A good question is more important than a good answer because it provokes thought. My good friend Dr. Fu Jialin recently asked me: What is the biggest change the Internet has brought to marketing? This is a good question.
The biggest change the Internet has brought to marketing is in communication and channels. The Internet as a tool mainly refers to communication tools, while as a channel it mainly refers to sales channels.
The biggest obstacle the Internet has brought to marketing is communication. Because traditional media is controllable, whereas communication in the Internet era is basically uncontrollable so far. Even the Internet celebrities of this era have not discovered the rules of becoming an Internet celebrity. Before they can summarize the rules, they are quickly replaced by new Internet celebrities. No wonder Luo Zhenyu said that the Internet celebrity "Papi Jiang" should quickly monetize her fame.
Lei Jun is an example. Unintentionally, Lei Jun became an Internet celebrity, boosting Xiaomi; when he thought he had found the rules of Xiaomi's success and summarized a series of rules such as the "Seven-Character Formula," he was quickly marginalized by the Internet. Perhaps from becoming an Internet celebrity to being marginalized, Lei Jun was confused all along.
The Internet Has Not Changed the 4P Framework Whether it is the Internet as a tool, a channel, or an essence, it will not change the basic elements of marketing. The best integration framework for the more than 20 marketing elements (marketing variables) is the 4P. Not long ago, I published an article saying that "4P is a universal framework," meaning that 4P is an analytical framework that does not change because of the Internet. Today, our analysis still uses this framework.
Has the Internet Changed Consumer Demand and Product Forms? The Internet has changed consumer demand and product forms in four aspects.
1 Cross-industry integration can change almost all industries and product forms. The supporting technology of the Internet is microelectronics (IT technology). Microelectronics technology can cross industries and almost change all industries, creating unprecedented products. Now Internet companies can easily enter traditional industries, such as Tesla and Google entering the automotive industry.
2 The Internet has changed lifestyles. Changes in lifestyle can derive new demands and product forms. This is similar to how machines and electricity gave birth to industrial civilization, which, as a lifestyle, derived many demands and product forms different from agricultural civilization.
3 As an information tool, the Internet is a tool for understanding and gaining insight into consumer demand. For example, in the past, no matter how much emphasis was placed on discovering consumer demand, whether through consumer research or consumer insight, it was difficult to truly achieve. The current demand chain logic allows geeks in society to deeply participate in the R&D stage using the Internet as a link, thereby truly achieving consumer orientation.
4 As a marketing communication tool, the Internet requires that the product itself has self-communicating attributes. In Internet communication, the product itself is the source of communication, so the requirements for the product are naturally higher. Products that spread quickly online must have their own characteristics. If there are no characteristics, even if big names spread the word and heavy investment is made, it may not be effective.
As for the self-proclaimed "ultimate products" and Internet thinking, they are just business language. Merchants can say it, but readers should not take it seriously.
Of course, under the current specific circumstances, the Internet is also changing manufacturers' product systems. In the past, because the pricing systems for KA and general trade were different, manufacturers often had two product systems. Now with e-commerce, there may be a third product system.
Has the Internet Changed the Pricing System? My answer is "definitely yes," and it has formed a new cost equilibrium.
As long as the Internet can change the cost system, it can change the pricing system. As for the pricing changes brought about by product structure adjustments, they are not directly related to the Internet itself, but rather the e-commerce era coinciding with the "mainstream shift."
According to the "Retail Wheel Hypothesis," the rise of any large new commercial format starts from the "three lows" (low status, low gross margin, low price) and has cost advantages, such as Walmart, which brings about a cost rebalancing in commerce.
E-commerce in China started with low prices, attracting "loser" consumers. However, e-commerce has now also become "three highs" (high status, high gross margin, high price), and it has become normal for e-commerce prices to be higher than offline. E-commerce has completed the cost rebalancing process, with offline costs decreasing and e-commerce costs increasing, approaching equilibrium.
However, the cost equilibrium process for e-commerce is not over. The popularization of C-end e-commerce has formed a round of cost equilibrium, while B-end e-commerce is just beginning. The biggest feature of B-end is that operating costs will decrease, forming a new cost equilibrium.
Has the Internet Changed the Channel System? The Internet has diversified the channel system. This is beyond doubt. E-commerce is a channel, which is somewhat correct.
The e-commerce channel theory once had a market and was persuasive. After Xiaomi's success, some said traditional channels were no longer needed. Since Xiaomi fell out of the top five in 2016, there has been reflection on the limitations of online channels.
The Internet has definitely changed the channel system. The future channel system will definitely be a symbiosis of online and offline. At a certain stage, online may be more prominent, but a single channel system is crippled.
In the past, traditional enterprises roughly had two major channels: one was general trade; the other was KA. The Internet has changed the channel system.
A channel system has four major participants: manufacturer (F), distributor (B), retailer (R), and consumer (C). These four participants were originally linked vertically, although there were also cross-level links, such as direct sales, but they only accounted for a very small share.
With the emergence of C-end e-commerce, all links can connect with consumers (C), so F2C and B2C appeared, such as JD.com, Tmall, and the hotel industry's Jiudianxianwang; R2C also appeared, such as community e-commerce; and C2C also appeared. F2C, B2C, R2C, C2C, the channel links have definitely increased.
B-end e-commerce emerged, with F2B, such as Zhaoshang.com; F2R, such as JD New Channel and Alibaba 1688; and B2R, such as Yantai Wanshanggou, Yijigou, Yijiupi, and Piduoduo, almost every industry has them.
In summary, manufacturers have increased from the original two channels (general trade, KA) to three e-commerce channels (F2B, F2R, F2C) and one WeChat business channel. Distributors have increased from the original two channels (direct supply to terminals, direct supply to second-tier wholesalers) to two e-commerce channels (B2C, B2R) and one WeChat business channel.
The manufacturer's links have increased from two to six. With more channels, total sales may not increase, and sales per channel will be diluted. Distributors have increased from two major channels to five major channels, and can use e-commerce to operate across regions, so total sales may increase.
The Biggest Challenge the Internet Brings to Marketing Is Communication The Internet is first a communication tool, then a business tool. Business originates from information asymmetry. However, many enterprises seem to have suddenly lost the ability to communicate in the Internet era.
Communication brings transaction traffic. If you only buy traffic in e-commerce, it is hard to make money, so you must learn to bring your own traffic.
Where does traffic come from? New traffic comes from communication.
In the past, communication was controllable because the media was controllable, and spending money could basically solve the problem. Now, the Internet itself is difficult to control, and spending money cannot control it either.
Whether in manufacturing or commerce, the basic pattern is determined by the communication pattern. Business originates from information asymmetry, and the communication pattern determines the business pattern.
Traditional media (except for the mouthpiece) is basically an oligopoly. Oligopoly determines that the communication threshold is high and capital investment is large, such as CCTV. Once the industry pattern is formed, it is difficult to subvert. Therefore, most industries are now oligopolistic. The big get bigger, unless the industry leader makes mistakes.
After the Internet appeared, there was a so-called decentralization phenomenon. The rise of the underdog is because after decentralization, the threshold for counterattack was lowered. But the Internet also has a greater centralization phenomenon. BAT is a super center, or Internet platform.
In summary, the Internet has changed communication in three ways:
First "Hard advertising" has basically disappeared. The monopoly of traditional media determined that even hard advertising was effective, so there was the advertising phenomenon of "the worst creativity also has the best effect." Traditional communication relied on continuous communication and strong investment to form influence, which is hard to replicate on the Internet.
Second Internet traffic is more concentrated where it is concentrated, and more dispersed where it is dispersed. Overall, traffic is concentrated on BAT, forming larger Internet business platforms. No matter how large an enterprise is, it is very small in front of the platform. The decentralization of the Internet and the fragmentation of traffic have created obstacles for marketing communication. Fragmented communication needs to be "ignited" to become an Internet celebrity and trigger a trend, but it is still difficult to find the rules.
Third Internet data provides convenience for targeted marketing. Although the Internet provides communication convenience, marketing communication cannot be like shooting a shotgun at random. The links and transactions on the Internet eventually settle into data, which provides a basis for targeted communication. Therefore, Internet companies now like to say they are data companies, and some say we have entered the DT era.
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