Perspectives of Coach Inc, Amazon and eBay to Succeed - Assignment Example

Electronic Commerce and Application Contents Question A 3 Introduction 3 Discussion 3 Analysis of companies 4 Conclusion 5 Question B 6 Introduction 6 E-marketing Theories 6 Types of e-marketing strategies 7 Conclusion 8 Reference List 10 Question A Introduction In the marketing literature, first mover advantage (FMA) is defined as the ability of earning higher profits by taking an innovative step that has not been considered by competitors. The basic argument behind this strategy is the chance of obtaining a higher market share. On the other hand, a market follower approach is one where follower firms quickly adapt the successful strategies of the first-mover firms. In the world of virtual marketing there are evidences that early followers have a competitive edge over the leading firms (Reichheld and Schefter, 2000). This paper explores the existing debate between first-mover and follower firms to study the impact of each of them. Discussion The synthesis of the existing literature points out that the first-mover advantage in e-commerce comes from both the customer and the producer side. It has been documented that the first-mover firms have an opportunity to obtain greater knowledge about customers and securing their trust. Works of researchers like Reichheld and Schefter (2000) had comprehensively pointed out the advantages that accrue to the producers on account of FMA. Another recurrent factor in the academic discussions is the higher market share that results from the FMA. They suggested affiliate relationships, establishing partnership with major portals and increasing access to financial resources as the major advantages (Barney, 1991). One of the major examples of firms using e-commerce for growth is Netflix which has introduced features like personalization tools and recommendations systems as a useful mechanism to differentiate between customers in the rental business. Similarly, e-bay had also banked on the e-tailing technology to rapidly expand its set of buyers and sellers. Despite the advantages that can be earned from the FMA, several researchers have also shown that follower firms can also gain a number of advantages by replicating the efforts of the leading firms (Suarez and Utterback, 2007). For instance, the research of Golder and Tellis (1993) had shown that late movers can easily become free riders on the first-movers allowing them to obtain similar knowledge regarding buyer education and enhanced security in transactions. Other researchers like Suarez and Utterback (2007) have shown that late movers can have additional advantages as the market uncertainties and technological drawbacks are removed by the time they enter. Finally, factors like customer satisfaction and customer needs can only be comprehended after a certain time span has elapsed proving followers advantage (Boulding and Christen, 2003). For example, in case of spider/crawler search engines Webcrawler was considered to be the first-mover but it could not become the market leader. It was Yahoo which was a market follower that had become the market leader. The market share of Yahoo is currently higher than Webcrawler (Boulding and Christen, 2003). Analysis of companies This paper discusses the case of Amazon and E bay, both of which were first movers in different industries but both of them had gained additional advantage over their competitors. Ebay, has evolved into a marketplace, based on the virtual platform. It is a platform which allows the users to buy or sell things. The company had rapidly banked on the popularity of e-commerce (Porter, 2001). The company had been able to build a strong base of both buyers and sellers with the help of aggressive marketing. The company has successfully expanded its operations on both sides of the Atlantic. E bay had established relationship with more than 60 websites to create a robust commercial network (Porter, 2001). E-bay had also successfully relied on viral marketing in its initial years to drive out the competitors. Competitors were unable to match the success of the company as it continues on the quest to become the largest shopping mall in the virtual world (Porter, 2001). The case of Amazon is one of the classic examples where being the first-mover had helped the company to establish itself as the market leader back in 1995. Amazon had strategically partnered with the leading players in the internet service industry like Prodigy, Netscape and Yahoo to capitalize on their customer base. Amazon had particularly followed a product diversification strategy and e-commerce became a major part of their increased market penetration strategy. Researchers had suggested that the FMA of Amazon could be traced to the intangible assets and capabilities, technical superiority and market knowledge (Mellahi and Johnson, 2000). Innovation in the e-commerce arena had allowed Amazon to become a true leader. Soon competitors began to copy the e-commerce business model and ride on its free technology but they were unable to duplicate the success of Amazon.com because it had already built a huge consumer base and a brand name. Amazon had been able to obtain a great deal of information from the customers, which in turn had allowed them to forecast demand in a better manner (Mellahi and Johnson, 2000). Conclusion This paper has explored into the first mover and follower strategy of e-commerce. From the analysis of the companies it has been found that first-mover advantage can provide a host of opportunities as has been observed both in case of Amazon and Ebay. Both of these companies has established themselves as market leaders and the firms which have followed them has been unable to replicate the success even though they became free riders and utilized the existing customer base of the mentioned companies. For this purpose it can be suggested that first over advantage in e-commerce is a lucrative notion. Question B Introduction Coach Inc. has crafted a name for itself in the luxury fashion industry in New York. The company initially established in 1941 had opened its first virtual store in 1999 as www.coach.com. The current website of the company is satisfactorily impressive on account of two main features: the physical appeal of the website and the ease of navigation it provides (The Coach, 2014). However, the main shortcoming of the website is that it does not allow an easy preview of the product which could be largely attributed to the cumbersome design. This section of the paper helps in selecting an internet marketing plan for the company in Singapore by weighing the available options available to them namely one-to-one marketing, viral marketing, blog marketing and social media marketing. E-marketing Theories The existing theories on web marketing are relatively scarce. Most of the research that has been conducted in this regard has focused on the role of website effectiveness, designing the website and search engines (Hennig-Thurau, et al., 2004). Social media marketing has effectively altered the purchasing behaviour of the individuals in terms of information search and obtaining after sales service. It has been observed that use of social media platforms are widely being used by marketers to generate interest among consumers by interacting directly with them. Researchers like Hennig-Thurau, et al. (2004) had pointed out that the e-marketing strategies help in performing a series of multi-dimensional functions that ranges from attracting and searching customers to retaining them. Many researchers have pointed out that there are three main sources of influencing the customers namely scope, site and system. The first one relates to the concept of using a website for transactional purposes. The second one relates to the use of website for comparing and the final one relates to the security of the people while conducting search on the websites (Lindgreen, Dobele and Vanhamme, 2013). Companies like Amazon have successfully incorporated a wide range of e-marketing strategies like youtube videos to the point of making them viral, social media marketing and affiliate advertising methods in order to attract maximum consumer attention (Lindgreen, Dobele and Vanhamme, 2013). Types of e-marketing strategies An integrated social media marketing can be adopted the Coach which would involve a series of online marketing channels. The rationale behind choosing this method is that it encompasses a wide range of activities like blogs, one-to-one marketing, viral marketing and social media marketing. The current statistics of using social media marketing in Singapore is shown below: Figure 1: Social Media Usage in Singapore (Source: Hashmeta, 2014) Fashion and Beauty products have a total sale of $146 million (Hashmeta, 2014). Viral Marketing: This form of marketing largely relies on the social relations set up by the business where the expectations that the customers have from the products are highlighted. Coach can implement viral marketing by putting up edgy videos on the social networks that can generate wide interest among the users. One-to-one marketing: The concept of one-to-one marketing is derived from that of the relationship based marketing. Researchers have pointed out that this form of a marketing strategy allows a company to establish an individual dialogue with the customers and they become loyal to the brand (Lindgreen, Dobele and Vanhamme, 2013). For instance, Coach can significantly create a one-to-one marketing by following the buying behaviour of the customers. Frequent shoppers can be directly communicated through e-mails to make them aware of the special discounts and offers. Additionally, higher discounts can be given on the basis of more frequent purchase. Affiliate Marketing: Affiliate marketing is one of the most rapidly growing forms of social marketing in which the merchant puts up an advertisement on the space of a website for customers to view (Duffy, 2005). In case of the Coach, one of the most effective strategies to use affiliate advertising would be to use Facebook as an affiliate as statistics show that it has the largest popularity in Singapore. Blogging: Empirical evidences show that the phenomenon of blogs can be created very easily without investing formidable financial resources. In case of Singapore it has been observed that fashion blogs have a significant impact on the purchasing behaviour of the individuals as they have become a potential contender of word of mouth. Most of the fashion brands like Dolce and Gabbana and Chanel are using blogs to shape the opinion of the customers (Ng, 2008). Social Network Marketing: There may be a number of social network marketing strategic tools that can be used by companies like Facebook, Instagram, LinkedIn, Google+ and Tumbler to name a few. In case of Coach maximum promotional activities can be taken up in Facebook, Youtube and Google+ as they have the largest market share. Conclusion Social media marketing is a wide concept that requires careful detailing. Coach Inc. has already become quite successful in the U.S and is currently seeking a prosperous market share in Singapore. In doing so, developing a comprehensive marketing plan involving a variety of tools like affiliate marketing, social networking, blogging and one-to-one marketing can be used. It can be expected that following these strategies will help the company to improve its dialogue with the customers and improve the overall brand loyalty. The improvement in brand loyalty and customer satisfaction is expected to translate into financial gains. Reference List Barney, J., 1991. Firm resources and sustained competitive advantage. Journal of Management, 17(1), pp.99-120. Boulding, W. and Christen, M., 2003. Sustainable pioneering advantage? Profit implications of market entry order. Marketing Science, 22(3), pp.371–392. Duffy, D. L., 2005. Affiliate marketing and its impact on e-commerce. Journal of Consumer Marketing, 22(3), pp.161-163. Golder, P. and Tellis, G., 1993. Pioneering advantage: Marketing logic or legend. Journal of Marketing Research, 30(2), pp.158–171. Hashmeta, 2014. Social Media in Singapore. [online] Available at: [Accessed 22 December 2014]. Hennig-Thurau, T., Gwinner, K.P., Walsh, G. and Gremler, D.D., 2004. Electronic word-of-mouth via consumer opinion platforms: what motivates consumers to articulate themselves on the Internet? Journal of Interactive Marketing, 18(1), pp. 38–52. Lindgreen, A., Dobele, A. and Vanhamme, J., 2013. Word-of-mouth and viral marketing referrals: what do we know? And what should we know? European Journal of Marketing, 47(7), pp. 67-82. Mellahi, K. and Johnson, M., 2000. Does it pay to be a first mover in e.commerce? The case of Amazon.com. Management Decision, 38(7), pp. 445-452. Ng, M., 2008. Building a global Asian fashion brand. [pdf] New York University. Available at: [Accessed 22 December 2014]. Porter, M.E., 2001. Strategy and the Internet. Harvard Business Review, 79(3), pp.62-79. Suarez, F. F. and Lanzolla, G., 2007. The role of environmental dynamics in building a first mover advantage theory. Academy of Management Review, 32(2), pp.377–392. The Coach, 2014. About us. [online] Available at: [Accessed 22 December 2014]. Read More