I have just returned from Egypt and it’s no surprise that I am in AWE of the pyramids—that’s the only way to describe this feeling. It’s one thing to see an Egyptian pyramid in a photograph or on a movie screen but to see one up close is a completely breathtaking experience like none other. Close to 2.3 million blocks of orange stone chipped and carved by hand, each stone weighing 2 tons or more. I absorbed this view of the Pyramids of Giza against the blue Egyptian skyline. The mere thought of thousands of years of history set in stone like this is overwhelming. I walked around the base of the Great Pyramid which took me a quarter of an hour at a leisurely pace and then sat down to just take in this experience and record it in my memory permanently.

The story goes that because they were built as status symbols showing off the wealth of the deceased kings, the pyramids attracted thieves who came to dig out these graves for the treasures buried there. In later years, the Egyptians made underground tombs such as the Valley of Kings to bury their dead rulers.

Back to reality…back to work…I think about the concept of The Fortune at the Bottom of the Pyramid, written about in the book by University of Michigan professor, and one of the great creative thinkers in recent times, the late C.K. Prahlad. When it came out a few years ago, the book made marketers sit up and think about this vast, untapped base of the pyramid that could spiral unimaginable growth and prosperity. The challenge was how to do this.

For the B2C marketplace the answers came easier—smaller/economy size packaging, vernacular advertizing, reverse innovation or glocalization, job creation in the supply chain and distribution network, and other “affordability strategies” that brought dramatic volume growth in emerging markets. If you weren’t selling, soap, shampoo, salt, water, apparel, fast-food or similar consumer goods, however, and marketing to the B2B buyer instead, this bottom of the pyramid (BOP) concept was still a mystery.

More than 6 years after the book made significant waves in the world of marketing, I wonder, are we there yet? Does this new digital economy allow us the luxury to market to the bottom of the pyramid? More importantly, do we have the wherewithal to differentiate go to market strategies for the top and the bottom and balance sales revenues from these two opposite ends of the pyramid?

Factors B2B Marketers Need to Prepare for in the New Digital Economy

A research paper by Oxford Economics, “The New Digital Economy: How it will transform business” studies 6 significant shifting influences that companies need to prepare themselves for. Here is a succinct summary of the report I’d like to share with you today.

1. The Internet-engineered “third wave of capitalism”. This is a mature digital economy we operate in now. Not only has it transformed customer behaviour as I reflected on last week, it is also forcing organizations to be flexible and nimble on their feet when it comes to adapting business models for a large and diverse global market. The four universal phenomena driving this wave in developed nations as well as emerging economies are: mobility, cloud computing, business intelligence and social media.
2. IT application is no longer a choice. There’s no looking back now; no matter what industry you are in, the combined effect of the mature digital age and globalization of the market makes it imperative for B2B companies to transform themselves. Information technology needs to be applied; not to throw out the old, tried and true processes and systems but in order to modify them and be effective within a digital footprint.
3. Technological prowess in emerging economies has reversed the digital divide. The study shows that twice as many companies in developing economies than advanced markets plan to increase expenditures in the latest digital technologies by over 20%. According to Tim Weber, the BBC’s business and technology editor, “Emerging markets now have the scale, investment and focus to make use of the digital economy.” As a result, he adds, “We are going to see a lot of leapfrogging of technologies, where countries bypass normal technological states of development because they don’t need them.” He gives the example of the G20 Summit in South Korea, when delegates from the Western countries could not use their “old-fashioned” phones on the 4G networks! In the developed world, there is an urgent need for us to recognize that we are no longer technologically superior than our counterparts in developing countries and so, the sooner we gear ourselves to meet this new challenge, the more successful we can be at limiting the extent of this gap or digital divide.
4. Corporate growth strategies must plan for customer acquisition in emerging markets. There was a time when only populations were increasing in developing nations. Today, the purchasing power is increasing too, albeit not anywhere close to the population growth rate. In the Western world, we have to make the humble confession that what’s “good enough in America” is not necessarily good enough in Brazil, or India, or China or Israel. The market is different, the customer psyche is unique and therefore, inevitably, our offering and our marketing strategy must be different. The opportunity is huge, without a doubt, but the work to be done is even bigger. A good starting point would be to find the middle ground between centralized and decentralized marketing and work towards establishing local / regional centers of marketing excellence. Simplify your complex marketing processes on the foundation of proven best practices. Economies of scale can indeed become a reality if you can ensure that there is no duplication of effort between the CMO’s office and regional centers.
5. Real-time business intelligence and predictive analysis are a must. Speed to market is critical in this digital age. At every stage of your business cycle, from product development through to market testing and customer response, you need to apply real-time business intelligence and predictive analysis. The growth in emerging economies is super fast propelled by new technologies. Market dynamics are evolving even as we ready ourselves for the next big change. In the face of all these factors, organizations have no choice but to
   1. be accurate and fast in decision making,
   2. stay alert to new opportunities opening up every day, and
   3. prepare to handle a market in hyper-drive that throws up unexpected risks
6. Moving towards an organic network structure, breaking down the silos. This is what will help companies reorganize and explore the potential of the digital economy. We have new competition from the emerging economies. Several of them are start-ups and small to medium sized businesses that have neither the hierarchical organizational structure nor the water-tight departments and rigid corporate policies that a majority of medium to large corporations in developed countries are plagued by. To mirror the make-up of the newer markets we want to tap into, our company structure requires to be reorganized into a logical, organic, seamlessly networked structure. Collaborative decision-making holds the key to successful participation in the fiercely competitive and fast-paced digital marketplace.

How will these Factors Play a Role in and Impact how B2B Marketers Adapt?

The Oxford Economics study outlines some key imperatives for top executives of B2B organizations:

• Companies need a forward-looking mobile strategy for emerging markets, where the phone is the primary means for Internet access.
• A good overhauling of processes is required ensuring that data analytics are improved and will help organizations anticipate and prepare to face rapid global market shifts.
• When there is so much frenetic marketing activity happening all around, the threat of security breaches becomes very real. While cloud marketing and storage virtualization are gaining ground, companies need to make it a priority to build stronger safeguards into their operations.
• Watch for the dark horses! The emerging markets are challenging and highly attractive, so it’s natural that organizations are drawn towards them and want to focus their resources to profit quickly from these new goldmines. But you cannot do this at the cost of neglecting to secure and strengthen your market share in your home country. Just as we step across borders to market our wares in emerging markets, our ‘guerillas’ in developing nations will have built a fort in our backyard while we are still walking around the base of the pyramid!
• The “bottom of the pyramid” can be an opportunity even in developed economies, especially in rural markets where there is also the same increasing adoption of digital technology.

The New Digital Economy, Oxford Economics Whitepaper

How is your B2B organization preparing to face the challenges posed by the new digital economy? What measures do you have in place to ensure that growth is now negatively impacted by players from emerging markets stepping into what was once your stronghold? Let’s discuss this on my blog. You can also email or call me, Louis Foong, at (905) 709-3827.