Chapter 11 Marketing Strategies for a Digitally Networked World

Chapter Overview 2 1.THREATS OR OPPORTUNITIES? THE INHERENT ADVANTAGES AND DISADVANTAGES OF THE DIGITALLY NETWORKED WORLD FOR MARKETERS 2.DEVELOPING A STRATEGY FOR A DIGITALLY NETWORKED WORLD : A DECISION FRAMEWORK 3. Developing Strategies to Serve Digital and Social Networking Markets

Exhibit 11.1 – Social Networking Demography U.S. Social Network User Penetration, by Age, (Historcial and Forecast) % of internet Users in Each Group Who Use Social Networks Age Total

THREATS OR OPPORTUNITIES? THE INHERENT ADVANTAGES AND DISADVANTAGES OF THE DIGITALLY NETWORKED WORLD FOR MARKETERS Ability to optimize Syndication of information Increasing returns to scale of network products Personalization and customization Disintermediation and restructuring Global reach Round-the-clock access Instantaneous delivery

Ability to Optimize Digital marketing tool –Makes everything measurable –Enables marketers to change content aimed at different market segments –Helps optimize spending

Syndication of Information Sale of an informational good to many customers Syndication process –Delivers informational goods –Can be automated and digitized Enables syndicated networks to be created, expanded and flexibly adapted

Increasing Returns to Scale of Network Products Positive network effect: A product becomes more valuable as the number of users increases Categories of media –Owned media –Paid media –Earned media

Personalization and Customization Personalization is marketer-driven Customization is user-driven Help build customer loyalty Make it less likely for customers to switch to other suppliers

The Ability to Efficiently Personalize and Customize Market Offerings Collaborative filtering: Personalizing a market offering to each c ustomer Rules-based personalization –Formal decision rules identified by the way customers behave Mass-customization –Allows customers to specify the nature of what is offered to them –Is user driven

Disintermediation and Restructuring Disintermediation: Customers can be reached directly without: Expense or complication of distribution channels Deciding to disintermediate or restructure one’s channel: –Should not be done lightly

Global Reach, 24/7 Access, and Instantaneous Delivery Global reach: Digital goods, or services available anywhere one can gain access to the web –Making goods available 24 hours per day, seven days per week, 52 weeks per year –Providing instantaneous delivery

Digital World Fundamentals - Threats Variable cost for syndicated goods approaches zero Threat of disintermediation Few barriers to entry Privacy and security issues

Exhibit A Customer Experience Model for New-Economy Marketing Decision Making

Marketing Applications for a Digitally Networked World Applications for: –Customer insight –Product promotion, customer acquisition, and brand building –Conducting transactions –Delivering digital products –Customer service and support –Product return and disposal

Exhibit Diagnostic Questions for New-Economy Marketing Decisions

11-16 Managing Digitally Networked Strategies Challenge –Finding talented people to manage –Leading necessary efforts and initiatives

11-17 Developing Strategies to Serve Digital and Social Networking Markets Considering the various ways in which revenue can be generated –Web –Mobile phones Understanding one’s revenue model –Willing to change it as market and technological conditions change

11-18 – Anticipating future customer needs – Realizing that entry barriers for new entrepreneurs are low Developing Strategies to Serve Digital and Social Networking Markets