Internet Marketing into Future Shop Stores - Case Study Example

Running Head: INTERNET MARKETING Internet Marketing of Internet Marketing Introduction If we analyzed then we come to know that E-Business, as distinct by Wikipedia, an Internet encyclopedia, "is any information system or request that authorize business procedure (Wikipedia.org, 2005)." By means of e-businesses, the internet turns into the hub for all business activities. Just stated, it just means conducting or doing commerce over the internet. There are more than a few distinct benefits to doing trade over the internet. These benefits comprise the aptitude to reach a better number of people and entities that are involved in doing trade with you, to generate cost-savings and operational efficiencies, civilizing marketing and promotional activities, as well as many extra benefits. With the series of eCommerce, which is the buying and selling of products and services via the internet, e-business has broken off into quite a few components, two of which are Business-to-Consumer (B2C) in addition to Business-to-Business (B2B). Furthermore, Business-to-Consumer or B2C commerce refers to the buying and selling of products and services online from the seller to the purchaser. It engages the "consumers shopping for and buying individual and household products. It also needs businesses to use online marketing and products techniques to draw and retain customers as well as to endorse products and services to them (eCommerce Program, 2005)." An instance of a victorious Business-to-Consumer website would be Target.com. Just like the usual brick and mortar store, customers can log onto the site and shop for personal and family items. There are no mediators to go during, the shopper just adds items to his or her shopping cart and when ended, checks out with a credit card or online check. In a Business-to-Consumer environment, mainly functions of the company are handling or are obtainable to the consumer via the internet from sales to purchaser support. One of the advantages to online B2C method is the unlimited availability of the site; as long as you can log in, you are free to browse and purchase. Background of Organization Established in 1982, Futureshop had turn into today Canada's main electronics retailer. Throughout these 20 years, Future Shop has full-grown from a "one store operation" situated in Burnaby, British Columbia, to Canada's main, fastest-growing nationwide retailer of customer electronic products for the digital age with more than 100 stores from coast to shore and still rising. (Their annual sales in year 2001 had surpassed 2 $ billion) Future Shop stores are now a separation of Burnaby-based Best Buy Canada Ltd., which is a wholly-owned supplementary of Best Buy Co. In order to achieve our objective the consulting team first looked at the company background and analyzed Futureshop's current value chain activities and the revenue model being used. An examination of the various methods they use in order to market and promote their website was conducted. This was achieved by looking into aspects of market segmentation, web presence, and specific advertising used at Futureshop's webpage. Our team also studied the legal, ethical and cultural issues pertaining to Futureshop. Now for each of these sections of analysis we performed a SWOT analysis in order to characterize our most important findings. By using our SWOT analysis we were able to propose recommendations which are suggested to improve the business. Service/Product Offering This project investigates the web based business of a well known Canadian based retailer, Futureshop.com. The main objective of the Futureshop e-commerce website is to be at an international level of business and to enhance its marketing capabilities. Our team analyzed the website of Futureshop. This company's presence on the web was established in 1995 and represents a reflection of all goods and services delivered by Futureshop to its customers. Futureshop. By the end of the project we have given our conclusions and recommendations concerning modifications to be introduced in order to improve the e-commerce of Futureshop. Futureshop has contracts and relations with product manufacturers and therefore none of the operations in processing the product before sale is done by Futureshop itself. Markets Targeted FutureShop's virtual store also targets certain customers individually by placing a cookie that retains information about the visitor. As a practical example, try to add something to the shopping cart, like a memory stick, without creating a new account or logging into it. Close the browser, restart the computer and when you log on the site the next time, you will notice that the item you "placed in your cart" is still there waiting for you to buy it. Position in Market Futureshop launches marketing campaigns and distribute flyers to attract new customers. They also provide free newsletters online which is easy and cheap compared to other means. To better serve existing customers Futureshop regularly carries customer satisfaction surveys and questionnaires. In addition to that, Futureshop provides a toll free number for customers' assistance and support. As a reselling business, Futureshop does not carry any activity related to this issue. Purchase materials and supplies: Futureshop buys their products that they sell from various electronic equipment vendors. Their products cover almost all categories of electronic equipment ranging from computers, televisions, printers, phones and much more. Their suppliers are all well-known companies in this field of industry. Concerning the quality monitoring, the site does not mention it explicitly. Upon talking to Mr. Carl Fortin mid class manager it was revealed that Futureshop keeps records of the after sale status of their sold products. From such records, Futureshop monitors the quality of the products and takes the appropriate decision upon future orders. Market and sell: Futureshop provide many discounts to encourage and increase their sales. They advertise and promote for their products on their website. They have special session sales. From time to time they launch special package deals. In order to attract their customers they have a special membership which gives its holder certain advantages in payments. Deliver: Futureshop deliver their products to their customers in a very efficient and quick way, where most of their deliveries are free of charge. Explanation of the Concepts This is the "age" of commercial rise. It considers time from the year 1997 up to now. This season is more friendly to E.commerce even for the development of internet. Mainly in this time people started to use internet and believe in it. Search engines such us Hotmail, ICQ, GeoCities started to address many people and were finally successful. The vision of future E-commerce points out that customer is our master. Even now businessmen address customers as masters, but it is not so free and obvious as it is possible on internet. Mainly from the point that there is open space of choices, many windows that can be open at the same time and thus customer can check prices he is interested in at many shops at one time, not to buy the first thing that cross their way. When I go shopping I do not bother myself with going from one shop to another to check prices. But when I am online I just have impulsion to check more than one page for some product. Benefits and Disadvantages of Digital Marketing and E-CRM It's suggested that Futureshop could build strategic alliance with another large- or medium- size fireworks manufacturer, either domestic or foreign ones. For instance, Futureshop's firm can focus on manufacturing display fireworks while his partner puts stress on consumer fireworks. Another way is to form a joint venture with another firm, i.e. if Futureshop forms a joint venture with a Chinese producer, he can be in accuse of management and marketing activities while his partner can focus on production (Roth, L., 2003). Advantages: Strategic alliance can create synergy, while joint venture can reduce costs and risk by sharing with partners. Since Futureshop is a "freshman" in fireworks industry, he can take advantage of his own management knowledge and his partner's manufacturing experience, and finally, both of them can benefit from this. With this synergy, hopefully Futureshop can compete with foreign competitors in terms of packaging, quality control and management capabilities. Disadvantages: There might be some possibilities of inequitable share of responsibilities in a strategic alliance or joint venture. Furthermore, some Chinese manufacturers don't respect contract, which could lead to the unstableness of the relationship. Strategic Option To capitalize on Internet as a tool for the business process. Internet provides "Clicks-and-Mortar" synergy and great opportunities for firms. Therefore, Jerry can also capitalize on E-business. Advantages: Internet has a important impact on business procedure. Some processes, such as procurement and SCM (Supply Chain Management) become more well-organized and cost-effective via Internet. Internet is also a good way for a company to sell its products honestly to its customers bypassing mediators in order to increase profit margin and to expand eCRM(Customer Relationship Management). Conducting on-line research also costs less but more well-organized (M2 Presswire, 2003). Disadvantages: Price transparency on Internet worsens price competition, which will result in the decrease of profit margin. Another threat of Internet is the commoditisation of brands. This threatens a company's brand image and markup as well (King, E., 2003). Clear Planning Process Marketing Strategy: Companies are now using the web as part of their marketing strategies in order to increase brand awareness and improve their reputation. The basic principle of marketing strategies is the marketing mix (4 Ps). FutureShop.ca offers every "consumer electronic Product for the digital age" , at the lowest Price on the market. Therefore they attempt to attract their customers by offering them the lowest price possible on the market: If the same product is found elsewhere at a lower price, Futureshop will automatically charge the competitor's price in order to "keep their word" and satisfy their customers. They also promote certain items that are on sale on the home page of their website by showing their discounted price as well as the amount the customer is saving in order to boost sales. Their Promotion strategy is a "MORE" in which they try to do more for the customer whenever possible. The element of Place refers to the need to have the product in different locations. The place referred here is the internet. When connected to FutureShop's home page, customers can shop by departments. Customers' needs aren't segmented; it is the classification of their products that is segmented. Therefore, they are using product-based strategy in their website which is very effective in their case because they are selling goods to many types of customers who have a wide variety of choices. Doing a product-based strategy helps customers find the product they want by looking in a particular product category or by using the search bar (Grande, C., 2003). Situation Analysis Market Segmentation: FutureShop sells practically every single electronic device that is now being sold on the market and owns more than 160 stores across Canada. They target all age groups located almost everywhere in Canada. Any middle aged person interested in buying a home appliance or any 16 year-old willing to buy a video game could go shop there. Hence, FutureShop segments its web site both demographically by focusing on customers of different age and psychologically by trying to appeal to the need of all of these potential customers. By being present on the Web, FutureShop is already considered as an "international business" and therefore also offer a geographical function that allows clients to search for their closest retailer in order to reduce channel conflict, streamline supply chain management and promote security to the people that are hesitant or so far resistant to online shopping to come to them directly. However, it is difficult to say that it is engaging in international business since they do not ship outside of Canada. By creating an e-commerce website, channel conflict will not be a major issue since they can capture a larger geographical part of the market that buys electronic devices from their competitors because they may be closer to where they live or work. FutureShop.ca provides the ability for a user to conveniently search for the different locations of stores around Montreal, and even around Canada. By having both the physical and virtual stores, they will have a larger share of the market (Carter, M., 2003). Objectives "There are five ways for proper running of shop online, for leading E-commerce. 1. Suitable technical sortiment 2. Wide range of offered products 3. Cheaper prices than in real shops 4. Additional information for products. In these shops there are no shop-assistants, so the buyer cannot contact anybody, thus he must read it somewhere. 5. Dominant aspect is active marketing for at least first three years of existence of shop, website etc." Strategies and Tactics Provide after sale service and support: Futureshop provides a good after sale support. They have a good remote support that ranges from e-mail and a toll free number for any questions and a technical support help via the web site which is flexible and cheap to conduct. The after sales customer support is not done on site, this is a big disadvantage as most of the equipment is difficult to handle and carry to the physical location .Futureshop offers an on-site ( Futureshop site) refund or an exchange for the items bought online within 30 days. Their support activities include the following: Finance and administration: As a huge business chain, Futureshop has a pretty well organized financial and administrative structure. Of course this structure cannot be seen on their web site but it can be felt. Otherwise they cannot grow so fast with an astonishing success. Human resources: Futureshop offers a detailed description of all their hiring activities that include the job position, a detail about the nature of the job, the category under which it is listed, the location of the store and when this position was posted (Batts, L., 2001). Communications Plan for Marketing Communications to Support the Launch of the Web Site Generating Site Visitors Technology Development: Futureshop is not a manufacturer of any of the products; therefore there is no need for any research and development department. Channel Conflict: Channel conflict also called cannibalization, can occur whenever sales activities on a company's Web site interfere with its existing sales outlets. Established 1982, Futureshop was merely a classical reseller. Around 1995 Futureshop launched its E-commerce web site. Evident that from the Futureshop web site no specific information about channel conflict can be obtained. Based on that we contacted Mr. Carl Fortin, a mid class manager, who affirmed the huge increase in the turnover. No specific information about the percentage of the e-commerce share was given (Bittar, C, 2002). According to Mr. Carl Fortin, launching the web site increased the sales in the physical store location due to the fact that customers utilized the web site to know more about the products and about their availability. Advertising: As mentioned before, identifying a group of potential customers is an elementary start in selling to them. To be able to target these prospective consumers, companies should use the right means of communication to carry the marketing message. Media communication selection is very crucial for an online business that has no physical store since their challenge would be to gain the trust of its targeted customers. In a physical store, it's all about customer service, that is, excellent personal contact between the employees and the customers. It is also important to display the products in a professional way in the store in order to attract clients and make them feel confident that we are selling high quality product. Since FutureShop has already built its reputation around its clients, its online business is an expansion of its physical one in order to extend its products to online customers. The web is considered to be an intermediate phase between mass media and personal contact. Web communication has as much advantages as personal contact since FutureShop.ca offers online customer service, encourages customers to email feedback about the website, company in general, the service offered by employees and the products sold on the site. FutureShop's main advertising media on the internet is done via e-mail. All promoted products and holiday offerings are sent to all newsletter subscribers. However, with the Christmas season approaching, they are trying to reach more people through Television advertising. Both television and radio are among FutureShop's most popular advertising media. They prefer this method of advertising rather than banner ads, even though web advertising is more trusted than mass media. They also advertise on the bottom of the webpage certain products that are new on the market to show that they are always up-to-date. This includes them updating the website frequently which is a competitive advantage for stickiness (Merle. 2000). Assessment of Models of Online and Multi-Channel Buyer Behaviour Revenue model: Futureshop focuses on their web catalog model as their revenue model where customers can place orders through their web site. The catalog can be viewed categorized by departments, which is sub-categorized to sections, or by brand, which makes it easy and flexible for the customer who is looking for a specific item (McDonald, Malcolm. 2002). Appraisal of Relevant E-Commerce and E-Marketing Tools For Marketing Marketing & Web Presence Many of today's companies have reached a point where having a website is a fundamental tool to achieve success. Giving the right image and effectively reaching their targeted customers are two of the most important factors of marketing on the web. The first page displayed when visiting FutureShop.ca is a link that directs you to either French or English languages knowing that they are the essential languages in Canadian business communications. FutureShop's website includes all the standard e-commerce features such as a Web Catalog, Shopping Cart, Transaction Processing, E-mails, Promotion and Discounting, Shipment Tracking and Secure Transaction. It is imperative to distinguish between sales and marketing. Sales promotions focus more on actually selling the products and making profit whereas marketing's main objective is to create strong relationships with the customers by targeting them with the right products and gaining their trust. Comparison with Offline Marketing Tools Approach for Evaluation When you refer to website stickiness it means making your website so interesting, so entertaining, and so informative that visitors will want to return time after time and spend more time browsing through it per visit (Jobber, David. 2001). There are several factors to test the stickiness of a website. First you must know your target market, which in this case is everyone with the need to have electronic equipment. After that you must check if your website includes any unnecessary graphics or images that will increase loading time needlessly; which isn't the case for Futureshop.ca. In addition to that, they include free information to their visitors about each product they sell and allow you to compare them. They also allow you after viewing a certain product to e-mail the page you are viewing to a friend; this idea also helps promoting certain products that are on sale. An on-line inventory check is also available to their visitors to ensure them that the product is available and can be delivered. This requires continuous updating and maintenance that is very appealing to consumers to show that there is constantly someone serving them when they have needs whether it is in the physical or virtual store. In addition to updating the inventory, they also update the advertisements on the home page that promotes certain new products on sale. It is a critical to change and update the website frequently because it keeps the visitor entertained, the content won't be repetitive and encourage the user to make frequent visits. Also available to website visitors are articles about FutureShop. This is a tool that promotes the web site's reputation and keeps the user on the website longer, making the website "stickier". The visitor will look through articles that promote the company and give assurance to the buyer that they can be trusted. Trust is also a factor of stickiness since it allows certain browsers to visit the website again and purchase an item. They also have an e-mail newsletter available to their visitors that allow them to receive product information and promotional news. The newsletters never include spam, they are only sent to the people who subscribe to it. Monitoring and Delivery of Service Quality of Online Presence Web Presence: Achieving an effective presence on the Web refers to the public image that an organization conveys to its customers, suppliers, employees, stockholders, and the general public. An effective Web site is one that creates an attractive presence that meets the objectives of the organization. These objectives should include: A. Attracting visitors: One of the many ways that Futureshop tends to attract their visitors is showing them the promotional offers and the new products on the market that they currently have on hand. This is very attractive for a visitor that visits the site for the first time. B. Keeping their attention: the effective use of website stickiness at Futureshop.ca is a positive asset for keeping customer attention in the website. C. Inviting visitors to explore the site: anywhere that Futureshop advertises they always include the link to their website to promote their e-business. This way they are inviting both their current customers and their potential customers to visit the website. D. Two way communication channel: customer service e-mails and numbers are displayed on the website. And usually they try to "give feedback in less than 15 minutes" if the problem isn't too serious (Doyle, Peter. 1994). Conclusion In Conclusion, Futureshop.ca is effectively meeting the needs of their visitors because they offer easily accessible facts about the company, allow viewing the site in different ways (English/French), offering easily accessible information about their products, sustaining the visitor's visits and encourage their return. References Ackoff, R. I. (1987), "Mission Statement". In Jobber, David. (2001), Principles & Practice of Marketing, 3rd ed. London: McGraw-Hill. Bagozzi, Richard P. (et al.) (1998), Marketing Management, London: Prentice Hall. Clancy, Kevin. (2001), "Marketing Strategy Overview", Online: Marketingpower, Available http://www.marketingpower.com/live/content.phpCategory_ID=300&Session_ID=6cd7d6f8924f07a7f1f31f4c66b42202&Item_ID=1285&Src, 15th August 2002. Doyle, Peter. (1994), Marketing Management & Strategy, Oxford: Prentice Hall. Lee, Linda and Hayes, Denise (2001),"Creating a Marketing Plan", Online: Marketingpower, Availablehttp://www.marketingpower.com/live/content.phpCategory_ID=373&Session_ID=47f0c65f04feec076c572a9db8ab3e9c&Item_ID=1029&Src=, 1st September 2002. Jobber, David. (2001), Principles & Practice of Marketing, 3rd ed. London: McGraw-Hill. McDonald, Malcolm. (2002), Marketing Plans: How to Prepare Them. How to Use Them, 5th ed. Oxford: Butterworth-Heinemann. Merle. (2000), "Winning the Game: Your Strategic Marketing Plan", 27th October, Online: Addme, Available http://www.addme.com/issue175.htm, 14th August 2002 Bittar, C,(2002), "New Faces same name", Brand Week, March11, v43, pp.28-30 BUAV - The Bluffers Guide To Animal Testing In The Cosmetics Industry (http://www.buav.org/pdfs/cosmetic_experiments_-_bluf.pdf). (Accessed: 03/09/03) Batts, L., (2001) (http://www.ecrm-online.com/Expose/V6_4/30.pdf) (Accessed:03/09/03) Carter, M., (2003), Estee Lauder gives itself a makeover, Financial Times, London, UK, p.8 Carter, M., (2003), A battle against the ageing process Airpost sales are down and department stores out. So beauty brand Estee Lauder is customers: [Surveys Edition], Financial Times, London, UK, pg.7 Grande, C., (2003), Top-End Tactics, Financial Times, London, UK, p.2 King, E., (2003), "Chance of Counters", Australian Financial Review, 28/03/03, p.89. M2 Presswire, (2003), Research and Markets: Estee Lauder Co. (EL) - Quantitative Valuation Report, Coventry, pg.1 Roth, L., (2003), Skincare brings glow to Estee Lauder earnings, FT.com, London, UK, pg.1 Schiffman, L., Bednall, D., Cowley, E., O'Cass, A., Watson, J., Kanuk, L., (2001), "Consumer Behaviour" (2nd Edn), Prentice Hall, Frenchs Forest NSW Singh, S., (2001), New-look structure to revitalize, Marketing Week, London, UK, pg.22 Singh, S., (2001), Estee Lauder moots $1bn global advertising review, London, UK, pg.10 (http://www.sharelearn.com/520samp.html) B2C Commerce (2005). Basics of eCommerce Website Development. http://www.ecommerceprogram.com/ecommerce/ecommerce-website-development.asp "E-Business" (2005). Definition retrieved February 11, 2005 from www.Wikipedia.org Read More