Marketing Strategy in the Digital Age The Internet Changes Everything

“ Killer App” Changes the way society itself works and functions.

Changes the way society itself works and functions.

The New Five Forces Moore’s law Metcalfe’s law Coasian economics Firms Markets Flock-of-birds phenomenon Fish tank Phenomenon

Moore’s Law Speed of microprocessors, at a constant cost, also doubles every 18 to 24 months. Computing power becomes ever faster, ever cheaper Drives convergence What will our industry or market be like when computers or chips are literally everywhere?

Speed of microprocessors, at a constant cost, also doubles every 18 to 24 months.

Computing power becomes ever faster, ever cheaper

Drives convergence

What will our industry or market be like when computers or chips are literally everywhere?

Metcalfe’s Law How useful is a piece of technology? The answer depends entirely on how many other users of the technology there are and on how easily they can be interconnected. (usefulness or utility of the network equals the square of the number of users) Increases the speed of its adoption by still more users. Consider what the efforts of technology will be that enables their customers to talk to each other, suppliers to talk to each other and customers to talk directly with suppliers.

How useful is a piece of technology? The answer depends entirely on how many other users of the technology there are and on how easily they can be interconnected. (usefulness or utility of the network equals the square of the number of users)

Increases the speed of its adoption by still more users.

Consider what the efforts of technology will be that enables their customers to talk to each other, suppliers to talk to each other and customers to talk directly with suppliers.

Coasian Economics Transaction cost economics: Way of explaining which activities a firm will choose to perform within its own hierarchy and which it will rely on the market to perform for it. Technology reduces costs of the hierarchy What functions the Internet will permit firms to outsource. How to respond to digital competitors

Transaction cost economics: Way of explaining which activities a firm will choose to perform within its own hierarchy and which it will rely on the market to perform for it.

Technology reduces costs of the hierarchy

What functions the Internet will permit firms to outsource.

How to respond to digital competitors

The Flock-Of-Birds Phenomenon In many cases new communication technologies do not “belong” to any one institution, not does any particular authority control them. Access is equalized

In many cases new communication technologies do not “belong” to any one institution, not does any particular authority control them.

Access is equalized

The Fish Tank Phenomenon Anyone can set up a website and theoretically be seen by the world Creative inputs of millions of individuals around the world, who now have the ability to show us what they can do (in many cases outdoing the large institutions) Firms may be threatened by small startups.

Anyone can set up a website and theoretically be seen by the world

Creative inputs of millions of individuals around the world, who now have the ability to show us what they can do (in many cases outdoing the large institutions)

Firms may be threatened by small startups.

Summary Change is rapid Continually understand how your value chain could be destroyed Resources are less about tangible and more about knowledge and the ability to constantly innovate Customers want control and the power to solve their own problems. Strategy is no longer long-term

Change is rapid

Continually understand how your value chain could be destroyed

Resources are less about tangible and more about knowledge and the ability to constantly innovate

Customers want control and the power to solve their own problems.

Strategy is no longer long-term