Chennai, Feb. 18
COMPANIES must involve consumers in creating brands, as there has been a "mind-boggling" rise in consumer-to-consumer communication even as corporates' own understanding of value creation has blurred, said Prof Venkat Ramaswamy of the University of Michigan Business School.
At the valedictory session of the Brand Summit here today, Prof Ramaswamy expanded on the theme of The Future of Competition, a book he co-authored with management guru C. K. Prahalad. In that book, the authors had suggested that companies engage customers as equal problem-solvers. In other words, create channels of communication that will help consumers play a more active role in creating the service experience.
Prof Ramaswamy said the Internet, along with other communication channels such as SMS and blogs, has meant that customer experiences are shared more rapidly and widely, what he termed a "word-of-mouth" overdrive. For instance, over a billion SMS messages are exchanged everyday. Because of such an explosion of information, consumers are much more in the know about the product, in a position to make comparisons easily and are ready to experiment.
On the other hand, with increased convergence, companies have difficulty in figuring out their competitors, which industry they are in and how to gain the competitive edge.
Such being the case, companies can engage consumers in a two-way interaction and deliver the experience that they want. Apple, he said, has created an environment for buying and sharing music with its iTunes portal, from which 250 million songs have been downloaded.
With its iPod, consumers can `carry' their favourite songs with them. In addition, Apple has opened retail stores. So, the focus is on individual value and experience, he said, with the choice of doing business entirely with the consumer.
Co-creation, as the process is termed, also builds trust, he said.
Prof Ramaswamy also mentioned ITC's eChoupal portal, where changes "come out of the interactions (that the company has) with the farmers."
Although there aren't many such Indian initiatives, he said, "India is a hotbed for experimentation." This is because Indian consumers seem more sophisticated and willing to experiment than their Western counterparts, who have certain mindsets; the same, he said, holds true for the companies there.
Responding to a question, he said that the traditional methods of advertising may well die. Advertisers need to learn how consumers interact with new media. Clients can create their own advertising along with the agency, bringing in the customer experience.
Mr N. Murali, Chairman, Brand Summit 2005 and Joint Managing Director, The Hindu group of publications, said that at the first two Summits not many Indian brands could be showcased and many foreign speakers were invited. But, today, there were more Indian case studies to be shared and more Indian brand practitioners could participate which was heartening. He urged the CII to institutionalise the Brand Finale award in future summits.