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The Search for Consumer Content in Energy Marketing and Retailing

Fortnightly Magazine - September 15 1996

a shift from little choice and few features to differentiation (em first by price and reputation, and then later by features, branding, ubiquity, and perceived value in use. Other industries have, of course, successfully transformed themselves from staple to branded consumer good. In recent memory (that of the Baby Boom generation), successful branding has come to American wine, bottled water, telephone calls, software, poultry, and cash management (in the form of money-market funds).

The power of branding resides in the ability of famous brands to compress information, engender trust, and often control the buying decision within seconds of exposure to a compact image.

Branding by itself does not always suffice for enduring success. Even the most entrenched brand can lose market share, if the business environment suffers rapid macroeconomic change. It took the Great Depression for Pepsi to finally establish itself as a serious competitor to Coca-Cola, even though the Pepsi brand was invented within 10 years of Coca-Cola. Pepsi's selling proposition as the deep-discount cola (twice the amount for the same price) made little impression on consumers until economic hardship impelled them to seek bargains. Then, having established itself, Pepsi later adroitly repositioned its product as a self-expression brand (more fun). It was no longer forced to compete on price.

Meanwhile, Coca-Cola has continued to succeed in the guise of quintessential Americana, surviving in an increasingly segmented market, but without the domination it once enjoyed.

Internet, Cyberspace,

and Mass Customization

The railroad and the telegraph expanded together (em and that's no coincidence.

Marketing channels and the infrastructure of physical delivery share one important attribute: they are useless without information technology to animate them. The railroad served as a conduit that gave birth to a national consumer market, but it was the information technology of the telegraph that ran the railroads. The airlines and telephones co-evolved in similar fashion.

Today the new frontier lies in cyberspace marketing. Nevertheless, this new channel has become feasible only as networked computing emerges as a powerful information technology. As with gas molecules and electrons, the collapsing price of the computer chip and the electromagnetic spectrum as physical commodities will create a new cheap resource (bandwidth in telecommunications) that will cause consumers and retailers to reorganize their patterns of product use and distribution.

The Internet's World Wide Web functions today as a medium of entertainment, advertising, and communications. It has not yet achieved status as a distribution channel or transactional forum for extensive regulator commerce. But wait. As the Internet evolves into a true multimedia channel ("multimedianet"), and as issues of privacy, transmission speed, and financial integrity are resolved, cyberspace will become the dominant medium for selling data and information and delivering customized knowledge. Yes, the Internet gained its initial underwriting from gambling and pornography (em but so did Gutenberg's press. These nefarious applications will soon give way to way to conventional business, which awaits the usual proof of concept.

Changes in infrastructure have always created new businesses while crushing old ones. The refrigerated railcar led to national marketing of produce and a boon for California agriculture.