Marketspace Strategy - a Discovery Process - Michael Quinn.

Authors Avatar

Marketspace Strategy – a Discovery Process.

Michael Quinn *

Few managers now doubt that electronic commerce is growing. Forrester estimate that by 2001 ecommerce revenues will total $64 billion in Europe. But there is considerable scepticism about the size and development of the Irish electronic marketplace, particularly the business to consumer market. Many managers are wondering whether this is an evolution or a revolution? But most senior managers that I talk to are interested in discovering the answers to two key questions : How will electronic commerce impact my business? And what should I do about it?  This article looks at the strategic issues posed by the Internet, highlights a key insight from my ongoing work in this area and outlines three scenarios for discovering an Internet action plan.

Strategic Issues

There are a number of strategic issues lurking in the Marketspace, the environment where companies do business electronically. Marketspace is a term coined by Professors John Sviokla and Jeffrey Rayport of the Harvard Business School. The key issues are;

  1. Technology is redefining the marketplace. A recent CEO survey by Diamond technology partners discovered that about 70% of managers surveyed believed that technology ‘can either upset their company’s plans or provide significant new business opportunities’. For example,Visio the software company (which develops, markets, and supports drawing and diagramming software) are exploiting the internet to provide a customised experience for their customers. They have just launched eVisio where customers can configure the products they want online.

  1. New Virtual Competitors are emerging. Driven by different net based economics many new companies who did not exist in the marketplace are now going online and capturing significant business. One interesting example is E-Trade the virtual stockbroker who is giving the existing competition a good run for their money. Another is Drugstore.com who intend to sell prescription and over the counter drugs on the Internet using convenience as a major selling factor. Have a look at eToys if you want to see how the Internet is making the toy search process easy while competing in the marketspace.

  1. Your most valuable customers may be online.  One of the real ‘got ya’s for many businesses is that their most attractive customers are already online. The implication here for business has significant repercussions for their customer retention strategies, which is where we are told the profit is rather than customer recruitment. The CommerceNet Nielsen Internet demographics survey (USA/Canada) results indicate that 25% of the online population have family income over $80,000 (national average is 10%), 50% are professional or managerial and 64% have at least college degrees. The Irish Internet Association surveys provide similar findings although we have a small online population.

  1. Customer Knowledge is poor. Real knowledge of who the customer is and which ones are more important is often very poor and sometimes unavailable. Many companies have decided to go to market through channel partners and as a result have little information about their end users. Even when we deal directly with customers no total view of the customer’s transactions may exist because we are organised by product, or are focused on products and thus don’t really have customer relationships. Note that E-Trade can boast of a 99% loyalty factor in the online environment, and was the 4th Internet Company to achieve $1b valuation.
Join now!

The Internet Influence is bigger than you think.

But despite all this ‘snake oil’ many managers insist that ‘we won’t be selling online’ so we don’t need an Ecommerce strategy, or at least for some time until Ireland goes online, so we should ignore all this hype. What many managers are missing is that customers often go online to do their information searching and then go offline to do their buying. In a study by Ernst & Young estimated that around 64% of online consumers would research products ...

This is a preview of the whole essay