The increasing popularity of social networking is leading to a big shift in business perspective.
In the typical model, businesses attempt to gain the best deal, merchants try to achieve the most profit, and buyers look to secure the lowest price. But from now on, thanks to the undeniable influence of social media, businesses can no longer continue solely with the same practices they have employed in the past.
"This is the impact of social media," said Manoo Ordeedolchest, Chairman of ICT Policy, Sri Pathum University. "It has brought all communities together with its interactive technology and it is hard for businesses to gain profit from this."
The businessmen have to change their attitudes from zero sum to positive sum, Manoo said, noting that it's not only the sellers and buyers who stand to benefit, but also society as a whole. He cited the example of trading goods packed by plastic bags as an unsustainable practice.
Manoo said that the emergence of social networking technology represents a huge change for business, and it is different to when e-business emerged, as Manoo reasoned that the concept of business transformation had not yet been realised when this began.
Citing the National Statistical Office (NSO), there were around 10 million Internet users in Thailand, or 15 percent of population, in 2007. The Internet community is expanding and this year the projected number of Internet users is some 17 million.
As of this year, baby boomers (born before 1959) account for 43 percent of the population, and Manoo considers many of this demographic to be illiterate in ICT. This proportion will decline to 27 percent by 2030.
The new generations - X, Y and Z - account for 21, 23 and 12 percent of the 2010 population, respectively, and these ratios of these groups are projected to be 17, 19 and 20 percent, respectively, by 2030.
"Generations X, Y, and Z will play a greater role in society and they are not amazed by ICT or social networks," Manoo said, predicting that by 2030, more than a third of the whole world population will be connected to the Internet and social networks.
Manoo Ordeedolchest
"We will have a single unified market of more than three billion people; a virtual market via social networks," he said, citing the United Nations' estimate that the world population will reach nine billion by 2040.
"Over the next 20 years, these three to four billion people will be the voice by which your business lives or dies," said the Software Park board chairman.
Citing Stephen Vargo and Robert Lusch, Manoo noted that the business concept has changed from its traditional 4P to innovation and services by focusing more on knowledge and skills. In the virtual unified market, the voice of customer is all-powerful.
"There will be three billion customer voices that businesses must listen to more and adjust themselves to," he said, adding that business must view services rather than goods as the focus of economic and social exchange.
Business must take a customer-centric approach, which Manoo called the "outside-in" strategy. A customer-centric approach focuses on services, no matter what the business sells, while goods become appliances for service delivery, and to conduct business effectively, companies must gain a thorough understanding of ICT, because is the tool that will support this approach.
"Businesses must change their mindset from goods-dominant logic to service-dominant logic," he said, pointing out that businesses don't depend on products, rather the service of that product.
Virtually every product today has a service component. ICT is driving business toward a service-based economy.
A service-based economy can refer to one or both of two recent economic developments. One is the increased importance of the service sector in industrialised economies, while IT is of relative importance to service in a product offering. That is, products today have a higher service component, referred to as the "servitisation of products".
"Servitisation" is an attempt to transform products to services. "You still sell the products, like cars, kitchenware, and whatever, by are selling them in a service context," said Manoo.
Traditional service businesses, such as hospitality, still exist, and with this comprehension, Manoo said, it implies all economies are service economies and all businesses are service businesses.
ICT is driving the whole economy to the era of service-based economy, by using innovation to transform business. Business must thus find the way to be scalable, via social media.
Manoo gave Thai massage as an example which of a physical service, and then discussed how to scale it and how to use the Internet to employ service-dominant logic. The first condition of servitisation is to digitise the product so that people around the world can see it. Digitising Thai massage could be done in the form of animation, article descriptions, and publicising via social networks.
"If we understand this, we can digitise everything on social websites and subsequently we can scale," Manoo said.
"Thus, if business acknowledges this concept, we can view the outcome of positive sum. The strategy is trying to change the transaction to a relationship. Once we are in the social network, the services must be personalised and customised."
He noted that in the past, personalised service and customised service required a high investment cost, but now businesses can do this at a low cost by employing ICT and social media.
Innovation requires a range of knowledge by which organisations have to find external resources. The supply chain and value chain is being transformed. Manoo pointed out that the success of a business depends on "co-creation" between customers and sellers.
People empowerment (customers and people) is important, said Manoo, pointing out that the US is moving towards this track as the government's policy is for "citizen empowerment". This can lead to sustainability.
Pointing out the food processing business, in which Thailand is a world leader, Manoo noted that from now on, the voice of the customer will be ever-powerful.
Once a consumer posts on Facebook that he has experience a problem when consuming Thai products, others may also post about their own similar problems, which can be highly damaging to a business.
The government thus must be more serious in controlling the quality of the Thai products, as otherwise this business will be unsustainable. The products must ensure, not only to sellers and buyers, but also to the world inn general, that they are both healthy and environmentally friendly.
For Thailand to pave the way for this direction, there must be collaboration between business, the education sector and the government to carry out research and development on service-dominant logic and the impact of ICT on business transaction to understand the direction of business transformation.
Businesses should understand the ICT infrastructure and how to market their services and communicate with customers via Facebook and other social media. "If the executives have no knowledge of IT, how can they lay down a strategy?" asked Manoo.
M Interaction managing director Siwat Chawareewong noted that marketers have applied social media as a source of information-gathering to aid purchasing decisions. However, he said this does not work in every case.
Siwat cited the examples of Oishi Green Tea, Pringles, Coke and Pepsi as those that have successfully undertaken a different marketing approach.
Pringles uses a video clip to present a story surrounding the brand. Coke does not talk about the specifications of its goods, but rather about its brand and fan club. Pepsi attracts viewers by aligning with an existing event or image that consumers are already interested in, for example, Academy Fantasia.
Siwat said marketing on social media must consider product categories because consumers exhibit different types of behaviour when making purchasing decisions.
He broke this behaviour into four categories: high involvement/rational decision; low involvement/rational decision; high involvement/emotional decision' and low involvement/emotional decision.
The group of high involvement/rational decision covers high-price products such as cars, condominiums and computers, for which consumers require detailed product information and after-sales service to help them make a decision.
The group of low involvement/rational decision covers less expensive products such as toiletries and snacks. Purchasing decisions are often influenced by advertising, promotions and other activities.
The high involvement/emotional decision group covers non-essential products that consumers choose more consciously, for example designer clothes, and so marketers should pursue a more intimate style of promotion. An after-sales services is also important.
The low involvement/emotional decision group covers impulse purchases.
"Reputation is shaped by what people say about you, rather than what you say about yourself," Siwat concluded.
Relate Search: Manoo Ordeedolchest, Chairman of ICT Policy, Sri Pathum University, Citing the National Statistical Office
