Part One: Chapter Two A Digital World

1. Internet Marketing & e-CommerceWard HansonKirthi KalyanamRequests for permission to copy any part of the material should be addressed to: PERMISSIONS DEPARTMENTTHOMSON BUSINESS and ECONOMICS5109 Natorp BoulevardMason, OH 45040Phone: (800) 423-0563

2. Part One: Chapter TwoA Digital World “When if ever will the astounding increase in the productivity growth, and in the growth of productivity growth, of computers end?” W. Nordhaus, The Progress of Computing

3. The State of Being Digital • Something is digital when all of its properties and information are stored as a string of zeroes and ones

4. The State of Being Digital • Something is digital when all of its properties and information are stored as a string of zeroes and ones • Those zeroes and ones are called bits

5. The State of Being Digital • Something is digital when all of its properties and information are stored as a string of zeroes and ones • Those zeroes and ones are called bits • Everything on the Internet is digital

6. The State of Being Digital • Something is digital when all of its properties and information are stored as a string of zeroes and ones • Those zeroes and ones are called bits • Everything on the Internet is digital • The falling cost of digital technology is one of the most powerful forces in the modern economy

7. Understanding Moore’s Law Intel co-founder Gordon Moore observed that each generation of computer memory chips – released about every 18 months – could pack the same technology into half the space Source: AP/World Wide Photos

8. Understanding Moore’s Law • Moore’s Law applies broadly to computing and technology costs • Computer speed since the 1970s has increased roughly 75 billion times • The cost of technology and storage, meanwhile, has dropped sharply

9. The Fast Fall of Digital Storage Costs Source: Brian Hayes, “Terabyte Territory,” American Scientist 90 (May–June 2002)

10. Putting Moore’s Law to WorkSubstituting digital material when possible can lead to substantial savings

11. Putting Moore’s Law to WorkSubstituting digital material when possible can lead to substantial savings • Sun Microsystems as early as 1995 saved hundreds of thousands of dollars by moving to online customer support

12. Putting Moore’s Law to WorkSubstituting digital material when possible can lead to substantial savings • Sun Microsystems as early as 1995 saved hundreds of thousands of dollars by moving to online customer support • Online software distribution saved Sun an estimated $1.5 million per quarter compared to traditional distribution

13. Digital Substitution Other examples: • Online banking services, such as automatic payroll deposit • Wireless laptops for sales representatives working in the field Other potential uses: • Automatic online language translations

14. Digital Environments • Technology allows users to create virtual spaces to display information, tell stories, educate or amuse • For marketers, new ways to reach consumers and promote a product

15. Digital EnvironmentsAugmented reality and the virtual first down line Source: ELIOT J. SCHECHTER/EPA/Landov

16. Key Features of Digital Environments • Procedural: Computers must be taught what to do in a digital environment • Hardware may be cheap but software is difficult to get right and expensive to create • Rules lead to adaptive results • Rules require explicit understanding of business decision

17. Key Features of Digital Environments • Participatory: Effectiveness depends on ease of consumer use and interactive potential • Leads to Interactivity • Leads to Personalization • Eg. Auction

18. Key Features of Digital Environments • Spatial: Realistic features are important but hard to create in business setting • Virtual space or Cyberspace • Augmented Reality • Hybrid of digital and real world • Combining creativity and discipline

19. Key Features of Digital Environments • Encyclopedic: Low cost allows almost endless storage capacity • Audio • Video • Streaming

20. Digital Convergence • Cheap and powerful digital technology has contributed to the merging of industries, technology and content

21. Digital Convergence • Cheap and powerful digital technology has contributed to the merging of industries, technology and content • One crucial area: convergence of computing, communications and media content

22. Digital Convergence • Cheap and powerful digital technology has contributed to the merging of industries, technology and content • One crucial area: convergence of computing, communications and media content • When barriers between industries fall, marketers have greater flexibility to choose the best medium for the pitch

23. Digitizing the Marketing Process Archive • Retain and digitize existing materials • Substitute digital materials into marketing process • Change marketing processes to better use digital features Substitute Redesign

24. Digitizing the Marketing Process • Digital capabilities allow businesses to better understand their customer Key example: The online focus group

25. Digitizing the Marketing Process • Digital capabilities allow businesses to better understand their customer Key example: The online focus group • Digital capabilities allow businesses to redesign and streamline transactions Key example: Airlines and the evolution of e-ticketing