The Digital Micro Environment

David ButtCM522 – November 11th 2010

Digital Micro Environment - Content

• Porters 5 Forces Model & the Digital Marketplace• How Digital Helps the Value Chain• Digital Competitors• Digital Customers• Digital Intermediaries• Digital Business / Revenue Models • Digital Market Bleed• Digital Grey Market Exports

Porters 5 Forces Model

Impact of Digital on Porters 5 Forces

• Buyer Power

• Supplier Power

• Substitute Threat

• Barriers to Entry

• Competitive Rivalry

Porters Value Chain

Digital Value Adding Activities Market Research

• Feedback

• Social Networks

• Search Engine Analysis

• Web Analytics

Digital Value Adding Activities Marketing Products

• Attract new Customers at lower costs

• Aggregators (Price Comparison Sites)

• Customers Communities

• Bundle Options

Digital Competitors

• Continuous Competitor Analysis (SWOT)

• Sample Competitor Analysis

• Rank tracker

Digital Customers

• Who is your Digital Customer?– Sample Persona

• How will you Convert & Measure?

• Digital Customers have power, they have done their research & want an immediate response

Habits of Digital Customers

• -send tweets when thinking of buying a product• -search Twitter and follow conversations about a

product• -become fans of product pages, on Facebook, related

to products – goes viral• -read reviews before purchasing• -share information about your business and their

buying experience• -expect instant feed back; discount codes; affiliate

programs; real time information

Digital Intermediaries• Provide support to Business and Consumer

– B2B & B2C “Information Exchanges”; Google; Bing etc. – Price Comparison Sites – Travel Supermarket.com– Newspaper sites– Auction Sites - eBay– Forums – Boards.ie (B2C); Linked-in (B2B).– Portals – Yahoo Ireland

• Infomediary

• Generally Independent of Brand and Service– “Countermediaries” (not truly indep)– May be owned by brand – Banking sector, Microsoft

Impact of Digital on Business Models

• Banking– closing down of retail - NIB

• Software – move from Server based to SaaS

• DVD / Gaming Rentals– retail to on-line libraries

Revenue Models

• Subscription Access - The Times on-line• Pay per download - iTunes• Display Advertising (CPM) – Entertainment.ie • CPC Advertising - Google; Bing• Sponsored areas of site - Eircom Portal• Affiliate Revenue – Constant Contact; Amazon; Ryanair

• Email Lists – opt in to partner marketing

Bleeding Markets

• Easy access to causes Market Share to erode

• Internet Explorer vs Firefox

• Chrome vs Rockmelt

Grey Markets

• Internet facilitates the Grey Market• Easy Distribution

• Auction Sites Facilitate

• Country specific serial numbers• DVD Region Codes prevent Grey Market