Topic: Analyze the online classified ad service industry and the business position of Craigslist in the industry.
The essay should be 3-4 pages + title page and references list, double-spaced, using APA style.
This is a short essay.Include an introduction, conclusion, and cited references from Craigslist articles, and other outside sources.
Be sure to address each of the three topics thoroughly. (That includes analyzing all five of Porter’s Five Forces!)
1. Visit https://www.craigslist.org (Links to an external site.) and familiarize yourself with Craigslist’s services and company policies.
2. Read the following articles:
Craigslist: The geeks shall inherit the earth (Links to an external site.), Sacramento News & Review
Craigslist.com’s Craig Newmark (Links to an external site.), Practical Ecommerce
Craigslist: 15 years later (Links to an external site.), Entrepreneur
(Links to an external site.)
For full credit, Porter’s Five Forces Model, three generic strategies, and value chain analysis must all be addressed in the essay.
Students should review the following questions and, if necessary, select the most relevant to analyze in their essay.
Five Forces Model
What are the products/services of the online classified ad service industry?
Who are buyers (who pays for the products/services of online classified ad service companies)?
Is the buyer power high/moderate/low in the online classified ad service industry? Briefly explain why.
What can Craigslist do to keep customers from using other online classified services?
What are the raw materials used to produce the products/services by online classified ad service companies?
Who are the online classified ad service industry’s suppliers (who supplies raw materials to online classified ad services)?
Is the supplier power high/moderate/low in the online classified ad service industry? Briefly explain why.
What can Craigslist do to control the costs of running their business?
Who are direct competitors in the online classified ad industry?
Is the rivalry among existing competitors high/moderate/low in the online classified ad industry? Briefly explain why.
What must Craigslist do to keep ahead of existing competitors like Oodle (Links to an external site.) or AutoTrader.com (Links to an external site.)?
What are substitutes to the products/services of the online classified ad service industry?
Is the threats of substitutes high/moderate/low in the online classified ad industry? Briefly explain why.
What can Craigslist do to keep customers from switching to alternatives like online auctions, newspaper classifieds, or yard sales?
What are barriers to entry in the online classified ad service industry?
Is the threat of new entrants high/moderate/low in the online classified ad industry? Briefly explain why.
What can Craigslist do to prevent new entrants into the industry?
Three Generic Strategies
Review the three generic strategies. Which of the three strategies is Craigslist using? Briefly explain why.
Value Chain Activities
Which of these value chain activities should Craigslist focus on to increase the value of their products and services for customers? Briefly explain why.
In the past, some students have confused the different forces while attempting this essay. So here is a brief explanation of each. Remember, you are writing from the point-of-view of the company selling the product: Craigslist.
1) Buyer power refers to the power your customers have over you (in this case, you = Craigslist). Can your customers easily do without your product or change to another company? Locking in customers by increasing their switching costs or creating a high level of brand loyalty are common strategies to gain an advantage here.
2) Supplier power is the power wielded by companies that supply you with raw materials or services. Can they charge you what they want and deliver on their terms? Or can you switch suppliers and get the same product/service somewhere else? Researching suppliers and making them bid/bargain against one another is a strategy that can be employed in some situations.
3) Existing competitors are companies that already provide the same or similar products/services as you. How can you gain a competitive advantage over them? Providing a better quality of service, higher quality goods, cost differentiation, and niche marketing are examples of ways to obtain an advantage.
4) The threat of substitutes is your customer’s ability to use a different product or service (NOT the same/similar product or service your direct competitors provide) as a substitute for what you provide. If you are a hotel chain, customers could substitute staying with relatives, camping, or a Bed & Breakfast for your hotel room services. Most importantly, the threat of substitutes does not refer to your competitors. The authors of the textbook did a poor job of explaining this.
5) The threat of new entrants is when a company/individual that did not previously provide your service/product starts to do so. The goal of your company should be to make it as expensive as possible for a new vendor to start offering your product. Large capital to start a business, a large manufacturing site to start a business, high government regulations, and well established brand recognition: these are examples of barriers to entry that make entering an industry difficult.