February 2014 | Business Trends
Marketing is in the midst of revolutionary changes. The rise of social media and big data, new channels, and more empowered consumers means there is no such thing as business as usual. Here, Wharton faculty weigh in on the challenges and opportunities facing marketers in 2014.
With 84 percent of global consumers now trusting recommendations from friends and family as the most accurate sources of information about products (up from 78 percent in 2007), generating word of mouth is becoming a critical marketing strategy. But many companies take a narrow view when it comes to execution. Wharton marketing professor Jonah Berger, author of Contagious: Why Things Catch On, notes, “Companies are allocating greater and greater portions of their marketing budgets to word of mouth. It is 10 times as effective as traditional advertising. People trust it more and it’s more targeted. But to harness its power, you have to understand why people talk and share in the first place. Social media is not enough.” In his book and in programs such as Wharton Fellows, Berger shares the science behind interpersonal communication and how people can apply that science to get their own products and ideas to catch on.
Wharton marketing professor Peter Fader says firms will continue to feel nonstop pressures from globalization; smarter, more demanding customers; and increasing competition. “It’s not enough to produce things better and faster. That strategy doesn’t cut it anymore. In a changing marketplace, you need something different to grow your business, and there are great opportunities around your customers. You probably have all the data and the skills you need to identify and build a strategy around your best customers. It’s not something you need to outsource.”
But Fader warns that as customer analytics becomes a “hot topic,” it has the potential for being over-hyped. “When something is trending, and many people are experimenting with it, you can get some less-than-optimal approaches. This is still so new that it is important to separate the wheat from the chaff.” Fader is leading Wharton Executive Education’s first online program, Strategic Value of Customer Relationships, to help participants do just that. “There is a wonderful duality between the nature of the program and the way it will be taught. Analytics are driven by a recent explosion in firms’ ability to track what consumers do online. And there is a separate explosion related to online education. Our new program brings both of these red-hot topics together. It is exactly the right content for this platform and the platform is exactly right for the content.”
Regardless of whether Amazon is ever able to use mini-drones to deliver packages to your doorstep in 30 minutes or less, retail is experiencing astounding changes. “It’s very me-centric,” says Barbara Kahn, Wharton marketing professor and director of the Jay H. Baker Retailing Center. “You can get same day delivery, when and where you want it. Getting a package within an hour delivered to the park bench you’re sitting on is happening now. And people are changing the way they order. Zappos started the trend by offering free shipping and returns to reduce risk for the consumer. You order a lot of merchandise — maybe something you really want and a number of things you are considering — try things on at home, and send back what you don’t want. People are bringing the store into their homes.”
Aside from the headache for retailers who must process the returns, there’s also a benefit. Kahn, who serves as faculty director of Brand Leadership: Strategies for Driving Growth in a Global Marketplace, explains, “There is big data being collected from these orders as well as from your online behavior. Retailers can see which items they might be able to sell to you later if the timing and price are right. It’s information that often gets lost in brick-and-mortar stores. Those clothes you leave in the dressing room get restocked instead of first being inventoried as items you were close to purchasing.”
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