Slide 1.
Chapter 2
The Internet
micro-environment
Situation analysis
Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009
Slide 1.2
Learning objectives
• Identify the different elements of the Internet
environment that impact on an organisation’s
Internet marketing strategy
• Complete an online marketplace analysis to
assess customer, intermediary and competitor
use of the Internet as part of strategy
development
• Evaluate the relevance of changes in trading
patterns and business models enabled by digital
channels
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Slide 1.3
Questions for marketers
• How do I complete a situation analysis as part of
planning for digital marketing?
• How are the competitive forces and value chain
changed by the Internet?
• How do I assess the demand for Internet
services and customer behaviour?
• How do I compare our online marketing with that
of competitors?
• What is the relevance of the new intermediaries?
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Figure 2.1 The Internet marketing environment
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Figure 2.2 An online marketplace map
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Understanding customer search
behaviour
See [Link]
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Figure 2.3 A model of the Internet marketing conversion process
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Figure 2.4 An example of a conversion model
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Figure 2.5 Model showing conversion between the digital channel and traditional channels during the buying process
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Figure 2.6 i-to-i showing prominent
phone numbers ([Link]
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Evaluating demand levels
• 1. Level of Internet access
– Includes type of access – broadband and mobile
• 2. Consumers influenced by using online
channel:
– Includes understanding type of sites which have
influence – see Fig 2.2. Marketplace analysis and
Figure 2.9 Information sources
• 3. Transact online
– Includes different types of transactions, not just sales,
e.g. support, forum comments, etc.
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Figure 2.7 Variation of broadband penetration in different countries
Source: OECD ([Link]
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Figure 2.8 Usage of mobile phones in Europe and US (data for 3-month period
ending August 2006)
Source: M:Metrics, 2006
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Figure 2.9 Information sources used to select retailers
Source: EIAA (2008)
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Figure 2.10 Percentage (by category) who bought online after researching online
Source: EIAA (2008)
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2.11
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Figure 2.12 Development of experience in Internet usage
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Consumer characteristics
• Demographics:
– Age, gender, social group
• Webographics
– Access methods and times
• Personas:
– Dulux example
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Dulux persona example
• Aims:
– The aim was to position [Link] (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).
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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 25-44 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
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Example personas
• First time buyer.
– 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
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Figure 2.13 Dulux site ([Link])
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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.
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Figure 2.14 Internet usage by businesses in European countries
Source: European Commission, 2008.
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Consumer behaviour models
• 1. Information / experience seeking
behaviour models
• 2. Hierarchy of response buying process
models
• 3. Multi-channel buying models
• 4. Trust-based models
• 5. Community participation models
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Slide 1.27
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 ([Link]) 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.
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2. Hierarchy of response buying
process models
Figure 2.15 A summary of how the Internet can impact on the
buying process for a new purchaser
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Figure 2.16 Initial product search showing e-retailers available
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Figure 2.17 Comet product comparison facility ([Link]): example page
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3 Multichannel buying models
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4 Trust-based models
Figure 2.18 A model of the relationship between different aspects of trust
and consumer response based on the categories of Bart et al. (2005)
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Figure 2.19 Segmentation based on information need and trust
Source: Adapted from Forrester (2006) Teleconference Driving Sales With Segmentation Analyst: Benjamin Ensor of
Forrester Research, February 27th 2006
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Figure 2.20 Benchmark comparison of corporate websites
Source: Bowen Craggs & Co ([Link])
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Figure 2.21 Performance benchmark example for Canadian banks
Source: Gomez ([Link]
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Figure 2.22 All Things Green ([Link])
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Figure 2.23 Jack Ma, CEO of Alibaba, explains his business strategy
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Figure 2.24 [Link], a European price comparison site
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Porter’s five forces (or use Fig 2.3)
Bargaining
powers of
customers
Power of Threat of
The business
suppliers subsitutes
Extent of rivalry
Threat of new
between
entrants
competitors
Chaffey, Internet Marketing 4th Edition, © Pearson Education Limited 2009
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Figure 2.25 Value creation model
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Figure 2.26 Two alternative models of the value chain: (a) traditional
value chain model, (b) revised value chain model
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Figure 2.27 Lonely Planet online shop ([Link]
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Figure 2.29 Disintermediation of a consumer distribution channel showing: (a) the
original situation, (b) disintermediation omitting the wholesaler, and
(c) disintermediation omitting both wholesaler and retailer
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Figure 2.30 Screentrade insurance intermediary ([Link])
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Figure 2.31 From (a) original situation to (b) disintermediation or (c) reintermediation or
countermediation
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Figure 2.33 Different types of online trading location
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Figure 2.34 Alternative perspectives on business models
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Countermediation
• Creation of a new intermediary
• Example:
– B&Q [Link]
– Opodo [Link]
– Boots [Link]
[Link]
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2.34
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Publisher revenue models
• 1. Revenue from subscription access to content.
• 2. Revenue from Pay Per View access to documents.
• 3. 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’.
• 4. 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.
• 5. Revenue from Sponsorship of site sections or content types (typically
fixed fee for a period) –
• 6. 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.
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Figure 2.35 Business-to-business publisher EConsultancy ([Link])
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Figure 2.36 Peer-to-peer lending exchange, Zopa ([Link])
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