e-Business Strategy:Marketspace transformation and relationship capital

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4.5 Marketspace transformation and relationship capital

The business webs and virtual community stereotypes are useful broad-brush tools for thinking about how the Internet might transform business models in the theatre industry. At a more tangible level we can use the marketspace model (Dutta & Segev, 2001) to think in more detailed terms about how the  traditional 'four P's' of marketing (product, price, place, promotion) might be transformed in cyberspace.

The marketspace model (figure 4.13) is built on two dimensions: a technological capability and a strategic perspective. The technological viewpoint comprises interactivity and connectivity. The real-time, online nature of the Internet enables more interactive and richer relationships between organizations and customers. The open and global nature of the Internet increases connectivity and fosters the creation of a shared global marketspace.

The strategic dimension of the model takes the traditional '4 Ps' of marketing and adds a customer perspective, which is particularly significant in an Internet context where personalization and one-to-one marketing are possible. Using the strategic dimension to analyse the Playhouse case we see that there is potential for a significant degree of transformation (table 4.2) that goes beyond simple online ticket sales.

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The key aspect of Internet marketing is to manage the marketface – the mix of the marketspace(e.g., buying tickets online, seeing video excerpts, engaging in online promotions) and the marketplace (e.g., buying tickets in person from the box office and other physical outlets, experiencing a live performance). However, above all else the Playhouse must not lose sight of its core business: the provision of a live theatre experience. An indiscriminate use of technology, such as the introduction of live 'theatre-cams', which would reduce theatre to an inferior form of cable television, would damage the Playhouse's product.

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Summary

• e-business goes beyond the simple e-commerce approach of offering theatre seats for sale on the Internet.

• Business webs are emerging that harness the power of the Internet to facilitate new business models that would not be possible without the reach and communication power of the Internet.

• Despite the opportunities offered by the Internet, e-business models are still just business models. A sound strategy for how to compete is still a fundamental requirement.

• Virtual community aspects can be blended into the operations of all types of business webs and traditional businesses.

• Organizations need to manage the marketface: the intersection of their traditional business (marketplace) and their online operations (marketspace).

Exercises

1. Use the template in table 4.1 to create a business model for a University MBA or undergraduate degree programme.

2. Create a value map using the notation in figure 4.5 for a theatre industry value chain integrator.

3. How might a University offering a weekend programme to senior executives create value from a virtual community?

Further reading

Dutta, S. and Segev, A., (2001). Business Transformation on the Internet. In: Barnes, S. and Hunt, B., E-Commerce & V-Business, Butterworth Heinemann.

Hagel and Armstrong, (1997). Net Gain. Harvard Business School Press, Boston, Mass.

Howard, M., Vidgen, R., Powell, P. and Graves, A., (2001). Planning for IS Related Industry Transformation: the Case of the 3DayCar. In: Smithson, S., Gricar, J., Podlogar, M. and Avgerinou, S., editors, Proceedings of the 9th European Conference on Information Systems, Bled, Slovenia, June, pp. 433–442.

Kannan, P., Chang, A. and Whinston, A., (1998). Marketing Information on the I-Way.Communications of the ACM. 41(3): 35–43.

Porter, M., (1980). Competitive Strategy. Free Press.

Porter, M., (2001). Strategy and the Internet. Harvard Business Review, March, 63–78.

Rappa, M., (2001). Business Models on the Web. http://digitalenterprise.org/models/models.html

Rheingold, H., (2000). The Virtual Community. MIT Press (original edition published in 1993).

Seybold, P., (2001). The Customer Revolution. Random House Business Books, London.

Tapscott, D., Ticoll, D. and Lowy, A., (2000). Digital Capital: Harnessing the Power of Business Webs. Nicholas Brealey, London.

Timmers, P., (1999). Electronic Commerce: Strategies and Models for Business-to-Business Trading. Wiley, Chichester.

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