and Agents as Consumers
Bo Hedberg, firstname.lastname@example.org is Professor of Management at the School of Business at Stockholm University where he heads the research program on Imaginary Organizations.
Richard Gatarski, email@example.com is PhD student of the same school and an expert on new electronic media. The notion of Content Management comes from Gatarski. The research program on Imaginary Organizations has been funded by the Swedish Council for Research in the Humanities and Social Sciences.
Information Technology (IT), including hardware and software computer components and various links for digital communication, is about to change the world. This has been said many times during the last decades. But as we write this chapter, many signs show that this change is well under way.
Our focus in this chapter is on how IT may augment change of organizations, products, markets, and marketing in the decades to come.
One starting point comes from our understanding of how the notion of Imaginary Organizations will influence new enterprises and the development of old ones (Hedberg et al., 1994). Another starting point comes from our conviction that it will be necessary to distinguish between contents, services, and goods in the creation and distribution of products for future markets. Currently a whole new industry is under formation. Thus we believe that contents management will be equally important as service management and goods management in future marketing (Gatarski 1994a). A third starting point comes from the assumption that increasingly information-rich environments will change the role of the customer and the patterns of market communication. Thus, providers who employ customer-base strategies and intelligent agents, acting as consumers/prosumers, are very likely components in scenarios of the market in 2019.
Although we believe that these patterns of change apply to all kinds of knowledge- intensive products, we focus particularly on electronically enabled products, i.e. commodities that are packaged, distributed, and consumed with the aid of information technology.
We are challenged to stretch our minds to a point in time twenty-five years ahead. In this exercise, let us first discuss some important trends in today's society, where Information Technology plays an important role in reshaping the structure and functioning of markets. We know that such early trends often need a decade or more to really reach full effect in society. This initial exercise in current trends and changes in patterns might help us reveal some relevant changes that might shape markets and marketing after the turn of the century. We will finally take another and braver jump towards the future and attempt to describe some major principles that moves somewhat closer towards the year 2019.
Although scholars of business face increasing difficulties to specify the borderlines of organizations and to judge what is inside and what is outside of the business firm, we still talk in terms of organizations and organizational environments. Information technology will make this dichotomy even more fuzzy.
Inner markets will evolve inside organizations, and outside actors will link up with "the firm" to form production systems, delivery systems, and marketing systems that virtually overflow the legal unit, the business firm. We refer to these new patterns of organizing as Imaginary Organizations (Hedberg et al., 1994). Others call them virtual organizations and tie this phenomenon closely to developments in modern IT (Davidow & Malone, 1992; de Meyer et al., 1993). We define Imaginary Organizations in the following way:
"Imaginary Organizations are systems where important actors, assets, and processes exist and function outside the terra firma jurisdictional unit and also outside the accountings and other descriptive languages of the enterprise."
The forming of Imaginary Organizations is greatly facilitated through the availability of modern IT. Transaction costs for coordinating information can be cut drastically so that lateral coordination becomes a realistic alternative to control through hierarchies. In Willimson´s terms (Williamson, 1975), lower transaction costs for coordinating affect the choice between markets and hierarchies towards the former. Thus, islands of business can be linked together in networks to form functioning partnerships that are very capable of producing, communicating, and delivering a variety of products for different markets.
So, one effect of modern IT in the world of business is that markets emerge both inside and outside of the core unit that we call enterprise and that units outside of the company link up to perform functions that traditionally were confined to the interia of the firm. Thus the enterprise develops towards a mix of production units and markets, and the environment contains both markets and other production units. It will be increasingly difficult to uphold a clear distinction between organizations and environments. Production units and markets, competencies and customer bases, will be arranged in boundary-spanning meta systems, i.e. Imaginary Organizations. In addition, IT makes it easier for customers to participate in, and also to contribute to, the value-creating process of the firm. The play on the organizational scene is loaded with new ambiguities. Actors can assume many roles. Groups of actors in the audience create the play together with the actors on stage. Demand and supply play on both sides of the field.
Both functions and shapes of business organizations are changing. And it has become increasingly clear through the recent decade that business schools with their curricula on accounting , finance, management theory and organization behavior face mounting difficulties to cover changing patterns in the business world. Vital assets do not appear in the balance sheet. Virtual organizations are not easily captured in traditional organigrams. Leaders are expected to lead people who they do not employ and sometimes even are not aware of. New businesses often lack traditional substance but possess impressive stocks of knowledge, experience, etc. Microsoft Corporation, currently with higher market value than even General Motors, is one clear example of this. Networks replace conglomerates, and management of meaning , trust, or attraction between people, oftentimes replace legal contracts. We therefore need new curricula's and alternative management perspectives to cope with all this.
The term Imaginary Organizations denotes new, emerging organizations, such as knowledge-intensive firms that work through networks, but also numerous service producers, and many educational organizations. IT is often, but not always, a necessary condition for their functioning. But the concept of Imaginary Organizations can also serve as a new perspective on existing business. The imaginary system which is inherent in the traditional business firm is important to reveal as a starting point both for restructuring and focusing of ongoing activities and as a platform for new business development. An analysis of the imaginary system of a business begins in the market and then works itself backwards. A starting model is shown in figure 1.
Figure 1: Imaginary systems should build from the customer base
The core system of an Imaginary Organization defines the relationships between the customer base and the provider of various products (goods, services, or content). What kind of values for the customer are going to be produced? How will market communication take place? How can deliveries be arranged? And how are payments most efficiently arranged? How shall offerings be bundled and presented? And what role will the core unit assume ? Who else needs to be involved in the value-creating process? The architect of a new and growing imaginary system, the imaginator, must pay attention to all these issues and particularly to the combination of core competencies. This is the essence of meta-management in the context of Imaginary Organizations.
The formulation of the business idea and the forming of the core system lead to the second step; resourcing through the arrangement of a network of partners and other suppliers. Partners may be involved in the production system but they can also supply delivery systems, customer (data) bases, payment systems , or communication channels. A partner base is added to the initial core system (Figure 2).
Figure 2: Resourcing the imaginary system
Once the starting solution is found, further challenges emerge which relate to the consolidation of the Imaginary Organization. The sharing of a joint vision and mission is one. The design of a proper incentive structure is another. Sometimes a set of legal contracts are needed, but many Imaginary Organizations grow and develop without much of a contractual base. More important, perhaps, is joint information systems for the coordination of production, customer communication, and streamlining of deliveries. The cohesive forces of such systems of excellence are sometimes very strong.
This section of the chapter dealt with the formation of Imaginary Organizations, and particularly with the inner arrangements of such systems. Let us now again turn to the market, the organizational environment, remembering though that the distinction between inside and outside, between producer and consumer will be increasingly fuzzy in the business world of 2019.
Today's markets show many dysfunction's that result from customers insufficient information and restricted ability to learn. The Rational Man of classic economic theory has never been quite able to live up to his role. Information technology can change this situation a great deal.
CompUStore provides one example of this. They offer lowest-price-information to members on a range of capital consumer products, eg. hi-fi equipment, cameras, home electronics, and home machinery. The company maintains national on-line data bases with lowest-price quotations for the listed categories of items. Subscribers call CompUStore´s switchboard where staff consult their data bases to learn the lowest price for a wanted item. The customers can then either order the goods through CompUStore, which in turn calls up a network of cooperating dealers at retail level and arranges home delivery , or they can use their information to walk down to the retailer around the corner and negotiate. The same dealer may very well also be linked to the CompUStore network and deliver at their prices anyhow. CompUStore´s business is basically to make markets work a little bit less distant from the perfect conditions which many economists assume. Demand meets supply closer to the "right price".
IT can clearly also improve customers information about available products and about product characteristics as well. Consumers who net-surf through BBSs and other easily available data bases will be exposed to masses of information. If they master the circumstances, they can acquire, process, and evaluate many more alternatives in the market than ever before. However, the problem of information overload is pertinent. Data is not necessarily information. It is quite possible that the consumer of 2019 will employ her own agent, a smart intermediator , a piece of intelligent software that assists in the task of selecting and searching for relevant information. More about intelligent agents below.
In the grocery store of our childhood the shop owner, and the lady at the checkout, kept track of the customers. Ledgers were used to keep customer accounts. The regular customers formed a grand family around the business. Development killed most of this. Shoppers became anonymous. And shop attendants were difficult to find.
Modern IT makes it possible for both small and big businesses to regain a family relation to their customers. Black books and card files are replaced by customer data bases (CDB) where relevant facts about each customer and about customers behavior and preferences are stored. The IKEA furniture stores address their VIP customer base, "the Family" and provide these customers with pre-view information, bonus offerings, and a head start when sales are on. Frequent Traveler Schemes are the rules rather than the exceptions among air carriers. And banks begin to work really actively with their hidden assets in customer data bases. Point-of-sales (POS) terminals makes it possible to register data on buying behavior at low cost. Mass storage devices and relational data bases then allows storage and efficient access of these vast amounts of data.
The well organized CDB is perhaps the most valuable asset of Scandinavian PC Systems (SPCS), an Imaginary Organization where about forty employees and several hundred involvees (working for the company but not on the payroll) develop and distribute inexpensive PC programs all over Sweden in a way that has made the company a winner and a market leader in several professional segments in less than five years. The customers are thoroughly registered at their first purchase and their entries in SPCS´s CDB are then updated regularly as the customer relation develops. As time passes, SPCS presents new offerings, either based on new product developments or based on the presumed life cycle, or maturity cycle, of the customer. In addition, the customer magazine with a circulation of more than 100 000 copies addresses the customers five times per year. The bulkpart of SPCS´s sales comes from additional sales to already registered customers. And this , of course, is not unique. Cross-selling and additional selling to old customers is a major source of success in most successful companies. And the customer data base, well kept and maintained, is an interesting asset also in businesses which outlived their business ideas.
Students of industrial marketing (Hammarkvist et al., 1982, Håkansson & Snehota, 1989) emphasized the necessity of long-term, trustful relationships between a company and its input and output markets and developed models where networks and relationships were essential and strategic assets of the well-managed firm. This paradigm has then spread also to other vistas of marketing and at least partly replaced earlier notions of marketing mix and of marketing as warfare. Current publications on the matter describe relationship marketing as highly relevant to most areas of market communication (Gummesson, 1994).
Well organized and easily accessible customer data bases are needed in order to manage and develop relationship marketing. Not only will sales persons of the future need to know when a customer was last approached, or when she last contacted the company . They will also benefit from better understanding of customer behavior and customer preferences as mirrored through the files of the CDB. POS- terminals, smart cards and other electronic payment means, together with increasing network communication will greatly facilitate the regular and relatively inexpensive gathering of such information.
When good and descriptive CDBs are established, the focus changes to maintenance, updating, and pattern recognition in these data bases. AMEX, American Express, appears to be one of the pioneers of the latter activity. They reportedly use quite efficient pattern recognition programs (artificial intelligence) in order to signal significant changes in customer buying behavior. These signals are then used in order to spot early on emerging payment problems with customers or substantial changes
(improvements) in customers purchasing power. Similarly Harley-Davidson have built up a world-wide membership club to which the bike company addresses a magazine and arranges rallies for members. Likewise, Kraft General Foods uses sent-in coupons to list and enlarge its CDB. And Business Week reports (Sept 5, 1994) that General Motors regularly surveys its 12 million credit-card holders on car preferences and on future purchasing plans.
We have most likely only seen the beginning of organized commercial use of customer data bases yet. In a world of deregulation's, where monopolies within regions, rule systems, or customs shelters are shattered, monopoly-like relationships with customers remains a golden opportunity.
From these various descriptions of how IT may change organizations, markets and marketing in a mainly structural sense, let us now turn to how the very products, or facets of products, may evolve. Let us look at the importance of content.
In this section we introduce arguments for an extension of the product concept. Our digital future, supported and caused by IT, will call for management strategies which cannot easily be accommodated in the goods or the services paradigms. We believe that there will be a strong need for a third, and supplementary, paradigm, one for content. Let us look at the current situation.
National production statistics demonstrate that the service sector now accounts for the largest percentage of GNP in most developed countries. This is partly the effect of the externalization of services from enterprises. If Imaginary Organizations, as a management perspective gains ground, the statistically recorded service sector will most likely increase even more. Knowledge about resources, such as potential partners ( know-who), represents content as we will define the term below. If contents are valuable, the contents sector will grow rapidly. Let us give a few more examples that might support the growth of a contents sector: Instead of hiring a professional (human) translator, an enterprise might, in the future hire contents in the form of a software based translator; And instead of buying the services offered by a Direct Marketing company, the Imaginary Organization can purchase contents from another organization's customer data base.
Information, i.e. data, facts, figures etc., can be traded in numerous markets. Large media industries often cover the whole spectrum from books, magazines, and newspapers to radio and television programs, etc. What we listed here can today, more or less, be transformed into digital bits and then be made available, copied, and manipulated. No matter what the different industries call their outputs, these products represent an increasingly important part of our economies.
Information about services is for example of great value. Recently the US company Official Airline Guides (OAG) was sold with a price tag of GBP 275m. Compare that with the values of airline companies. Information about media can actually be more valuable than the media itself. For example, the contents in one medium, "TV Guide", generate larger profits than all the US TV networks together (Negroponte, 1994). Although the latter employ more people and engage more infrastructure and money.
The media industry increasingly uses the word content, instead of information, in order to describe its core product. So we see good reasons to elaborate this concept in our description of future trends in market communication.
Information was early identified as one of the factors marketers have to consider as an essential part of products. Alderson (1965) provides one early example of this, although he primarily emphasized information about goods, in his textbook Dynamic Marketing Behavior. When discussing "The Movement of Goods" Alderson stated:
"The movement of goods differs sharply from the movement of information because it implies physical movement in the literal sense. That is to say, the same goods cannot exist simultaneously at two different places..." and later "The same information can exist at the same time in various parts of the system. Information can be transmitted to a recipient but still exist in the hands of the sender."
Alderson noted that a marketer can move either goods, people, or information . He also observed that a marketing system can increase its efficiency by substituting one type of movement for another. E.g. people can read a sports magazine, instead of attending the actual events. And, instead of moving people in a selection stage, marketers can, move information, such as travel folders, time tables, and weather information.
"Perhaps the most important substitution of all lies in substituting movement of information for the movement of goods" ...... "For each of these types of substitutions it is possible theoretically to measure the economic value that is added by the substitution"
Alderson(1965) also suggested that one could regard advertising as a demand item , with a yearly spending of 10 billion dollars already in those days, that is 2% of the US GNP at the time.
"This does not mean that consumers would be willing to pay a separate price for advertising but well informed buyers know that it is one of the costs covered by the price they pay for the product"
Even though Alderson gave information a salient position, he did not perceive information as a product, per se. Neither did he define characteristics of information in detail.
During the last 30 years Philip Kotler has probably influenced marketers and students of marketing more than anyone else. Let us therefore also cite how he defined the term product in the most recent version of his textbook Kotler (1994) :
"A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need."
He continues by writing that marketed products can include physical goods, services, persons, places, organizations and ideas. Apparently, Kotler does not specifically discuss contents although some of his reasoning comes very close to recognizing contents. As we have illustrated above are contents definitely not physical goods, nor persons , or places, and neither organizations or ideas only.
If contents are not any of those, could it fit under the services paradigm? Let us look at how marketers define services. Kotler defines service as:
"any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product."
Figure 3 lists four major characteristics for services, destilled by Kotler from a number of scholars.
Figure 3: Commonly used characteristics for services
Many marketers and people in general understand service simply to mean human-to-human offering. Services are sometimes augmented by machines. Examples of such services are: haircuts, car repairs, automatic teller withdrawals, or air transports. Grönroos (1990), although reluctantly, tried to combine different scholars service definitions into the following formulation:
"A service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, take place in interactions between the customer and service employees and/or physical resources or goods and/or systems of the service provider, which are provided as solutions to customer problems."
Our findings is that activities and human interaction are not the key issues when dealing with the core we call contents. When comparing these and our other insights of the problems related to contents, the service management concept does not offer a sufficient solution.
Shostack (1977) warned that marketing might fail to develop proper paradigms for the service sector. Gummesson(1977), Grönroos(1978/1990), Normann(1983) together with several colleagues, then joined forces to define and develop a useful paradigm for service management.
Practitioners all over the world have since benefited from the knowledge parked under the service management umbrella. We have understood that interaction when servicing is rather different from place and the other Ps which are relevant concepts in the marketing of goods. Both interaction and place try to pinpoint the important spot where "the product meets the consumer."
Now, 15 years later, and 25 years before 2019, we are indicating a new kind of product. And many scholars (e.g. Björkegren, 1992) point to the fact that media, culture, and other knowledge-based activities increasingly contribute to nations GNP's.
Let us also take a look at some publishing from the business world. In an article about the U.S. Economy, Business Week recently attempted to recalculate the official figures to highlight the importance of the third sector and to show how current government statistics mislead and fail to show the real size and shape of the economy (Figure 4.) They argued that, as a result of massive implementation of Information Technology, the traditional split between goods and services no longer makes sense.
Includes mining, utilities, and most manufacturing
Includes people-oriented services such as auto repair, banking, and hotels; most health care; state and local government; elementary and secondary education
Includes information-oriented services such as advertising and entertainment; communications; publishing; software; computers; higher education; medical diagnosis; securities industry
Figure 4. The spawning of a third sector: Information, Source: Business Week, nov 1994
In summary: to our belief, this new sector and these reformed products, at least partly, fall outside both the goods and the service management paradigms.
When contents are the core of the value creating process, neither place nor interaction is sufficient to describe this encounter between the product and the consumer. Instead, copying emerges as one initial process of a chain of processes through which contents are carried over to consumers. Further processes might include editing, transformations, and higher forms of consumption manipulation. To cope with the management of contents, neither the goods paradigm nor the service paradigm is sufficient. Let us exemplify with some content cases:
CompUStore´s customers, are primarily buying contents. The product is to know the lowest price and the location of requested goods. Any subscriber to CompUStore can get access to that knowledge. He can use it when deciding to buy the actual good, a purchase that might include delivery (service). But contents are the core commodity of the deal. And this commodity is produced at the very moment when CompUStore scans the market on request. Forwarding is not dependent on the customer interaction process. The commodity - edited data - is copied from machine memory to human mind.
Another case is when an enterprise engages in cross-selling with AMEX. The enterprise consumes contents in the form of extracts from AMEX's Customer Data Base (CDB). A third case could be when an Imaginary Organization purchases contents representing knowledge about potential partners in order to extend its networks. Providers of such contents might be Online Services as Dialog or Tenders Electronic Daily (TED).
CompUStore, AMEX, Dialog and TED are all selling contents. The value of their contents depends largely on how they are copied. Information Technology allows contents to be copied at negligible cost. The same is clearly not the case for goods or services.
Another more detailed example can be found in the music industry; Ace of Base, Roxette, and Dr Alban are three Swedish music groups. These groups are clearly contents providers rather than producers of services or goods. And these contents are later packaged as services (concerts) or goods (CDs). The groups are very popular in the international music community at the moment. As a result, they generate a lot of profit and also Swedish export revenue. In other words, their products are very important market commodities.
Most marketers would probably agree that going to one of the concerts of these groups, implies to buy a service. However, the buyer of the CD-albums purchases goods. And the experience of attending a concert differs considerably from digging the same music in a car. Likewise, enjoying music from a car radio is different from enjoying it from a CD-player in the same car. So concerts, radio programs and CDs are different kind of products which all originate from the same contents. The difference is here to be found in the packaging of the core product.
One part of helping the consumer buying a CD is a place problem. One part of helping the consumer to enjoy the concert is an interaction problem. On the borderline between place and interaction lies the retail store. A music record store offers service in the form of goods distribution. Figure 5 lists a number of distribution channels for CD records. And more channels are probably being developed.
Figure 5: Some major distribution channels for CD records
The distinctions between goods and services, become more complicated with the new interactive music CD's, such as productions by Peter Gabriel, David Bowie, Prince and the Swedish group Electric Eskimos. These new products are prosumed. The user can edit the music, cut videos and play computer games. We can also add gaming networks such as Internet MUDs, MS Flight simulator, Doom or Habitat. This is interactive pleasure. As such it resembles a service, but content interaction differs from service interaction.
Let us now focus on the CD contents. Here we can find music and computer programs. Everything is originally converted into digital bits and then stored on a 20 gram plastic disc. Physical CD's can be distributed in a number of ways. But what about the actual contents?
Before we answer that, let us continue with traditional information providers such as Dialog, TED, Reuters, Associated Press, Bonnier Information Services and similar actors who sell raw information. They are also content providers. And they make use of most of the electronic carriers which are listed in figure 6. In addition, they can use paper and fax to distribute most of their contents.
Figure 6: Available carriers for distribution of contents
Note that, except from the first two, all these vehicles does not carry physical material. And the very same vehicles can be used to distribute the actual digital contents on CD-records.
Again, non-material contents are potentially easily copied. This is both an advantage and a disadvantage. When money is involved and the contents are very valueable this becomes a real problem. Everybody who is commercially interested in publishing digital contents is currently bothered by this. And solutions are not likely to be found in marketing paradigms that solely center around place or interaction. It is neither marketing of goods nor of services.
The notion of contents as product needs to be developed and defined. Let us propose a first, tentative definition:
"Contents are any intangible products, externalized from the human mind, which have the potential to generate knowledge and/or emotive-like effects for the consumer".
Gatarski (1994a) discussed some of the characteristics of contents, see figure 7. The term intangible marks the separation from materia and the term externalized is used to emphasize that contents are not the same as a brand or a company position or an image. The latter is a result of contents, e.g. customer interaction or advertising, and cannot be traded since it is locked into the human mind. Consumers can be humans as well as agents (see below) or other actors with cognitive and affective capacity. Contents can be considered as both raw material, as well as a finished products. Contents can carry value, so they are typically traded in markets.
Figure 7: Proposed characteristics of contents
The understanding that information and other soft components are facets of products is not new. Sensation can be one important aspect of travelling, although physical movement from A to B may be what the provider mainly offers to the market. And deep-frozen food offers nutrition, but also the opportunity for a nice dinner-for-two and, sometimes a new culinary experience. However these sensations cannot be traded without a service or a good. Some futurists apparently dream of sophisticated devices, connected to the human brain, which could be fed with contents in order to create the desired sensation. But until then, let us concentrate on the trends we actually know.
Contents move up in priorities when we consider the informatisation of merchandise. The fact that information can be distributed in all these forms (as goods, services, and as contents) and that copying (which is cheap,easy, and legally not sufficiently protected) is the process through which contents are spread makes it necessary to distinguish contents marketing and contents management from the other aspects of product delivery.
While defining contents, it is useful to look at how contents are produced. This helps us to position contents in relatione to the value-creation process. In most, if not all, instances contents are edited data. Many times this editing implies very creative processes. Sometimes physical resources such as studios, costumes, paint and properties are required. This is salient in film production. In other instances editing takes place through sorting, extraction, or compilation.
An author produces contents which later can be marketed as for example a book, an article, a tape cassette, or a theatre performance. Editing takes place through creative work, such as authoring, or through organizing (e.g. a telephone directory), or through filtering (e.g. a market report). Sometimes external data is cheap or even free raw material. In any case the work, the editing process, carries costs and together with other input produces added value potential through refinement.
Contents can then be distributed through copying. Contents can then serve as input to other links in further production chains, or be subject to end use. Now, if not before, when the product is loaded with value, copying needs to follow copyright rules. This implies that raw material also mostly comes at a cost. There is seldomly such a thing as a free breakfast, even at the information table.
Many products hold the potential of appearing under more than one of the paradigms for goods, services or contents. Cellular mobile telephones offer one example;The good is the physical telephone set. Examples of services are the promised mobile telecommunications and contracted maintenance of the set. Contents are found in the manuals, software (BIOS which tell the set how to communicate) and added functionality, such as expansions for Short Message Services, Digital Data Communication or even digitized phone books, which many manufacturers already provide on smart cards.
It is commonly agreed today that adding services to goods offers very powerful means of product differentiation. Likewise, adding contents to goods, or upgrading contents in services may prove to be very powerful supplementary strategies.Vice versa, could adding services and/or goods to contents be good strategies for contents differentiation.
That has been a successfull strategy for the Swedish company Informationtjänst AB (Information Services AB). They collect information about most Swedish construction projects. This information is offered to suppliers, communities, constructors, undertakers etc. Although the result is sold in raw form to some customers, part of their success lies in the fact that they offer customized, value-added services to their basic information. The contents is neatly individualized and packaged into paper sheets, fax pages, diskettes, address labels and more.
We foresee a development through which contents will appear as a separate and major productive sector in the GNP of 2019 in most countries.
In summary, and concluding this section of our chapter, we propose that the three paradigms of Goods, Services, and Contents gain their power and usefulness through various combinations and add-ons (Figure 8).
Figure 8 - Combining the Product Paradigms.
Many years ago Simon (1971) warned that we live in an information-rich world. A world in which human cognitive capacity easily, if not regularly, is overloaded. The situation has not improved since then. It will certainly not improve in the perspective we outlined above. So, if consumers are to benefit from increased outputs in the form of contents, they need assistance.
The principles of assistance would be about the same as those which are embedded in already available Information Technology. Take for instance pocket calculators, spread sheet software and Automatic Teller Machines as some examples. These tools can help us in handling our money. Word processors, fax machines, television, telephones,
e-mail, CD-ROMs and OnLine services, are increasingly used as tools for human communication, and these tools are all mediated by computers which are specially designed to manipulate, transform, and transfer digitized information.
But counting and communicating is no longer enough. For long scientists envisaged machines to handle more complex tasks which required more thinking than simply the solving of algebraic problems. This desire lead to early research into Artificial Intelligence (AI) and Expert Systems (ES). Today businesses, other organizations, and people in general can readily use AI-systems to aid their thinking. In applications exemplified by programs that analyze customer behavior, stock portfolios, crude-oil distribution patterns, or medical symptoms.
A newly reborn phenomenon is the concept of intelligent agents. Let us regard these agents as simulators of human processes. Simulators with the capacity to use and manipulate all kinds of representations. In fact they are supposed to manipulate ideas, thoughts and behavior. Agents as a concept where initiated around 1970. Now they are slowly being implemented. Although in simpler ways than envisioned so far.
Agents can be a part of man's interface to electronically stored information. Maes (1994) describes agents in the following way: "The metaphor used is that of a personal assistant who is collaborating with the user in the same work environment. The assistant becomes gradually more effective as it learns the user's interests, habits and preferences (as well as those of his or her community)." Another description comes from Negroponte (1994): "Imagine a future where your interface agent can read every newspaper and catch every broadcast on the planet, and then, from this, construct a personalized summary." We believe that their visions can be expanded to include every bit of digitally stored content.
Researchers typically make a distinction between two types of agents; (1) Filter agents and (2) Searcher agents. The first ones act as intelligent filters. Filter agents scan the flow of information on behalf of their owners. Sometimes these agents are also capable of deciding what to do with the incoming material. Such an advanced filtering system is being developed by the Swedish Institute for Computer Sciences (SICS). There the agent is programmed by its user to adopt a number of rules. In action the agent scans Internet Usenet News and performs "auxiliary actions such as save, copy, print, forward etc.". More complex agents are in use at the MIT Media Lab. There agents scan and manipulate incoming mail, recommend entertainment, and plan meetings in calendars. The meeting planner agents actually communicate with other users agents to be able to find suitable times for joint meetings.
Searcher agents are, for example, agents that users send out into the digital information world with a mission to search for something needed. General Magic together with AT&T and others have developed such intelligent agents. They are capable of finding specific information in situations with considerable human information overload. Also IBM have announced similar products which they call "proxies".
There are, however, both technical and social reasons why the use of agents will take on rather slowly. Expert systems are still rather cumbersome to use and relatively expensive. It will also take some time before even the enthusiasts will really trust agents to act for them. Norman (1994) addressed the issues of privacy and confidentiality. "If agents know about their creators/owners, who else will?" Financial systems, commuter trains and airplanes can technically run without humans in the driver seats. But we do not really allow that. Historically, we tend to be constructively slow in adopting new technologies. This tendency will probably be even more salient when technology comes as close to us as the concept of agents suggests.
If agents gradually will assume the role which many forecasters predict, they will clearly be consumers of contents. In fact, that is probably the only thing they are able to consume. Services might be, but goods are definitely not accessible to them.
Computer scientists are already considering how agents will help consumers to find goods and services in the marketplace. Norman (1994) exemplified: "Thus, agents might set up schedules, reserve hotels and meeting rooms, arrange transportation and even outline meeting topics, all without human intervention." And Mitchel et al (1994) envisaged agents performing tasks such as: "providing services for work and home, such as paying bills, making travel arrangements, submitting purchase orders and locating information in electronic libraries."
Also the providers of for example Video-On-Demand services are likely to rely on agents. Ramanathan & Rangan (1994) are engaged in the construction of such systems. They noted: "Personal service agents, as their name implies, play a central role in tailoring the fabric of multimedia services to fit the needs and preferences of clients."
Today's marketers go to great length to investigate human behavior in order to market their products more efficiently. If our assumptions about the future role of agents are correct, marketers of the future will have to investigate also agent behavior. Such thoughts are actually emerging among marketers. Gatarski (1994b) is discussing marketing strategies when dealing with agents. Davenport (1994) remarked in a recent HBR article that there will be strong need for solutions that can sort out information: "Technologists are working on personalized filters or "agents" that can separate real information from junk. But it's likely that good marketers of electronic information will find ways to circumvent filters-just as direct mail now looks like a tax refund or personal check. In fact, some communication technologies just exacerbate this problem."
The knowledge one agent has built up, could be of value to other agents, organizations or humans. Genesereth and Ketchpel (1994) exemplified: "As the Internet becomes increasingly commercialized we envision a world where agents act on behalf of their creators to make a profit. Agents will seek payment for services provided and may negotiate with one another to maximize their expected utility, which might be measured in a form of electronic currency."
To conclude this part. Agents will most likely appear on the market as intelligent assistants. Recent Information Technology developments facilitates this. These agents will represent a value that in turn can be used by other agents, or humans. As a matter of fact, the commissioner of this book, Market Technology Center (MTC), have already started to think about this. MTC is currently computerizing their knowledge and relational network. And that opens the question of how the contents in this data base can be prosumed. Maybe MTC can open up their contents to agents from members in the MTC network.
So agents will be both actors and merchandise. The market in 2019 will indeed challenge our current concepts and definitions. The notion of contents management is only one step in developing proper notions for this brave new world.
A further very important feature of the market in 2019 concerns issues around product distribution, marketing channels and market communication. Theories regarding the management of marketing channels have been developed in close connection with the development of marketing as a concept. In the early exchange economies the consumers met with the producers in the "market". In the agricultural era, town and countryside stores played a central distribution role together with the railroads. Then came the industrial era with highways, flight transportation and supermarkets. And this has now evolved even further. One example comes from Stern (1992) who listed some of today's market places, i.e. what he called "major retailing institutions", such as department stores, specialty stores, chain store systems, supermarkets, planned shopping centers, discount houses and non-store retailers such as ATMs, mail order and house-to-house selling. He went on to divide grocery stores into combination stores, superstores, warehouse stores and convenience stores. Stern then added the impact of information technology by defining some technology areas for channel communication: On-Line Databases, Scanning, Telecommunications, Office automation, Videotext, Artificial Intelligence, Retrieval and Storage systems and finally Robotics.
It is obvious that information technology can be used for all kinds of marketing communication. A recently published textbook (Hoge 1993) contained 28 chapters filled with descriptions of electronic communication channels. Hoge described more than 100 channels, which range from broadcast television to in-store talking displays. More and further advanced communication channels for goods, services and contents will likely be evolved in the years to come.
Middlemen and brokers are also very important parts of the picture. Selling directly from providers to consumers requires a lot of contact lines. Also electronic markets will most likely need some, although radically fewer, wholesale functions to concentrate communication and to establish powerful interchanges. The introduction of wholesalers reduces the number of contact lines, but it also limits the alternatives which are open to all consumers. Therefore, an important management decision is the number of concentrators and brokers in the distribution chain.
One of the most salient factors in the development of today's markets, is the shift to prepackaged goods and self-service. Without that, the economies of distribution would have looked quite different. The packaging of a product divides, protect and communicate its inner part. Designers of for instance book jackets, know that the average consumer does not spend more than around 30 seconds looking at the book. So those seconds constitute a very critical moment in selling the product. Paper-based books are fairly easy to distribute and rather time-consuming to copy.
We believe that one very important aspect in the marketing area, will be self-service when buying services. That is already initiated in American Airlines booking system SABRE, which now is available to end consumers. Similarly, Club Med sells leisure travels through multimedia kiosks in France. Home-buyers in Denmark have access to similar kiosks provided by the real estate chain of Home. Their customers can by themselves search for housing objects and prepare for purchase. Californians use the InfoMed system for public service. These are examples of self-service that has the potential of radical cost reductions.
The trends regarding packaging and distribution of contents are also very important to the understanding of future markets and of marketing in the future. Earlier we discussed how music content might be packaged with different consequences Examples of contents packaging are Multimedia CD-ROMs, Interactive Television sets and OnLine terminals.
A current discussion around electronic distribution concerns the bypassing of the middlemen. E.g. the music industry is talking about the elimination of the records stores. A no-middlemen solution would require each consumer to directly connect to each music provider. We find that very unlikely. That trend is also contradicted by the great forces involved in the construction of information highways, which resemble "virtual middlemen". Ramanathan & Rangan (1994) exemplifies such a structure for video-on-demand services.
It is beyond the scope of this chapter to go into detail of future product distribution. We will only mark that the subject is complex and very refined. Our point is that package and distribution patterns found in goods and service areas, will probably evolve in a similar way for contents. That is with prepackaging, self-service and different middlemen. To a high degree this evolution will affect the structure of the markets in 2019.
A number of new information and media products have the potential of becoming commodities in the Market of 2019. However, the traditional ones, such as books, magazines, statistical reports, radio, film and television will probably all survive. But most of them will be digitized and thus transformed into contents.
Less clear trends suggest that we will use agents, knowledge, and a wide variety of other electronically packaged contents. Perhaps we could even buy an Artificial Intelligence package, that could help us solve design problems in our Imaginary Organizations or to select proper resources from industrial partner markets. Or maybe we can hire an Expert System that diagnoses the red spots on our grandchildren´s skin. We can probably send out an agent to find the relaxing interactive entertainment we need after a hard day´s work. And in the weekend we can go mushroom picking with a few friends, while our agenda agent arranges next week´s meetings.
A few of these products will be contents in isolation. Others will be part of goods and/or services. Maybe filling the function of value-additions. If we have to pay for these products, they will be on the market. And the market will be there. And we will most likely pay for these products through similar procedures as the ones we use to order them. First Virtual, the newly announced payments clearing center of InterNet, is a good illustration. Other examples are First Data, DigiCash and CyberCash. Beware, you old bankers!
Returning to our initial model of the Imaginary Organization, we have now added on delivery systems for contents, as well as for services and goods. Also we find reasons to place agent programs in the customer base. Agent programs which assist in the value-creation process. Figure 9 illustrates this.
Figure 9: The changing scene of the Market in 2019
The year 2019 is very far ahead. If we travel equally far backwards in time, we land in the European student revolutions of 1968. Much has happened since then. Probably even more will happen in the next 25-year time span. We find it hard to spin a full-blown scenario of the Market in 2019. Instead we believe it is wiser to concentrate on a summary built from the trends highlighted above. Our conclusions therefore consists of major features, patterns, and design principles which we believe might shape the market in 2019:
On the way to the future a number of research problems ought to be addressed. So we indicate four major areas for research, which bear upon themes to be central in this chapter:
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