Sixth Annual Netcentricity Conference
The Future of the 21st Century Digital Enterprise

According to Eric Clemons, you can learn a lot about marketing in the digital economy by drinking beer. Well, technically, you can learn a lot by examining the way people decide which beer to drink. Clemons, professor of operations and information management at the Wharton School, University of Pennsylvania, was a keynote speaker at the Smith School’s 6th Annual Netcentricity Conference on April 28, 2006. Business leaders and business school faculty from around the United States attended the event, which featured talks and panel discussions focused on “The Future of the 21st Century Digital Enterprise.”

Clemons used the "digitalization of beer" to describe how worldwide information networks support a level of product differentiation unknown in the past, and how that extreme differentiation requires a different mindset for marketing.

Key to this mindset is understanding the power possessed by the average consumer. In the digital economy, everything is an information good—even beer. The Internet has made it possible for consumers to know everything about a product—where to get it, how much it costs, and exactly what its attributes are. Clemons described several Web sites reviewing beers; in perusing those sites he discovered a stout so highly regarded by its creator that Clemons couldn’t just purchase the beer—he had to interview for it. “What a great, great world,” Clemons laughed.

Because consumers have the choice of so many kinds of beer (or ice cream, or Power Bars, or golf balls) companies must change the way they think about market share. In the past, says Clemons, companies pursued the “fat spot,” a large segment of satisfied—if not devoted—consumers of the company’s product. Now companies can be profitable in the “sweet spot”—a smaller segment of customers who are wildly enthusiastic about a company’s product. Companies should not be concerned about getting many people to like their product, but about getting some people to love their product, Clemons advised.

“It’s not about one product being better,” said Clemons. “It’s about being better for each customer. There is no best.”

Clemons used the proliferation of microbrews as an example to describe how “sweet spot” marketing can maximize profits. “Informed consumers are unwilling to pay any more than they have to for commodities, and are willing to pay a big premium for what they truly want,” says Clemons. “If you get the product right, you won’t have to worry about advertising. The customer will find you.”

The Netcentricity Conference offered participants a vision of the future of digital business from multiple perspectives, with many sessions and panel discussions. The introduction of a new Internet channel to sell products provides many opportunities, but many challenges as well. The University of North Carolina's Jay Swaminathan described to attendees how to effectively use both the traditional and digital channels to buy and sell products and services. By the year 2010 about 40 percent of households will be buying online, said Swaminathan. Different pricing strategies are needed to maximize profits when you have multiple channels and it is detrimental to a firm to let the Internet channel act independently, or to blindly match prices in all channels, said Swaminathan.

Other speakers included: Ritu Agarwal, the Smith School's Robert H. Smith Dean's Chair in Information System, who spoke on the opportunities and challenges associated with digitizing the health care system and focuses specifically on technologies that can used in care delivery facilities. Peter Cramton, University of Maryland, spoke on the many types of online auctions and bidder behavior.

Panel discussions on online communities and markets, the evolution of the modern supply chain, and auction design for the digital enterprise were conducted by members of the Smith School's distinguished operations management and information technology faculty.