Market Segmentation: How to Do It and How to Profit from It, Revised and updated 4th Edition

Chapter 12

Predicting channel transformation

Summary

We live in a time of rapid innovation. Companies have had to learn, and some still need to learn, how to move beyond the continuous, minor innovations at which they are expert towards the step-change innovations now demanded by the business environment.

While product innovation continues apace, with the internet giving many opportunities for providing digitizable products and surrounding services remotely, we believe that a dominant business theme of the next 10 years, as it has been over the last 10 years, will be innovation in the route to market – the channels by which the customer is communicated with the product delivered. New technologies are forecast to revolutionize both the ‘new age’ channels, such as Web, e-mail, text and mobile voice, and the ‘traditional’ channels of face-to-face and landline voice. Increasing bandwidth, common messaging standards and enhanced network capability for the mobile customer are already contributing to this. Companies such as Direct Line, First Direct, easyJet, eBay, Amazon and IBM all compete by exploiting IT-enabled remote channels to add value, reduce costs, or both.

A reminder: Because there is not a general consensus on the distinction between customers and consumers, this book subsumes both under the title of ‘customer’.

How organizations should respond to the opportunities and threats of these IT-enabled channels and use them to build profitable customer relationships, is the subject ...