MKTG 680 Chapter 17 The Digital Revolution and Global Electronic Marketplace Objectives History of Digital Revolution Convergence Value Networks and Disruptive Global E-Commerce The Digital Revolution: A Brief History 1937 to 1942 world s first electronic digital computer was developed at Iowa State University 1947 the transistor was invented 1950 s saw the invention of the silicon chip 1970 s was the decade for companies like Atari, Commodore and Apple 1
The Digital Revolution: A Brief History 1981 IBM introduced is first Personal Computer (PC) 1984 Apple introduced the Macintosh 1982 the 286 microprocessor was unveiled 1993 was the creation of the Pentium The Digital Revolution: A Brief History 1969 is where the Internet can trace its origins (Defense Advanced Research Projects Agency) 1972 E-mail was sent for the first time 1973 saw the creation of a cross-network protocol; the true birth of a network of networks or the Internet 1993 Tim Berners-Lee invented URL, HTML and Http. Also the first commercial browser was created In 1993 there were 600,000 web users; in 2003 there are an estimated 580 million PCs accessing the Internet Convergence A term that refers to the coming together of previously separate industries and product categories More examples? Disintermediation Reintermediation 2
Value Networks and Disruptive Innovator s Dilemma Staying committed to a current, profitable technology Failing to provide adequate levels of investment to new and riskier technologies Company is responding to the needs of established customers Value Networks and Disruptive Value Network Found in every industry Cost structure that dictates the margins needed to achieve profitability Boundaries are defined by the unique rank ordering of the importance of various product attributes Each network has its own metrics of value Value Networks and Disruptive Sustaining Incremental or radical innovations that improve product performance Most new technologies developed by established companies are sustaining in nature The vast majority of innovations are sustaining in nature 3
Value Networks and Disruptive Disruptive Redefine performance New entrants to an industry Enable something to be done that was previously deemed impossible Enable new markets to emerge Global E-Commerce In 2003, global e-commerce revenues stood at $1.6 trillion and growing According to a report released by the University of California-Berkeley, in 2002, five exabytes of information an amount equal to every word spoken by humans were generated worldwide. China has more than 68 million Internet users; in Shanghai, Beijing and Guangzhou, one-third of all residents use the Internet. Japan has about 60 million Internet users, and Japan accounted for $1.6 billion in online revenue in 2004. Global E-Commerce Can be divided into 3 broad categories Business to Business (B2B) Business to Consumer (B2C) Consumer to Consumer (Peer-to-Peer) 4
Web Sites Classified by Purpose Promotion sites to promote goods or services Content sites that provide new and entertainment Transaction sites allow consumers to purchase goods and services Web Sites Companies must be willing to integrate interactive media into the marketing mix Can be developed in house or by an outside firm Web Sites Things to consider when creating a global Web Site Localize the Web site in the native language and business nomenclature of the target market Should reflect local culture, customs, and aesthetic preferences Privacy 5
Web Sites What makes a good Web site? Technology and functionality. This category includes layout, ease of navigation, and print-out opportunities. Does the site offer interactive functions such as order forms and e-mail subscriptions? Content. This category includes e-mail address information for key people or corporate functions; corporate information such as mission, vision, and company history; and financial information such as quarterly reports in PDF or HTML format. Broadband Has sufficient capacity to carry multiple voice, data, or video channels simultaneously Bandwidth determines the range of frequencies that can pass over a transmission channel Broadband Creates opportunities for streaming audio, video, and media On-line gaming Online education Medical diagnosis and treatment E-Commerce 6
Mobile Commerce and Wireless Connectivity Mobile commerce or M-commerce is the term for conducting commercial transactions using wireless handheld devices such as PDA s Wi-fi (Wireless Fidelity) permits laptop and PDA users to establish high-speed wireless Internet connections Bluetooth uses less power than wi-fi, works well with cell phones and covers shorter distances than wi-fi Smart Cell Phones 400 million cellular handsets are sold annually Smart phones give users some of the capabilities of computers currently 5% of the market Cell phone users bought 5 million ring tones in 2003 Technology Forecast By 2008, the global market for cell phone games could reach $7 million. - Strategy Analytics 7
Internet Phone Service The next big thing for the telecommunications industry Has the potential to render the current telecommunications infrastructure obsolete Currently only accounts for 3% of total global calling 8