© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Internet Marketing & e-Commerce Ward Hanson Kirthi Kalyanam Requests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENT THOMSON BUSINESS and ECONOMICS 5109 Natorp Boulevard Mason, OH Phone: (800)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Part Two: Chapter 11 Innovation and the Net “Nothing endures but change.” Heraclitus ( BC)

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed Traditional business rivalries have been bitter, enduring battles Coke vs. Pepsi on the front lines of the Cold War SOURCE: ©Bettman/CORBIS: Vice President Richard Nixon and Soviet Premier Khrushchev share a Pepsi, 1959

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed In high-tech markets, rivalries burn bright but fast –IBM vs. Apple in personal computers –Digital vs. Data General in minicomputers Most prominently: the Browser Wars –Microsoft vs. Netscape in late 1990s –Now, Microsoft vs. upstart ( 暴發戶的 ) Firefox

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed On “Internet Time” marketers face strain of creating new products at the moment of new opportunity

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed On “Internet Time” marketers face strain of creating new products at the moment of new opportunity –Time-to-market influences profitability

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed On “Internet Time” marketers face strain of creating new products at the moment of new opportunity –Time-to-market influences profitability –Swiftness signals innovativeness

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed On “Internet Time” marketers face strain of creating new products at the moment of new opportunity –Time-to-market influences profitability –Swiftness signals innovativeness –Early arrivals draw partners and alliances

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation ☆ Competition and the Need for Speed On “Internet Time” marketers face strain 拉緊 of creating new products at the moment of new opportunity –Time-to-market influences profitability –Swiftness signals innovativeness –Early arrivals draw partners and alliances –Market leaders can set industry or product standards and gain dominance

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Competition and the Need for Speed

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Standards Marketing Open Standards: Formed by process of official debate and consensus ( 一致 ) –Widespread adoption and innovation, but also greater competition Example: WiFi

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Standards Marketing Open Standards: Formed by process of official debate and consensus –Widespread adoption and innovation, but also greater competition Example: WiFi De Facto ( 事實上的 ) Standards: Based on market acceptance, but proprietary ( 專屬的 ) –Harder to establish, but more profitable Example: Xbox and Playstation

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Standards Marketing Growth in certified Wi-Fi product types, according to the Wi-Fi Alliance

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Understanding the Idea Funnel 漏斗 –Dual goals of identifying unmet needs and weeding 雜草 out costly ideas early in process –Few ideas make it through the funnel, but process still can be costly

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online The Idea Funnel for event-driven new products

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Understanding the Idea Funnel –Dual goals of identifying unmet needs and weeding out costly ideas early in process –Few ideas make it through the funnel, but process still can be costly Improving the Idea Funnel –Online market research screens concepts –Virtual setting facilitates consumer- assisted design

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Not all products fit easily into preexisting product categories

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Not all products fit easily into preexisting product categories Simulation and digital environments offer realistic market research settings

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Not all products fit easily into preexisting product categories Simulation and digital environments offer realistic market research settings Information Acceleration (IA) –Places consumer in virtual buying environments –Can replace expensive prototypes, spot importance of valuable new features

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Modular Product Development Products divided into subsystems for more focused development –Visible design rules: describe how different modules fit together –Hidden design parameters: offer flexibility –One example: Wikipedia

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Modular Product Development

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Early feedback and rapid release –Key role of for fast, meaningful consumer input

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Early feedback and rapid release –Key role of for fast, meaningful consumer input –Prerelease of products for swift prototyping and testing

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Early feedback and rapid release –Key role of for fast, meaningful consumer input –Prerelease of products for swift prototyping and testing Alpha release – trusted lead users, such as company employees

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Early feedback and rapid release –Key role of for fast, meaningful consumer input –Prerelease of products for swift prototyping and testing Alpha release – trusted lead users, such as company employees Beta release – wider public sampling at lower price or for free

© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation Product Development Online Early feedback and rapid release –Key role of for fast, meaningful consumer input –Prerelease of products for swift prototyping and testing Alpha release – trusted lead users, such as company employees Beta release – wider public sampling at lower price or for free –Speed to market drives profitability