“The traditional model we all grew up with is obsolete”.
My mobile phone finally gave up last week. I’ve had it for ages. For such a ‘simple’ lifestyle device, the options are many. Sim-only or contract? 3G or 4G? Android or Apple? Direct through the network provider or via a mobile phone retailer (or even my supermarket)? However the latter point got me thinking about what some of the likely impacts on the distribution channel for enterprises might be in an IoT world.
In the digital world ‘disruption’ is one of the latest buzzwords. But does this really apply to the current ‘place’ part of the traditional marketing model where there is a simple choice. You could either choose indirect distribution (via intermediaries), direct (to customers) or a combination of the 2. It’s a model that worked pretty well.
In early 1997, Dell created an internal sales and marketing group dedicated to serving the home market and introduced a product line designed especially for individual users. Fuelled by the Internet, domestic customers could configure and buy PCs to meet their individual requirements. This certainly changed the market dynamics and more importantly customer expectations. Why pay for features you don’t need when others you do aren’t included? At the time this was pitched to tech-savvy buyers rather than mass market…but it did provide a seismic shift in the home PC market.
So roll on almost 30 years…and enterprises face a similar scenario.
My colleague, Danny Wootton wrote a really interesting blog about digital product personalisation – and how long before it became the norm. Carrying that through into the discussion on distribution channels, it’s clear that there are likely to be far reaching implications. Indeed it could be argued that IoT has the potential to make intermediaries obsolete…unless they can establish a way of adding value, above and beyond what the product provider offers as part of their service, or that the customer can do for themselves (or even a combination of both).
With increasingly sophisticated Generation Y customers, with a clear understanding of what they want, companies able to provide an exceptional, flexible and agile product or service configuration platform can by-pass their intermediaries, by allowing the customer to do for themselves, what the intermediary may have done for them. But there’s more. Advanced and predictive analytics can directly include the buyer in every stage of the production process at the touch of a button – so you can not only see how the product is coming together…but where the components are in the supply chain (and even change them if you find something better) – to truly customise your product or service. The ubiquity of sensors is increasing all the time. Cost has dropped significantly making them much more viable for lower value ‘devices’ which means individual components can be IoT enabled. Overlaying a platform that allows the sensor data to be aggregated and used, empowers the business…but can also provide a unique view to the customer at every stage of the production cycle – which from a customer engagement and service perspective could render the middleman completely obsolete.
When you buy a new car, it’s through a dealership – but what value do they really add? You can get information on the car, test drive a similar car, configure the specs, get updates on build progress and delivery, and after-service elements such as service and MOT reminders. One could argue that almost all of these could be provided by the car manufacturer themselves (or even by the diagnostics and sensors in the car) – and who knows in the future of driverless cars, which are due to appear in 2017 on the UK roads…the car could even come to you to take out for a test drive.
So what role could the intermediary play in an IoT-enabled world to provide that value-add (and improve their chances of surviving)? Put simply, specialisation on core elements of the supply chain, and the expertise to be better than the manufacturer or self-service customer on delivering them is key. And where the intermediary brand is weaker than the manufacturer…marketing becomes increasingly important for those who want to continue to exist.
If you’re interested in reading more on IoT, marketing and my experiences, take a look at my previous blog posts.
If you’re interested in finding out more about IoT, download a free copy of our IoT for Dummies Guide.