Does location matter when selling online? Will the Internet of Things come to pass? Why do high flying companies stumble at the peak of success?
The Lazaridis School of Business and Economics recently hosted its second annual Marketing Symposium. This day of learning brought together graduate students, academics, and marketing practitioners from private industry to hear from three leading marketing academics on the questions above.
Location is (Still) Everything
David Bell (of the Wharton School) lead the day by sharing his GRAVITY framework for understanding how the real world connects to the virtual one when selling online.
source: David Bell: Location Is (Still) Everything: The Surprising Influence of the Real World on How We Search, Shop, and Sell in the Virtual One)
A few key take aways:
- Currently, only ~10% of North American purchases are conducted online, but online and mobile search and visits play a huge role in influencing choices and pre-purchase research.
- Although you would think that the internet makes all locations in the world equal, in truth, the real world exerts a gravity on the choice of channel that we use - we trade off preference and effort. For example, someone who lives in a neighbourhood with less young children is more likely to order from Diapers.com – they are also less likely to find a huge selection of diaper choices in their neighbourhood.
- Resistance must be countered by removing ‘friction’ (e.g., what will it look like? will it fit? what if I want to return it?). Notably, some of the most successful companies in the US (Warby Parker for example), find it hard to replicate their success in in Canada (in part because the margin implications of shipping multiple pairs of glasses don’t work in the less dense, geographically sparse, Canadian environment).
- Companies are finding success in the omni channel universe, offering a mix of offline showroom and online fulfillment.
- The democracy that is possible on the internet through reviews and communities (think Trip Advisor or Yelp) helps consumer confidence with online purchases:
- In the early years, Jeff Bezos was criticized for allowing customer reviews because negative reviews would detract from Amazon.com’s job to “sell things.” Bezos held his ground, because: “We don’t make money when we sell things. We make money when we help customers make purchase decisions."
Emergent Experience and the Connected Consumer in the Smart Home Assemblage and the Internet of Things
Donna Hoffman, from George Washington University [Postsocial.gwu.edu] presented a framework that might help to understand when and how the Internet of Things (IoT) will move to the mainstream. Currently, there is a disconnect between industry, who are pushing forward with IoT (100% of Samsung devices will be internet connected in 2020, for example), and consumers, who have been slow to adopt and to see value in the early devices (for example, slow uptake of Apple watch or Nest)
Quoting professors Hoffman and Novak, “What awaits us as we are able to interact with smart objects in our everyday lives, and these objects are able to interact with each other, often autonomously? What are the implications for human interaction and for consumer experience? Will new marketing approaches be required? In the course of thinking about these kinds of questions over the past few years, we realized we needed a new framework to help our thinking jell. We found that framework in assemblage theory. The smart home assemblage serves as the context for our theorizing, but we believe our approach generalizes to any consumer IoT assemblage.”
Finally, Professor Gerald Tellis of USC spoke of the challenges that organizations face as they move through product lifecycles, and how they can protect themselves from failure. Many incumbents falter in what can be termed an Incumbent’s Curse. Professor Tellis contrasted a self destructive culture with one that can thrive:
Self Destructive Culture:
- Glorifies past success
- Myopia – focus on the present success
- Avoids risk
- Focus on the future
- Embraces risk
- Cannibilize own successful products