1.

Convergence

Objectives
Explain how the Internet and information technology offers benefits and challenges to consumers, businesses, marketers, and society. Distinguish between e-business and e-marketing. Describe the Internet and the use of intranets, extranets and the Web. Explain how increasing buyer control is changing the marketing landscape. Understand the distinction between information or entertainment as data, and the information receiving appliance used to view or hear it.

The Music Industry

File sharing programs, such as KaZaA, enable consumers to illegally download music. The Recording Industry Association of America has sued over 400 consumers for piracy. 14% U.S. consumers still download illegal files CD sales plunged to $13 million in 1999; $10.6 billion in 2003 Apple Computer introduced iTunes at .99 each.

What will happen to the music industry?

The actual cost of producing a CD is $10.17. Only $1.29 goes to the artist. Online distribution makes sense. What do you think will happen to the music industry? What do you think will happen to the movie industry?

E-marketing Defined
The use of information technology to create, communicate, and deliver value to customers. for managing customer relationships to benefit the organization. The result of information technology applied to traditional marketing.

E-Business, E-Commerce, and E-Marketing

E-business is the continuous optimization of a firms business activities through digital technology. E-commerce is the subset of e-business focused on transactions. E-marketing is one part of an organizations ebusiness activities.

The Internet
A global network of interconnected networks. E-mail and data files move over phone lines, cables and satellites. Three types of networks form part of the Internet: Intranet: network that runs internally in an organization. Extranet: two joined networks that share information. Web: GUI for navigation with a browser (IE). Most people refer this as Internet.

However, e-marketing is bigger than Web

First, many e-marketing technologies exist predating the web - CRM, SCM, EDI etc Second, non-Web Internet communication (email, newsgroups) are effective avenues for marketing. Third, Internet delivers text, video, audio, and graphics to many more information-receiving appliances than simply PCs. Finally, offline electronic data-collection devices, such as bar code scanners and databases, receive and send data over an intranet.

Web Is One Aspect of E-Marketing

Refrigerator

Web

Automobile

E-mail

Internet
Cell Phone

PC Database

PDA

Bar Code Scanner

Television

Past, Present, and Future

The first generation of e-business was like a gold rush. From 2000-2002, over 500 Internet firms shut down in the U.S. Almost 60% of dot-coms were profitable in the fourth quarter of 2003. Today, the Internet is mainstream in industrialized nations. 20 nations comprise 90% of all Internet users.

E-Business Recovery Is Sweet

1990-96 1999 2000 2001 2002 2003-2004 2005 - 2006 Equity Times Debt Times Positive Cash Flow

E-Marketing Today
Power shift from sellers to buyers Marketing fragmentation: mass market to one customer Death of distance Time compression Knowledge/database management is key/easy Marketing and technology: an interdisciplinary focus Intellectual capital is important resource

Consumer Control
New technologies such as personal video recorders (PVRs) etc will increase consumer control. Convergence of television, radio, print, etc. Customer-controlled entertainment, and shopping on demand.

Improved Internet Strategy Integration

Organizations will integrate information technology seamlessly into marketing strategy. Multichannel marketing: Web site, retail store, and catalog Integration of inventory databases Integration of customer service across channels

Refined Metrics
Internet provides great deal of data, not all of which is very useful. Tracking customer acquisition cost (CAC) and other key metrics is a critical marketing function still in its infancy. Future metrics will provide better measures of performance, return on investment, etc.

Wireless Networking Increases

Cell phones, PDAs and laptops connect to the Internet via wireless modem worldwide. Hang-out joints like CCD, Starbucks Hotels and airports Train stations Customers will have information, entertainment and communication when, where and how they want it.

Appliance Convergence
The receiving appliance is separate from the media type. Computers can receive digital radio and TV. TV sets can receive the Web. New types of smart receiving appliances will emerge. Internet refrigerator is many digital appliances in one. Global position systems (GPS) allow in-car communication and entertainment.

Semantic Web
The Semantic Web will utilize a standard definition protocol that will allow users to find information based on its type, such as: The next available appointment for a doctor Details about an upcoming concert Menu at the local restaurant Represents the next huge advance: providing worldwide access to data on demand without effort.

(Awaiting the next Technological Breakthrough)

Internet-Time Analogy

3500 BC Sundial

1583 AD 1600s 1929 1949 Pendulum Mechanical Quartz Crystal Automatic

Web is here Now

Discussion Questions

Discussion Question 1
Q: Define E-business and E-marketing. E-business - Continuous optimization of a firms business activities through digital or information technology Anything digital you do to optimize. E-marketing - Use of information technology in the processes of creating, communicating, and delivering value to customers, and for managing customer relationships in ways that benefit the organization and its stakeholders.

Discussion Question 2
Q: What are metrics and why are they important? Specific measures designed to evaluate effectiveness and efficiency of the e-business and e-marketing operations. The problem occurs in trying to sort through all the data to identify metrics that help marketers understand how consumer behavior translates to sales and profits - without spending too much time or money collecting, analyzing, and reporting. As a marketer you are accountable for the ROI for your strategies, hence you must identify the best measures to indicate success during and after marketing plan implementation.

Discussion Question 3
Q3: How does technology change traditional marketing? Firstly, it increases efficiency and effectiveness. Secondly, it transforms many marketing strategies, resulting in new business models that add customer value, in view of the following properties of Information Technology: Bits not atoms, Mediating technology, Global reach, Network externality, Time moderator, Information equalizer, Scalable capacity, Open Standard, Market deconstruct, and Task Automation.

Discussion Question 4
Q4: As a technology, how does the Internet compare with the telephone? Telephone is a mediating technology, has global reach, and has network externality. In contrast, the Internet has properties that create opportunities beyond those possible with the telephone, television, postal mail, or other communication media. It is these differences that excite marketers and makes them wonder how to best capitalize on them.

Discussion Question 5
Q5: What are some of the marketing implications of Internet technologies? 1. Bits not atoms: Can be stored, sent, received instantaneously. Text, audio, video, graphics, and photos can all be digitized, but digital products cannot be touched, tasted, or smelled. 2. Mediating technology: Peer-to-peer relationships (business partnerships, auctions, music file sharing etc) can be formed regardless of geographic location. 3. Global reach: Opens new markets and allows for worldwide partnerships, employee collaboration, and salesperson telecommuting. 4. Network externality: Businesses can reach more of their markets with automated communication, and consumers can disseminate brand attitudes worldwide in an instant.

Discussion Question 5 - contd

5. Time moderator: Consumers expect faster

communication with companies and faster work processes within companies. 6. Scalable capacity: Firms pay for only as much data storage or server space as needed. 7. Open Standard: Companies can access each other's databases for smooth SCM and CRM, which equalizes large and small firms. 8. Market deconstruct: Many distribution channel functions are performed by nontraditional firms and new industries emerged (e.g., ISPs) 9. Task Automation: Self-service online lowers costs and makes automated transactions, payment, and fulfillment possible.

Discussion Question 6
Q6: In the context of e-marketing, what does the medium is not the appliance mean? Digital media are simply data that can be sent to viewers a number of ways. Television programs, radio shows, news, movies, books, and photos are sent by their creators in electronic form via satellite, telephone wires, or cable, and then viewed by the audience on receiving appliances such as televisions, computers, radios, cell phones, PDAs, and others. Contrary to popular usage, the receiving appliance is separate from the media type. In other words, watching a television set doesnt mean one must be viewing television programming. Computers can receive digital radio and television transmissions, and television sets can receive the Web.

Discussion Question 7
Q7: Describe the important Internet properties that affect marketing Answer7: As answered earlier

 Q8: What fundamental changes has the Internet brought to marketing? The balance of power is shifting to buyers. Cos have practically lost control of brand images due to blogs, online bulletin boards, and other online communication. Other changes include: Market fragmentation: Internet put finality to this trend by extending to its ultimate a market size of one customer - and prompted marketers to create products and communication to small target groups. Death of distance: Geographic location is no longer a factor when collaborating with business partners, supply chain firms, or customers, or just chatting with friends.

Discussion Question 8

Discussion Question 8 contd

Time compression: Time is not a factor for
communication with stakeholders. Online stores can be open 24/7; can communicate as schedules permit; times zones disappear for collaborating with other continents. information is easy and inexpensive to gather, store, and analyze. Can track marketing results as plans unfold. However, turning huge databases into meaningful knowledge is a major challenge.

Critical knowledge management: Customer

Interdisciplinary focus: Marketers must understand

technology, as they need to know enough to select appropriate suppliers and direct technology professionals.
entrepreneurship are more important resources than financial capital.

Intellectual capital rules: Imagination, creativity, and

Discussion Question 9
Q9: As a marketer, do you agree with the executives who say better quality customer relationships is one of the most important ebusiness benefits? Why? As competitors and consumers can easily and quickly check prices by visiting their respective Web sites, the need for additional value added attributes or services is very enhanced. In fact, selling firms must differentiate their products on some basis other than price that is important to buyers: non-price competition. Undoubtedly better quality customer relationships is critical in differentiation their product in this increasingly commoditized market.

Discussion Question 11
Q10: As a consumer, are you likely to benefit when e-business becomes just business in the near future? Explain your answer. Eventually, online integration of e-business into everyday life is expected. Ubiquitous existence of technology will create a highly specialized market for consumers allowing them to find specialized products with greater ease. Very likely consumers buying habits and other data will be recorded leading to privacy issues. The just business part will seamlessly come as more and more users adopt technology of future, the way telephones and TV changed marketing!

Discussion Question 11
Q11: Some economists suggest that the increase in ecommerce within the B2B market will lead to greater competition and more goods and services becoming commodities, meaning they compete solely on price. How do you think this competition is likely to affect buyers within the B2B market? How would it affect sellers?
Answer: Competition might increase because purchasing firms can easily and quickly check prices for competing selling firms simply by visiting their Web sites. In fact, the selling firm will send e-mail and provide customized Web pages to make it even easier for buyers. Sellers can similarly view competitors prices and thus may try to match them. In this environment, firms must differentiate their products on some basis other than price that is important to buyers: non-price competition. They can use the Web to help them by conducting market research to see what customers want, how they perceive various competitive products, and by using these data to modify product offerings. They further can use the Web to customize communication to buyers thus adding value.

Discussion Question 12
Q12: What concerns about consumer privacy are raised by the increased use of wireless computing and handheld devices outside the home or workplace? Privacy refers to: the right to be left alone, and the right to keep ones personal information private. With regard to wireless computing, one big concern is text message spamming. Another is can intercept wireless transmissions, accessing personal information sent over wireless networks. With services that broadcast data throughout the air, consumers have reason to be even more concerned. The same issues with privacy, credit cards numbers, personal information, etc. apply, except now people can listen in and even jump onto your network. Encryption standards are still widely debated. In future with mobile commerce and automated account transfers over wireless networks, security will become paramount.

Discussion Question 13
Q13: As a consumer, how will your life change when the Semantic Web becomes a reality? Consumers will define tasks for their personal digital agents, which will search for pieces of data and return them as movies to the television set, appointments to the PDA, contact information to the address book, and more. There could be many future scenarios. For example, one could be personal agents to synchronize personal calendars, personalized databases, and entertainment on demand. The Internet refrigerator could scan products the user removes, and either automatically find recipes online, or add them to the shopping list if not returned to the refrigerator. Endless possibilities.