Outlook 2005: Technology’s Impact on Marketing

Originally Published: October 2004

As 2004 begins to wind down, we look back on the year as one of improvement, with an overall economic recovery and increased spending in many sectors, including technology, marketing and advertising. As we look forward to 2005, the outlook remains positive. The overall economy should continue its recovery – barring any unforeseen circumstances, such as an elevation in global unrest. The technology sector should also continue its upward trend, as new technology continues to drastically change the way we do business. The four technologies that will have the greatest impact on marketing in 2005 include the proliferation of RFID, data mining, internet-based tools and wireless technologies.

The new technology that is poised to explode onto the scene and promises the greatest commercial opportunity in 2005 is RFID. Radio Frequency Identification will give users the ability to accurately track their goods, for example, from the point of entry into the distribution system to the pre-determined end point, which is typically the delivery of the product to the end user. This extensive tracking capability allows businesses to efficiently and accurately manage and control inventory, ensuring that products are available when and where customers require them. Businesses can follow the product as it passes through logistical channels, from manufacturing through shipping and warehousing and onto store shelves. RFID also allows businesses to track shelf life and even identify where and when a product is purchased.

Although controversial at this point, RFID could also be utilized to very accurately and narrowly segment and target markets. By extending the tracking system, marketers could easily identify who purchased the product and link demographic data to the buyer to establish a profile that could then be applied to other potential buyers or market segments. RFID could be extended even further to identify where and when a product is consumed. This information could be utilized by companies to trigger end user contact to offer promotional incentives to re-purchase. Companies would be able to target customers on a truly individual basis and make product and distribution adjustments on the fly as they learn how and where their products are being purchased and consumed. The ability to use this information to market products more efficiently is commendable. The capability to significantly increase the “big brother is watching” environment could prove to be worrisome and will surely raise new privatization issues that will definitely be addressed in the near term. Companies who quickly implement RFID technology will be at a distinct advantage over laggard competitors initially but soon RFID will be required of most producers. RFID will significantly enhance inventory management and has the potential to become the bedrock of marketing intelligence.

Data mining has been around for many years, but advances in technology have allowed marketers to more effectively drill down through huge amounts of data. The resultant information has given marketers the ability to target customers and prospects very effectively. We should see even greater advances in 2005, with mining software that can more quickly and more accurately provide the information marketers seek. Greater volumes of data will be searched and sorted more quickly than ever before and more effective modeling will render information that was previously missed. Advancements in technology will lead to more effective data mining capabilities and more highly targeted marketing initiatives with the resultant efficiencies providing revenue increases and cost savings for businesses.

The Internet is just a little over a decade old, but the majority of companies has only begun to take full advantage of its power by utilizing Internet-based tools. To stay competitive in 2005, companies will increasingly turn to Internet-based tools to broadcast individualized company, product and service information to prospects and customers. Consumers as well as professional buyers are turning to the Internet consistently and frequently for information gathering – information that ultimately influences purchase decisions. The Internet now competes side by side with “traditional” information sources such as television, radio, newspapers, business and trade publications and consumer magazines. The credibility of Internet-based information is increasing, and along with it, people increasingly surf the Internet for product and service information, reviews and testimonials regarding other users’ experiences with the product or service under consideration.

In business-to-business marketing, the Internet is already one of the primary sources of information regarding new products and suppliers, and this trend will continue. This trend is changing the face of the business-to-business marketplace, as the power is now in the hands of buyers as they have quick, easy access to a plethora of information and alternatives. In order to be successful, companies must quickly, accurately and effectively communicate product and service benefits and points of differentiation from competitive offerings. In addition, business-to-business companies will be required to further embrace technology advancements in data mining and intelligence gathering to determine where their customers are located, monitor criteria for making the buying decision, track and interpret value proposition trend changes and determine how to most effectively reach the greatest number of profitable customers at the lowest possible cost.

Just a few years ago, mass media was effective at reaching prospects and converting them into customers, as prospects sought out the limited product choices they heard about in mass media. Now, consumers are bombarded by commercial messages offering product alternatives, are becoming better informed and are more demanding for good reasons. Why should they “waste” their time or possibly increase their perceived risk by giving your company or product a chance? As such, new media such as online marketing, email, events, product placements, online and console-based games and facilitated word-of-mouth advertising are some of the new methods of marketing…and are quickly becoming effective tools for breaking through the clutter. Technology is creating the means to quickly and accurately target the best prospects and communicate with them on their terms within their chosen time frames. Businesses must embrace it or be passed by.

Wireless technology has also been around a while, but has yet to be fully exploited. Companies will begin to take greater advantage of wireless technology in the coming year. Wireless advertising (including commercial instant messaging and on-phone advertising), wireless phone gaming and wi-fi networking are three areas that will show growth in 2005. These three areas are on the verge of becoming truly mainstream marketing tools, as companies are beginning to demonstrate the successful implementation of these types of marketing programs.

The coming year will be one of continued change, but in the Information Age, change has become the norm. The year 2005 will see growth in many areas of technology and some of the most exciting applications will significantly benefit the marketing industry. Businesses will be able to target customers and prospects more directly, nearly on a per-person basis. Identification, tracking and connectivity will be carried out more accurately, efficiently and very quickly. The speed of business will continue to increase at dizzying speeds, and technology will be one of the guiding forces driving change. 2005 will be an exciting year. I hope you are prepared for the ride.