EMARKET MAP

1
CHAPTER 3

• E-MARKET MAP

2
SESSION OBJECTIVES

• ANALYSING INFORMATION AND TRANSACTION FLOWS
• BUILDING AN E-SYSTEM MAP
• ROLE OF INTERMEDIARIES
• COMPETITION AND SUPPLIER ANALYSIS

3

• E-COMMERCE STILL A PROCESS OF MANAGING
  TRANSACTION
• EXAMINE HOW TECHNOLOGY
• REDUCES INFORMATION COST
• INCREASES INFORMATION SPEED
• PROVIDES 24 HOUR/365 DAY ACCESS
• MAKES HIGH VOLUME INFORMATION PROVISION TECHNICAL
  FEASIBLE
• PERMITS INFORMATION CUSTOMISATION

4

• EXAMINE TRANSACTION OPPORTUNITIES
• REDUCE COSTS / SPEED-UP DELIVERY
• ENHANCE CONVENIENCE
• EXPAND MARKET COVERAGE
• EXPAND PRODUCT CHOICE
• E-COMMERCE STRATEGY MUST BE INTEGRATED INTO
  OVERALL ORGANISATIONAL STRATEGY

5
KEY Transaction Flows Information Flows
Company
Intermediaries
Suppliers
End User Outlet
Distribution
Competition
THE CORE MARKET SYSTEM
Technology
Finance
THE MACROENVIRONMENT
FIGURE 31 A MAP OF A MARKET SYSTEM
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MACROENVIRONMENT

• ECONOMIC CONDITIONS WILL IMPACT CORE MARKET
  PERFORMANCE
• POLITICS WILL INFLUENCE E-COMMERCE (CHINESE
  GOVERNMENT DATE EXCHANGE RULES)
• LEGISLATION OVER WEB OPERATIONS
• WHO PAYS SALE TAX?
• SHOULD ALCOHOL BE SOLD ON-LINE?
• CROSS BORDER VARIATION IS LEGISLATION

7

• TECHNOLOGY CRITICAL BECAUSE IMPACTS SYSTEM (E.G.
  ADVENT OF WAP ON MOBILE PHONES)
• FINANCE NOT AN ISSUE FOR NEW DOT COMS
• EXISTING FIRMS HAVE TO FUND FROM NORMAL SOURCES
  AND NOT ABLE TO USE START-UP STOCK OPTION
  PACKAGES
• CULTURE IS INFLUENCE OF SOCIAL VALUES AND NORMS
  ON USAGE OF E-COMMERCE (E.G. DELLS BLACK BORDER
  WEB-SITE IN JAPAN)

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E-commerce New Market Entrants
E-commerce Downstream System Threat
E-commerce Competitive Rivalry
E-commerce Upstream System Threat
E-commerce Substitute Goods
FIGURE 33 AN E-COMMERCE CONTENDING
COMPETITIVE FORCES
MODEL (Adapted from Kleinal 1999)
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CORE MARKET

• GENERIC MARKET OF ALL POTENTIAL CUSTOMERS
• CORE MARKET OF ACTUAL CUSTOMERS
• GIVEN USAGE/BEHAVIOUR VARIATION PROBABLY NET
  ON-LINE AND OFF-LINE MARKETING PROGRAMMES

10

• INTERMEDIARIES LINK SUPPLIER TO CUSTOMER
• ROLES OF LOGISTICS AND PROVISION OF END-USER
  OUTLETS
• SUPPLIER E-CHOICE OF GO DIRECT OR USE
  INTERMEDIARY WEB-SITE
• SUPPLIER GOING DIRECT COULD ALIENATE TRADITIONAL
  CHANNEL MEMBERS

11

• ERNST YOUNG RESEARCH INDICATES MAJORITY OF
  CONSUMERS LIKE MIXED MODEL (E.G. VISIT WEB-SITE,
  THEN RETAIL STORE)
• ISSUE OF DISINTERMEDIATION, I.E. REMOVAL OF
  INTERMEDIARY
• EXAMPLE OF AIRLINES SELLING DIRECT NOT VIA TRAVEL
  AGENTS
• JAKORSKI PROPOSES CHANGE OF
• MARKET REDEFINITION (FRESH FLOWERS)
• PLAYER ELIMINATION (MP3 IN MUSIC)
• ROLE MODIFICATION (MICROSOFT INTO CAR MARKET)

12

• COMPETITION MODEL (PORTERIAN THEORY) OF
  CONTENDING FORCES
• COMPETITIVE RIVALRY (DELL vs. OTHER PC MAKERS)
• DOWNSTREAM THREAT (CONSUMERS WITH PRICE
  KNOWLEDGE)
• UPSTREAM THREAT (WEB-SITE DESIGNERS)
• SUBSTITUTE GOODS (FROM DEVELOPING NATION
  WEB-SITES)
• NEW ENTRANTS
• SUPPLIERS CAN CONSTRAIN SUPPLIES BUT MORE USUAL
  ROLE AS SOURCE OF BETTER TECHNOLOGY (INTELS
  PENTIUM CHIPS)