long shot. That you need more of the same. That gigantic databases are required, and legions of response managers.
They really can't help telling such stories—because that's what they have to sell. So more online malls are built. More
promotional networks are revved up. More push technologies are pushed.
Imagine instead, for just a moment, that a direct-marketing agency told you things could be arranged so the customers
themselves and the market would do most of the work. And imagine the agency insisted that the users themselves would
handle response management. And that the folks you used to call customers would design and even sell the products
themselves! Of course such an agency would maneuver itself right out of work. So you must take the advice of traditional
marketing agencies with a grain of salt: They wouldn't tell you anything of the sort—even if they knew it to be true.
Forget whatever you've heard about marketing…
Forget whatever you've heard about marketing in the context of the digital media! One reason is that the conventional
approach costs a lot of money which creates wealth for the marketing agencies, not for their clients.
What's more, the emergence of the user creates a new kind of dynamics as it levels the barrier between the business and the
market. One of the most promising reactions to this change is that a few companies are already converting the "market" into their own powerful resource, and are virtually integrating their "customers" into their business.
These companies are practicing intracommerce, as their commerce and their market are not "somewhere out there"—but right inside their own business. Regis McKennae has been demanding it for years: Roll out the red carpet for the customers and welcome them into your business. They'll join you in developing your new products. They'll be fully aware that the products exist. And they will buy the products, because these products are tailored exactly to the customers' needs.
Bye-bye advertising! So long traditional marketing!
In intracommerce, users will also quite naturally take on product support, because who could provide better information than
someone who uses products on a day-to-day basis.
The mailbox was filled with hundreds of designs
If you think this can’t work, take a look at what happened at Stern. This leading German illustrated news magazine asked its users through the Internet to design an advertising campaign for the magazine. In a matter of days, the publisher's mailbox was
filled with hundreds of designs. That's a remarkable feat when you consider how long it normally takes to get results from an
ad agency. And it's exhilarating: The erstwhile "customers" themselves are now creating free advertising designed to promote the magazine to themselves! A small step perhaps, but the users' reaction shows the true potential.
And when you get right down to it, what was it that Netscape was actually doing? The company gave browsers away to users,
so that these users could program millions of home pages and hundreds of thousands of applications for those browsers. And
this torrent of activity created the need for more browsers. And so on. Like a supernova, the business converted the whole
world into its own resource. Pure intracommerce!
GeoCities too is practicing intracommerce: When GeoCities founder David Bohnett tells you that he's got just 55 employees
but that he has 500,000 editors, he's describing exactly what we've been talking about: Your business has less work to do
when you use the market as your own resource.
Intracommerce means incorporating the market into your business
Intracommerce means incorporating the market into your business. The users themselves are designing products, creating
music, contributing their ideas and desires as resources. The company as such is content to stay at the sidelines, providing for
easy communications and looking forward to the fruits of its efforts in the form of satisfied customers.
Perhaps all those software companies who've made the news lately because of their sharply declining sales should take this to
heart. They ought to be building intracommerce tools. Like software for online marketing platforms on the Internet—meeting
places where users can collaborate to solve the company's problems. Or more software for connecting the Internet "outside" directly to the company's workflow systems "inside". Or design tools allowing customers and insiders to jointly develop a product—without the intimidating complexity of a CAD system. Create tools to help companies unlock the immense resource which is the market!
And so I'll be getting my pink shirt after all. All I need to do is step virtually into a business and design a shirt for myself. And
en route I'll be meeting other users (and probably finding it somewhat difficult to tell whether they're company employees or
customers), and we'll be talking about the old days when everybody had to buy things alike, even though they actually wanted
something different. Can you imagine!
Article by: Stephan Magnus CEO Creative Capital
