Analysis of the Online Environment

Analysis of the Online Environment

In this lesson, you’re expected to:
– identify the elements of an organization’s online marketplace that have implications for developing a digital marketing strategy
– evaluate the different factors in the micro and macro digital environments

Introduction

In the Strategy module, we talked about the need to scan the marketing environment and perform a situation analysis. Similarly, to develop a digital marketing strategy, marketers must also scan the environment in which digital marketing activities will take place.

Given that digital marketing is marketing facilitated by digital technology, the process and elements of environmental scanning remain the same as described in traditional marketing.

However, due to the change in context, it is necessary to highlight certain aspects of environmental scanning as it applies to the digital marketing environment.

The digital marketing environment involves two major elements:

(1) Micro Environment 
(2) Macro Environment

Source: Digital Marketing, Dave Chaffey
Enlarged image: http://bit.ly/2jfr395
(1) Micro Environment 

The micro environment is known as ‘the operating environment’, and focuses on the players which shape the immediate trading environment.

These players include the customers whose needs and wants are to be satisfied, along with competitors, intermediaries and suppliers. These groups of actors shape the online marketplace – so a digital marketer needs to understand their behavior and the implication of changes – if an organization is to develop an effective digital marketing strategy.

(2) Macro Environment 

The macro environment is sometimes known as ‘the remote environment’ and consists of external forces which can significantly affect organizational success.

These forces originate from the marketplace, which is largely beyond the immediate control of an organization – e.g. economic conditions, changes to international trade legislation, technological developments and innovations, social change and political interventions.

Online Market Ecosystem

The trading environment can have a profound impact on performance; consequently an organization should continually monitor the environment (both micro and macro).

Major online players such as Facebook, Google and Salesforcehave developed their own infrastructure or online market ecosystem which connects websites through data exchange, giving opportunities to enhance the customer experience and extend their reach and influence.

To better understand what an online ecosystem is, let’s use the examples of Facebook and Google:

Facebook has developed an API* system to enable exchange of data between websites and applications including mobile apps. This enables other site owners to incorporate information about consumer Facebook interactions into their own websites/apps, and share social objects across the Facebook ecosystem to extend their reach.

Google has developed its own ecosystem related to search marketing and mobile – the Android ecosystem. As part of marketplace analysis, companies have to evaluate the relative importance of these ecosystems and the resources they need to put into integrating their online services with them, to create a plan.

* API: Application Program Interface
Micro Environment
What is online marketplace analysis?

Marketplace analysis should always start with your online audience and involves review of these four main areas, analyzing the dynamics of the interactions between:

1. Potential online audience – “What are the profile, characteristics, behaviors, needs and wants of audiences from digital media platforms?”

2. Customers – A similar analysis to potential audience, but also gaining feedback on their views of your current online presence. Defining personas is an essential technique here.

3. Competitors – Benchmarking the capabilities of direct competitors for your services and indirect competitors for traffic or review of other sites.

4. Online intermediaries, influencers and partners – Establishing the strengths and weaknesses of intermediaries which can include current or potential partners to reach and influence your audience. These include different types of publishers, blogs and affiliates, social networks and communities.

Marketplace Analysis

The most important components of the immediate micro environment are:

– Customer Analysis: getting closer to the customer in order to understand their needs and wants to deliver more relevant services and communications

– Competitive Analysis: 
benchmarking to find out where you could do better.

– Partner Analysis: finding relevant partners and reviewing the value that’s delivered from existing partners.

Resources for analyzing the online marketplace

– Google Campaign Planner
– Google Trends
– Google Keyword Planner
– Similarweb
– Nielsen
– Comscore
– SEMRush
– Google Analytics
– Alexa
– Government sources (e.g. Eurostat)

Benefits of Marketplace Analysis

Marketplace analysis can help you compete by becoming more customer-centred in your online marketing since it will show you:

1) How customers research and select your products.
2) Where you need to improve the marketing effectiveness of your website or digital marketing campaigns.
3) Potential revenue improvements from gap analysis
4) Future opportunities and threats.

Issues Facing Digital Marketers in the Micro Environment

1) Customers
– access to digital platforms
– level of use of digital platforms and services
– behavior as they seek and buy products (intent), influences they respond to and their characteristics
– service expectations, satisfaction ratings

2) Suppliers
– level of technology adoption
– integration and connectedness
– service provision
– trading relationships

3) Intermediaries
– strategic intentions and planning
– communications and promotional techniques used
– resources and capabilities
– levels of service provided
– supplier and intermediary relationships
– performance

[Optional] Micro Environment
Watch this 4-minute video to learn more:
Link to the video: https://www.youtube.com/watch?v=nP1g5ckhub8
Macro Environment
An organization is often influenced by the environment it works in. The nature of the micro environment is very much dependent upon macro environmental factors. The macro environment consists of society, government, rules, and tax, politics, technology, economics etc.

The macro environment will influence all the players operating in the market. Therefore, it does not imply that the organization should not be bothered with changes happening in the macro environment. Organizations need to constantly monitor changes happening in the political and regulatory environment and make changes accordingly.

Organizations which adapt to the changes happening in the macro environment can showcase this as a differentiation and have a competitive advantage.

1) Social Factors

Though the advent of the internet is a universal phenomenon, the usage pattern is not the same. The level of internet access and usage directly influences buying behavior while the social perception directly influences its use. The social impact of the internet cannot be undermined since it has greatly influenced our way of life.

The population with income and a certain degree of education is able to use and access the internet more easily compared to other sections of society. In addition, developed countries are promoting the use of the internet and making efforts through social programs.

2) Legal and Ethical Issues 

There are certain types of behaviors that are tolerated and accepted by society around the use of the internet. These generally accepted norms are referred to as ethical standards.

Countries continuously develop laws advocating the correct use of the internet. Organizations need to be aware of these laws and develop their marketing programs after taking them into consideration.

Amongst internet users, the biggest concerns revolve around the issue of privacy. Effective digital marketing requires an organization to protect contact information, consumer profiles, and behavioral information at all times. Organizations should not share or use personal information without prior consumer consent.

3) Technological Factors

New technological innovations are emerging at a tremendous pace. Deciding whether to invest time and money in a certain technology is not easy for digital marketers. Here are some steps that most managers follow when making the decision:

1) Evaluate the technology to make sure it is the right fit for the business.
2) Create a list of goals and objectives for the new technology.
3) Determine when the new technology is to be implemented.
4) Determine the ROI of implementing the new technology.
5) Implement the new technology into the digital marketing strategy.
6) Re-evaluate the new technology to see if it has met your objectives.

These steps can help guide you in figuring out whether the new technology will help or harm your business.

4) Economic Factors

The economic macro environment assesses the availability of purchasing power in an economy, which depends on the current prices, credit availability, comparative foreign exchange rates and business cycles. Economic macro environment factors also affect an organization’s ability to maintain a stable profit.

5) Political Factors

Political forces refer to the stability of the political environment and the attitudes of political parties or movements. This may manifest in government influence on tax policies, or government involvement in trading agreements.

Political factors are inevitably entwined with legal factors such as national employment laws, international trade regulations and restrictions and consumer protection.

Jim Rohn