E-marketing 653
3 Commercial arrangement perspective. Yahoo! is
involved in all three types of commercial
arrangement shown.
Michael Porter (2001) urges caution against
overemphasis on new business or revenue
models, and attacks those who have suggested
that the Internet invalidates his well-known
strategy models. He says:
Many have assumed that the Internet changes
everything, rendering all the old rules about
companies and competition obsolete. That may
be a natural reaction, but it is a dangerous one... decisions that have eroded the attractiveness
of their industries and undermined their own
competitive advantages.
He gives the example of some industries using
the Internet to change the basis of competition
away from quality, features and service and
towards price, making it harder for anyone in
their industries to turn a profit. In reviewing
industry structure, he reinterprets the well-
known five forces model, concluding that many
of the effects of the Internet, such as commoditi-
zation, are damaging to industry. He also
reiterates the importance of six fundamental
principles of strategic positioning:
1 The right goal: superior long-term return on
investment.
2 A value proposition distinct from those of the
competition.
3 A distinctive value chain to achieve competitive
advantage.
4 Trade-offs in products or services may be
required to achieve distinction.
5 Strategy defines how all elements of what a
company does fit together.
6 Strategy involves continuity of direction.
Decision 4. Marketplace restructuring
A related issue to reviewing new business and
revenue models is to consider the options
created through disintermediation and reinter-
mediation within a marketplace, as discussed
in the section on situation analysis. Options can
be summarized as: Disintermediation (sell direct).
Create new on-line intermediary
(countermediation).
Partner with new on-line or existing
intermediaries.
Do-nothing!Prioritizing strategic partnerships as part of
the move from a value chain to a value
network should also occur as part of this
decision.Decision 5. Market and product
development strategies
A further e-marketing strategy decision is
whether to use new technologies to expand
the scope of the business into new markets
and products. As for decision 1 the decision is
a balance between fear of the do-nothing
option and fear of poor return on investment
for strategies that fail. The model of Ansoff
(1957) is still useful as a means for marketing
managers to discuss market and product
development using electronic technologies.
Options to be considered in an e-marketing
context are:1 Market penetration. Digital channels can be
used to sell more existing products into
existing markets. On-line channels can help
consolidate or increase market share by
providing additional promotion and customer
service facilities amongst customers in an
existing market. The Internet can also be used
for customer retention management. This is a
relatively conservative use of the Internet.
2 Market development. Here on-line channels are
used to sell into new markets, taking
advantage of the low cost of advertising
internationally without the necessity for a
supporting sales infrastructure in the
customers’ country. This is a relatively