Internet Marketing & e-Commerce
Ward Hanson
Kirthi Kalyanam
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Phone: (800) 423-0563
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Part Two: Chapter 11
Innovation and the Net
“Nothing endures but change.”
Heraclitus (540-480 BC)
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Competition and the Need for Speed
• Traditional business rivalries have
been bitter, enduring battles
• Coke vs. Pepsi
on the front lines
of the Cold War
SOURCE: ©Bettman/CORBIS: Vice President Richard Nixon and Soviet Premier Khrushchev share a Pepsi, 1959
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Competition and the Need for Speed
• In high-tech markets, rivalries burn
bright but fast
– IBM vs. Apple in personal computers
– Digital vs. Data General in minicomputers
• Most prominently: the Browser Wars
– Microsoft vs. Netscape in late 1990s
– Now, Microsoft vs. upstart Firefox
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Competition and the Need for Speed
• On “Internet Time” marketers face
strain of creating new products at the
moment of new opportunity
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Competition and the Need for Speed
• On “Internet Time” marketers face
strain of creating new products at the
moment of new opportunity
– Time-to-market influences profitability
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Competition and the Need for Speed
• On “Internet Time” marketers face
strain of creating new products at the
moment of new opportunity
– Time-to-market influences profitability
– Swiftness signals innovativeness
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Competition and the Need for Speed
• On “Internet Time” marketers face
strain of creating new products at the
moment of new opportunity
– Time-to-market influences profitability
– Swiftness signals innovativeness
– Early arrivals draw partners and alliances
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Competition and the Need for Speed
• On “Internet Time” marketers face
strain of creating new products at the
moment of new opportunity
– Time-to-market influences profitability
– Swiftness signals innovativeness
– Early arrivals draw partners and alliances
– Market leaders can set industry or product
standards and gain dominance
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Competition and the Need for Speed
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Standards Marketing
• Open Standards: Formed by process
of official debate and consensus
– Widespread adoption and innovation, but
also greater competition
• Example: WiFi
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Standards Marketing
• Open Standards: Formed by process
of official debate and consensus
– Widespread adoption and innovation, but
also greater competition
• Example: WiFi
• De Facto Standards: Based on market
acceptance, but proprietary
– Harder to establish, but more profitable
• Example: Xbox and Playstation
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Standards Marketing
Growth in certified Wi-Fi product types, according
to the Wi-Fi Alliance
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Product Development Online
• Understanding the Idea Funnel
– Dual goals of identifying unmet needs and
weeding out costly ideas early in process
– Few ideas make it through the funnel, but
process still can be costly
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Product Development Online
The Idea Funnel for event-driven new products
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Product Development Online
• Understanding the Idea Funnel
– Dual goals of identifying unmet needs and
weeding out costly ideas early in process
– Few ideas make it through the funnel, but
process still can be costly
• Improving the Idea Funnel
– Online market research screens concepts
– Virtual setting facilitates consumerassisted design
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Product Development Online
• Not all products fit easily into
preexisting product categories
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Product Development Online
• Not all products fit easily into
preexisting product categories
• Simulation and digital environments
offer realistic market research settings
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Product Development Online
• Not all products fit easily into
preexisting product categories
• Simulation and digital environments
offer realistic market research settings
• Information Acceleration (IA)
– Places consumer in virtual buying
environments
– Can replace expensive prototypes, spot
importance of valuable new features
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Modular Product Development
• Products divided into subsystems for
more focused development
– Visible design rules: describe how
different modules fit together
– Hidden design parameters: offer flexibility
– One example: Wikipedia
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Modular Product Development
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Product Development Online
• Early feedback and rapid release
– Key role of email for fast, meaningful
consumer input
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Product Development Online
• Early feedback and rapid release
– Key role of email for fast, meaningful
consumer input
– Prerelease of products for swift
prototyping and testing
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Product Development Online
• Early feedback and rapid release
– Key role of email for fast, meaningful
consumer input
– Prerelease of products for swift
prototyping and testing
• Alpha release – trusted lead users, such as
company employees
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Product Development Online
• Early feedback and rapid release
– Key role of email for fast, meaningful
consumer input
– Prerelease of products for swift
prototyping and testing
• Alpha release – trusted lead users, such as
company employees
• Beta release – wider public sampling at lower
price or for free
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation
Product Development Online
• Early feedback and rapid release
– Key role of email for fast, meaningful
consumer input
– Prerelease of products for swift
prototyping and testing
• Alpha release – trusted lead users, such as
company employees
• Beta release – wider public sampling at lower
price or for free
– Speed to market drives profitability
© Copyright 2006, Thomson South-Western, a division of the Thomson Corporation