Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003 OHT 2.1 Chapter 2 The 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

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 organisation Source: 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 –Opodo –Boots

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 and

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 2000 Source: ITU (

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 GB adults aged 15+, December 2001 Source: e MORI Technology Tracker, January See 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 2002 Source: e MORI Technology Tracker, January See 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 2002 Source: e MORI Technology Tracker, January See 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 location Source: The Internet Monitor, BMRB,

Chaffey: Internet Marketing, 2nd edition © Pearson Education Limited 2003 OHT 2.24 A pyschographic segmentation Figure 2.18 Psychographic segmentation for Web users Source: Netpoll (

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 category Note: There are 9.9 million online shoppers (54% of Internet users aged 15+) Source: The Internet Monitor, BMRB, November 2001 (

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 access Note that results are weighted by business size and that some countries are included for different years Source: 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 size Source: 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