Internet Entrepreneurship - Assignment Example

Internet Entrepreneurship Table of Contents Table of Contents 1.0 Introduction 2 2.0 Market Opportunity 3 2 Aims and Objectives of the Internet Marketing Website emuu.com 3 2.2 Product Offering 4 2.3 Available Market and Potential Customer Segment 4 2.4 Competitors 5 2.5 Weaknesses of the Existing Sites 7 2.6 Potential Risks of the Proposed Venture 7 2.7 Barriers to Entry 8 3.0 Proposed Business Strategy 8 3.1 Value Propositions for the Customers 9 3.2 Value Proposition Principles 10 3.3 Value Creation 10 3.4 Capabilities of the Site 11 4.0 Business and Revenue Models 11 4.1 Security Aspects 12 4.2 Revenue Model 12 4.3 Financials 15 5.0 Marketing Strategies 16 5.1 Marketing Communications 17 6.0 Organisational Design and Start Up Considerations 18 7.0 Conclusion 19 References 20 Internet Entrepreneurship 1.0 Introduction One recent form of technical entrepreneurship has developed using the latest improvements in the information and communication technology especially in the computer technology in particular the internet for promoting the process called entrepreneurship. Thus an internet entrepreneur is one who makes use of internet for doing business. The internet entrepreneur takes the role of an innovator in finding new ideas for marketing in the internet. The entrepreneur is one who identifies new opportunities and takes advantage of such opportunities to his benefit. Based on the entrepreneurial innovative process this project has identified the marketing a safe network on the internet for young people. This paper details the market opportunities for providing a safe social net work for customers who are young people. The developed website is named www.emuu.com and will be marketed in this name and style through the internet. This paper is structured to present the market opportunities, proposed business strategy covering the customer segmentation and value proposition for the customers. In addition the paper also presents a business and revenue model for the marketing of www.emuu.com and the design of the organisation and the issues that need to be considered while starting up the internet business. 2.0 Market Opportunity The success of marketing a social network depends on the selection of a proper social net work software to design the website and also on the provision of the right kind of service to the customers so that they stay longer with the site (Ron McNeil). The objective of the social net work is to help the customers build up large communities and groups over the time. The site should create more opportunities for the customers to stay longer with the website and create the right kind of customer loyalty which is an absolute necessity for successfully running a social networking web site. In line with these observations, www.emuu.com is being promoted as social net work for younger people with the following aims and objectives. 2.1 Aims and Objectives of the Internet Marketing Website emuu.com The ultimate aim of the website is to create a safe social network for the young people which has a real value for the time and money the young people spend on the site. In order to achieve this aim the website has the following objectives: (1) Providing a number of educational games which have the effect of stimulating the minds of young customers; the games will not be the usual computer games but will have a good educational value and will contribute to the creation and development of analytical skills among the young children (2) Encouraging the communication between old friends and new ones who got acquainted through the internet; the site will act as the base for the development of a meaningful communication between the subscribers and the visitors to the website (3) Enhancing the importance of the internet safety by providing suitable safeguards in the form of encrypted user names and passwords so that the information supplied on the network is not being misused by fraudsters for illegitimate purposes 2.2 Product Offering The website proposes to offer the following products and services among other things to the young children aged between six and twelve: Educational and mind games online and offline Chatting, Blogging and other communication facilities Sale of children merchandise Trading in pictures and cards Downloading MP3s Entry to a virtual World with fake money Acquiring of assets in the virtual world 2.3 Available Market and Potential Customer Segment Social networks in general are targeted at adult generation with the main objective of providing hobbies and shared interests. But these networks in particular are formed with the intent of gathering people and slowly these sites turned to be internet marketing sites creating more revenues. However with respect to the social network for younger audience, the social network and the associated virtual worlds need to be created by brilliant marketers backed by creative ideas to enhance the passion for the product. Matt Bailey (2008) observes that in the year 2007 the visitors to the children social network website 'Webkinz' has increased by 342 percent to approximately six million unique visitors in the month of November 2007 alone. eMarketer estimates that almost 20 million children will become the members of various virtual worlds by the year 2011.The figure for the year 2007 was estimated to be 8.2 million. This provides a strong business case for the introduction and marketing of emu.com. Just like the 'webkinz' where the target customers are aged between 7 to 12 years, the target audience for emuu.com will be the young people in the age group of 6 to 12 years. With the increasing awareness the young children in this age group have become more computer savvy and hence there is high potential for attracting more young customers for project emuu.com. 2.4 Competitors One of the major competitors for the project emu.com is imbee.com. This website claims to be the first free social network created for the young world. The site included various fun activities like blogs, uploading of pictures, trading cards, audio, and video presentations. The site also claims that it is parent approved and teacher endorsed social networking site specially created for kids. Source: http://imbee.com/ One other competitor for the proposed emu.com can be identified in 'Webkinz' which plays the idea of an exclusive club with the membership given to those who purchase a plush toy. The site offers a virtual world where by playing games and earning money one can buy more items like a house, pool and other items. However social interaction in the site 'Webkinz World' is limited to the extent of chatting through pre-programmed statements. Another service being provided by this site is 'Webkinz Chat Plus' where direct chatting is permitted when the parents pay for this special service. Even in this product there is a limited vocabulary that can be made use of. This way the site prevents the use of addresses, phone numbers, and words from being exchanged. Source: http://www.marketingnewz.com/marketingnewz-22- 2.5 Weaknesses of the Existing Sites Taking clues from these competing websites, emu.com has been created to eliminate the short comings of these sites so that the website is made strong enough to compete with these sites. The imbee.com although claims to be a free social networking site, there are no enough features to attract more young children in the form of mind games or other attractions. The only strength that the site can claim is that it started off early. Similarly although the site 'webkinz' appears to be interesting, since there are restrictions on the interactions through chatting, the site may not found to be interesting for children above the age of 8. emuu.com takes in to account the drawbacks of both the sites and combines mind games and expanding the communication skills of children in the website. These features will be considered better than the other sites by the customers. 2.6 Potential Risks of the Proposed Venture The usual risks associated with any other internet business are inherent in this particular venture also. There is the potential risk of safety to the children as they are exposed to electronic and electric gadgets. This may need the involvement of the parents for sometime till the children get used to the application of various equipments and gadgets. The other risk being faced by the site is the protection of data being fed in by the children especially with respect to the personal identification details of the children. There is the risk of the vital data being hacked by the fraudulent people with ulterior and illegitimate motives. The greatest risk being faced by the website is the responsiveness from the customers. Despite all the planned promotional activities there is the potential danger of the site being not accessed by more number of customers. 2.7 Barriers to Entry Though there are certain formalities are there for the registration of the site the main barrier lies in the start up cost including the cost of the development of the programs and maintenance of the website. Another barrier to the entry into the industry is the need for creativity. Since the website is intended to target the younger customers, the creation of the programmes should have the maximum creativity which is difficult to maintain. Moreover the stiff competition among the players also presents barriers to the new entrants. Since the proposed emuu.com combines the features of educational games along with the communication facility the site is expected to perform exceptionally well against competition. Hence the project does not expect any major risk in taking off. 3.0 Proposed Business Strategy The business strategy of emuu.com will adopt a business strategy that makes the interface with the site easy for children, especially with older siblings around them. In order to meet the objectives of the project, emuu.com will revolutionize the off-line online interaction by allowing the children a safe socializing mode online and make them experience a cipher-world to which the adults have never been exposed before. In addition to the educational games the site will present a host of other attractions like blogging, how to do guides, selling branded toys and other merchandise catering to the younger generation and also introducing fake money and similar concepts of virtual world like that of wbekinz. 3.1 Value Propositions for the Customers The fundamental elements for the creation of value propositions for the customers lie in: (1) understanding the needs and preferences of the younger customers being the target market segment of the proposed venture (2) identifying and underpinning the ways and in which the customers in the segment communicate with each other and also the tools and techniques the younger generation can use and leverage for interacting through the website (3) identifying the issues and challenges in targeting and serving the customer segment and mitigating the challenges by effective means (4) learning from the existing best practices from the competitors and other firms in the industry and adopt them for the development of the site (5) developing a credible potential customer-centric value proposition based on the broad framework developed which covers: a. range of products, services and content of the products and services b. marketing and promotion of the website c. sales and service and amendments based on feedbacks of the customers d. established and successful business model e. mutually beneficial partnerships and f. efficient marketing communications (Telco 2.0) 3.2 Value Proposition Principles By adopting the above fundamental elements emuu.com will develop the following value propositions over the period: Customer Objective - to enable young children to develop their analytical and communicating skills by using the distinct features of the website Business Objective - to establish a strong customer base, build stronger customer loyalty and create high switching costs for the existing customers (by offering more value to the customers for the money spent which prevents them from switching to alternate service providers) Value Proposition - to create and strengthen high social value embedded and community focused networking solutions built around the unique requirements of younger generation through offering improved social networking, texting, music and other fine arts and fun and educational games 3.3 Value Creation Based on the above value principles the following values have been established to be created by emuu.com which is expected to meet the needs and preferences of the customers. Quality and Value for money - The site expects to create a higher quality and value for the money they pay for the services of the site. Customers' Preferences - The site proposes to bring to the use of the younger customers fun activities and interactive games which will enhance the creative skills of the children. At the same time the site also proposes to increase the effective communication skills of the children by encouraging them to enter into meaningful communications with peers identified through the website. Trust - Security of the personal data and other information provided by the children on the website will be provided utmost security so that there will be considerable trust developed on the website Parental Authority - The site will function with a dual authority system with the requirement if of both child and parent to log in to ensure ultimate safety for the data and supervision over the browsing and chatting through the site. Instant Messaging - The site will also offer an instant messaging service free of cost for the subscribers. 3.4 Capabilities of the Site As compared to the competing websites the proposed emuu.com will use specialist web designers for creation of the website so that the site becomes competitive. The product offering of instant messaging service is an additional feature that the website offers to the customers. Similarly the parental control on the internet activities of the children is an additional and unique feature of emuu.com. These enhanced capabilities of the firm make the website superior to the other competing sites. 4.0 Business and Revenue Models The business model of emuu.com will take the appropriate web models that have been by far the best and widely used models. These models have gained success in terms of their popularity and in terms of revenue generation as well (Thomas Alling). The business model will take care of the internet technologies that need to be used for the creation of websites. The criterion for developing the technology is the direct and easy accessibility to the children. emuu.com will thus be a simple, direct, and easy to use website that enables younger people to access and work on it with ease. 4.1 Security Aspects As far as the security of the system and programmes are concerned the registration process can be carried out by paying the subscription through credit cards or debit cards with appropriate card payment security procedures. The system interlink will be provided by the logging in of both the child and the parent and for this purpose the software will be equipped with a two profile system. For additional security archiving of all the data will be routed through the site for easy monitoring. As an enhanced feature word filters are provided to ensure that the children do not pass on unnecessary information through the website. Elaborate terms of conditions of service will be appended to the website which lays down the precise conditions for use of the website including the terms relating to the security aspects. 4.2 Revenue Model The revenue model for emuu.com will cover the sources of revenues to the site. The revenue model has the objective of maximizing the revenue from the website through various sources. The adult social net working sites like MySpace, Facebook, Bebo have been given much attention by the media and the analysts the rapid growth in the children networking sites have not so far attracted much attention. However Matthew Wall, (2007) of The Guardian is of the opinion that "Social networking sites for children are growing fast - and they are attracting attention from media companies and concerned adults" He further stresses that sites like 'Webkinz' and other interactive sites aimed at primarily young girls are proving to grow very popular among them. For instance Cartoon Doll Emporium targeting children six and sixteen has 3 million visitors in a month and Stardoll, another site aimed to serve seven and seventeen year old children claimed to have 8.8 million members. Nick Gibson, an analyst with Games Investor Consulting, says: "Game-playing among pre-teen children is pretty much 100% so this is a market that has emerged strongly over the past few years. We're likely to see a gradual infusion of non-games companies into this virtual world environment as brands attempt to control the marketing message." Disney online is the latest one to launch Virtual Magic Kingdom which attracts more than 17 million visitors a month aimed to capture the biggest market share in the age group between eight and fourteen in the year 2005. With these encouraging developments the proposed website emuu.com proposes to raise revenues from the following sources: Subscription/Registration Fees Banner advertisement charges Sale of Merchandise Commission from partner/affiliate websites and Selling marketing related data obtained from daily and weekly polls to marketing firms The revenue model will incorporate the following conditions relating to the revenue sources. Subscription - The website emuu.com will be made available to subscribers since the ultimate objective is to have the site as secured as possible. Giving a free access to the website will increase the chances for misuse of data fed into the website. It is proposed to have an annual subscription of 4.99 with a minimum subscription for 12 months. The expected subscription traffic is: Particulars No of Subscribers Year 1 10,000 Year 2 40,000 Year 3 75,000 Advertising - With the growth in the popularity over the period, the site is expected to receive advertising revenues. The charges that the company will be making for the advertising will be decided on the size of the banner and the demand for the advertising space. Sale of Merchandise - The website will promote the sale of toys and other children item branded with emuu.com logo as depicted below: The products will be priced between 5 and 20. These products will be sold through the online store. The sourcing of products will be based on the repeat sales of various items offered through the website. New products will be added as and when some innovative ideas are created. Commission from Partner Websites - Another revenue source is the commission receivable from the partner/ affiliate sites with whom emuu.com is sharing the web. The percentages of revenues to be shared will be decided on the basis of traffic to the site and the relative popularity of the partner sites. Periodic contracts will be entered into with these sites and the charges determined. Selling Marketing related Data - This is one of the popular revenue sources of networking websites. The site will conduct daily and weekly opinion polls on the preferences of children for various children products and the data collected on such daily/weekly polls will be bought by marketing firms to formulate their marketing strategies. This is an additional source of revenue for the website. 4.3 Financials One of the important aspects in deciding on the internet entrepreneurship is the financial considerations. The financial considerations in the case of emuu.com are detailed below: Details of Setting up Costs Particulars Cost () Website design (Building & Launching) 50,000 Security software 25,000 Stock (5000 @ 1.5) 7,500 Legal fees 2,000 Digital marketing 500 Registration of domain name 450 Advertising 40,000 Total 125.450 Details of Annual Recurring Costs Particulars Cost () Year 1 Cost () Year 2 Cost () Year 3 Wages 40,000 44,000 48,000 Overheads 5,000 7.500 10,000 Details of Expected Revenue Particulars Revenue () Year 1 Revenue () Year 2 Revenue () Year 3 Subscriptions 50,000 160,000 300,000 Advertising Revenue 25,000 40,000 75,000 Sale of Merchandise 7,500 10,000 15,000 Receipts from Partner Sites 4,000 8,000 10,000 Sale of Marketing Data 3,000 5,000 8,000 Total 89,500 223,000 408,000 5.0 Marketing Strategies The fact remains that the fastest growing trend on the internet today is the 'online community' among adults as well as children (Troy Berlin). 'Myspace' is the classic example on hand for the development of online community cite. However in order to take advantage of the rising market it is vitally important to create relationships without which any business can not meet a long term success. 5.1 Marketing Communications The marketing of emuu.com will be attempted through various modes of promoting the website. Some of the marketing strategies among other available marketing tools, the project proposal has identified are: By placing advertisements over search engines like Google, Yahoo! which brings an enormous potential marketing opportunities for the website. Though it may involve some initial expenditure in the form of fees payable to the search engines for listing it is a very important source of marketing for the site By entering into partnership and collaboration agreements with various other existing popular sites such as Facebook, Myspace and the like the product can be marketed to a wider section of the targeted customer population. For instance the current program being used by Facebook is known as 'Facebook ads' where the advertiser has the option to pay per click or per impression. The Facebook has become a popular site with its customer targeting, pricing and setup (Dirk Wagner) Word of mouth is another element of marketing the project considers of value in the marketing of the site. Since the target customers are young children in the age group of 6 to 12 there will be a high peer-pressure working on them. This is evident from the fact that the present day children talk about the Television shows and the computer games they played at schools as well as in any other social gatherings. On these occasions by proving its worth the site can become a much talked about one and attracted by many new subscribers. Promotional campaigns at various social gatherings by distribution of promotional vouchers have also been considered as one of the major marketing technique for the website. This has turned to be a proven marketing tool in respect of a large number of other similar products. The other marketing technique proposed to be adopted by emuu.com is the distribution of free merchandise at special events organised by the schools in various locations and other functions organised by cultural organisations. Distribution of free toy or other plaything will carry immense value among children and a proper marketing pamphlet or brochure distributed along with the free merchandise will do the rest of the marketing. 6.0 Organisational Design and Start Up Considerations The organisational design for the administration of the website will be a lean one with less number of employees to begin with. Apart from the CEO there will be a Senior Marketing Executive to be assisted by 3 marketing personnel at various levels. On the administration side initially a CFO will be appointed to take care of both the finance and administration functions of the organisation and he/she will be assisted by 2executives at different levels. There will be a research and development team consisting of 2 designers and other technicians to take care of the new product developments and other technical staff will include 2 people on roll with subcontracted services to take care of the amendments to the website as and when necessary. The issues that may crop up while starting up the project will be in relation to the creative work to be completed in the website design and the identification of potential products that may be offered to the customers. It is important to have a series of meetings with all concerned to arrive at strategic decisions for implementation of various policies relating to the product offering so that the success of the website is ensured. 7.0 Conclusion Social networking helps to build healthy and professional relationships among individuals. When this principle is applied to younger children with parental care and control, it will help to develop citizens with high ethical and moral standards. Since the social networking represents a collection of emotional ties between people of various origins, and culture and also the strengthening of those ties established, a website promoting this aspect will have to be considered as one that enhances the social values to new heights. "A website, which utilizes the right social network software, can provide a tool to measure of the loyalty that builds up by the continued presence of the users, and, at the same time, assists in determining how the information flows within the groups, building up and fostering the growing trust within" (Ron McNeil). There are a quite a number of advantages resulting from having a social networking website especially for children as it has got a great amount of value in internet marketing. Although internet marketing could be established without a networking concept, the marketing options become restricted in those cases. With a proper networking website backed by an efficient marketing strategy and the right kind of social network software much could be achieved over a shorter period of time. References Dirk Wagner 'Social Networking - New Revolution - How to Capitalize' Matthew Wall (2007) 'Virtual Worlds for Kids Take off' The Guardian August 9th 2007 Matt Bailey (2008) 'Webkinz And Marketing To Children' http://www.marketingnewz.com/marketingnewz-22- Ron McNeil 'Social Network Site Benefits' Telco 2.0 'Digital Youth: Exploring New Business Models' Thomas Alling 'The Google Revenue Model' Troy Berlin 'Web 2.0 Social Network Marketing Strategies' Read More