Last week we discussed how digital marketing was finally taking off after what some feel was a slow start. Today we look at another technology that many marketing experts have been preaching will be a game-changer. The technology is mobile payment systems. While there are many flavors of mobile payments, the ones that appear to be gaining the most traction are systems that conveniently allow purchasers to simply tap, point or wave (a.k.a. contactless payment) their mobile device to make a payment.

Mobile payment technology, to some extent, has been around for a several years and has attracted major banks and credit cards companies as well as Google, with its Google Wallet, and few others. Back in 2012, we discussed this technology and indicated that several leading retailers, including Walmart, Target and CVS, were working together to develop their own mobile payment system. However, the system the big retailers are working on is different because, unlike nearly all the other systems on the market, control of the financial side resides with the retailers and not with the big financial houses.

But is it really a big deal who handles the money? You bet! So big that it appears these retailers are circling the wagons in an attempt to keep out competitive mobile payments. As discussed in stories in both Los Angeles Times and USA Today, top retailers have put a stop to allowing customers to pay using a new mobile payment service introduced last week by Apple. According to these stories, the issue is all about control. The retailers, and specifically the group they belong to (Merchant Customer Exchange) that is developing the technology called CurrentC, want to bypass banks and credit card companies and avoid paying credit card processing fees. These fees range from 2% to 4% per transaction. While these fees may not seem to be very big, consider that the mobile payment market in the U.S. is forecasted to be $90 billion by 2017. Thus, the CurrentC mobile payments system, which is linked to users's debit card accounts, offers retailers the potential for enormous savings while accepting other payment systems may still leave retailers on the hook for huge processing fees.

Whether the big retailers will actually implement their own technology remains to be seen. They are only in the test market phase, and much can still happen to derail their system. Also, potential backlash from customers who want to use Apple Pay or another system could create even more problems. If Apple and others remain strong, one could see that, even though members using CurrentC will have their own system, retailers will have little choice but to accept other payment systems.

Power of Digital MarketingEvery day it seems marketers are being confronted with more evidence signaling a change is underway in how promotion should be done, especially for consumer products. And at the heart of this change, we are seeing traditional methods of promotion, such a television and radio advertisements, newspaper coupons, product demonstrations and many others, are being displaced in favor of new digital promotions, such as social media, online advertising and mobile technologies. While traditional promotions still represent the bulk of spending on consumer product promotions, many companies now understand that what they originally thought about digital must be reevaluated.

For instance, when social media was first used by marketers, it was primarily intended to be a one-way communication tool, such as using Twitter to let followers know about a new television advertisement that they could watch on YouTube. However, as social media has evolved, marketers have learned that it can be used to stimulate conversation and, thus, become a two-way interactive form of promotion. This makes social media more like personal selling than advertising. But that is not all, marketers are now finding that actively monitoring social media can be used as a way to signal when other types of digital promotions should occur. This has led to an explosion in so-called responsive or real-time marketing, where companies look to program their promotions based on something that is happening right now, such as one of the company's product receiving heavy social media coverage. With responsive marketing marketers may be able quickly to adjust other promotions, such as online and electronic billboard ads, to take advantage of what is being discussed in social media.

In the mobile technology arena, companies are obtaining promotional value by creating product-oriented apps downloaded by loyal customers. The apps not only serve as useful freebies for valued customers (e.g., games), they also become promotional outlets as companies target ads and special sales promotions on these apps.

A very nice example of a company that has jumped into digital marketing with both feet is found in this story from Fast Company that looks at cookie giant Oreo. Oreo's parent company, Mondelez International, is planning to spend 50% of it U.S. advertising budget on digital promotion. The story traces the path Oreo has taken that has led to digital promotions becoming so important. The story also notes how the digital marketing area continues to evolve and how new options may be coming, suggesting marketers must not only understand what is currently available but also be ready to adjust when new options emerge.

Adjusting Marketing Strategy at TargetStudents in college-level marketing courses are often exposed to case studies that provide insight into important marketing lessons. One lesson that comes out of many cases students read is that marketers must be willing to change. The change may be in how they deal with customers or how they deal with suppliers or how they deal with the media, or thousands of other issues.

While understanding something needs to change is one thing, the decision to make the needed change is a much more difficult pill for many marketers to swallow. Why? Because making the adjustment often means moving away from something that was working and the company was comfortable doing. Moreover, the ultimate result of the adjustment may be hard to predict, especially if the change it is not easy for customers, suppliers or the company.

However, companies that run into roadblocks and are reluctant to change are not long for their industry. Eventually, things will catch up to them. For examples, look at Radio Shack, Blackberry, Kodak and many other companies who once dominated their market and now face tough times. These firms are struggling because they would not accept or did not recognize the changes their market demanded.

Yet, for the companies that do adjust, there can be a significant payoff – staying a relevant brand. For example, in this story from Advertising Age, the CMO of leading retailer, Target, discusses a number of adjustments the retailer as made due to a major credit card breach in 2013. Among the changes is acknowledging their target market is shifting from the suburban middle-class mom, who drives their minivan to the store each week, to customers who shop by mobile device. These changes signaled to Target the need to focus more effort on mobile and online shoppers.  This has resulted not only in stronger security measures but also in a more aggressive online marketing effort.

Understandably these changes have not come easy, but Target's CMO seems to present a good case that Target is doing the right thing.

Status and Target MarketsMany believe the holy grail of marketing is trying to figure out what the key factors are that affect customers' purchase decisions. The general idea is that, with this knowledge, marketers can directly target these factors with their marketing efforts. However, as we note in our Consumer Buying Behavior tutorial, it is practically impossible to isolate one factor as the primary reason someone makes a buying decision. Sure price is often a major influencer, but few people are making a buying decisions strictly on price or on any other marketing factor, as many other issues can impact what is purchased. For example, certain cultural and group characteristics that are ingrained in the consumer can affect what they buy. These characteristics, which are often considered outside of the control of purchasers, can weigh heavily on what is bought. Other external factors include the purchase situation and the economic conditions facing the buyer.

While marketing and external factors heavily affect customer purchasing, marketers almost always find that the most difficult factors influencing consumer behavior are those that exist inside a buyer's head. These internal factors include such things as how much knowledge a customer has about a purchase; the circumstances motivating a customer to make a purchase; how a customer views their self; and many more.

A good example of how internal factors can influence consumer behavior is found in this story from Knowledge@Wharton. The story discusses research that examined how perception of status affects the purchase of new products. While the subjects in this research are business buyers rather than consumers, the results are likely to apply to the consumer market. Essentially, the research shows that those who view their status within a group as being in the middle of the status scale are more likely to adopt new products with the hope the product will improve their status. Those at the top or bottom of the status scale are less likely to buy, primarily because those at the top feel they do not need to increase their status while those at the bottom feel they are so low that the purchase will not help them.

The research method used to gather this information is quite interesting as it involved over 6,000 scientists from around the world. The research also confirms how external "opinion leaders" (well-regarded external people or groups) can influence customers' decisions.

Pricing at Comedy ClubsFor many marketing organizations, determining price is the most challenging of all marketing decisions. The reasons are many, but often it comes down to the difficulty marketers experience in trying to determine what people are willing to pay for the value they derive from consuming a product. While the struggle with price vs. value is at the top of the list when marketers try to figure out what to charge, it is not the only issue they face. Another is whether to design a pricing strategy that is far different than what is customary in the industry and, if they do, how will it be accepted.

For example, for over 50 years, with the exception of music released as a single, most music was sold on an album pricing model rather than an individual song model. That is, if fans wanted an artist's music that was not a single, they had to purchase the full album whether or not they liked the other songs they were receiving. This model began to change when music publishers found Internet sites, such as Napster, uploading songs without publishers' permission. Once publishers researched customers' download preferences, they switched to a customer-friendly pricing model that allows for the purchase of individual songs.

While market forces drove the change in music pricing, other examples show that companies within an industry are the key drivers in changing how pricing is done. For example, airlines have figured out that all seats in a plane are not equal and they now charge more for seats that are located more forward or have slightly more leg room, such as seats in exit rows. While this model is used by nearly all airlines, customers are much less receptive to this pricing compared to music pricing.

Most changes in an industry pricing model, whether customers like or dislike the model, starts with one company trying something new and if successful others will adopt. What may be an example of a new pricing model, that if successful could be adopted by others in the industry, is discussed in this story from Time about an experiment at a comedy club in Spain. Nearly every comedy club in the world charges customers a single price to attend a show, though some may adjust this somewhat based on seat location. However, this club is experimenting with a method where they will charge based on how much a customer laughs. The number of laughs is calculated with facial recognition technology tracking customers' reactions. Thankfully, for customers who experience an excellent comic, there is a cap on what can be charged.  But for the poor comics, who struggle to please an audience, this could be a big problem, especially if their pay is tied to the number of laughs they produce.