5 Trends Driving The Rise Of Product-As-Platform

Chief marketing officers are facing demands for a more service-oriented approach to products. Increased commoditisation and innovative partnerships are just some of the factors to consider.

5 Trends Driving The Rise Of Product-As-Platform

It’s a seismic shift: Companies across a variety of sectors are switching from simply marketing their products to turning them into platforms that can be used to offer customers a connected service ecosystem.

Nest is the poster child for the trend. When combined with sophisticated data analysis, its thermostats and smoke detectors transform from one-off products into a responsive home management system that enables ongoing dialogue and deeper engagement with customers.

The potential business benefits of product-as-platform haven’t gone unnoticed in the C-suite. As marketers face demands for a more service-oriented approach to product, we have identified five key technology, commercial, and behavioural influences to be aware of, and analysed what they mean for CMOs.

1. Increased Commoditisation

Commoditisation is having a big impact on the rise of the product-as-platform. Sectors including automotive, airline, financial services, and utilities are increasingly commoditised because easy online comparison sites mean consumers can make choices based on cost rather than brand. Finding a profitable solution in these markets requires a fundamental rethink of what constitutes brand loyalty. This includes focusing less on the attributes of the brand and more on any unmet consumer needs that the brand can help meet profitably.

U.S. drugstore retailer Walgreens is responding to this challenge by offering wraparound connected digital health services that incorporate much more than just the drugs or devices to monitor blood pressure or check glucose levels, such as its Walgreens Connect app.

In transport, French rail operator SNCF goes beyond A to B train journeys by offering a door-to-door service that allows travellers to book a train plus taxi, car hire, and even flights in one single booking.

As these examples demonstrate, the challenge for CMOs in commoditised sectors is to create additional value around the brand by solving a bigger problem for the consumer rather than merely supplying and marketing a one-off product or service.

2. Connectivity And Data

Faster network connectivity, coupled with sensors that enable previously static objects to communicate, such as house keys, has opened a world of opportunity for businesses looking to weave smart digital features around previously functional products.

Take Pirelli’s Cyber Tyre technology, which has embedded sensors to report on road conditions and vehicle performance. By leveraging digital technologies that collect and analyse real-time data from cars, the automotive sector can expand into product-as-platform by offering a host of safety-related, entertainment, and information services far beyond their core offer.

For CMOs, this level of innovation requires a closer working relationship with the CTO and CIO to ensure that connectivity and data are being exploited to their true potential in order to identify new services that can help build brand and increase customer loyalty.

3. Personalisation

Another response to commoditisation that is impacting the rise of the product-as-platform is the trend to personalise products and service experiences. Nike was at the forefront of mass personalisation with user-designed shoe offerings dating back to 1999.

The latest generation of data analysis is allowing CMOs in a range of sectors to anticipate and respond to consumer preferences in a much more immediate and sophisticated way. Not only does personalisation give brands a unique edge, initial findings suggest that consumers spend more time visiting the websites of brands offering personalisation and display greater loyalty.

Sports fuel brand Gatorade is harnessing growing consumer demand for personalised products and services to answer the challenge of commodisation in the energy drinks sector. Gx, its personalised hydration system, uses consumer data to enable professional athletes to refuel based on their individual needs. Gx will roll out to a wider consumer target this year.

The challenge for CMOs, particularly in FMCG , is to constantly explore opportunities for tailoring products and services to customers’ individual needs. Staying ahead of sector trends, mining consumer and usage data for insights, and encouraging consumers to voice any unmet needs around the brand will help inform a company’s personalisation strategy.

4. Innovative Partnerships

The rise of the product-as-platform is also reflected in new partnerships between companies in different sectors as they combine insights and products to create new services.

In FMCG, adidas has partnered with Spotify to create Adidas Go, an app that allows users to accompany their workouts with Spotify music selected to match their running pace and music taste. Meanwhile, Facebook Messenger has joined forces with KLM Royal Dutch Airlines to allow passengers who book flights through KLM.com to get boarding passes and use live customer service chat to make flight changes all within the messenger app.

For CMOs, these partnerships often enable the kind of disruptive innovation and fast response to consumer demands that might be harder for one company to achieve alone. They also open up the potential of entirely new revenue streams for both companies. However, a great deal of thought needs to go into identifying the precise consumer need the partnership intends to address and the brand pay-offs for each partner.

5. The Sharing Economy

The “sharing economy” is driving the product-as-platform by providing digital platforms to help people monetise underutilised assets ranging from property (Airbnb) to their home Wi-Fi (Fon). The car industry has seen a variety of new services along these lines. For example, Ford has developed the Dynamic Shuttle concept that allows urban commuters to request trips on demand through a smartphone app.

Not all brands lend themselves to asset-sharing platforms such as Airbnb. In the context of a wider trend towards sharing—experiences/advice/social—CMOs should ask whether their brand has a role to play in adding value by enabling consumers to share recommendations, recipes, reviews, and opinions.

Takeaway

The product-as-platform trend is the culmination of technological, social, economic, and behavioural trends. As custodians of the entire customer journey with oversight of customer, commerce, and content, CMOs are driving both product development and the expansion of product into platform. By blending understanding of these trends with insight into consumers’ needs, expectations, attitudes, and cultural references, CMOs are well positioned to shape a new platform’s brand, role, and purpose. Done well, the product-as-platform represents a significant opportunity to enhance brand building, strengthen loyalty, and create new revenue streams.