Slide 2.
Chapter 2
Marketplace analysis for
e-commerce
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.2
Learning outcomes
• Complete an online marketplace analysis to
assess competitor, customer and intermediary
use of digital technologies and media as part
of strategy development
• Identify the main business and marketplace
models for electronic communications and trading
• Evaluate the effectiveness of business and
revenue models for online businesses,
particularly online start-up businesses
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.3
Management issues
• What are the implications of changes in
marketplace structures for how we trade with
customers and other partners?
• Which business models and revenue models
should we consider in order to exploit the
Internet?
• What will be the importance of online
intermediaries and marketplace hubs to our
business and what actions should we take to
partner these intermediaries?
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.4
Online marketplace analysis
• Understanding the online elements of an organization’s
environment as illustrated in Figure 2.1 is a key part of
situation analysis for digital business strategy
development.
• Situation analysis: Collection and review of information
about an organization’s external environment and internal
processes and resources in order to inform its strategies.
• There is also the need for a process to continually monitor
the environment which is often referred to as
environmental scanning: The process of continuously
monitoring the environment and events and responding
accordingly.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.5
Online marketplace analysis
Figure 2.1 The environment in which digital business services are provided
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.6
Environment constraints and
opportunities
Micro-environment
•Customers – which services are they offering via their
website that your organisation could support them in?
•Competitors – need to be benchmarked in order to
review the online services they are offering – do they
have a competitive advantage?
•Intermediaries – are new or existing intermediaries
offering products or services from your competitors
while you are not represented?
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.7
Environment constraints and opportunities
(Continued)
• Suppliers – are suppliers offering different
methods of procurement to competitors that give
them a competitive advantage?
Macro-environment
• Society – what is the ethical and moral
consensus on holding personal information?
• Country specific, international legal – what are
the local and global legal constraints, for
example, on holding personal information, or
taxation rules on sale of goods?
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.8
Environment constraints and opportunities
(Continued)
• Country specific, international economic – what
are the economic constraints of operating within
a country or global constraints?
• Technology – what new technologies are
emerging by which to deliver online services
such as interactive digital TV and mobile
phone-based access?
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.9
A process for Online marketplace analysis
• Analysis of the online marketplace or ‘marketspace’ is a key part
of developing a long-term e-business plan or creating a shorter-
term digital marketing campaign.
• Completing a marketplace analysis helps to define the main types
of online presence that are part of a ‘click ecosystem’ which
describes the consumer behaviour or flow of online visitors
between search engines, media sites and other intermediaries to an
organization and its competitors.
• Figure 2.4 shows the relative importance of different online
intermediaries in the marketplace and the flow of clicks between
your different customer segments, your company site(s) and
different competitors via the intermediaries.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.10
Figure 2.4 An online marketplace map
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.11
Figure 2.5 Google Trends – useful for consumer interest in products
Source: http://www.google.com/trends/.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.12
Review of marketplace channel structures
marketplace channel structures describe the way a manufacturer or organizations delivers products and services to its customers
B2B and B2C interactions between an organisation, its suppliers and its
Figure 2.6
customers
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.13
Disintermediation: The removal of intermediaries such as distributors or
brokers that formerly linked a company to its customers .
Disintermediation :
Disintermediation of a consumer distribution channel showing (a) the
Figure 2.7
original situation, (b) disintermediation omitting the wholesaler, and
(c) disintermediation omitting both wholesaler and retailer
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.14
Reintermediation: The creation of new intermediaries between customers and
suppliers providing services such as supplier search and product evaluation .
Figure 2.8 From original situation (a) to disintermediation (b) and reintermediation (c)
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.15
Counter-mediation
• Countermediation: ‘The advent of e-commerce means that
marketers cannot rely on the online presence of existing
intermediaries – instead they must create their own online
intermediaries.’
• Creation of a new intermediary
• Example:
– B&Q www.diy.com
– Opodo www.opodo.com
– Boots www.wellbeing.com www.handbag.com
– Ford, Daimler (www.covisint.com)
• Partnering with existing intermediary – Mortgage broker Charcol and
Freeserve.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.16
The importance of multi-channel marketplace models
A channel chain shows different customer journeys for customers with
different channel preferences. It can be used to assess (analysing) the
current and future performance of these different customer journeys
Example channel chain map for consumers selecting an estate agent to
Figure 2.9
sell their property
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.17
Business model
Timmers (1999) defines a ‘business model’ as:
An architecture for product, service and information
flows, including a description of the various
business actors and their roles; and a description of
the potential benefits for the various business
actors; and a description of the sources of revenue.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.18
Business model
Business Model Canvas which is a valuable framework for summarizing strategy for
online businesses. The main sections of the canvas in a logical order to consider them are:
1. Value proposition. This is at the heart of what the business offers to its audiences and is
arguably most to important success.
2. Customer segments. Different target audiences the value propositions will appeal to. In
the business model canvas the alternatives recommended are mass market, niche market,
segmented (broken down further) or a range of diverse segments.
3. Customer relationships. The types of relationships that will be formed, for example
self-service, automated services, communities or more personal assistance. Co-creation of
content may be part of this.
4. Channels. The methods by which the organisation’s services will be delivered and the
audiences reached.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.19
5. Key partners. To exploit online and offline value networks ,forming
partnerships gives an opportunity of expanding reach and taking advantage of
existing organisations and online influencers that have built an audience.
6. Activities. Which are the main activities that need to be performed to
deliver the value proposition to develop revenue?
7. Resources. Different types of process and people to complete the activities
to create and deliver the value proposition.
8. Cost structure. Different cost-elements, these should be checked against
activities and resources. Costs are classically broken down into Fixed and
Variable costs and economies of scale.
9. Revenue stream. This is the method by which a business derives income.
Common online options are: ad revenue, subscription fees, sales of physical or
virtual goods or affiliate based commission arrangements. Licensing and
leasing are other alternatives.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.20
Figure 2.10 Business Model Canvas example
Source: Smart Insights. With permission.
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.21
Figure 2.11 suggests a different
perspective for reviewing alternative
business models. There are three
different perspectives from which a
business model can be viewed. Such a
categorization of business models can
be used as a tool for formulating
digital business strategy.
1. Marketplace position perspective.
The book publisher here is the
manufacturer, Amazon is a retailer and
Yahoo! is both a retailer and a
marketplace intermediary.
2. Revenue model perspective .
The book publisher can use the web to
sell direct and Yahoo! and Amazon
can take commission-based sales.
Yahoo! also has advertising as a
revenue model.
3. Commercial arrangement
perspective .All three companies offer
fixed-price sales, but, in its place as a
marketplace intermediary, Yahoo! also
offers alternatives.
Figure 2.11 Alternative perspectives on business models
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.22
Revenue models – Online publisher and
intermediary revenue models
Revenue models: Describe methods of generating income for an organization.
The main types of online revenue model are:
•Subscription access to content: A range of documents can be accessed from a
publisher for a period of time (month or year).
•Pay per view content access:Here payment occurs for single access to a document,
video or music clip which can be downloaded.
•CPM display advertising:CPM stands for ‘cost per thousand’. Site owners charge a fee
according to the number of times ad are served to site visitors
•CPC advertising on site: CPC stands for ‘cost per click’. Site owners charge a fee
according to the number of times they are clicked upon.
•Sponsorship of site sections or content types: typically fixed fee for a period. A
company can pay to advertise a site channel or section
•Affiliate revenue (CPA cost per acquisition or CPC): Affiliate revenue is commission-
based, for example I display Amazon books on my site DaveChaffey.com
•Subscriber data for e-mail marketing
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.23
Figure 2.12 Example spreadsheet for calculating a site revenue model
Note: Available for download at www.smartinsights.com/conversion-model-spreadsheets/
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
Slide 2.24
Figure 2.12 Example spreadsheet for calculating a site revenue model (Continued)
Note: Available for download at www.smartinsights.com/conversion-model-spreadsheets/
Chaffey, Digital Business and E-commerce Management Powerpoints on the Web, 6th edition © Marketing Insights Limited 2015
