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Mining Change for Competitive Advantage
In an era of rapidly evolving markets and economies, knowledge management plays an indispensable role in creating lasting bonds between businesses and consumers.
Posted Dec 11, 2000
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Knowledge management and marketing intersect when businesses use database technology to aggregate customer information; when they position products and services to serve profitable segments; and when they communicate with markets using integrated strategies and then measure the results. On the surface, this is a sound approach, but in practice, it is heavily reliant on quantifiable outcomes. Knowledge management too often becomes confused with data collection; as a result, many marketing blueprints are rich in measurement but lack customer relevance.

Using information technology to mine purchase behaviors, brand selection and product loyalty offers new ways to reach customers. Internet technology and expanding communications channels allow for highly selective strategies that penetrate both share of mind and share of market. Finding and reaching, for example, the 34-year-old purchaser of personal financial software is possible through new technology; getting that person's attention is more difficult.

In essence, knowledge management is the art of responding to change for competitive advantage. Within most successful marketing organizations, the role of knowledge management--and the large amount of information it creates--is to support decisions, not reveal them. Those companies align internal and external knowledge to anticipate, address and respond to shifts in markets. Ultimately, the role of the marketing organization is to harness opportunity from the intellectual capital created in the organization.

Change-based Principles
The influence of knowledge-based strategies has produced new principles for marketing organizations. Here are half a dozen key ones. Customer satisfaction is not good enough. It has been statistically validated that a company can satisfy customers and still lose them and that a satisfied customer is not necessarily a long-term customer. In a world characterized by brand switching and decreased customer loyalty, satisfaction is the baseline; a high-value relationship is the goal.

The personal and the professional converge. Because the lines between the professional and the personal are blurring, marketers must look at prospects and customers in more human terms, earning the right to be invited into their entire lives.

Genuine connectivity is king. Relevant and efficient connection must be made between all constituencies in the marketing sphere of influence, which include customers, employees, alliances and investors, all of whom share a common interest in each other's success. These links must foster information exchange, education and understanding, while eliminating waste of time, expense and conflict.

Community is powerful. A great misunderstanding of our connected society is that consumers have tuned out. In fact, they have tuned in to new, smaller communities of common interest and values. Nurturing such relationships will require a strategic blend of individual, segmented and mass-marketing techniques.

The importance of obtaining feedback is paramount. The ability to learn and relearn customer preferences and apply this information to marketing and business strategies is critical to marketing effectiveness. Listening to what customers say (or won't say) is the most effective means of mining change for competitive advantage.

Brand for people, not markets. Information overload can lead to abundant analysis, endless perspectives and quantitative black holes. The temptation is to create communications that serve as data packages designed to support findings, but which lose personality. Instead, consistency of brand and constancy of style will lead to more meaningful relationships.

The Business Idea
Effective communication respects people's time, reflects a meaningful role and responds to market conditions, both today and in the future. Not long ago, the marketer's quest was for the big idea-the single response to the wealth of challenges presented by shifting markets and changing consumer preferences. Today, the role of advertising is to bring life to the business idea, which often is referred to as the rational model of the forces behind a business' current and future success. Ultimately, the business idea leads to competitive advantage when combined with distinctive competencies, a unique personality, a sense of scale and staying power.

Marketing in the high-performance world requires a different, somewhat counter-intuitive view of marketing investment. To build brand value, marketers must recognize that perceived value is required to gain permission to grow real value. A glance at the rapid emergence of the e-business arena, coupled with the significant (somewhat volatile) value placed on those businesses solely as concepts, illustrates the contribution marketing and communications can contribute to brand value creation. Early articulation, visibility and validation of a business concept are requirements for success. Competing in an environment of continuous, accelerating change, marketers segment into three distinct types of brand investors:

Change Reactor: the marketer who responds, however swiftly, to market forces after they occur. This stance requires continuous evaluation and reevaluation of investment strategies and the programs they drive. But it can never quite catch up and demands a significant catch-up investment strategy late in the business development cycle in order to leverage market forces.

Change Doubter: the marketer who follows classic brand-investment patterns of early "spike" investment, followed by steady decline in market visibility. This marketer is reliant on non-marketing momentum (mostly sales-driven strategies and customer relationships) to carry and build brand value. It may see a quick decline in perceived value, rapid underperformance relative to competitive perceptions and ultimate market irrelevance.

Change Leader: the marketer who recognizes and invests today, with a view toward tomorrow's markets. The core of this approach is to establish investment levels that create the desired brand end-state in the short term and expect market forces to catch up with and validate perceived value. Tactically, it means greater, earlier investment. Strategically, it means contributing to the definition of market change rather than reacting to it. The result is early perceived value, strong demand generation, buildup of latent purchase intent and an increasing efficiency in brand development expenditures over time.

The change leader will start out ahead and finish ahead. It also recognizes that brand investment today is not simply about budgets but about commitment, clear and consistent reinforcement of brand principles and the fostering of the most advantageous role in the customer's life.

The principal function of business strategy is to create a lasting bond between the company and the customer in the midst of rapidly evolving markets and economies. As such, the company on the path to success views itself as an agent of change, like those helping to define today's infrastructure in technology, financial services and healthcare. This means letting the customer dictate the value proposition of a product or service. Marketing success is achieved when a company and its customers view each other as playing the highest value role in achieving their respective goals.

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