1. CHAPTER 2 The Internet micro-environment

2. Learning objectives
Identify the different elements of the Internet environment that impact on an organisation’s Internet marketing strategy;
assess competitor, customer and intermediary use of the Internet;
evaluate the relevance of changes in trading patterns and business models enabled by e-commerce.

3. Questions for marketers
How are the competitive forces and value chain changed by the Internet?
How do I assess the demand for Internet services from customers?
How do I compare our online marketing with that of competitors?
What is the relevance of the new intermediaries?

4. The Internet marketing environment
Figure: The Internet marketing environment

5. Porter’s five forces

6. Alternative models of the value chain
Figure 2.2 Two alternative models of the value chain: (a) traditional value chain model, (b) revised value chain model

7. A value network
Figure: Members of the value network of an organisation
Source: Adapted from Deise et al. (2000)‏

8. Disintermediation
Figure: Disintermediation of a consumer distribution channel showing: (a) the original situation, (b) disintermediation omitting the wholesaler, and (c) disintermediation omitting both wholesaler and retailer

9. Example – Vauxhall

10. Reintermediation
Figure: Reintermediation process: (a) original situation, (b) reintermediation contacts

11. Example - Priceline

12. Assessing demand Need to assess: Access to Internet
Proportion of customers influenced by channel
Proportion of customers who buy direct

13. Global population with Internet access
Figure: Percentage of global population with Internet access
(based on Nua and Cyberatlas compilations at and

14. Global variation in Internet access
Figure: Global variation in number of PCs per hundred population and percent Internet
access in 2000
Source: ITU (

15. UK adoption of different media
Figure: UK rate of adoption of different new media, base c GB adults aged 15+ ( 2001)‏
Source: e MORI Technology Tracker, January See for details

16. Internet user demographics
Figure: Summary of current demographic characteristics of Internet users, base 1673 GB Internet users aged 15+, January 2002
Source: e MORI Technology Tracker, January See for details

17. Variations in access to new media – social group
Figure 2.16 Summary of variation in different access to new media according to
social group, base 4222 GB adults aged 15+, January 2002
Source: e MORI Technology Tracker, January See for details

18. Different types of Internet access location
Figure 2.17 Different types of Internet access location
Source: The Internet Monitor, BMRB,

19. A pyschographic segmentation
Figure 2.18 Psychographic segmentation for Web users
Source: Netpoll (

20. Percentage of online shoppers by product category
Figure 2.19 Percentage of online purchasers by product category
Note: There are 9.9 million online shoppers (54% of Internet users aged 15+)‏
Source: The Internet Monitor, BMRB, November 2001 (

21. Percentage of businesses with Internet access
Figure 2.20 Percentage of businesses with Internet access
Note that results are weighted by business size and that some countries are included for different years
Source: DTI, 2001

22. Businesses that identify suppliers online
Figure 2.21 Percentage of businesses that identify suppliers online by business size
Source: DTI, 2001

23. Hitwise competitive ranking

24. Intermediaries
Table 2.5 The most visited sites in the UK