Module 3: How Digital Tools Are Changing Placement

Marketing in a Digital World
Professor Aric Rindfleisch
Module 3: How Digital Tools Are Changing Placement
Table of Contents
Module 3: How Digital Tools Are Changing Placement ........................................................... 1
Lesson 3-1: Basic Concept-Placement ..............................................................................................2
Lesson 3-1.1: Placement .......................................................................................................................................2
Lesson 3-2: View From The Quad .................................................................................................. 10

Lesson 3-2.1: Online Shopping ............................................................................................................................10
Lesson 3-3: Digital Concept 1-New Retail ...................................................................................... 12

Lesson 3-3.1: New Retail .....................................................................................................................................12
Lesson 3-4: Case Study-Tesla......................................................................................................... 27

Lesson 3-4.1: Case Study Introduction: Tesla .....................................................................................................27
Lesson 3-5: Digital Concept 2-Desktop Manufacturing ................................................................... 32

Lesson 3-5.1: Self Manufacturing .......................................................................................................................32
Lesson 3-6: Exercise-Thingiverse.com............................................................................................ 48

Lesson 3-6.1: Exercise-Thingiverse.com .............................................................................................................48
1
Lesson 3-1: Basic Concept-Placement
Lesson 3-1.1: Placement
Our third P is placement. This aspect of the marketing mix focuses on making a product
conveniently accessible to potential customers.
For most products, placement involves the physical movement of a product from manufacturer
through a series of marketing channel intermediaries ending with the independent retailer. This
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retailer then provides a number of important functions like displaying the product upon it shelves
and educating its staff about it's features so they can help sell it to potential customers.
Coke is a great example of a firm that has effectively employed this aspect of the marketing mix.
Coke distributes is product, really it's formula, to a network of over 250 bottling partners around
the world. These distributors mix the coke formula with water, bottle it, and ship these bottles or
cans to a network of warehouses, which in turn distribute this product to over 16 million retailers
in more than 180 countries around the world. These retailers include not only grocery stores, but
also convenience stores, restaurants, movie theaters, and vending machines. It is nearly
impossible to walk into a store in most parts of the world and not to be able to buy a bottle or a
can of Coke. That's good placement.
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The placement portion of the marketing mix has a number of key concepts including inventory
management, logistics, and sales force management.
In this module, we will focus on two fundamental concepts, distribution and retailing.
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The distribution channel used by most firms is typically outsourced to a series of independent
firms, like an importer, a wholesaler, and a retailer. For example, take a look at the distribution
channel for imported flowers. The distribution process is often lengthy and requires substantial
resources in terms of both time and money. Each member of this channel is typically
independent from the other members. So each participant is trying to maximize their revenues
while minimizing their cost. As a result, conflicts and misunderstandings among channel
members often arise. In order to properly manage this channel, a manufacturer needs to
carefully select and closely monitor each of his channel partners. This is a very difficult and
costly endeavor that typically drives up the price of this products.
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The retailer is typically the final step in the distribution chain. Selecting the type and number of
retailers is an important decision because it affects the type and number of customers that can
acquire a product. For example, firms that produce luxury goods like Louis Vuitton employ an
intensive placement strategy by making their products available at only a few exclusive retailers.
In contrast, lower priced consumer goods like toothpaste and shampoo, typically employ an
extensive placement strategy by making their products available to as many different retailers
as possible. Now, retailers also vary in terms of their degree of customer service. Some
retailers, like convenience stores, are largely self-service operations where customers locate
and stark products with almost no assistance from the retailer. In contrast, full-service retailers,
like high-end department stores, take a much more active role in assessing a customer's needs
and locating the right product for them.
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With few exceptions such as Dell Computers, most products are sold through an extensive
network of distributors and retailers. These firms play important functions by helping get this
product into the hands of customers. Now, these functions are not free. Typically, a
manufacturer receives about 60-70 percent the products retail price. Thus, traditional product
placement is a very expensive proposition for both firms as well as customers. This traditional
approach is beginning to break down due to the rise of digital tools.
Today, many firms are supplementing or even bypassing physical retailers by making their
products directly available at either an online retailer like Amazon.com or on their own website.
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Now, this trend has been going on for some time, and online sales are growing very rapidly.
Even products that we traditionally want to touch or try out at a store are now being sold online.
A great example of this is Casper, which is a very innovative new firm that sells mattresses
online. That's right, mattresses online. So the first time that a customer gets to try out this
mattress is after it's delivered in their home. Now, if a mattress can be sold online, just about
any product can bypass traditional physical stores.
Now, this growth of online retailing is probably not too surprising to most participants in this
course. However, what maybe surprising is the fact that digital tools are now capable of not only
replacing the retailer, but the entire distribution channel. Today, even large online retailers like
Amazon.com have to physically ship products from the manufacturer to the customer. However,
newly emerging tools such as 3D printers are now making it possible to eliminate the distributor,
by allowing a firm to ship a digital design rather than a physical product.
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A nice example of this is, I have one right over here, bakers' cube. Now, this is all in one
measuring tool for baking cookies and cakes. The digital design for this product is freely
available on Thingiverse.com. So anyone in the world with access to a 3D printer can now print
this out almost for free. So in this new digital marketing environment, we are moving from long
channels for physical goods to short channels for digital goods. In this module, we'll discuss
how new digital tools like 3D printers are starting to change how products are being distributed. I
think you'll find this discussion quite fascinating, and it may alter the way you think about this
aspect of the marketing mix.
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Lesson 3-2: View From The Quad
Lesson 3-2.1: Online Shopping
What types of things do you like to buy online? What type of things do I like to buy online? I like
to buy make-up, shoes, hair products, all types of things. I buy things that I need around the
house. Maybe that's like a new cable for my iPhone or a poster, things, more so, things that just
come up in my day-to-day life that I could just order quickly on Amazon or things like that.
Headphones. Headphones? Like the once you're wearing right now? Yeah. Clothes, shoes,
anything? Would you ever buy a car online? I think I would buy a car online just if everything
lined up with what I was looking for and it's in a different part of the country, then why not order
it online and get it shipped to me if it's a good deal? Oh, if it was a Tesla, I would. Not exactly.
That will be too much to spend on online. I would never buy a car online. I would want to
actually see the car, drive the car, test it out. Who is your favorite retailer? My favorite retailer
like brick and mortar or? Yeah. Any retailer. Oh, man. I would say Toys R Us, but they're not
around anymore. Amazon. I think my favorite store is Target just because it's affordable and you
can find everything you want. I like Urban Outfitters. Okay. I do like Fashion Nova for quick
outfit, but those are probably what I'd choose. So another question is, what is 3D printing? Oh, I
know all about 3D printing. Perfect. 3D printing is where, isn't it, it's complex. It's hard to really
explain, but it's where you can create your own things and turn your ideas into something
physical, is how I would describe it, simply. If you could 3D anything that you would like, what
would you make? I would 3D print food of course. Probably a purse. Cool. Actually a bed. A nice
comfortable bed. Oh, a bed? Yeah. Ah, yeah. Have you ever heard of Thingiverse.com? No.
No. No. I have not. Okay. Oh, yeah. Yeah. Is that the website where they're just a bunch of
things and you can just pick and choose what you want to download and print it? In fact, you'd
say universal things. Oh, okay. Okay. Yeah. All right. Yeah, yeah. Yeah, I'm very familiar.
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Lesson 3-3: Digital Concept 1-New Retail
Lesson 3-3.1: New Retail
In today's digital world, just about any product can be purchased online. For example,
Amazon.com sells nearly 600 million different products. Many of these products would be rather
difficult to locate at a physical retailer. For example, if you were a University of Illinois fan living
in Chennai, India, it would probably be quite difficult to find this University of Illinois scarf at your
local retailer. However, you can easily buy this product from Amazon along with about 7,000
other Illinois items, including T-shirts, hats, and sunglasses. Addition to a large online mass
marketers like Amazon, there are also many highly successful online retailers that specialize in
specific product categories, such as eyeglasses, shoes, and even wedding dresses. In countries
like the US and China, over 80 percent of all consumers engage in online shopping, at least
occasionally, and low-price items like books and clothing are more likely to be purchased online
than in a physical store. Even large, expensive objects are now being purchased online. For
example, a few years ago, my wife and I were recently remodeling our house, and we
purchased our staircase from an online vendor. So online retailing has become a considerable
threat to traditional physical retailers. This online competition has forced several well-known
retailers across a wide variety of product categories, including music, books, and electronics to
go out of business. Here in the US, many indoor shopping malls are closing, and most have at
least a few vacant stores. Due to this threat of online retailing, physical retailers have had to
change how they do business.
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For example, most retailers have established websites that allow customers to both obtain
information about their products and also buy them online. In addition, a growing number of
retailers such as Walmart have made it easy for customers to order online and then pick up their
products at the store. Some retailers have even decided, if you can't beat them, join them.
They're now selling their merchandise through popular online shopping websites, like Amazon
or Alibaba. Also, several physical stores are starting to use digital tools to enhance the shopping
experience.
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In this video lecture, we'll focus on how physical retailers are adapting in response to this new
digital world to form a new retail landscape.
Here are a few examples of this new landscape. Best Buy vending machine. Like many big-box
retailers, Best Buy has had difficulty combatting online retailers. In contrast to Amazon.com,
Best Buy has a much higher set of fixed costs, like the lease for its buildings, the cost of energy,
and the salary of its sales staff. So big-box stores like Best Buy are shrinking in size to bring
these costs down. Best Buy has taken the size reduction to the extreme by installing vending
machines stocked with a variety of digital products like smartphones, cameras, and headphones
across many high traffic locations like hotels, airports, and train stations. At present, Best Buy
has installed over a 100 of these machines across the US.
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Tesco virtual stores. The British mega retailer Tesco has installed a set of virtual stores at bus
stops and subway stations in Seoul, South Korea. In essence, these stores are simply a large
screen that displays various products. Shoppers just need to download a Tesco app. They can
use this app to scan the barcode for any item they want to purchase. The items that they scan,
are then delivered to their home and ready when they arrive. The Tesco app is one of the most
popular shopping apps in Korea, and this virtual store concept is now being copied by other
retailers in other countries.
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b8ta. This new California-based retailer of consumer electronics is quickly expanding as
locations across more than a dozen US states and also a growing presence internationally.
Some of these stores are stand-alone and others are located within larger retailers like
department stores and home improvement stores. b8ta has very little physical inventory, and all
of its products in their stores are displayed out of the box and customers are encouraged to
touch and try them out. Each product also has a tablet next to it that provides product
information and allows for easy ordering. Their stores also have a number of cameras that keep
track of what products customers are browsing and touching. Perhaps the most interesting
feature of b8ta, is that it doesn't make any money from customer sales. Instead, manufacturers
pay b8ta to carry their products in their stores.
These three stores are great examples of a new emerging phenomenon that I call new retail. In
essence, new retail is a collection of strategies: some physical, some digital, that physical
retailers are using to react to the changes of operating in a digital world. Now there are lots of
interesting issues surrounding retailing in a digital world. For the purpose of this discussion, I'd
like to focus on three key observations about this new retailing landscape.
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First, location, location, location. According to many real estate experts, location is the single
most important factor when it comes to selling a home. Thus, it is better to have a bad house in
a good neighborhood, than a good house in a bad neighborhood. The importance of location
also extends to retailing. A substantial body of research shows that online retailing is heavily
affected by location. For example, people who have access to well-priced physical stores are
less likely to shop online. Thus online shopping is more likely to occur among consumers living
in small towns like Champaign, and those living in big cities like Chicago. Thus, the appeal of
the digital is strongly influenced by one's physical environment.
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Second, purchase versus information. In addition to providing a means of purchase, digital
retailers also provide a considerable amount of product information. For example, Amazon.com
provides a product description, extensive technical information, and also user reviews for most
of the products that it sells. So consumers that visit digital retailers can not only purchase
products, but also obtain information about them. Now they can also do the same for physical
retailers. In recent years, there's been lots of discussion about this showrooming phenomenon
in which customers first visit a physical store, and then buy a product online. Perhaps you've
done this yourself. Indeed, here in the US, about two out of every three customers who buy
online, first go to a physical store to examine a product.
Now, although showrooming does happen, in reality, more people engaged in webrooming,
which they first obtain information about a product online, and then buy it in a physical store.
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Third, digital and physical. We tend to think of digital and physical as two entirely separate
things. Indeed, these two forms of retail are quite different in many ways. However, as shown by
the test code example that we just discussed, a growing number of retailers are seeking ways to
blend the two together. This blending of the digital and the physical is often referred to as
Omnichannel Marketing. It was based on the idea that retailers need to take advantage of the
strengths of each of these two shopping channels. For example, physical retailing is more
effective for returning products and obtaining customer service, while online retailing is superior
in terms of conducting product research and getting the best price. So a growing number of
retailers are seeking to have a presence in both of these two channels.
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Here are some academic insights about retailing in our new digital world. In this recent study,
published in the Journal of the Academy of Marketing Science, Michael Sciandra, Jeff Inman,
and Andrew Stephen examined how the use of smartphones affects shopping behavior in
grocery stores. They conducted this study by interviewing 2,000 grocery stores shoppers in the
US, both before and also after they entered the store. They asked shoppers about what they
plan to buy before they went into the store. After they came out, they asked them what they
actually bought. They also asked them about how they use their smartphone while they were in
the store. The results of these surveys were quite interesting.
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First of all, they found that only about 15 percent of all shoppers actually use their phones while
shopping. They then asked how they were using their phones, and found that the majority of
people were using these devices to talk or text with family or friends, rather than using them for
shopping related tasks like checking prices. What was most interesting, is that they found that
shoppers who were busy talking or texting forgot to purchase about a third of the items they had
planned to buy, and they also engage in a higher levels of impulse buying of unintended
purchases.
The results of this study suggest that smartphones often distract shoppers by taking their focus
away from the shopping task, and that this distraction reduces the purchase of items they
planned to buy while increasing the purchase of things they didn't plan to buy.
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In this recent study, published in the Journal of Interactive Marketing, Hyo Jeong Kang, Jung-
Hye Shin, and Kevin Ponto examined how Virtual Reality, or VR, impacts the shopping
experience. They began by examining over 300 customer reviews of store-base augmented
reality.
Based on this assessment, they proposed that virtual reality provide shoppers with two key
benefits. First, visual-spatial cues, which is simply the ability to visualize a product in three-
dimensional space. Second, interactivity, which is the ability to rotate and examine a product in
this virtual space.
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They also proposed that these two benefits allow shoppers to gain more information about a
product and also be more playful with it. They test these ideas through an experiment of over
200 participants and found strong support for their ideas. They also found that the increased
sense of playfulness provided by virtual reality enhance shoppers opinions about the product,
and that the increased degree of information provided by VR increase their purchase intentions.
In some, this study suggests that investments in VR technology maybe a wise strategy for
physical retailers.
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First, market to shoppers. In recent years, there's been increased focus on understanding and
influencing the behavior of shoppers once they enter a physical store. This new trend is called
shopper marketing and has led to a number of tools and strategies for enhancing the
performance of physical retailers. For example, in the US, grocery stores are starting to
introduce smart shopping carts that allow customers to keep track of the things they put into
their cart, and also send them personal ads and promotions. Another way that physical retailers
can market to customers or market to shoppers, is to make their shopping experience more
enjoyable. For example, many shopping malls are now turning into entertainment centers,
complete with amusement rides, water-slides, and even ski slopes.
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Second, enhance the physical by adding the digital. Another way that physical retailers can
meet the challenges posed by digital tools is to employ these tools themselves. In addition to
allowing customers to purchase online, some forward-looking retailers are starting to digitize the
in-store experience. For example. Sephora, a French beauty retailer, has installed something
called magic mirrors in its stores. These are augmented reality devices, that allow customers to
digitally see how different types of makeup would look on their face without actually having to
touch a physical product. Also in Brazil, their clothing retailers C&A uses high-tech hangers that
display the number of likes that an item of clothing has received from fellow shoppers.
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Third, use the power of touch. A growing body of research suggests that many customers have
a strong desire to physically touch products before they buy them, and that they are more likely
to buy products that they are actually able to touch. This may be one reason why many people,
like myself, still shop in physical stores rather than digital ones, especially for products such as
clothing, food, and furniture. The ability to touch a product before buying it is an inherent
advantage for physical retailers. Thus, they should leverage this advantage as fully as possible.
For example, the New York furniture store, Coco-mat lets tired shoppers take a nap on its
mattresses. In addition to taking advantage of customers need for touch, this is also a great way
to keep customers in their store for a longer period of time.
The days of the big-box store are numbered, they are simply too big and their costs are too
high. It also cost a lot to shut them down. That's rather than making such a large and risky
investment, retailers can reduce this risk and save money by setting up a pop-up store. These
are small retail stores that exist for a short period of time, which may be as brief as a single day.
Because of their small footprint and temporary duration, these pop-up stores have low fixed
cost, but often generate substantial attention and considerable customer traffic. For example,
Lego has begun to open a pop-up stores in the empty store fronts and shopping malls across
the US. Facebook recently opened up a pop-up cafe in London, and the German clothing firm,
Adidas, opened up a pop-up store in Barcelona, Spain, that looked like a giant shoe box.
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Lesson 3-4: Case Study-Tesla
Lesson 3-4.1: Case Study Introduction: Tesla
For most of us, buying a new automobile is one of the most expensive and also one of our most
important purchase decisions. Here in the US, a new car typically cost at least $20,000 and
many people keep their cars for five years or more. Now cars are also quite interesting because
they are products that are both highly functional it also very symbolic in nature.
Most people who own cars drive them nearly every day. And since they're large and highly
visible, they often serve as a signal to others. For example, the symbolic meaning of a Subaru is
very different than that of a BMW. Now, I don't know about you but I really like cars. My first car
was a used 1976 Chevy Camaro. I'm [LAUGH] sure many of you are not live at that time. But
buying that car was where the highlights of my life. Since then I've owned a number of different
cars including BMW, Land Rover, Alexis, Nissan, Plymouth. Remember those? Pontiac, Saturn,
and several Saabs and Volvos. However, by far the best car that I've ever owned is a car that I
currently own, a 2018 Tesla Model 3. What I like most about this car is how different it is from
every other car that I have owned over the past 35 years.
Now, what is most different about Tesla is what it doesn't have.
For example since test those are electric vehicles. They have no engine, no transmission, no
radiator, no muffler and of course, no gas tank. Because of all these differences, I had to
completely change my perspective of automobiles. As a result, when I drive my Tesla, I feel like
I'm driving a car for the very first time. In fact, I'm feel like I'm back in my Camaro in the early
1980s. That's just my Tesla makes me feel young again.
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Well, that's enough about me. Let's talk about the purpose of this case study. What we're trying
to do here in this Tesla case is to illustrate and apply the concept of new retail to an actual
business.
Let's take a look at Tesla's background.
Tesla is an American automobile manufacturer of electric cars and trucks that was founded in
2003. It is based in Palo Alto, California and the Heart of Silicon Valley and is headed by a
fellow named Elon Musk, who currently serves as its CEO. As you may know, Elon is one of the
world's best-known CEOs has appeared in movies such as Iron Man and has a huge social
media following. He's really a celebrity. Now despite its recent founding and relative high price
of his vehicles, Tesla is currently one of the world's largest automobile manufacturers and
quickly expanding in scope. It's sales have steadily increased over time is introduced a number
of new vehicles including a new space age Cybertruck and is opening new manufacturing plants
in both Asia, and also Europe. Now in contrast, many traditional automobile manufacturers are
facing declining sales now shrinking their product line. So on the surface, Tesla seems to be a
company on the rise. However, over the past few years, its stock price has experienced
dramatic ups and downs and both Tesla and Elon Musk are the targets of a substantial degree
of skepticism variety of business leaders, academic experts, and the mass media.
Now part of the reason for this skepticism is a way in which Tesla and Elon Musk conduct
business, which is very different from traditional automobile manufacturers in almost every way
including the way which Tesla handles its retail operations.
Tesla's retail strategy is dramatically different from the way in which automobiles have
traditionally been sold the assigned reading and video highlights some of these key differences.
In brief, there are three main ways the Tesla differs from traditional car companies in terms of
the retailing strategy.
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First of all, the number of retail locations. For a number of reasons, Tesla has far fewer at retail
locations compared to nearly every other traditional automobile company. For example, there
are around 50 Volkswagen dealers in the state of Illinois. But only six Tesla retail stores, and all
of them are located in the Chicago area. Second, size and design of retailers. Traditionally,
dealerships are large buildings located at the edge of a city or a town.
They usually have dozens of cars lined up in expansive parking lot and also several within a
large and glitzy showroom. In contrast, Tesla's retail stores are quite small and often located
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within a mall or shopping center and have just two or three vehicles in a rather austere
showroom.
Third, the role of retailers. The main role of most traditional dealerships is to make a sale which
often involves a somewhat pushy sales person and may take several hours to negotiate the
deal and complete the paperwork in contrast. The main role of a Tesla retail store is provide
information about its vehicles. Also, prices are not negotiated and the purchaser Tesla can be
done within five minutes or less on its website. In fact, over 70% of all Tesla sales are made
online, away from stores. Perhaps in your pajamas.
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Now sometimes being different can be quite good but it can also be rather risky. Thus, I like you
to consider the wisdom of Tesla's retail strategy in terms of marketing in a digital world.
Specifically, I like you to answer the following three questions. First of all, what role do digital
tools play in Tesla's retailing strategy and what are those tools? Second, what are the pros and
cons of this strategy? And third, how can Tesla improve its retailing strategy? Well, I hope you
enjoy working on this case study and I look forward to seeing your thoughts. Hey, thanks for
sticking around here. Here's your bonus fact. Although Elon Musk is its current CEO and widely
recognized as the face of Tesla, it was actually not one of its initial Founders. You know who
they are? Well, before you Google it, the company was initially founded by two fellows, Mark
Carpeting and Martin Eberhard and Martin is alumnus of the University of Illinois, go Alana.
Good luck with the case.
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Lesson 3-5: Digital Concept 2-Desktop Manufacturing
Lesson 3-5.1: Self Manufacturing
"Twenty years from now, we'll have Star Trek replicators that can make anything." That's a
quote from Professor Neil Gershenfeld who's the Director of MIT's Center for Bits and Atoms
and a very smart guy. This quote nicely illustrates the revolutionary potential of desktop
manufacturing. Although we don't yet have Star Trek replicators on our desktops, over the past
decade an increasing array of digitally enabled desktop devices have been created such as
desktop machines, laser cutters and my favorite 3D printers. These devices are relatively low-
cost and fairly easy to use. Of all these various devices, desktop 3D printers are by far the most
common, the most affordable and the easiest to use. Thus this video lecture we'll mainly focus
on this particular technology. I first learned about 3D printing back in 2008. At that time I was
teaching at the University of Wisconsin, just north of here and I learned about this technology
from a student presentation. I was so intrigued that I bought a 3D printing kit and built my first
printer in 2010. Since that time, I've purchased and used dozens of 3D printers and have made
a variety of different objects including a copy of my wife's head, a shallow head in the shape of
a Tyrannosaurus Rex and a six-foot tall 3D printed man. I also co-founded along with my
colleague Vishal Sachdev, the Illinois MakerLab, the world's first 3D printing lab in the business
school. Now, I have a question for you. Take a few moments to think about your favorite object.
You got it? Now, I'm not a magician, I'm just a marketing professor. So I don't know what you
picked. However, I believe I can tell you two things about it.
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First, you probably didn't make it or even see it being made and second, it was probably made
by somebody you don't know living in a far away place most likely somewhere in China. In
essence, your favorite object wasn't your idea, it was someone else's idea, you just happen to
like it. However, if you have access to a 3D printer or other types of desktop manufacturing
devices and you know how to use them, you now have the power to turn your ideas into objects.
According to several reading sources including Wired Magazine, The Economist, The New York
Times, 3D printing will lead to a new industrial revolution and dramatically alter our economy
thus this new emerging digital tool has important implications for the way products are
distributed and placed in the marketplace. Now, at this point in time, most people have heard of
3D printing but don't really know much about how this technology works or what they would do
with it thus this video lecture will provide you with this type of essential information.
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3D printers are currently being used by millions of people around the world to make a wide
variety of different products. Here are three examples of how individuals like you and me are
using this digital tool to create and distribute a variety of cool and helpful products.
First, the functional hand. Our hands are one or two of the most important parts of our body. We
use them throughout the day for all sorts of different task. Most people take using their hands for
granted and probably don't even think about how they will get through life if their hands didn't
work properly. Unfortunately, some people especially those of us over 50 have difficulty using
our hands due to a variety of different conditions such as arthritis, carpal tunnel syndrome or
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multiple sclerosis. People who have these conditions often have difficulty holding small objects
such as spoons or pencils. In order to provide help to these folks, two designers in Chicago,
Linda Mary and Molly Gardener have designed a product called Functional hand. This simple
device holds small objects in place and helps people with hand mobility challenges use them by
grasping the functional hand. We actually manufacture this product for Linda and Molly right
here in Champaign at the Illinois MakerLab, Illinois is the new China.
Second, Baker Cube. I'm not a very good cook but I like to bake things like cakes, cookies and
cupcakes. My most favorite part of the baking process is actually licking the butter off the spoon.
How about you? Now, baking is fun and fairly easy. However, it requires lots of ingredients and
tools, especially measuring cups and spoons. If you want to bake a cake for example, you have
to measure lots of different things such as flour, salt and baking powder. In order to measure all
of these different ingredients, you'll need at least one measuring cup and several different types
of measuring spoons. In addition to having to buy all of these different items, you have to keep
them organized and clean them off when you're done. There should be a better way. In 2017, a
designer named Iomaa I-O-M-A-A provided a solution to this problem by designing a product
called Baker Cube and posting it on a 3D file-sharing website called Thingiverse so that anyone
in the world who had access to a 3D printer could download it and print it out. This ingenious
product fits in the palm of your hand and contains all of the measures that a baker would need
ranging from a quarter teaspoon all the way to a cup. Nanohack. Now, this is one of the coolest
examples of desktop manufacturing I've ever seen.
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As you know, the year 2020 was unlike any other. The coronavirus outbreak quickly spread
around the world, killed many people and changed our way of life. The extent and rapid spread
of this virus quickly overcame our ability to cope with it and resulted in a shortage of many
essential medical supplies and equipment especially respiratory mask. In March 2020, a small
group from Chile created a digital design of a 3D printable mask made from a copper infused
thermoplastic. They uploaded the design file for this mask on a website so that anyone in the
world who has access to a 3D printer and this particular type of thermoplastic could download
the design and print out this mask for free. It took about two hours to print this mask and it only
cost $10. Amazing stuff. This was just one example of the many different types of products that
were digitally designed and 3D printed in response to the Coronavirus. For example, a group of
Italian volunteers designed 3D printable valves that could be used to connect patients to
ventilators. Now, medical supply companies were charging as much as $10,000 for these
valves, and they were in short supply. The 3D printed version cost, you ready for this? One
dollar. A very powerful example of how desktop manufacturing helps individuals achieve digital
democracy.
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A desktop 3D printer is an electronic device, usually about the size of a microwave oven, that is
capable of turning digital designs into physical objects through an additive process. In essence,
a 3D printer creates an object one layer at a time, in a manner similar to how construction
workers build a skyscraper. Now, there are a variety of different types of 3D printing processes
and lots of different materials that can be printed, including plastics, metals, ceramics, and even
chocolate. Yes, 3D printing can be delicious. Regardless of the specific processes or types of
materials, all 3D printers start with a digital model that they will then turn into a physical object.
Thus, 3D printers are good example of a new digital marketing tool. 3D printing technology is
not new, printers have existed for over 30 years. However, until recently, these printers have
been very large and very expensive. Well, the past decade, the size and cost of these machines
have shrunk dramatically. Many of today's 3D printers can be purchased for less than $1,000
and are small enough to sit on your desk. As a result, the number of 3D printers is expanding
rapidly, and this tool is quickly becoming democratized and available to consumers around the
world. 3D printing is a fascinating technology and one of my key interest in terms of both
teaching and research. There are lots of things we could talk about in terms of 3D printing.
However, in this deeper dive, I'd like to focus on three important topics.
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First, how does 3D printing work? As we discussed earlier, there are lots of different 3D printing
technologies including selective laser sintering, stereolithography, and fused deposition
modeling, just to name a few. However, nearly all 3D printers work in one of two different ways,
they either take a soft material and make it hard, or take a hard material and make it soft. Thus,
just about any material that can be hardened or softened can be 3D printed. 3D printers are
computer-controlled devices that contain a printhead and various hydraulic motors that move
the printhead or the print platform in three different dimensions. The movement of this printhead
is determined by a digital design file, which is read by the printer's motherboard. These design
files can come from a variety of sources that could be created using a 3D modeling software
package, such as Google SketchUp, could come from a digital scan or could be a digital
download from a file-sharing website such as Thingiverse. Thus, if you can download a file, you
can create a 3D printed object.
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Second, what's special about 3D printing? 3D printing has a number of special characteristics
compared to traditional manufacturing techniques. First of all, 3D printing is a very sustainable
manufacturing approach. Unlike traditional subtractive manufacturing approaches such as laser
cutting, 3D printing produces virtually no material waste. In addition, since 3D printers create
products from digital files, these files can be shipped electronically and printed locally, thus
eliminating the cost, both financial and environmental of shipping physical products.
Also, 3D printers require no setup cost, such as molding, as a result, it's just as easy to make a
100 identical objects as it is to make a 100 different objects. Thus, there are really no
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economies of scale in 3D printing. This means that a small manufacturer like the Illinois
MakerLab, can easily compete with a large corporation. Finally, 3D printing allows us to make
complex objects that come already assembled. There's no other manufacturing process that
can make objects in this way without some form of additional assembly.
Third, how will 3D printing change business? As we discussed earlier, 3D printing is believed to
have the potential to create a new industrial revolution. Now, this is a big claim, so why are so
many people saying this? I think it's because 3D printing has the potential to do for a physical
objects what the computer did for music, text, and video. Music is a good example. When I was
in college back in the 1980s, music was a physical good, a CD or a cassette tape created by a
large recording company and purchased at a physical store. However, the computer turned this
physical good into a digital file that could be created by anyone with access to digitally adding
tools and downloaded for a very low price, perhaps even free. Thus, it's not hard to imagine that
3D printers could have a very similar impact on a variety of traditional physical goods. With this
new technology, really any product can be digitized and downloaded. Thus, objects will become
downloads. When this happens, it will change everything.
For example, with 3D printing, you can download replacement parts rather than having to order
them from manufacturer and have them sent to your home. Thus, manufacturers no longer need
to keep these parts in physical inventory and logistic companies no longer have to physically
ship them. In addition, if a part doesn't fit just right, a customer will be easily able to modify it.
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Thus, 3D printing has the potential to change not only products, but also the roles of both firms
and customers. The research on desktop manufacturing and 3D printing in particular, is still
quite new and emerging. So there's a lot that we don't know yet about this new digital tool.
However, research on this topic is quickly growing. I'd like to share two recent articles with you.
This first article was one that I actually wrote with two of my good friends and colleagues, Alan
Malter and Greg Fisher. It was published in 2019 in the review of marketing research. In this
research, Alan, Greg, and I, examined 3D printing's potential to impact the retailing industry. We
discussed how this new technology can both help and hurt traditional retailers. For example,
with 3D printing could help retailers by reducing their inventory by replacing a physical products
with digital designs. On the other hand, 3D printing could harm retailers by enabling customers
to create their own products rather than buying them from a retailer. In addition to identifying
these threats and opportunities, we also create a topology of 3D printed objects through a
classification of 500 randomly selected objects in the website thingiverse.com.
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We identified two dimensions: first, whether it was a new or an existing object, and second,
whether it was a standalone object component of a larger object. We then allocated these 500
objects to four different categories that we call replacements, solutions, creations, and
substitutes. For example, a 3D printed whistle is a good example of a substitute of device that
integrates Lego blocks with BRIO tracks is a good example of a solution. Our analysis reveals
that about half of all the objects uploaded on Thingiverse are actually creations. Only five
percent are replacements. Thus desktop 3D printing appears to be a way for people to create
new standalone objects such as a grading dice, rather than existing components such as a
stove knob.
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The second article is by Wiecek, Wentzel, and Erkin. It was published in the year 2020 in the
journal of the Academy of Marketing Science. In this recent research, the authors seek to
understand how consumers respond to objects that they make via desktop 3D printing. They
have proposed that individuals who print their own objects will feel more closely connected to
them and display a higher sense of perceived ownership, which should result in more positive
evaluations of these products. They test these ideas through four different experiments, all of
them conducted in Germany, which is where the authors were from. I'll just briefly describe their
first study. In the study, the researchers divide 77 participants into three roughly equal size
conditions; a no print condition, a print but don't watch it being printed condition, and a print and
watch it condition. In all three conditions, participants were asked to evaluate a 3D printed key-
chain. In particular, they were asked to report how much they liked it, how much they would pay
for it, and the degree to which they felt that they actually owned it.
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The results of the study revealed that participants who printed the key-chain, whether they
observed it being printed or not, reported a higher degree of liking and a higher willingness to
pay compared to participants who did not engage in 3D printing. They also found that this effect
was due to an increased sense of perceived ownership. In a subsequent study later on in this
article, the researchers found that these effects were stronger for hedonic products like toys,
then for utilitarian ones like tools, for example. In some, this research suggests that firms that
allow consumers to 3D print their own products should achieve positive outcomes in terms of
greater liking and a higher willingness to pay.
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First, make the physical digital. What's really special about desktop manufacturing is that it blurs
the dividing line between the physical and the digital. All the objects created through desktop
manufacturing techniques like 3D printing start with a digital model. Now once an object is
digital, it can be easily stored, transported, and modified to meet specific customer demands.
Firms can get a head start on this process by creating new objects using digital modeling tools
such as SketchUp, and by using a 3D scanner to turn existing physical products into digital
designs. These digital files are especially helpful for replacement parts which are costly to store
and difficult to transport. For example, NASA uses 3D printers to replace parts that break on a
spacecraft while in space.
Second, let consumers customize your design. Now, once firms start thinking about products as
digital goods rather than physical ones, new possibilities emerge. Physical goods are difficult
and expensive to customize. Anyone who has ordered a tailored suit or bought custom furniture
knows this. However, with digital products, customization is cheap and easy. Indeed, it is even
possible to eliminate finished products altogether. Instead, at some point in the future, a firm will
be able to offer basic template that let its customers design a product to fit their specific needs.
Thus, customers will soon be able to create unique digital designs rather than having to buy off-
the-shelf physical products. You can see thousands of examples of unique designs on file
sharing websites such as thingiverse.com. For example, this unique design is one of my
favorites, thus the digitization of physical goods makes it easier to satisfy a broad range of
customer preferences.
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Third, cut out the middleman or middlewoman. 3D printing alters physical goods, just like the
Internet and the laptop alter digital goods. If you're my age, remember how physical music
stores were replaced by iTunes. Thus, the 3D printer has the potential to disrupt the manner
which physical goods are distributed. Shipping firms such as DHL and UPS are very concerned
about this possibility. Products that are shipped digitally save both time and money, and also
give firms greater control over the distribution process, thus cutting out the middleman is a very
enticing prospect. A firm can do this by posting digital files of his product or parts of his product
on a website for easy downloading, or can post it on a third-party website of a digital
manufacturer such as Voodoo Manufacturing.
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Fourth and finally: done is the engine of more. This is one of my favorite mottos. It comes from
The Cult of Done Manifesto, check it out. This document was written by Bree Pettis and Kio
Stark, and contains a set of ideas related to getting things done. We actually have this
manifesto displayed on the wall in our MakerLab. My favorite idea in this manifesto is the last
one, done is the engine of more. This is a very simple but profound statement that emphasizes
the importance of doing rather than planning. Traditionally, business schools focus more on
planning rather than doing. So this statement makes me think differently about how to get things
done. It also captures one of the key benefits of 3D printing. Because desktop 3D printing is
rather cheap and easy, there was no need for extensive planning. If you have an idea, you can
design it and make initial prototype in a few hours on your desktop in your pajamas. Once you
have this physical prototype, you can then get a better idea how well it works. You can then
tweak your design and print the modified version, and then another one. If it's not right, you can
keep doing it, thus done is the engine of more.
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Lesson 3-6: Exercise-Thingiverse.com
Lesson 3-6.1: Exercise-Thingiverse.com
If you're like most people, you probably never heard of Thingiverse. Well, this is one of my all
time favorite websites. What's really cool about Thingiverse is the fact that it allows nearly
anyone in the world to turn digital designs into physical objects. Thingiverse was launched back
in 2008 by MakerBot to help develop the emerging desktop 3D printing community by creating a
library of digital files that could be 3D printed. In essence, it's like an Apple iTunes Store, except
it has objects rather than songs. Also all of these files can be downloaded for free, nearly all of
them are created and uploaded by individual folks like you and me. Currently Thingiverse has
files for well over one million objects across a wide range of categories including artistic
creations, household objects, and toys and games, so you're sure to find something that fits
your needs or your interest.
The goal of this exercise is to provide you a hands-on experience with 3D printing to better
understand how this technology works and appreciate its potential impact on marketing in
general and placement in particular. Now I'd like to show you how to complete the Thingiverse
exercise. First of all, go to Thingiverse, there we are. We notice under the explore tab we have a
variety of menu options, click on Things, and within the things that pop up you have a lot of
different ways to search them. I recommend choosing popular which shows you the most
popular objects on Thingiverse, and simply scroll down and find an object that grabs your
attention. Here's one, flexi cat, it's like a cat version of what the heck it is, an armadillo or
something. Take a look at the pictures and you'll see a description, in this case it's a pretty short
description, it's some flexible cat, and if you click on comments you can see what other people
have said about this design, and that will give you a sense of 3D printing on Thingiverse.
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Now here's the assignment. First of all, record your things name and its number, you see it on
top of the URL. Second, what type of object is this? Remember our four categories, is a
replacement, a substitute, a solution or a creation. Third, why did you pick this particular object?
Finally, your thoughts and how might Thingiverse or a service like this have an impact on
product placement? Well, that's it. I hope you enjoy this exercise, I look forward to reading more
about your Thingiverse thoughts.
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Module 3: How Digital Tools Are Changing Placement

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Marketing in a Digital World

Professor Aric Rindfleisch

Module 3: How Digital Tools Are Changing Placement

Lesson 3-2: View From The Quad .................................................................................................. 10

Lesson 3-3: Digital Concept 1-New Retail ...................................................................................... 12

Lesson 3-4: Case Study-Tesla......................................................................................................... 27

Lesson 3-5: Digital Concept 2-Desktop Manufacturing ................................................................... 32

Lesson 3-6: Exercise-Thingiverse.com............................................................................................ 48

Lesson 3-1: Basic Concept-Placement

Lesson 3-1.1: Placement

Lesson 3-2: View From The Quad

Lesson 3-2.1: Online Shopping

Lesson 3-3: Digital Concept 1-New Retail

Lesson 3-3.1: New Retail

Lesson 3-4: Case Study-Tesla

Lesson 3-4.1: Case Study Introduction: Tesla

Lesson 3-5: Digital Concept 2-Desktop Manufacturing

Lesson 3-5.1: Self Manufacturing

Lesson 3-6: Exercise-Thingiverse.com

Lesson 3-6.1: Exercise-Thingiverse.com

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