Digital Context and the Changing Direction of Business Models

Created in the 50s, developed in the 60s and consolidated in the 80s, the concept of marketing mix was useful for understanding how the product, its price, place and promotion (the 4 Ps) influenced buying decisions. With the evolution towards an increasingly competitive market, there was a change in orientation from product to consumer, from price to cost, from place to convenience, and, finally, from promotion to communication (the 4 Cs), generating significant changes in business models. As time went by, more "Ps" and "Cs" were added: people, processes, presentation, productivity and content, among others, while interesting product proposals with a focus not only on the product, but also consumers and their needs, such as the iPod or iPad, brought to mind the symbiosis between the P's and the C's.

Today, technological advances are redefining the marketing mix, affecting not only the product proposal, but also product use and compatibility, in a nutshell, the overall experience resulting from its acquisition.

We went from seeking palpable shopping experiences, for example, going to a Walmart store that offers a wide range of products, affordable prices, strategic locations and customer service, to models such as Amazon, where this entire experience has been reconfigured to such an extent that the meaning of convenience has been redefined. It now includes the possibility of avoiding a physical space while still "virtually" identifying product characteristics, of enhancing the variety of products to which you have instant access, or of making faster, more efficient comparisons, among other advantages.

Another interesting proposal is the Amazon Go model, which scales the physical store with the support of aspects such as automated processes and the use of algorithms and sensors to provide convenience through speedier, more efficient stock management, thereby generating a clearly different consumer experience.

Of course, a key principle of a strategically successful model lies, among many other things, in the capacity to align market coverage expansion with the response to the so-called satisfaction of the conscious or unconscious wants and needs existing in the market

We must also mention Starbucks, a company that was launched in the 70s offering a mix of quality coffee and a propitious setting,  with a model based on the concept of service experience through flexible seating and product personalization, among others. Nowadays, Starbucks has enriched its business model with digital processes and tools that support not only its operations, in terms of product, but also its promotional efforts and customer experience.

However, the concept of product and service has now evolved considerably to the extent that consumers have a greater expectation of being recognized, and also of their tastes and preferences being known, not only through records of past activity, but also what they are about to need again, consciously or unconsciously. This provides the opportunity to use technologies related to facial recognition and artificial intelligence, as well as precise descriptive, prescriptive and predictive data analysis, etc.

Hearing about the impact of the Internet of Things on diverse business models is becoming increasingly common. According to McKinsey, its use in business grew from 13% in 2014 to 25% to date, since more and more devices will be connected under the premise of Industry 4.0, connected cars and, of course, the trend towards smart cities and homes.

Let’s consider the current implication of being able to go shopping, with the benefit of customer service and support processes based on facial recognition, artificial intelligence, etc. Undoubtedly, every single sector is caught up in the whirlwind of changes resulting from all of these technologies and their tools, to go beyond what consumer markets can currently even imagine.

The traditional concept of a world that moved between the "Ps" and the "Cs" is a thing of the past, since our idea of product has developed beyond its characteristics and use. Matters such as the compatibility of products with other products and/or services is highly valued in terms of the communication that could occur between them, for example. Forms of product promotion have also migrated, from stimuli to communication, from bidirectional to collective and often persuasive and/or dissuasive in the face of an environment and context accustomed to evaluating, reviewing and sharing.

The convenience of having access to an enormous wealth of information on products or services from a variety of sources, or the means to do so, has changed the use of place. For example, a visual or physical evaluation of a product or service can now be carried out through augmented reality. Furthermore, price is conceptualized and dimensioned from a more holistic perspective, with the possibility of not only being able to compare, but also assess the value of the purchase, in comparative or usage charts, for example, thereby defining the opportunity, acquisition, attribution cost, etc. Similarly, operations and strategy, within the C2C, C2B, B2C and B2B channels, have been highly influenced by each and every one of the aforementioned components, which leads us to rethink, over and over again, the relevance of increasingly flexible and adaptable business models and cultures. In short, circumstances and digital context invite us to reconsider the definition of product and consumer, in all their variations and components, within the framework of an increasingly dynamic market.