Digital Marketplaces Unleashed
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45.4.1 Consumer
The word consumer will summarize people independently if they intend to use a service or buy a product or not or have or haven’t done it already. The indicator of a consumer is the presence in the area of the INS despite his intention to be there.
Most of the consumers try to get information of the location or are curious to use a new service like an INS‐app. Some just want to be entertained. Some like hunting coupons. After having installed the app the consumer may look for opportunities like free services (complementary transportation, free WLAN, access to lounges, etc.). Other consumers have the intention to find services or products to satisfy an actual demand (e. g. a coffee, gifts, or to buy s.th. for immediate use etc.). When the customer wants to buy a distinct product or product group, he may want to find and compare similar products and their prices. After having identified the distinct facility (e. g. a certain shop), it is mostly required to get there comfortably. Often this is not feasible using static signatures since the number of possible destinations are too high. This is the point where the INS‐app has its largest leverage for customer satisfaction. The consumer gets a personalized route and get a pleasurable feeling of being understood and being guided by the “hosting landlord”. However it also has the largest risk to lose the customer as a buyer when the INS does not work reliably or lacks in usability.
After having reached the final destination, a feature to enable home delivery is really appreciated by the consumer. When buying clothes, different colors that are not available in the shop but in a central store are also required.
45.4.2 Retailer or Chain Store
The retailers are eager to make consumers to buyers or even to patrons. They aim to increase the number of potential consumers in their shop or in their online‐shop. They try to have a big conversion rate from potential customers to buyers. They try to increase the visit frequency of patrons and to increase the check (revenue per buy) by up‐selling or cross‐selling. Therefor they also like customers possessing purchasing power.
In other words, retailers aim for everything that increases their revenue. However an INS‐app facilitates to get information about the customer. In most cases a registration is necessary in which the customer has to at least release his e‐mail address. He also has to commit the terms and conditions for the use of the system that includes the commitment of the Data Privacy Statement. This enables the retailer to perform marketing campaigns to get customer retention and loyalty. Marketing campaigns may be issuing newsletters, sending special offers or coupons. The retailer can also send messages to the consumer when he is approaching the shop to get him into the shop. These messages are most effective when personalized. However this form of real‐time marketing is only in its infancy.
45.4.3 Mall Manager
The MM plays a special role. He is the only one who is able to integrate an IPS and to provide the position data to retailers or consumers. The business generation model of the MM is either to provide good services to attract consumers to increase their number to attract retailers that pay high rents for shops in the attractive mall. MMs often apply a retail‐revenue dependent part of the rent. In these cases the MMs are also interested in increasing the overall revenue of all shops within his mall. He additionally aims to attract solvent buyers to his mall.
However the MM has to avoid that retailers cannibalize their shop revenue by moving transactions to their online store or lose the costumer to online shops of the external e‐tailers. In this case the achievable rent for the mall manager decreases.
Mall managers also try to manage their shop portfolio to make the mall attractive to customers. They also try to position the different shops to optimize the revenue. By collecting customer movements and dwell and waiting times, the MM is the only one who is able to analyze customer behavior in his overall mall. He is then able to optimize the mall and can also advise the retailers to optimize their portfolio or their shop set‐up. He also may sell consumer data or consumer positions (IPS‐data) or behavior to refinance his infrastructure investment. But he needs to mind personal‐data‐security‐compliance. He also need to orchestrate the requirements of the different shops regarding pop‐ups of special offers. He also has to govern digital marketing campaigns. Otherwise sending too many messages annoys the customer and may led him to de‐install the app. At the end of the day the MM is the hub of the spoke and has to be the “highlander” to run and to develop the overall system in a multi‐win manner, which is a real challenge.
45.4.4 Possible Measures
Malls are usually equipped with a WLAN infrastructure. This needs to be optimized regarding indoor navigation (completeness of illumination and spatial distribution). Then a mobile‐app needs to be developed accompanied by a marketing campaign to get the app onto potential customers’ UDs. Afterwards a beacon‐based IPS‐solution needs to be implemented. The app needs to be extended accordingly. In parallel a stakeholder community needs to be established to understand the requirements of the shop‐owners and to communicate the benefits of an INS. Additionally online‐shops of the retailers may be already in place. Afterwards the MM may decide to implement either an app of app solution or to implement a “mall‐shop‐solution” and to implement interfaces to the other systems (the vision is “virtual mall solution”). Since most of the malls don’t have an IT‐department or in cases where they have one(e. g. big airports) but not having the expertise in IPS/INS, malls need to mandate and to partner with a professional IT‐Integrator. Additionally a solution for operating and maintaining the systems as well as for the further development needs to be established.
However, the implementation of an IPS/INS‐solution for malls that will generate a significant business benefit is extremely complex. It needs an extensive financial investment upfront and permanent management attention. The implementation and the operation need a cooperation on all levels (management, process, people and technology) as well as an excellent communication between all involved parties and participants. The risks of such a venture are crucial. Therefor the risk mitigation is mandatory and will be discussed in the next section.
45.5 Implementation Risks and Mitigation Thereof
When the first shop owner in a mall starts about or even thinks about introducing beacons in his shop, it is time to start thinking about the implementation of mall‐wide IPS/INS. Only the MM is able to implement a mall‐wide INS infrastructure. Unfortunately it is also necessary to provide an app which runs on different smartphones. Both need a significant up‐front investment by the mall. This can be refunded by usage contracts or by increasing the rent after tenant changes. This risk is not mitigable because it is an entrepreneurial decision by the MM.
The technology still isn’t a commodity. Therefor an integrator needs to be mandated who has already proved his expertise by reference projects and that his offered solution is able to fulfil the requirements. It needs to be decided if a prime contractor is applied or if the disciplines of indoor positioning and integrating the multichannel part (implementation and integration of app, website, online‐shop) should be split into two specialized providers. The IPS is very technical whereas the INS is very end‐user related, especial the front‐end app.
The vertical integration starting from the physics of radio waves over mathematical methods and technology interfaces up to the GUIs for the end‐user, combined with the retail and marketing processes in the back‐office of the vendors is very complex. Therefor an “Enterprise Architect” is mandatory to oversee the overall architecture to assure that all components fit together seamlessly. Otherwise the solution does not work properly and won’t be accepted by the customer and make the investment void.
The user acceptance of the solution is very critical. Only if numerous potential consumers use the solution and generate new revenue the ROI will be achieved. To gain custome
r satisfaction a continuous improvement process needs to be implemented that involves the customers. Requirements of the customers need to be discussed between managers, IT‐personnel, as well as IT architects and vendors to consequently improve the solution. Additionally the vendor market and the activities of the competitors need to be traced to be able to react timely on market developments in this field in an appropriate manner.
Another risk is that the actual WLAN/beacon technology may be disrupted by other upcoming technologies. This risk is not mitigable because it is unforeseeable. Another sensor or positioning technology may have such a progress to be able to provide a better or cheaper solution than the actual one. It may also be a risk that large smartphone vendors introduce new possibilities or standards for their product or prevent using the sensors for IPS. This may induce a rapid depreciation of the investment for the already implemented solution.
Another risk is the hitchhiking of the IPS‐infrastructure by other online retailers. Since the IDs of beacons and WLANs are often detectable the retailer who has an app with the detecting and transmitting features is able to detect that the customer is in a mall or in a certain shop. Doing so he is able to push an offer to the customer to prevent him buying in the shop but initiate to buy in his online shop. To prevent this hitchhiking an encryption and a frequent change of the IDs are required.
As already mentioned in the preceding section, the aims of the vendors may lead to conflicts since the consumer can only be in one shop at a time. So one vendor aims to get the consumer in his shop whereas the other vendor tries to keep the consumer in his shop as long as possible. This coopetition of the different shops may lead to a confusing situation for the consumer e. g. by receiving too many push notifications containing offers or coupons. The MM has to be the mediator by managing the app and the marketing campaigns in cooperation with all shops. In the future it may be that shop owners become shareholders of their mall for this reason. The other possibility is to form informal committees or formal subsidiaries to manage this complex issue. This is somehow comparable with the Prisoner’s Dilemma [13]. At the end it is better to work together instead of aiming towards individual victory and in the end lose more than initially gained.
45.6 Conclusion
This paper has shown, that implementing Indoor Position Systems is still a technological challenge due to the necessity to combine different technologies. The indoor positioning‐technology is on the slope to becoming mature. The horizontal and vertical business and technology integration is extremely complex and needs excellent multidisciplinary teams. However the increasing number of already implemented systems by early adopters proved the concept regardless of a bunch of areas for improvements.
There are different possibilities to develop an indoor navigation system based on an indoor positioning system to give the customer the possibility to find his way to his gate. Depending on the target user group you need to decide carefully how the user interface should be designed. Sole indoor navigation does not have a direct payback but is an excellent customer service. To achieve revenue it is necessary to combine it with business systems offerings e. g. an online‐shop, couponing, loyalty programs etc. Be aware the following subjects are more or less still in an “experimental phase”: Digital Market Malls, Customer Journey Analystics, Real‐Time Marketing, Bluetooth Beacons and Multichannel Markets and need enormous investments with unforeseeable Return‐of‐Invest. Definitely it is crucial to cope continuously from the very beginning with stakeholders’ competing interests.
Anyway, mall managers need to approach the outlined subjects to be able to consult their shareholder regarding their investments, risks and opportunities. At the end of the day it is not the question if, but when and how to start, not to be withdrawn by the competitive online retail market.
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Part XI
Industry 4.0
© Springer-Verlag GmbH Germany 2018
Claudia Linnhoff-Popien, Ralf Schneider and Michael Zaddach (eds.)Digital Marketplaces Unleashedhttps://doi.org/10.1007/978-3-662-49275-8_46
46. Preface: Industry 4.0
Robert Blackburn1
(1)BASF Group, Ludwigshafen, Germany
Robert Blackburn
Email: robert.blackburn@alumni.uni-heidelberg.de
46.1 Introduction
The economy is at the beginning of the next major industrial revolution, and technology is the driver, this time as the heart of both the production of many different products and as a core intelligent component of the things we use every day. Digitization has long since moved into factories, and is now enabling operations in which humans work side by side with intelligent machines.
“Industry 4.0” is the catchphrase widely used to describe digital networking in the manufacturing industry. Industry 4.0 is the fourth industrial revolution after the mechanization of production in the 18th century, the electrification of production and the introduction of assembly lines in the late 19th century, and, finally, the automation of production beginning in the 1970 s and continuing ever since. This fourth revolution is set to r
aise automation to a new level, marked by the unstoppable march of information technology through all areas of industry, also known as the Internet of Things. Now businesses are gearing up to invest almost a trillion dollars a year in the digitization of production according to a global study by PricewaterhouseCoopers based on answers from managers of more than 2000 companies in nine areas of industry.
Over the last two to three years, many companies across all industries, including the world’s leading chemical company – BASF –, have made major strides in this transformation process. Innovative developments in fields of artificial intelligence, virtual reality or smart factories, to name only a few, are already showing great promise in execution. It is clear that Industry 4.0 is and will remain a major business and societal topic for the foreseeable future, and not only in the chemicals industry. In my experience from leading both Boards of Directors as well as performing senior executive roles in leading high tech businesses, and now at BASF, I have seen how digital technologies have become part and parcel of serving customers around the world, optimizing a vast global supply chain, logistics operations and information services operations. Even though these technologies are often behind the scenes, they impact our lives every day and are blazing a trail for Industry 4.0. We recognize the potential of digital technologies to advance every part of a company, especially in areas such as logistics, engineering, production, procurement, supply chain, marketing and sales.