By Fiona Czerniawska, Gavin Potter (auth.)

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And you probably get what you feel to be a pretty reasonable rate of return from the expenditure overall. Yet this model has a serious flaw. If you could manage your marketing budget at a lower level of detail, you would undoubtedly increase the returns that you would achieve. More precise targeting could be made of individual consumers (a topic we cover in depth later on in the book), leading to higher returns. The question is not whether the marketing budget is apportioned inefficiently, but how inefficiently.

We certainly cannot make a robot capable of fooling a human being with its responses. But why are we bothering? Rather than try to get a computer to enter the physical world of the human, why don’t we try to enter the world of the computer? Virtual reality turns this way of thinking on its head: instead of trying to get the computer to enter the human world (walk, talk), we should enter the world of the computer. And this is potentially a much more fascinating world than the one we live in. It is not constrained by gravity or three dimensions, and solid objects can change shape in ways which defy physical laws.

Economies of scale count for nothing in this new virtual environment where physical processes are replaced by information. Not suprisingly, other booksellers have had to respond in kind (playing by Amazon’s rules rather than their own), by setting up their own Web-based outlets. 28 BUSINESS IN A VIRTUAL WORLD From capital requirements to knowledge requirements The only resource that Porter considered, in developing his ideas on barriers to entry, was money. Finance was a scarce commodity which meant that those who had access to it had an immense competitive advantage.

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