CHAPTER 2
Online marketplace analysis:
Micro-environment
Introduction
Online marketplace is complex and organizations
should carefully analyse the market context in
which they operate.
Understanding an organization's environment is
a key part of situational analysis.
Situational analysis refers to a collection and
review of information about an organisations’
external environment and internal resources and
processes in order to refine its strategy.
Environmental Scanning and Online
Marketplace Analysis
Environmental scanning is the process of continuously monitoring and analyzing
events in an organization’s environment which have implications for planning.
Online marketplace analysis helps to define the nature of the competitive market.
Organizations need to ‘sense and respond’ to the rapid changes in customer
behavior.
Through online platform such as Facebook and Google
E.g. see how online media sites have increased in popularity .
Example of Environmental Scanning
Hotel A Hotel B
The Digital Marketing Environment
Involves two key elements of business environment:
Micro-environment Macro-environment
Focusing on the players Consists of external
which shape the forces which can
immediate trading significantly affect
environment organizational success.
E.g. economic
E.g. Customers need
condition, legislation,
and wants,
technology
competitors,
development, political
intermediaries and
intervention.
suppliers.
Elements in Micro-Environment
Customer
Competitors
Suppliers
Online marketing intermediaries
1. Customer Analysis
Consumer behavior
From micro-
analysis can be
environment
considered from 2
perspectives,
Understanding the perspectives:
customers are
consumer behavior.
important actors in a
1. Demand analysis
company’s immediate
2. Digital consumer
trading environment.
behavior.
Customer Analysis
Demand analysis Digital consumer behavior
Marketers need to access the
Understand the needs,
level of customer Internet
characteristics and digital
access and activity for
experiences of target
different market and the
consumers.
online market share.
Customer Analysis
Internet access
Consumers
Evaluating demand
influenced by using
analysis
the online channel
Customer analysis Purchased online
Digital consumer
Demographic
behavior (Customer
characteristics
characteristic)
Customer Analysis
There are 3 factors that affect the demand of online business:
Consumers influenced by Purchased online
Internet access using the online channel
(digital influence) (consumer transaction)
• Marketers must review • How online media • Consumers will
access and usage of the influenced consumer purchase products or
Internet channel at behavior. service vary according
many different • E.g. consumers to the product or service
geographical levels. research products and type.
• E.g. In UK, statistic services online, but they • Factors that may affect
reported that 55% of may buy through offline purchased online may
household had access to • E.g. refers to many include product
the Internet. website to search characteristics,
information (brand familiarity and
website, review website) confidence.
Customer Analysis (Example of Internet
Access and Internet Influence in Malaysia)
Customer Analysis (Purchased Online)
Customer Analysis
Understanding the nature of customers is
fundamental to marketing practice and it is
important.
Customer Marketers need to analyze on the customers’
demographic characteristics e.g. gender, age or
characteristic
income for market segmentation.
This analysis is important as part of the
segmentation of different groups within target
market. E.g. female are more active Internet
users.
Customer Analysis
Persona analysis Customer scenario
Further understanding on
customer characteristics in
situational analysis,
Is a ‘thumbnail’ description
marketers can refer to 2
of a type of person.
techniques: customer A set of tasks that a
Used in segmentation and
scenario and persona particular customer wants to
advertising and improving
analysis. do in order to accomplish his
web site design.
or her desired.
E.g. characteristics, needs
and motivation
Example of Persona
• Persona 1 – George: George is a 45 year old violin teacher who
has used the Internet for less than a year. He accesses the
Internet from home over a broadband connection. He has never
purchased online before, preferring to place orders by phone.
• Persona 2 – Georgina: Georgina is a 29 year old ad exec who
has been using the Internet for 5 years and uses her Macbook,
iPad and Android phone to access the web - whatever is to hand.
Example of Scenario
For an online bank, scenarios might include:
New customer – opening new account
Existing customer – transferring an account
online
Example of Web Persona for First Time
Buyer
FIRST TIME BUYER: Penny Edwards, Age: 27, Partner: Ben,
Location: North London, Occupation: Sales Assistant
2. Competitors Analysis
For any marketer, it is important to monitor competitor use of Internet marketing
for acquisition and retention customers.
Need to understand the structure of competitive market and competitors'
behavior.
A strategy in conducting competitors analysis is benchmarking.
Competitor Analysis
• Make comparison of digital
marketing approaches of
an organization’s service
Competitors within a market.
benchmarking • Review what are their
strengths, their
weaknesses, their
planning, market share.
Example of Benchmarking
Competitor Analysis
Marketers also
need to review Developed by
threats arising in
the e-business era Michael Porter in
using competitive 1980.
forces model.
Involve 5 main
competitive forces.
The Impact of Internet on Competitive
Forces
Bargaining power of Bargaining power of
buyers suppliers
5 competitive forces
The increase in customer
power and knowledge is the Company can reduce cost
biggest threat posed by and increase supply chain.
electronic trading.
e.g. customer evaluate
product and share with
others
The Impact of Internet on Competitive
Forces
Threat of substitute
Barriers to entry
products and services
5 competitive forces
The greatest threat occur
For traditional companies,
where digital
new online entrants have
product/service fulfillment
been a significant threat for
can occur over the Internet.
retailers selling products
Online channel replicating
such as books.
an existing service.
E.g. traditional book
E.g. online legal
retailers is threatened by
subscription music services.
Amazon.com
The Impact of Internet on Competitive
Forces
Intensity of rivalry
5 competitive forces
The Internet has
encouraged the
commoditization of more
products, making it harder
to differentiate between
product offers.
3. Suppliers
Suppliers have
Key issues include the
Suppliers deliver goods significant impact on
effect of suppliers on
and services a the value of the quality
product price,
business needs to of the product or
availability and
carry out its activities. service delivered to the
features.
end users.
4. Online Marketing Intermediaries
MARKETING ONLINE INTERMEDIARY
INTERMEDIARIES SITES
Firms that help a company
to promote, sell and Connecting Internet users
distribute its product or with product information
services.
E.g. franchise system is a
part of marketing e.g. Google and Yahoo
intermediaries to actual Trip Advisor.com
corporate McDonalds in US.
New Channel Structures
Channel structure
describe the way a A company selling
manufacturer or products my have a
E.g. wholesalers and
selling organization longer distribution
retailers
delivers products or channel involving
serviecs to the more intermediaries.
customers.
Example of Traditional Channel Structure
New Channel Structures
The Internet offer a means of By interacting directly with
bypassing some of channel customers via Internet,
partners. manufacturers would have
Refers to “cutting out the opportunity to change the
middleman”. retail channels.
Example of Online Channel Structure
Search Book E-
Portal
engine online mail/text
END OF CHAPTER 2
