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1. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved
Chapter2
OnlineMarketplace
Analysis:
Micro-environment

2. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved
MainTopics:
•Situationanalysisfordigitalmarketing
•Digitalmarketingenvironment
•Understandingcustomerindigitalmarkets
•Consumerchoiceanddigitalinfluence
•Customercharacteristics
•Competitors
•Suppliers
•Newchannelstructures
2
Chapter2–OnlineMarketplace
Analysis:Micro-environnement

3. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved
Introduction
Thedemandsonmarketerswhoareresponsiblefor
planningdigitalmarketingstrategiesaregrowing
considerablyastheyworkouthowtomanagethe
complexitiesofthecompetitivemarketplace,digital
socialcommunitiesandinnovativetechnologies.
Thegrowthinuseofdigitalmediaandtechnology
hasledtonewpaths-to-purchasethatarehighly
complexaspurchasedecisionsarepotentially
influencedbymanytouch-points.
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Introduction
Paths-to-purchasearethedifferentsites,channelsand
devicesandinformationsourcesthatconsumersuseto
informtheirpurchasedecisionforaproductorservice.
Potentialcustomersareusingmultipledevices(sometimes
simultaneously)togatherinformationthatwillinformtheir
purchasedecisions.Thisprocessisknownasmulti-
screening.
Onlinemarketplace:Exchangesofinfo&commercial
transactionsb/wconsumers,businesses&governments
completedthroughdifferentformsofonlinepresencesuch
assearchengines,socialnetworks,etc.
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eWOM(electronicwordofmouth)isan
extensionoftraditionalface-to-faceWoM,whereby
communicationexchangesbetweenindividualstake
placeindigitalenvironments.
Digitalmarketingpractitionersoftenusesocial
medianetworksandblogstoengagetheirtarget
audienceineWOMconversations.
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Introduction

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SituationAnalysisforDigitalMarketing
Situationanalysisisthecollection&reviewofinfoaboutan
organisation’sexternalenvironment&internalresourcesand
processesinordertorefineitsstrategy
Thedigitalmarketingenvironmentor‘onlinemarketplace’
thatafirmcompetesiniscomplexanddynamic.
Firmsshouldcarefullyanalysethemarketcontextinwhich
theyoperate,identifyopportunitiesandthenplanhowtheycan
competeeffectively.
Understandinganorganisation’senvironmentisakeypartof
situationanalysismarketingplanningadigitalmarketing
strategy
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A.Customers.Digitalmarketingpropositionsand
communicationsshouldbebasedaroundthecustomer–
theircharacteristics,technologyusage,behaviours,
needsandwants.
B.Marketplaceanalysis.Includingintermediaries,
influencersandpotentialpartners.Therearemany
influencestoconsider,includingsearchengines,publisher
mediasites,blogs,reviewsitesandsocialnetworks.
Marketplaceanalysisalsoinvolvesreviewingopportunities
andthreatsfromdigitalmediaandtechnology,includingnew
businessandrevenuemodels.
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Whatshouldbereviewed
insituationanalysis?

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C.Competitors.benchmarking customer propositions and
communications activities against direct and indirect
competitors and out-of-sector businesses can identify
opportunities for new approaches and digital marketing
activities that need to be improved.
D.Wider macro-environment.social, legal, environmental,
political and technologicalinfluences.
E.Internal review.of the effectiveness of existing digital
marketing approaches. This will includereviewing current
resultsfrom digital marketing by review of KPIs and
dashboards and the organisational capabilities and processes
used to manage digital marketing, summarised as strengths
and weaknesses.
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Whatshouldbereviewedinsituationanalysis?

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TheDigitalMarketing
Environment
1.Micro-environment(alsoknownastheoperating
environment)Theplayersandtheirinteractions,which
influencehowanorganisationrespondsinits
marketplace.Theseplayersincludethecustomers
whoseneedsandwantsaretobesatisfied,alongwith
thecompetitors,intermediariesandsuppliers.
2.Macro-environment(sometimesknownas‘theremote
environment’)Broadforcesaffectingallorganisationsin
themarketplacelargelybeyondtheimmediatecontrolof
anorganisation,includingsocial,technological,
economic,political,legalandecologicalinfluences
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Figure2.1SituationAnalysisforDigitalMarketing
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Whiledigitalhasbecomemainstreamandthe
distinctionbetweenon-andofflinehasbeeneroded,it
isimportanttorecognisethatnotall
organisationsarefullydigitallyengagedandthe
importanceofdigitalchannelsdiffersbetween
industrysectors.
Therefore,eachorganisationhasitsownunique
spacewithintheonlineandofflineworld,which
shouldbeconsideredwhenanalysingitsmarketing
environmentandplanningadigitalmarketingstrategy.
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TheDigitalMarketing
Environment

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The marketing environment can have a profound impact on
performance; hence,an organisation should continually
monitor both micro and macro influencesenvironmental
scanning
Online market ecosystemthe interactions between different
online systems related to a specific hardware or software
technology, which may be independent or developed by a
particular brand.
Major online players have developed their own infrastructure or
online market ecosystemsthat connect websites through data
exchange, giving opportunities to enhance the customer
experience and extend the firms’ reach and influence.
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TheDigitalMarketing
Environment

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Understandinghowcustomersinteractwith
digitalmarkets
Inthephysicalworld,‘goingtotheshops’isawell-understood
concept,butlessisknownabouttherangeoftriggersand
influences(devices)thatcanshapeashopper’sjourneyand
informtheirultimatepurchasedecision.
Theonlinecustomerencountersmanymore‘touchpoints’which
influencetheirdecisionmaking(e.g.,websites,socialmedia
contentandblogs)andcaninfluencepurchasedecisionsbefore,
duringandafterashoppingencounter.
Tohelpunderstandcustomers’interactionswithphysicaland
digitaltouchpoints,triggersandinfluences,journeysmapsare
increasinglyusedtomodelbehaviourofdifferenttypesof
targetaudiences.
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Figure2.2Anexampleofacustomerjourneymap
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UnderstandingCustomerin
DigitalMarkets
Itisusefultoproduceanonlinemarketplacemapwhich
summariseshowtargetcustomersegmentsmightbeinfluencedby
differenttypesofdigitalsites.
Themainelementsoftheonlinemarketplacemapare :
1.Customersegments
2.Searchintermediaries:Themainsearchenginesaretypically
Google,Yahoo!,BingandAsk,butothersareimportantinsome
marketssuchasChina(Baidu)
3.Intermediaries,influencersandmediaorpublishersites
4.Destinationsitesandplatforms:Thesearethesitesthatthe
marketeristryingtoattractvisitorsto.
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Inmarketing,understandingthetradingsituationisvery
importantnotonlytoconsidercustomers’behaviourbutalsoto
knowhowtoanalysereactionsandresponses.
Inthedigitalworld,customeractionsarehighlytrackable
andquantifiable,sodigitalmarketersshouldknowhowto
measurecustomerbehaviourinrelationtomarketing
objectivesinhighlyaccurateways.
Thespecificmeasurementandanalysistoolswillvary
dependingonthedesiredmarketingoutcomes .
Customeranalysistounderstandthedigital
consume
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Customerbehaviouranalysisinvolvesresearchintothe
motivations,mediaconsumptionpreferencesandselection
processesusedbyconsumersastheyusedigitalchannels
togetherwithtraditionalchannelstopurchaseonline
productsanduseotheronlineservices.
CustomersegmentsGroupsofcustomerssharingsimilar
characteristics,preferencesandbehavioursthatare
meaningfulintermsofvariousmarketpropositions,and
whicharedefinedaspartoftargetmarketingstrategyand
planning.
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Customeranalysistounderstandthedigital
consume

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Customerbehaviouranalysiscanbeconsideredfromtwo
perspectives:
1.Demandandgapanalysis :Thisinvolvesunderstandingthe
potentialandactualvolumeofvisitorstoanonlinepresenceand
theextenttowhichprospectsconverttotacticalandstrategic
outcomes,e.g.leadgenerationandsales.
2.Digitalconsumerbehaviour:itisunderstandtheneeds,
characteristicsanddigitalexperiencesorbehavioursoftarget
consumers.Basedonthisanalysis,customersegmentscanbe
createdthatwillbeusedtodeveloptargetingapproachesas
partofstrategyandplanning
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Customeranalysistounderstandthedigital
consume

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ConsumerChoice&DigitalInfluence
Consumerchoiceandthesucceedingdecisionmakingare
crucialtothepurchasingprocess(onlineandoffline)butdigital
medianowplaysanincreasinglyimportantroleinbuying
decisions.
Manybuyersvisitonlinefirsttofindinformationthatwillinform
whattheybuy,sothewebandsocialmediaare:
1.Avitalpartoftheresearchprocess,asinternetusersnow
spendlongerresearchingproductsonline;
2.Usedateverystageoftheresearchprocess fromthe
initialscantothemoredetailedcomparisonandfinal
checkingofspecificationsbeforepurchase.
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Theresultofthischangeinbehaviourmeansthatbuyersaremore
informed,andrefertoamultiplicityofsourcestofind
informationthatwillinformtheirfinalpurchasingdecision,e.g.brand
websites,socialmedia,reviewsites,traditionalprintmediaand
personalrecommendations
Digitalsourcesofinformationnowplayamoreimportantrolein
shapingpurchasedecisions.
So,companieshavetothinkcarefullyhowtheycanmaximise
thevalueofpositivecommentsandreviewsandreinforce
consumerperceptionsthroughproductquality,andservice
experiencesbothonandoffline.
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ConsumerChoice&DigitalInfluence

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CustomerCharacteristics
Understandingtheindividualnatureofcustomersis
fundamentaltomarketingpracticeandplanning.
Manyfactorsthatinfluenceonlinebehaviourandovertime
themarketsegmentsthatusetheInternetanddigitalservices
havechangedsignificantly
Today,digitalmarketshaveglobalreachandhave
penetratedeverytypeofmarketsegment.
itisincreasinglyimportanttopreciselyidentifytarget
markets.
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Researchsuggestsafruitfulplacetobeginidentifyingconsumertarget
marketsistoconsider:
1.Demographicvariables:Keyelementsofaconsumer’s
demographicprofilethathavebeenfoundtoinfluence
onlinebehaviourincludevariablessuchas:income,
education,race,age,genderandlifestyle,culturaland
socialmake-upthatinfluencesonlinebehaviour
2.Psychographicandbehaviouralvariables:Anyaspectofa
consumer’sperceptions,beliefsandattitudesthatmight
influenceonlinebehaviour,andinparticularaconsumer’s
intentiontoshop.
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CustomerCharacteristics

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Animportantpointtoconsideristhatpastexperienceswillprovide
thebasisforfutureevaluations.
Theonlineexperienceconsistofanimportantlistofconceptsthatcan
positivelyornegativelyinfluenceormotivetheconsumertoengagewith
adigitaloffer:
1.Informationprocessing(IP).Thisisveryimportantasitshapeshowa
consumerdealswithavailabledataandinformationthatwillshape
theirfuturebehaviour.IPinvolvesthementalprocessesandsenses
anindividualusestointerprettheworldtheyinhabit
2.Perceivedease-of-use.Thisalsoneedsconsiderationbydigital
marketers,astheeasierawebsiteormobilesiteistouse,themore
likelyacustomerwillhaveapositiveonlineexperience
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CustomerCharacteristics

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3.Perceivedusefulness.Thisreferstotheextenttowhich
thedigitalofferfitswiththecustomer’sdailylife–for
instance,shopping,onlinebookingtraintickets,banking.It
isherethatthedigitalmarketercanreallystarttodevelopa
pathtoconsumerbenefits.
4.Perceivedbenefits.Ifacustomerfeelstheywillbe
rewardedinsomepositivewaybyengagingwithadigital
offer,thisislikelytogeneratesupportforanonlinebrand.
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CustomerCharacteristics

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5.Perceivedcontrol.Ifacustomerisaskilleduserofthe
digitaltechnologyinquestionthentheywillfeeltheyare
abletofunctionsuccessfullyinthisenvironment.
6.Skill.Thisreferstothecustomerabilitytousethe
technologytoachievetheirdesiredgoals.>>individuals
learnbydoingintheInternetenvironmentandsobuild
theirskillsetovertime–forexample,themorefrequent
thevisitoristoawebsitethegreatertheirexposureand
thehighertheirabilitytoengagewiththisdigitalcontent.
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CustomerCharacteristics

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7.Trustandrisk.Theyplayanimportantroleinhowacustomer
behavesonline.
InexperiencedInternetuserscanfeelvulnerabilityandfear.
Customersshouldbeabletoachievetheirbuyinggoalswithor
withoutfeelingtheyareexposedtounduerisk(e.g.,financial
risk,socialrisk,personalrisk).>>Marketersshouldseektofind
waystolimittheriskofengagingwiththeironlineofferand
seektobuildtrustthroughdevelopingonlinerelationships
8.Enjoyment.Thisisanoutcomeofapositiveonlineexperience.
These8antecedentscaninfluencehowthecustomerthinks
(cognitivestate)andfeels(affectivestate)abouttheironline
experienceandaffecttheoutcomesofanysubsequent
behaviour.
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CustomerCharacteristics

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Figure2.3:Frameworkforunderstandingonline
customerexperiences
Source:Rose and Hair (2011)
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SocialMedia&Emotions
socialmediainfluencecapturingandsharing
consumerexperiencesanditisamajorconduit
throughwhichconsumersshare,recommendand
feedbackontheirproductandservice,choicesand
experiences.
Socialmedianetworksaregivingaccessto
personalisedrecommendationsinrealtime,basedon
individualpersonalexperiences,whichcanbehighly
influential(bothpositiveandnegativedependingon
thenatureoftherecommendations).
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Theuseofsocialmedianetworks,suchasFacebook,
Instagram,TwitterandLinkedIn,haverisen
substantiallysince2008.
Socialmediahasbecomeimportantasameansof
communicatingandinteractingonlineandalsoasa
sourceofpeerrecommendations.
Thecapacityofsocialmedianetworkstodisplay
ourpersonalfeelingsisextensive.
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SocialMedia&Emotions

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ConsumerPersonas
Personas:Fictionalprofilesthatrepresentaparticulartargetaudience;
thumbnailsummaryofthecharacteristics,needs,motivationsand
environmentoftypicalwebsiteusers.
Personasareatool,whichcanhelpunderstandonlinecustomer
characteristicsandbehaviourandthencreatecommunicationsmore
relevanttoyouraudience.
Creatingpersonasisapowerfultechniquefordevelopingcustomer
centeredonlinestrategies,companypresencesandcampaignsand
formspartofmarketplaceanalysis.
Personasareessentiallya‘thumbnail’descriptionofatypeofperson.
( includeillustrativepicturesandfictionalnamesthatmakethemtangible
todigitaldesignersandmarketers)
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TheRedBullstudentpersonais:
‘Thethrillseeker
He’s24yearsold
Graduatedfromcollege,2yearsagowith
anEnglishdegree
Heiscurrentlytheassistantmanagerata
ski&boardshop
Hemakes£30,000ayear.
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Exampleof
Personas

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AccordingtoKotlertherearedifferentstagesinthebuyingprocess.
Ateachstagethepurpose(fromboththebuyerandsupplier
perspective)isaparticularoutcome:
❑Awareness;
❑interest;
❑evaluation;
❑trial;
❑adoption.
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TheBuyingProcess

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Thissetofoutcomeshasbeenconsideredinthedigital
marketandChaffeyandSmith(2017)describethemas:
1.Problemrecognition;
2.Informationsearch;
3.evaluation;
4.Decision;
5.Action(saleoruseofonlineservice);
6.Postpurchase.
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TheBuyingProcess

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Figure2.4Asummaryofhowdigitalmediacanimpact
onthebuyingprocessinanewpurchase
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PPC ads : Pay-Per-Click ads / E-PR : E- Public Relation/ SEO Search Engine Optimization

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Competitors
thewell-establishedPorter’sfiveforcesmodelstillprovidesasolid
foundationforunderstandinghowtechnologyisreshapingcompetition
andindustrystructure.Thefivecompetitiveforcesare:
1.Bargainingpowerofbuyers
2.Bargainingpowerofsuppliers
3.Threatofsubstituteproductsandservices
4.Threatofnewentrants(barrierscangodownwhencompletelynewdigital
productsandservicesbypasstheexistingonesinamarket)
5.Intensityofrivalry(intensecompetion)
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CompetitorAnalysis&Benchmarking
CompetitoranalysisInvolvesidentifyingthecompaniesthat
arecompetingforourbusinessandthenreviewingwhatthey
aregoodat,whataretheirstrengths,wherearetheir
weaknesses,whataretheyplanning,wheredotheywantto
takethecompanyandhowdotheybehavewhenother
companiestrytotaketheirmarketshare.
CompetitorbenchmarkingAstructuredanalysisofthe
onlineservices,capabilitiesandperformanceofan
organisationwithintheareasofcustomeracquisition,
conversion,retentionandgrowth.
Competitorbenchmarkingiscloselyrelatedtodeveloping
thecustomerpropositionandbrandexperienceandis
informedbyunderstandingtherequirementsofdifferent
customerpersonas.
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MarketingintermediariesFirmsthatcanhelpacompanytopromote,
sellanddistributeitsproductsorservices,forexamplepublisheror
mediasites,comparisonsites,searchengines,socialnetworksandblogs.
Destinationsitesaresitestypicallyownedbymerchants,product
manufacturersorretailersprovidingproductinformation.
OnlineintermediarysitesWebsitesthatfacilitateexchangesbetween
consumerandbusinesssuppliers.
Onlineintermediariesarebusinessesthatsupportbusinessand
consumeraudiences,sotheycanservebothB2BandB2Cinformation
exchanges.Auctionsitesareanothertypeofonlineintermediarythat
supporttheB2BandtheC2Cexchanges
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Suppliers:DigitalMarketing
Intermediaries

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Channelstructure:Theconfigurationofpartnersinadistribution
channel.
Traditionally,adistributionchannelwillconsistofoneor
moreintermediaries,suchaswholesalersandretailers
Acompanysellingbusinessproductsmayhavealonger
distributionchannelinvolvingmoreintermediaries
TheInternetoffersameansofbypassingsomeofthe
channelpartners.Thisprocessisknownas
disintermediation.
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NewChannelStructures

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Disintermediation:Theremovalofintermediariessuchas
distributorsorbrokersthatformerlylinkedacompanytoits
customer.Forexample:Pearson.
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NewChannelStructures

40. Copyright © 2019, 2016, 2012 Pearson Education, Inc. All Rights Reserved
Reintermediation:Thecreationofnew
intermediariesbetweencustomersandsuppliers
providingservicessuchassuppliersearchand
productevaluation.
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NewChannelStructures