When businesses segment their markets and decide which segments to target, they evaluate the attractiveness and accessibility of each individual segment. In the fast moving Internet world the attractiveness and accessibility of target audiences will change dramatically over time and by country. The early adopters in all global Internet markets have been young male computer users, but over time the online population is becoming more representative. However, if you accept that the speed at which scale is achieved will separate the winners from the losers, you may not be able to wait until your target audience is fully online before you can introduce your business.
The appeal of any particular concept will be defined by customer attributes, values and behaviour. Customer attributes (such as wealth, disability, age and sex) drive their values (such as convenience, price, or choice) which in turn drive their behaviour (buying online or directly). To illustrate this relationship, think about this example of an impoverished widow in her late sixties. Her attributes are 'poor', 'retired', 'widow', 'aged 65+'. Because she is poor, she may value price above all else, because she is housebound she values convenience and social contact. This in turn explains her behaviour – spending significant amounts of time on the Internet surfing for the best deal on the thirdage.com community site. Internet business will derive the most benefit from discovering their customers' values, and matching these with their Web sites and merchandising principles. Attributes are commonplace, behaviour can be tracked, but matching your offering to their values is the glue that will make your customers stick by you.
Achieving this is further complicated by the fact that customer attributes and consequently values and behaviour will also vary by country. Now you can consider the implications of these values and behaviours for an Internet offering targeting this segment. This particular concept is very appealing to the online target audience because it can satisfy the customer's deeply held values.
Having completed this table for your business, you can then try to research the extent to which the target segment is found across Europe in your previously chosen attractive markets. There are three key questions to research:
The business opportunity will differ dramatically by product market. In any Internet business case there are two key drivers of product market attractiveness. The first is the size of the market; the second is the percentage of customers moving online. These figures vary significantly by product market: during Christmas 1999 only 0.8% of European retail sales were via the Internet. But in some product areas Internet share is far higher: 15% of retail stockbroking and 5% of book sales in Europe now take place over the net. Travel, computer hardware, books and financial brokerage alone account for three-quarters of the European online market. In addition, in some categories the Internet will be used as an essential source of information before a traditional purchase, or for aftersales support and advice.
Take airline tickets: although 18% of UK online buyers had actually bought airline tickets through the Internet, 51% of them had used it to research their choice. Participation in the eWorld is thus not an option but a necessity for airlines and travel agents. The product market opportunity also varies enormously by country. For example, by 2003 over 15% of the UK and German populace will be buying online, while Spain will still be below the critical threshold with only 4% of its population buying online. Generally speaking, the attractiveness of entering a new category depends on the level of competitive development in any particular country.
Now we need to assess the attributes of a product category that make it 'Internet friendly'. There is no black and white answer to this; rather there are a number of attributes which each contribute to product market attractiveness.
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1. What is the compelling business value in online businesses
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