The future of Marketing according to Regis Mc Kenna

Regis Mc Kenna has been the Californian ICT marketing guru since the end of the nineteen eighties. And he is certainly one of the most renowned authors in the area. Following into his footsteps, Christine Moorman[89] , a professor of marketing at Durham University, NC USA, remarks that (in 1999) marketing is becoming more and more pervasive as it stops being the exclusivity of marketing departments because “everything is marketing.” Even production is about marketing and marketing is about production, etc. Likewise, in my previous work entitled Visionary Marketing[90] I insisted upon the difference between the marketing function and marketing activity, a more universal way of handling marketing, and more holistic.

Changing the engine while flying

The incumbent telco dilemma hinges upon 4 different factors. First and foremost, the financial pressure that they have to face is tremendous. Despite the outstanding turnarounds undertaken by most of these companies, most of them remain very vulnerable because of the huge debt that they have gathered. Secondly, the pressure on their core revenues is also tremendous due to the fact that the prices for their core activities are going down at a very fast pace. On the one hand, regulatory demands on the lowering of interconnection prices are increasingly stronger. On the other hand, end prices are naturally eroding because of the commoditisation of such services (classic product life cycle issue). Thirdly, clients are putting pressure on telcos for them to lower their prices (mostly B2B clients) and reduce their telecom spend as well as demanding faster and better ROI’s. Lastly, shareholders are increasingly demanding in terms of innovation and new product investments.

This is exactly where the biggest problem lies. Such new products and services imply heavy investments in R&D and infrastructure and their results may not be visible immediately (see Metcalfe’s magic quadrant on page 2). This is why incumbent telcos have to bolster creativity and innovation, in order to improve operational results, without threatening the financial equilibrium which has just been reinstated. Keeping the balance right is very difficult. Cisco’s IBSG[92] consultants coined the following phrase to describe this situation: Changing the Engine while flying. Indeed, this is just as if we were asking Lindberg to replace his old propeller engine for a new jet in the middle of the Atlantic Ocean – certainly not easy …

Figure 28: The incumbent Telco dilemna[93]

Figure 29 : Telecom offerings at the end the Internet bubble[94]

Growth & diversification

This unusual situation for telcos will entice them to try and cover the whole spectrum telecom products and services, whether it be new lines of services or new markets and a combination of those. Three main strategic options are available to them: Firstly, to increase their penetration on their existing markets, namely through the globalisation of their presence (against all odds, France Télécom emerges as the champion in that area with 41% of its revenue generated abroad, versus only 11% at British Telecom[95]; secondly, to up sell new value-added services or even by selling new services or products outside their core business activities like Internet services or even fully-fledged integration services; thirdly, to move into outsourcing and/or out-tasking services, which enable telcos to generate recurring revenues (typically over 7 or 5-year periods).

The reason why going out of the Internet bubble years became so difficult for telcos was their choice to diversify at full speed outside of their core-business, and therefore indulging a record buying spree involving the buyout of new technologies, new people and new companies, not to mention worldwide expansion. All was not bad in that strategy but the impact of bad choices was so huge that it implied the systematic denial and rejection of any kind of strategy vaguely negating the ‘core-business’ diktat.