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Digital disruption

The digitalization affects entire business models and thus the underlying functions in the value chain. For example, the marketing function has changed dramatically with a much stronger focus on online and mobile marketing and less of a focus on traditional advertising. Beyond that, new social media have arisen, creating a stronger interest in social networks. Assortment and pricing decisions have become more flexible in online environments. Logistics have become of ultimate importance to compete, as customers demand to be served night and day with fast home-deliveries. These logistics streams have also become more complicated as products have to be readily available and customers return many products. This also implies that the marketing and logistic functions need to cooperate more in order to deliver superior customer value, whilst at the same time limit costs. The digital disruption not only involves new online opportunities, but is expected to evolve in which new trends, such as the Internet of Things and data-driven smart products and services (i.e. a refrigerator which automatically orders at an online retailer).

Yet, another development due to this digitalization is the increasing amount of data available within business. Data has become very massive and has moved from weekly, to daily, to hourly data on a large number of transactions of millions of customers. These data can be used for targeting customers, pricing decisions, assortment optimization, prediction of demand, optimization of logistic streams, et cetera. However, having access to this data also puts pressure on firm executives raising the bar to justify their budget decisions.

The increasing digitalization is here to stay, and will thus have dramatic effects on how business will operate in a long-term sustainable manner. Importantly, this digitalization also requires a strong interdisciplinary focus. Within firms we observe a stronger use of multi-disciplinary approaches to deliver more customer value and to work more efficiently. Also from a research side, stronger interdisciplinary focus is required.

Themes

  • Advent of Digital and Disruptive Business Models

With the advent of the internet and new developments, such as the Internet of Things, new business models arise that often disrupt existing markets. The way firms create and capture value has fundamentally changed. Digital competitors make use of new platforms and tools to undercut competitors, establish closer relationships with customers, and disrupt the usual way of doing business. Incumbent firms in many industries (health care, education, entertainment, retail, hospitality, financial brokerage and investing) face the challenge of how to adjust their old business to harness the power of breakthrough digital technologies. New business models often involve relationships among three principal actors; buyers, such as an E-commerce platform, suppliers and end-customers, implying a reciprocal value-exchange relationship between each actor in the triad. In these triads, products and services can move from suppliers towards consumers directly. When outsourcing services to suppliers and sellers the overall performance of buying organizations is highly dependent on suppliers’ performance, and poor performance from the side of these subcontractor immediately affects customer satisfaction. Not only in distribution and logistics changes are needed, but also in customer relationship management, the purchasing and contracting in triadic relations, and the development and pricing of new products and services.

  • Marketing Mix Effectiveness in Digital Environments

Marketing invests strongly in attracting and keeping customers. It is of crucial importance to understand the effectiveness of new digital marketing instruments and how this effectiveness is changing due to developments of new devices and media. Specific attention is being devoted to new media and channels and the application of these channels. For example, the use of search engine advertising and the effects of new social media has gained attention.

  • Adoption and Use of New Smart Products and Services

In the past we have observed a stronger usage of self-service channels and customers have been migrated to new E-service channels. The development of new smart products, will be a next development in this context, where these products may take over functions executed by customers (i.e. automatic ordering of products). Moreover, in a service context employees may be replaced by robots. Organizational and business innovations need to be aligned with those technological innovations. As an important aspect, we see a need to study the potential adoption and usage of these new technologies by employees as well as customers.

  • The Socialization of the Market Place

The upcoming of new social media induces a much stronger influence of social networks on customer decisions. Beyond that specific new online phenomena, such as online customer reviews, have become more prominent. The analysis of social factors in the market place induces the use of new data and new methods, such as agent-based modelling.

  • Using big-data and digital analytics to optimize marketing and logistics

Data has become massive and big data has become a buzz word. Firms look for new methods to analyze these data. At the same time, there are concerns about privacy resulting from these data. From a logistics perspective, poor demand forecasting is one of the main contributing factors for excessive logistics costs. It is not uncommon that the initial ‘pipeline fill purchase’ is much too large due to a lack of sales data on which traditional forecasting techniques are based. Social media data can considerably improve demand predictions and thereby lower logistical costs.

Many e-tailers operate with a main central warehouse located, for instance, centrally in the Netherlands. At the same time, in order to guarantee fast delivery, stocks may be kept at multiple stocking points close to the customers, i.e., at local retailers. This certainly holds for traditional brick-and-mortar companies that have later started online selling. New inventory networks, delivery strategies (from the central warehouse or a local stock point) and policies for internal logistics operations, interacting with large amounts of data, are needed to trade off stocking costs and delivery speed, whilst also taking sustainability and in particular CO2 transport emissions into account.

Last modified:23 May 2018 2.52 p.m.