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The5C'sofConvergenceMarketing
ByYoram(Jerry)Wind,VijayMahajan,RobertE.Gunther Date:Dec6,2001 Returntothearticle

Ebusinessandtraditionalbusinesscancometogethertocreatesomethingnewanddifferentandconsumersarecombining themtosuittheirtastes.JerryWind,VijayMahajan,andRobertE.Guntherlookatfivekeyareaswhereconvergenceoccurs.

EarlyproponentsoftheInternetclaimedthatitchangedeverything.Therulesoftechnology,business,andmarketingwere different.ForgetROI,theysaid;buildmarketshare.Forgetmassmarketing;developapersonalrelationship.Forgetthe traditionalconsumer;focusonthe"cyberconsumer."Ifyoudon'tunderstandthis,theserevolutionariessaid,youaremiredin thepast.Youjustdon'tgetit. ItiscleartodaythattheInternetdoesn'tchangeeverything.Butinthebacklash,wecannotforgetthatitdoescreatemajor changesinthewayconsumersbehaveandhowthebusinessoperates.Thepowerofthenewtechnologycreatesfundamentally newpossibilitiesforconsumersandcompanies.Ifwebegintolookbeyondtheeither/orviewoftheworld,weseearichand complexsetofopportunities.Thechallengeissortingthroughtheinteractionsbetweenconsumersandtechnologytofindthese opportunities.Thegreatestopportunitiesarethroughafusionoftheoldandthenew,physicalandvirtual. Manyorganizationsinitiallytreatedebusinessasjustanotherofferinginthefoodcourt.PureplayInternetfirmssawitasa standalonerestaurant.Butinfact,themostpowerfulnewmodelsmaynotbethosebasedonafoodcourtconcept,butrather onadeeperfusion.Thisislikefusionincuisine,whereAsianandFrench,orSpanishandAmericaninfluencesarejoinedinto creativeandtastynewdishes.Ebusinessandtraditionalbusinesscanbebroughttogethertocreatesomethingnewand different,andindividualconsumersarecombiningthetwoinwaysthatsuittheirindividualtastes. Notallthesecombinationswork,andthekeyistoexperimentwithdifferentcombinations.Inebusiness,thedotcom revolution ledtoafuriousperiodofexperimentation,ascompaniesquicklytestedwhatworkedanddidn't.Asinvestorspouredcapitalinto thesemarkets,wesawoneofthemostmassiveexperimentsinnewbusinessmodelssomegood,somefatallyflawed. Whathavewelearned?Inourbook,ConvergenceMarketing:StrategiesforReachingtheNewHybridConsumer,weexplorefive specificareasinwhichthisconvergenceseemstoleadtoverypowerfulcombinations.Thesearealsoareaswherethe interactionsarecomplexandimportanttobusinesssuccess.These"fiveC's"areareasinwhichsomeofthemostinteresting new"fusion"conceptscanbedeveloped: CustomerizationConvergenceofcustomizedandstandardizedofferingsandmessages CommunityConvergenceofvirtualandphysicalcommunities ChannelsSeamlessconvergenceofcall,click,andvisit CompetitivevalueConvergenceofnewandtraditionalcompetitivevalueequationsandpricingmodels ChoicetoolsConvergenceofnewsearchenginesanddecisiontoolsforconsumersandcompanyprovidedadvice Theseareareasinwhichnewtechnologiesandsystemscreateopportunitiesforcustomerstodothingstheycouldneverdo before,buttheyarealsoareasinwhichcustomersarecreativelycombiningtheoldwiththenewtocreateafusion.Mostofthe initialdiscussionofthesetopicsoverthepastfewyearshasfocusedonwhatconsumerscandointheseareasemployingnew

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technologies.Inourbook,we'velookedbeyondthisquestiontoexamine:Whatdotheywanttodo,andwhataretheylikelyto dointhefuture?Inthisarticle,weexamineeachofthesefiveareas.Theseareplaceswheretherearesignificantchallengesand opportunitiesforconvergencewithinandacrosstheseareas.

ConvergenceofCustomerizationandStandardization
Powerfulnewtechnologiesallowcustomerstobecomecoproducersindevelopingcustomizedproductsandservices.New technologiesalsoallowcustomerstocustomizemessagesthattheyreceiveandpermitcompaniestopersonalizethemessages thattheydeliver.Whilesuchtailoringwasonceofferedonlytotheeliteforaveryhighcost,thetechnologymakessuch customizationmuchcheaperandeasier.Fromjeanstocoffee,tobicycles,toeyewear,tocosmetics,tovitamins,tobreakfast cereals,companieshaveusedthistechnologytocreatecustomizedofferings.Thepioneersofthistechnologysawitasanearly certainwin.Ifcustomerscouldgetexactlywhattheywant,whywouldtheysettleforsomelessthanperfectstandardized offeringormessage?Andifcompaniescouldmanufacturetoorder,theinventoryreductionwouldgodirectlytothebottom line. Infact,however,standardizedproductshavenotgoneaway.Therearereasonswhypeoplelikeofftheshelfofferings,atleastin certainareasoftheirlives.Theproductorservicemaynotbeimportantenoughtowarrantthetimeandenergyof customization,andcustomersmayhaveanunarticulatedneed,sotheymaynotknowwhattheywantuntiltheyseeit.Theyalso mightliketofitintoacrowd,withpopularmusicoraglobalbrand.Theymightliketoengageinanexperiencethattheydon't needtodesignthemselves.Forexample,manymovieviewerswouldprefertoseetheartist'svisionfortheplotthantowrite theirown"customized"endtothemovie. Companiescanuseavarietyofstrategiestocombine standardizationand"customerization"(thecustomizationofbothofferings andmessages).Companiescankeeptheirstandardizedofferingsaclickawayfromtheircustomizedprograms.Theycanoffer superficialcustomization,suchasdifferentfaceplatesandringtonesforcellularphones,withoutfundamentallytransforming theunderlyingoffering.Theycaninvitethecustomerintothelabtoactivelyengageincreatingthenewproduct. TexasInstrumentuseditsWebsitetoinvolveteachersindevelopingitsnewTI92calculatoronitsWebsite.Theparticipants weresoengagedintheprocessthatwhenacompetitorcameoutwithacopycatproduct,oneteachercomplainedthatthe "competitorstoleourideas."Companiescanalsocreatestandardizedproductsthat offeropportunitiesforfuturecustomization. Forexample,theLegoStudioisastandardproductthatchildrencanusetoputtogetheroriginalmoviesthatthey cansharewith othersovertheInternet.Neurosmithdevelopedacartridgesystemthatwillallowparentstogoonlinetochangethetunethat playsonthecompany'sMusicBlocksforinfants.

ConvergenceofVirtualandPhysicalCommunities
TheInternetcreatestheopportunitytodevelopvirtualcommunitiesthatdrawtogetherpeoplewithcommoninterestsacross continents.Thepowerofthesecommunitieshasbeendemonstrated,butthemembersofthesecommunitiesarealsomembers ofphysicalcommunities.Thefirstconvergencechallengeistheopportunityforthesephysicalandvirtualcommunitiestobe fusedindifferentways.Asecondconvergencechallengeistofusethesocialmissionofmanyofthesecommunitieswithan economicpurpose. Forexample,Sulekha.comgreworganicallytobecomeoneofthelargestIndianonlinecommunities,reaching20millionpeople ofIndianheritagein70countriesaroundtheworld.Butitfacedtwochallenges:integratingitsonlinecommunityintothefabric ofexistingIndiancommunitiesanddevelopingaviableeconomicbusinesswhilepreservingthesocialstrengthofthe community.Tobettermergetheonlineandofflinecommunities,SulekhapartneredwithlocalIndiancommunitiesandoffered ticketstoeventssuchasIndianmusicandtheater.Thecompanyalsoisworkingonasystemtocombinetravelserviceswith community.Forexample,anIndianimmigrantinEnglandwhowantsherelderlyparentsto visitmightuseSulekhatoarrangefor acommunitymembertravelinginthesamedirectiontoserveasacompaniononthejourney.Bycombiningthecommunity with commerce,thesitecreatesauniqueofferingthataddsvalueforcommunitymemberswhileensuringthattheybooktheirtravel throughthesite.Buyticketsandsendcompanionwithparents. Theconvergenceofvirtualandphysical,socialandeconomiciswheremanyoftherichopportunitiesofcommunitieslie. Companiesneedtotakeadvantageofthestrengthsandweaknessesofphysicalandvirtualcommunitiestodesigncoherent offeringsthatinviteinteractionbetweenthetwoinwaysthatsupportcorporateandbusinessobjectives.

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ConvergenceofOnlineandOfflineChannels
Customerswantto"call,click,orvisit,"withseamlessinteractionacrossonlineandofflinechannels.Theyexpecttobe recognizedandengageinacontinuousdialoguewiththecompanyacrossallthesechannels,inperson,onthephone,onthe Internet,orthroughwirelesschannels.Companiesneedtodesignstrategiesthatcombinethestrengthsofonlineandoffline approaches. Companiescanletcustomersdecidehowtheywanttointeract.Forexample,Barnes&Nobleandotherbookstoreshavekiosks instoresthatgivecustomersaccesstothecompany'sentireonlinedatabaseandwarehouse.Ifabookisinthestore,the system showswhereitislocated.Or,customerscanjumpofftheterminalandbrowsetheaislesofthestoreorsitinthecafe.The customerhasmanyoptionsforinteractingwiththecompany,onlineandofflineinthesamephysicallocationoranywhereat anytimeusingbn.com. Thebestchannelforinteractingwiththecustomeroftendependsonthecontextfortheinteraction.Forexample,75percentof electronicsellingforDomino'spizzaintheUnitedKingdomisdonethroughinteractivetelevision.Why?Becausepeopleare mostactivelywatchingtelevisionatthetimetheyarethinkingaboutorderingpizza. Companiesalsohavetocreateseamlessinteractionsandbesuretotreatcustomersthesameacrossdifferentchannels.For example,acustomerwhofillsoutaloanapplicationonlineshouldbeofferedanupdateonthestatusthenexttimeshecallsor visitstheATM.Todevelopthesechannels,companieshavetodeveloptherightbrandorsetofbrandsandusepartnershipsor alliancestocomplementtheirweaknesses.Theyneedtocreatea"fusion"of differentchannelstoprovideacoherentexperience orsetofexperiencestocustomers.

ConvergenceofNewCompetitiveValueEquationsandTraditionalPricing
CompaniessuchaseBayandPricelinehaveofferednewpricingmodelssuchasauctionsornameyourownprice.Butpeople don'tbuyexclusivelythroughthesechannels,soconsumerscombinetraditionalsellerinitiatedpricingwiththesenewbuyer initiatedpricingmodels.CustomersmightpurchasethroughPricelineforsometripsbutstillgothroughanonlineagentora physicaltravelagentforothers. Companiesarefindingwaystocombinetraditionalsellerinitiatedpricingwithbuyerinitiatedpricingmodels.Forexample,eBay offersitssellerstheopportunitytoadda"BuyItNow"buttonthatallowscustomerstoshutdowntheauctionbeforeitstarts andbuytheproductatafixedprice.Inthisway,thesitecombinessellerinitiatedfixedpriceswithmoredynamicbuyerinitiated pricing. Companiesarealsoredefiningthevalueequationbyaddinginformation,entertainment,andeducationtotheirtraditionalvalue propositions.Thevalueequationhasbecomemorecomplex.Thenewvalueequationisbasedonavarietyofsourcesofvalue, includingtheproduct/serviceofferingitself,service,thebrand,speed,24x7availabilityandotheraspectsofconvenience,ease ofuse,novelty,peaceofmind,experienceandentertainment,informationincontext,educationandprofessionalgrowth,and controlallbalancedagainstprice.Thereisalsovaluecreatedfromtheconvergenceofonlineandofflinebusinessesworking together. Inaddition,companiesarecombiningtheofferingandexperienceinnewwaystocreatenewvaluepropositions.Theambiance ofretailers,suchasthepianoplayerinNordstrom,hasalwaysbeenapartofthevalueequationoftherealworldshopping experience.Nowonlinesitesarepayingmoreattentiontotheexperience.Forexample,Swatchoffersonlinebuyersthe opportunitytodesigntheirown"virtualclerk"withdiversefaces,eyes,hairstyles,andattitudes.BMWcommissionedanumber ofshortfilmsbyprofessionaldirectorsforitsWebsite,whichonlymarginallyfeatureditscars.Volkswagenhassetupanonline radiostation.Experienceisbecomingacriticalpartoftheonlinevalueequation.

ConvergenceofChoiceToolsandHumanExperts
Powerfulnewonlinedecisiontoolsgiveusersaccesstoadvicethattheyoncecouldreceiveonlyfromhighlytrainedhuman experts.Individualscanassesstheirinvestmentstrategiesandmonitortheirportfoliosinrealtime,andtheyoftenhaveasmuch ormoreinformationthantheirbrokersorotheradvisors.Consumershaveaccesstosearchengines,decisiontools,andlife

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managementtools.Theemergenceofthesenewtoolscreatesanumberofconvergencechallenges. Thefirstchallengeisthebalancebetweendecisionmakingtoolsandexperts.Theproliferationofsearchanddecisionsupport toolshasraisedconsumerexpectations.Howdocompaniesneedtochangethetraininganduseofhumanexpertsasaresult? Howcancompaniesaugmenttheonlinesearchenginesanddecisionmakingtoolsusedbyconsumerswithadditionaltoolsand personal,expertadvice?Companiesneedtoincreasethesophisticationoftheirhumanexpertsormayneedtochargeforthe personaladvicethatwasoncepartoftheirtotaloffering.Studieshavealsofoundthattheuseofavatarsorotheragentsonline canincreasethecredibilityoftheiradvice. Thesecondconvergencechallengepresentedbythenewdecisiontoolsismanagingthemixofcompanymessagesandthird partyinformation.Customersareexposedtoandstillrespondtoadvertising,PR,anddirectmarketingmessagesthatare firedatthemdaily.Butthesemessagesarefilteredoutmorerigorouslybyconsumerswhohaveaccesstoindependent informationandareincreasinglyskepticalaboutmessagesthatarepipedintotheirhomesandheads.Howcancompanies combinetheadvertisingandspinoftraditionalmarketingcommunicationswiththirdpartyinformationsources?Howcanthey balancethemessagesthattheywantcustomerstohearwiththeinformationandinsightthatconsumerswant?Byoffering outsideinformationincludingthirdpartycontentandcompetitorinformationontheirownsites,companiescanincrease theircredibilitywithcustomers.

OpportunitiesforConvergence
ThesefiveC'sofconvergenceandtheirinteractionsofferrichopportunitiestocreatenewofferingsfromtheconvergenceof newtechnologyandold,andtheyopenupcreativecombinationsofnewandexistingconsumerneedsandbehaviors.Drawing togetherthesedisparateelementsisanartandrequiresextensiveexperimentation,buttheresultscanbefarmorewonderful andrewardingbothforchefs(companies)andtheircustomersthantheindependentcomponentsalone. ThisisthesecondofthreearticlesexploringinsightsfromourbookConvergenceMarketing:StrategiesforReachingtheNew HybridConsumer.Inthefinalarticle,wewillexamineinsightsonredesigningorganizationalarchitecturetocreatea"digital fabric."Apreviousarticleexploredthecomplexinteractionbetweentechnologyandpeople.

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