Digital Marketing. Annmarie Hanlon
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is driven by technology, especially as it becomes smaller, faster and easier to access. Examples of technology-driven digital disruption include:
1995: Amazon disrupted the traditional book-selling market
1997: Netflix disrupted the traditional video-hire market
2008: Airbnb disrupted the accommodation sector
2009: Uber disrupted taxi services
What is interesting to note is that some disruption takes years to gain scale. As an example, Amazon is heralded as the next new easy-to-use online supermarket, yet it has existed for over 20 years.
Activity 1.2 What's Your Digital Disrupter?
1 Thinking about one of your favourite brands, what innovations could disrupt and change how it works?
2 Describe and assess how disruption would bring benefits and differentiate the brand.
See Template online: Assessment of Disruption
1.5 Internet of Things
The Internet of Things (IoT) (see Key Term) is one factor that has contributed to digital disruption. Understood as connectivity technologies where devices are joined up, the IoT ecosystem relies on sensors such as barcodes and RFID tags (radio-frequency identification) within a WiFi zone. From this it can identify physical properties such as: Are there people in the building? How is your health? Is your heart beating at the usual rate? What's the date on the barcode? What's the thermostat temperature? This is combined with autonomous machines being accessed via a remote control source such as an app on your phone or your wearable device.
Having identified the tags and what's happening means that we are more intelligently using the data. One commonplace example is a Satnav system that finds the fastest way to your destination, suggesting alternatives routes to avoid congestion. Some Satnav systems have greater connectivity where marketing is involved, showing the nearest Starbucks, BP petrol station or McDonald's.
IoT has developed dramatically in healthcare and medical devices, such as pacemakers that can be adjusted while the patient is at home and the cardiac consultant is in their office. This does scare some people (what if it goes wrong?) and there have been rumours about issues with US presidents and their pacemakers being hacked!
In domestic situations we are already witnessing the start of how the IoT is developing, with devices like Google Home and Amazon Alexa that can connect to lighting, heating and security within the house. This means if you leave the house and can't remember if you left the lights on or not, you can check the app and switch off the lights. Equally if you're arriving back late, you can switch on the lights, the heating and the oven 10 minutes before you arrive home.
Figure 1.3 Consumer-centric IoT business models
Source: Verhoef et al., 2017, p. 5
Based on a discussion group, Professor Peter Verhoef and many colleagues explored consumer connectivity and they created a framework for a consumer-centric IoT, as shown in Figure 1.3. This is a simplistic matrix approach where they have used two variables – ecosystems and interactions – and from this identified four business models.
In ecosystems they have noted the idea of open and closed systems. For business model (I), which is a closed system with utility, they used Amazon Echo as the example. It is closed as it is only available in a specific geographic area, it is linked to an individual or family account and it may be passcode protected.
Open networks are available to others, such as the smart meters which are shown in model (II). This means that instead of the requirement to stay at home when the electricity, gas or water meter usage is checked and recorded by an engineer, this could happen remotely from the supplier's office. Model (II) facilitates better energy use as washing machines could be intelligently managed and switched on when there is less power usage on the grid, or timed to complete the wash cycle five minutes before the alarm clock goes off.
The group discussed levels of interaction between business and consumers. Business model (III) is a closed system for use by consumers. In this example, they used Nest, the technology company that enables consumers to connect devices and send commands remotely from an app to switch on the lights, measure the amount of heat, light and power used that month or check the security cameras.
Model (IV) explored consumers interacting with each other on a peer-to-peer basis. So if there is a day in your calendar when you are not using your car, one of your neighbours could rent or borrow it, and their example was Relay Rides, a firm that enables this functionality in the United States, similar to Airbnb, but for cars.
It is an interesting model, which, in a utopian world, would work well, but there may be privacy concerns about sharing your calendar with your neighbours – do you want them to know when you're away or at home all day?
Amazon Echo had challenges when initially launched as children were making purchases via their parents’ Amazon accounts. Amazon has solved this with the option to enter a passcode before confirming purchases. There are additional concerns about the devices being hacked so that snoopers can monitor your conversations. The difficulties ahead may be about the fear of use and potential misuse of systems, rather than the technology.
As the technology evolves and as we become more comfortable with its use and security improves, we could use the IoT in other ways, for example:
Scanning food into the fridge, which will tell you what's needed for the menu that night before sell-by dates are reached – less food waste.
Regular items automatically re-ordered as the supplies run low – better management of household goods.
Changes in health or diet could trigger an automatic request for a medical check-up – proactive healthcare monitoring.
Key Term Internet of Things (IOT)
In a background report from the Organisation for Economic Co-operation and Development (OECD) for a ministerial panel, the authors provided this definition:
IoT refers to an ecosystem in which applications and services are driven by data collected from devices that sense and interface with the physical world. In the Internet of Things, devices and objects have communication connectivity, either a direct connection to the internet or mediated through local or wide area networks. (Working Party on Communication Infrastructures and Services Policy, 2016, p. 9)
Another aspect of the IoT is the industrial internet of things (IIoT). This considers IoT on an industrial scale, where, within towns and cities, different elements are connected, such as traffic lights and pollution sensors, drains and surface water output, outdoor temperatures and heating systems. The typical aspects that contribute to the IIoT are focused on improving energy production, healthcare, manufacturing and logistics. This has become a recognised phenomenon and there is a dedicated Industrial Internet Consortium, founded by organisations including IBM, Intel, General Electric (GE) and other technology companies.
Part of the IIoT is the concept of Smart Cities, which have been described by Yasir Mehmood and his colleagues as a ‘complex ecosystem characterized by the intensive use of information and communications technologies (ICT), aiming to make cities more attractive and more sustainable, and unique places for innovation and entrepreneurship’ (Mehmood et al., 2017, p. 16).
The move towards the smart city concept is only possible with sensors, cameras and mobile devices collecting and sharing data, part of which revolves around big data (see Key Term). The issue is whether you, as a future citizen of big cities, are happy being tracked, monitored and shared through an ecosystem.
There is a dark side to the Internet of Things, which is well described