The Internet micro-environment

“We have only two sources of competitive advantage:

1. the ability to learn more about our customers faster than the competition and

2. the ability to turn that learning into action faster than the competition. ”

-- Jack Welch, CEO of GE, outlining his competitive strategy for the next century

Competitive Advantage...

Source: European Interactive Advertising AssociationSource: European Interactive Advertising Association

Number of B2C online Purchases in Europe during January-June 2007

The Internet marketing environment

Micro Environment

• The Marketplace

• Customers

• Suppliers

• Competitors

• Intermediaries

The Marketplace

Refers to the interactions between all the elements

Competitive forces

Value chain

New channel

Location of trading

Commercial agreements

New business &revenue models

Power ofsuppliers

Bargainingpowers ofcustomers

Extent of rivalrybetween

competitors

Threat ofsubsitutes

Threat of newentrants

The business

Competitive forces

Value creation model

New channels

Location of trading

• Virtual marketplace

• Electronic marketplace

• What representation do company have

Types of marketplace

location

Different types of online trading location

Commercial arrangements

Negotiated deal(www.ec21.com)

brokerrred deal(www.screentrade.co)

auction(www.ebay.com)

Fixed price sale(www.dominos.com)

barter(www.intagio.com)Pure markets

(shares dealing online

 Alternative perspectives on business models

Customers

Online customers

Demand analysis

&

Conversion modeling

Online

Buyer

behavior

Demand analysis & conversion modeling

Understanding the Potential and actual

Volume of visitorsTo site

The extent to which they convert to the outcomes

Assessing customer demand

Need to assess:

– Access to Internet (ACCESS)

– Proportion of customers influenced by channel (CHOOSE)

– Proportion of customers who buy direct (BUY)

CONVERSION MODELS

Conversion of potential visitor to actual visitor to repeat visitor

• Awareness efficiency

• Attractibility efficiency

• Contact efficiency

• Conversion efficiency

• Retention efficiency

A model of the Internet marketing conversion process

Online buyer behavior

webographics

Usage location

Access drive

Connection speed

Usage type

Usage level

Customer persona & scenario analysis

Thumbnail descriptionOf a type of person

Developed for different personas

Set of tasks a customer wants for desired outcome

Models of online behavior

• Lewis & Lewis (1997)

• E-Consultancy (2004)

• Hierarchy of Response Models

Lewis & Lewis (1997)Five different types of web users

• Directed information seekers: only go for information, not typically plans for buying

• Undirected information seekers: like to browse, mostly clicks on banner advertisements

• Directed Buyers: purchase specific products online, compares the features

• Bargain Hunters: find offers, known as compers

• Entertainment seekers: look for enjoyment and contests

E-Consultancy (2004)

• On the basis of UK retail sites

• Classification on the basis of online shopping behavior

Select supplier(enquire)

‘Tracker’Completing

‘Hunter’Researching

‘Explorer’Browsing

Directed goal-orientedUndirected, exploratory

Destination purchase

(buy)

Definerequirements

Assess supplier

capabilities

‘Inspireme’

‘What’s outthere’

Hierarchy of Response Models

Competitors & suppliers

Intermediaries

• Are the firms that help a company to promote, sell and distribute its products/services.

• Provides info about the destination sites

• Can be independent or owned

• Also known as cybermediaries