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OPINION14 February 2018

Why brands must market to machines or die

Innovations Media Opinion Retail Technology

When the tech giants start helping consumers with their purchases, they will become the gatekeepers for brands – so brands now need to think about influencing the algorithms, says Professor Steven Van Belleghem.

Today, if a businessperson needs to book a plane ticket to Barcelona, they can arrange it themselves in a few different ways:

  • They go directly to the website of an airline and book the flight on this site. In this case, the customer deliberately chooses to fly with their airline of preference. This preference can be based on past experience, force of habit, the airline’s loyalty scheme, etc. In other words, the airline’s brand is the key determinant.
  •  The customer goes to an umbrella website, where the flights of different airlines are on offer. In this case, the customer knows where they want to go and they aren't too concerned about which airline flies them there. In this case, the best price, best time, best connection, etc. will be the factors for their final decision. In other words, choice is the key determinant.
  • The customer makes use of a travel agency to find the right flight. In this case, the customer relies on the expertise of the agency to find them the best deal. The advice of the travel agent is the key determinant.

Each of these three purchasing models requires a degree of effort on the part of the customer. They need to surf to a website, make a choice, contact a travel agent, etc. But if our businessperson has a virtual personal assistant in their life, things would be very different. They could just ask Google to buy a ticket, and that would be that. This requires much less effort than any of the three scenarios above.

From the moment a virtual assistant is given responsibility for buying a plane ticket for a customer, there is a fundamental change in the hierarchy between brands. The customer will now have most confidence in the brand marketing the virtual assistant (Google, Apple, Amazon, Microsoft), rather than the airline or travel agency brand. The greater the trust a consumer places in the brand of the technology platform, the less relevant the power of other brands becomes. The reasoning is: “If Amazon says that brand X is best for me, then it must be so”.

Because of their outstanding performance and customer service, in recent years the major technology platforms have all built up a high degree of trust in the market. If something goes wrong with Amazon, there is never any discussion. The problem is solved quickly and correctly, in a manner that asks as little effort as possible from the customer. Similarly, Google is getting better every day, and the iPhone is arguably the most successful product in history. Once the tech giants start helping consumers with their daily purchases – whether it is an airline ticket or a tin of beans – the technology platforms will become the gatekeepers for all other brands.

Of course, if someone is a big fan of a particular airline and instructs Google to book a flight with that company, the virtual assistant will do it efficiently. However, in all other cases the customer simply wants to get from point A to point B at the right time and for the best price. This type of ‘non-brand-loyal’ consumer leaves the choice to the technology platform.

This evolution is first and foremost a threat for sectors that sell functional products; products where the actual brand is not so important for the consumer. This includes sectors like insurance, telecom providers, energy, business travel, etc. In these sectors, billions have been spent over the years on marketing, in the hope that creative communication would make the difference. And it often did – in the past. But in the world of virtual assistants this strategy will be less successful.

The virtual assistant only looks at objective value and makes a suggestion to the consumer on this basis. When this happens, perceived value will fall and real value will rise. The impact of marketing communication will decrease and the impact of the algorithms installed in the personal virtual assistants will increase.

Professor Steven Van Belleghem is an author on customer focus in the digital world

1 Comment

2 years ago

Very scary concept but as #AI exponentially becomes part of our lives this is somehow quite believeable...

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