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Marketing ManagementMarketing Management

Adapting Marketing To The New EconomyAdapting Marketing To The New Economy

Dr. Zafer Erdogan

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The Internet will create new winners and bury the laggards.

Kotler on Kotler on MarketingMarketing

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Major Drivers of the New EconomyMajor Drivers of the New Economy

–Digitization and Connectivity

–Disintermediation and Reintermediation

–Customization and Customerization

–Industry Convergence

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How Business Practices are Changing

– From organizing by product units to organizing by customer segments

– Shift focus from profitable transactions to customer lifetime value

– Shift focus from financial scorecard to also focusing on the marketing scorecard

– Shift focus from shareholders to stakeholders

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How Business Practices are Changing

– Everyone does the marketing– Build brands through performance,

not just advertising– Customer retention rather than

customer acquisition– From none to in-depth customer

satisfaction measurement– From over-promise, under-deliver

to under-promise, over-deliverThe Fact is the New Hybrid!

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– E-business– E-commerce– E-purchasing– E-marketing

Some argue that ‘e’ will be dropped in time

How Marketing Practices are How Marketing Practices are Changing: E-businessChanging: E-business

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Four Major Internet DomainsFour Major Internet Domains

– B2C (Business to Customer)

– B2B (Business to Business)

– C2C (Consumer to Consumer)

– C2B (Customer to Business)

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Pure Click vs. Brick and ClickPure Click vs. Brick and Click

• Pure-Click companies– Search engines, Yahoo!, Google, Excite

– Internet service providers, AOL, CompuServe

– Commerce sites, Amazon, e-Toys

– Transaction sites, e-bay, e*trade

– Content sites, The Globe and Mail, E.Britannica

– Enabler sites, hardware and software companies

• Brick-and-Click companies

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Which is more important for Which is more important for developing an e-presence: the agility developing an e-presence: the agility of a pure-click company, or the well of a pure-click company, or the well defined and readily identifiable defined and readily identifiable resources of a traditional resources of a traditional brick and mortar brick and mortar company?company?

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How Marketing Practices are Changing: How Marketing Practices are Changing: Customer Relationship MarketingCustomer Relationship Marketing

– Reduce rate of customer defection– Increase longevity of customer

relationship– Enhance growth potential through cross-

selling and up-selling– Make low profit customers more profitable

or terminate them– Focus disproportionate effort on high value

customers

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Table 2.3: Mass Marketing vs. One-to-One MarketingTable 2.3: Mass Marketing vs. One-to-One Marketing

Mass Marketing One-to-One Marketing

Average customer

Customer anonymity

Standard product

Mass production

Mass distribution

Mass advertising

Mass promotion

One-way message

Economies of scale

Share of market

All customers

Customer attraction

Individual customer

Customer profile

Customized market offering

Customized production

Individualized distribution

Individualized message

Individualized incentives

Two-way messages

Economies of scope

Share of customer

Profitable customers

Customer retention

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Four steps for CR MarketingFour steps for CR Marketing

– Don’t go after everyone, identify

prospects.

– Differentiate customers by their needs

and their value to the company.

– Individual interaction with customers

builds stronger relationships.

– Customize messages, services, and

products for each customer.

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Marketing Spotlight: Yahoo!Marketing Spotlight: Yahoo!

1. If "point of destination" placed Yahoo! on the Internet map, what marketing miscue causedYahoo!'s "point of departure" from the scene? Discuss.

2. If Yahoo! was caught in the web of overconfidence with the dot-corns in 2000, can you suggestmarketing management strategies that would help it avoid this situation in 2005 and after? Is amerger the only answer?

3. What changes would you suggest for Yahoo! to give their marketing strategy a longer rangemarketing perspective?