M3:Macro and micro environment analysis approaches 4 Competitor benchmarking.

Benchmarking requires you to look not just at the key performers in your own market sector – where you benchmark against organisations that perform better than you do; but also at organisations in other industries which are highly successful and demonstrate best practices.

Business excellence: Outstanding practices in managing the organisation and achieving results based on findamental concepts:

1. Results orientation
2. Customer focus
3. Leadership and constancy of purpose
4. Management by processes and facts
5. People innovation and improvement
6. Partnership development
7. Public responsibility

Benchmarking steps

Benchmarking digital competitors is potentially more difficult than a traditional audit, as:
•         Competitors and star performers are less well known
•         The internet and the global marketplace enable many new entrants to gain market share and have significant impact across a range of industries
•         There is a greater turnover of organisations, and success one week is no guarantee against the demise of that same business the next
•         The fundamentals of online businesses can be distorted by ‘skewed’ investment and revenue dependencies

Your benchmarking should review:
•         Well known (home market) competitors
•         Well known international competitors
•         Digital companies in the home market (within sector and out of sector)
•         Digital companies in international markets (within sector and out of sector)

When scanning for competitor sites, you should watch out for:
•         New approaches from existing companies
•         New companies starting on the internet
•         New technologies and applications
•         New design techniques
•         Customer support methods that might give a competitive advantage

M3:Macro and micro environment analysis approaches 3. E-marketplace mapping

Short-term SWOT analysis requires you to be able to identify:

1. Current competitors – Businesses with similar offers, similar customer needs, similar geographical scope; businesses with higher market share; and new entrants looking to grow market share in similar areas.
2. Critical offer features – Those features of your offering that have a significant effect on sales.
3. Present significant operating factors – Those characteristics of the operating environment where your organisation must be strong to be successful.
4. Present strategic resources – Assessed in relation to the competition and in light of the significant operating factors.
5. Present issues – Those which have to be reacted to fairly quickly. For example, constantly changing web-technologies require high-level skills and continual training in order to maintain your website.

Building a longer-term SWOT

1. Determine the present situation
2. Present significant operating factors >> Future significant operating factors
3. Present strategic resources >> Future strategic resources required
4. Future strategic resources required >> Strengths and weaknesses
5. Issues >> Opportunities and threats

In longer term SWOT, strengths and weaknesses:

• Derived from looking at present strategic resources in light of future significant operating factors.
• Strengths and weaknesses are relative to future competitors.
• In online markets, for example, customer switching costs can be significantly lower. Inertia is reduced and the likelihood of customers changing to your competitors is increased.

In longer term SWOT, opportunities and threats:
Identified by looking at all the issues and dividing them into those which:

• Can be taken advantage of
• Must be guarded against

SWOT analysis for an e-business looking at current and future use of technology should focus on corporate, marketing, supply chain and information system issues.

 

M3:Macro and micro environment analysis approaches 2. How to conduct a digital marketing specific SWOT analysis

E-marketplace modelling
A fundamental technique that can be used to develop an organisation’s e-marketing strategy and is also useful in the early stages of planning an online marketing campaign to indicate:
•  Which types of site to partner for promotions
•  The type of search terms required to purchase pay per click advertising

An e-marketplace map helps to summarise the linkages and traffic flows in your e-marketplace

This modelling approach will reveal:
•         The relative importance of different online intermediaries in the marketplace
•         The flow of clicks between your different customer segments, your company site(s) and different competitors via intermediaries

Situation analysis to support digital communications planning
Required on an ongoing basis to assess:
•  Consumer use of keyphrases entered for generic product or service searches
•  More specific phrases and brand phrases incorporating their brand and competitor names

Use web analytics to track your brand’s popularity and monitor how this varies through time with seasonality and offline and online campaigns.

Reserach tools for assessing emarket place

 

M3:Macro and micro environment analysis approaches 1. Planning for environmental scanning

Devise some form of structured approach to environmental analysis

Determined the direction to follow – external to internal or vice versa – then decide:
•         What and how often to scan the environment
•         Who should conduct this activity
•         Whether the type of organisation affects the extent of the environmental scanning process

What and how often to scan the environment will largely be dependent on the elements of the environment that you are interested in.

It’s the responsibility of the strategy team to determine the knowledge requirements.  Individual specialist departments, e.g. market intelligence, should then be able to provide detailed market, competition and customer knowledge.

Scenario planning is a method used mainly by larger organisations to project alternate views of the future. This process involves making an assessment of the current state and then creating scenarios of where the end- state is likely to be after a certain strategy has been pursued. The creation of different scenarios and their likely outcomes allows organisations time to take advantage of opportunities and counteract threats.

Data needed to conduct an environmental scanning exercise for your organisation. Key issues include:
•  Data sources?
•  Who collects data and develops the insights?
•  How will the information be summarised?
•  Who conducts the reviews?
•  Who takes action?

Metrics categories can include:

• Customer and social – eg. tech adoption, search behaviour,
• Competitor – sales trends, product propostition, online value proposition, promotion
• Intermediary – popularity, content, services, competitor activity
• Partner – - popularity, content, services, competitor activity
• technical – hardware advances, software improvements, new applications, web-analytic improvements
• Legal – privacy, sales promotion and international laws

M3:Macro and micro environment analysis approaches – Summary

Modelling approaches that can be used to analyse an organisation’s macro and micro environments.

Four different approaches to monitoring, modelling and analysing your trading environment so that you can develop valuable insights to guide your digital marketing planning.

First you’ll consider the stages involved in carrying out an environmental scanning exercise for your organisation including key data collection issues such as:
•      Which sources of data?
•      Who collects data and develops the insights?
•      How will the information be summarised?
•      Who conducts the reviews?
•      Who takes action?

E-marketplace mapping is a fundamental technique that helps to summarise the linkages and traffic flows for your e-marketplace communication planning. The map summarises customer segments, search intermediaries, media and destination sites using supporting data from competitive intelligence services.

E-marketplace mapping can reveal 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 intermediaries.

Three elements of your trading arena:

1. Macro environment
2. Operating environemnt
3. Internal environment

Benchmarking is the continuous process of measuring your organisation’s performance against competitors and/or industry leaders. Using measurement techniques to identify a ‘performance gap’ between your organisation and the competition.

Three key questions that should be addressed by your marketing audit
1.       Where are we now?
2.       How did we get here?
3.       Where are we heading?

•         The answers to these questions provide an assessment of my company’s current trading situation.
•         Understanding how we got into this current situation helps us to assess our strengths and weakness.
•         From these we can identify future opportunities and threats that might affect our current and future strategies.

Measures for financial – cost efficiency

1. Visitor acquisition cost
2. Customer acquisition cost
3. Repeat-customer acqusition cost
4. Customer mainteneance cost
5. Cost of order picking
6. Cost of delivery

Measures for market

1. Market share
2. Order growth
3. Customer growth
4. New products introduced

Measures for customer retention:

1. Repeat-customer conversion rate
2. Customer churn rate
3. Repeat-customer churn rate
4. Customer extension

Measures for web

1. Unique visitors
2. Web quality
3. Page impressions
4. Clickstream analysis
5. Visitor frequency

Measures for process-timeliness

1. Click to ship time
2. Ship to delivery time
3. Online enquiry to response time
4. Return notification to refund time

 

M2: Internal environment 2. Digital capabilities

Online competence determined by:

• Strategic competence – Identify new market trends relevant to organisation’s capabilities

• Innovations – new ways to improve products and process technology

• Quality – means customer expectations are met – reliability, tangibles, responsiveness, assurance and empathy. ‘loyalty due to convenience’ will rarely apply to customers purchasing online.

• Productivity – Digital marketing offers improvemnt in the customer interface and administration of logisitics. Focus on longer term advantages of streamlinging ordering process to improve cutomer experience

• Financial competence – web-based activities require sufficient funding to implement and maintain

7Ss for assessing strategic capability

1.     Strategy
2.     Structure
3.     Systems
4.     Staff
5.     Style
6.     Skills
7.     Superordinate goals

M2: Internal environment 1. The flexible organisation

Dominant culture: shared set of values within the organisation (Palmer 2004).

Two other important aspects of the organisation affecting the uptake, development and ultimate success of your digital marketing strategies are the:

1. Workforce
2. Technological infrastructure

Consider the infrastructure and the workforce:

• Core workers
• Peripheral workers

Identify where digital marketing human resources are to be located in your organisation – for example, within Marketing or IT or Publications

Workforce

To achieve optimal workforce performance, you must have access to the right skill sets. A problem facing the e-commerce industry is the recruitment, retention and ongoing skills development of the commercial and technical staff responsible for the development and operation of e-commerce systems and digital marketing. The status of the market also affects the salaries and benefits required to attract the best workers.

It is often difficult to achieve a long-term sustainable advantage over your competition (Jobber 2004). This is often because of poor understanding of customer needs and the fact that internal operations utilise very similar computer technologies.

Two important variables that influence customer satisfaction for digital marketing organisations:

1. Speed and accuracy of service delivery
2. Sustaining the technical reliability of all online systems

Forward- facing information systems that enable you to communicate and transact with your trading partners are critical to maintaining effective relationships between the four key organisational stakeholders:

• Customers – Digital activities supported include sales, marketing, customer relationship management, after-sales service and distribution
• Suppliers – Digital activities supported include inbound logistics, procurements and supplier relationship management
• Management – Digital activities supported include management information systems, executive information systems, and decision-support systems
• Employees – Digital activities supported include human resource management, training, production

To have the internet as your primary channel to attract new customers and retain existing customers, your systems must be fully integrated (Jobber 2004). You will be successful only if all data flows are continuous – giving you capabilities to stay ahead of the competition.

M2:Internal environment – Summary

This topic will provide you with an appreciation of the internal environment, its elements, influences and capabilities.

The internal workings of an organisation affect how it responds to its environment. Wide-scale adoption of digital technologies by commercial organisations has caused trading environments to become very dynamic and highly competitive. To remain competitive, your organisation and its digital marketing must be responsive to every aspect of its changing trading arena.

This implies the importance of organisational flexibility.

Two important variables influence customer satisfaction:

1. Speed and accuracy of service delivery
2. Sustaining the technical reliability of all online systems

The integration of forward-facing information systems (that enable you to communicate and transact with your trading partners) with back-end systems is critical to maintaining effective relationships between the four key organisational stakeholders:
1. Customers
2. Suppliers
3. Management
4. Employees

An organisation’s digital capabilities depend on
•         Strategic competence
•         Innovations
•         Quality
•         Productivity
•         Financial competence

What role do front-end systems play in organisational performance?
Ensuring the interface between back end systems and the cosumer is efficent and provide the best possible customer experinece. Faciliating CRM,

M2:Micro environmental analysis – the actors 4. Intermediaries and infomediaries

Intermediaries are typically independent organisations that fill a skills gap or create an online environment to bring buyers and sellers together.

One type of intermediary, known as infomediaries, derive revenue from managing and brokering information and making it accessible to others. Search engines such as Google.com and Yahoo.com are infomediaries.

Infomediaries can be:

• Vendor-oriented
• Consumer-orientated

The most important thing to determine is whether an intermediary can add value and help ensure your investment in online services is beneficial.

Eight main online advertising revenue models:

1. Subscription access to content
2. Pay per view access to documents
3. Cost per thousand (CPM) display advertising onsite
4. Pay per click (CPC) advertising onsite
eg. 3rd part ad networks – Google adsense, Yahoo content match, microsoft content ads, MIVA

Search content networks are one of the biggest online marketing secrets. Search generate over a third of their revenue through their ad delivery networks but some advertisers fail to realise their ads are being displayed beyond the search engines and so don’t serve ads for this purpose.

5. Site section or content sponsorshipThe payment structure for a company to advertise in a site channel or section payments is typically:

• A fixed fee for a fixed period (usually a year) known as a fixed price, cost per acquisition (CPA) or pay per click (CPC) deal.

• A reciprocal arrangement or contra-deal where neither party pays although, as this is a negotiated arrangement, there may be CPA or CPC elements.

6. Affiliate revenue

Commision based revenue which can be:
• Cost per acquisition (CPA) or pay-per-performance ad deal.

• CPM or CPC. This approach gives the advertiser more negotiating power. However, this approach is increasingly being replaced by CPA.

7. Subscriber data access for email marketing

8. Customer access for online research

The two approaches that can be used to assess page or site revenue generation effectiveness are:

1. Effective cost per thousand (eCPM)
A measure of the total revenue the site owner can generate through advertising and other revenue options for every 1000 pages served for a section or the whole site

2. Revenue per click (RPC) and earnings per click (EPC)

A relatibe measure of the effectiveness of a site or section of a site in generating revenue for the site owner through advertising and other revenue for every 100 pages served for the whole site or a section.

Basic revenue model evaluation spreadsheets based on these variables are available from www.marketing- insights.co.uk/spreadsheet.htm.

M2:Micro environmental analysis – the actors 3. Competitors

As Porter (2001) pointed out, interactive media enable new services to be launched and promotions changed much more rapidly than through print communications.

Organisations are also developing competitive advantage from the unique properties of the digital trading environment. For example, lower costs create significant savings that can then be translated into lower prices, improved service quality, greater and more personalised choice.

Benchmarking is a technique used to compare offerings in digital markets.

•         Who are your competitors?
•         What are their strengths and weaknesses?
•         What are their key objectives?
•         What are their strategies?
•         What are their patterns of response?