So far, most of my examples have focused on typical consumer marketing items—apparel, consumer electronics, telecom, credit cards, travel, and so forth. How is the influencing process changing for big-ticket items, such as houses, cars, and fine arts? Most of these items are specialty items that require negotiations or auctions that use one or many intermediaries. Automation and web connectivity have influenced how buyers and sellers come together and have transformed the influencing process in auction and negotiation markets for big-ticket items. In an auction market, a group of buyers and sellers settles a transaction through competitive bidding. In a negotiation market, a dealer may support the sales process. These are imperfect markets, as there could be serious supply-demand imbalances leading to significant price fluctuations, and hence opportunities for and paranoia about abnormal profits. Savvy marketers have been able to create an aura for their product and use that buzz to create extra value in the marketplace. How would big data change the influencing process for these markets, and what can marketers do to enhance their marketing using many observations?

To study the impact of new multiway communications and collaborations, and to project how auction markets would change, I decided to first look at traditional auction markets. I sat down with Ashish Bisaria to understand the auction markets for Manheim, a division of Cox Communication, which deals with the auction of cars in business- to-business markets. Most Manheim car buyers are used car dealers. They also have a regular group of sellers: mostly car fleets for large corporations and car rental companies. Manheim uses a number of car auction sites, which are gigantic parking lots, where cars are paraded at the time of auction. Traditionally, buyers purchased these cars after taking a good look under the hood. A number of visual parameters, including sight, sound, and under-the-hood inspection drove buyers to purchase specific cars. Car auctions also involved an element of rivalry among the buyers, as these savvy buyers knew each other and competed with each other for the best cars.12

The digital revolution is rapidly changing the traditional car auction business. Auctions are increasingly being settled in electronic markets, where the buyers offer bids electronically. Unlike traditional car auctions, these electronic auctions use digitized information about cars and seek buyers electronically. A buyer does not need to be in the same parking lot or even in the same city to participate in an electronic auction, and may not be familiar with the auction bidding behavior of the other buyers. Electronic auctions generate a larger number of buyers and more quantitative information, possibly bringing these auctions closer to a perfect market with more efficiency and lower margins for the seller. In the same dealership, a grandfather may look forward to inspecting each car under the hood before the auction and compete with others to get the best deals, while the grandson may sit behind a large screen watching several auction markets and searching for the best deals at many places focusing entirely on quantitative information provided by the suppliers.

Real estate transactions among homebuyers are a typical example of the negotiation market. Traditional real estate markets were dominated by real estate companies, such as Remax and Coldwell Banker, whose agents knew specific geographies and worked closely with the sellers to get their houses to the market. The electronic revolution, however, has brought a new set of discount brokers, such as Redfin, which work with savvy buyers and sellers to conduct these transactions. With freely available real estate information from a variety of information services providers, such as Zillow and Trulia, buyers can effectively search and short-list houses. For a buyer, much of the shopping has turned electronic, with an occasional physical tour of the house once the buyer has a serious interest.

Stock markets are the ultimate electronic auctions. Transactions are conducted using speed-trading platforms in which one second is too long. With a large number of options accompanying the stock, there is a proliferation of products, and savvy buyers use a myriad of electronic sources to collect an enormous amount of information about the marketplace before deciding on their transactions. Real-time bidding for advertisements is an equally complex high-velocity platform where trading speeds are counted in milliseconds.

The buying and selling of big-ticket items is a tricky business. The pricing is more variable because of supply-demand imbalances and the lack of a perfect market. In addition, trust becomes an important issue. Over a long period of time, a consumer may end up spending more on food, wireless devices, and apparel, but each atomic transaction is relatively small, and in general there are easier opportunities to switch. In comparison, the purchase of a house or car is a high- value transaction from an unknown source, and has significant risk potential. At a higher end, art purchases are even higher in risk. As a recent Forbes article relates, prices can be artificially inflated by gaming the auctions.13 The electronic markets offer marketers an enormous opportunity to collect many observations about their customers and products, and offer them to the marketplace. These observations can be used to create a buzz or to reduce the risk associated with the transaction. They present a good opportunity for an increased flow of buyer-seller interaction information, as well as a chance for the seller to use buyer information along with product information to improve the marketing process. In the absence of the physical product, an electronic auction must include enough information either about the product or the seller’s reputation, so that the buyer can make an informed judgment. In most commercial situations, such as car auctions among dealers, auctions represent repeated transactions, where the past transaction history can be used by buyers and sellers to make good decisions about the next auction.

Auction and negotiation markets are still evolving for high-ticket items. For example, in the real estate market, the success so far has been in organizing housing data for shopping, as performed by information services companies like Zillow and Trulia. Transformation efforts, such as Redfin, are still struggling for acceptance in the marketplace.14 Marketing will evolve with the auction markets and will start to utilize the rich collaboration possibilities for improved product marketing.

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