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Running head: EBAY 1

EBAY 3

eBay

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Institution

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eBay is one of the main players when it comes to the global e-commerce market. The market that the company is operating in is facing some headwinds, but long-term growth is expected to take place due to the company’s strong market position (Bradley, 2001).

From the five force analysis, eBay is facing large competition. The completion is coming from both offline and online sources. Customers in eBay's market segment can purchase products from various players in the market, such as distributors, retailers, auctioneers, search engines, and directories among others. This makes competition be very intense. There is also stiff competition being seen from the payment business. Some of these competitions are on bank wires, debit and credit card, other online payment services, and offline payment methods, such as mobile phones, money orders, check, and cash. Entry of new players, such as Alibaba and Apple Pay into the market is expected to increase the competition to another new level. Even with the intense competition, eBay together with other online companies still has the ability to make profits. The purchase decision of customers can be easily influenced by price, services, and product selection. The companies in this market segment can play with such factors when it comes to increasing their revenues. This strong competition will cause a restriction when it comes to pricing of commodities in the market place. This is due to the price-based competition taking place in the market.

The problems that really need to be addressed by the company are the one relating to pricing, services and products. The market has many competitors, and there are others who are coming in. This will mean that the level of competition will even heighten. Heightening in the level of competition make the bargaining power of buyers will increase. This is because they can purchase the product they require from the many players in the market. Also, the services they require can be obtained from different sources. The company needs to look for a way to reduce this bargaining power of customers.

One of the key success factors of eBay in the industry it is operating in is the use of broad differentiation strategy. The differentiation strategy helps the company to separate themselves from other competitors in the market segment. "According to Michael Porter, the value is what buyers are willing to pay, and superior value stems from providing unique benefits that more than offset a higher price" (Kotler & Keller, 2006, p. 243). Competition can be based on cost leadership or differentiation. Competing based on cost is a poor move. This is the reason why the management of the company has directed much attention on the differentiation of it products and services. Differentiation will make it possible for the company to maintain market leadership. A Large variety of product is being offered by eBay. These products appeal to many consumers in the market. Some of these consumers are corporations, entrepreneurs, and individual sellers throughout the world. eBay community enables the company to attain it product differentiation. It is a global reach and is not matched by any competitor in the market. It has a category span of approximately 27,000. Also, the services of the company make it be different compared to other competitors in the market. Many customers see value when it comes to making use of the company’s services.

References

Bradley, Stephen. (2001). eBay Inc. Harvard Business School 9-700-007. Kotler & Keller (2006). Marketing Management (12th ed). Upper Saddle River, NJ: Pearson-

Prentice Hall.