A01 chaf6542 06 se fm indd

Commoditisation

The process whereby 

product selection 

becomes more 

dependent on price than 

differentiating features, 

benefits  and   value‑  added 

services.

Soft lock‑in

Electronic linkages 

between supplier and 

customer increase 

switching costs. 

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Part 2  Strategy and applications

rather than a public service, and the [advertising] campaign is responding to our 

customers who tell us they are unaware of this and find the sites confusing.

His assertion is partially true in that although Moneysupermarket covers approximately 

80% of the motor insurance market, it does not list quotes from some large insurers 

such as Norwich Union or other insurers owned by the Royal Bank of Scotland, includ‑

ing Direct Line, Churchill, Privilege and Tesco Personal Finance.

In a  counter‑  argument, Richard Mason, director of Moneysupermarket.com, said 

that Direct Line’s campaign:

smacks of complete desperation. We are the new kids on the block and Direct Line 

don’t like it. They have lost their market share since we came on the scene – they 

were in a position where consumers thought they were competitive and kept renew-

ing their policies. They spent hundreds of millions of pounds on advertising. But now 

consumers can find cheaper alternatives and are doing so in their droves.

Data from Hitwise (2006) supports Moneysupermarket’s position. It suggests this site 

achieves around a third of its visits from  price‑  sensitive searchers looking to compare 

by typing generic phrases such as ‘car insurance’, ‘cheap car insurance’ and ‘compare 

car insurance’. It has also invested in traditional advertising through TV, print and out‑

door media to increase brand awareness.

An additional downstream threat is the growth in number of intermediaries (another 

form of partner) to link buyers and sellers. These include consumer portals such as Bizrate 

(

www.bizrate.com

) and business-to-business exchanges such as EC21 (

www.ec21.com

). If 

a company’s competitors are represented on a portal while the company is absent or, worse 

still, they are in an exclusive arrangement with a competitor, this can potentially exclude a 

substantial proportion of the market.