Chapter VIII

Virtual Market Space

 Learning Objectives

1 2 3 4
Explain virtual Identify the best Discuss virtual Understand the
market space practices used organization functions and
by web retailers structure of
virtual
organization
New Virtual Business Opportunity

World-wide economy is increasingly based on information

and intangible value. This evolution causes virtual forms
of market space.

Virtual market space is the platform to bring together

supply and demand as well as technology and economic
requirements to optimize the employment of resources
and administration as well as selling process.
Virtual market-
spaces
The information space

The communication space

The distribution space

The transaction space

….
+ A firm activities in some or all of these virtual
marketspaces should be aimed at increasing
overall profitabilitu which can be achieve either by
increasing revenue:
+ Increasing customer base
+ Increasing the amount of purchase
+ Increasing the purchase frequency
+ Or decreasing cost
+ Reducing new service/product development
cost
+ More effective/ efficient promotional spending
+ More effective/ efficient inventory
replenishment
+ Business reengineering
+ Greater capital efficiency/effectiveness
The Information
Space
+ The key aim in exploiting the information space is to move
prospective customers further along the sales cycle by
converting interest into action:
+ Providing the basic information that customers would
need such as product information, company contact
information, areas that ithe company services and what
visitors can do at the site.
+ Building up buyer confidence in the company by having
a professional looking website and providing
information that will enhance the forms credibility
+ Providing information that will move visitors further
along the sales cycle such as contact information for
the nearest-real world retailer, camparisons with
competitive offerings or third party evaluations of the
company’s offering
The Information
Space
+ Content Isn’t Just for Customers:
+ Prospective employees
+ Investors
+ Supply chain partners
+ The media
+ The company’s own employees
The
Allows for companies to exchange information
with the various stakeholders in their business:
suppliers, customers, and strategic allies.
Communication Ø Email as a communication channel

Space Ø Follow-on Marketing with mailing lists

Ø Creating communities
The Distribution Space

The virtual distribution space consist of new distribution

channels for variety of products and services.

The first category of products includes those products that can

be efficiently distributed by means of internet.

The second category includes such services as text, voice, or

video-based consulting and training
The Transaction
Space
+ The virtual transaction space consist of new
internet-based channels through which economics
agents can exchange formal business transactions
such as orders, invoices and payments; this can
range from simple email and online order forms to
online ordering using a credit or debit card and
online accounts
 A brochureware site essentially
provides little more than product
information with a phone number or
Brochureware address for contact--- electronic
versions of the company’s real-
worlds brochures
Pitfalls of On-line + Delivery

Sales + Channel Conflict

 Affiliation with an Real world
Strong branding Established High Promotional
Traffic Site Program

Reduce the Cost Reduce the Cost

of Acquiring Reduce first-time of Servicing

Best Practices of
Purchase Risk
Customers Customers

Web Retailers Offer Valuable

Ordering Quick Order
Processing
Providing Order
Status
Applications Information

Develop
Incentives for Easier Site
Repeat Navigation
Purchases
Virtual
Organization
A network of independent firms that
join, often temporarily, to produce a
service or product.

To provide innovative, high-quality

products or services instantaneously
in response to customer demands

Virtual office, virtual teams and

virtual leadership.
 Partners in virtual organization share risk, costs and rewards in
pursuit of a global market. The common characteristics of these
organizations include a purpose that is motivated by specific
market opportunities, world class core competence, information
networks, independent relationships and permeable boundaries.

Represent structures that are motivated by specific market

Characteristics opportunities. Once the alliance has been formed and the
opportunity has been exploited, partners may move on to new
partnerships and alliances.
of Virtual
Organization Advance information technology also becomes an important
element and key to success of virtual organization

Members of the virtual organization, in turn create a network of

interdependent relationships. These relationships require firms to
be much more dependent on one another demanding
unprecedented level of trust.
 Virtual teams
Virtual teams are defined as a group of
people who interact through
interdependent task guided by a common
purpose.
Performs work across space, time and
organizational boundaries connected by
interactive communication technologies

These team often stay together to

perform its episodic task. (the team
dissolves when the project is finish)
Virtual Leader
+ The new leadership skills required to lead in
the virtual environment includes the ability to
manage a network of interdependent firms,
to design virtual operations, to create and
sustain virtual relationship with internal as
well as external constituents, to support
virtual teams, and to keep virtual teams
focused.