Three: Friction and Customer Experience
A customer relies primarily on his first-hand experience of a product or service, assessing whether the use of the product met our expectations and, to a lesser degree, whether the peripheral interactions such as purchasing or obtaining service after the sale. The experience of an initial purchase can lead a customer to repurchase, or take their business elsewhere - but prior to having any experience with a firm, a customer must assess the information that is available to them.
Traditionally, an inexperienced customer had few sources of information: they were influenced by the company's advertising, any mention of the brand in the press, and a limited amount of word-of-mouth. This has changed significantly, particularly with the emergence of the Internet and social media, which enable a customer to find a plethora of information - from expert reviews to first-hand experiences of other customers - but even so, customers regard second-hand information from any source with some degree of disbelief until they have had first-hand experience.
From the earliest instances of trade to the present day, customers have sought one things: a product that serves their needs that can be obtained with minimum difficulty. Marketing has been geared to convey the belief that a given brand will deliver exactly that, and when the customer's experience meets his expectations, a relationship is formed. When experience fails expectations, there may be a one-time sale, but the amount of "friction" the customer experience may give him incentive to buy from someone else next time.
The Rise of Markets
The authors do not consider all trade to be marketing. Individuals who swap goods with one another or the occasional travelling merchant do not qualify. Marketing begins in the fixed marketplace, where people routinely sell items and where there is a common standard of value, be it silver, shells, salt, or beads. In other words, the defining characteristics of "a market" are regularity and competition.
(EN: it could be splitting hairs, but there is regularity and completion in barter systems as well as in stand-alone selling, so I wouldn't necessarily disqualify them - but this becomes theoretical, as barter and temporary merchants are rare.)
Merchant
Also for context, the author considers the merchant as a profession that is characterized by selling goods and services to others. The merchant class represents an evolution - from those who produced primarily for their own consumption and traded their occasional excess, to those who produced goods intended to be traded, to those who did not produce goods but instead merely facilitated trades of goods produced by others.
There is also a trend toward customer control: a producer who trades occasional excess is entirely indifferent to the desire that others might have for it (he produced it to be suitable to his own use, and the fact that it is "excess" is incidental), whereas a non-producing merchant must be very attentive to what customers value because if he fails to trade, he fails to profit.
(EN: This is a bit stilted, as the driving force is not producer-vs-merchant but the nature of the goods involved. A farmer can still feed his family if people don't want his product, but a shoemaker or a jeweler are in a much more vulnerable position.)
There's also the acknowledgement that the existence of commerce as a profession depends on political stability (protection of personal property from various perils) as well as a certain amount of infrastructure to transport goods among locations, which explains why mercantilism seemed to falter throughout history (the vast markets of Rome disappeared with the fall of the empire, etc.)
Overcoming Geography
Until very recently, markets were heavily dependent on geography because transportation of goods over great distances was virtually impossible, and definitely impractical given the cost and risks of transportation. As such, markets were land-locked, and production facilities were located next to the population centers that constituted both the customer base and the supply of labor.
The industrial revolution was facilitated by the introduction of railways in the late nineteenth century and revitalized by the highways system some decades later, which overcame the geographic boundaries between manufacturers and retailers who made goods available to local markets.
Recent advances in both logistics and telecommunication technology provide a direct link from manufactures and customers, not only coast-to-coast but around the globe. Modern-day consumers may be inured to the "world wide" scale of commerce, but historically speaking, it is a truly wondrous thing, and neither industry nor culture has yet fully come to terms with it.
From No Communication to Mass Communication
While information is by its nature far more transportable than physical goods, it also suffered from geographic limitations. Prior to the telegraph system, news was embedded in physical objects (letters and other paper communications) that had to be physically transported.
The mass-media of radio and television, now well established, was also revolutionary in the ability to communicate information quickly and over great distances. These were also commercially-funded channels of communication, from the very start: programming was provided at no charge to the consumer, and used by advertisers to captivate their attention. From the consumer's perspective, there was some advertising interrupting the programming; from the advertisers who paid for the media to exist, there was some programming interrupting their advertising.
Radio and television were also fundamentally different than print in their intrusive nature: a newspaper or magazine may contain advertisements, but readers can pay attention to them or ignore them as they please. With radio and television, the audience that wanted to give attention to the programming could not avoid receiving the advertising messages.
The difference was significant because passive advertising is merely available to customers who are looking for a product or service - they know what they need and are seeking a product to serve their needs - whereas intrusive advertising provides the ability to send a message that the advertiser wishes the customer to receive, without their active consent.
The author notes that the last few generations of marketers worked in an unusual time when they had the ability to inflict themselves on an unwilling audience - the challenges of advertising in new channels such as the Internet are not new, but had merely been on hiatus during the era in which television and radio were the primary media, and advertising must now remind itself of the passive model it had previously followed.
Media Fragmentation
As television and radio grew in popularity, there were an increasing number of networks: television changed from having only three networks to hundreds with the advent of cable, and radio competition increased as the FM channels multiplied and, eventually, satellite radio offered even more.
The result was a fragmentation of the audience: there were no longer a small number of general-interest networks from which viewers had to choose, but a large number of special-interest ones. It was a boon to niche marketers who identified their products with very specific demographic groups, but a nightmare for mass-marketers who wished to reach as many members of the general population as possible at a reasonable cost.
More Choice, More Control, More Communication
The development of industry, transportation, and communication resulted in greater choice and control. Customers who originally could not purchase a jar of mustard in their local supermarket suddenly had a choice between dozens of brands, trucked in from across the nation to be set side-by-side on a shelf.
Given this development, it was no longer sufficient for a seller merely to offer an item to customers desperate to have anything - they had to generate demand by convincing customers that their brand was the best among many options, and to make it as easy as possible for the customer to obtain.
Into Cyberspace
For a time, suppliers were able to control the media to guide customers in their choices, but the introduction of the Internet changed that significantly: communication was now far more open than it had previously been.
At first, this seemed a boon: the Internet was a new channel, advertising was cheap, and sellers could create highly customized niche-based messages that could be positioned to very specific and receptive audiences.
The downside was that advertisers were no longer in control of the media, and the Internet was a democratic environment in which anyone could be heard. Word-of-mouth was no longer a fringe method of promotion, as any person could easily voice his opinion at no cost.
Consider the example of the 2003 film, Gigli, which was heavily promoted in the media and the studio expected it to be a smashing success. The film opened to crowds on the east coast - and unimpressed audiences expressed their disappointment online. Three hours later, when the film opened on the west coast, the crowds were considerably thinner.
This could not have happened during the era of mass-media, when even channels eager to be the first to report would require several hours to prepare and deliver a broadcast, and professional reviewers would be counseled by advertising managers to be gentle in their criticism of products whose advertising dollars kept the media in business.
The Experience Economy
In an environment of such intense competition, customers flock to providers who offer them more for less.
In the manufacturing sector, the means of competition is a careful balance between quality and price: giving the customer a set of features that serve their needs for the least possible expense. In the retail sector, the means of completion became the selection and prices of merchandise.
The constraints of reality, however, lead to commoditization: eventually, every firm will offer a product with the same features at about the same price. There will be temporary variations as one firm moves ahead of the others, but they will catch up quickly.
As a result, firms are now seeking to compete in ways that are more subjective and idiosyncratic - namely, customer experience.
Customer experience is easiest to understand in the reductive sense: it's about reducing the friction of interactions surrounding the product (obtaining it and using it). It's also fairly simple to address, but remaining attuned to the customer experience to recognize where friction occurs and solve the problems that are causing it.
Customer experience is more difficult to understand in the productive sense: it is about increasing the satisfaction of customers in those same interactions. This requires more speculation, and is more difficult to address - because while it is simple to observe where customers are experiencing pain, it is difficult to imagine opportunities that might delight them.
The shift to experience is disconcerting to marketers because it explicitly shifts the control from the producer to the consumer, and because consumers are highly idiosyncratic. In reality, the consumers were always in control - able to vote with their buying dollars as to whether the decisions made by the producer were acceptable - and the sense that marketers "sell" the consumer has been an illusion. In that sense, customer experience can be embraced as the opportunity for producers to listen more closely and make more informed choices in provisioning the market.