chapter 2 the internet micro-environment

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.1

Chapter 2The Internet micro-environment

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.2

Learning objectives

• Identify the different elements of the Internet environment that impact on an organisation’s Internet marketing strategy;

• assess competitor, customer and intermediary use of the Internet;

• evaluate the relevance of changes in trading patterns and business models enabled by e-commerce.

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.3

Questions for marketers

• How are the competitive forces and value chain changed by the Internet?

• How do I assess the demand for Internet services from customers?

• How do I compare our online marketing with that of competitors?

• What is the relevance of the new intermediaries?

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.4 The Internet marketing environment

Figure 2.1 The Internet marketing environment

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.5 Porter’s five forces

Power ofsuppliers

Bargainingpowers ofcustomers

Extent of rivalrybetween

competitors

Threat ofsubsitutes

Threat of newentrants

The business

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.6 Alternative models of the value chain

Figure 2.2 Two alternative models of the value chain: (a) traditional value chain model, (b) revised value chain model

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.7 A value network

Figure 2.3 Members of the value network of an organisationSource: Adapted from Deise et al. (2000)

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.8

Disintermediation

Figure 2.4 Disintermediation of a consumer distribution channel showing: (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.9

Example – Vauxhall

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.10 Reintermediation

Figure 2.6 Reintermediation process: (a) original situation, (b) reintermediation contacts

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.11

Countermediation

• Creation of a new intermediary

• Example:– B&Q www.diy.com– Opodo www.opodo.com– Boots www.wellbeing.com

www.handbag.com

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.12 Alternative online trading locations

Figure 2.7 Different types of online trading location

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.13

Example – Barclays B2B

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.14

Example - Priceline

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.15 Different business model perspectives

Figure 2.10 Alternative perspectives on business models

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.16

Example - Mondus

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.17

Assessing demand

• Need to assess:1. Access to Internet

2. Proportion of customers influenced by channel

3. Proportion of customers who buy direct

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.18 Global population with Internet access

Figure 2.12 Percentage of global population with Internet access(based on Nua and Cyberatlas compilations at www.nua.ie/surveys and www.cyberatlas.com)

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.19 Global variation in Internet access

Figure 2.13 Global variation in number of PCs per hundred population and percent Internet access in 2000Source: ITU (www.itu.int)

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.20 UK adoption of different media

Figure 2.14 UK rate of adoption of different new media, base c. 4000 GB adults aged 15+, December 2001Source: e MORI Technology Tracker, January 2002. See http://www.e-mori.co.uk/tracker.shtml for details

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.21 Internet user demographics

Figure 2.15 Summary of current demographic characteristics of Internet users, base 1673 GB Internet users aged 15+, January 2002Source: e MORI Technology Tracker, January 2002. See http://www.e-mori.co.uk/tracker.shtml for details

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.22 Variations in access to new media – social group

Figure 2.16 Summary of variation in different access to new media according to social group, base 4222 GB adults aged 15+, January 2002Source: e MORI Technology Tracker, January 2002. See http://www.e-mori.co.uk/tracker.shtml for details

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.23 Different types of Internet access location

Figure 2.17 Different types of Internet access locationSource: The Internet Monitor, BMRB, www.bmrb.co.uk

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.24 A pyschographic segmentation

Figure 2.18 Psychographic segmentation for Web usersSource: Netpoll (www.netpoll.net)

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.25 Percentage of online shoppers by product category

Figure 2.19 Percentage of online purchasers by product categoryNote: There are 9.9 million online shoppers (54% of Internet users aged 15+)Source: The Internet Monitor, BMRB, November 2001 (www.bmrb.co.uk)

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.26

Percentage of businesses with Internet access

Figure 2.20 Percentage of businesses with Internet accessNote that results are weighted by business size and that some countries are included for different yearsSource: DTI, 2001

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.27 Businesses that identify suppliers online

Figure 2.21 Percentage of businesses that identify suppliers online by business sizeSource: DTI, 2001

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.28

Competitor benchmarking

• Activity– You are e-commerce manager

within easyJet– Which criteria would you use to compare a

competitor’s online offering? Group them under five or six headings

– Conduct an assessment of your services against competitors such as Buzz, Ryanair and British Midland

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.29

Hitwise competitive ranking

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.30

Intermediaries

Table 2.5 The most visited sites in the UK

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003

OHT 2.31

Example - Kelkoo