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The 5 C's of Convergence Marketing

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E-business and traditional business can come together to create something new and different – and consumers are combining them to suit their tastes. Jerry Wind, Vijay Mahajan, and Robert E. Gunther look at five key areas where convergence occurs.

Early proponents of the Internet claimed that it changed everything. The rules of technology, business, and marketing were different. Forget ROI, they said; build market share. Forget mass marketing; develop a personal relationship. Forget the traditional consumer; focus on the "cyberconsumer." If you don't understand this, these revolutionaries said, you are mired in the past. You just don't get it.

It is clear today that the Internet doesn't change everything. But in the backlash, we cannot forget that it does create major changes in the way consumers behave and how the business operates. The power of the new technology creates fundamentally new possibilities for consumers and companies. If we begin to look beyond the either/or view of the world, we see a rich and complex set of opportunities. The challenge is sorting through the interactions between consumers and technology to find these opportunities. The greatest opportunities are through a fusion of the old and the new, physical and virtual.

Many organizations initially treated e-business as just another offering in the food court. Pure-play Internet firms saw it as a standalone restaurant. But in fact, the most powerful new models may not be those based on a food court concept, but rather on a deeper fusion. This is like fusion in cuisine, where Asian and French, or Spanish and American influences are joined into creative and tasty new dishes. E-business and traditional business can be brought together to create something new and different, and individual consumers are combining the two in ways that suit their individual tastes.

Not all these combinations work, and the key is to experiment with different combinations. In e-business, the dot-com revolution led to a furious period of experimentation, as companies quickly tested what worked and didn't. As investors poured capital into these markets, we saw one of the most massive experiments in new business models—some good, some fatally flawed.

What have we learned? In our book, Convergence Marketing: Strategies for Reaching the New Hybrid Consumer, we explore five specific areas in which this convergence seems to lead to very powerful combinations. These are also areas where the interactions are complex and important to business success. These "five C's" are areas in which some of the most interesting new "fusion" concepts can be developed:

  • Customerization—Convergence of customized and standardized offerings and messages

  • Community—Convergence of virtual and physical communities

  • Channels—Seamless convergence of call, click, and visit

  • Competitive value—Convergence of new and traditional competitive value equations and pricing models

  • Choice tools—Convergence of new search engines and decision tools for consumers and company-provided advice

These are areas in which new technologies and systems create opportunities for customers to do things they could never do before, but they are also areas in which customers are creatively combining the old with the new to create a fusion. Most of the initial discussion of these topics over the past few years has focused on what consumers can do in these areas employing new technologies. In our book, we've looked beyond this question to examine: What do they want to do, and what are they likely to do in the future? In this article, we examine each of these five areas. These are places where there are significant challenges and opportunities for convergence within and across these areas.

Convergence of Customerization and Standardization

Powerful new technologies allow customers to become co-producers in developing customized products and services. New technologies also allow customers to customize messages that they receive and permit companies to personalize the messages that they deliver. While such tailoring was once offered only to the elite for a very high cost, the technology makes such customization much cheaper and easier. From jeans to coffee, to bicycles, to eyewear, to cosmetics, to vitamins, to breakfast cereals, companies have used this technology to create customized offerings. The pioneers of this technology saw it as a nearly certain win. If customers could get exactly what they want, why would they settle for some less-than-perfect standardized offering or message? And if companies could manufacture to order, the inventory reduction would go directly to the bottom line.

In fact, however, standardized products have not gone away. There are reasons why people like off-the-shelf offerings, at least in certain areas of their lives. The product or service may not be important enough to warrant the time and energy of customization, and customers may have an unarticulated need, so they may not know what they want until they see it. They also might like to fit into a crowd, with popular music or a global brand. They might like to engage in an experience that they don't need to design themselves. For example, many movie viewers would prefer to see the artist's vision for the plot than to write their own "customized" end to the movie.

Companies can use a variety of strategies to combine standardization and "customerization" (the customization of both offerings and messages). Companies can keep their standardized offerings a click away from their customized programs. They can offer superficial customization, such as different faceplates and ring tones for cellular phones, without fundamentally transforming the underlying offering. They can invite the customer into the lab to actively engage in creating the new product.

Texas Instrument used its Web site to involve teachers in developing its new TI-92 calculator on its Web site. The participants were so engaged in the process that when a competitor came out with a copycat product, one teacher complained that the "competitor stole our ideas." Companies can also create standardized products that offer opportunities for future customization. For example, the Lego Studio is a standard product that children can use to put together original movies that they can share with others over the Internet. Neurosmith developed a cartridge system that will allow parents to go online to change the tune that plays on the company's Music Blocks for infants.

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