Current Marketing Issues Seminar

1. Current Marketing Issues Seminar …its defining attributes, concepts & emergent ramifications …

2. 2nites Mission: • What “it” is… • Who-saw-what coming-when… • “Its” defining dimensions…& their implications…. • “Its”Ramifications: • New Rules for Organization Structure & Management • New Business Models • Need for New Marketing Skills & Strategies..

3. January 3, 2000, page S1 “There’s a new economy out there – and it looks nothing like the old one”

4. “The new economy is not just a dot.com thing. It’s not just about high tech …computers or microchips. What it is about is new ways of doing things in every industry, every government. It’s about speed, quality, flexibility, knowledge and networks.It will affect everything.” (Collaborative Economics)

5. New Forces in the New Economy…. • Over-capacity & hyper-competition. • Ascendant power of customers. • Ascendant power of distributors over manufacturers. • Growth of digitalization & the Internet as major sources of efficiency & profitability. • Proliferation of channels & media. • Globalization & global interdependence. • Mergers, alliances, large company bankruptcies

6. Tangible assets Rigid-Vertical Org. Protected markets Competition Distribution hierarchy Rigid barriers Standardization Domestic Prdt-Life Cycle=Years Seller power Intangible assets Fluid & Modular Open markets Hypercompetition Direct to customer Flexible entry Personalization Global PLC=months Buyer power At Least Ten Key Differences Old Economy New Economy

8. New Economy – Information driven New “E”conomy % 100 75 U.S. GDP 50 IndustrialEconomy 25 0 ’72 ’78 ’84 ’90 ’96 ’02 ’08 Source: Marvin Zonis & Associates • Old Economy – Manufacturing driven • Differentiation, customization • Networks & speed-Economies of Scope • Diversified -Adhocracy • Standardization & Duplication • Economies of scale • Hierarchical - bureaucractic

10. … arising largely from new developments in the internet, telecommunications and computer sectors.

11. Commercialization of the Internet Until 1993-The GENERAL PRINCIPLE of Internet Use: • “NSFNET Program Backbone services are provided to support research and education in and among US research and education institutions and for private or personal communication incidental to such activities… Use for other purposes, including extensive use for private or personal business, is not acceptable.

12. 1993- National Information Infrastructure Act is passed-- Internet commercialized COMPUTERS HOSTS IN INTERNET (MILLONS) 25 20 15 10 5 0 25.000.000 20.000.000 5.000.000 130.000 4 1969 JUL. 1992 MAR. 1994 JUL. 1995 SEP. 1996 JUL. 1997 JUL. 1989 SEP. 1991 OCT. 1993 ENER. 1995 ABR 1996 FEB. 1997 NOV. 1997

14. Seamless-Instant 24/7 global Connectivity ~10,000 GEOs, MEOs & LEOs local ISP Enables an ever-increasing Interdependent Interconnected Mobile Society living in the Info-Bubble regional ISP router server company network

15. Computers emptied factories & gave us paper-work in offices As Machines emptied countryside... & gave us factory-work in cities

16. And the office work grew... • If there’s no document... nothing happens • Where industry had its products, administration has its documents • "914", the First Automatic Xerographic Machine (1959) • The First Laser Printer for Computer Output (1978) • Desktop Laser Printing (1984) History of the Office:Office Machines http://inventors.about.com/library/inventors/bloffice.htm

17. The New Economy % “Information-Workers” • A Knowledge Economy • By 1990 -1/2 American workers are knowledge workers • Today -80%+ of new jobs are in information intensive sectors 50% 2%

20. W/ New Tech comes NewRealities • Time becomes more important • Decision-making accelerated- as business processes automated • Space/Distance- less important, even meaningless • Connectivity & virtuality renders distance obsolete • Intangibles more valuable • new value is applied information (CRM,SCM)

21. 2nites Mission: • What “it” is… • Who-saw-what coming-when… • “Its” defining dimensions…& their implications…. • “Its”Ramifications: • New Rules for Organization Structure & Management • New Business Models • New Marketing Strategies

22. to knowledge based economy to primary focus on information gathering, analysis & marketing As early as 1969Peter Drucker foresaw an “age of Discontinuity” w/ upcoming shifts: From manufacturing based economy From primary focus on engineering & manufacturing Drucker, Peter F. The Age of Discontinuity. Harper & Row Publishers, Inc: New York, 1969.

23. In 1988 Drucker wrote“The Coming of the New Organization” • “by 2008 successful organizations “will be knowledge-based • … composed largely of specialists who direct … their own performance through organized feedback… from colleagues, customers & headquarters.”

24. In early ’70’sDaniel Bell foresaw coming post-industrial society-- that would: • Shift from a goods-producing to service economy • Be dominated by professional & technical class • Be knowledge driven • & Future oriented "Coming of Post-Industrial Society: A Venture in Social Forecasting; 1973

25. 1980- Toffler’s 3rd Wave • First Wave ~8000BC Hunter Gatherer To Agricultural Age • Second Wave ~1750’s Agricultural Age To Industrial Age • Third Wave ~1950’s Industrial Age To Information Age

26. 1982 Naisbitt’s MegaTrends:Ten New Directions Transforming Our Lives • Industrial to Information Society • National to World Economy • Short to Long Term • Centralization to Decentralization • Institutional to Self Help • Representative to Participatory Democracy • Hierarchies to Networking • North to South • Either/or to Multiple Options

27. May 30, 1983 Vol. 121 No. 22 May 30, 1983 COVER STORY Technology has set off a scramble for jobs, profits and global markets Near the corner of Main and Walnut streets in the small town of Maynard, Mass., stands a massive complex of aged red-brick buildings. Within those walls, workers toiled amid clanging, churning machinery to produce carpets in the 1850s and Army blankets during two World Wars. But today the sturdy, old facade houses an entirely different enterprise. The noisy machines and grease-stained factory floor have given way to offices where engineers huddle over glowing oscilloscopes and secretaries peck quietly at word processors....

28. 2nites Mission: • What “it” is… • Who-saw-what coming-when… • “Its” defining dimensions…& their implications…. • “Its”Ramifications: • New Rules for Organization Structure & Management • New Business Models • New Marketing Strategies

29. Knowledge Digitization Virtualization Molecularization Integration Disintermediation Convergence Innovation Prosumption Immediacy Globalization Discordance Tapscott’s Defining Dimensions of the New Economy Strategy in the new economy Don Tapscott. Strategy & Leadership. Chicago: Nov/Dec 1997

30. Knowledge “The new economy is: • a knowledge economy • based on human capital & networks”

31. New Economy – Information driven • Old Economy – Manufacturing driven • Buildings, tools & equipment are expenses • people are assets • & knowledgeablepeople greatest asset of all… • Buildings, tools & equipment are assets • people are expenses

33. How many mfgg plants & office buildings does Microsoft own? • What is the value of all the equipment in its offices? • How much inventory does it have? Microsoft’s real assets walk out the door every night…

34. Another Dimension to Consider: Digitalization! 11010010110100100100100100110001011010010110100100001001001100010110100101101001001001001001100010110100101101001001001001001100010110100101101001001001001001100010110100101101001001001001001100010110

35. The “Media Fusion” Bomb Akin to energy generated by nuclear fusion, communication power generated by media fusion is formidable… W/ digitalization all media become translatable into each other –and gives one ability to digitally mix all media on a common palette…

36. The New Economy: Digitalization A Digital Economy • Old information flow: atoms - paper • Cash, checks, invoices, maps, photographs… • New information flow: bits • All things - done digitally

37. “Being Digital” (’95) is understanding the significance of... The movement of compressed weightless bits of data/ information • Transmitted at speed of light • Combined seamlessly • Retrieved instantly, anywhere • 24/7 around globe

38. Virtualization “As information shifts from analog to digital, physical things can become virtual… Changing the metabolism of the economy, the types of institutions & relationships possible, & nature of economic activity itself ” The Virtual: • Partner/ Community • Office/ Corporation • Store/ Mall Entering the infosphere Journal of International Affairs ; New York; Spring 1998; Michael Vlahos

39. Molecularization “The old corporation is being disaggregated replaced by dynamic molecules & clusters of individuals which form the basis of economic activity” The knowledge worker (atom) forms working clusters/ molecules

40. Integration & Internetworking “The new economy is a networked economy, integrating molecules into clusters which network w/ others for the creation of wealth” Enables small companies to • Overcome advantages of large companies economies of scale & access to resources • Avoid burdens Bureaucracy, hierarchy & inflexibility

41. Disintermediation 100% Mfgrs Middleman functions …being eliminated thru digital networks • Musicians don't need recording companies • Airlines, Hotels don't need travel agents • Food Companies don’t need wholesalers 90% 80% Wholesalers 70% 60% 50% 40% Retailers 30% 20% 0% Japan Britain United States Number of companies involved in each level of the food industry, % of total, 1993

42. Convergence 1 “ the dominant economic sector is being created by three converging industries which, in turn, provide the infrastructure for wealth creation by all sectors” -Tapscott. 2 3

43. Steam Power MechanicalEngineering Material Sciences Over 100 years ago a technology convergence fueled a new economy The resulting Industrial Economy defined the business landscape for the 20th century

44. Communication Technologies Computing Technologies Content Technologies Today, another technology convergence is fueling a new economy COMPUNICATIONS The resulting Techno/Info-sphere is re-defining the business landscape for the 21st century

45. Innovation “The new economy is an innovation-based economy. …Obsolete your own products • The collapse of product life cycles • ‘96 Sony introduced 5000 new products • “No matter how good you are, you are only 18 months away from failure”

46. ATTACK of the Cyber-Blob! • Every 18 months- double CPU power- for ½ the price (Moore’s Law) • Every 12 months double fiber network capacity for ½ the price • Every 9 months double wireless capacity for ½ the price

47. Prosumption • 2nd Wave created situation where vast majority of food, goods n’ services destined for exchange(Sector B) • Virtually wiped out goods produced for self-consumption (Sector A) • Created civilization where almost no one– not even farmer wasself-sufficient

48. 3rd Wave Rise of PROSUMPTION: • 1970’s few self service retail outlets nor tools, building materials, medical instruments sold to consumers • 1980’s DIY explosion in full force • 3rd wave characterized by massive growth of sector A

49. Prosumption 3RD Wave finds gap between consumers & producers blurring CUSTOMERS INVOLVED IN PRODUCTION PROCESS • Levi’s – Original Spin