Adapting Marketing to the New Economy

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Adapting Marketing to the New Economy

• Chapter 2

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Adapting Marketing to the New Economy

• Major Drivers that underpin the New Economy
• Digitization and Connectivity
• Disintermediation Reintermediation
• Customization Customerization
• Industry convergence

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• 1a. Digitization
• Past analog information which is continuously
  variable in response to physical stimuli.

Today Digital information converts text, data,
sound, images that can be transmitted from one
appliance to another.
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• 1b. Connectivity ability to flow from one
  application and location to another.
• Intranet when they connect people within a
  company to one another the company mainframe.
• Extranet it allows suppliers and buyers to hook
  into a special information communications
  network.
• Internet when they connect users to a large
  worldwide information bank.

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• 2a. Disintermediation when a brick-only
  retailers is put out of business by a Web site
  based business that serves the consumer need
  better.
• 2b. Reintermediation e-business an Internet
  middleman.

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A Web site that brings together collectors
sellers.
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• 3a. Customization the company is able to product
  individually differentiated goods whether ordered
  in person, on the phone, of online.
• Note
• Not for every company
• May create products with low resale value.
• Results in increase costs
• Online retailers cannot provide the same services
  of a clicks-and-mortar store
• Is very difficult to implement with complex
  product.

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• 3b. Customerization combination of operational
  customization and marketing customization. Its
  when a company is able to dialogue with
  individual customers and respond by customizing
  its products, services, messages on a
  one-to-one basis.

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• 4. Industry Convergence

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• How Business Practices are Changing From old
  economy to new economy
• 1. Organize by product units to organize by
  customer segments
• 2. Shift focus from profitable transactions to
  customer lifetime value
• 3. Shift focus from financial scorecard (sales
  revenue) to also focusing on the marketing
  scorecard (market share).

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• 4. Shift focus from shareholders to stakeholders
  (i.e., Internal marketing satisfy employees
  first)
• 5. From marketing does the marketing to everyone
  does the marketing
• 6. Build brands through performance behavior,
  not just advertising i.e.,

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7. Customer retention rather than customer
acquisition 8. From none to in-depth customer
satisfaction measurement 9. From over-promise,
under-deliver to under-promise, over-deliver 10.
The New Hybrid combination of old new
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Adapting Marketing to the New Economy

• How Marketing Practices are Changing E-Business
• E-business
• E-commerce
• E-purchasing
• E-marketing

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• E-business means the use of electronic means and
  platforms to conduct a companys business.
• E-commerce more specific than e-business the
  company offers to facilitate the selling of
  products and services online.

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• E-purchasing companies purchase goods, services,
  and information from various online suppliers.
• E-marketing company efforts to inform,
  communicate, promote, and sell products and
  services over the internet.

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Adapting Marketing to the New Economy

• Internet Domains B2C (Business to Customer)
• Internet Domains B2B (Business to Business)

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B2C Domain
The internet is most useful for B2C products when
the consumer seeks greater ordering convenience,
lower cost, or information about product features
prices.
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B2B Domain
B2B does by far the greatest amount of commerce
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Adapting Marketing to the New Economy

• Internet Domains C2C (Consumer to Consumer)
• Internet Domains C2B (Customer to Business)
• Pure Click vs. Brick and Click Companies

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C2C Domain (word of web)
Contributors share information about bikes,
rallies, technical information, reviews about
aftermarket products.
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C2B domain
It allows frustrated consumers to communicate
their dissatisfaction with businesses products
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Pure Click Firm
Why many pure-click firms failed
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• Lack of infrastructure
• Relied on buzz instead of target marketing
• Poorly-designed Web site
• Focus on customer acquisition rather than
  building relationships.

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Brick and Click company sells though store and
online
Advantages of a brick-and-click firm
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• Allows service to far-flung customers
• Deeper industry knowledge
• Better know brand names allow less marketing to
  acquire new customers
• Greater financial resources

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• Seven elements of effective web sites (Rayport
  Jaworski)
• Context Layout Design
• Content Text, pictures, sound, video (they
  facilitate repeat visits, but they do not ensure
  that this happens).
• Community How the site enables user-to-user
  communication (having an electronic chat room
  linked to your site).

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• 4. Customization Sites ability to tailor itself
  to different users or to allow users to
  personalize the site
• Communication How the site enables two-way
  communication
• Connection Degree that the site is linked to
  other sites
• Commerce Sites capabilities to enable
  commercial transactions

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• How to improve the value of your customer base
• Reducing customer defection
• Increasing the life of the customer relationship
• Enhancing customer profit potentialthrough
  cross-selling and up-selling

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• 4. Make low profit customers more profitable or
  terminate them
• 5. Focusing disproportionate effort on high value
  customers

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• Four steps for One-to-One Marketing
• Dont go after everyone, identify prospects.
• Define customers by their needs and their value
  to the company.
• Individual interaction with customers builds
  stronger relationships.
• Customize messages, services, products for
  each customer.