CHAPTER 2 The Internet micro-environment

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.

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?

The Internet marketing environment Figure: The Internet marketing environment

Porter’s five forces

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

A value network Figure: Members of the value network of an organisation Source: Adapted from Deise et al. (2000)‏

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

Example – Vauxhall

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

Example - Priceline

Assessing demand Need to assess: Access to Internet Proportion of customers influenced by channel Proportion of customers who buy direct

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

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

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

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

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 2002. See http://www.e-mori.co.uk/tracker.shtml for details

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

A pyschographic segmentation Figure 2.18 Psychographic segmentation for Web users Source: Netpoll (www.netpoll.net)‏

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 (www.bmrb.co.uk)‏

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

Businesses that identify suppliers online Figure 2.21 Percentage of businesses that identify suppliers online by business size Source: DTI, 2001

Hitwise competitive ranking

Intermediaries Table 2.5 The most visited sites in the UK