timone NetMarketing
disponibile anche in italiano

Marketing in the internet – as seen from Italy

No. 64 – July 26, 2002

Other articles on similar subjects
are published in English
in the monthly Offline column


loghino.gif (1071 byte) 1. Editorial: Why the web is “slow”

World wide wait, it was nicknamed a few years ago. And that is still the experience with many websites. The “paradox” is that the internet was much faster when the connection speeds were much slower. And with the broadband disease things may get worse.

End-user broadband connections are scarce. In spite of heavy promotion by telecoms and providers (and declared government support) only five percent of the people online in Italy are using “fast internet” services – and very few are interested in buying them in the near future. Broadband penetration is small in most of the world. Even if it suddenly doubled, 90 percent of the people would still be very uncomfortable with services based on broadband. But that is only part of the problem.

We know from research that people using the internet have a perception that many websites are “slow.” That feeling is shared by newcomers and people with years of experience. The reasons have little, if anything, to do with bandwidth.

What matters isn’t “absolute time.” It’s time as perceived by people – and that can vary enormously depending on circumstances. When we are doing something pleasant, minutes, hours or days can be too short. When we are stuck in front of a monitor waiting for some device to do what we expect, a few seconds are more than we can (or should) tolerate.

A website (or another online service) can be “slow” for many reasons. It can be overloaded with pictures and other “heavy” stuff (that can appear slowly on the reader’s monitor for a variety of “bottlenecks” unrelated to the connection speed between the end user and the provider.) But that’s only part of the problem. It’s slow, boring, irritating when it makes us waste time. Because the path to what we are seeking isn’t as direct and easy as we expect. Because it muddles our perception with non-functional graphics, distracting animations, unrelated content, or other disturbing intrusions (including those awful pop-up windows that try to point us in the wrong direction.) Etcetera.

Offering fast, efficient, pleasant connection isn’t a matter of bandwidth. It’s based above all on site architecture, content organization, usability, readability and service. Qualities that aren’t achieved with technical devices or showbiz gimmicks, but with careful, patient, endless dedication to the subtle and wonderful art of human communication.

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loghino.gif (1071 byte) 2. The price dilemma

After many years of debate and discussion (often quite meaningless) about e-commerce – there is till no clear view about a crucial question that was obvious from the beginning. How does selling and buying online influence prices and profits?

For over twenty years (and long before there was widespread use of the internet) there has been serious discussion on the fact that the “balance of power” is shifting in favor of the buyer (both in the case of mass-market consumers and distributors or of large or small companies organizing their purchase systems more effectively.) With expanded net access it was quite obvious, six or seven years ago, that there were greater opportunities for customers to control and compare prices – and that was part of an increasing “customer empowerment.”

That raised an obvious question: will competition turn into a cutthroat price war or will there still be room for quality and service values?

The surprising fact is that there is still no clear answer and the subject is still debated with a variety of conflicting opinions.

An article in the July 2002 issue of Social Trends reported the observations of some American economists, such as Edward Learner who believes that increased productivity generated by the internet may be a reason for declining profit in the ’90s because the net reduces company profits in favor of customer savings. This may indeed have happened in some sectors in the US, such as the hotel business. But another economist, Doug Henton, argues that hotels benefit by using the internet because they fill rooms that otherwise could have remained vacant. There are equally contradictory observations on other industries. More broadly, Florian Zettermayer believes that the internet helps companies in many ways, allowing them to personalize their products and to compete in a wider geographic area. And so on...

There is little, if anything, in these discussions that wasn’t debated in the early days of e-business – and even earlier, in the late Seventies or early Eighties, when there were discussions on the emerging “information age.”

A pretty obvious fact is that the impact of the so-called “new economy” on corporate débacles was not caused by customers demanding lower prices but by financial adventures in a heavily drugged stock market where “customers” (in this case shareholders and employees) were the victims.

Another obvious fact is that (except for a few individual and well developed cases of online business) the picture is still very blurred and confused. Most companies, large or small, still don’t understand if and how they can benefit from online communication – or be hurt by developments that don’t fall into the pattern of their consolidated experience.

While economists and analysts of all sorts fail to agree on anything, the case for a single company is far less complicated and distressing.

The fear of a “price war” could be one of many reasons why companies stay away from a real commitment online and try to “get by” with superficial cosmetic solutions, based on appearance and gimmicks, with no real service or useful content. But avoiding the issue doesn’t solve the problem.

Let’s assume that a company, by offering its products and services online, makes it easier to compare quality and price. Let’s assume that customers find the time to check and think before they buy. If the system works well, there is an advantage for the “consumer.” But tat doesn’t damage the economy – and it isn’t a problem for companies that offer real quality and service at a fair price.

Avoiding the issue, or trying to confuse it, may work for a while. But if companies lose sight of value and service they can run into all sorts of unexpected problems with management and staff that are unprepared to face reality. Competition is a fact in every market that isn’t warped by monopolies or privileges. Competitive advantages are obtained by understanding competition and by using it as a tool for improvement – not by avoiding it.

Is the net a tool for competitive advantage? Of course it is. But simply wedging (or avoiding) “price wars” is rarely an effective solution.

The best way to use networking is not to work on a single factor. A company can improve its efficiency and quality by managing synergies. Improving efficiency, quality and service as well a reducing costs. By doing that before the outbreak of a price war or a market confusion a company is much better prepared to weather the storm and use some of the turbulence to its advantage.

This approach is conceptually simple. But it takes time, commitment, consistency, learning, testing and experimenting. In many companies it implies a change of mentality, organization and process. And a vision beyond the nervous, short-term hipshooting that has become dominant in many environments.

Companies shouldn’t be afraid of “empowered” customers. They should work with them to improve quality and service and encourage choices based on value, not just price. The net (not by itself, but in active combination with all other company activities) is a particularly effective tool for that purpose.


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loghino.gif (1071 byte) 3. The eclipse of common sense

On almost every subject (not only in politics) there is a perennial, and often obscure, debate between people saying that “everything is just fine” (which is obviously not so) and others insisting that “everything is awful and getting worse” (which, unfortunately, is often true – but the issue becomes unclear when positions appear dictated by prejudice, ritual imitation or a partisan viewpoint.)

I dislike the role of Cassandra and I feel even more uncomfortable in the unpleasant position of claiming “I said so.” So let’s get rid of any personal implications – and let me admit that I was wrong on a number of issues. For instance in 1996 I thought that the mindless race to unnecessary complication would come to an end and the pendulum would swing back to simplicity and functionality. (One of several articles on this subject was The Hermes pendulum and the art of lightness.) I was careful enough to avoid a time frame – but the fact is that six years later (and in spite of abundant proof that simple systems work better) the trend isn’t reversed. In practically all fields, but especially in information technology.

But some of my observations did come true. It wasn’t particularly difficult to understand that “exponential” projections were false, that many business plans were based on nonsensical assumptions and that the speculative bubble would deflate. When some of us pointed to those obvious facts we were called “pessimists.” And now we are called, despairingly, “optimists” when we point to the clear and simple fact that there is no “crisis of the internet” and the net is continuing to grow quite vigorously (see the data section on this site.)

In the current state of schizophrenia, it happens quite often that whoever tries to take an unbiased look at facts is called both an “optimist” and a “pessimist.” That doesn’t mean that a “middle course” is the answer, but that what we need is a completely different approach from the dominating hypes and hangovers. Less hysterical, less opportunistic, more practical.

Understanding problems isn’t “pessimism.” Trying so solve them isn’t naive “optimism.” But no problem can be solved without a “whynot” attitude, a determination to find a solution beyond the blinding haze of appearances. There is a serious and increasing need for the management style that was explained in a wonderful little old story – Brown’s Job.

I discuss these problems quite often, with people in all sorts of different roles. All, in one way or another, are perplexed (including those whose “official” position is hagiographic, while in private they are edgy and nervous.) They all, more or less grudgingly, agree that there is too much running around without a clear direction, a basic lack of strategies and realistic objectives. They are all uncomfortable and uncertain about what they are doing and where they are going. Nearly all (and increasingly more often) at the end say something like «we would need a bit of common sense.»

I can’t find an answer to this distressing question. What’s happened to common sense?



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