The Secrets of Consistent Innovation at Intel - Term Paper Example

Running Head: DIGITAL TECHNOLOGY AND RELATIONSHIP Digital Technology and Relationship [The [The of the Institution] Digital Technology and Customer Relationship Introduction Businesses have always valued their customers, but today there is much greater appreciation of the importance of customers for the profitability of the enterprise. In new business model, E-commerce generated massive amounts of data about customers and prospects that could not be integrated with the data in compartmentalized information systems. (Frederick, 1994) B&N fully understand these problems that the company develops the customer relationship management (CRM) systems to address these problems. CRM systems capture and integrate customer data from all over the company, consolidating the data, analyzing the data, and then distributing the results to various systems and customer touch points across the company. C.Laudon and P.Laudon (2006) believed that well-designed CRM systems can improve sales and customer service. Thompson and Cats-Baril argued, "Customer relationship management systems typically offer software and online tools for sales, customer service and marketing." (Thompson, 2003, 121-130) CRM systems provide sales prospect and contact information, product information, product configuration, and sales quote generation capabilities. In B&N Company, CRM software enables customer and prospect information to be shared easily among sales, marketing, and delivery department. It can increase sales department's efficiency in reducing the cost per sale as well as the cost of acquiring new customers and retaining old ones. (Harrington, 1991) CRM software also has capabilities for sales forecasting, territory management. Customer service modules in CRM systems offer tools and information to create call centres, help desk service, and customer support personnel more proficient. CRM systems have capabilities for assigning and managing customer service requests. Digital Communication Technology In the early 1990s, the idea of 500 TV channels had been embraced by the nation's leading media, computing, and telecommunications conglomerates. Now--after the mid-1990s--the nation's leading microprocessor manufacturer was ridiculing the old capacity and pioneering the way toward half a million marketing channels. Hollywood and Silicon Valley may have loved Grove's statements, but in Madison Avenue, they triggered fear and loathing. Media planners, in particular, felt distraught. Deregulation, cable revolution, and alternative media options had already shattered the old and cozy status quo. As the "big three" networks lost control of the prime time audience, promotions were invading ad volumes and brand loyalty was rapidly becoming a remnant of history. (Negroponte, 1995) Interactive television threatened to re-fragment the already fragmented markets. And now Silicon Valley was dreaming of 500,000 channels That did not mean a simple channel multiplication any longer; instead, it meant far more--a revolution in the entire channel infrastructure and the ensuing demise of all conventional industry wisdom. Digital Marketing Communications Since the mid- 1980s, the global markets have been swept by the emergence of digital marketing communications. In the past, mass marketers conceived of, organized and implemented the marketing paradigm, which originated from the consumer markets. Toward the end of the 20th century, marketers were conceptualizing and launching a new marketing paradigm. It evolved in business-to-business markets. (Brockman, 1996) If Procter & Gamble heralded the era of mass marketing, Federal Express seemed to anticipate the new one of digital marketing communications. In the long term, these systems would also proliferate in the consumer markets. (Robert, 1997) The new environment puzzled even the hard-nosed veterans. Industry wisdom had become a competitive disadvantage. Old rules no longer worked. As technology companies, they were familiar with software; as media companies, they knew how to use the traditional techniques of media advertising and sales promotion. Overall, they represented a curious amalgam of the old and the new--the kind of dynamic and web-driven technology integration that reflected and would accelerate the convergence of American media and entertainment, marketing and advertising, computing and telecommunications. (Marco, 1998) Since the early 1990s, many observers, practitioners, and analysts have compared the Internet to a "tidal wave" or a "digital tornado." (Albert Yu, 1998) Such metaphors suggest a popular perception of flux, dynamics, and change. It can actually be quite useful heuristically to examine the evolution of the Internet as a sequence of product life cycles affecting (and being affected by) strategy, marketing, and competition. (Riyad, 2005) A structural frame work provides context and order into the seemingly chaotic progression. Historically, the starting point for analyzing industry evolution has been the classic product life cycle, or technology adoption life cycle. Marketing Growth and Customer Relationship The idea is that an industry passes through a number of stages--introduction, growth, maturity, and decline. These stages are defined by inflection points in the rate of growth of industry revenues. In an ideal case, industry growth is expected to follow an S-shaped curve because of the process of innovation and diffusion of a new product. The flat introductory stage tends to reflect the difficulty of over-coming buyer inertia and stimulating trials of the new product. Rapid growth ensues when buyers and rivals rush into the market after the product has proved its success. When the marketplace becomes saturated, the rapid growth will stop and eventually level off. Finally, the growth is expected to taper off as new substitutes replace the initial product. (Porter, 1980) As the industry goes through its life cycle, the nature of competition will shift. From the standpoint of strategy and marketing, the specific nature of these shifts is particularly important in issues affecting, among other things, buyers and buyer behaviour, products and product change, traditional marketing functions, overall strategy, and competition. (Kotler, 1997) Technology Marketing: Ideas and Campaigns As the marketing channels of entire industries were changing, the value chains of distinct companies would have to follow. If, indeed, the entire infrastructure of the economy were changing, clearly such shifts would not take place without substantial consequences in strategic marketing management. The more perceptive observers began to question the absence of time in marketing practices. That paved way to future ideas on various forms of speed economies (i.e., agility, flexible production, time-based competition, and so on). In the past, marketing managers had focused on transactions, persuasion, and broadcasting, without active or reactive feedback. The new marketing managers began to focus on relationships, dialogue and interactivity, and feedback loops. ( Richard, 1995) As the centre of gravity in a dynamic new sector shifted decisively to the west, similar changes occurred in the very characteristics of that centre. In particular, the insularity of old-line industrial communities gave way to a far more open, flexible and proactive network economy. (James, 1996) As a result, it is hardly surprising that it was in Silicon Valley, too, where the changing concepts and practices of relationship marketing were first realized. Customer Relationship Management As the new value chains reflected the accelerating bargaining power of the buyer (e.g., consumers, enterprises, and corporations), intense rivalry in new and emerging industries reflected both the efforts to increase entry barriers and the attempts to raise switching costs through dense seller-buyer relationships. By the late 1970s and early 1980s, several perceptive observers paid increasing attention to the implications of this shift in bargaining power. Their writings heralded and made way for those ideas and practices that would proliferate in the early years of Internet marketing. (Steven, 1998) In retrospect, the common denominator lies in the centrality given to the idea of relationship, interactivity, or feedback loop. The relationship between a seller and a buyer does not end when the sale is made. In a great and increasing proportion of transactions, the relationship actually intensifies subsequent to the sale. It becomes the critical factor in the buyer's choice of the seller the next time around. The sale consummates the courtship; how good the marriage is depends on how well the relationship is managed by the seller. As a result, he urged companies to avoid trouble and enhance their standing by recognizing at the outset the necessity of managing their relationship with customers. Such an understanding implied a significant revision of classic economic theory: "This takes more than what comes normally in good marketing. It takes special attention geared to what uniquely characterizes a relationship. That is time. The economic theory of "supply and demand" is totally false in this respect." (Stuart, 2007) It presumes that the work of the economic system is time discrete and absent of human interactions--an instantaneous, disembodied sales transaction clears the market at the intersection of supply and demand. This was never so and is increasingly less so as growing product complexity and interdependencies among the institutions of the industrial system intensify. The buyer of automated machinery does not, like the buyer at a flea market, walk home with his purchase and take his chances. He expects installation services, applications aids, parts, post purchase repair and maintenance, retrofitted enhancements, and vendor R&D in support of the buyer's need to stay competitive in all respects. The buyer of a continuous stream of transactions, like a frozen food manufacturer who buys cartons from a packaging company and cash-management services from a bank is concerned not with "clearing the market" but rather with maintaining the process. (Tushman, 1998) In these new conditions, a purchase decision is no longer a decision to buy an item, but a decision to enter a bonded relationship. This, argued Levitt, requires of the would-be seller a new orientation and a new strategy. In the past (mass marketing), the seller, living at a distance from the buyer, had reached out with his sales department to unload onto the buyer what the seller had decided to make. Marketing segmentation, the seller, living closer to the buyer, penetrated the buyer's domain to learn about his needs and desires, and then designed and supplied the product. With increasing interdependence, however, marketing would have to reach for long-term relationships between sellers and buyers. (Stuart, 2007) Exploring the evolution of fundamental categories of competition, Levitt noted that relationship management was in a rapid state of change. In the past, the item itself had been synonymous with the product; by the early 1980s, the increasing complexity of the products had evolved into hybrids, such as augmented products; and in the future, the customers could be expected to look for more extensive solutions, such as system contracts. (Ronald, 2003) Similarly, in the past, service had been modest and strategy based on sales; in the present, service had become important and strategy adapted to marketing; and in the future, service would become vital while strategy would increasingly originate from relationship management. (Levitt, 1986) Marketing Management and Cyber World The future of marketing management would be characterized by more and more intensified relationships, especially in industrial marketing, but also increasingly even in frequently purchased consumer goods. (Geoffrey, 1991) For instance, Procter & Gamble, copying General Mills' Betty Crocker advisory service, soon found out that the installation of a consumer hotline to give advice on its products and their uses raised customer brand loyalty. Only a decade later, companies would begin exploring the potential of Internet marketing in customer service--to enhance the service concept, to benefit strategically (e.g., raising switching costs), and to move from brand loyalty to sales (e.g., Web-driven direct sales). Assuming that, in time, the Web-driven new entrants and incumbent industry leaders focus on relationship management, how real is the issue of rising switching costs Commenting on the issue fifteen years after the release of his original essay, Levitt thought "it is possible," but also expressed some caution. Such a situation would not be automatic. Just because it was possible, it would not necessarily be actual. In particular, he argues that the proposition of heightened switching costs rested on two presumptions: It assumes that the Internet will become an instrument of maintaining a closer and abiding relationship. It also assumes that both parties understand the importance of doing that; that if the seller is particular to the buyer, the buyer gets a lot of advantage from the seller, too. Then the relationship will add to the switching cost or at least raise barriers to the new entrants. (Levitt, 1986) Theodor Levitt's classic book on marketing reflected, anticipated, and instigated new developments in marketing and management. As the business-to-business expanded and more industries emerged and more companies got into the play, the conduct of business grew far more complex and extensive. (Martin, 1992) First with Apple and then with others, we began to see that we were moving out into broader and broader markets. That made things difficult. It is hard to build relationships with a thousand, not to speak of a million, people. But the technology is enabling us to manage millions of people. We would have to develop a concept of how to view technology to create, evolve, and develop relationships with a far broader proportion of the public. (Maeve, 2004) The Internet is interactive. The relationship itself is a dialogue. If that dialogue is dynamic, both can gain, grow, and learn. (David, 2000) Electronic spreadsheet, a productivity software package, is the most widely used software tools among business and consumer users. (Mats Larson, 1998) Electronic spreadsheet software "provides computerized versions of traditional financial modelling tools, such as the accountant's columnar pad, pencil, and calculator. An electronic spreadsheet is organized into a grid of columns and rows" (C. Laudon and P. Laudon 2004, p.203). According to O'Brien (2000), the electronic spreadsheet software is a type of application software that offers so many benefits and spreadsheet support traditional business functions. They summarize raw data and produce information. The electronic spreadsheet's ability to swiftly add long rows or columns of data is essential to produce the organized, and summarized information. Managers need to understand and analyze their company's performance. B&N Company fully realized that an electronic spreadsheet package can answer some questions. For example, is the marketing plan working What does the latest customer survey say about company's service If the answers are not clear, managers can use the spreadsheet software to convert into business graphics charts and graphs that permit them to make comparisons and discern trend in the data. They simplify the control process. In business arena, businesspeople are judged by the results they produce. Management of B&N usually makes assessment whether the company reaches the goals in its plans If not, what went wrong The data in a spreadsheet can help answer these questions, which are central to the business control process. Spreadsheets can even be constructed problems show up in a different colour on the computer screen, alerting employees to the need for corrective action. They help managers make decisions. Although electronic spreadsheets are a powerful aid to business problem solving and decision making, the numbers they produce are no substitute for human judgment and common sense. In fact, managers should view the numbers on an unfamiliar spreadsheet with scepticism, since a faulty assumption or formula can destroy the usefulness of many calculations. This is why experience spreadsheet users follow a clear sequence in setting up and documenting their spreadsheets. Conclusion As an E-commerce company, customer service is playing very important role in business-to-customer (B2C) model. In practice, when a customer calls a standard phone number, the system routes the call to the correct service person, which inputs information about that customer into the system. (Carol, 1999) Once the customer's data are in the system, any service representative can handle the customer relationship. Improved access to consistent and accurate customer information helps customer service centre handle more calls per day and decreases the duration of each call. B&N has already gained more benefits from the CRM system which can achieve greater productivity, reduce transaction time, and higher quality of service at lower cost. Meanwhile, the customer is also happier because they spend less time on the phone restating their problem to customer service. CRM systems of B&N Company has already included Web-based self-service capabilities: the company Web site can be build to provide inquiring customers personalized support information as well as the option to contact customer service staff by phone for additional assistance. CRM systems support Internet-marketing companies by providing capabilities for capturing prospect and customer data, for providing product and service information, for qualifying leads for targets marketing. B&N Company has applied these systems into their marketing process. Marketing modules have also included tools for analyzing marketing and customer data identifying profitable and unprofitable customers, designing products and services to satisfy specific customer needs and interests. Much of the software used in business today is consist of application software packages and desktop productivity tools. References Albert Yu, Creating the Digital Future: The Secrets of Consistent Innovation at Intel ( New York: The Free Press 1998) Brockman, John Digerati: Encounters with the Cyber Elite (San Francisco: Hardwired 1996), p. 180. Carol V. Brown, E. Wainright Martin, Daniel W. Dellayes, Jeffrey A. Hoffer, and William C. 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