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The Internet micro-environment

Competitive Advantage...

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

Source: European Interactive

Advertising Association
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

Competitive forces
B a r g a in in g
p o w e rs o f
c u s to m e rs

Pow er of T h re a t o f
T h e b u s in e s s
s u p p lie r s s u b s itu te s

E x t e n t o f r iv a lr y
T h re a t o f n e w
b e tw e e n
e n tra n ts
c o m p e t it o r s
Value creation model
New channels
Location of trading
• Virtual marketplace
• Electronic marketplace

• What representation do company have

Types of
Different types of online trading location
Commercial arrangements

brokerrred deal
Negotiated deal (

barter Fixed price sale

Pure markets
( (
(shares dealing online
Alternative perspectives on business models
Online customers

Demand Online
Demand analysis & conversion modeling

Understanding the
Potential and actual The extent to which
Volume of visitors they convert to
To site the outcomes
Assessing customer demand
Need to assess:

– Access to Internet (ACCESS)

– Proportion of customers influenced by channel


– Proportion of customers who buy direct (BUY)

Conversion of potential visitor to actual visitor to repeat

• Awareness efficiency
• Attractibility efficiency
• Contact efficiency
• Conversion efficiency
• Retention efficiency
A model of the Internet marketing conversion process
Online buyer behavior


Usage location

Access drive

Connection speed

Usage type

Usage level
Customer persona & scenario analysis

Developed for
Thumbnail description different personas
Of a type of person 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

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


• 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
‘Explorer’ ‘Hunter’ ‘Tracker’
Browsing Researching Completing

Define Select
‘What’s out
requirements supplier
there’ (enquire)

Assess Destination
‘Inspire purchase
supplier (buy)

Undirected, exploratory Directed goal-oriented

Hierarchy of Response Models
Competitors & suppliers
• 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