Professional Documents
Culture Documents
Strategic success factors students may mention include the following: Branding a distinctive brand the earlier brand name was perhaps less appropriate although more direct. First-mover advantage gaining a critical mass through the foresight of the owner. Security and fraud realising that this is important to reputation, so investing in managing this and controlling PR related to this. eBay has developed Trust and Safety Programmes to manage this. Partnerships and acquisitions, which fit/relate well to the service, that is, PayPal and Skype. Communication of customer value proposition the case describes how eBay explains this. Revenue model the market has judged that this gives a good balance for sellers, purchasers and eBay. Setting fees at the right level has enabled eBay to scale for some time. Process efficiency the case describes how eBay measures and then seeks to improve the key areas of Acquisition, Activation and Activity. Growth strategies these are covered in Chapter 4 and include market development (geographic) and product development (new categories for consumers and businesses).
Technology scalability not referred to in this chapter, but eBay has been successful in deploying technology that has supported the companys rapid growth.
Case Study 2. Boo-Hoo learning from the largest European dotcom failure
1. Which strategic marketing assumptions and decisions arguably made Boo.coms failure inevitable? Contrast these with other dot.com era survivors that are still in business, for example, last minute.com Boo.com lacked the expertise, resources and capabilities to make a successful launch in 18 countries simultaneously. The founders had created a successful online book business in Scandinavia but Boo.com was a much more complex operation. Additionally, the underlying technology infrastructures were not in place and the aspirations of the management team for the functionality of the website were way beyond the know-how of developers at the time. Ultimately, Boo.com did not have a coherent strategy and so rather than building a scalable business that could grow over time they aimed to build a global business overnight. The company benefited from the high demand for high-tech stocks, which allowed money to constantly be pumped into the business. However, once the company demonstrated its inability to deliver, the launch date for the website was constantly put back. The failure to deliver on time linked with the stock market crash it was almost inevitable that the business would fold. In contrast, other businesses were making more scalable and sustainable plans. Companies like Tesco.com and new pureplays like Last minute.com. These are examples of businesses that looked at the potential in the marketplace and developed both sustainable and scalable solutions. 2. Use the framework of the marketing mix to apprise the marketing tactics of Boo.com in the areas of product, pricing, place, promotion, process, people and physical evidence.
More specifically, the marketing mix is covered in Chapter 5, so this part of the question should only be set if this concept has been covered previously. Details of the marketing mix that relate to Boo.com are as follows: Product. Premium brands were used, leading to premium prices. Unclear on mix between sportswear and high street fashion. Scope relatively narrow, limiting target audience. Price. As mentioned in the case, there were issues of pricing in different regions. No mentions of discounting are made, consistent with the brands premium positioning. However, competitive selective promotions are today commonly used by many e-retail brands. Place. Boo.com had a worldwide distribution, which was good for achieving reach, but added to the cost-base of the company, impacting on promotion. A global launch of a new brand was ambitious and can be contrasted with the more conservative approach from the likes of Amazon and eBay. Promotion. To build the Boo brand and drive visitors, it was reliant on online advertising, which gave rise to a high cost per customer acquisition that ultimately led to the brands failure. The use of PR was more effective and is one of the successes of Boo. The magazine appears overambitious and did not pay for itself through sales generated. At the time, the promotion through online marketing techniques such as search engine advertising and affiliate marketing techniques was limited in its possibilities. Today, these are more effective for companies. Process. People and physical evidence. It is well known that the technology was too advanced for a time when the vast majority was accessing the web over dial-up modems. This led to a clunky experience that resulted in the low conversion rates referred to in the article. It also seems likely that the cost of providing customer service was not factored into the business model.
3. In many ways the vision of Boos founders were ideas before their time. Give examples of the eretail techniques used to create an engaging online customer experience which Boo adopted and in now becoming commonplace. When boo.com collapsed, the company left a legacy of the underlying e-commerce technology. This was bought for 250,000 by Dan Wagner, which enabled him through his company Bright Station to create an e-commerce solution package, which runs many of todays successful online retailers web operations. The 3D images of products, sales assistant avatars and multiple country online stores are examples of some of the features of Boo.com operations that have now become commonplace, for example, IKEA for online sales support through their Ask Anna facility.
The section in Chapter 8 on 'Conversion marketing objectives' also covers many of these concepts. From a strategic perspective, the issues that students should consider are as follows: Proportion of total loans market that this service will appeal to. Proportion of savings and investments market, this model will appeal to. It is a lot of effort compared to other savings and investments methods for a limited differential. As a result it will only appeal to a limited number of investors. Will the number of lenders balance the number of borrowers dependent on the appeal of the proposition as noted above? Business model scalability can it be applied in other countries and to other financial products or beyond? Technology costs and scalability
Case Study 4. Tesco.com uses the Internet to support its diversification strategy
Question Based on the case study and your own research on competitors, summarise the strategic approaches which have helped Tesco.com achieve success online. The strategic decisions covered in this chapter provide a useful framework for summarising the strategic approaches adopted by Tesco.com. Decision 1: Market and product development strategies. Tesco has used the Internet to extend its market into new product markets such as financial services, white goods and DVD rental. While these are promoted through the store, the web provides a wider choice of products, more detailed information about products and a method of purchase. The Internet can also support entry into new geographical markets. Decision 2: Business and revenue model strategies. New revenue sources are available through extending the product range online as explained above, but also with new digital revenue streams such as those for music downloads and e-Diets. Tesco also supports advertising on its site of related product such as financial services. Decision 3: Target market strategy. Tesco.com has a broad market of customer types, so it is less relevant for them to use online to selectively target these with communications. However, the article explains how Tesco has used the web and e-mail channel to target more closely through targeting different lifecycle groups these are customers who are grouped according to their level of adoption of online service. Tesco also uses the web to target specific requirements such as diets and financial services through search engine marketing. Decision 4: Positioning and differentiation strategy (including the marketing mix). Tesco offers some unique online promotions and lower online prices for selected products such as financial services, which could attract a percentage discount when purchased online. It appears not to use the service elements of the mix for positioning beyond the slogan You Shop, We Drop. But attention has been paid to improving the customer experience through usability activities and reduction of download times.
The marketing mix, which is covered in Chapter 5, is also suitable for assessing some of the tactical elements of Tesco.com strategy. Product Price Place Promotion Process, people and physical evidence. Decision 5: Multi-channel distribution strategy. This is straightforward. Tesco.com has taken the decision to distribute Internet orders via stores unlike some rivals such as Ocado (www.ocado.com) who have setup distribution channels.
Decision 6: Multi-channel communications strategy. This is not referred to in the article this describes the mix between online and offline communications tools for driving visitors to the site. Offline communications in store and through direct mail are clearly important for attracting visitors to the site. Decision 7: Online communications mix and budget. Again, this is not mentioned, although the importance of e-mail marketing for customer communications is apparent. Decision 8: Organisational capabilities (7S). Tesco has achieved focus online by creating a separate Tesco.com brand and a separate division headed by Wade Gery.
Case Study 5. The new Napster changes the music marketing mix
Question Assess how Napster competes with traditional and online music providers by reviewing the approaches it uses for different elements of the marketing mix. These are aspects of how Napster.com applied the mix that students may comment on: Product. The core product is the streamed music service available through subscription, but extended product offerings include the sale of compatible MP3 players. The wide range of products (more than 1 million) indicates a broad product range contrasting with existing stores, but smaller than some online suppliers like iTunes. The article shows the importance of the Napster brand identity, including its pedigree and community experience in shaping the service. Price. Different versions of the monthly subscription service are available according to whether the music is kept on a computer or downloaded to the MP3 player. There are options to purchase tracks by album or price, with cost reductions for volume purchases. Place. The Internet is the place of distribution, although Napster has signed agreements with colleges, radio stations and stores selling MP3 players to distribute the service more widely. Promotion. Establishing brand awareness and familiarity with Napster among potential downloaders of music is the key. Offline media are arguably best for this. Unlike other online services, relatively few prospects will Google Online music download services; instead, many prospects will have a consideration list and the aim of the offline communications is to get Napster on the consideration list. Napster does use paid search marketing, particularly when visitors are searching for the brand. It also uses affiliates to extend reach into third-party sites to promote the service (not covered in the article). Process, people and physical evidence. These are the different aspects of the customer experience such as usability and customer service. These are perhaps less relevant for Napster, but they are important to converting trial lists to subscribers and to renew their subscriptions.
This is a relatively simple analysis. For a more in-depth question and answer, students could be prompted to look more at the Napster offering compared to rivals such as iTunes and download services run by e-retailers. This also works well as many students use such services and so will have strong opinions on them.
Business versus consumer Dell's site offers products in each of these areas. Value higher value consumer audiences (gaming) and business audiences (larger companies) are offered separate content. Vertical business markets (e.g., government, education and healthcare particularly in core markets such as the United States). Lifecycle first purchase or repeat purchase. Accessories and add-ons have they been purchased?
Privacy. Explain clearly at signup. Test changes to use of data with user-group of trusted users. Explain reason for future changes clearly. Technical problems. Testing programme focusing on load testing. New entrants. Developing proposition to lock-in existing users, forming partnerships to approach new audiences.
The following are characteristic of Amazons use of technology: Use of in-house technologies for personalisation; Early adopter Rapid adoption of new techniques, for example, Jeff Bezos has talked about the merits of Web 2.0; Extensive testing and optimisation to find the best approach; Avoidance of monolithic projects, with focused teams tackling specific issues; Infrastructure scalable to deal with rapidly increasing demand; Approaches developed for one product must be extensible to others. 4. How does the Amazon Culture of Metrics differ from that in other organisations from your experience? This question asks students to reflect on their own experiences. From the case, the following are characteristic of Amazons approach: Passionately driven from the top by Jeff Bezos; Importance of metrics in governing all marketing and technology activities; Arguments about the best marketing approach are often based on tests rather than those who shout the loudest: Data trumps intuition; Accepted wisdom is not accepted tests are re-run since the approach may vary through time.