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New x (Economy +Business Rules + Business Models) Şule Özmen Marmara University, Istanbul, TURKEY Department of Business Administration sozmen@marun. edu. tr ozmens@yore. com. tr URL: www. feas. marun. edu. tr/business/homepages/suleozmen 2001 International Conference Istanbul - Turkey 1

AGENDA Are they really new? What has changed and what has not changed in new economy? Generic objectives – Marketing, production and finance Comparison of old and new economy with respect to: l l Business value of generic objectives What extent the objectives are considered Strategy formulation and implementation Business tasks performed – planning, execution and control Sule Ozmen 2001 International Conference Istanbul - Turkey 2

The New Economy –Digital Economy Information economy * l First stage (based on computers) l l Data processing, spreadsheets, word processing Second stage ( based on networks) l Connectivitiy, networks and teradata *Stan Davis & Cristopher Meyer; (1998); Blur: The Speed of Change in the Connected Economy; Perseus Books, New York Sule Ozmen 2001 International Conference Istanbul - Turkey 3

Business Rules in New Economy Time –Speed l l Time between business processes gets shorter real time responses Space - Distance l Connectivity decreased the importance of locations Value – Intangibles l Economic value shifted from tangibles to intangibles value is added by information (CRM, SCM) Consumers are empowered Sule Ozmen 2001 International Conference Istanbul - Turkey 4

Digital Economy Customers Became number one Empowered customers Sule Ozmen 2001 International Conference Istanbul - Turkey 5

Who is your customer in digital economy? Who doesn’t buy every product or service you offer like in “old good days” n Equipped with information Less brand loyal, runs away to your rival by a click But when? Sule Ozmen If not satisfied ! 2001 International Conference Istanbul - Turkey 6

Market Adoption Sequence: Traditional and Internet Life Cycles Source: Patel, Mc. Carthy; 2000; Digital Transformation; Mc Graw Hill Sule Ozmen 2001 International Conference Istanbul - Turkey 7

MARKETING PROCESS New and Traditional Identifying the needs, wants, desires Buyer Product / service design Search promote Order and payment Sule Ozmen Seller Delivery 2001 International Conference Istanbul - Turkey 8

E-conomy, e-business e-commerce, e-competition Traditional Make Sell New Sense Process Respond HOW ? ? ? By e-commerce, by e-business, by new business models CRM, SCM, ERP, Data Warehousing Sule Ozmen 2001 International Conference Istanbul - Turkey 9

What has not changed What has changed Goal of making money ROI Efficiency Effectiveness The way of doing business Strategy formulation procedures Performing the business tasks l l l Planning Executing Monitoring The way of doing business through the extensive use of computer and internet technologies Sule Ozmen 2001 International Conference Istanbul - Turkey 10

Generic Objectives Business Tasks Planning Marketing Production Finance Execution Controling üBusiness value of objectives üTo what extent considered üStrategy formulation and implementation 2001 International Conference Istanbul - Turkey 11

Old Economy New Economy Marketing Objective Business value of objective Converting light buyers to heavy buyers getting them buy more frequently High Getting competitors’s buyers High Acquiring new buyer. (selling to non buyers) High Retaining existing buyer - Making the buyer loyal High Keeping the profitable customer High 2001 International Conference Istanbul - Turkey 12

Old Economy New Economy Marketing Objective To what extent considered Converting light buyers to heavy buyers getting them buy more frequently Getting competitors’s buyers Considered much Considered moderately Considered much Competitor’s buyer is “one click away” from you. Acquiring new buyer. (selling to non buyers) Considered much Less considerable than retaining existing customer Retaining existing buyer - Making the buyer loyal Not considered much Offers are limited Considered much Your competitor is “one click away” from your customer Keeping the profitable customer Not considered much Profitability measurements Considered much were not common 2001 International Conference Istanbul - Turkey Leaving unprofitable customer to competitor. 13

Old Economy New Economy Strategy Formulation and Implementation Planning executing and controlling Marketing Objective Converting light buyers to heavy buyers getting them buy more frequently Not easy Knowing-Understanding– Identifying the customer is time consuming and costly Easier Less costly Cross selling, upselling strategies. CRM, 1 to 1 marketing Getting competitors’s buyers Not easy Customers are more loyal Easier Less costly Customers are less loyal Acquiring new buyer. (selling to non buyers) Not easy Costly More challenging but arising need is more probable Retaining existing buyer - Making Easier Customers are more loyal. Not much effort is required the buyer loyal Keeping the profitable customer Difficult to identify the profitable customer. Both the tools and the information for measuring profitability are not developed 2001 International Conference Istanbul - Turkey More challenging but alternative loyalty programs are applicable. Easier Profitable customers are followed very closely. Both the tools and the information are available. 14

Technology is enabler now Collect teradata amounts of data to know, understand identify your customers and their needs. Current and potential needs. Offer the products or service faster through alternative distribution channels Receive orders and accept payment through internet Follow your customer after delivery Don’t lose contact with your customer once interacted you Communicate with your customer on the basis of the knowledge obtained from the data warehouse Sule Ozmen 2001 International Conference Istanbul - Turkey 15

It is now possible to Know who your customers are and who your best customers are Stimulate what they buy or know what they won’t buy Know the time when and how they buy Learn customers’ preferences and shape the offer accordingly Formulate strategies to make your customers loyal customers and to keep your customers for many years Define characteristics that make up a great/profitable customer Model channels best to address a customer’s need Predict what they may or will buy in the future 2001 International Conference Istanbul - Turkey 16

Key success factors Vision, leadership, Commitment of Senior management Strategy and management People at work It is both cheaper and profitable to absolete yourself than it is to let your competitor do it for you Peter Drucker Sule Ozmen 2001 International Conference Istanbul - Turkey 17

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New x (Economy +Business Rules + Business Models) Şule Özmen Marmara University, Istanbul, TURKEY Department of Business Administration sozmen@marun. edu. tr ozmens@yore. com. tr URL: www. feas. marun. edu. tr/business/homepages/suleozmen 2001 International Conference Istanbul - Turkey 19