Term Paper, 2005
19 Pages, Grade: A (80 percent)
1 Range of current Technologies
1.3 CD ROM
1.5 Phone, Mobile Phone, Short Messaging Service
1.6 Management Software and Database Marketing
1.7 Potential Future Technology: Interactive TV and ATM
2 Impact of Technology on Marketing Strategy
3 Legal Issues
4 Technology that can be utilised in the Business Technology PLC
4.1 Financial Plan
According to O’Conner (1998), the impact of technology on marketing is dramatic. The industrial countries of today represent a growing information society which is based on technology. For an organisation “information is the most precious of modern corporate resources and its exploitation the key to competitive survival, the spotlight falls on marketing” (Mazur, 1994). To gather, handle and analyse the high amount of information, companies rely on technology. 1.5 billion pounds are invested on marketing related IT applications just in the UK (Leverick, 1998), which makes 15 percent of the total amount spent on IT, and this percentage is still increasing.
The aim of this paper is to evaluate the impact of all potential technologies on the marketing strategy, using a variety of industry and organisational examples, and addressing the implications and potentials for the future.
Therefore, it is necessary to firstly consider the range of current and potential future technologies that may or can be utilised in the company’s marketing function. Examples of how ‘real’ companies use this technology need to be provided and appropriate legal issues have to be discussed. Finally, possible technologies for the fictitious Business Technology PLC’s marketing function are suggested including a financial plan.
A wide range of technologies could be identified including hardware, software and communication technology. It could be shown that technology has a strong impact on the marketing strategy in terms of collect, handle, interchange, communicate, analyse, personalise and customise information, leading to cost reductions, more effective marketing procedures and improved customer satisfaction. The paper shows the technology-driven changes regarding the marketing mix.
The use of technology by marketers is regulated by the national Data Protection Act and European laws.
Finally, it is suggested that Business Technology PLC requires an internet presence, a database and a multimedia presentation of its products as a first step to increase sales, estimated set-up cost are approximately 5,500 pounds.
When the first modern computer was invented, experts from IBM forecast the market demand for such a machine for no more than half a dozen world-wide. This demonstrates that information technology can exceed all expectations when it matures (O’Conner et al., 1998). However, it is necessary to define the term information technology (IT). It is a “generic term encompassing a range of technologies to capture, store, process and transmit information” (O’Conner et al., 1998). It includes the three main technology groups of hardware, software and telecommunications. Thus, IT includes computers, internet, videotext, mobile telephones, digital communications, personal digital assistants (PDA) and many more.
This section presents a range of mature and emerging technologies, and provides organisational/industrial examples of their implications and potentials.
The Internet allows the buying and selling of goods and services online which has led to an enormous increase in e-commerce. In the UK, consumers spend over one billion pounds a month online. Additionally, British firms bought goods and services for 23 billion pounds in 2001. An e-commerce website offers various benefits such as access to a global market as goods can be sold and bought from every corner in the world. The products and services are directly sold to the customer, making the middleman redundant. Having installed a website that accepts payment online, customers can order and pay at any time. It also leads to improved customer satisfaction and customer information. A well-designed homepage allows the customer to buy, browse and ask for help. Statistical tools enable the marketers to learn about the buying habits of their customers to provide them with the right products (DTI, e-commerce, 2004).
A good example for personalised marketing is Amazon’s website which suggests products based on the customer’s and other people’s previous purchases (DTI, e-marketing, 2004). Many companies even integrate their business processes into the website. This means that “orders come into their website, card details are processed, goods dispatched and stock re-ordered seamlessly, dramatically reducing the costs of each sale” (DTI, e-commerce, 2004).
A further example is Rapid Racking, one of the UK’s leading suppliers of storage, racking and shelving systems for business, commercial and industrial use. First, the company launched a website. Later, they noticed that this was an excellent additional sales channel to sell their storage solutions. Their fully transactional website allows customers to view stock, place orders and pay online. A personalised login system is used to accessing orders. It also includes the option to modify details such as customer delivery address and payment information. The online orders now account for 8 percent of the turnover (DTI, Rapid Racking, 2004).
Another example, demonstrating the effect of the Internet and especially the use of search engines is the small enterprise Bluesky Experience. It organises outward bound and team building activities on their 700-acre site in Perth. To increase sales, the company launched a website but the site only received 16 hits a week and the leads were not converting into sales. With the help of search engines such as Google, the right search words and a pay-per-click advertising campaign, the company increased their hits to an average of 1,000 users a week. For each pound the company spends on marketing they receive a return of 22 pounds (DTI, Bluesky Experience, 2004).
Email offers companies a “fast, flexible and effective way of getting marketing messages through” (DTI, e-marketing, 2004). Half of the UK’s population already has a mail account. This channel seems to be less intrusive compared to telephone marketing. It also provides the option to link the customer to a specific page to purchase a product immediately and to forward or reply to the message. However, marketers need to handle this tool with caution with respect to the company’s reputation as customers are already confronted by unsolicited mails. To inform the customer through email incurs virtually no costs, which is one of its most important benefits.
Besides computer disks, CD ROMs offer a marketers excellent opportunities to market their products. Apple Computer, for example, developed a CD ROM which included a software store. The user could browse for the needed program, install it and test the product. If the customer wanted to buy the product he or she just needed to call a 800-number to provide his credit card details. Afterwards, he received a special code which unlocked the already installed programme (Direct Marketing, 1994).
Broadband describes a “high capacity data-transmission system” (O’Conner et al., 1998). Typically, speeds higher than two million bps are regarded as broadband. The communication technology includes modems (14.4 Kbps), ISDN (144 Kbps) and ATM (up to 622 000 Kbps).
One example of a successful installation of broadband is the online retailer IrishWear.net. The company strongly increases its internal operating efficiencies using broadband instead of a 56K dial-up internet connection. The ability to keep their website up-to-date is of prime importance. Uploading of the website content represents a major task. The manager of IrishWear.net states that the uploading takes a lot of time and this could even mean that the website becomes disconnected. Broadband could reduce the time and costs involved and, therefore, ensure that the business window does not go off-line (DTI, Irishwear.net, 2004).
Telemarketing is another type of direct sales channel, based on a regular or cellular phone. It can be used in two different ways: either the customer phones up the organisation e.g. calling a free number of an insurance company (inbound), or the company phones the customer e.g. to inform him about new products (outbound) (O’Conner, 1998).
Short Messaging Service (SMS) can be used as a further channel to reach the customer. 70 percent of the population in the UK already has a mobile phone and most people carry them with them all of time. On the other hand, as mobile phones are a personal thing, people can respond very negatively, to receiving unsolicited messages. Also the length of the text is limited to 160 characters.
One positive example is the Adidas SMS campaign. The company used the 24/7 Media Europe opt-in SMS database to send text messages to a specific demographic group. This enabled the company to increase brand awareness and to drive users to watch the Adidas television advertising in the first break of the Brit Awards. Through this method a precise target audience (people in the UK aged under 30) could be contacted at a specific time (Mort and Drennan, 2002).
Another innovative development is the Multi Messaging Service (MMS) which allows sending more interesting multimedia messages including pictures, video-clips and music (DTI, e-marketing, 2004).
Marketers need management information software to manage the high amount of daily data (O’Conner, 1998). The software includes operating systems, Management Information Systems (MIS), Decision Support Systems (DSS), Executive Information Systems (EIS) and application software (word processing, databases, and integrated packages).
Database marketing refers to “all uses of databases for marketing purposes” (O’Conner et al., 1998), which has become an integral part of today’s marketing function (Tapp, 2001). Data warehouses present very large databases that hold “operational, historical and customer data and makes it available for decision making purposes”. It is an analytical system “where the information is a snapshot at a particular point in time”.
Most supermarket chains obtain this data through bar-code data from the checkout points. Often the checkout systems are integrated into the entire ordering, stocking and replenishment systems.
An interesting example of the use of data warehouses is a large US retailer. With the help of its database, the company identified that a distinct correlation between the sales of nappies and beer exists, just after work hours. In response, the retailer merchandised nappies closer to beer and could increase the sales of both items.
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