Illustrate some of the advantages and disadvantages of the use of technology.

Lena Diestel International Marketing 17/11/2003

“ Many have assumed that the Internet changes everything, rendering all the old rules about companies and competition obsolete. That may be a natural reaction, but it is a dangerous one . . . decisions that have eroded the attractiveness of their industries and undermined their own competitive advantages.” Michael Porter

Technology is revolutionising global business, this in turn is affecting international consumer behaviour. Some examples of technological advances could include the Internet, mobile phones and modern aircraft. The consumer can now easily purchase items from a variety of sources worldwide, this encourages competition between manufacturers reducing costs to the customer. Before the advances in technology, the supply and demand tended to be influenced by industry, whereas nowadays the customer needs and wants lead companies in different directions.

The purpose of the following essay is analysing this behaviour to illustrate some of the advantages and disadvantages of the use of technology.

The industrial revolution has never ended though at times economic recessions have slowed it down. The present day is sometimes referred to as “Age of Automation” and has major effects on economies of relevance to marketing management. (D. Foster & J. Davis, 1994)

Although the Collins Dictionary (1982 edition) defines technology as “the total knowledge and skills available to any human society for industry, art, science”, it is difficult concept to define in a single sentence.

Technology is the technical means people use to improve their surroundings. It is also knowledge of using tools and machines to do tasks efficiently. (J. Harrington 1991)

Technological developments also have wide reaching effects on economic and marketing activities. Consider, for example, the development of computers for commercial purposes in 1951 and their present-day widespread use. New factories, equipment and engineering were needed. New and better-paying jobs resulted and additional marketing facilities and concepts were required to sell, lease and distribute the machines and their associated software. New markets were created for magnetic tape, disc, paper and other supplies. New facilities were needed for the training of technicians and there was increased interest in knowledge. (D. Foster & J. Davis, 1994)

Companies providing credit services were able to expand and speed up their operations. Design engineering of all kinds (cars, planes, capital equipment and major industrial products, etc.) could be done more quickly. Production methods could be simulated and the most appropriate selected, thus improving manufacturing efficiency. Enquiries, reservations and confirmations for travel and hotel facilities could be provided very quickly and more efficiently. (Chernatony, 1992)

The modern car and public conveyances improved the transport infrastructures and helped to create major cities and increase leisure and business travel. Trucks expedited the delivery of goods. The modern aircraft speeded up internal and international travel. Planes also improved the transportation of goods internationally, necessitated new material handling methods and reduced the damage and pollution of goods in transit and losses due to pilfering and other reasons. Satellite communications revolutionised international communication links. The availability of instant colour TV transmissions from remote parts of the world extended consumer interests into learning more about these world areas and stimulated interest in long-distance travel and holidays. (D. Foster & J. Davis, 1994)

All of these and many others contributed greatly to the growth of economies and in marketing opportunities for business. Marketing executives cannot ignore the effect of technological changes. (Harrington, J., 1991)

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There is some evidence to suggest that dominant firms may protect their existing market shares and status quo by either keeping new ideas secret or denying entry to firms with a newer technology. Maclaurin (1950) detailed how major communications firms in the United States (Western Union, Postal Telegraph and American Telephone and Telegraph) resisted the development of radio, preferring instead to buy up competitors and to enter into restrictive agreements. They also attempted to frustrate Marconi’s new technology by refusing to connect its overseas service to Post Office telegraph lines. Blair (1972, pp.230-2) added other similar cases in the rubber, shoe-making machinery and golf clubs industry.

New technology you need to differentiate a product, for example, the addition of Internet and e-mail features on a mobile phone. The Economist (1999) noted that Procter & Gamble had been successful in differentiating many of its products through new technological features. Examples of this included the Swiffer mop that captured dust, and the Nutridelight orange drink, which had a special formula to allow iodine to co-exist with certain vitamins and minerals, and allowed children to gain weight. (Lipczynski, J., Wilson, J., 2001)

Not only is technology the key to economic growth, for many products it is the competitive edge in today’s global markets. The ability to develop the latest technology and to benefit from its application is a critical factor in international competitiveness of countries and companies. (Hoyer, Wayne D., MacInnis Deborah J., 2001)

Three interrelated trends will spur demand for technologically advanced products. First there is an expanding economic and industrial growth in emerging markets, second there is the liberalization of Eastern Europe and third the privatisation of government-owned industries.

The economic development of Japan and many Asian countries have been in a state of rapid economic growth over the last 25 years. Japan has become the most advanced industrialized country in the region, while South Korea, Hong Kong, Singapore and Taiwan (the ‘four tigers’) have successfully moved from being cheap-labour sources to industrialized nations.

As a market economy develops in the Newly Independent States (former republics of the USSR) and other Eastern European countries, new privately owned businesses are creating a demand for the latest technology to revitalize and manufacturing facilities. The big emerging markets (BEMs) are estimated to account for more than €1.3 trillion ($1.5 trillion) of trade by 2010.

These countries are demanding the latest technology to expand their industrial bases and build modern infrastructures. Telmex, a €3.6 billion ($4 billion) joint venture between Southwestern Bell, France Telecom and Telefonos de Mexico, has invested hundreds of millions of dollar to bring the Mexican telephone system up to the most advanced standards. Telmex is only one of scores of new privatised companies from Poland to Patagonia that are creating a mass market for the most advanced technology. (P.R. Cateora, P.N. Ghauri, J.L. Graham, 2000)

Consumers in Western cultures are fascinated by technological advances. More consumers than ever before believe that computers, VCRs, ATM machines, answering machines, car phones, and fax machines, not to mention the internet, improve the quality of their lives. Even low-tech products like fruits and vegetables are improved through the process of genetic engineering. (Schultz, D.E., 2000)

Technology with features that work automatically is increasing in popularity because such features make it easier for the consumer to operate equipment. (S. Samu, H.S. Krishnan, R.E. Smith, Jan. 1999)

For example with, compared with older software, computer software is now more often designed to make the product do more and be more user-friendly. Thus consumers appear to value technology more for what it can do make life easier than for the technological advance per se-making technology an instrumental rather than a terminal value. (Hoyer, MacInnis, 2001)

From an international business and management perspective, the central debate in globalisation focuses on Levitt’s (1983) and Ohmae’s (1989) thesis that international firms can only survive by developing global strategies. Central to Levitt’s argument is the view that intensified competition and technology developments will drive companies to operate globally ignoring national boundaries. Thus, firms who seek to get closer to their customers or seek cost/differentiation advantages through economies of scale, labour specialisation or greater market share through penetration/concentration in international markets and are encouraged by globalisation forces. The general assumption which shaped Levitt’s (1983) writing was that because of the driving forces of globalisation, markets, consumers and customers were becoming more similar and ‘homogenised’ – thus requiring organisations to develop global marketing, production and corporate strategies which cross national boundaries. However, in developing global market strategies, there is considerable dissent concerning the need for standard, as opposed to clearly differentiated, strategies for ‘going global’. Other globalisation debates centre on the heterogeneity of world markets, consumers, and customers – implying the need for differentiated marketing orientations and strategies to respond to cultural diversity and complexity (Trompenaars, 1993; Hofstede, 1980).

Nevertheless, technological changes are sometimes so rapid that we have trouble keeping up with them, resulting in a renewed emphasis on simplicity or at least on managing complexity. This trend is reflected in the rise of retail concepts like the Body Shop, which sells natural personal care products, as well as a revived interest in classical music and untreated packaging materials like glass, cartons, and paper. (Hoyer, Wayne D., MacInnis Deborah J., 2001)

Because the variety of goods and services has increased dramatically, the consumer is constantly confronted by decisions. There is a greater choice, but there is also the inherent problem that it’s almost impossible for the consumer to be completely informed. When change was slower and there were fewer products on the markets, there was more time for consumers to research, test and experiment, and so to make a more informed choice. ()

But on the other side the consumers are better educated. They know what they want and how to go about getting it. Instant access to information on the Internet has made it easier for consumers to research and compare services and products. The U.S. Bureau of the Census found out that 48 million Americans have used the Internet for this purpose and more than 14 million have made a purchase online. ()

The growth of the World Wide Web is only the tip of the information technology iceberg. Today, for less than $1000, a consumer can buy a computer with Internet access. Suddenly consumers can literally shop the world for products and services. They are not limited by space or time to fill their wants and needs. How dramatically is this changing the marketing arenas in which most organizations operate? Just look at what Amazon.com has done to the retail book business. It has literally made every book currently in print available to consumers. It has made logistics and information technology, not retail locations and store ambience, the keys to book-selling success. Online trading is rapidly becoming commonplace. (Schultz, 2000)

In the 18-24 year old group, penetration rates are approaching 90 per cent in the US and have already exceeded that figure in Sweden. In most countries, the fastest growth of Internet penetration is among the senior population. For example, in the UK, Internet penetration among seniors grew by 35 per cent from Quarter 2 to Quarter 4 in 2001. Text messaging is by far the most popular facility used by consumers on their mobile phones, for all groups. On average, less than 10 per cent of consumers currently use their phones for other purposes. Optimise Web marketing strategies Target Internet audiences more effectively identify future investment opportunities. ()

The Internet is an exciting innovation whose popularity continues to rapidly increase. As consumers use the Internet, the increase in their control may result in changing expectations of their interactions with businesses in general. The accumulation of successful experiences in obtaining information and negotiating terms during active, self-initiated and self-controlled online interactions may lead consumers to expect more responsiveness and control over offline marketing interactions. ()

Consumers worldwide are not the same, and the differences in consumer behaviour between countries are increasing. Because all aspects of consumer behaviour are culture-bound, and not subject merely to environmental factors but integrated in all of human behaviour, there is an increased need to identify and understand this integration and its impact on global marketing and advertising. ()

As the boundaries continue to merge between brick-and-mortar retailers and online companies, in terms of true market share, the long-term frontrunners most likely will be the companies that have integrated strategies, not just online-only approaches. Interest in buying traditional consumer technologies online is expected to grow by a minimum of 135 percent in the next two years and by a maximum of 439 percent according to CEA. In terms of dollars, Internet sales of traditional consumer technologies could reach an estimated $14 billion by the end of 2001 at the low end representing 13 percent of annual industry sales, and as much as $25 billion (24 percent) at the high end. (Loffler, Stevens, 2000)

The impact of digitalisation on businesses and their marketing and communication activities has been so immense that we seem scarcely to have scratched the surface of the changes it will create. Just look at the impact of digitalisation on Eastman Kodak, the photography giant. Eastman Kodak, for all intents and purposes, invented, developed, and brought to market the entire field of consumer and pleasure photography. Using the basics of films, paper, and chemicals, Kodak built a global business in photography and, in spite of though competition from Fuji and others still controls more than a half of the world’s sales of film and developing. (Schultz, 2000)

The technological developments of the last years influenced not only the buying behaviour of all customers worldwide, it has also a big impact on all economic and marketing activities. Production with the use of advanced technology can be done more quickly, and companies try to protect their market shares by preventing the access of firms with a newer technology. For differentiation and improvement of existing products the firms need the use of technological advances as in the case of Procter & Gamble, which has been very successful in recent years. Many countries like Japan and other Asian countries complete their economic growth while using technologically advanced products.

Consumers of all nationalities are affected by technology. Not only their lives have improved through the use of Internet and mobile phones, technology has also a wide impact on areas like engineering or infrastructure.

T. Levitt states that our world is becoming a common market, on which people regardless of the place they live in, desire the same products.

Rapidly changes are important for the progress of the humanity but it also creates confusion. The consumers are confronted with a lot of daily decisions, which makes it difficult to react quickly.

The digitalisation of businesses is extensive; so it is still not possible for us to estimate in which directions it will develop.

BIBLIOGRAPHY

Cateora, Philip R., Ghauri, Pervez N., Graham, John L., (2000) International Marketing, European ed., McGraw Hill Publishing Company
Davis, J., Foster, D., (1994) Mastering Marketing, Macmillan
Harrington, J., (1991) Organizational structure and information technology, Prentice Hall
Hoyer, Wayne D., MacInnis Deborah J., (2001) Consumer Behavior, 2nd

Ed., Houghton Mifflin Company

Krishnan, H.S., Samu, S., Smith, R.E., “Using Advertising Alliances for New Product Introduction: Interaction between Product Complementarity and Promotional Strategies, “Journal of Marketing”, Jan. 1999
Schultz, D.E., (2000) Communicating Globally – An integrated Marketing approach, Macmillan Business