Tuesday, February 21, 2006

Marketing RIP

The theory of The Supply Chain is well established and are described thus: The entities of a supply chain typically consist of manufacturers, service providers, distributors, and retail outlets. Supply chain activities transform raw materials and components into a finished product (Wikipedia).

This worked well for the first two waves of economic change as we progressed through 8000 years from an agrarian economy, then for 200 years as an industrial economy and, from about the 1960's, to an information economy. From about 2000 we have been in a new, networked, economy.

The information economy caused the supply chain to begin to break down. The late professor Peter Doyle called this the disintermediation of supply chain which was observed at the turn of the century (also reported by Evans and Wurster in their book Blown to Bits) . This effectively allowed organisations and consumers to go direct to the manufacturer and circumvented the traditional distribution channels. In effect, we were able to go online and buy products direct. Examples of successes in this new form of economy include companies like Amazon and Dell.

The Networked economy is now disintermadiating manufacture.

We now see a model where the customer seeks a solution and the customer becomes the manufacturer. An example might be seen in the 'package' holiday. Once this was a product offered as a complete package but now is changed such that the customer will assemble the components of the holiday by going direct to the supplier for the flight, hotel, hire car, insurance etc. to create or 'manufacture' their own 'package'.

Another example of the networked economy is where the consumer takes control of management functions such as Marketing.

The competitive advantage is not found by creating a product, service or network that can be copied but in providing an organisation that can respond to customer's ability to create their own 'product', develop a market or to be involved in product evolution.

Analysis of the case of Herceptin, a drug for cancer sufferers indicates how this works. Heceptin may be sought as a palliative for which it is not proven to be efficacious but 'in the mind of the consumer' offers a solution to their need and so the consumer usurped the role of marketing.

In the case of Herceptin, a woman embarked on a legal battle to be prescribed this breast cancer drug free through the UK National Health Service.

Ms Rogers and her clinician believed Herceptin offered her the best chance of survival. There was said to be no evidence from any specialist in the field which did not support the use of this treatment for women who fit the eligibility criteria.

However, the drug was not licence for this particular treatment even though three-quarters of cancer doctors were allowed to proscribe the drug for early stage breast cancer.

This is a case where the consumer has taken control of the National Health Service' and Roche marketing and was demanding that it changes its marketing policy. The 'consumer' was acting as product managers and was driving the 'marketing plan' and, in this case, was using the courts to force her marketing plan upon the organisation.

The values that she ascribed to the drug were her values which were not the same values as the organisation.

In this case the value dissonance between the consumer and organisation are played out in a court but in other circumstances that are played out in the market or on the streets.

For example a musician may achieving stardom by approaching a market through free downloads of music to iPods and optimises the shareholder return from sell out gigs. This approach to market is culturally outside the common understanding of the traditional music industry to the extent than Emap announced that after 28 years, it was closing its one time iconic magazine Smash Hits, the pop music magazine. At a time when consumer magazines, and particularly celebrity magazines, was the best performing print genre, the dissonance is considerable.

The networked economy heralds the death of Marketing as networked consumers become the manufacturer and create their own markets.

Pictuure: Webclip Art