Marketing for MOSTModule 10 – I.T & Marketing 技術経営コンソーシアム 開発担当者 ：Ritsumeikan Asia Pacific University 教授: Takamoto, Akihiro 更新日 October, 2003
IT and Marketing Need for a new Marketing Paradigm. e-commerce, e-business &e-marketing. e-segmentation,e-targeting and e-positioning. The 11 Immutable Laws of Internet Branding. e-marketing research. New Marketing Mix. More on e-business. Has IT changed Marketing?
“Embrace the Internet. Bring me a plan as to how you are going to transform your business beyond adding an Internet Site” - Jack Welch, former CEO of GE “ I think people still underestimate in the decade ahead how much digital approaches will change the way they work and the way they live” - Bill Gates, The Richest Man on Earth
Is this WOW! • The cost of sending mail to 10 million GE customers in 1985 :$ 3.3 million. • The cost of sending the same e-mail to 10 million GE customers today : $ 0.
Internet and E-Commerce Websites Competitors Business Partners Global Markets Corporate Communications Human Resources Internet Capabilities Vendors Supplier Customers Information Management Systems Intranets Extranets Marketing Constraints Research Technology Developments Product Development Sales Cost Containment Product Distribution New-Business Product Potential Customer Support Core Business Function Price Competition Competitive Environment The Internet Bigdoli Hossein:electronic commerce: principal and practice(2000)
The Need for a New Marketing Paradigm • There are three stages in the new Marketing Paradigm. Stage 1: Selling concept, where starting point is the factory and the aim is profits through sales volume using selling and promotion. Stage 2: Marketing concept, where starting point is the identifying the customers varying needs and the aim is profits through customer satisfaction using market STP. Cont…
The Need for a New Marketing Paradigm …Cont. Stage 3: Holistic Marketing concept where the Starting point is identifying the individual customers needs and aim at profitable growth through capturing customer share, customer loyalty , and customer lifetime value. This is achieved using database management and value chain integration linking collaborators. Right now we are passing the second stage and entering the third stage which, is part of the transition to the Digital Economy.
Marketing department does the marketing. Marketer focuses on “interrupter” marketing. Marketing focuses on acquiring new customers. Marketing focuses on intermediate transactions. Marketing expenditures are viewed as expenses. Marketing integrates the work of exploring, creating and delivering customer value. Marketer focuses on “permission” marketing. Marketing focuses on customer retention and brand loyalty. Marketing focuses on capturing customer lifetime value. Many marketing expenditures are viewed as investments. Changing Assumptions in Strategic Marketing Thinking Old Marketing New Marketing Reference:Marketingmoves: Kotler, Jain & Maesincee
Don’t we have to redraw Maslow’s Hierarchical chart? Don’t we need to have another tier for information needs?
The New Economy • Or the digital economy. • Paperless companies. • Data base emphasis. • Got to be tech savvy otherwise heavy. • Information transparency • Information overload. • The world is the playground.
The major shift towards Digital Economy Digital economy has forced corporations to undergo a sea of change and there are nine new paradigms to be applied to operate efficiently in the new economy. • From asymmetry of information to democratization of information. • From goods for elites to goods for everyone. • From make-and-sell to sell-and-respond. • From local economy to global economy. Cont… Reference:Marketingmoves: Kotler, Jain & Maesincee
The major shift towards Digital Economy ...Cont. 5. From the economics of diminishing returns to the economics of increasing returns. 6. From owning assets to gaining assets. 7. From corporate governance to market governance. 8. From mass markets to markets of one. 9. From just-in-time to real-time. Reference:Marketingmoves: Kotler, Jain & Maesincee
How corporations are adapting to the Digital Economy • Estimates of World B2B transactions in 2004: $ 7.3 Trillion1. • Ford and GM moved their B2B supply chain worth 300 and 500 billion USD online. • Cisco Systems announced they won’t do business with suppliers, who can’t take orders via the net. 1. Gartner
More than 12% of the World Population is online • WORLD Total 605.60 million • AFRICA 6.31million • ASIA／Pacific 187.24 million • EUROPE 190.91 million • MIDDLE EAST 5.12 million • CANADA & USA 182.67 million • LATIN AMERICA 33.35 million Source:Nua.com
Modes of communication between businesses and customers consumer business business Source:e Marketing excellence by P.R. Smith consumer
Relationship between e-commerce, e-business and e-marketing • e-commerce includes e-tailing and just simple exchange of goods and payments online. • e-business involves all the business processes in the value-chain. • e-marketing is at the heart of the business adding value to the products, widening distribution channels, boosting sales while getting closer to the customer and understanding them better.
One perception is that e-marketing,e-commerce and e-business is one and the same thing? Do you think that’s true? Relationship between e-commerce, e-business and e-marketing EM=EC=EB Source:e Marketing excellence by P.R. Smith
Another perception is that e-commerce is a part of the process of e-marketing and both of them are part of the bigger process which is e-business. Relationship between e-commerce, e-business and e-marketing EB EM EC Source:e Marketing excellence by P.R. Smith
There is still another perception and that e-commerce, e-marketing and e-business are different processes altogether, although they overlap some of their functions. Relationships between e-commerce, e-business and e-marketing EC EM EB Source:e Marketing excellence by P.R. Smith
How much money is generated from the NET? Source:Activmedia
e-segmentation • The market is segmented based on customers like businesses, individuals and government. • Segmentation of market based on B2B, B2C, C2B and C2C. • The market is segmented considering the companies promotion mix ( offline vs. online mix). • It is difficult to segment the market geographically as the Internet population is estimated at 20-30 million with 10% monthly growth rate all over the world. Cont…
e-segmentation …Cont. • Demographically, the market is made up of young users with higher income levels. • The psychographic segmentation is very accurate as the user’s browsing habits hint at his preferences. • Product related segmentation is most important, as net users look for added values, technologically superior and best priced products.
e-targeting • The target market for most of the companies has become large due to easy access all across the world. • The target market should also be based on the companies product, and whether the product can be sold more effectively online or offline. • Due to the availability of the internet the target market is huge but on the other hand competition is immense, therefore the company has to choose what region to target to create a niche market. Cont…
e-targeting …Cont. • With the fast growth of the internet its difficult to imagine the scope of the target market. • Target marketing on the net is more effective when, it is concentrated on small number of customers especially in the case of high value products, on the other hand for innovative products, bigger target markets have been successful as well.
e-positioning • The most important strategy on the Internet is how to position your product. • Only online, only offline, or offline-online available products. • Shift from product-centric companies to customer-centric companies. • Adding a new medium for providing information, and reach the customer through the web. Cont…
e-positioning Cont… • Customization is the new mantra for customer value. • Distribution channels are matched to customer’s preferences. • Make profits on customers lifetime value. • It’s a two way communication network via the web, which is necessary to expedite transactions.
The 11 Immutable Laws of Internet Branding • The Law of either/or : the internet can be business or medium, but not both. • The Law of interactivity: online business cannot survive without interactive website. • The Law of the common name: most internet companies have a common word as their name which, is not very attractive • The Law of the proper name: name is the most important asset of the company on the net, so it better be something spectacular. • The Law of singularity: the internet is innovative and creative and to be the market leader is the mantra for success. The one who does it first reaps the most benefits. • The Law of advertising: advertising off the net will always be bigger than on the net, use the right kind of mix. Cont… Source:Immutable Laws of Internet Branding: Al Ries , Laura Ries: Harper Collins.
The 11 Immutable Laws of Internet Branding Cont… • The Law of globalism: on the internet there are no boundaries and territories. The world is the playground. • The Law of time: the internet is very fast and you have to be quicker and focused to reap the benefits. • The Law of vanity: do not try and do everything, be selective and have common sense. • The Law of divergence: the internet is moving in the opposite direction of convergence. • The Law of transformation: to be successful on the internet, you have to believe that it has transformed our lives and will further affect it in different ways. Source:Immutable Laws of Internet Branding: Al Ries , Laura Ries: Harper Collins.
e-marketing research benefits • Cost savings. • It is individually directed. • It is a good way to reach unreachable people like doctors, lawyers, professionals. • It is fast and has maximum reach. • Sample size is not a problem. • It offers anonymity for the surveyed, therefore there is more honesty. • It is easier to reach early adopters.
e-marketing research traps • The users of the internet do not represent the whole population, they are different. • Online research is not right for every company and product. • Sample audience is not defined. • There is no interaction between the surveyor and surveyed.
The New Marketing Mix in the Digital Economy • Digital value added • Brand experience Product • Online vs. Offline Mix • Integration The New Marketing Mix Promotion Price • New Pricing Models • Price Transparency • Representation • New Distribution Models Place
Product • Can your product be produced in a better way using IT? • Is the internet the right medium for your product? • Is your product easily deliverable? • Can your product be purchased without the customer actually feeling it or touching it? • Can you make sure that utility of the product is the same to the consumer, whether purchased offline or online? • What are the added values to buy online?
Price • Because customers have new buying models, new pricing approaches are essential. • Price transparency is the way on the Internet. • Prices are complex and have a lot add-ons. • Fixed pricing has made way for leasing in a big way: cars, computers, even music can be leased. • Pricing under pressure is experienced by all corporations: “in the digital world the customer has become the true King”.
Place • Does it matter whether you are in Timbuktu or in New York? Your store is online. • New distribution models have given birth to 1) Disintermediation. 2) Reintermediation. 3) Info mediation. 4) Peer-to-Peer Services. 5) Affiliation and collaboration. • The world is the playground now and distribution has taken over the limitations of place, especially in “information intensive” businesses. • Physical limitations do exist however, in many businesses.
Promotion • Both, online and offline promotion is important to optimize the promotional mix. • Both, offline and online communications have to be integrated. • They have to be creative. • There has to be interaction with the customer. • Globalized approach.
Source: Jupiter Communications What is the web’s advertising revenue? Source:Jupiter Communications
The Fifth P- PEOPLE • People are more important now than ever before. • Customers have to be satisfied more as they have more alternatives and more information. • Staff has to be trained as marketing tools are advancing rapidly technologically. • As marginal costs are low repeat customers means lots of profits. • Happy Staff= Happy Customers= Happy Shareholders.
What industries has the internet really revolutionized? • Information-intensive industries namely: • Financial services • Entertainment • Education • Government • Auction industry. • Travel Industry. • Some parts of retail industry, like books.
Let’s talk about the e-customer • The e-customer is smart and well informed, well educated, more affluent, and an early adopter of technology. • The e-customer is used to extras. • The e-customer wants simplified purchases. • The e-customer is lazy. • The e-customer wants the best price. • The e-customer is not very loyal. • The e-customer can be an individual, corporation, government. • The e-customer wants interaction.
What we pay for and what we don’t? Pay Free Internet access Shopping info Commodity or financial data Analysis Entertainment Search engines Customized services E-mail Purchases
Advantages of e-business for consumers • Perfect for couch potatoes. • Price transparency. • Complete information. • Instant delivery. • Ease of payment. • Infinite product choice. • After sales service without leaving home.
Disadvantages of e-business for consumers • Payment security. • No tangibility of goods. • Dependence on e-tailer’s word. • Addictive. • Makes them lazy. • Unlimited information leads to confusion.