Ebay Inc. Case Analysis

Organizations normally reformulate their marketing strategy several times during a product’s life cycle. Economic conditions change, competitors launch new assaults and the product passes through new stages of buyer interest and requirements (Kotler, 2001, p. 484). Consequently a company must plan strategies that address any changes in the market. ebay Inc. is the world’s largest and most popular person-to-person trading community on the internet (Bradley, 2001, p. 1). From its inception eBay was unchallenged however with amazon.com’s (Amazon) entrance into the online person-to-person auction arena and other competition from Yahoo! Auctions, Auction Universe, and OnSale, eBay was faced with the issue of how to separate themselves from competitors and maintain market leadership in an increasingly crowded marketplace.

Michael Porter stated that value is what buyers are willing to pay, and superior value stems from providing unique benefits that more than offset a higher price. There are two basic types of competitive advantage: cost leadership and differentiation (Porter, 1985, p. 3). Attempting to compete based on cost would be a poor move for eBay. Their competitors already offer both lower costs and many offer similar services at no cost at all. Therefore, eBay must be able to differentiate themselves from their competitors in order to maintain market leadership. Differentiation is the act of designing a set of meaningful differences to distinguish the company’s offerings from competitor’s offerings (Kotler, 2001, p. 90). eBay needs to focus on creating a product or service that is perceived as being unique throughout the industry.

Services are extremely difficult to differentiate themselves however Kotler (2001, p. 90) notes that services are able to differentiate themselves by developing a differentiated offer, deliver or image. eBay will continue to be a market leader if they are able to continue differentiating themselves by focusing on their brand image, continuing to offer innovative features, and supplying a delivery service with proprietary technology. This uniqueness should translate into higher profit margins and keep them above the competition.

Service companies are able to differentiate their image through symbols and branding. A recognizable brand name is extremely important to the continued success of eBay. eBay was the first mover in the online person-to-person auction industry and because of it they have a competitive advantage which will help differentiate themselves from their competitors. By focusing on their brand image eBay will be able to attain brand recognition, brand preference and brand loyalty. With a strong brand image consumers are able to recognize the eBay name and instantly know what it stands for and the service they provide.