Marketing Strategy Case Study Ebay

Topics: Online auction business model, Auction, EBay Pages: 5 (1328 words) Published: June 17, 2008
Internal Factor Evaluation Matrix (IFE Matrix)

Critical Success FactorsWeightRatingWeighted Scores
A savvy management team and a venture capital backing0.2030.60 Continuously well financial management and high gross margin profit0.0540.20 A flexible financial flexibility to pursued strategic acquisitions and alliances0.0530.15 Good relationship with strong channel suppliers0.0540.20

Well community building plan and strong brand loyalty and consumer involvement0.2040.80 Weakness
Management team can not make a decision on complete information and enough time0.1020.20 R&D need new technology to enhance trust and safety and decrease fraud and potential risk0.2010.20 R&D need more classified-specific search engine and more features0.0520.10 Investment and capital is not big enough0.0520.10

Can not provide free service0.0510.05
Total Scores1.00262.60

This table shows us to consider the whole things rather than just part of the factors. We can see that eBay has exhibit internal strengths but not too much. They can still work on some parts they are not good at but important. For example, improve new technology for enhancing trust and safety and decrease fraud and potential risk. In addition, they should work on something they did not do well, such as considering the importance of free service.

External Factor Evaluation Matrix (EFE Matrix)

Critical Success FactorsWeightRatingWeighted Scores
Market tends to be more open to online auction0.1040.40
personal market become more important0.1040.40
Online auctions are one of the fastest-growing business models on the Web0.0540.20 The customer-to-customer online auction model is a new niche0.1040.40 The whole market is not well, people tends to sell more cost effective0.1030.30 There still more than 90% people have never used online auction0.1030.30 Weakness

Government begin to doing some regulations for online shopping industry0.0520.10 More and more specialty players enter in this industry0.1010.10 The importance of insurance program become more important0.2010.20 Technology is continuously improving0.1020.20

Total Scores1.00282.60

This table tells us, eBay has already done very well in their external strengths. They should take care of the improving technology and try to make their insurance program better. In addition they should focus on the worse parts, such as incoming competitor and government regulation.

Five Forces Model

Supplier Power: High
The market is dominated by a few large suppliers. For example, eBay has an 89% market share of person-to-person auction market. There is not particular input for supplier. Each one can chose their own way to begin their business. Supplier’s bargaining power is high because customers are not fragmented. The switching cost from one supplier to another is high because each supplier has different operating way and community. Buyer Power: Low

Buyers do not buy in large volumes.
Once buyers buy from certain supplier, they can not replace by substitutes easily because each supplier has its own features and advantages. If buyers want to switch to an alternative product, the cost will be high and it takes time to build their own credit in another supplier. The service here is much cheaper than others and plays an important role to its certain buyers. Threats of New Entrants: Low

The economic scale is growing.
The initial investment and fixed cost is low, relative to other real channel. This industry is not protected by intellectual property. Although the switching costs for customers are high and distribution are controlled by existing players, if the new entrants can provide more beneficial plan, customers will willing to change. Substitutes: High

Competitors are everywhere. (From real to virtual)
The brand loyalty and customer relationships are low.
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