Marketing Strategies – New Economy
1. What do we mean by the “new economy”?
This refers to the industries that fuel the
development of or participate significantly in
electronic commerce and the Internet, develop
and market computer hardware and software,
and develop or provide any of the growing
array of telecommunications services.
2. Does every company need a neweconomy strategy?
Why or why not?
• Reasons why
• Growing penetration of the Internet and
mobile telephony in all segments of the
population around the world
• Inherent efficiencies of the Internet to reduce
transaction and other costs
• Strong venture capital support for high
technology industries will spawn further
• Many established bricks and mortar companies
have had success with their Internet gambits
• Reasons why not
• Many once-promising Internet business
models have failed to make money
• B2B hubs
• B2C e-tailers
Seven key elements characterize
new-economy technologies: are they advantages or
Syndication of information
Increasing returns to scale of networks
Personalization and customization
• Syndication of information
• Definition? involves the sale of the same good—typically an informational
good—to many customers, who then combine it with information from other
sources and distribute it.
• Advantages? A company can syndicate the same informational goods or
services to an almost infinite number of customers with little incremental cost.
The syndication process can be automated and digitized, enabling syndicated
networks to be created, expanded and flexibly adapted far more quickly than
would be possible in the physical world.
• Disadvantages? It is difficult to police the information that gets sent out. For
example, copyrighted material could be sent out for free and without
permission, causing the authors or companies to lose money.
• Increasing returns to scale of networks
• Definition? The lower cost of subsequent transactions
arising from positive network effects.
• Advantages? Companies like Cameraworld.com are
benefited by building a community of photo enthusiasts
who share insights with one another via the
• Disadvantages? For companies that are new to the
market it may be difficult to get customers to switch
because of the relationships already developed with
• Personalization and customization
• Definition? Personalization is marketer-driven, in other words a
marketer can personalize the message it sends to each
customer (i.e. send a reminder of an upcoming birthday).
Customization is user-driven, which allows users to specify the
nature of what is offered to them.
• Advantages? Personalization and customization can help build
customer loyalty and make it less likely for customers to switch
to other suppliers.
• Disadvantages? Once again, for competitors it is difficult to get
potential customers to switch because of the loyalty they have
with the company they are currently doing business with.
• Definition? Marketers reaching customers directly
without the expense or complication of distribution
• Advantages? Cuts out the middleman and his costs,
which can increase profits for some businesses. Note,
however, that the middleman’s functions typically must
still be provided.
• Disadvantages? Performing the functions the former
middleman played may turn out to be expensive and/or
• Global reach
• Definition? Information, digital goods or services
available anywhere one can gain access to the Web.
• Advantages? Reaches distant markets easily and
• Disadvantages? Global reach is limited to those who
can gain access to the Web, which is not available in all
parts of the world and all economic levels.
• 24x7 access
• Definition: Allowing customers access 24 hours per
day, seven days per week, 52 weeks per year.
• Advantages: Great advantage to customers in our
increasingly time-pressed world.
• Disadvantages: Even though customers have access
24x7, most companies can’t operate all those hours,
which can make it frustrating for the customer
• Instantaneous delivery
• Definition? Delivery of information, digital goods and
service over the Web instantaneously.
• Advantages? Fast and convenient delivery in our
increasingly time-pressed world.
• Disadvantages? May require more effort by the
purchaser, which may offset the convenience.
Instantaneous delivery is limited to information, digital
goods and services.
3. Are these new economy attributes
opportunities or threats?
• Variable cost for syndicated goods
approaches zero zero price
• Few barriers to entry
• Internet strategies may be imitated
• Privacy issues
– Click streams
• Security issues
– The value of information to different kinds of
customers is likely to vary substantially
– Freedom from annoyance, speed, user interfaces,
• Now can use:
– Market segmentation, targeting, differentiation,
4. What factors should be considered in
coming up with marketing strategy
decisions in the new economy?
How should marketers decide
what new-economy tools to apply?
Product return or
Can we do so
first, and/or be
is what kind
Can we reach
5. Many of you may have thought of ideas
for entrepreneurial new-economy
ventures. What are some key questions
we have learned to date to test the merit
of those ideas?
• The basics already covered
• Is the market attractive?
• Large and growing market, favorable macro trends
• Is the industry structurally attractive?
• Five forces favorable on balance
• Threat of new entrants
• Bargaining power of suppliers
• Rivalry among existing competitors
• Bargaining power of buyers
• Threat of substitute products
• Driving forces - CSFs favorable
• The basics already covered
• Does my idea satisfy some target customers’
wants and needs better than current solutions?
• Who is the target market?
• What benefits will we offer them?
• Do we have some basis for establishing
sustainable competitive advantage?
• Unique or proprietary technology or capabilities
• Difficult for others to imitate or duplicate
• What questions have often been overlooked by
would-be entrepreneurs in the new economy?
• Where will our revenue come from? Who will
pay? For what? How much will they pay?
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