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Thursday, September 19, 2019

Net Worth: Shaping Markets When Customers Make the Rules
by John Hagel III and Marc Singer, Harvard Business School Press, 1999

"As the reader will discover, we believe that infomediaries have the potential to become quite large and attractive but that few companies will in the end be able to build such businesses." (page xi)


"Ultimately, information about people may be the most important information collected on the Internet." (xii)


"In the case of infomediaries, we are hard pressed to point to any examples of companies today that can provide anything more than distant analogies to the role we envision the infomediary playing. Nevertheless, we believe that the underlying business dynamics support and in fact demand the emergence of this kind of business." (page xiii)


"Each day, marketers expose Americans to some 12 billion display ads, 3 million radio ads, and more than 300,000 television commercials. The unsolicited electronic junk mail known as 'spam' now constitutes some 10 percent of all worldwide e-mail. The average U.S. consumer receives roughly 1 million marketing messages a year across all media, or about 3,000 messages per day." (page 3)


"Beneath the current antagonism, marketers and consumers share a set of very real common needs - consumers need the goods and services vendors sell, and vendors need consumers to buy these goods and services. But the fact that it is economical for companies to send out junk mail and catalogs with the expectation of a 2 percent response rate means that 98 percent of what consumers receive is irrelevant to their needs and interests. Inundated with so many irrelevant messages, consumers feel besieged by marketers. Marketers are beginning to wear out their welcome with the people they need the most." (page 7)


"The advent of the Internet has released an explosion of choices for the consumer by removing the constraint that used to hold back the proliferation of products - limited retail shelf space. With the Internet, shelf space constraints disappear. By logging on to the Internet, consumers can access all products offered for sale within a particular category." (page 11)

"As the range of potential choices expands, the time and effort required to sort through them also expands. Because different vendors offer these different products, difficulty comparing and evaluating products increases. Vendors, in an understandable effort to differentiate their offerings, seek to design and represent their products in a slightly different way, making straightforward comparisons virtually impossible. In the case of consumer electronics, for example, vendors will often take the same model of VCR or 'boom box' and change the model number, color, and perhaps a marginal feature or two to allow major retailers to differentiate their offerings from those of other retailers."


"Behind the continuing invasion of consumer privacy and the constant expansion of product choices lurks an unrecognized truth about consumers and marketers: their wants and needs are misaligned. Marketers gather customer information and create loyalty programs to build deeper and more lasting 'relationships' with customers, but the customer's demand for selection and comparison is sharply at odds with a deep or exclusive relationship with any one vendor." (page 12)


"The Limitations of relationship marketing…" (page 13)

"Relationship marketing" - also known as "one-to-one marketing" - first came into fashion in part because companies were (and still are) limited in the type of information they can obtain about people who aren't already their customers."

"Because companies aren't as well positioned to learn about people who are not their customers, relationship marketing focuses companies largely on collecting additional information about the customers they do have."


"…and permission marketing" (page 14)

"Another approach to marketing is known as 'permission marketing.' Permission marketing explicitly acknowledges the importance of obtaining permission from customers before blitzing them with advertising messages and criticizes the 'interruption' marketing programs in which advertisements are inserted in media of delivered in unsolicited ways, such as a phone call at dinner. Advocates of permission marketing instead propose contests and sweepstakes in which customers will participate in exchange for agreeing to receive certain marketing messages."

"Permission marketing begins to address the challenge of finding and reaching customers in a less intrusive way than traditional marketing approaches…But permission marketing fails to address the challenges marketers face in accessing information about customers who purchase from competing vendors."


"Thus we have a widening gulf between marketers and consumers. Not long ago, consumer regularly responded to marketing surveys. Today most will complete surveys only if they receive rewards in cash or in kind." (page 15)

"The Internet only makes the dilemma more acute. As the Internet lowers barriers to market entry and the number of product vendors expands, marketers will confront growing competition for customers' attention. Most will increase their use of advertising, direct mail, telemarketing, and spam. Numbed consumers will pay less and less attention, prompting more advertising in response."


"In order for consumers to strike the best bargain with vendors, they'll need a trusted third party - a kind of personal agent, information intermediary, or infomediary - to aggregate their information with that of other consumers and to use the combined market power to negotiate with vendors on their behalf." (page 19)