Social Networks and e-Business: Architecture Implications of Dynamic Niche Markets

Social Networks and e-Business: Architecture Implications of Dynamic Niche Markets

David A. Marca (The University of Phoenix, USA)
DOI: 10.4018/978-1-4666-1619-6.ch011
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Abstract

If prolonged economic downturn causes further mass market evaporation, then future e-Business survival may depend on correctly understanding and selling into niche markets. There are abundant niche markets in electronic social networks. Traditionally, companies have tried to eavesdrop on social networks to create buying relationships with individuals. This mass-market strategy creates no deep understanding of consumer needs and preferences, especially if prolong economic downturn forces consumers to purchase high-customization and low-cost products. Using the Language/Action Perspective, social networks can be understood and analyzed to glean buying intent, preferences, and cost. Using intelligent agents, companies can engage in highly aligned online advertising and transacting to satisfy those intents, preferences, and costs. The architecture for such activity could comprise: a) a real-time customer-based and transaction-based organization, b) highly adaptive offerings that anticipate consumer need, c) an intelligent value-seeking front-end, and d) an intelligent product decision-making back-end.
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Introduction To Social Networks And Online Markets

Social Networks: They are Niche Markets!

The prevailing business thinking around electronic social networks sees their participants in terms of demographic profiles or past buying patterns (Marca, 2010). Today’s e-Business design emphasizes individuals – individual buyers and individual suppliers. There is no business incentive to examine this way of thinking when markets are increasing and product demand grows. However, in the context of today’s evaporating mass markets (Dent, 2008), business survival may well depend on considering the mass market to be dying, and thus focus investments on the abundant niche markets that already exist in electronic social networks. This chapter will discuss a competitive advantage: thinking about electronic social networks as places where underlying intentions are shared through conversations. In other words, electronic social network conversations can be used to identify dynamic, intention-based, niche markets. Correct identification yields immediate buying intent, and sometimes unmet consumer need.

E-Business: Strategic Focus on Niche Markets

Acknowledging and understanding the decline of mass markets is critical for today’s e-Business. Doing so puts into question the prevailing thinking of the business forces that surround an e-Business within the context of expanding mass markets. During the past decade or so, the predominant forces have been: a) declining transactional value, b) displacement due to the emergence of an industry standard solution, c) a shift from commodity- to solution-based selling, and d) displacement due to electronic intermediation. Counteracting these forces used to require an adaptive e-Business strategy that relied on an adaptive end-to-end architecture (Marca, 2006). However, due to reasonably constant (over time) market growth, the adaptation cycle time did not need to be extremely fast. A company could be content to change its e-Business strategy, architecture and product line within “reasonable” time frames.

Architecture Implication #1: High Modularity

“Growing mass-market” thinking naturally leads people to think of buyers and suppliers, and so best-in-class e-Business architectures were often built on carefully combined atomic e-Business connections (Weill, 2001), such as the one shown in Figure 1. But having a focus on connecting individual buyers with individual suppliers has left today’s e-Business architectures unable to seamlessly adapt to maximize the opportunity lying dormant in today’s electronic social networks. To do that, next generation e-Business architectures will need to have new elements: The “front end” of the architecture would have the ability to: a) identify and advertise into the highly dynamic and short-lived niche markets created by electronic social networks, and b) transact with agents representing those electronic social networks. The “back end” of the architecture would have: a) strategically aligned legacy systems and organization, b) value-based e-Business connections, c) a defined intermediation strategy, d) e-Marketing reach and immediacy, and e) ethical, regulatory and privacy rules for trustworthy operation. The remainder of this chapter will briefly discuss these new elements and their architectural implications.

Figure 1.

e-Business Architecture. Distinct Sell-Side and Buy-Side Connections to Address a Mass Market

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