The Information Technology Boom

The explosive growth in computer, telecommunications and information technology has had a major impact on the way companies bring value to their customers. The technology boom has created exciting new ways to learn about and track customers, create products and services tailored Co meet customer needs, distribute products more efficiently and effectively, and communicate with customers in large groups or one-to-one. For example, through videoconferencing, marketing researchers at a company's headquarters in Mew York can look in on focus groups in Chicago or ljaris without ever stepping on to a plane. With only a few clicks of a mouse button, a direct marketer can tap into online data services to learn anything from what car you drive to what you read to what flavour of iee cream you prefer.

Using today's vastly more powerful computers, marketers create detailed databases and use them to target individual customers with offers designed to meet their specific needs and buying patterns. With a new wave of communication and advertising tools - ranging from eel! phones, fax machines and CD-ROMS to interactive TV and video kiosks at airports and shopping malls - marketers can zero in on selected customers with carefully targeted messages. Through electronic commerce, customers can design, order and pay for products and services -all without ever leaving home. From virtual reality displays that test new products to online virtual stores that sell them, the boom in computer, telecommunications and information technology is affecting every aspect of marketing.

Perhaps the most dramatic new technology surrounds the development of the Information Superhighway and its backbone, the Internet. The Internet is a vast and burgeoning global Web of computer networks, with no central management or ownership. It was created during the late 1960s by the UK Department of Defense, initially to link government labs, contractors and military installations. Today, the Internet links computer users of all types around the world. Anyone with a PC and modem - or TV and set-top 'Web box' - and the right software can browse the internet to obtain or share information on almost any subject and to interact with other users.19 Companies are using the Internet to link employees in remote offices, distribute sales information more quickly, build closer relationships with customers and suppliers, and sell and distribute their products more efficiently and effectively. Internet usage surged in the 1990s with the development of the user-friendly World Wide Web. More than 50 million people surf the Internet each month, up from just 1 million people in late 1994. There may be as many as 4-6 million Web sites worldwide, and these numbers are growing explosively.20 The advent of the World Wide Web has given companies access to millions of new customers at a fraction of the cost of print and television advertising. Companies of all types are now attempting to snare new customers in the Web. For example:

Car makers like Toyota (www.Toyota.com) use the Internet to develop relationships with owners, as well as to sell cars. Its site offers product information, dealer services and locations, leasing information and much more. For example, visitors to the site can view any of seven lifestyle magazines - altlerrain, A Man's Life, Women's Web Weekly, Sportzine, Living Arts, Living Home and Car Culture - designed to appeal to Toyota's well-educated, above-average-income target audience.

Sports fans can cosy up with Kike by logging on to www.nike.com, where they can check out the latest Nike products, explore the company's history, down-load Michael Jordan's latest stats, or keep up with Tiger Woods' latest movements. Through its Web page, in addition to its mass-media presence, Nike relates with eustomers in a more personal, one-to-one way.

The Ty Web site (www.ty.com) builds relationships with children who collect Beanie Babies by offering extra information, including the 'birth date' of the 50-plus toys, highlights on special Beanie Babies each month, promotion of newly developed Beanie Babies, and even a role of honour section that includes a child's photo and grades. Is it effective? In less than a year, based on the counter on the site, Ty.com received over 266 million visitors.

The very small retail ohain Next Stop North Pole (NSNP) sells only penguin-related products - T-shirts, plush toys, porcelain reproductions, books and others. A search for 'penguins' on the Web yields Pete & Barbara's Penguin Page ('the best source for information about penguins'), which contains a link to the NSNP Web site. The Web site contains pages from the store's direct-mail catalogue and a link to its e-mail mailbox, where visitors can request the full printed catalogue. The Internet gives tiny Next Stop North Pole access to consumers around the world at very little cost.21

It seems that almost every business, from garage-based start-ups to established giants, is setting up shop on the Internet. All are racing to explore and exploit the Web's possibilities for marketing, shopping and browsing for information. However, for all its potential, the Internet does have drawbacks. It's yet to be seen how many of the millions of Web browsers will become actual buyers. Although the value of a Web site is difficult to measure, the actuality is that few companies have made any money from their Internet efforts. And the Web poses security problems. Companies that link their internal computer networks to the outside world expose their systems to possible attacks by vandals. Similarly, consumers are wary about sending credit card account numbers or other confidential information that may he intercepted in cyberspace and misused. Finally, using the Web can he costly. For companies to make the most of the Internet, they must invest heavily in leased telephone lines, powerful computers and other technologies, and Internet specialists.

However, given the lightning speed at which Internet technology and applications are developing, it's unlikely that these drawhacks will deter the millions of businesses and consumers who are logging on to the Net each day. 'Marketers aren't going to have a choice about being on Internet,' says Midori Chan, vice president of creative services at Interse, which helped put Windham Hill Records and Digital Equipment Corp. on the Internet. 'To not be on the Internet... is going to be like not having a phone.'32 We will examine these online marketing developments more fully in Chapter 22.

Rapid Globalization

The world economy has undergone radical change during the past two decades. Geographical and cultural distances have shrunk with the advent of jet planes, fax machines, global computer and telephone hook-ups, world television satellite and cable broadcasts, and other technical advances. This has allowed companies greatly to expand their geographical market coverage, purchasing and manufacturing. Many companies are trying to create a global structure to move ideas swiftly around the world. The picture is one of a vastly more complex marketing environment for both companies and consumers.

Today, almost every company, large or small, is touched in some way by global competition. European and US firms, for example, are being challenged at home by the skilful marketing of Japanese and other Asian multinationals. Companies like Toyota, Honda, Fujitsu, Sony and Samsung have often outperformed their western competitors in overseas markets. Similarly, western companies in a wide range of industries have found new opportunities abroad. Glaxo, Asea Brown Boveri, Coca-Cola, IKEA, Toys '#' Us, Club Mediterranean and many others have developed global operations, making and selling their products worldwide (see Marketing Highlight 1.3). Many companies are moving aggressively to take advantage of international marketing opportunities.

Today, companies are not only trying to sell more of their locally produced goods in international markets; they are also buying or making more components

Many US companies are finding new global opportunities. Looking/or growtii, MTVcries to repeat its phenomenal American success abroad, here in Hungary.

Taking Advantage of Global Opportunities

Marketin a

Highlight

The following sire just a few of the countless examples oi' western companies taking advantage of international marketing opportunities:

IKEA, the Swedish home furnishings retailer, grew from one store in 1958 to more than 130 stores, stretched over 28 countries, by the lale 1990s. IKEA's European expansion has hit the fortunes of traditional furniture retailers and manufacturers in supposedly staid furniture markets. Some have not survived the onslaught. [The UK's Habitat] was later acquired by IKEA. IKEA has successfully spread into the North American, Far Eastern and Australian markets. It practises its four-pronged philosophy - attention to product quality, value (low prices and 'more for your money'), innovative style and service - which it has successfully transferred to markets worldwide. Over the years, IKEA has built, and capitalized on, its 'affordable Swedish style' mass market positioning. IKEA's international expansion has raised its fortunes in what competition claims to be a traditionally chill and fragmented market. IKEA has proven that, with the right marketing approach, fortunes ean be grown even in staid, old markets.

Toys 'fl' Us spent several years slogging through the swamps of Japanese bureaucracy before it was allowed to open the very first large US discount store in Japan, the world's no. 2 toy market behind the United States. The entry of this foreign giant has Japanese toy makers and retailers edgy. The typical small Japanese toy store stocks only 1.000 to 2,000 items, whereas Toys 'JT Us stores carry us many as 15.000. And the discounter will probably offer toys at prices 10-15 per cent below those of competitors. The opening of the first Japanese store was 'astonishing', attracting more than 60,000 visitors in the first three days. The retailer appears to be benefiting from profound social change in Japan. According to one source, 'Japan's absentee, workaholic salaryrnan father is increasingly becoming a relic, and his successor is taking life easier, spending more time with his family.

Japanese families now spend more time together ... On Sunday they ... go out to lunch and then browse at a big store like Toys 'JT Us ... Toys '.fl' Us has made shopping a form of leisure in Japan.' Japanese retailers will have their hands full. Toys 'JI' Us began with just five European stores in 1985 but now has over 80 and growing. European sales, now over $800 million, are growing at triple the rate of total company sales. After ten years of relentless growth in America, Music Television's (MTV) home market has become saturated. However, the US music video network is exploding abroad. For example, it's a monster hit in Europe. Set up in 1990. MTV Europe now reaches 27 countries and 59 million homes, almost a million more than US MTV. The network is aggressively pan-European - its programming and advertising are the same throughout Europe and they are all in English. It has almost single-handedly created a Euro-language of simplified English. MTV meets the common concerns of teenagers worldwide, broadcasting news and socially conscious programming, such as features on the plight of European immigrants and notes on global warming. MTV Europe has convinced advertisers that a true 'Euroconsumer' exists. It delivers advertising from companies such as Levi Strauss, Procter & Gamble, Apple Computer and Pepsi-Cola to a huge international audience. The company also operates MTV Asia, MTV Latino and MTV Japan. In all, MTV reaches more than 240 million homes in 63 territories around the world.

SOURCES: For these and other examples, sec J. Reynolds, 'JKEA: a competitive company with style', Retail and Distribution Management, 16, 3 (1988); Helen Jones, 'IKEA's global strategy is a winning formula1,Marketing Week (15 March 1997), p. 22; 'MTV: nick on', The Economist (3 August 1991), p. 66; Teens: the most gloha! market of all', Fortune (16 May 1994), pp. 90-7; Robert Neff, 'Guess who's selling Barbies in Japan now?', Business Week (9 December 1991), pp. 72-6; Patrick Outer, 'Toys 'fl "Us making Europe its playpen', Business Week (20 January 1992), pp. 88-91; Julie Sliiir Hill, Toys '>!' Us seeks global growth', Advertising Age (30 March 1992), p. 33; Kevin Cote, 'Toys' a' Us grows in Europe', Advertising Age (21 April 1992), pp. 1-16.

and obtaining supplies abroad. Increasingly, international firms have to coordinate functional operations across borders and to increase efficiency. Consequently, many domestically purchased goods and services are 'hybrids', with design, material purchases, manufacturing and marketing taking place in several countries. British consumers who decide to 'buy British' might reasonably decide to avoid Sony televisions and purchase Amstrad's. Imagine their surprise when they learn that the Amstrad TV was actually made from parts and components imported from the Far East, whereas the Sony product was assembled in the United Kingdom from British-made parts.

Luxury cars are another case tn point. Japanese luxury car makers such as Honda (the Acura) and Toyota (the Lexus) have moved some production to America. The German Mercedes is building sport-utility vehicles at its American assembly plant in Alabama. Rival, BMW's factory in South Carolina, already makes several versions of the 3-series as well as the 23 coupe for export to dozens of markets around the world - including Germany. Buyers, who want high quality and low price, are now prepared to accept American-built luxury ears.23

Thus managers in countries around the world are asking: Just what is global marketing? How does it differ from domestic marketing? How do global competitors and forces affect oxir business? To what extent should we 'go global'? The technological and marketing resources needed to conquer world markets in sectors such as telecommunications, airlines, ears and media, are forcing companies to seek partners. Many companies are forming strategic alliances with foreign companies, even competitors, who serve as suppliers or marketing partners. The past few years have produced some surprising alliances between competitors such as Mazda and Ford, France Telecom, Deutsche Telecom and Sprint, General Electric and Matsushita, Philips and Siemens, and Daimler Benz and United Technologies of the United States. And Microsoft and Dow Jones have teamed up to develop software for global financial markets. Winning companies in the decade ahead may well be those that have bxiilt the best global partnerships and networks.-4 We will examine global marketing management issues in greater detail in Chapter 5.

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