Google+ Consumer Psyche: Now or Never

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Thursday, January 15, 2009

Now or Never

Now or Never: How Companies Must Change to Win the Battle for Internet Consumers

The hype and market valuations surrounding certain Internet stocks may lead one to conclude that the e-commerce race is over--or nearly so. Clearly, the Internet has caught traditional companies off guard, giving the more nimble dot coms a huge head start. But the race is far from over, says Mary Modahl, a vice president at Forrester Research. In Now or Never, she argues that we are in the first year of a "ten year transition in the way consumers shop and save," and that winning in the Internet space not only requires identifying consumers that are most likely to take their shopping online, but exploiting the new and different business models made possible by online commerce.

Modahl believes that conventional demographics, which segment populations according to their income and education, is a poor predictor of online behavior. As an alternative, she advances Forrester Research's work on "technographics," which measure consumers' attitudes toward technology. Forrester has found that 52 percent of the population is optimistic about technology and is "marching happily towards online shopping," and she shows how companies can better target their marketing strategies to meet this growing legion of consumers. In addition, Modahl considers the "post-Internet competitive environment," which she thinks will be "far more fluid and responsive to changes in supply and demand." Using examples of traditional industries that have had their business models turned upside down by Internet economies--newspapers, travel agencies, and brokerages--Modahl offers ways that the old guard can better cope with technology change, channel conflict, and their own inertia toward this new marketplace.

Modahl, an analyst at Forrester Research, has spent the past several years researching the impact of the Internet on business, using questionnaires, focus groups and interviews. To make sense of the marketplace, she has developed a concept she calls "Technographics," an approach that examines and ranks computer users by their comfort level with technology and how likely they are to use the Internet. This scheme yields three basic users: Early Adoptees, Mainstream Users and Laggards. These groups can be further broken down into such subgroups as "Handshakers, successful professionals with low technology tolerance"; "Gadget Grabbers, lower-income consumers focused on tech-based entertainment"; and "New-Age Nurturers, affluent believers in technology for family and education." Understanding this segmentation model, argues Modahl, is vital for companies eager to remain profitable. Asked how companies should organize their Internet efforts, Modahl says the answer "depends on a company's consumer Technographics, on the speed and nature of business model change in their industry, and on the ability of the organization to fund Internet set-up costs." Writing with the authority gained from her research as well as common sense from her viewpoint as an online consumer, Modahl offers persuasive arguments for both Internet startups and existing bricks-and-mortar companies to rethink their approach to online service.
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