ROT068

BLURRING

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THE LINES
WHY ITS

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TIME TO RE-THINK
MARKETING yo
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The time has come to develop new mental models that reect the complex inter-linkages
between modern consumers and business. by Yoram Wind
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WHEN I BEGAN MY ACADEMIC CAREER in the mid-1960s, the primary
focus of marketing research was consumer marketing. Even then,
however, most of my contemporaries recognized that the core
principles of consumer marketing could be modied and applied
to business-to-business interactions for goods and services, as well
as to the sale of raw materials to industrial buyers. Despite some
obvious parallels between them, in the early development of these
elds it made sense for consumer and industrial marketing to
advance independently.
Unfortunately, my contemporaries and I were so successful in
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ways, which I will describe, along with their implications for
rethinking our approach to Marketing.
1.The blurring of B2B and B2C
The lines between business-to-business (B2B) and business-to-
consumer (B2C) marketing are blurring. In recent years, eBay has
become one of the planets largest retailers, but without any stores
or display shelves and without holding any actual inventory.
Instead, it serves as a massive virtual ea market for buyers and
sellers. These customers may start out small but then emerge as

separating consumer and industrial marketing that we managed to
create separate silos. The two elds have matured signicantly
since then, and the environment has changed so dramatically that
we cannot continue with this separation. The lines between con-
sumer and industrial marketing are now blurring in ve important
industrial sellers and buyers as their volumes increase. Large cor-
porations such as Sun Microsystems, recognizing the perishable
nature of their products, have begun to sell merchandise directly
on eBays auction platform. There are multiple business partners
involved in the sale process, such as companies involved in bill

62 / Rotman Magazine Spring 2008

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payment, escrow and shipping, and customers lead the way in cre-
ating new services such as automotive sales, so that when a catego-
ry reaches a critical mass of items, eBay then creates a new section
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in its virtual store. The ourishing of small businesses around the
globe in recent years has further blurred the lines. The needs of
small businesses overlap with those of individuals, a fact that is
exploited by companies such as Staples or Home Depot, which
cater to both markets, selling ofce supplies and building materials
to students and homeowners as well as ofces and contractors.
And while Costco is primarily viewed as a B2C operation, some 40
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per cent of its members are actually small businesses.
2. The blurring of value chains
Hong Kong-based Li & Fung manufactures apparel and other
items through a exible, virtually-congurable network of suppli-
ers across many different countries: a network of seven factories in
ve countries that is created to deliver an order for 100,000 shirts
on one day might be very different from the one used a week later.
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Relationships are congured on the y, with Li & Fung as the con-
trolling hub of a dynamic network. Because the relationships
between the rms involved are exible partnerships, there appears
to be little traditional marketing involved: Li & Fung typically con-
tracts for no more than 70 per cent of its partners capacity to
ensure their independence and exposure to new ideas from other
companies. This example is consistent with the new concept of
marketing, which is moving toward managing strategic partner-
ships and positioning rms between vendors and customers in the
value chain with the aim of delivering superior value to customers.
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A proliferation of such strategic alliances is blurring the bound-
aries between rms.
When Apple set up its iTunes store, it brought together a set
of recording companies with content and customers who wanted
to download their 99-cent tunes. It was a stroke of genius in
64 / Rotman Magazine Spring 2008
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connecting the desire of producers to have an effective market for
digital songs and the desire of consumers to have an easy way to
purchase and share digital music les. At what point does industri-
al marketing occur in a continuously-recongured value chain,
with consumers at its core?
3. The blurring of relationships with customers
With the emergence of online communities, opportunities for cus-
tomers to collaborate with one another and directly with compa-
nies have increased enormously. Firms are nding ways to tap into
customer insights, so that innovations that once owed through
B2B channels now percolate out of communities that involve both
customers and rms.
MITs Eric von Hippel and his colleagues have found that the
majority of signicant product innovations in many industries are
initially sparked by lead users and later rened by companies. This
means that while companies have traditionally looked to their own
labs or to partners for ideas, an equally-important source of innova-
tion can be their relationships with their own customers.
Peer-to-peer networks are taking on increasing prominence in many
areas. For example, high net-worth individuals, tired of the hard sell
of wealth management rms, have created networks to share nan-
cial advice and ways to manage their money with one another. They
exchange ideas and offer advice, as well as making investments
together or obtaining group discounts on services and products.
Open source software and the Wikipedia online encyclopedia are
other examples of how people have come together in grassroots net-
works to develop new products.
In addition to trust building through marketing initiatives and
the selling power of real performance, we also have peer-to-peer
rating systems, whereby buyers rate sellers after each interaction
(and sellers can also rate buyers), offering buyers a cumulative
scorecard for assessing a specic seller. The importance of peer-to-

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peer interaction is also seen in referenceability: recent studies have
found that a customers willingness to refer another consumer to a
company, and to act as an advocate for that company, is the clearest
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sign of customer satisfaction. This creates a shift from a transac-
tional focus to a focus on building relationships with customers.
4. The blurring of functions within the rm
Through electronic data interchange, companies such as Procter
& Gamble and Wal-Mart have transformed their relationships by
connecting retail shelves and inventories directly to manufactur-
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ing. This has blurred the lines not only between rms but between
operations, marketing, sales, IT, nance and other functions with-
in the rm. These relationships would seem to bypass some mar-
keting issues in a traditional sense, but they also raise new chal-
lenges for industrial marketing: How are these relationships devel-
oped in the rst place? How do new entrants break in? In a certain
sense, this is a classic example of the straight rebuy that we talked
about in the 1960s, with a direct computer link between the two
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companies. But these links have proven to be much more robust
and interactive, bridging disciplinary silos.
5. A blurring of products, services, and customer experience
Businesses are increasingly based upon knowledge networks,
which presents a very different set of challenges for companies. In
contrast to the industrial-market focus on nding raw materials
and turning them into nished products (i.e. adding value through
manufacturing), the focus today is on adding value through knowl-
edge. Where purchasing raw materials is a procurement and mar-
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keting challenge, nding knowledge is much more of a human
resource challenge encompassing all the management disciplines.
Rethinking Our Mental Models
Mental models play a powerful role in shaping our perception and
This document is authorized for educator review use only by Mohammad Ekhlaque Ahmed, Institute of Business Management until February 2016. Copying or posting is an infringement of
copyright. Permissions@hbsp.harvard.edu or 617.783.7860
t
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In contrast to the industrial-market focus
on nding raw materials and turning them
into nished products, the focus today is
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on adding value through knowledge.
actions in any eld. As the world around us changes, failure to chal-
lenge and rethink our models continuously will hold us back. At
the same time, we must recognize that every new mental model we
adapt can come with its own set of blinders. Following are nine
important concerns that new marketing models must address.
1. Expand the focus from buyers to stakeholders
Since business decisions are affected not only by customers but
by end consumers, distributors, suppliers, employees, share-
holders and others who are all heterogeneous, marketing con-
cepts and approaches should not be restricted to buyers but
should apply to all stakeholders. With the increasing pressure
for corporate social responsibility, it is clear that companies
need to develop strategies including marketing strategies
that address the needs of all stakeholders. Thus, industrial mar-
keting decisions need to take into account the impacts on end
consumers and other stakeholders. These cannot be considered
in isolation if the company is to understand and manage the full
impact of its strategic decisions.
2. Recognize new forms of relationships and empowered
consumers
Whether rms like it or not, new technologies have empowered
consumers, leading to a shift in the relationship between compa-
nies and customers. Alvin Tofer has referred to this trend as the
emergence of the prosumer a blend of producer and consumer.
This empowered consumer, who is often involved in developing or
customizing products and services, behaves more like an active
buyer in an industrial market. Instead of buyers and sellers, we see
models of co-producers, where the customer is not a passive recip-
ient but an active collaborator. We have seen similar shifts in indus-
trial relationships. In this environment, instead of merely provid-
ing marketing messages, rms must provide tools for customers to
Rotman Magazine Spring 2008 / 65

create their own products and services. Dell, for example, allows
consumers or industrial buyers to customize their products.
Companies can use the Internet to provide buyers with search
engines and tools that give them the comparative information, and
decision aids that help them make optimal buying decisions.
Customer relationship management (CRM) must be augmented
with customer-managed relationships (CMR), whereby customers
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markets and the expansion of multinational rms have also
changed the practice of industrial marketing. It can no longer be
assumed that marketing functions including research, new
product and service development and even sales are best per-
formed by the rm itself. Forward-thinking companies are mov-
ing to hybrid marketing systems that combine direct sales forces
with diverse channels, deconstructing their vertically-integrated

are recognized as being in the driver's seat. This is a very different
relationship between buyer and seller, and entails a different role for
Marketing. American Airlines used this approach in developing its
Sabre reservation system, empowering agents with a platform to
search and maintain relationships with many different airlines.
3. Re-examine the role of outsourcing and traditional make-
buy decisions
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value chains and creating a value network based on strategic
alliances ranging from outsourcing of various functions to co-
branding, co-promotion and co-marketing.
4. Bridge disciplinary silos
Vertically-integrated rms often deal with consumer marketing
and industrial marketing in different parts of the organization. We
need to bridge the walls between the marketing functions (such as

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One of the most signicant changes in the global business envi-
ronment has been the rise of low-cost manufacturing in locations
such as China and the emergence of business process outsourcing
in places like India. The increased technological sophistication
and size of these markets have fundamentally transformed the
nature and scope of business relationships. For example, a compa-
ny with a service centre in Bangalore might be interacting with a
client rms end customers, so the partner carries part of the B2C
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relationship even though the outsourcing relationship would be
characterized as a B2B interaction. The development of global
customer service and sales) and marketing and other business func-
tions (such as operations and nance). This is critical given that
most marketing decisions are interrelated and, in turn, affect and
are affected by the other functions. For example, is an electronic
data interchange relationship the domain of marketing, operations
or IT? The answer is, all three.
5. Recognize the importance of brand equity
Brand equity is an increasingly important driver of rm decisions.
But building brands can be very expensive, so companies are looking

Build Your Brand But Dont Forget to Deliver an Experience by George Stalk
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For most companies, branding is about posi-
tioning, advertising, packaging, and catchy
logos and slogans. That is no longer enough.
Branding in todays marketplace is about the
total experience a customer has with your
products or services. It is about enticing
customers, gaining their trust, and making
the experience so pleasant that they are
proud of their choice and will tell others
No
keep his promise. He didnt arrange for
immediate pickup, nor did he schedule the
service appointment promptly. With that sin-
gle incident, the dealer decimated the posi-
tive feelings my wife had towards his brand.
Todays consumers are not a happy lot and
they wont tolerate much abuse. They are:
Pressured for time: Only a few years
that will meet their performance require-
ments. In the trade-off between cost
and quality, the perceived status and
condence associated with buying a
name brand isnt enough to close the
sale any more.
Short of money: Pressures on income are
increasing for most consumers. They have
no extra money to be wasted by underper-

about it.
Recently, I was in the market for a vehicle
that would be safe and meet the needs of
my busy wife and children. We narrowed the
choice to two vehicles. I travel a great deal,
so when one dealer promised that in the
event of a breakdown he would pick up the
vehicle immediately and take it in for servic-
ing, my wife was sold.
For the rst two months, my wife told
everyone how much she enjoyed the vehicle
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ago, a half hour to prepare food at home
was considered normal for fast-home-
cooked offerings. Today, if the food isnt
on the table in ve minutes or less, its
not fast enough.
Starved for afnity relationships: When
consumers are short on time they are
short on relationships. Many new retail for-
mats from coffee shops to destination
restaurants play up the need to belong.
Jaded and sceptical: Todays marketplace
forming suppliers.
Now more than ever, companies cannot
afford to forget that the customers expe-
rience is an integral part of branding. We
call this chain end-to-end learning
because the customer is learning who and
what we really are. Theyre learning about
us based on what we do, not what we say.
That empirical experience is indelible so
wed better be sure that we know what

and appreciated the security in the dealers offers customers unprecedented choice. were teaching them.
guarantee. She was a walking brand builder They know that in many categories of The challenge of managing a customers
for that manufacturer. But the rst time the goods and services, they can buy lower- experience comes from the fact that it hap-
vehicle needed service, the dealer failed to cost but high-quality private-label brands pens out on the front lines of the company. >>

66 / Rotman Magazine Spring 2008

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at ways to leverage brands across consumer and industrial markets.
Companies such as Canon, Hewlett-Packard, Dell and IBM, as
well as some pharmaceutical and nancial rms, have successfully
built meaningful brands across B2B and B2C markets, nding that
brand building in one market pays off in the other.
6. Unleash the power of technology
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pre-purchase to purchase to use to post-purchase disposal. This is
shifting the dominant logic of Marketing from one based on eco-
nomic models that were applied to manufacturing and tangible
goods to a logic focused on intangible resources and the co-cre-
ation of value and relationships. This shift away from traditional
industrial transactions leads to deeper and more complex relation-
ships between companies, corporate customers and end users, as

Web-based platforms for interaction are transforming relationships
between buyers and sellers in both consumer and industrial mar-
kets. The rise of blogs, for instance, has changed the ow of com-
munications to include B2C, C2B, B2B and C2C, and increased
their informality, frequency and intensity. We are also seeing a con-
vergence of communications across different channels. Google has
become the ubiquitous search engine, replacing the push of mar-
keting messages with the pull of searches for information, even as
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well as new revenue models.
7. Design business models for the developing world
Eighty-six per cent of the worlds population is in developing coun-
tries and we need new approaches to reach them. C.K. Prahalad
has shown that with new models, even low-income segments can
be protable as companies discover a fortune at the bottom of the
pyramid. But these markets require rethinking business and rev-

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it creates a powerful, unconventional advertising platform for busi-
nesses. Given these changing channels, communications increas-
ingly reach both B2C and B2B buyers.
6. Shift from a transactional focus to the total customer
experience
Companies in both industrial and consumer markets are starting
to focus on dimensions beyond product-feature functionality
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and price. Some are even bundling products with services and
concentrating on shaping the total customer experience from
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enue models, product and service offerings, channels and relation-
ships more than ever. For example, ITC created electronic hubs in
small villages across India, providing information and trading plat-
forms for rural farmers. This satellite-based network links the
farmers to pricing information for agricultural products, markets
and suppliers, transforming the process of rural farming while
enriching the lives of the farmers (who are both business people
and consumers). The opportunity to build a B2B market across
India in this way could not have been recognized or achieved
through the approaches used in developed countries. The emerging

Frequently, managers who are making
major decisions on new investments or
process redesign have little idea of the
end-to-end impact those decisions will
have on the customer experience. One
client has created a series of videos
demonstrating its target customer experi-
ence. These videos are shown not only to
marketing managers, but also to the sys-
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Before launching that next advertising
campaign or promotion, ask yourself how
your investment decisions affect the cus-
tomer experience, and if everyone from
senior executives to counter clerks is
aware of how much the brand's value hinges
on the quality of experience you deliver.
Here are some questions to consider:
consumer distemper to service calls and
product returns? Can you measure the eco-
nomic implication of xing these problems?
5. What is the dollar value of delivering an
experience that consistently produces brand
boosters and eliminates brand blasters?
Brand management is at a turning point.

tems developers who are building the sup-
port infrastructure that will enable the
experience. No written list of systems
requirements can ever substitute for the
visceral understanding that people develop
when they see and hear the customers
experience with the product.
Brand relationships are not conned to con-
sumer products. They exist with hospitals,
taxi companies, cleaners, garages, airlines,
restaurants, and more. The strength of a
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1. Can you describe the end-to-end experi-
ence (learn-buy-get-use-pay-service) that
different customer segments experience?
2. Could you present it in a video for
employees?
3. Do you have specic measures that track
your ability to overcome the dissatisfactions
(such as long waits for delivery and repairs or
inaccuracies in orders and billings) cus-
As the cacophony of the marketplace
escalates, only those brands that deliver
will succeed. Increased advertising invest-
ment alone wont move the sales needle:
instead, refocus your brand management
on the outcomes that matter most those
that affect the lives of your customers.
George Stalk is senior partner and

managing director of Boston

brand experience is inextricably linked to tomers encounter? Consulting Group of Canada Ltd.
every aspect of buying and using a product, and an adjunct professor of
not just to the inherent performance of the 4. Can you map the ripple effects of prob- Strategic Management at the
product itself. lems from misleading marketing claims to Rotman School of Management.

Rotman Magazine Spring 2008 / 67

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copyright. Permissions@hbsp.harvard.edu or 617.783.7860
 t
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Cross-cultural acquisitions, alliances

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and other relationships are required to
succeed in developing markets, but
they also pose distinctive challenges .

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markets of Asia and other parts of the world present tremendous
opportunities, but also challenges in forging relationships with
companies with different cultures and business practices. Cross-
cultural acquisitions, alliances and other relationships are required
to succeed in these markets, but they also pose distinctive chal-
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monitor marketing effectiveness of the rm toward its clients and
prospects, but also track key indicators of the clients customers.
You might, for example, need to track a companys share of wallet,
account protability and growth with business customers and the
corresponding measures of the effectiveness of the company with

lenges and present new risks. Have we changed our view of mar-
keting to reect this global reality?
8. Rethink the role of market research
The increased complexity of the business environment requires
more effective marketing research and modeling approaches, yet
critical business decisions such as mergers and acquisitions are
often made with no marketing input at all. Equally disturbing is the
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its end customers.
In closing
The breakthroughs made in business and industrial marketing
over the past few decades have allowed companies to harness the
power of new concepts and tools in their interactions with one
another. It is now time to build on this foundation by employing
broader thinking that embraces both consumer and industrial

fact that many decisions are being made on non-projectable, non- markets, as well as mental models that better reect the increas-
generalizable focus group interviews or convenience-based sam- ingly complex inter-linkages between consumers and business.
ples. It is critical to develop more effective data mining and other
analytics as part of a decision support system as well as marketing
research and modeling tools. We are seeing increased rigor and
innovation in this area such as internet-based conjoint analysis
studies and increased use of adaptive experimentation. To help
managers make better decisions, companies are using a variety of
Yoram (Jerry) Wind is The Lauder Professor and professor of
tools such as simulations and game theory to allocate resources
Marketing at the Wharton School of Business. The co-author of
and prioritize marketing and business strategies. Competing in a Flat World: Building Enterprises for a Borderless World
Do

and The Power of Impossible Thinking: Transform the Business of Your

9. Rethink metrics and dashboards
With increasing attention being paid to the ROI of marketing, we
must rethink the measures we use to track and evaluate these
investments. New-and-improved dashboards should not only
Life and the Life of Your Business (Wharton School Publishing,
2007 and 2005), he is also the editor of Wharton School Publishing.
This is an excerpt from a paper that recently appeared in the Journal of
Business & Industrial Marketing, published by Emerald.

68 / Rotman Magazine Spring 2008

This document is authorized for educator review use only by Mohammad Ekhlaque Ahmed, Institute of Business Management until February 2016. Copying or posting is an infringement of
copyright. Permissions@hbsp.harvard.edu or 617.783.7860