3 ways IoT will change Marketing Management

This is the next big move. Ready to jump in ?

Internet of Things (IoT) is the next big move.

Starting from this year, there are more connected objects on face of the earth than people. In 2016, there were 6.4 billion connected objects in circulation through the world. By 2020, this figure will triple to reach 20.5 billion[1].

Beyond IT and communications notoriously known as the first industries impacted by this revolution, IoT is deeply transforming a large number of other sectors. For example, in the automobile industry, Apple CarPlay is allowing the smartphones to communicate with cars. In the aviation industry, Rolls Royce is connecting the plane’s motors. The company has developed EHM (Engine Health Management), a program of maintenance that tracks thousands of engines operating worldwide, using onboard sensors and live satellite feeds. In the bank industry, the range of remote services is rapidly growing and we now have pure players in the sector. In the home equipment industry, there is already a large choice of connected devices such as Alexa, the Amazon’s personal assistant that can order an Uber, the iRobot vacuum that cleans up your apartment when you’re out, or the connected oven of GE Appliances that is controllable through a smartphone’s app.

These new technological outlooks carry an infinite number of possibilities in consumer knowledge, innovation development, and value creation. With them, also come many transformations in the “traditional” corporate organizations. In that context, this piece intends to focus on the foremost trends that will affect marketing management in a near future.

Here are the 3 trends that will redefine the practice of marketing in an ever-connected world.

1-The industry of packaged goods will no longer be a reference in marketing excellence.

Since the 60’s the industry of packaged goods has gained its reputation as a domain of excellence in marketing. The soap manufacturers (P&G, Unilever…) have introduced many best practices and codes that remain available till today. In particular, we owe them some media purchase techniques (in reference to the “soap operas”), the codes of ad efficiency (the before-after effect), and the present organization of marketing departments (in reference to Brand Management System and Category management model invented by P&G).

For years, two main advantages have driven the excellence in that industry. It had the higher penetration rate, coupled with one of the greatest set of market metrics. Thanks to these two factors, this industry has been able to develop one of the finest consumer knowledge system ever. Based on that, they have been able to create innovative approaches that have become best practices in market listening, product development, pricing methods, sales promotion, and communication. Today, this notability is threatened.

First, in terms of penetration rate, the connected objects are going to leapfrog the packaged goods.

There are numerous parts on the globe already covered by the mobile network that packaged goods will still take years to reach. In example, 1 billion Africans out the 1.2 live with less than 6$ a day[2]. They can’t afford packaged goods, however, there is 850 millions phones circulating on the continent. People who even haven’t access to electricity now own phones. The industry of connected objects is having a larger consumer base than any other sector[3]. I forecast that prior to 2025, the leadership of packaged goods will be definitively lost in every part of the world to the benefit of the industry of connected things.

Second, in terms of market’s metrics, the industry of connected objects is also going to leapfrog the sector of packaged goods.

In addition of having sales and market data, connected objects enable to collect data from the usage of the products. That makes a great difference. Henceforth, the visibility of the manufacturers doesn’t end once the product put into the shopper’s basket. It goes further, and reaches the most valuable moment of the consumer journey: the consumption time. Being able to track this part enlightens manufacturers on the way people truly interact with their products. Thanks to that, the industry of connected objects offers a better range of market metrics than the sector of packaged goods.

In short, nowadays and in the coming years, the industry of packaged goods will own no more the largest consumer base and the most efficient market’s metrics system. The industry of connected objects will. Somehow, Apple is becoming the new P&G.

2- Marketing will be replaced by Data-marketing

Even though data is already used in marketing decisions, it’s still infinitely underused comparatively to the coming years, thanks to three main reasons.

First of all, there will be a huge amount of data generated by the connected objects. Second, as the amount of data collected will increase over time, that data will become more and more qualified to generate smart insights. Third, the progresses in Artificial Intelligence, and computer’s power will provide to companies the appropriate tools to crunch the huge amounts of data available. As consequence of these, in the coming years data will not only going to be used to back marketing decisions. That will become so important and so present that it will actually make these decisions.

This revolution is going to have two main impacts on marketing departments.

First, the profile of the marketers will change.

Henceforth they will be data-marketers. Thanks to the key role of data, the candidates will be required to have a business profile with a background in engineering, or an engineer profile with a background in business. In the future, marketing management, and data management are going to be the two faces of a same coin. It’s a deep change versus what is presently observed. In some tech companies, the transformation has already started. I do think that over time, it will progressively gain the organizations in various industries.

Second, there will be some significant changes in the design of the marketing departments.

In order to take into account the changes induced by the connected things and the new IT competences that will join the teams, marketers will need to entirely rethink their department. They will need to build new bridges between the commercial and the technical worlds, to integrate the new process of category and consumer listening through the new tools at their disposal, and to invent the new go-to-market policies and techniques. To meet these challenges, I think the marketing departments in the future will look like the following.

We are going to have two main poles: “Intelligence” and “Experience”.

The missions of the “Intelligence” pole will be:

- To define in coordination with the second pole what data have to be tracked on the products

  • To define under what format and where the data should be collected and stocked
  • To secure the data and define the crunching tools
  • To define the KPI’s that will be tracked permanently on the products
  • To crunch the data collected and build a consumer knowledge system
  • To identify the smart insights to boost the development, the promotion, the sales, the usages, and the after-sales services on the products.

The mission of the “Experience” pole will be:

  • To develop the products in collaboration with the first pole based on the insights generated
  • To design rich, unique and valuable experiences for users
  • To price, distribute and promote the products in a more efficient way
  • To continuously improve the products through the remote updates
  • to manage the after-sales services
  • To secure the data stocked in the devices.

The connected things will turn marketing into data-marketing. As I’m writing these lines, the transformation have already started is the most advanced companies. With the new opportunities in the digital era also comes a set of new challenges. The successful companies will be the ones that distinguish themselves by their capacity to integrate new talents and to shape new forms of organization.

3-There will be a whole department dedicated to the watch.

Thanks to the IoT, many “traditional” companies will become tech companies.

One of the main characteristics of the tech industry is its dynamism. Things change and evolve at an incredible speed. There are newcomers, buyouts, new alliances, new products and services every day, thanks to the strong compression of the innovation cycles, and globalization. Regarding this, the companies that want to stay in the race have no choice but to follow the pace. This challenge is important regarding that many giant tech companies collapsed, or are presently facing big issues due to their inertia towards the deep transformations going in their industries and the society. Kodak, Blackberry, Yahoo, Lucent, and IBM illustrate this phenomenon very well. These companies remind us how critical the watch is. It is not even a competition matter anymore, but a life or death one. Being aware of the last technological, strategic, and marketing moves in an industry is key for the survival of a company.

In consequence, in a near future, companies will need to set a whole department dedicated to the watch. That department could be composed of specialists in marketing, IT, and strategy, and will interact with the departments of marketing, IT, R&D and the general management. For the sake of efficiency, the watch should cover three key areas. I called it the 3D watch.

The first dimension of the watch is the market.

It will consist in observing and analyzing the products, services, technologies, offers, and the communications created by the direct competitors, the substitutes, and the potential newcomers. It will allow the company to have a global view on its market and anticipate any meaningful threat, or trend to come.

The second dimension of the watch is the technology.

The goal here will be to keep the company posted on the new technologies, services, or tools that could potentially reshape the industry and affect the company. In many modern domains such as artificial intelligence, predictive algorithms, or physical sensors for example, there is a large choice of solutions that can help companies to solve particular issues or explore new possibilities. And every day new solutions are developped to these ends. The final purpose of this watch is to maintain the company at a step ahead in terms of technology and to guide the R&D teams.

The third dimension of the watch covers the strategy.

In tech industries, there are a lot of acquisitions, merges, transfers and alliances between companies. Decrypting these moves could help the companies to identify the next trends on their market, anticipate the next moves of their competitors, or foresee the perspectives in their category. The other important point here will be to identify the improvements and the moves in terms of business models.

Nowadays, the prosperity of the companies directly depends on their capacity to keep reinventing themselves. Dedicating a whole department to the watch will empower the enterprises in order to meet their coming challenges.

[1] http://www.gartner.com/newsroom/id/3598917

[2] http://www.economist.com/news/middle-east-and-africa/21676774-africans-are-mainly-rich-or-poor-not-middle-class-should-worry

[3] http://edition.cnn.com/2016/01/19/africa/africa-afrobarometer-infrastructure-report/index.html