Chapter 2

Marketing in the New Economy

Objectives
What are the major forces driving the new economy? How our businesses and marketing practices changing as a result of the new economy? Our marketers using the Internet, customer databases, and customer relationship management in the new economy?

New elements of the new economy

Companies are increasingly subcontracting activities to outsourcing firms. Companies are increasingly benchmarking their performance against best of class companies anywhere in the world. Companies are deepening their partnership agreements. Companies are emphasizing interdepartmental teamwork. Companies are inventing new advantages rather than relying on their existing advantages. Companies are recognizing that much of their market value comes from intangible assets. Companies are making substantial investments and information systems. Companies are increasingly organizing their activities around customer groups, not just around products.

Major drivers of the new economy

Digitization and connectivity Disintermediation and reintermediation Customization and customerization

Individually differentiated goods The combination of operational customization and marketing customization

Industry Convergence

Internet domains

B2C(business to consumer)
Focus of most popular press Ones that we typically use

B2B(business to business)
Where most businesses conducted

C2C(consumer to consumer)
Chat rooms, etc.

C2B(consumer to business)
Pure click companies Brick and click companies

Designing a Web Site

Context: layout and design Content: text, pictures, sound, and video. Community: how the site enables user to user communication. Customization: the sites ability to tower itself to different users. Communication: how the site enables site to user, user to site, or two-way communication. Connection: agree that the site is linked to other sites. Commerce: the sites capabilities to enable commercial transactions

Building a Revenue and Profit Model

Advertising income Sponsorship income alliance income Membership and subscription income Profit income Product and service sales income Transaction commissions and fees Market research/information Referral and come

Customer Relationship Management

Objectives
Reduce the rate of customer defection Increased longevity of customer relationship enhancing the growth potential each customer through share of wallet, cross selling, and up selling making low profit customers more profitable or terminating them Focusing disproportionate effort on highvalue customers

Customer Databases and Database Marketing

Objectives
Identify prospects Decide which customers should receive a particular offer Deep and customer loyalty reactivate customer purchases Avoid serious customer mistakes