1. Chapter 2 Online marketplace analysis: Micro-environment

2. Learning objectives
Identify the elements of an organisation’s online marketplace that have implications for eveloping a digital marketing strategy
Evaluate techniques for reviewing the importance of different actors in the microenvironment: customers, intermediaries, suppliers and competitors as part of the development of digital marketing strategy
Review changes to business and revenue models enabled by digital markets.

3. Questions for marketers
What are our capabilities for understanding our online marketplace?
How relevant is the behaviour of the actors in the micro-environment to the future of our business?
How do I complete a marketplace analysis and how does this inform our digital marketing planning?
How are customers’ needs changing as digital platforms develop and what are the implications of such changes?
How do I compare our online marketing with that of our competitors?
How do we find suitable intermediaries at the planning stage of a digital marketing strategy?

4. Scenario for marketplace analysis
You have been appointed by Blackcircles.com as digital marketing manager.
Your task is to create a digital marketing plan for the next year and beyond
What would you need to review about the online marketplace to help create your plan?

5. Figure 2.1 Blackcircles.com

6. Figure 2.2 The Internet marketing environment

7. Figure 2.3 An online marketplace map

8. Figure 2.4 Correlation between search volume in Google Trends and retail
sales volume
Source: Chamberlin (2010)

9. Example searches – implications?
Table 2.1 Top 10 search terms for all retailing and for apparel

10. Tools for marketplace analysis
Google Agency Tookit
Key Tools:
Alexa: or
Hitwise:
Nielsen:
Comscore: Press releases
IMRG:

11. Issues in analysing the online marketplace
Table 2.3 The micro-environment: issues for digital marketers

12. Figure 2. 5 A model of the Internet marketing conversion process
Figure 2.5 A model of the Internet marketing conversion process. It shows key traffic or audience measures (Q0 to Q4), first-time visitors (Q2) and repeat visitors (Q2R) and key conversion efficiency ratios

13. Figure 2.6 An example of a conversion model

14. Evaluating demand levels
Level of Internet access
Includes type of access – broadband and mobile
Consumers influenced by using online channel
Includes understanding type of sites which have influence
Transact online
Includes different types of transactions, not just sales, e.g. support, forum comments, etc.

15. Figure 2.7 Model showing conversion between the digital channel and traditional channels during the buying process

16. Figure 2.8 Research Online Purchase Online example
Source: Google, 2010

17. Figure 2.9 Variation of broadband penetration in different countries
Source: OECD (

18. Figure 2.10 Consumer Internet Activities
Source: (accessed 31 May 2011)

19. Figure 2.11 Development of experience in Internet use

20. Figure 2.12 Reasons for and for not purchasing over the Internet in the UK
Source: Chamberlin 2010

21. Consumer characteristics
Demographics:
Age, gender, social group
Webographics
Access methods and times
Personas:
Dulux example

22. Figure 2.13 Internet use by businesses in European countries
Source: European Commission, 2009

23. Dulux persona example Aims:
The aim was to position Dulux.co.uk (Figure 2.13) as “the online destination for colour scheming and visualisation to help you achieve your individual style from the comfort of your home”. Specific outcomes on the site are to browse colours, add colours to a personal scrapbook, use the paint calculator and find a stockist. Further aims were to ‘win the war before the store’i.e. to provide colour help tools that can help develop a preference for Dulux before consumers are in-store and to prompt other ideas to sell more than one colour at a time.
Specific SMART objectives were to increase the number of Unique Visitors from 1M p.a. in 2003 to 3.5M p.a. in 2006 and To drive 12% of visitors to a desired outcome (e.g. ordering swatches).

24. Figure 2.14 Dulux site (www.dulux.co.uk)

25. Target audience variation
Based on research, it was found that the main audience for the site was female with these typical demographics and psychographics:
Would be adventurous women, online
Lack of confidence with previous site:
- Gap between inspiration (TV, magazines, advertising) and lived experience (Large DIY sheds,nervous discomfort)
- No guidance or reassurance previously available currently on their journey
Colours and colour combining is key
Online is a well-used channel for help and guidance on other topics
12 month decorating cycle
Propensity to socialise
Quality, technical innovation and scientific proficiency of Dulux is a given

26. Example personas First time buyer. Part time Mum. Single Mum.
Penny Edwards, Age: 27, Partner: Ben, Location: North London, Occupation: Sales Assistant
Part time Mum.
Jane Lawrence, Age: 37, Husband: Joe, Location: Manchester, Occupation: Part time PR consultant
Single Mum.
Rachel Wilson, Age: 40, Location: Reading, Occupation: Business Analyst

27. Business consumer characteristics
Variation in organisation characteristics
size of company (employees or turnover)
industry sector and products
organisation type (private, public, government, not-for-profit)
application of service (which business activities do purchased products and services support?)
country and region.
Individual role
role and responsibility from job title, function or number of staff managed
role in buying decision (purchasing influence)
department
product interest
demographics: age, sex and possibly social group.

28. Consumer behaviour models
Information / experience seeking behaviour models
Hierarchy of response buying process models
Multi-channel buying models
Trust-based models
Community participation models

29. 1. Information / experience seeking behaviour models
Directed information-seekers. These users will be looking for product, market or leisure information such as details of their football club’s fixtures. They are not typically planning to buy online.
Undirected information-seekers. These are the users, usually referred to as ‘surfers’, who like to browse and change sites by following hyperlinks. Members of this group tend to be novice users (but not exclusively so) and they may be more likely to click on banner advertisements.
Directed buyers. These buyers are online to purchase specific products online. For such users, brokers or cybermediaries that compare product features and prices will be important locations to visit.
Bargain hunters. These users (sometimes known as ‘compers’) want to find the offers available from sales promotions such as free samples or competitions. For example, the MyOffers site ( is used by many brands to generate awareness and interest from consumers.
Entertainment seekers. These are users looking to interact with the Web for enjoyment through entering contests such as quizzes, puzzles or interactive multi-player games.

30. 2. Hierarchy of response buying process models
Figure A summary of how the Internet can impact on the buying process
for a new purchaser

31. Figure 2.16 Initial product search showing e-retailers available
Source: Google, 2011

32. Figure 2.17 Currys’ product category page (www.currys.co.uk)

33. 3 Multichannel buying models
Table 2.5 The impact of channel experience on customer relationship

34. 4 Trust-based models
Figure Segmentation based on information need and trust
Source: Adapted from Forrester (2006) Teleconference Driving Sales With SegmentationAnalyst: Benjamin Ensor of Forrester Research, 27 February 2006

35. Competitor benchmarking
Activity – which aspects of a competitors online marketing activity should be reviewed?

36. Suggested benchmarking activities
Benchmarking tools:
See:

37. Figure 2.20 Benchmark comparison of corporate websites
Source: Bowen Craggs & Co (

38. Figure 2.21 Taobao (www.allthingsgreen.net)

39. Types of portal
Table 2.8 Portal characteristics

40. and (c) disintermediation omitting both wholesaler and retailer
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

41. (c) reintermediation or countermediation
Figure From (a) original situation to (b) disintermediation or
(c) reintermediation or countermediation

42. estate agents to sell their property
Figure Example of a channel chain map for consumers selecting an
estate agents to sell their property

43. Porter’s five forces

44. Impact of the Internet on the five competitive forces
Table 2.7 Impact of the Internet on the five competitive forces

45. Figure 2.25 Different types of online trading location

46. Figure 2.26 Alternative perspectives on business models

47. Publisher revenue models
Revenue from subscription access to content.
Revenue from Pay Per View access to documents.
Revenue from CPM display advertising on site (e.g. banners ads, skyscrapers or rich media).
CPM stands for ‘cost per thousand’ where M denotes ‘Mille’.
Revenue from CPC advertising on site (pay per click text ads)
CPC stands for ‘Cost Per Click’. Advertisers are charged not simply for the number of times their ads are displayed, but according to the number of times they are clicked.
Revenue from Sponsorship of site sections or content types (typically fixed fee for a period) –
Affiliate revenue (typically CPA, but could be CPC)
Affiliate revenue is commission based, for example if you display links to Amazon books on your site, you can receive around 5% of the cover price as a fee from Amazon. Such an arrangement is sometimes known as Cost Per Acquisition (CPA). Amazon, and others offer a tiered scheme where the affiliate is incentivised to gain more revenue, the more they sell. Hence this is often called a pay-per-performance ad deal.

48. Figure 2.27 Revenue model spreadsheet
Source: SmartInsights.com