Introduction The Buzz Words We Hear Today: Information Economy Information Age Information Society In fact, information, by itself, is being viewed as a resource for gaining competitive advantage. 3/15/2004 MIKM 1 3/15/2004 MIKM 2 Introduction On the flip side, we often hear: Marketing is too important to be left to the marketing department. WHY? Are all of you here focusing on marketing not talented or trained enough? Marketing and Technology Coalignment: A Necessity Examples COSMOS SABRE ECONOMOST 3/15/2004 MIKM 3 3/15/2004 MIKM 4 COSMOS Federal Express s COSMOS customer service system tracks every movement of every package in the network (through handheld computers carried by all employees who handle packages). It has become the basis for the firm s continuing ability to differentiate itself in an increasingly competitive market. The company is now providing customers with terminals and/or software so that they can tie into systems directly in effect enabling Federal Express to manage its own shipping department, thus creating huge customer switching costs. SABRE American Airlines SABRE reservation system, in addition to its welldocumented role in retail travel agencies, is the basis of both the firm s successful frequent flier program and its ability to implement yield management or flexible and dynamic pricing. The system has now been extended to in-house corporate travel departments and help organizations manage their travel and entertainment operations. 3/15/2004 MIKM 5 3/15/2004 MIKM 6 1
ECONOMOST McKesson, the pharmaceutical wholesaler, implemented its pioneering ECONOMOST system by placing terminals in drugstores and trying them into McKesson s central computer. Originally designed to expedite order processing and control inventory, the system rejuvenated the wholesale drug distribution industry (not coincidentally resulting in the elimination of dozens of competitors). McKesson is now effectively managing retail drugstores for its clients by selling back to them summaries of information collected daily. Topics of Discussion Defining Information and Assessing Marketing Information and Knowledge Organizational Information Processing Explicit and Tacit Knowledge The Case of KPMG 3/15/2004 MIKM 7 3/15/2004 MIKM 8 Information Data that has been structured so as to endow it with meaning. Current trends: Increase in amount of information. Increase in speed of information transmission. Consequences Blurring of product-market boundaries. Example: Consumer Electronics and Computer Manufacturers. Changes in Organizational Roles. More outsourcing, especially IT. Porter s value chain analysis? Breakdown of functional boundaries within firms. Marginalization of the role of marketing. Justify existence by linking to Bottomline. 3/15/2004 MIKM 9 3/15/2004 MIKM 10 Information Continuum Information as Wealth Generating Asset Information Independent Products (e.g., McDonalds) Information critical for marketing effort but not part of product per se (e.g., most consumer nondurables) Information used in product customization (e.g., Panasonic Bicycles) Information forms secondary part of product (e.g., American Hospital Supply) Transaction Based Information Systems (e.g., SABRE) Accurate Relevance Clarity Timeliness 3/15/2004 MIKM 11 3/15/2004 MIKM 12 2
Increasing Returns Examples: Increasing Returns RETURN 60 50 40 30 20 10 0 RETURN ON ASSETS 1 2 3 4 5 6 7 8 ASSET LEVEL Physical Asset Information Products that have high network externality Interstate highway system Fax machines When fixed costs are high and variable costs are low (Ford Motor Company). Organizational culture 3/15/2004 MIKM 13 3/15/2004 MIKM 14 Focus on information from the Market. Consumers Competitors External Stakeholders, in general. Examples: Buyer behavior Competitive signals and reactions Domains New Product Development New Product Marketing Customer Relationship Segment, Target, Position (STP) Designing Marketing Mix Elements Market Structure 3/15/2004 MIKM 15 3/15/2004 MIKM 16 Organizational Information Processing Processes through with information is created, disseminated and used in firms. Encompasses organizational learning Exploration Exploitation Vicarious Learning Collateral Learning Experiential Learning Organizational Information Processing Instrumental Assimilation Transmission Utilization Conceptual 3/15/2004 MIKM 17 3/15/2004 MIKM 18 3
Explicit and Tacit Knowledge Why did you decide to get a Marketing Degress? Explicit Knowledge: Can be easily articulated and passed on to others (e.g., technical skills) Tacit Knowledge: Embedded in organizational socio-cultural systems that create barriers to imitation. KPMG: One Giant Brain Objective: deliver the collective know-how of all our professionals, any time, any where on the map. We don t produce widgets, we are the quintessential knowledge-based organization; we are one giant brain. 3/15/2004 MIKM 19 3/15/2004 MIKM 20 Knowledge Manager (KMan) The conference (Tacit Knowledge) It was a repository of experiences, lessons learned, information, and documents submitted from throughout the firm, and reviewed for quality by content experts. The Library (Explicit Knowledge) Keywords searchable abstracts. Knowledge Web (KWeb) Knowledge capture and dissemination Access to internal and external databases Messaging and collaboration tools Internet linkages Platform for creating various application software 3/15/2004 MIKM 21 3/15/2004 MIKM 22 Knowledge Process Acquisition Library Activities Indexing Filtering Linking Distribution Application Keys to Success Adapting organizational structures Embedding knowledge sharing environment in organizational culture. 3/15/2004 MIKM 23 3/15/2004 MIKM 24 4
Summary Defining Information and Assessing Marketing Information and Knowledge Organizational Information Processing Explicit and Tacit Knowledge The Case of KPMG Conclusion We view every aspect of marketing with the Information lens. Our objective is how to best manage this information We hope that soon somebody important will say: Marketing is too important NOT to be left to the marketing department! 3/15/2004 MIKM 25 3/15/2004 MIKM 26 5