Consumer marketing replicability: concept and strategies.

Author:Fili, Andreas
  1. INTRODUCTION

    In the current paper, it is argued that the global markets of today are subject to a deep and important transition in terms of consumer perceptions of goods offered by firms. Ten years ago, even with global trade, consumers were constrained to local markets. Through the advent of broadband Internet, consumers are suddenly no longer isolated in their respective markets, but information on other markets and the offers on those markets are easily accessed. This has shifted the power from producers to consumers (Malone et al., 1987). As information on alternative offers becomes available at low cost, real price differences between different markets will decrease, in line with the law of one price (cf. Persson, 2008) Traditionally, each difference in price in something perceived as the same good by consumers will enable an arbitrageur, or an entrepreneur in the Schumpeterian sense--someone who exploits a market opportunity--to make profits from the difference. Today, the consumer himself can perform that function, by shopping directly from other markets via the Internet (cf. Hoffman & Novak, 1997). Furthermore, some goods are easily copied due to these technological advances (Johnson, 1985). It is the purpose of the present paper to explore the issue of consumer perceptions of goods in terms of how easily they are substituted with copies. The issue of customers switching to competitors' goods has been investigated extensively from a number of perspectives, in terms of differentiation and substitution (Porter, 1985), copiability (Johnson, 1985), or imitability (Barney, 1991). In this paper, we will limit our argument to only deal with consumers (individuals) and not business to business (industrial) marketing. Furthermore, we wish to approach the subject from a broader perspective. Therefore, instead of any terminology inherent to a single one of these scientific traditions, we will use the term replicability. The present paper is a structured analysis of replicability and some strategies for how firms and industries could adapt to this new context. First, theoretical points of departure are presented. This is followed by an in-depth description of the concept of replicability. In order to illustrate the concept, the movie industry is presented in terms of replicability. The paper ends with strategies for handling replicability and some concluding remarks.

  2. THEORETICAL POINTS OF DEPARTURE

    There have been numerous papers written on the advent of the Internet, and the copyright implications arising from the new context. However, many of these are written from very different practical and theoretical viewpoints, such as economics (Johnson, 1985; Johnson & Waldman, 2005), law (Samuelson, 2003) and Internet technology/software (Piatek, Kohno & Krishnamurthy, 2008; Peha, 2008). We will draw on theory and insights from many different fields, and consequently, the theoretical overview will paint a broad background to our argument.

    According to the law of one price and theories on arbitrage (cf Ross, 1976), firms acting on the same market, that is, offering the same goods to the same consumers, are forced to compete in terms of price. This will force these firms to follow the cost-leadership strategy or to differentiate their offer (Porter, 1985). Theoretically, this means that the firm has entered or created a new market (since the firm is no longer offering the same good as competitors). In practice, it means that the firm changes its offer and can charge higher prices, but continues to cater to the needs of existing clients. One way of differentiating your offer is described by Kotler and Armstrong (1996) in the well-known 4P framework. By adapting your marketing mix (price, product, promotion and place) to your consumers, you will be able to cater to each segment. Price variables include allowances and deals, distribution and retailer mark-ups, and the discount structure. Product variables include quality, models and sizes, packaging, the different brands you market and the service you provide. Promotion variables include advertising, sales promotion, personal selling and publicity. Finally, place variables include channels of distribution, outlet location, sales territories, and your system for warehousing. (Kotler & Armstrong, 1996)

    This view has been criticized as unidirectional and treating the interaction with the consumer as a number of single transactions, rather than as a relationship that evolves over time (Gronroos, 1997). As a reaction to the transactional view of the 4P and others, marketing stressing the importance of viewing interaction between firms and their consumers as part of a longer relationship has emerged (Morgan & Hunt, 1994) In this perspective, firms need to define their relationships to their consumers and systematically build trustful relationships, something which will increase consumer loyalty and lead to greater marketing productivity (Sheth & Parvatiyar, 1995).

    However, it has been noted that some goods are particularly vulnerable to the advent of high-bandwidth Internet (Biddle et al., 2002; Byers et al., 2004). These goods are easily copied by consumers, which, make them hard to get paid for. Specifically, it is the experience of the consumer that must be in focus (Underhill, 1999). We have moved beyond a focus on objective...

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