I am attending the Second Life Community Convention this weekend in San Francisco and recently listened to a panel based on Real-Life Business in Second Life. SL resident Bolliver OddFellow who runs Infinite Vision Media made an extremely bold statement regarding, “advertisers and marketers must throw out everything they know about advertising and start all over when planning for the virtual world.”
I fundamentally disagree with OddFellow’s statement. Marketing is built around the 4 P’s which hasn’t changed for the last 40 years. E. Jerome McCarthy wrote his classic book called Basic Marketing which has been a staple for brand strategists and agencies across the world. Product, Place, Price, and Promotion must all be taken into account in the virtual world. These four pillars are in every advertising and marketing campaign. The remark in which Bolliver OddFellow made earlier today totally threw away this notion of the 4Ps.
I would say that we need to be especially careful on how we plan campaigns in the virtual world to everyone’s point on the panel (including my friends, Steiger and Verbeck). Second Life has around 530,000 early adopters who are taking part in forming this amazing world and each individual contributes greatly how the world will play out for the future. Brands and their respective agencies must acknowledge that planning and executing a campaign in the virtual world may be different than real life, but it still uses the same science and history that we’ve used to plan hundreds of billions of dollars of campaigns in the real world.
"Product, Place, Price, and Promotion must all be taken into account in the virtual world."
Why?
Product - more and more in the real world, "product" is being replaced with "experience". It's not the hotel room, it's the experience of the vacation - as Starwood's CEO said not so long ago. And he's not alone in his thinking. It's not the ugly plastic cd tower, it's the impression the music collection makes on visitors (my own revelation during a design discussion). "Product" was important when differentiation was more obvious. That's no longer the case. Apple has long recognized this. They don't design computers, they are a movement which doesn't just include the stylish case, but the packaging in which it comes and the stores in which they can be purchased. The iPod and iTunes are successful not because they're nice products and software, but because the Experience of using these products was so pleasant. Nike didn't revolutionize tennis shoes by making better product. They revolutionized that market by changing the perception of how their products fit into the wearers' experience; the elevated shoes from fabric and rubber to lifestyle enhancements. People don't care about "product". They care about the "experiece" the product promises.
Place - in a virtual world, place is effectively irrelevant.
Price - like place, price is also effectively irrelevant. There are no limits to replication. There is no capital investment in tooling for additional volumes. There are none of the issues that dog real world products. Product can be viral. It can replicate all on its own with only a few lines of computer code.
Promotion - and because a product can replicate itself like a virus, it becomes its own promotion. Done intelligently, this can be part of a much more powerful system (one of which I described some time back on my blog and which has alternately scared quite a number of gamers and intrigued some well-known developers).
While I believe there are elements of each that are still worthwhile, I tend to agree that a rethinking of the 4P's is in order.
Posted by: csven | August 19, 2006 at 10:18 PM
Product - if you're selling the experience, that's the product.
Place - how is it irrelevant? The virtual world is essentially the same as the real-world. The only difference we have right now is that the virtual world has less people, which makes finding things a bit easier. However, placing the product within a certain area (in MLB's stadium vs. Joe Shmoe's House) carries weight (as in real life).
Price - how much are you selling it for? That's the issue. Not how much can it be replicated, but what is the cost of it originally. This is where status comes from.
Promotion - products need to be promoted to replicate. Promoted can be a simple viral "sneeze" or a mass campaign.
The 4Ps do exist.
Posted by: Darren Herman | August 19, 2006 at 10:25 PM
"Product - if you're selling the experience, that's the product."
I agree. However, it's not how most marketers think and why "People" was later added to the 7P's. The Starwood CEO example comes via a video interview on Ad Age. The CEO said as much about that industry which should, imo, be among the first to take that position. They weren't thinking about Experience, they were thinking Rooms (tangible product instead of intangible). Wrt the cd tower, I've designed those things. The company CEO and senior officers never once thought about the real reason consumers bought their product. They didn't think about "People". In fact one told me flat out, "We don't know who buys this sh*t" (Gotta love honesty). They never considered that their towers might be more than just a storage product; a product that involved customer lifestyle. And had they bothered with a focus group, from the one's in which I've participated, I seriously doubt that angle would ever have surfaced, because most focus group questions and subsequent group dynamic come from the biased questions originating from the company marketing team.
Placement (actually Distribution) - when someone can distribute a product virtually by simply dragging and dropping (imagine someone in RL emailing you a new BMW), that throws out the whole idea behind Distribution. A better factor would be Filter. That's where I think the music labels will eventually wind up. In a virtual world, where everything is equally digital, that becomes the real issue - not distribution. If I'm not mistaken, quite a lot of product in SL isn't even sold in the world, but on external websites. So Placement in the world is one factor, not *the* factor. Also, Second Life is one virtual world. Not every virtual world will be this straightforward. I expect we'll see the emergence of something a bit more along the lines of Molyneaux's "The Room", with portals that defy normal spatial rules.
"Price - how much are you selling it for?"
The best plans I've come up with give the product away for free. Google is a free service, yet look at the money they've made. YouTube is a free service. MySpace. The list goes on and on. Anything that's digital can and likely will be free - tied to something else not easily replicated. I could create and sell digital goods and every one of them could be pirated out from underneath me. On the other hand, I could partner with some RW company and give away the virtual product which becomes a promotional tool for the product not easily pirated (for now).
"Promotion - products need to be promoted to replicate."
No. They don't. I could create a product that would literally be it's own promotion. It would sense interest through the use of positional data and duration of acquisition and then clone itself and give itself away. That's not Promotion in the traditional sense by any stretch of the imagination and not something I suspect has been considered by the RW marketing community. So "rethinking" it is very much in order I think.
Posted by: csven | August 19, 2006 at 11:34 PM