IT strategy and marketing

1. IT strategy and marketing Niels Bjørn-Andersen Copenhagen Business School B19 IT strategy Session 7 Thursday 16th March 2006

2. Contents • Customer focus according to Vandermerve • Customer activity cycle • Value of customer relationship • Using the Internet for marketing, • Viral marketing

3. Customer value Obtain value for customers Obtain value from customers

4. Strategies for Customer Retention • Watch the door • Identify customers who have just defected or are about to • Make it easy to complain • Freephone nmers, reply paid envelopes, incentivize with prize draws • No quibbles return policy • To retain customers, get early warnings, and motivate to error reduction • Celebrate and communicate complaints • Eliminate people’s fear that they will be punished for admitting mistake • Apologize and offer compensation • A modest gesture can make quite a difference • Explain what went wrong • Resear suggests that clear explanation is often more effective than simply fixing the problem • Empower employees to act • To avoid long-drawn-out and costly complaint-handling procedures • Recognize that customers are not always right • Handle these cases with sensitivity; accept without blame – indeed, firm may have failed to communicate properly in the first place Source: Bichene, J., The Quality 60: A Guide for Manufacturing and Service, Picsie Books, Buckingham, 1998

5. From Products to Market Spaces From To Cars Personal mobility Personal Computers Global-networking capabilities • Look for arenas that are greater than the sum of core items • CEO David Ball of Unilever’s new home and clothes cleaning venture says: • ”The value of the new market space ... is worth double the value of retail sales of household cleaning products” • Find market spaces that can be expanded over time • Cleaning is only one market subspace of home-care management • Ball describes it as ”anything related to saving time in the home” • After cleaning, Unilever will move into gardening, security, do-it-yourself, decoration, insurance, shopping, sending flowers, renting videos etc. • Bridge product lines • British Petroleum now provides ”integrated energy assurance” • Most customers don’t care on what energy source their factories are running • Cross-stream teams help customers decide. BP even partners with competitors and trades for fuel to get the best product. The customer pays to BP. • Cut across industry boundaries • Market spaces are made up of convergence between industries • Virgin defined its banking unit as ”lifelong cash-event management” • Span customer activities over time – perhaps over a lifetime • Lego’s construction-toy market share of 72% (and over 90% in Europe) happens in a falling share of children’s spare-time activities. Now Lego is in ”family edutainment” which is a convergence of toys, education, interactive technology, software, entertainment, computers and consumer electronics. Fuel oil Integrated energy assurance Sandra Vandermerwe,”How Increasing Value to Customers Improves Business Results, ” Sloan Management Review, fall 2000

6. Early awareness Kidneywise.com General practitioner awareness, training Help lines, information sites, Kidneywise.com Various relevant services Early and speedy diagnostics Mobile units Hemodialysis at home Treatment-option educators in clinics Early diagnostics Maintenance and replacement of equipment Training Remote prescription adjustment Help lines, peer support Mobile nurses Installation of equipment Telemedical monitoring Personalized home care and delivery Delivery of other drugs Emergency, 24-hour help lines and phones ”Edutainment” and education How did Baxter Capitalize on Value Gaps in the Customer-ActivityCycle? • Peritonial • Hemodialysis Pre ”deciding what to do” Experiences symptoms Has a kidney transplant Goes to doctor Has next treatment Receives diagnosis Chooses treatment Post During ”keeping it going” ”doing it” Starts treatment Adjusts treatment Is monitored Organizes supplies/home dialysis Has dialysis Sandra Vandermerwe, ”How Increasing Value to Customers Improves Business Results,” Sloan Management Review, fall 2000

7. Customer lock-on • The more relationships strengthen with customers, • The more information is used and re-used to provide proactive and precise offerings • The more people and machines are linked • The more players involved in supplying, supporting and servicing the offering to provide value • The more developers innovate to offer constantly improving value, • As more relationships strengthen, knowledge and information is shared, used and reused, the more the economy of scale sets in and reduce costs creating .. The higher the customer lock-on

11. Internet used for marketing • DFDS christmas calender, • DR’s pakkeleg, • Katja K’s gallery, • Totalkredit – housing game • Citroen case

12. How to define viral marketing?

13. Viral marketing cases • www.goviral.dk • Bullguard • Mastercard

14. When to use viral marketing • Viral marketing is good when you want to get in touch with first movers and trendsetters. • Viral marketing is appropriate as a cost effective way of sustaining and increasing brand or product awareness. • Viral marketing is appropriate for product launches and to kick-start new marketing campaigns/activities, often through releasing a viral edit of a new TV commercial before it goes on air to create buzz. • Viral marketing is appropriate when your target group is big and/or geographically spread out • Viral marketing is appropriate when your target group has a common interest in your product category and there are websites and communities with similar interests. • Viral marketing is appropriate when you want to differentiate messages for different target groups using different media. • Viral marketing is good for E-business’ with a global target group and distribution through the Internet. • Viral marketing boosts the effect of both online and offline campaigns and is often a very effective alternative or supplement to traditional banner advertising that suffers from low click through rates. www.goviral.dk

15. Conclusion • IT plays a major role in marketing • E-business is particular effective for relationship marketing or one-to-one-marketing • Internet contributes to changing the focus from • Market places to market spaces • Price/promotion/place to content/commerce/community • Pay attention to potential of viral marketing