“Ecosystem Marketing: The Future of Competition” – Christian Sarkar and Philip Kotler
Recent examples (e.g. Marathon Oil, Russian Influence Campaigns) of online mass manipulation show us the power of ecosystem marketing is not to be dismissed. In essence, ecosystem marketing is about understanding the market as a network of participants and being able to influence the right actors at the right time.
An ecosystem view of marketing allows us to see early signals that traditional marketing approaches may miss altogether – until it’s too late. We decided to take a deeper look at what ecosystem marketing entails – especially for business.
All companies will die sooner or later.
Companies used to last 75 years. Now the average company dies or disappears in 15 years.
Companies die for a number of reasons. One growing reason is that the company’s leaders do not understand the ecosystem that supports the company. Just like a species can die when a key nutrient is withdrawn from its ecosystem, a company can die when one or more elements in its ecosystem shift unfavorably. Companies must understand the dynamics of competition in their ecosystems.
What shifts are occurring with its customers, suppliers, communities, competition, etc.?
How should a company respond to change? Is it possible to disrupt the competition?
Ecosystem marketing is the process of positioning your idea, message or product in the right ecosystems to gain visibility, engage prospects, capture attention, and create customers. It is the process of discovering, analyzing, understanding, and taking marketing actions – in four distinct yet interrelated ecosystems:
- Category, and
When done right, ecosystem marketing delivers the following advantages:
– it accelerates the time to market/value
– it positions the company effectively vis-à-vis its competitors
– it improves the efficiency of marketing campaigns
– it improves visibility and awareness with key stakeholders
– it helps establish category leadership
Now let’s explore each of these ecosystems. We’ll present the critical questions to consider, and illustrate what we mean with a micro-case study. A visual map of these various ecosystems is very useful in understanding where a company stands vis-à-vis its competitors, and to design the right ecosystem strategy based on identified gaps and deficits. Ecosystem maps are illustrations of what you learn as you uncover information and intelligence about the ecosystems you want to participate in.
Ecosystem visualizations can be built manually, or they can be built using real-time, big data visualization tools. The ecosystem maps we’ve used are explained in the notes section at the end of this article.
Let’s begin with an observation: online ecosystems are abstractions of real-world ecosystems. Most real-world ecosystems thus have a mirror reflection on the Internet. Your website sits in a digital neighborhood, surrounded by connecting sites that make up your online ecosystem.
Company ecosystems are defined as the digital neighborhood in which your business is located to include your partners, suppliers, and distributors. It is your business ecosystem.
The concept of the business ecosystem first appeared in the May-June 1993 Harvard Business Review article, Predators and Prey: A New Ecology of Competition by James Moore, and won the McKinsey Award for article of the year.
Moore defined “business ecosystem” as:
An economic community supported by a foundation of interacting organizations and individuals—the organisms of the business world. The economic community produces goods and services of value to customers, who are themselves members of the ecosystem. The member organisms also include suppliers, lead producers, competitors, and other stakeholders. Over time, they coevolve their capabilities and roles, and tend to align themselves with the directions set by one or more central companies. Those companies holding leadership roles may change over time, but the function of ecosystem leader is valued by the community because it enables members to move toward shared visions to align their investments, and to find mutually supportive roles.
Another definition for “business ecosystem” was developed in Strategy as Ecology by Marco Iansiti and Roy Levien (March 2004, Harvard Business Review). They defined business ecosystems as the “loose networks – of suppliers, distributors, outsourcing firms, makers of related products and services, technology providers, and a host of other organizations.”
Is our company positioned in the right ecosystem? What can be done to make sure you are positioned in the right location in your digital neighborhood?
Without positioning your company in the right digital location, there is very little chance you will find the right audience for your products and services.
Competitor ecosystems are defined as the digital neighborhoods your competitors are positioned in. They include your competitor and their network of partners, suppliers, and distributors.
Are your competitors well positioned in the ecosystem you are competing in? Is there anything that can be done to improve your company position vis-à-vis your industry competitors? Are there strategic or tactical weaknesses in your competitor’s positioning that your company could exploit?
The best companies don’t just invent something to sell us, says category design expert Christopher Lochhead. They don’t simply make products or services that incrementally improve on whatever came before. Instead, they create a new category. According to Lochhead, the greatest category designers in the technology industry never leave category to chance. They take the next step to educate the market to see the world the way they do.
This is the essence of competing in the category ecosystem. You may want to brush up on the category design journey– which says that your point-of-view (POV) makes it crystal clear what you stand for, what you stand against, and why customers should choose you over the rest.
What is the category we are competing in? Can we create our own category? How can we own the control points in our chosen category ecosystem? How do we demonstrate our leadership?
The last type of ecosystem is the customer ecosystem – the segmentation of the marketspace based on the type of customer your company is seeking. Segment the ecosystem by “jobs to be done.”
Who is the customer? Where can they be found? What job are they hiring us to solve? How do we make sure we frame our messages correctly to get the customers attention in an ethical way? Can we insert ourselves into the conversation and consideration? How do we build trust? What is our winning story? What makes us unique? How will we get and keep attention? How will we demonstrate thought-leadership? What tactics work best for our customers in the long-term?
Ecosystem marketing rewards the thought-leader, the company that builds a new category or demonstrates a winning value-proposition in a crowded market. By creating a differentiated message that resonates in each of these four ecosystems, a company can quickly spread its point-of-view in the market and disrupt the traditional “three-horizons model.”
Steve Blank tells us that the three-horizons model is no longer applicable, because “the three horizons are no longer bounded by time. Today, disruptive Horizon 3 ideas can be delivered as fast as ideas for Horizon 1 in the existing product line.”
A key component of this speed to market is ecosystem marketing.
Furthermore, the role of messaging in an ecosystem cannot be over-emphasized. The right message at the right time for the right audience– this is the hallmark of successful ecosystem marketing initiatives.
When Nike decided to make Colin Kaepernick the face of its “Just Do It” campaign, it knew exactly what the message was, and who it was targeting. Professor Scott Galloway explains: “…the calculus here is that this is an opportunity to come across as a leader, to do something bold, and strengthen your relationship with 90-95% of your customer base at the risk of alienating 5-10% – a good trade.”Nike’s customer ecosystem rewarded them overnight.
Tool: The Ecosystem Marketing Canvas
Putting all of this together, we’ve created a tool to help businesses plan their ecosystem marketing strategy. We hope you find it useful. (Download the PDF here >>)
The Ethics of Ecosystem Marketing
Trust is the currency of ecosystems. In fact, it is the future of your brand. According to this report from Accenture:
The heightened transparency inherent in our digital world means trust is a highly flammable, ever-present concern. Managing trust cannot be relegated to simply addressing individual incidents with public relations as necessary. Instead, companies need to intentionally create a culture that builds, maintains and preserves trust. They must bake trust into their DNA, strategy, and day-to-day operations. In this age of transparency, how a company does things has become as equally important as what it does. Trust must permeate relationships with all stakeholders—from employees, to customers, suppliers, investors, analysts and the media.
Companies will have to double down on consent. Business must inform the customer of all their options. Omissions and “alternative facts” are not an option.
In the “war of ideas,” the line can be drawn as follows: we marketers should never convince the customer to buy something not in their best interest.
In other words, our messages should never seek to deceive the consumer.
Our laws provide for “truth in advertising” – but do we take them seriously enough? Also, why don’t these laws apply to political advertising?
Here’s the FTC.
Are you ready?
Stay tuned. Our next article on the subject will explore ecosystem strategy.
- The ecosystem maps used to illustrate the various types of ecosystems were created using an ecosystem visualization tool: Ecosystematic. The colors for each node in the maps signify traffic and attention levels.
Philip Kotler is the “father of modern marketing.” He is the S.C. Johnson & Son Distinguished Professor of International Marketing at the Kellogg School of Management at Northwestern University. He was voted the first Leader in Marketing Thought by the American Marketing Association and named The Founder of Modern Marketing Management in the Handbook of Management Thinking. Professor Kotler holds major awards including the American Marketing Association’s (AMA) Distinguished Marketing Educator Award and Distinguished Educator Award from The Academy of Marketing Science. The Sales and Marketing Executives International (SMEI) named him Marketer of the Year and the American Marketing Association described him as “the most influential marketer of all time.” He is in the Thinkers50 Hall of Fame, and is featured as a “guru” in the Economist. He is the author Confronting Capitalism: Real Solutions for a Troubled Economic System, 2015; and Democracy in Decline: Rebuilding its Future, 2016.
Christian Sarkar is the editor of THE MARKETING JOURNAL, an entrepreneur, marketing consultant, and activist. He is the founder of Ecosystematic, an ecosystem visualization tool. See also the $300 House project and FixCapitalism.com. He is the co-author (with Philip Kotler) of Brand Activism: From Purpose to Action (2018).