Past paper: Discuss the advantages and disadvantages of the new economy for marketers (60%). How might companies develop a new economy strategy for their products or services (40%)? Illustrate your answer with examples.
* Does every company need a new-economy strategy
* Definition: new economy means the industries that stimulate the development or play an important role in electronic commerce and the internet, market computer hardware and software, and provide any of growing arrays of telecommunications services. E.g. dot-com retailers—Amazon, web portals—Google and Yahoo! * The growing adoption of new-economy technologies in consumer and commercial sectors illustrates the importance of an internet strategy. E.g. high-speed broadband connection is revolutionizing the possibilities of what the internet can offer, in U.S. 2010, more than 70% households wanted to be broadband connected, compared to 31% in 2004. * The growing market acceptance of the internet and other new-economy technologies and the inherent advantages that they bring suggest that nearly every company needs to examine how it will be affected by and can take advantage of these new technologies. * Forms of e-commerce: B2B (Cisco) C2B (Priceline/ www.elance.com) B2C (Amazon) C2C(eBay) * E business models: Bricks and Mortar only; Bricks and back up clicks; Bricks and clicks and clicks only. * Threats or opportunities? (seven attractive elements)
1) The syndication of information (lies at the heart of e-commerce business models) * Syndication involves the sales of the same good (information good) to many customers, who may then combine it with information from other sources and distribute it. * Why syndication is important:
a) Syndication delivers informational goods, variable cost of which is zero. b) Syndication process can be automated and digitized, enabling syndicated networks to be created, expanded, and flexibly adapted far more quickly than physical goods. * Syndication via the internet opens up endless opportunities for markets, replacing scarcity with abundance, processing the information timely and can be distributed everywhere. * However, companies should identify and occupy the most important niches in syndication networks, which can maximize the number and strength of links to other companies and customers. 2) Increasing returns to scale of network products
* Positive network effect (network externality): the characteristic of informational networks—a product becomes more valuable as the number of users increases. * Companies that can identify and exploit opportunities where they benefit from the increasing returns to scale that result from positive network effects can sometimes grow quickly on relatively modest capital investment. * Though some companies received lofty valuations, most are struggling to find a business model that actually makes any money. 3) The ability to efficiently personalize
* Rules-based personalization: collaborative filtering is one way of personalizing a market offering to each customer, when formal rules can be identifies in the way customer behave, it is done. 4) customize market offerings
* Customization technique: is user-driven instead of marketer-driven, allowing users to specify the nature of what is offered to them. * Personalization and customization can be help build customer loyalty and make it less likely that customers may switch to other suppliers. 5) Disintermediation and restructuring of distribution channels * The internet makes the distribution channels possible for marketers to reach customers directly, without expenses or complication of distribution channels (disintermediation). * Those who consider disintermediation their channels and selling direct must determine how they will perform these functions and must evaluate whether doing so is more effective and...