EBay Case Study

Question 1

EBay’s marketing environment has several facets attached to it. Among them is that the market is very dynamic. There are several changes taking place in the market now and then. A couple of aspects have contributed to these changes. These include the growing list of subcategories and categories of the products being offered to consumer. Business operations also tend to change from time to time. This will mean that any organization involved in the market must change its strategies time and again to avoid obsolesce. Any form of rigidity would result to lose of market share since the consumer preference and tastes keep changing (Schneider, 2011). Desire to satisfy consumer needs is of paramount importance in this market. This is vivid based on the strategy that eBay is taking on enhancing favorable working environment with its sellers. The sellers are the ones that provide products to the consumers. EBay aims at reducing the costs that they incur based on the level of sales that they make. When the terms are favorable to the sellers, they will attempt to replicate the same thing on the side of consumers. As a result, eBay is able to enhance consumer orientation and meeting the demands of its marketing environment.

Among the forces shaping eBay’s business is competition. The main competitors in the industry are Amazon, Wal-Mart and Buy.com. Initially eBay did not consider Wal-Mart to be a direct competitor. However, recent operations are an indication they are taking over the e-commerce platform. Such occurrences trigger the operations that the organization will be involved in. Strategies devised are aimed at creating a competitive advantage (Kotler & Armstrong, 2011). Failure to neutralize the competition will result to void operations.

Another force that shapes eBay’s business is the social environment. This includes the demographic shifts and cultural changes of both sellers and buyers. Most of the population is now becoming computer savvy. This means that there is going to be an increase in both the buyers and sellers. The organization must devise mechanisms of attracting these people so as to benefit from economies of scale. It would be a better way of enhancing a competitive advantage. Current organizational strategy will help in this realization since it aims at improving both the sellers and buyers welfare. The aspect will help in attracting new personnel.

Economic environment is also another critical force that shapes the company’s business. This aspect usually affects the buyers’ purchasing power. A good example is that most baby boomers generation are turning sixty years. As a result, they have funds from the retirement benefits that they can use for consumption purposes. EBay must devise a strategy to help capture this generation so as to boost its revenues. Failure of taking this initiative would be a way of giving the competitors a clear cut advantage (Schneider, 2011).

Question 2

The change in nature of sellers in eBay will help in creation of value towards the buyers. As John Donahoe became the CEO in 2008, he came up with a new strategy. The strategy was aimed at mending several issues that existed in the organization’s operations.  Donahoe pointed out that the fixed prices would stay put hence being favored over auctions. This brings creation of value towards consumers due to the shortcomings associated with auctions. Among them is that the buyers would get a fair value for the items that are being sold. On most occasions, auctions result in overpricing of products hence preventing most buyers from being engaged. These are those buyers that know the true value of an item being sold. Initiating a fixed-price mechanism would create value for them since the sellers would price the products appropriately. Online auctions are also prone to several malpractices. Some sellers might be contacted by timid buyers that lost the bid and request them to close a more favorable offer offline. The offer might be tempting hence prompt the seller into agreeing with the arrangement. This negates value on the side of buyers are using appropriate channels.

Donhoe also announced that there would be development of a new fee structure. The new fee structure would result in reduction of the listing cost. Highly rated sellers and the ones offering free shipping would also enjoy fee reduction. As cost on the side of sellers reduces, the price required to bring about break-even would reduce too. This would mean that the sellers would aim at reducing the prices that they charge towards the buyers. The most effective cost would be the cost of purchasing the products. It is likely to shift drastically since the sellers also want to take advantage of this and increase their sales levels. The lower the prices the higher the demand of the products being offered for sale. Low prices would create value for buyers based their levels of income. There would also be a decline on the shipping charges since sellers are not depending on this strategy so as to increase their profitability aspects. It will become easier for consumers to have value for their money.



Kotler, P., & Armstrong, G. (2011). Principles of marketing (13th ed., global ed.). Upper           Saddle River, NJ: Pearson.

Schneider, G. P. (2011). Electronic commerce (9th ed.). Boston, MA: Course Technology             Cengage Learning.