E-commerce fundamentals lastminute.com – an

58 Mini Case Study 2.1 Professor Donald N. Sull is an Associate Professor of Management Practice on the Strategy and International Management faculty at the London Business School. In the first video tutorial, ‘Fog of the Future’ on strategic agility visit www.ft.commultimedia and search for ‘London Business School’, he asserts that traditional management models of creating a long-term vision are flawed since our knowledge of the future is always imperfect and marketplace conditions are changing continuously. Rather than being the captain of a ship surveying the far horizon, analogous with the top-down model of strategy, the reality for managers is that their situation is more akin to that of a racing car driver on a foggy day, constantly looking to take the right decisions based on the mass of information about their surroundings coming through the fog. He believes that having a clear long-term vision, particularly where it isn’t based on environment analysis isn’t practical in most industries. Instead he says that companies should ‘keep vision fuzzy but current priorities clear’. He gives the example of the failure of Microsoft to respond sufficiently fast to the growth of the Internet. In a second video tutorial, ‘Strategic Agility’, he explains the basis for strategic agility. He explains that all knowledge of the future is based on uncertainty, but that managers must act now so they need to put in place US Marine Corps-style reconnaissance missions as an army would in order to make their battle plans. He gives the example of Dell, explaining how they spend relatively little on research and development, but are instead constantly probing the marketplace, trialling new ideas with multiple probes into the approach. He stresses the importance of finding anomalies in the marketplace where it doesn’t appear as expected and these may repre- sent learnings or opportunities. Detailed customer insights and business performance are necessary to iden- The Marine Corps demonstrates strategic agility Part 1 Introduction Figure 2.2 Professor Donald Sull of London Business School talks about strategic agility Source: www.ft.com Now complete Activity 2.1 to review the importance of these environmental influences. 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 mar- ketplace analysis helps to define the main types of online presence that are part of a ‘click ecosystem’ which describes the consumer behaviour Chapter 9 or flow of online visitors between search engines, media sites and other intermediaries to an organization and its competitors. Prospects and customers in an online marketplace will naturally turn to search engines to find products, services, brands and entertainment. Search engines act as a distri- bution system which connects searchers to different intermediary sites for different phrases, so the flow of visits between sites must be understood by the marketer in their sector. To help understand and summarize the online linkages between online businesses and traffic flows it is worthwhile to produce an online marketplace map as shown in Figure 2.3. This shows the relative importance of different online intermediaries in the marketplace and the flow of clicks between your different customer segments, your company sites and dif- ferent competitors via the intermediaries. 59 tify these anomalies. Finally, he makes the point of the need to act rapidly to have scalability to ‘swarm the gap in the defences of the enemy’ where there is a strong opportunity. In an e-business context, we can see that strategic agility requires these characteristics and requirements for an organization to be successful in its strategy development: 1. Efficient collection, dissemination and evaluation of different information sources from the micro- and macro-environment. 2. Effective process for generating and reviewing the relevance of new strategies based on creating new value for customers. 3. Efficient research into potential customer value against the business value generated. 4. Efficient implementation of prototypes of new functionality to deliver customer value. 5. Efficient measurement and review of results from prototypes to revise further to improve proposition or to end trial.

Chapter 2 E-commerce fundamentals

Activity 2.1 Why are environmental influences important? Purpose To emphasize the importance of monitoring and acting on a range of environmental influences. Activity For each of the environmental influences shown in Figure 2.1, give examples of why it is important to monitor and respond in an e-business context. Answers to activities can be found at www.pearsoned.co.ukchaffey The main elements of the online marketplace map presented in Figure 2.3 are: 1 Customer segments. The marketplace analysis should identify and summarize different target segments for an online business in order to then understand their online media consumption, buyer behaviour and the type of content and experiences they will be looking for from inter- mediaries and your web site. 2 Search intermediaries. These are the main search engines in each country. Typically they are Google, Yahoo, Microsoft Live Search and Ask, but others are important in some markets such as China Baidu, Russia Yandex and South Korea Naver. You can use audience panel data from different providers indicated in Box 2.1 to find out their relative importance in different countries. The Google Trends tool Figure 2.4 is a free tool for assessing site popularity and the searches used to find sites and how they vary seasonally, which is useful for student assignments. 60 Part 1 Introduction Figure 2.3 An online marketplace map 1 Customer segments Different customer segments with specific needs Horizontal portals or mainstream media Small-affiliates and blogs B: Intermediary flows to different types of intermediary OVPs = Online value propositions Aggregators and super-affiliates Niche media sites or social networks Company site OVPs Search engines 2 Search intermediaries 3 Intermediaries and media sites 4 Destination sites A: Search flows natural and paid Google Yahoo Live Ask Other search networks Vertical Search engines Specialist directories Different search types: • Generic search • Product-specific search • Brand search Purpose of mapping is to identify: • Main marketspace actors • Their relative importance • Relative visibility in marketplace given different customer journeys Existing vs new Web savvy Non-web savvy Demographic segmentation Lifecycle segmentation Psychographic segmentation Create personas for key audiences Direct competitors OVPs In-direct competitors OVPs