April 4, 2010
There has been a market change over the past few years. This market has been driven both in terms of supply and demand. There are huge market failures as a result and if businesses don’t figure them out, they will not be operational in a couple of years.
In my sector we talk about social media. I think we all feel that it is immensely important. However, social media is only a symptom of a changing business environment where it is no longer the output or purchases of a product that determines it’s value. Naturally, one might assume that I am talking about digital products and items such as blog posts, mp3’s and other stuff that can be copied and distributed freely. But no. I am talking about all of business.
What I am saying is that social media, or more correctly, the way we gather information and communicate through the Internet, has changed the way we evaluate situations, products and content. With content I naturally mean all that brings meaning to anything. It can be the looks of a person, a blog post online, a recipe of a delicious meal etc etc. Anything that brings something to life and gives it context.
A true World Market
The reason for this is that we can now tap into the whole world of content. When previously faced with a supply we thought that we were limited to choose from what we saw. Today we know different. The thing is. As we are able to tap into the whole world, we assume we can find EXACTLY what we want. The probability that we can find EXACTLY what we want has also dramatically increased as the social medias give way for us to find exactly what we want.
Through the unstructured societies with an extreme amount of output agents, we can use search to discover that “one in a million” has gone from impossible to a crowd of 1000 people. Naturally this falls over into our demand for common goods and our estimations on how great our life will be. Cause we are no longer satisfied with what we get, as we know we can get what we want. And that is the market shift. There is a huge demand of many different things.
Let’s exemplify this. Let’s say I want to buy a book. I don’t want to buy any book out there, but I want to buy a book about “minorities and their ability to create subcultures in modern Africa”. I promise that I didn’t check if that existed. So I go to my two search engines for books. Google and Amazon.
In Google the result page gives me this however Amazon gives me nothing. I was ready to purchase something, yet the supply was handed to me for free. It is amazing. Is this a common pattern when it comes to products online? Well, yes, anything that is digitized can probably have a free product option. In this case there was only a free product available, so I couldn’t buy it even though I would have wanted to.
Now this gives people a reason to think. What if every time I search to buy something, I can find it online for free? That must change our behavior right? Otherwise we wouldn’t be where we were today if we weren’t able to adapt to a better circumstance?
I know what you’re thinking. Digital products… right… but what about cars? what about buildings? they cannot be moved across the Interwebs or distributed like a PDF document.
I agree. They can’t. But the demand for them can. Thus the supply for something that cannot adopt to the fast pace of the web is in real big trouble. What these products need to do is to make it possible for the customer that finds them, to also be able to adopt them, to change the products.
If you cannot diversify, don’t deliver the final product
If you look at recent studies on what most effect a purchase decision, it is notable to see that the possibility to customize the product is amongst the highest indicators to why we decide to buy. Clay Shirky said one cool thing in one of his lectures. He said that “A screen without a mouse, is a screen delivered incomplete”. I would like to say that, any product that I cannot change, is a product that is incomplete.
A good example of an adaptable product is the Mini Car. They have understood that they won’t be able to meet the needs of the long tail distribution of demand and supply. Thus they have given the user options to amend their product into something that they want. In the case of an office building this could also be the case if you allowed the customer to change the product into what they need. They might not pay more for it, but they won’t buy it if they can’t. Yes, your profit margins on your MAIN PRODUCT will go down, but there is light at the end of the tunnel.
The Opportunity of Waste
This opens an opportunity for companies, and that is that there is no longer any waste. Even poo is a product that can be commercialized. (You don’t think so. Ask the Germans who bought Elk poo in masses during their vacation in Sweden.) Think about your organization and production today. I am 100% sure that you are currently producing stuff that could be put to the market but that is currently being thrown away.
DON*T do that… The online market enables you to buy and sell anything, as the demand for anything is there. Now you’re thinking that this will be a very costly experience. YES it will be if you don’t adopt as a buyer as well. Why the heck to you buy from the same place you’ve bought from for the past five years? Why do you agree to an over price, knowingly, or why do you continuously find yourself accepting to get a product that you would kind of like, rather than exactly what you want?
If you buy an ad campaign, when it is done, don’t throw away the posters, the campaign website and the other campaign material. Put it to the market. IT WILL SELL!! Your posters will go to your product fans, your website will go to an SEO and your other campaign material will be used for educational purposes. This is not recycling. This is business.
I promise you that you fill find at least two new areas within your company where you can make a considerable amount of money by just putting what you consider shit, to the market.
So why is Social media the Symptom
One could argue that the above stated would give social media a position as a driver in this change that is taking place. But it wasn’t social media that started this change. It was the lack of ability for companies to adopt to the shift in demand. The demand created social media as a mean to communicate more effectively.
So it is not social medias fault that people are spending time in it, it is the lack of ability to adapt that is shifting the focus of time. This is what the music industry has learned over the past few years, and we are seeing other businesses go the same route.
Social media does not explain the market change, but the market change explains social media. That’s why social media is a symptom and the market change is the core. Now… we are now a couple of years down the line and so social media is starting to become the core of where ideas become business, however, as with AIDS.. It is not AIDS that kills us it is the cold that we’re no longer resistant to that does.
Some concluding words
A couple of weeks ago I started to develop a new economic model where demand and supply get skewed by the new market structure for demand and supply. Some of what I say above might not make any sense without the basic understanding for that model. However, I feel like I am onto something and so I need to put this to the readers of this blog to see what I am missing.
Basically my findings so far:
- There is a new way in which demand is created
- Commercialized Supply is falling behind
- Social media is only a symptom, not the core of the problem
- There is an opportunity to make money in companies that is not being taken care of properly yet
Possibly related posts:
- Related posts on economics of the internet
- Mobiles To Change Economics Of The Internet
- Why I Didn’t Get a Marketing Degree «
- Related posts on internet supply and demand
- my class