Global Marketing Management

Chapter 16 Global e.marketing
Warren J. Keegan

Overview aThe Death of Distance aTargeting the individual customer aRelationship markting aSpeed to market aChanging rules of competition aComponents of the electronic value chain aSummary Keegan: Global Marketing Management Chapter 16 / 2 .

Learning Objectives aUnderstand the main drivers of the information and communication technology (ICT) aAppreciate the role of the Internet in providing a platform for e-commerce aLearn how the new technological environment impacts on global marketing activities aKnow the components of the electronic value chain Keegan: Global Marketing Management Chapter 16 / 3 .

IT-Environment: Important Facets aE-Commerce aExtranet aInternet aPortals aWeb Browser aWorld Wide Web aVirtual Reality aEDI (electronic data exchange) Keegan: Global Marketing Management Chapter 16 / 4 .

The Age of Technological Discontinuities aThe speed of technological change has accelerated dramatically aOur environment is characterised by `technological convergence and `technological ubiquity aThe internet is the most important driver of technological change Keegan: Global Marketing Management Chapter 16 / 5 .

Uptake of Consumer Technologies 120 100 Telephone 80 Cable Radio Millions of Users 60 40 Internet 20 TV 0 Source: Morgan Stanley. The Internet Advertising Report 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 Chapter 16 / 6 .

000 .0 0 0 20 .000 .000 . 1999 Keegan: Global Marketing Management Chapter 16 / 7 .org/mapsale/data/trends/trends-199907/sld004.htm.mids.0 0 0 0 Source: Adopted from: http://www.0 0 0 40 .000 .0 0 0 80 .0 0 0 60 . Aug. 30.Development of Internet Hosts 120 .000 .000 .0 0 0 100 .

html.ie /surveys/graphs_c harts/1998graphs /location. August 1999 Keegan: Global Marketing Management Chapter 16 / 8 .nua. 30.Geographical Distribution of Internet Users Source: http://www.

12 Keegan: Global Marketing Management Chapter 16 / 9 . p. Wien/Frankfurt am Main.The Evolution of E-Commerce tom orr ow today yesterday New Marketing Tool New Distribution System New Drive for Efficiency New Business Model Evolution Revolution Source: Roland Berger & Partner ( 1999) Erfolgsfaktoren im Electronic Commerce: Auszug aus den Ergebnissen der Studie.

Evolution in Business Context and Strategies Old Economy Market share Technology as an enabler Seller-centric market Physical assets Vertical integration based on size Decreasing return to scale Firm-centric marketing strategies New Economy Strategic control Technology as a driver Buyer-centric markets Knowledge assets Vertical integration based on speed Increasing return to scale Network-centric marketing strategies Keegan: Global Marketing Management Chapter 16 / 10 .

form alliances based on their potential for market access and synergies 3. Keegan: Global Marketing Management Chapter 16 / 11 . 1. secure a dominant market position as quickly as possible 2.. defend positions through an ongoing process of innovations.New Economy Forces Companies to . anticipate very high start-up investments 4..

ain markets `with high fixed costs `with high degree of intellectual factor input `when the product becomes more valuable when used by more people („network effect“) Keegan: Global Marketing Management Chapter 16 / 12 .1.e. Importance of Dominant Market Positions aCases where returns achieved through increased market share grow until market saturation has been reached i.

2.marketing of an innovative product) `horizontal (in the same industry. eg r&d) `diagonal (different industries. eg r&d) Chapter 16 / 13 Keegan: Global Marketing Management . Importance of Strategic Alliances aStrategic alliances = cooperation of legally independent firms aICT leads to a reduction of transaction costs a3 types of alliances `vertical (eg manufacturer & retailer .

Importance of Anticipating High Start-up Investments aIn many e-based industries high start-up costs are necessary to achieve the desired market share aMoney is needed `either from well established financially strong partners `or from the stock exchange („internet stocks“) aPayback might only be achieved on a long-term basis (in comparison with traditional companies) Keegan: Global Marketing Management Chapter 16 / 14 .3.

000 Priceline 35.700 15. of eBusiness August 7-10.4 24.800 14.com.500 11. 1999.5 64.200 5. Keegan: Global Marketing Management Chapter 16 / 15 . Hoover.300 Ingersoll Rand 5.0 91. Morgan 23.000 Amazon 610.700 Traditional Economy Valuations (1998) Market Cap Annual Company ($m) Revenues ($m) 149.400 8.000 15.900 11.P.900 26.200 Toys “R” Us Sources: Fortune. Performance.200 AMR 11.400 J.300 Lockheed Martin 13.0 23.500 ebay 47. ”Toward a Model San Francisco.900 Fed Ex 16.900 @Home 48.600.0 16.500 19.500 Alcoa 17.2 17.3 34.0 149.700 15. Arvind Rangaswamy.800 Yahoo 203.700 Pfizer 34. April 26 and May 24.8 12.Market Valuations: New Versus Old Economy Digital Economy Valuations (1998) Company Annual Market Cap Revenues ($m) ($m) AOL 2.300 18. 1999.100 Allied Signal 24.” Presentation at the American Marketing Association Summer Educators’ Conference.800 E*Trade CMGI RealNetworks 285.

Ongoing Innovations aDiffusion speed of new products has increased significantly aInnovation is necessary to keep a compny´s market share aICT leads to greater efficiencies in all stages of the new product development process Keegan: Global Marketing Management Chapter 16 / 16 .

in W. Staehle and P. 1992. Griese. (Berlin / New York). p. de Gruyter.Location of Value Chain Across Countries Supplier Country A Country B Country C Country D Country E Purchasing R&D Production Sale Customer Service Customer Support Level low medium high Support Level Source: Adapted from J. 423 Legend: In Country Presence Keegan: Global Marketing Management Chapter 16 / 17 .und Kommunikationssysteme auf die Organisation weltweit tätiger Unternehmen. v. Auswirkungen globaler Informations.H. Conrad (eds) Managementforschung 2.

Nunes and Brian S.Middlemen as Networks of Specialists Payments Specialist Context Supplier Sales Agents Market Makers Purchase Agent Context Supplier CUSTOMER SUPPLIER Logistic Specialist Source: Adapted from Paul F.” Outlook. Heft 1. 55 Keegan: Global Marketing Management Chapter 16 / 18 . 1998. Pappas. Andersen Consulting. ”Der Vermittler auf der Suche nach Reichtum und Glück. p.

customisation and interaction `fundamentally new business models (network organisations) `empowered customers Keegan: Global Marketing Management Chapter 16 / 19 .Summary Rapid advances in IT are profoundly affecting the way global marketing is conducted: `additional distribution & communication channels (ecommerce) `precise targeting (segment of one).