Digital Business

Concepts and strategies

Eloise Coupey

• Publisher: Routledge
• Year: 2016
• ISBN:
  9781315506395
• Edition: 2
• Topic: Commerce
• Subtopic: E-commerce

As businesses adapt to the realities of the digital world and build on the hard-won insights of the digital business pioneers, increasing importance is placed on the need to understand how traditional concepts of business strategy and implementation are influenced by the Internet, and to identify the novel aspects of business that are made possible by the Internet. That is why this book was written.

• How do you succeed in the digital business environment?
• How do you make the transition from offline to online?
• What aspects of your business will be affected, and how should you manage them?

Digital Business: Concepts and Strategies will help you develop the skills necessary to understand and integrate Internet technology and characteristics into business activity for attaining strategic objectives.

SECTION
IV
Applying the Framework

The Internet and Business Activity

In this section, we focus on ways in which the Internet influences business action. Building on the previous section, this section illustrates the impact of the Internet as a tool for implementing strategic planning with business action. To this end, in Chapter 9 we examine the role of the Internet as a tool for conducting research and developing business intelligence. In addition, we consider the use of the Internet as a set of resources that affect business action. These resources are described as content, channel, and communication. The Internet enables businesses to provide information as content, to augment distribution as a channel, and to interact with customers to facilitate communication.

In Chapters 10 through 12, we look at the impact of the Internet on elements of business activity. In addition, we consider ways that the Internet — as content, channel, or communication — effects the actions of people in each of the four perspectives in the exchange environment.

CHAPTER
9
Developing Business Intelligence with Online Research

Focus and Objectives

In this chapter, we focus on the role of the Internet as a tool for business research. The Internet serves as a source of information for identifying opportunities, and as a way to collect information. We review the stages in the research process, and consider the influence of the Internet on the activities associated with each stage. We also apply a framework for classifying data in business research using the Internet. We discuss the implications of Internet-based research for the objectives of understanding customer behavior and competitor behavior.

Your objectives in studying this chapter include the following:

■ Recognize the benefits of the Internet for business research.

■ Understand the difference between internal and external sources of data, and the role of the Internet in developing each source.

■ Identify the five stages in the research process, and possible influences of the Internet in each stage.

■ Understand the value of the presented framework for conducting business research with the Internet.

■ Know the classes of Internet-based data sources and the dimensions that define them.

■ Identify the risks (e.g., ethical breaches) and benefits of online research.

Getting to Know You

General Mills is the manufacturer of many well-known brands of food products. The Pillsbury Doughboy, Betty Crocker, and the Jolly Green Giant are all members of the General Mills family. The company’s products feed families throughout the day. From Cheerios and Wheaties at the breakfast table, Progresso soups and Totino’s pizzas at lunch, an afternoon snack of Bugles and Fruit Roll-Ups, to Hamburger Helper at dinner, and some Pop-Secret popcorn late at night, General Mills makes them all.

How does General Mills so accurately predict peoples’ tastes? The answer lies in extensive market research. Throughout its nearly 150-year history, the company has tracked and analyzed the American palate. Using mall intercepts and phone surveys, General Mills has gathered insights into the complex love affair between people and their food, and how it’s packaged. Research results led the company to develop two organic food brands, to revamp Betty Crocker — currently in her eighth iteration — and to offer a line of Cheerios brand products, among other things.

With the Internet, General Mills is able to collect even more information from its customers. For instance, the company used the Internet to conduct a taste test for a new Bugles snack flavor. Although the snacks arrived via snail mail, they came with a Web address and an invitation to sign up to take part in an online survey. The Internet approach worked well. Customers liked the comfort, convenience, and privacy of completing the survey at home. The company liked the savings in time and cost; time to field the study was cut from a typical 2-week time frame to mere days, and the cost dropped from $15,000 to $5,000.¹

General Mills has been happy with its foray into online research. So happy, in fact, that it plans to move more and more of its market research to the Internet. The company had more than 60 percent of its research activity online prior to 2002, and it continues to seek out new ways to use the Internet to develop consumer insight.

For instance, in 2001, the company pushed its efforts to use the Internet to gain consumer insight by introducing a sample set of consumers to MyCereal.com. The site measured customers’ individual taste preferences and health characteristics, thus accumulating a hefty store of descriptive information. Using a person’s data, the site suggested ingredients and combinations for individual cereals; participants could mix their own cereals, delivered to the door for around $7 a box, plus shipping. Although the experiment in custom cereals was short-lived, it served the company’s purposes, stimulating interest and increasing satisfaction with the company’s other cereal brands. In addition, it provided a valuable database of information about preferred tastes and configurations of ingredients.

General Mills used the Internet to understand its customers, and their needs and wants. This knowledge enabled them to identify product opportunities, to test new product concepts, and to revamp business strategies for existing products. But do the methods used by General Mills work for other companies? Is there a risk of generalizing results from online research to preferences of purely off-line consumers? Does online research work for companies in different industries, or with a solely off-line presence?

In this chapter, we’ll examine how companies can use the Internet to develop the business intelligence necessary to create a competitive advantage. For companies, information is a vital component for developing business strategy. Business intelligence is divided into two main categories: (1) developing insights into the market for a product, including customer demand; and (2) developing insights into the nature of competition for customers. First, we will consider how the Internet affects business research. Then we’ll examine how businesses can use the Internet to carry out the research process, including the types of data that can be used to understand customers and competition in a particular target market.

Generalizing from General Mills: Benefits of Internet Intelligence

Businesses use online research to answer questions about business activities. For example, an organization may wish to determine the profit potential of a new product or market, to assess the quality of its present business strategy, or to track a particular problem with a product. Getting answers to the questions that initiate the research effort might depend on how the research is conducted, such as the methods for gathering the data, and on the types of data that are collected (e.g., surveys or clickstreams). Given the wide array of data that are available to businesses, it is important to understand the pros and cons of different data sources, and the issues involved in using them, to answer business questions.

Bits & Bytes 9-1

Understanding whether a site works is important. Market research to evaluate Web sites indicates that 50 percent of surveyed consumers are less likely to make a purchase after visiting a site.

(Source: www.vividence.com, 2003.)

Internet Benefits for Business Intelligence

The Internet can be used to augment traditional research techniques and processes, and even to replace them (Figure 9-1). Its strengths as an information resource provide three primary benefits for business researchers: (1) the ability to gather related information across a wide array of sources, (2) the ability to update knowledge bases rapidly, and (3) the ability to use Internet technology to integrate the results of market research with decision-making processes.

Getting Information with the Internet

The research conducted by organizations is typically problem-oriented; the organization is focused on developing a strategy to maximize a limited set of resources, given a specified set of situational constraints. The Internet enables business researchers to collect data that serve as input for decision making. For instance, surveys and focus groups can be conducted online more quickly and often with lower costs than their off-line counterparts. General Mills estimates that its online survey research provides savings of 75 percent — in costs and in time — compared with off-line methods.²

FIGURE 9-1 Internet Benefits for Business Intelligence.

The rapid acceptance of digital content has resulted in an increased demand for more and different types of online information. At the same time, the decreasing costs and heightened availability of software for digitizing and posting information have lowered the hurdles to putting information online. As a result, the information available on the Internet reflects a wide variety of interests, objectives, and budgets. For instance, information about companies and their product offerings, both online and in traditional environments, is readily available as input for developing competitive intelligence. In addition, the communication and publishing characteristics of the Internet mean that providing information is not just one-sided: consumers can also get into the act. For example, an unhappy passenger on United Airlines set up the untied.com site to collect the experiences of other passengers with the company (Figure 9-2). How might United’s management use this source of information to guide business activity?

Online news groups and chat rooms are forums for people to express concerns with product performance, or company actions. They also enable customers to share tips about product use and alternative products. The many sources of information available via the Internet are a valuable asset for business research.

Keeping Information Current

Markets are dynamic. For instance, technological advances enable new product development. In addition, social changes may affect the desirability of existing products. These changes mean that consumers’ tastes and preferences may also change over time, and that the length of time for the chang...