Marketing for MOST
Module 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
1. Need for a new Marketing Paradigm.
2. e-commerce, e-business &e-marketing.
3. e-segmentation,e-targeting and e-positioning.
4. The 11 Immutable Laws of Internet Branding.
5. e-marketing research.
6. New Marketing Mix.
7. More on e-business.
8. Has IT changed Marketing?
Marketing for MOST: Module 10 – IT and 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
3
Marketing for MOST: Module 10 – IT and Marketing
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.
4
Marketing for MOST: Module 10 – IT and Marketing
Internet and E-Commerce
Websites
Competitors
Business
Partners
Global Markets
Corporate Communications
Vendors Human Resources Internet
Supplier Capabilities
Information
Systems
Management
Intranets Constraints Research Customers Marketing Extranets
Technology
Cost Product Sales Developments
Containment Development
Product Distribution New-Business
Customer Support
Product
Core Business
Price Potential
Function
Competition Competitive
Environment
The Internet
Bigdoli Hossein:electronic commerce: principal
5
and practice(2000)
Marketing for MOST: Module 10 – IT and Marketing
The Need for a New Marketing Paradigm
6
Marketing for MOST: Module 10 – IT and Marketing
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…
7
Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
Changing Assumptions in Strategic
Marketing Thinking
Old Marketing New Marketing
• Marketing department does • Marketing integrates the work
the marketing. of exploring, creating and
delivering customer value.
• Marketer focuses on • Marketer focuses on
“interrupter” marketing. “permission” marketing.
• Marketing focuses on • Marketing focuses on
acquiring new customers. customer retention and brand
• Marketing focuses on loyalty.
intermediate transactions. • Marketing focuses on
• Marketing expenditures are capturing customer lifetime
value.
viewed as expenses.
• Many marketing expenditures
are viewed as investments.
9
Reference:Marketingmoves: Kotler, Jain & Maesincee
Marketing for MOST: Module 10 – IT and Marketing
Don’t we have to redraw Maslow’s
Hierarchical chart?
Don’t we need to
have another tier for
information needs?
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Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
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.
1. From asymmetry of information to democratization
of information.
2. From goods for elites to goods for everyone.
3. From make-and-sell to sell-and-respond.
4. From local economy to global economy.
Cont…
Reference:Marketingmoves: Kotler, Jain & Maesincee 12
Marketing for MOST: Module 10 – IT and Marketing
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.
13
Reference:Marketingmoves: Kotler, Jain & Maesincee
Marketing for MOST: Module 10 – IT and Marketing
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.
14
1. Gartner
Marketing for MOST: Module 10 – IT and Marketing
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
15
Source:Nua.com
Marketing for MOST: Module 10 – IT and Marketing
Modes of communication between
businesses and customers
B2C C2C
Organizations Sites Auctions(Ebay.com, ubid.com)
(Dell,Amazon) Consumer
consume
Consumer Marketplaces reviews(bizrate.com,
(Pets.com,Walmart.com) Deja.com)
r
B2B C2B
Organization Sites(Dell,IBM) Customer Bids
Business Marketplaces (Priceline.com, hotwire.com)
(Commerce One, Vertical Net)
business
Source:e Marketing
excellence by P.R. Smith business 16
consumer
Marketing for MOST: Module 10 – IT and Marketing
e-commerce, e-business &
e-marketing
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Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
Relationship between e-commerce, e-
business and e-marketing
One perception is that
e-marketing,e-
commerce and e-
business is one and the
EM=EC=EB
same thing?
Do you think that’s
true?
Source:e Marketing excellence by P.R. Smith
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Marketing for MOST: Module 10 – IT and Marketing
Relationship between e-commerce, e-
business and e-marketing
Another perception
EB
is that e-commerce
EM is a part of the
EC process of e-
marketing and both
of them are part of
the bigger process
which is e-business.
20
Source:e Marketing excellence by P.R. Smith
Marketing for MOST: Module 10 – IT and Marketing
Relationships between e-commerce, e-
business and e-marketing
There is still another
perception and that
EC EM
e-commerce, e-
marketing and e-
EB business are different
processes altogether,
although they overlap
some of their functions.
Source:e Marketing excellence by P.R. Smith 21
Marketing for MOST: Module 10 – IT and Marketing
How much money is generated from the
NET?
Source:Activmedia 22
Marketing for MOST: Module 10 – IT and Marketing
e-segmentation, e-targeting & e-positioning
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Marketing for MOST: Module 10 – IT and Marketing
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…
24
Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
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.
26 Cont…
Marketing for MOST: Module 10 – IT and Marketing
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.
27
Marketing for MOST: Module 10 – IT and Marketing
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…
28
Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
The 11 Immutable Laws of Internet
Branding
30
Marketing for MOST: Module 10 – IT and Marketing
The 11 Immutable Laws of Internet Branding
1. The Law of either/or : the internet can be business or
medium, but not both.
2. The Law of interactivity: online business cannot survive
without interactive website.
3. The Law of the common name: most internet companies
have a common word as their name which, is not very
attractive
4. The Law of the proper name: name is the most important
asset of the company on the net, so it better be something
spectacular.
5. 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.
6. 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 ,
31
Laura Ries: Harper Collins.
Marketing for MOST: Module 10 – IT and Marketing
The 11 Immutable Laws of Internet Branding
Cont…
7. The Law of globalism: on the internet there are no
boundaries and territories. The world is the playground.
8. The Law of time: the internet is very fast and you have to be
quicker and focused to reap the benefits.
9. The Law of vanity: do not try and do everything, be selective
and have common sense.
10. The Law of divergence: the internet is moving in the
opposite direction of convergence.
11. 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 , 32
Marketing for MOST: Module 10 – IT and Marketing
e-marketing research
33
Marketing for MOST: Module 10 – IT and Marketing
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.
34
Marketing for MOST: Module 10 – IT and Marketing
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.
35
Marketing for MOST: Module 10 – IT and Marketing
The New Marketing Mix
36
Marketing for MOST: Module 10 – IT and Marketing
The New Marketing Mix in the Digital
Economy
Product •Digital value
added
•Brand experience
•Online vs. Offline Mix
•Integration
Promotion The New Price
Marketing Mix
•New Pricing Models
•Price Transparency
•Representation
Place
•New Distribution Models
37
Marketing for MOST: Module 10 – IT and Marketing
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?
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Marketing for MOST: Module 10 – IT and Marketing
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”.
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Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
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.
41
Marketing for MOST: Module 10 – IT and Marketing
What is the web’s advertising revenue?
Source: Jupiter Communications
Source:Jupiter Communications 42
Marketing for MOST: Module 10 – IT and Marketing
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.
43
Marketing for MOST: Module 10 – IT and Marketing
More on e-business
44
Marketing for MOST: Module 10 – IT and Marketing
What industries has the internet really
revolutionized?
1. Information-intensive industries namely:
• Financial services
• Entertainment
• Education
• Government
2. Auction industry.
3. Travel Industry.
4. Some parts of retail industry, like books.
45
Marketing for MOST: Module 10 – IT and Marketing
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.
46
Marketing for MOST: Module 10 – IT and Marketing
How do consumers actually use the
internet?
47
Marketing for MOST: Module 10 – IT and Marketing
What we pay for and what we don’t?
Pay Free
Internet access Shopping info
Analysis Commodity or
financial data
Entertainment Search engines
Customized services E-mail
Purchases
48
Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
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.
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Marketing for MOST: Module 10 – IT and Marketing
e-tools
• The web, interactive television and cellular
phones.
These tools enable marketers:
1. To get fine tuned.
2. To interact with buyers
3. Get direct response.
4. Brand building and customer service.
5. Cost savings.
51
Marketing for MOST: Module 10 – IT and Marketing
Advantages of e-business for sellers
• Cost savings.
• Interaction.
• Removal of customer service bottlenecks.
• Target approach and individualized service to the
customer.
• Improved purchasing, recruiting, training and internal
and external communications.
• Infinite database of customers.
• Transparency of Information.
• No boundaries.
52
Marketing for MOST: Module 10 – IT and Marketing
Disadvantages of e-business to sellers
• Price transparency.
• Technology dependence.
• Limited product differentiation.
• Minimal margins.
• No physical interaction.
• Frauds.
53
Marketing for MOST: Module 10 – IT and Marketing
Model for a Virtual Organization
Alliance with
subcontractors
Boundary of firm
Alliance with a
major supplier
Customer response
and order-fulfillment
teams
Intranets
Extranets
Alliance with a
major customer
Manufacturing teams
Alliance with a competitor
who provides services
Alliance with that are complementary
small suppliers Cross-functional teams Engineering teams
Reference:Burn Janice: e-business strategy 54
Marketing for MOST: Module 10 – IT and Marketing
Will Click replace the Brick?
• Maybe not, because we still enjoy going to
the market.
• Maybe not, because the Brick and Mortar
stores are integrating Bricks and Clicks very
well( Walmart.com, Macy’s.com).
• Maybe not, because 90% of the goods we
buy have to be touched and felt.
• Maybe not, because its still too early to say.
55
Marketing for MOST: Module 10 – IT and Marketing
The new types of operational systems
• Click Only: only website business and no prior history. E.g.
e.trade.com,etc.
• Click followed by Brick: some click only firms follow up with
brick stores. E.g. Amazon.com, gateway.com
• Brick followed by Click: existing brick and mortar companies
going online. E.g. Wal-Mart and walmart.com
• Brick and Mortar Only: only physical stores and no
online sales: E.g. some custom shops like REI.
• Brick followed by Click Only: a brick and mortar store followed
up with an internet site and then, the the brick store abandoned.
E.g. Egghead software.
Reference:Marketingmoves: Kotler, Jain & 56
Marketing for MOST: Module 10 – IT and Marketing
Has IT changed Marketing?
57
Marketing for MOST: Module 10 – IT and Marketing
Has IT changed marketing?
• Certainly, it has broadened its vision and boundaries.
• Competition is at a new level, it’s not local anymore.
• It has dramatically changed the whole process of
marketing.
• And yet, the essence of marketing remains intact: it is
an art and science to best meet the needs of
customers.
58
Marketing for MOST: Module 10 – IT and Marketing
Shifts in Operational Marketing
• Reverse Product design.
• Reverse Pricing.
• Reverse Advertising.
• Reverse Promotions.
• Reverse Distribution Channels.
• Reverse Segmentation.
Reference:Marketingmoves: Kotler, Jain & Maesincee 59
Marketing for MOST: Module 10 – IT and Marketing
CRM
The most important aspect of the internet is
its ability to let the organization interact with
the customer.
Customer Relationship Management is now
the focus of every marketing team, in every
organization.
60
Marketing for MOST: Module 10 – IT and Marketing
CRM
CRM helps a company develop customers who would :
• Buy more from the company irrespective of relatively
higher prices than competition.
• Recommend the company to other customers.
• Use company support service and facilities.
• Make the company the standard for the organization
or family.
• Try out the company’s new offerings and help them
make them better.
Reference:Marketingmoves: Kotler, Jain &
61
Maesincee
Marketing for MOST: Module 10 – IT and Marketing
Arthur M. Hughes’ five criteria for
successful CRM
1. The company has well developed marketing
processes.
2. The company can capture customers’ names,
addresses, and purchase behavior with ease.
3. Data about customers’ repeat purchases can be
captured at the point of sale.
4. The company has the skills to build and mine their
databases.
5. The company can offer a frequency reward
program with significant benefits for both parties.
Reference:Marketingmoves: Kotler, Jain &
Maesincee 62
Marketing for MOST: Module 10 – IT and Marketing
The CRM process
Stage of CRM Key initiatives
• Finding the target customers. • Defining target markets.
• Acquiring target markets.
• Filling the target customers’
needs. • Translating the customer
value into actionable
customer benefits.
• Matching the market
offerings with customer’s
• Forming the link with target choice context.
customers.
• Designing market
intelligence.
• Gaining insight from
customer information.
Reference:Marketingmoves: Kotler, Jain &
Maesincee 63
Marketing for MOST: Module 10 – IT and Marketing
Have we adapted to this new style of living?
• Do you think we can work without Computers
anymore. Imagine no e-mails.
• When we call the world without boundaries, isn’t the
Internet really it.
• It is not for couch potatoes it’s for efficient people
who believe in time savings.
• The Internet has given us more options than we ever
had.
• A whole world is just a CLICK away.
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Marketing for MOST: Module 10 – IT and Marketing
Will it transform our lives?
• You are kidding yourself, if you disagree that it has not already
transformed your life.
• How many people have not used the internet for purchasing
anything?
• How many people are not using chats and emails as alternative
to telephone?
• How many people don’t know what the internet is?
NEWS FLASH: We have been TRANSFORMED
completely.
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Marketing for MOST: Module 10 – IT and Marketing
What will be the next big thing now?
• Wireless- net: it’s not that reliable right now but popularity is
increasing because of reach to far off places.
• Peer-to-Peer: this technology helps individuals communicate
with each other through their PC’s.
• Cellular Browsing: e-mailing through cellular phones is already
very popular. Will it replace the PC in the future?
• Machine-to-Machine: right now companies like e-bay and yahoo
auctions are acting as intermediaries, will machines play an
important role in transactions between people.
In this fast paced world of technological advances, we
won’t have to wait long to see the next big thing to emerge .
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Marketing for MOST: Module 10 – IT and Marketing
The Future
• The internet is in the early majority stage.
• In years to come, if you someone calls their
kids Raj.com and Yuko.com, then don’t be
taken aback.
• IT is a way for a better informed and a more
efficient world.
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Marketing for MOST: Module 10 – IT and Marketing
The Future
But Beware:
• IT cannot create a single drop of water or a grain of
rice by itself.
• IT can be a dangerous weapon if misused.
• The “highest human needs” may not be satisfied by
IT.
• There is potential withering of human intellect through
information overload.
68