The New EconomyThe New Economy

Globalization:Globalization:

Worldwide Trends in consumer needsWorldwide Trends in consumer needs

Cos launching world productsCos launching world products

Consumers happily acquiring products and services Consumers happily acquiring products and services manufactured in distant countriesmanufactured in distant countries

Currency becoming freely exchangeableCurrency becoming freely exchangeable

Speed…the Currency of the New EconomySpeed…the Currency of the New Economy

Rapid rate of Rapid rate of obsolescence obsolescence inin

Technology and Fashion MarketsTechnology and Fashion Markets

AutomobilesAutomobiles CellphonesCellphones ComputersComputers Internet ServicesInternet Services

Disruptive Disruptive TechnologiesTechnologies

Displaced Displaced TechnologiesTechnologies

Printing PressPrinting Press ManuscriptManuscript

Personal ComputersPersonal Computers TypewritersTypewriters

RailwaysRailways CanalsCanals

Digital camerasDigital cameras Photographic FilmsPhotographic Films

Mobile TelephonyMobile Telephony Fixed TelephonyFixed Telephony

ADSL/CableADSL/Cable ISDNISDN

Personal ComputersPersonal Computers MinicomputersMinicomputers

Flash DrivesFlash Drives Floppy DrivesFloppy Drives

The New Empowered CustomerThe New Empowered Customer

Power flows from right of choicePower flows from right of choice

More information about more choicesMore information about more choices

Consumers setting prices: Consumers setting prices: Reverse AuctionsReverse Auctions

Consumers demanding and getting services at their convenienceConsumers demanding and getting services at their convenience

Consumers sharing their experiencesConsumers sharing their experiences

NewNew capability for coscapability for cos

Powerful information and sales channelPowerful information and sales channel

Wider geographic reachWider geographic reach

Internet powerful tool to know consumers betterInternet powerful tool to know consumers better

Faster communication internallyFaster communication internally

Customization of offeringsCustomization of offerings

More efficient Value ChainMore efficient Value Chain

Efficiency in Recruitment and TrainingEfficiency in Recruitment and Training

Promise of the Information AgePromise of the Information Age

More accurate levels of productionMore accurate levels of production

More targeted communicationMore targeted communication

More relevant pricingMore relevant pricing

Two sides of MarketingTwo sides of Marketing

FormulatedFormulated

CreativeCreative

Formulated MarketingFormulated Marketing

Focus:Focus:

AdvertisingAdvertising

Market ResearchMarket Research

Sales ManagementSales Management

Formulated Marketing PractitionersFormulated Marketing Practitioners

Hindustan Unilever LtdHindustan Unilever Ltd

P & GP & G

Creative MarketingCreative Marketing

FocusFocus

CreativityCreativity

PassionPassion

Creative Marketing PractitionersCreative Marketing Practitioners

AmazonAmazon

Air DeccanAir Deccan

Scope of MarketingScope of Marketing

Starting Point: Starting Point: Organizational ObjectivesOrganizational Objectives

Usually set in terms like:Usually set in terms like:

Financial: Returns on InvestmentsFinancial: Returns on Investments

Marketing: Market shareMarketing: Market share

Job of the Marketing ManagerJob of the Marketing Manager

Seek to Seek to influence influence the:the:

LEVELLEVEL

TIMINGTIMING

COMPOSITIONCOMPOSITION

Of DemandOf Demand

Different entities a marketer Different entities a marketer marketsmarkets

GoodsGoods ServicesServices EventsEvents PersonsPersons PlacesPlaces PropertiesProperties OrganizationOrganization InformationInformation IdeasIdeas

Marketing managementMarketing management

Problem of Problem of Regulating Regulating thethe

LevelLevel TimingTiming CharacterCharacter

Of Demand for one or more products of an Of Demand for one or more products of an organizationorganization

The Basic Marketing TasksThe Basic Marketing Tasks

Demand StateDemand State Marketing TaskMarketing Task Formal NameFormal Name

Negative DemandNegative Demand Disabuse DemandDisabuse Demand Conversional MarketingConversional Marketing

No DemandNo Demand Create DemandCreate Demand Stimulational Stimulational MarketingMarketing

Latent DemandLatent Demand Develop DemandDevelop Demand Developmental Developmental MarketingMarketing

Faltering DemandFaltering Demand Revitalize DemandRevitalize Demand RemarketingRemarketing

Irregular DemandIrregular Demand Synchronize DemandSynchronize Demand SynchromarketingSynchromarketing

Full DemandFull Demand Maintain DemandMaintain Demand Maintenance DemandMaintenance Demand

Overfull DemandOverfull Demand Reduce DemandReduce Demand DemarketingDemarketing

Unwholesome DemandUnwholesome Demand Destroy DemandDestroy Demand CountermarketingCountermarketing

Negative DemandNegative Demand

All/most potential customers dislike the productAll/most potential customers dislike the product

Try avoiding the productTry avoiding the product

The challengeThe challenge: Develop a plan that will cause attitude to change from : Develop a plan that will cause attitude to change from negative to positivenegative to positive

Marketing Tasks for Negative Demand-Marketing Tasks for Negative Demand-Conversional MarketingConversional Marketing

Analyze Analyze sources sources of resistanceof resistance

BELIEFSBELIEFS

VALUESVALUES

COSTSCOSTS

Communication ProgramCommunication Program

No DemandNo Demand

All/most important customer segments All/most important customer segments uninteresteduninterested or or indifferentindifferent to a to a particular productparticular product

Three categories:Three categories:

Familiar objects perceived to have no valueFamiliar objects perceived to have no value

Familiar objects,has perceived value, but Familiar objects,has perceived value, but not in particular marketnot in particular market

No Demand as no knowledge of unfamilar objectsNo Demand as no knowledge of unfamilar objects

Marketing Task for No Demand….Stimulational Marketing Task for No Demand….Stimulational MarketingMarketing

Connect object with some existing needConnect object with some existing need

Distribute Information/Increase ExposureDistribute Information/Increase Exposure

Latent DemandLatent Demand

When substantial number of people share a strong need for something When substantial number of people share a strong need for something that that does not existdoes not exist

Opportunity to Opportunity to develop a productdevelop a product

When right products developed and marketed, When right products developed and marketed, market is assuredmarket is assured

Marketing Task for Latent Demand-Marketing Task for Latent Demand-Developmental Developmental MarketingMarketing

Recognition of latent needRecognition of latent need

Development of the Development of the right productright product

Choosing theChoosing the right priceright price

Right channel of distributionRight channel of distribution

Adequate/convincing product information disseminationAdequate/convincing product information dissemination

Faltering DemandFaltering Demand

Demand for a product Demand for a product less than formal level less than formal level and whereand where further decline further decline is expected in the is expected in the absence of remedial effortsabsence of remedial efforts

Marketing Tasks for faltering Marketing Tasks for faltering DemandDemand

Revise:Revise:

Target MarketTarget Market ProductProduct Marketing EffortsMarketing Efforts

Challenge: Challenge: RevitalizationRevitalization

Irregular DemandIrregular Demand

Current Timing Pattern Current Timing Pattern of demand is marked by of demand is marked by seasonalseasonal or or volatile fluctuations volatile fluctuations that depart from the timing pattern of that depart from the timing pattern of supplysupply

Examples:Examples:

Mass transportMass transport

HotelsHotels

Airconditioner compressorsAirconditioner compressors

Irregular Demand-Another versionIrregular Demand-Another version

Supply is also variable and fluctuatesSupply is also variable and fluctuates

E.g. Mango ripens in summerE.g. Mango ripens in summer

In demand all through the yearIn demand all through the year

Irregular Demand-OptionsIrregular Demand-Options

Alter the Alter the supply pattern supply pattern to meet the demand patternto meet the demand pattern

Alter the Alter the demand patterndemand pattern to fit the natural supply to fit the natural supply patternpattern

Alter BothAlter Both

SynchromarketingSynchromarketing

StepsSteps

Promotion of new uses.desires during off seasonPromotion of new uses.desires during off season

Seasonal pricingSeasonal pricing

Off season advertisingOff season advertising

Full DemandFull Demand

Current level and timing of demand Current level and timing of demand is equal tois equal to the the desired level and timing of demanddesired level and timing of demand

Two erosive forces:Two erosive forces:

Changing Needs and tastesChanging Needs and tastes

Active competitionActive competition

Maintenance MarketingMaintenance Marketing

Primarily tactical issuesPrimarily tactical issues

Keeping the price rightKeeping the price right

Keeping the salesforce/dealers motivatedKeeping the salesforce/dealers motivated

Keeping tight control over costsKeeping tight control over costs

Overfull DemandOverfull Demand

Demand exceeds the level at which the marketer feels Demand exceeds the level at which the marketer feels able/motivated to supply able/motivated to supply

DemarketingDemarketing: : attempts to attempts to discourage discourage customers in customers in general or a certain class of customers either general or a certain class of customers either temporarily temporarily or or permanent permanent basis basis

General DemarketingGeneral Demarketing

Undertaken by a seller when he wants to discourage Undertaken by a seller when he wants to discourage overall demandoverall demand for his products for his products

Arises because of two reasons:Arises because of two reasons:

Temporary shortage of goodsTemporary shortage of goods

Products suffer from chronic overpopularityProducts suffer from chronic overpopularity

Selective DemarketingSelective Demarketing

Attempts to reduce demand Attempts to reduce demand selectivelyselectively

CertainCertain unprofitable unprofitable and and undesirableundesirable customerscustomers discourageddiscouraged

HotelsHotels ClubsClubs DiscosDiscos UniversitiesUniversities

Unwholesome DemandUnwholesome Demand

Undesirable qualities associated with productUndesirable qualities associated with product

Countermarketing/UnsellingCountermarketing/Unselling

Vice Products: Alcohol,cigarettes and drugsVice Products: Alcohol,cigarettes and drugs

WarsWars

Idea of Large familiesIdea of Large families

Eating tasty but nutritionally poor foodsEating tasty but nutritionally poor foods

Unselling competitor procuts/brandsUnselling competitor procuts/brands

Marketers DecisionsMarketers Decisions

Some common decisionsSome common decisions

How do we spot/choose attractive target markets?How do we spot/choose attractive target markets?

What feautures do we incorporate in our products?What feautures do we incorporate in our products?

What is the positioning of our offering?What is the positioning of our offering?

How do we increase volume of salesHow do we increase volume of sales

What is the size of the sales force that we employ?What is the size of the sales force that we employ?

Consumer MarketsConsumer Markets

Companies selling mass-consumed products and services:Companies selling mass-consumed products and services:

BooksBooks

TelevisionsTelevisions

AirtravelAirtravel

HealthcareHealthcare

EducationEducation

Writing PensWriting Pens

Consumer Marketer-Activities and DecisionsConsumer Marketer-Activities and Decisions

Research Consumer Needs

Develop offering to profitably meet consumer needs

Develop products Set Prices Communicate Offerings

Make Offerings accessible

Decisions:FeaturesQuality Levels

Decision:

Pricing Strategy

Decisions:Differentiation Positioning StrategyWhat media

Channel Strategy

Selection of channel members

Toyota India….Activities and DecisionsToyota India….Activities and Decisions

800 cc planned end 2010800 cc planned end 2010

Target: Europe with fuel efficient carsTarget: Europe with fuel efficient cars India,a production hubIndia,a production hub

Fortune R SUV:Fortune R SUV: < 4 m Length Excise Duty: 8%< 4 m Length Excise Duty: 8% >4 m Length,Excise Duty: 20%>4 m Length,Excise Duty: 20%

Initially targeted: 10% Market share by 2010Initially targeted: 10% Market share by 2010 : Pushed back to 2015: Pushed back to 2015

2009 Targets: 40,000 Innovas2009 Targets: 40,000 Innovas : 10,000 Corolla Altia: 10,000 Corolla Altia

Sub-Rs. 7,000 Refrigerators the new battlegroundSub-Rs. 7,000 Refrigerators the new battleground

Sub Rs. 7,000: new price pointSub Rs. 7,000: new price point

Tier II,III and IV marketsTier II,III and IV markets

Highly price sensitive marketsHighly price sensitive markets

Godrej will announce product soonGodrej will announce product soon

Chotukool from GodrejChotukool from Godrej

World’s lowest priced refrigerator@Rs. 3,500World’s lowest priced refrigerator@Rs. 3,500

7.8 Kg7.8 Kg

No CompressorNo Compressor

Battery and Cooling ChipsBattery and Cooling Chips

Competitors rev upCompetitors rev up

LG and Whirlpool likely to launch sub-Rs.7,000 fridge alsoLG and Whirlpool likely to launch sub-Rs.7,000 fridge also

Refrigerator penetration@18% (Consumer electronics and Refrigerator penetration@18% (Consumer electronics and Appliances Manaufacturers Association): Plenty of potentialAppliances Manaufacturers Association): Plenty of potential

Lowering Price Points Lowering Price Points

Critical for success in Indian marketsCritical for success in Indian markets

Category Expansion and Price PointsCategory Expansion and Price Points

From B&W TV to Colour to LCD From B&W TV to Colour to LCD

Lowering Price Points with each Technology LeapLowering Price Points with each Technology Leap

TV penetration: 45%TV penetration: 45%

Business MarketsBusiness Markets

Primary Motivation of buyers: Primary Motivation of buyers: ProfitsProfits

Products are bought either for:Products are bought either for:

INPUTSINPUTS

RESALERESALE

Business BuyersBusiness Buyers

Need to be convinced on how product acquisition will Need to be convinced on how product acquisition will lead to:lead to:

Higher RevenuesHigher Revenues Lower CostsLower Costs

Relatively minor role of advertisingRelatively minor role of advertising Strong Role: Sales ForceStrong Role: Sales Force Company ReputationCompany Reputation

A typical business buyer-Durgapur Steel Plant,WBA typical business buyer-Durgapur Steel Plant,WB

ERP system implementedERP system implemented

15 months/Rs. 35 Cr15 months/Rs. 35 Cr

HP: Implementation PartnerHP: Implementation Partner

Software:SAPSoftware:SAP

Key functions: PPCKey functions: PPC QCQC Material ManagementMaterial Management Plant ManagementPlant Management Sales and DistributionSales and Distribution

Profile of a Business Marketer-SAPProfile of a Business Marketer-SAP

SAP

Finance & Public Services

Manufacturing Services

The Finance & PS Vertical at SAPThe Finance & PS Vertical at SAP

SAP Finance & PS

Banking Defense HealthcareHigher

Education,Research

Insurance

The Manufacturing Vertical at SAPThe Manufacturing Vertical at SAP

SAP Manufacturing

Aerospace Automotive ChemicalConsumer Products

Engg,Construction

The Services Vertical at SAPThe Services Vertical at SAP

SAP Services

MediaProfessional

Services Retail TelecomTravel

Logistics

SAP in MediaSAP in Media

1600 Media customers worldwide1600 Media customers worldwide

Unique demandsUnique demands

Wide ranging customer profiles:Wide ranging customer profiles: Broadcast cosBroadcast cos Entertainment cosEntertainment cos Premium content suppliersPremium content suppliers Newspaper and magazine suppliersNewspaper and magazine suppliers Book suppliersBook suppliers

Global MarketsGlobal Markets Which markets to enter?Which markets to enter?

Mode of entry?Mode of entry?

Product: Adaptation/motivationProduct: Adaptation/motivation

Pricing: How to set pricing in different countriesPricing: How to set pricing in different countries

Communication: How to adaptCommunication: How to adapt

Nonprofit and Government MarketsNonprofit and Government Markets

Limited purchasing powerLimited purchasing power

Lowest bid system: Little room for qualityLowest bid system: Little room for quality

Definition of MarketingDefinition of Marketing

The Social Perspective:The Social Perspective:

Process by which individuals and groups obtain what Process by which individuals and groups obtain what they need and want through:they need and want through:

CreatingCreating OfferingOffering ExchangingExchanging Products and Services of Value with othersProducts and Services of Value with others

Definition of MarketingDefinition of Marketing

The Management PerspectiveThe Management Perspective Process of planning and executing theProcess of planning and executing the ConceptionConception PricingPricing PromotionPromotion Distribution ofDistribution of

IdeasIdeas GoodsGoods ServicesServices

To create To create exchanges exchanges that satisfy individual and organizational goalsthat satisfy individual and organizational goals

Target Markets and SegmentationTarget Markets and Segmentation

No marketer can expect to satisfy everyone No marketer can expect to satisfy everyone with same offeringwith same offering

Need for marketer to Need for marketer to choose its customerchoose its customer

Step 1: Step 1: Marketer divides a market by Marketer divides a market by identifyingidentifying and and profiling profiling different different buyer buyer groups: Segmentationgroups: Segmentation

SegmentationSegmentation

Market is composed of several elements-there are elements of homogeneity and hetreogeneity

Segmentation brings like minded decision makers to gether

Before After

STP-TSTP-T

Step 2Step 2

Targeting Targeting

Process of Process of selectionselection of one or more segmentsof one or more segments

The marketer develops a The marketer develops a market offering market offering for selected for selected target market target market

STP-PSTP-P

Create a positionCreate a position in the in the mindmind of the targeted of the targeted buyer through buyer through communicationcommunication

Leading brand from Wipro Consumer CareLeading brand from Wipro Consumer Care

Other Brand: ChandrikaOther Brand: Chandrika

Indian soap market: Rs. 7500 CrIndian soap market: Rs. 7500 Cr

Third largest brand after Lifebuoy and LuxThird largest brand after Lifebuoy and Lux

Leader in the SouthLeader in the South

More than 50% from rural marketsMore than 50% from rural markets

Positioning Santoor

Santoor….VFMSantoor….VFM

Early 1990s: Small 5-gm packs@Rs. 5Early 1990s: Small 5-gm packs@Rs. 5

Benefits from customer downtradingBenefits from customer downtrading

Santoor still have packs@Rs. 6 and Rs. 10Santoor still have packs@Rs. 6 and Rs. 10

Santoor….DistributionSantoor….Distribution

Early mover advantageEarly mover advantage

Available at 1.3 Million outlets(21% of Available at 1.3 Million outlets(21% of outlets)outlets)

Gaps in the NorthGaps in the North

Santoor….the original positioningSantoor….the original positioning

Launched in 1984Launched in 1984

““Natural Ingredients”Natural Ingredients”

Many brands positioned similarlyMany brands positioned similarly

Repositioning SantoorRepositioning Santoor

Younger-looking skinYounger-looking skin

Stuck to itStuck to it

A Simple Marketing SystemA Simple Marketing System

Industry(A collection

of sellers)

Market(A collectionOf buyers)

Communication

Goods/

Services

Money

Information

MarketsMarkets

Groupings of BuyersGroupings of Buyers

Different types of marketsDifferent types of markets

Needs MarketsNeeds Markets: Buyers share : Buyers share common needscommon needs

The Health Tourism MarketThe Health Tourism Market The Adventure Tourism MarketThe Adventure Tourism Market The Golf Tourism MarketThe Golf Tourism Market The Spritual Tourism MarketThe Spritual Tourism Market

Product MarketProduct Market

Buyers share needs of Buyers share needs of productsproducts

E.g The Branded menswear marketE.g The Branded menswear market

Market: All buyers of branded menswear productsMarket: All buyers of branded menswear products

Industry: All sellers of branded menswear productsIndustry: All sellers of branded menswear products

The Swiss Watch MarketThe Swiss Watch Market

The Swiss Watch MarketThe Swiss Watch Market

Total Exports in 2009= 13.2 Billion Swiss Francs = Total Exports in 2009= 13.2 Billion Swiss Francs = 12.3 Billion US $12.3 Billion US $

Major Brands: Major Brands: RolexRolex OmegaOmega CartierCartier

Geneva,based Giant luxury watch mfrGeneva,based Giant luxury watch mfr

One of the world’s most valuable brandsOne of the world’s most valuable brands

Largest single luxury watch brandLargest single luxury watch brand

2000 watches a day, Revenues: $ 3 Billion2000 watches a day, Revenues: $ 3 Billion

The Rolex SubmarineRThe Rolex SubmarineR

Rolex GMT MasterGoldRolex GMT MasterGold

French Jewellery and Watch mnaufacturerFrench Jewellery and Watch mnaufacturer

Owned by Switzerland’s Richemont GroupOwned by Switzerland’s Richemont Group

Founded by Cartier FamilyFounded by Cartier Family

Long history of serving royalty, stars and celebritiesLong history of serving royalty, stars and celebrities

No. 1 seller of luxury Jewellery in the worldNo. 1 seller of luxury Jewellery in the world

No. 2 seller of luxury watches in the worldNo. 2 seller of luxury watches in the world

Cartier JewelleryCartier Jewellery

A Cartier ModelA Cartier Model

Subsidiary of the Swiss Swatch GroupSubsidiary of the Swiss Swatch Group

One of the most recognized and known brandsOne of the most recognized and known brands

First watch in moon in 1969First watch in moon in 1969

Worn by James Bond since 1995Worn by James Bond since 1995

Worn by JFK, Prince Williams, George Clooney,Nicole Worn by JFK, Prince Williams, George Clooney,Nicole Kidman and Cindy CrawfordKidman and Cindy Crawford

Swiss Watches by MaterialSwiss Watches by Material

Swiss Watches….The Main MarketsSwiss Watches….The Main Markets

Swiss watches….the Top MarketsSwiss watches….the Top Markets

Leading Watch Exporting coutriesLeading Watch Exporting coutries

Leading Watch Exporting CountriesLeading Watch Exporting Countries

Demographic MarketDemographic Market

Buyers share Buyers share common demographic characteristicscommon demographic characteristics

e.g the DINK Familye.g the DINK Family

Geographic MarketGeographic Market

Buyers share Buyers share common geographic coordinatescommon geographic coordinates

e.g. the Maharashtra markete.g. the Maharashtra market

Other MarketsOther Markets

Commodity MarketsCommodity Markets

Job MarketsJob Markets

Donor MarketsDonor Markets

Consumer MarketsGovernment MarketsManufacturers Market

Resource Markets

Intermediary Markets

MarketplaceMarketplace versus versus MarketspaceMarketspace

Marketplace: Marketplace: PhysicalPhysical

Going to Foodworld to buy a packet of MaggiGoing to Foodworld to buy a packet of Maggi

Marketspace: Marketspace: DigitalDigital

Going to Going to www.irctc.co.inwww.irctc.co.in to buy a train ticket to buy a train ticket

Shift from Marketplace to MarketspaceShift from Marketplace to Marketspace

Physical location of inventoryPhysical location of inventory irrelevant irrelevant

Actual siteActual site of buying and selling irrelevant of buying and selling irrelevant

Traditional marketplace interactionTraditional marketplace interaction eliminated eliminated

Difference between marketspace transaction and Difference between marketspace transaction and marketplace transactionmarketplace transaction

ContentContent

ContextContext

InfrastructureInfrastructure

The Networked EconomyThe Networked Economy

Disintermediation: Removal of the intermediariesDisintermediation: Removal of the intermediaries

Reintermediation:Reintermediation: PortalsPortals (Yahoo,Rediff) (Yahoo,Rediff) AuctionsAuctions (eBay,UBid) (eBay,UBid) Matchmakers Matchmakers (Naukri,Indiamarkets)(Naukri,Indiamarkets) Comparison Shopping Engines Comparison Shopping Engines

(Shopping.com,Froogle)(Shopping.com,Froogle)

IndiaMarkets.comIndiaMarkets.com

India’s first B2B InfomediaryIndia’s first B2B Infomediary

140 product categories140 product categories

Few listed categories: Few listed categories: Electrical & Power Electrical & Power equipements,Healthcare,Plastic,Rubber and rubber equipements,Healthcare,Plastic,Rubber and rubber products,Electronics,Gems and Jewelleries,Paperproducts,Electronics,Gems and Jewelleries,Paper

Procurement Management Services(PMS) from Procurement Management Services(PMS) from IndiaMarkets.comIndiaMarkets.com

Extensive Extensive databasedatabase of of validated suppliersvalidated suppliers

Physical nationwide network of business centresPhysical nationwide network of business centres

Proven Proven online auctiononline auction mechanism mechanism

The Net Connects…..DisintermediationThe Net Connects…..Disintermediation

The Net connects :The Net connects :

Firm with firmFirm with firm

Firm with customersFirm with customers

People with peoplePeople with people

At At far lower costsfar lower costs and and far greater flexibilityfar greater flexibility

Buying AllianceBuying Alliance

The Net brings buyers togetherThe Net brings buyers together

Worldwide Retail Exchange(Worldwide Retail Exchange(www.worldretailexchange.comwww.worldretailexchange.com))

17 Major Retailers came together17 Major Retailers came together:: BestbuyBestbuy J C PenneyJ C Penney M&SM&S TargetTarget TescoTesco

The Net brings buyers and sellers togetherThe Net brings buyers and sellers together

IndiMarkets.comIndiMarkets.com MarketRx.comMarketRx.com

Improved connectivity reducing cost of communication and Improved connectivity reducing cost of communication and co-ordination of exchange transactionsco-ordination of exchange transactions

Possible to bypass Possible to bypass meditators meditators who have traditionally who have traditionally facilitated facilitated flow of information and goodsflow of information and goods

DisintermediationDisintermediation

Several industries:Several industries:

Travel(cleartrip,makemytrip,Yatra)Travel(cleartrip,makemytrip,Yatra)

Bookstores(Flipkart,FirstandSecond)Bookstores(Flipkart,FirstandSecond)

Stockmarkets(NSE)Stockmarkets(NSE)

Disintermediation threatens middlemenDisintermediation threatens middlemen

Travel AgentsTravel Agents StockbrokersStockbrokers MarriagebrokersMarriagebrokers Retail BanksRetail Banks BookstoresBookstores Automobile RetailersAutomobile Retailers Education ConsultantsEducation Consultants

Disintermediation creates new middlemenDisintermediation creates new middlemen

For every mediator eliminated,several new For every mediator eliminated,several new intermediaries createdintermediaries created

Flipkart disintermediates book retailersFlipkart disintermediates book retailers

Flipkart employs UPS for order fulfilmentFlipkart employs UPS for order fulfilment

For most productsFor most products

Products: Products:

Two components:Two components:

Physical ComponentPhysical Component Information ComponentInformation Component

Internet Enables SeperationInternet Enables Seperation

Information Information from from Physical ProductPhysical Product

Core ProductCore Product from from Complementary ProductComplementary Product

Core ProductCore Product Complementary Complementary ProductProduct

ComputerComputer SoftwareSoftware

Internet ConnectionInternet Connection

CameraCamera LensLens

FilmFilm

CarCar WarrantyWarranty

InsuranceInsurance

Financing Financing

AccessoriesAccessories

Buying a car….Analog WorldBuying a car….Analog World

Buyer depends on Automobile dealer for:Buyer depends on Automobile dealer for:

InformationInformation NegotiationNegotiation FinancingFinancing WarrantiesWarranties DeliveryDelivery

Buying a car….Analog WorldBuying a car….Analog World

Advantage:Advantage:

One Stop ConvenienceOne Stop Convenience

Disadvantage:Disadvantage:

Middlemen often not the best/lowest cost providers of Middlemen often not the best/lowest cost providers of information and complementary productsinformation and complementary products

Buying a car….Digital WorldBuying a car….Digital World

Customers can:Customers can:

Search for informationSearch for information NegotiateNegotiate Pay forPay for Receive DeliveryReceive Delivery

At At different points of timedifferent points of time from from different providersdifferent providers

The New MediatorsThe New Mediators

Integrated MediatorsIntegrated Mediators replaced by replaced by

Combination of:Combination of:

Marketspace MediatorsMarketspace Mediators: Manages : Manages Information FlowsInformation Flows

Marketplace Mediators: Marketplace Mediators: Manages Manages Physical FlowsPhysical Flows

The New Mediators-The Dark SideThe New Mediators-The Dark Side

Need to deal with a number of specialized mediatorsNeed to deal with a number of specialized mediators

High Search and Evaluation CostsHigh Search and Evaluation Costs

Customers connect with firmsCustomers connect with firms

Gather InfoGather Info Evaluate productsEvaluate products Configure ProductsConfigure Products Place OrdersPlace Orders Get Technical SupportGet Technical Support