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| The information technology boom |
The Information Technology Boom
The explosive growth in computers, telecommunications, and information technology has had a major impact on the way companies bring value to their customers. The technology boom has created exciting new ways to learn about and track customers, create products and services tailored To meet customer needs, distribute products more efficiently and effectively, and communicate with customers in large groups or one-to-one. For example, through videoconferencing, marketing researchers at a company's headquarters in New York can look in on focus groups in Chicago or Paris without ever stepping onto a plane. With only a few clicks of a mouse button, a direct marketer can tap into online data services to learn anything from what car you drive to what you read to what flavor of ice cream you prefer. Using today's vastly more powerful computers, marketers create detailed databases and use them to target individual customers with offers designed to meet their specific needs and buying patterns. With a new wave of communication and advertising tools - ranging from eel! phones, fax machines, and CD-ROMS to interactive TV and video kiosks at airports and shopping malls - marketers can zero in on selected customers with carefully targeted messages. Through electronic commerce, customers can design, order, and pay for products and services - all without ever leaving home. From virtual reality displays that test new products to online virtual stores that sell them, the boom in computer, telecommunications, and information technology is affecting every aspect of marketing.
The Internet
Perhaps the most dramatic new technology surrounds the development of the Information Superhighway and its backbone, the Internet. The Internet is a vast and burgeoning global Web of computer networks, with no central management or ownership. It was created during the late 1960s by the UK Department of Defense, initially to link government labs, contractors, and military installations. Today, the Internet links computer users of all types around the world. Anyone with a PC and modem - or TV and set-top 'Web box' - and the right software can browse the internet to obtain or share information on almost any subject and to interact with other users.19 Companies are using the Internet to link employees in remote offices, distribute sales information more quickly, build closer relationships with customers and suppliers, and sell and distribute their products more efficiently and effectively. Internet usage surged in the 1990s with the development of the user-friendly World Wide Web. More than 50 million people surf the Internet each month, up from just 1 million people in late 1994. There may be as many as 4-6 million Web sites worldwide, and these numbers are growing explosively.20 The advent of the World Wide Web has given companies access to millions of new customers at a fraction of the cost of print and television advertising. Companies of all types are now attempting to snare new customers on the Web.
For example, Carmakers like Toyota (www.Toyota.com) use the Internet to develop relationships with owners, as well as to sell cars. Its site offers product information, dealer services and locations, leasing information, and much more. For example, visitors to the site can view any of seven lifestyle magazines - terrain, A Man's Life, Women's Web Weekly, Sportive, Living Arts, Living Home, and Car Culture - designed to appeal to Toyota's well-educated, above-average-income target audience. Sports fans can cozy up with Kike by logging on to www.nike.com, where they can check out the latest Nike products, explore the company's history, download Michael Jordan's latest stats, or keep up with Tiger Woods' latest movements. Through its Web page, in addition to its mass-media presence, Nike relates with customers in a more personal, one-to-one way. The Ty Web site (www.ty.com) builds relationships with children who collect Beanie Babies by offering extra information, including the 'birth date' of the 50-plus toys, highlights on special Beanie Babies each month, promotion of newly developed Beanie Babies, and even a role of honor section that includes a child's photo and grades. Is it effective? In less than a year, based on the counter on the site, Ty.com received over 266 million visitors. The very small retail chain Next Stop North Pole (NSNP) sells only penguin-related products - T-shirts, plush toys, porcelain reproductions, books, and others. A search for 'penguins' on the Web yields Pete & Barbara's Penguin Page ('the best source for information about penguins'), which contains a link to the NSNP Web site. The Web site contains pages from the store's direct-mail catalog and a link to its e-mail mailbox, where visitors can request the full printed catalog. The Internet gives tiny Next Stop the North Pole access to consumers around the world at very little cost.21 It seems that almost every business, from garage-based start-ups to established giants, is setting up shop on the Internet.
All are racing to explore and
exploit the Web's possibilities for marketing, shopping, and browsing for
information. However, for all its potential, the Internet does have drawbacks.
It's yet to be seen how many of the millions of Web browsers will become actual
buyers. Although the value of a Web site is difficult to measure, the actuality
is that few companies have made any money from their Internet efforts. And the
Web poses security problems. Companies that link their internal computer
networks to the outside world expose their systems to possible attacks by
vandals. Similarly, consumers are wary about sending credit card account
numbers or other confidential information that may be intercepted in cyberspace
and misused. Finally, using the Web can be costly. For companies to make the
most of the Internet, they must invest heavily in leased telephone lines,
powerful computers and other technologies, and Internet specialists. However,
given the lightning speed at which Internet technology and applications are
developing, it's unlikely that these drawbacks will deter the millions of
businesses and consumers who are logging on to the Net each day. 'Marketers
aren't going to have a choice about being on Internet,' says Midori Chan, vice
president of creative services at Interest, which helped put Windham Hill
Records and Digital Equipment Corp. on the Internet. 'To not be on the
Internet... is going to be like not having a phone
Internet
A global computer network that enables
computers, with the right software and a modem (a telecommunications device
that sends data across telephone lines), to be linked together so that their
users can obtain or share information and interact with other users.
Rapid Globalization
The world the economy has undergone radical change during the past two decades. Geographical and cultural distances have shrunk with the advent of jet planes, fax machines, the global computer and telephone hook-ups, world television satellite and cable broadcasts, and other technological advances. This has allowed companies greatly to expand their geographical market coverage, purchasing, and manufacturing. Many companies are trying to create a global structure to move ideas swiftly around the world. The picture is one of a vastly more complex marketing environment for both companies and consumers. Today, almost every company, large or small, is touched in some way by global competition. European and US firms, for example, are being challenged at home by the skillful marketing of Japanese and other Asian multinationals. Companies like Toyota, Honda, Fujitsu, Sony, and Samsung have often outperformed their Western competitors in overseas markets. Similarly, western companies in a wide range of industries have found new opportunities abroad. Glaxo, Asea Brown Boveri, Coca-Cola, IKEA, Toys '#' Us, Club Mediterranean, and many others have developed global operations, making and selling their products worldwide (see Marketing Highlight 1.3). Many companies are moving aggressively to take advantage of international marketing opportunities. Today, companies are not only trying to sell more of their locally produced goods in international markets; they are also buying or making more components and obtaining supplies abroad. Increasingly, international firms have to coordinate functional operations across borders and increase efficiency. Consequently, many domestically purchased goods and services are 'hybrids', with design, material purchases, manufacturing, and marketing taking place in several countries.
British consumers who decide to 'buy British' might reasonably decide to avoid Sony televisions and purchase Amstrad's. Imagine their surprise when they learn that the Amstrad TV was actually made from parts and components imported from the Far East, whereas the Sony product was assembled in the United Kingdom from British-made parts. Luxury cars are another case in point. Japanese luxury car makers such as Honda (the Acura) and Toyota (the Lexus) have moved some production to America. The German Mercedes is building sport-utility vehicles at its American assembly plant in Alabama. Rival, BMW's factory in South Carolina, already makes several versions of the 3-series as well as the 23 coupes for export to dozens of markets around the world - including Germany. Buyers, who want high quality and low prices, are now prepared to accept American-built luxury ears.23 Thus managers in countries around the world are asking: Just what is global marketing? How does it differ from domestic marketing? How do global competitors and forces affect the boxer business? To what extent should we 'go global'? The technological and marketing resources needed to conquer world markets in sectors such as telecommunications, airlines, ears, and media, are forcing companies to seek partners. Many companies are forming strategic alliances with foreign companies, even competitors, who serve as suppliers or marketing partners. The past few years have produced some surprising alliances between competitors such as Mazda and Ford, France Telecom, Deutsche Telecom and Sprint, General Electric and Matsushita, Philips and Siemens, and Daimler Benz and United Technologies of the United States. And Microsoft and Dow Jones have teamed up to develop software for global financial markets. Winning companies in the decade ahead may well be those that have built the best global partnerships and networks.
The Changing World Economy
A sluggish world economy has resulted in more difficult times for both consumers and
marketers. Around the world, people's needs are greater than ever, but in many
areas, people lack the means to pay for needed goods. Markets, after all,
consist of people with needs and purchasing power. In many cases, the latter is
currently lacking. In the developed Western and Asian economies, although wages
have risen, real buying power has declined, especially for the less skilled
members of the workforce. Many households have managed to maintain their buying
power only because both spouses work. However, many workers have lost their
jobs as manufacturers have automated to improve productivity or 'downsized' to
cut costs. Current economic conditions create both problems and opportunities
for marketers. Some companies are facing declining demand and see few
opportunities for growth. Others, however, are developing new solutions to
changing consumer problems. Stronger businesses have recognized and taken
advantage of recent developments in communications and related technologies.
These developments have raised customers' expectations of product quality,
performance, and durability. They no longer accept or tolerate shoddy products.
Power and control have also shifted from brand manufacturers to channel
members, which have become as sophisticated at marketing and exploiting
technology as producers themselves. Many are finding ways to offer consumers
'more for less' like Sweden's IKEA and America's Toys 'JT Us. Heavy discounters
are emerging to offer consumers quality merchandise at everyday low prices.
These days, customers want value and more value. Increasingly, marketers must
deliver offerings that delight, not merely satisfy, customers, Toyota has
succeeded in doing that: its highly acclaimed Lexus luxury line offers
consumers all the technology (gadgetry) and comfort they can ever dream of,
and, at about £44,000, is considered exceptionally good value for money,
compared to rival offerings in its class.
The Call for More Ethics and Social Responsibility
The third factor in today's marketing
environment is the increased call for companies to take responsibility for the
social and environmental impact of their actions. Corporate ethics has become a
hot topic in almost every business arena, from the corporate boardroom to the
business school classroom. And few companies can ignore the renewed and very
demanding environmental movement. The ethics and environmental movements will
place even stricter demands on companies in the future. In the former Eastern
bloc and many Asian countries, air, water, and soil pollution have added to our
environmental concerns. These and other governments across the world must
consider how to handle such problems as the destruction of rainforests, global
warming, endangered species, and other environmental threats. The pressure is on
businesses to 'clean up our environment. Clearly, in the future, companies
will be held to an increasingly high standard of environmental responsibility
in their marketing and manufacturing activities.25 More specifically, in the
EU, the continuing trend towards tougher environmental rules should drive non-conformers
out of business, while others who are committed to 'cleaning up' or 'greening'
their practices and operations will emerge stronger. Specialist industries
for environmental goods and services (e.g. paper, bottle, and tire recyclers)
have expanded quickly in recent years. As they say, 'there is money in Europe's
muck'.
The New Marketing Landscape
The past decade taught business firms
everywhere a humbling lesson. Domestic companies learned that they can no
longer ignore global markets and competitors. Successful firms in mature
industries learned that they cannot overlook emerging markets, technologies, and
management approaches. Companies of every sort learned that they cannot remain
inwardly focused, ignoring the needs of their customers. Prominent Western
multinationals of the 1970s which floundered at marketing, including Philips,
Volvo, General Motors, and RCA, are all struggling to revive their fortunes
today. They failed to understand their changing marketplace, their customers, and the need to provide value. Today, General Motors is still trying to figure
out why so many consumers around the world have switched to Japanese and
European cars. In the consumer electronics industry, Philips has lost its way,
losing its share to Japanese competitors that have been more successful in turning
expensive technologies into mass consumer products. Volvo, which has long capitalized
on its safety positioning, has, of late, lost this unique selling point to
other car manufacturers, which have turned the safety benefit into a universal
feature: many large European and Japanese ear producers now offer, as standard
features, driver and passenger airbags, anti-lock braking system, and other
safety devices. RCA. The inventor of so many new products never quite mastered the
art of marketing and now puts its name on products largely imported from Asia.
As we move into the twenty-first century, companies must become customer-oriented and market-driven in all that they do.
It is not enough to be product or
technology-driven - too many companies still design their products without
customer input, only to find them rejected in the marketplace. It is not enough
to be good at winning" new customers - too many companies forget about
customers after the sale, only to lose their future business. Not surprisingly,
we are now seeing a flood of books with titles such as The Customer-Driven Company,
Customers for Life, Turning Lost Customers Into Gold, Customer Bonding,
Sustaining Knock Your Socks Off Service, and The Loyalty Effect.21 These books
emphasize that the key to success in the rapidly changing marketing landscape
will be a strong focus on the marketplace and a total marketing commitment to
providing value to customers.
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