crda vancouver 2000 presentation
TRANSCRIPT
Understanding the Understanding the Internet Internet
& Your Opportunity& Your OpportunityFebruary 11, 2000
Presentation to the Canadian Resort Development Association
William J. BrownInterval International
NOTE: advance slides with the & keys
© 1999 by William J. Brown; where content is cited and attributedto 3rd party sources, copyright is maintained by original author.
First: Participate• Please ask questions or share your comments as
we go forward• Later, you can get a copy of this presentation and
lots of other independent material by sending a blank e-mail to:
• I’m available to speak or exchange e-mail with you at any time
What We’ll Discuss
• A top-down look at the Internet & E-Commerce
• Emerging opportunities and challenges
• Actionable steps for developers and individual
properties
““In 5 years, there won’t be In 5 years, there won’t be ‘‘Internet Companies’.Internet Companies’.
We’ll ALL be Internet companies. We’ll ALL be Internet companies. Or we will die.”Or we will die.”
Andrew Grove, Ph.D.Chairman & former CEO
Intel CorporationRemarks made in May 1999
What is the “Digital Economy”
• The widespread dissemination of information technology among businesses and consumers coupled with the increasing use of the Internet has created a new way to conduct commerce and marketing – and is spurring massive changes in the economies of developed nations.
Impact
• As a result, we can anticipate fundamental shifts in the way many products or services are marketed, priced, delivered and purchased over the next decade.
Mandate• These changes have profound implications
for the business economics of all market participants.
• Understanding HOW these marketplace changes will unfold is a matter of research, study and pure guesswork.
• But attempting to understand is a powerful potential source of competitive advantage in the markets where you compete and for the attention of your customers and prospects.
• 40% of sales occur online• $30 MILLION a day!
• Reinventing their relationship with the customer
Traditional Companies Use the Web to Reinvent Traditional Companies Use the Web to Reinvent their Businessestheir Businesses
New companies appear who use the Web to New companies appear who use the Web to reinvent business modelsreinvent business models
The Web also is a The Web also is a powerful communication powerful communication platformplatform
So, Who Invented the Internet?So, Who Invented the Internet?
AL GORECandidate for U.S. President
• The precursor to the Internet, ARPANET was a large wide-area network created by the United States Defense Advanced Research Project Agency (ARPA). Established in 1969, ARPANET served as a testbed for new networking technologies, linking many universities and research centers. • The first two nodes that formed the ARPANET were UCLA and the Stanford Research Institute, followed shortly thereafter by the University of Utah. • Today, it’s estimated nearly 300 million adults have access to the Internet worldwide in nearly every country.• Nearly 40% of U.S. surfers have made a purchase online; of those, nearly 75% have used the Internet to at least research travel prior to making a purchase or reservation.
So, who So, who reallyreally invented the Internet? invented the Internet?
Conducting business online. This includes, for example, buying and selling products with digital cash via Electronic Data Interchange (EDI).
The conduct of commerce in goods and services, with the assistance of telecommunications and telecommunications-based tools.
Electronic CommerceElectronic Commerce
or
Source: Greenfield Online/USAToday
Among Internet users who bought books online in the past year, most said the reason they bought books online is because the books cost less.
Of the 42% of households with a personal computer, 74% have a modem. Chances are, though, that the modem is a mystery to the computer user.
Bandwidth is exploding in U.S & Canada...
Source: Gartner Group
150,000,000,000 tons 0 lbs., 0 ounces
Total weight of all e-mailsent, all-time
Total weight of all mail
handled by the U.S. Postal Service in
1998, estimated
• Internet seen as a mega-trend, not a channel, not a medium. A fundamental shift equivalent to the industrial revolution.
• Valuations may not be right, but they are rational.– Amazon went from $0 to $1 billion in sales in four
years in a dead industry.– AOL has taken 56 minutes (up from 7) out of
traditional media
Still, the Opportunities are Just Being Scratched
• As Robert Shaw once said
““So far we’re only putting lipstick on the pig.”So far we’re only putting lipstick on the pig.”
Do You Spot the Opportunities?
• Market inefficiencies attacked by technology
• Industry restructuring• Cultural obstacles for bricks-and-mortar
players• Customer-centered design for solutions
Moderator: James Ledbetter, The Industry Standard
• The Internet economy is first and foremost about dramatically reducing those costs, and in so doing restructuring industries, realigning markets, and redistributing competitive advantage.
KEY THEMES - More Industries, More Transformations
• Ronald Coase, Nobel prize-winning economist, recently said that inefficiencies in market transactions (“transaction costs”) could represent as much as $1.2 trillion annually in the U.S. alone.
More Industries, More Transformations
The General Message
– Applicable to all of e-business, is that “the Internet” (broadly) helps reduce transaction costs IN ANY EXCHANGE, IN ANY CHANNEL.
– B-to-B, C-to-C, B-to-C, G-to-C, G-to-B, just different faces of the same basic problem: inefficiencies in the market.
Fifteen Minutes of Fame
Process Reform:The Web may permit
YOU to change EVERYTHING
• The Web can help you to more efficiently build properties– www.buildnet.net– www.bidcom.com
• By using the Web, your staff can become more productive
• Bottom Line: Used effectively, an effective Internet strategy can allow you to gain more “bang” from your investments and become more profitable
• More achievable than growing your top-line
Marketing
• Where does the Internet fit into the marketing mix?
• How do you create an effective marketing plan in the new world?
• Basic answer: Much confusion.
Debra Williamson, Moderator
Marketing
• Where does the Internet fit?– Not a category killer for other media, but
“part of the mix”– You need to walk the walk - the proof for an
Internet ad is one click away
What We Can Learn From “dot-coms”
• Fifteen Things We’ve Learned Recently:– Portals, communities, and commerce
emerged all in the last three years!– No gender gap. Over 55 is the fastest-
growing segment in numbers and attention.– Volume and stickiness are up dramatically– Chat, auction, and games are the stickiest.
My guess as to why: they are the closest to real passions of the users.
Fifteen Minutes of Fame
Marketing: Auto Industry Case Study
• 40% of GM cars are being bought over the web, but GM only spends .0025% of its ad budget there. The change is faster than anyone in marketing realizes (Richy Glassberg, Phase 2 Media)
Marketing
• Biggest mistake in Internet marketing plan:– Having one at all. This is not a separate
thing, but an integrated part of a whole.– Having an ad plan, but no marketing plan.– Given the pace of change, build the brand
with many short tactical plans, not one long-term plan
Let’s Try to Learn Some Lessons from Similar
Industries
Transportation .COM Face-off
• Cars and air travel - what’s common problem?– Gross inefficiencies in buyer-seller
relationship (“information costs”)– Many of them are hard-coded into the
system by regulation Ubiquitous network and cheap computing are exposing these costs and creating huge opportunity for smart people who can “iron them out.”
Transportation .COM Face-off
• Who sees the potential?– Startups, of course - Priceline and Auto-By-Tel are
outsider solutions– Providers, too - Travelocity and deals with others by
TWA, but too constrained by channel conflicts and uncertainty to make a big bet.
– Current distributors - NOT. Are travel agents and car dealers finished?
• Well, if they add real value • Gone, not lamented
Transportation .COM Face-off
• Interesting observations early in the game– Besides reducing transaction costs, early
signs of changing dynamics• Manufacturers actually KNOW what customers
want, not what they settle for (Pink Volvos).• How long before buyers can overcome collective
action problems and get $999 of the $1000 in savings? (“the last stupid customer”).
Challenges
• The great ideas are the easy part.• Execution is hard for Dot-coms and
bricks-and-mortar companies.• Some difficulties are common to both,
and become more as Internet time continues to compress the business cycles.
• Expectations need to be properly set
KEY THEMES - Winning E-Business Strategies
Offline vs. Dot-Com
• Key issues:– Channel conflict– Creating a single experience regardless of
where the customer contacts you– Managing the brand consistently– Avoiding commoditization of price-shopping– Unclear role of shopping portals– Taxation as the first of many (new) regulatory
challenges
Looming Policy Issues
– Current crises: Tax collection• Sales tax can’t be avoided forever• But the U.S. alone has 20,000 taxing
authorities (including, e.g., mosquito abatement districts).
• Other countries may use e-commerce tax to protect local industries.
• “The good news is that nobody has a clue what to do in Washington.” (Irving)
Moderator: Elizabeth Wasserman, The Industry Standard
Action Steps
Set Your Priorities
• “E-commerce is all about the consumer.”• Consumers have higher expectations on-line.• Local car dealer closes 60% of referrals from
on-line auto shoppers--the other 40% don’t pass credit checks. (“Did I say $400 over invoice? I meant $300.”)
• If your customers are looking for you online, you must be there, too.
Fifteen Minutes of Fame
Analysis of Timeshare Web Sites:
An early look at my forthcoming VIR articleSites with photographs 100% (15 of 15)Sites with a consumer focus 87%Sites with e-mail customer support 87%Sites with buttons for employment 60%Sites with special promotions 47%Sites offering visitors transactions 40%Sites with contests or offers 33%Sites with an easy-to-find toll-free # 33%Sites with members-only area 33%Sites with 2 or more photos each/resort 27%Sites offereing privacy statement 27%Sites offering a free e-mail newsletter 13%Based on a survey of 16 resort developers with annual sales greater than US$20 million. NOTE: 1 of 16 did not have a Web site
Next Steps• Don’t be afraid to take chances• Create a community of members• Create “stickiness”• Offer more than the standard product• Speed is important• Make each visit valuable• Design around the user, not the company
Organizational Imperatives
• Every piece of collateral MUST promote:– Your Web site address (URL)– An e-mail address that will be responded to
• Train your people– Everyone must understand that you are on the
Web to:• Drive more sales• Build affinity• Further “monetize” your relationship with the customer
Going Forward• Wire your rooms• Start thinking about streaming video
– The printed brochure may go way of the horse-and-buggy
• Look for non-core revenue opportunities• Create reasons for your customers to come back to
your brand outside of their vacation• Use the Web to put your customers to work for you
– Empower your customers to help themselves
Final Thoughts
• Don’t be intimidated by the profound changes in technology– Embrace change for advantage
• The Internet is NOT an MIS issue – it’s a marketing and corporate priority
• Keep learning as much as possible
This is only the beginning.Contact me with any questions or ideas:
Join the virtual classroom for Internet Business Strategy @ University of Miami
Send a blank e-mail to:[email protected]
I hope that you will become a part of this innovative online community of professionals concerned with discovering better Internet marketing and operating practices. Interface with students, Internet luminaries, executive recruiters, management consultants, Web developers and other professionals who are asking the same questions as you.