E-marketing assignment on Olympics Web TV - Essay Example

?E-marketing assignment on Olympics Web TV In this paper we shall use the SOSTAC model to develop the marketing strategy, tactics and control for Olympics Web TV, a product that will enable UK consumers to watch the 2012 London Olympics games at any time during the day or night from an internet-enabled device. To enable us develop the strategy we shall first conduct a SWOT analysis on Olympics Web TV’s marketing mix, then perform competitor analysis and finally propose a strategy for Olympics Web TV using blue ocean strategy methodology. Part 1: Developing marketing strategy SWOT analysis As a new company Olympics Web TV will have strengths with regards to its marketing mix on product, place, promotion, people and physical evidence. From the outset the product will be specifically designed for online delivery and as such the organisation can easily personalise their product to different consumer tastes and also avoid the costly challenges that its multi-delivery competitors faced in migrating their offerings to the Web. This focused-delivery mode will result in huge savings for Olympics Web TV especially in terms of infrastructure needed to operate. Olympics Web TV could use the new computing paradigms such as cloud computing to convert capital expenditure into operating expenditure, and easily scale their offering as and when required thus maximising on investment for product innovation. As an Internet-provisioned product, Olympics Web TV will be cheap to distribute and cost comparatively less to promote in comparison to non-Internet enabled TV products. Finally, online provisioned products have significantly less human resource requirements and less investment in physical evidence. These shall provide Olympics Web TV with huge savings as well. Olympics Web TV weaknesses shall mainly be encountered in its marketing mix under price and processes. The greatest cost for online TV is content licensing. As a new company Olympics Web TV may not have the huge resources required to compete with incumbents in securing the lucrative Olympics licensing rights. Moreover, the incumbents, such as the BBC and ITV, have the advantage of having had previous relationships with several key content providers such as movie rights, International Olympics Committee (IOC), FIFA and so on. Secondly, streaming video has an impact on customer Internet usage and, thus, increases cost of service to the consumer. With regards to processes, online TV has got lower switching costs in comparison to say, cable TV thus Olympics Web TV will have to ensure that its processes operate at optimal efficiency around the clock. As a new player, Olympics Web TV does not own or have access to significant existing infrastructure and this may have a negative impact on its processes. In spite of the above weaknesses, there are a number of opportunities that Olympic Web TV could exploit to create sustainable competitive advantages. For starters, the global trend towards increased online video streaming and Internet usage is an emerging market that provides an almost equal and open platform for new and established players to be innovative. Secondly, unlike its competitors, BBC and ITV, Olympics Web TV can easily enter into joint affiliations and partnerships even with both organisations and end up leveraging their content to its advantage. The large industry players are more likely to enter into joint affiliations and partnerships with small organizations than with each other. All said Olympics Web TV must also be wary of the following threats: (1) the impact pirated content has on the video streaming culture; (2) competition from emerging services such as Apple’s iTunes and also from existing video-streaming service providers such as YouTube; and (3) the non-competitive practices of large incumbents with deep pockets. Competitor analysis According to Porter (1998) competitor analysis involves looking at: the competitor’s objectives, competitor’s assumptions, competitor’s strategy and competitor’s resources and capabilities. In this analysis we shall focus on Olympic Web TV’s largest competitors: the BBC and ITV. The BBC is a public service broadcaster, and also the largest broadcasting organization in the world. ITV on the other hand is the largest commercial television network in the UK. Both the BBC and ITV have made it their objective to seek growth in market share in the digital public space (BBC 2010) and to drive up commercial performance of their online platform (ITV 2011). ITV for instance has been increasing the distribution of its ITV player on Apple and Android devices (ITV 2011). With such purposeful objectives, it would be foolhardy for Olympic Web TV to consider directly penetrating this market. In evaluating competitors’ assumptions, it is evident that both the BBC and ITV believe that the greatest value comes from generating their own content for airing. One way that Olympics Web TV could adopt to challenge this assumption is to pursue content aggregation from various producers to enrich its customer value proposition, for example prior to a race, while BBC and ITV use their own pundits, Olympics Web TV could provide their customers with a diverse portfolio of pundits from Europe, Asia, Africa and the Americas to choose from. With regards to resources and capabilities: Both ITV and BBC have immense resources at their disposal to create stiff barriers to entry for Olympics Web TV. Also both organisations have developed strategies focused on increasing their content and capabilities on digital media. That is why in the proposed strategy, Olympics Web TV needs to create a blue ocean. Blue ocean strategy The blue ocean strategy postulates that companies must break out of the accepted boundaries that define how they compete. The maxim here is to aim not to out-perform the competition in the existing industry, but to create a new market space or a blue ocean (Kim & Mauborgne 2005). Considering that Olympics Web TV has already identified their main target audience – as 25 to 35 year old males, professions, residing in the major cities in United Kingdom, and who are into sports and technology – the company could use the Four Actions Framework together with the Eliminate-Reduce-Raise-Create Grid (ERRC) tool in the blue ocean strategy (BOS) to reconstruct buyer value elements in order to craft a new value curve for the online TV industry (Kim & Mauborgne 2005). Table 1. Eliminate-Reduce-Raise-Create Grid (ERRC) for Olympics Web TV  Eliminate Raise Subscription Widen product / service range Interactivity on mobile internet-enabled devices Reduce Create Content production Online social experience Eliminate Here BOS advances that Olympics Web TV has to look for those factors in online video streaming industry that the industry has been competing on that can be done away with. Many online video streaming companies try to lock-in their customers through use of subscription fees. Apple’s iTunes has circumvented this provision by offering an on-demand service where customers pay-per-download. Eliminating subscription reduces the cost for the customers and thus influences their purchasing decisions. Olympics Web TV could adopt a pay-per-view for live events and pay-per-download for recorded events. Secondly, by adopting a pay-per-view or pay-per-download strategy, Olympics Web TV could come up with several product offerings to meet a larger market such as event only, event-plus-analysis, event-plus-history-plus-analysis and so on. Reduce The one thing that is clear in the strategies adopted by the BBC and ITV is that both organizations invest a lot on creating original content or acquiring primary content licenses. Olympics Web TV could reduce its costs significantly by acquiring both licensing and content from third parties, which may include its own competitors. Olympics Web TV could then instead invest in content delivery and content diversity as its competitive advantage. For example could offer its customers the option of viewing a race from the BBC while listening to commentary from an ITV pundit. Raise The third action of the BOS Four Actions Framework seeks to identify factors that need to be raised well-above the industry standards so as to differentiate the company’s offerings from its competitors (Kim & Mauborgne 2005). Unlike BBC and ITV that spend heavily on content licensing and original production, Olympics Web TV could focus on raising the interactivity of its online TV experience and provide a wider product/service range as its customer value proposition. Create According to Kim and Mauborgne (2005) the fourth action of the Four Actions Framework is for the organization to discover entirely new sources of value for its buyers and to create new demand and shift the strategic pricing of the industry. Since the greatest value of the Internet is derived from the online interaction, Olympics Web TV should develop tools that shall enhance this social experience when a customer is using their service. For example Olympics Web TV could allow for real-time commenting, placing of sports bets, selecting camera views and so on. By adopting a blue ocean strategy, Olympics Web TV will be able to achieve two things: firstly simultaneously pursue both low-cost and differentiation strategies, and secondly, create an uncontested market space where it will capture new demand. Part 2: Marketing tactics The success of the marketing strategy is dependent on the implementation plan and how effectively it shall be executed. Marketing tactics will involve selection of the communication tools to be used, planning how these tools will be used, choosing the marketing message, ensuring consistency of the marketing message across all marketing activities and budgeting adequately to cover these expenses. However, just like in developing the marketing strategy, here too we shall begin with evaluating the marketing mix to draw up the marketing tactics. For Olympics Web TV to choose its marketing message it will have to take into account the following: (1) its primary objective, which is to launch as a new product; (2) the elements of the promotional mix that will be most appropriate for announcing the launch of a new product; (3) the unique selling proposition of Olympics Web TV; (4) the projected target market size and (5) Olympics Web TV’s marketing budget size. Assuming that Olympics Web TV adopted the blue ocean strategy of pursuing both low-cost and differentiation we would expect the 7Ps of its marketing mix to be affected differently. The first thing that Olympics Web TV will have to do is select its market positioning strategy. According to Baines et al. (2008) positioning encompasses two fundamental elements: the physical attributes the functionality and capability that a brand offers, and the way in which a brand is communicated and how consumers perceive the brand relative to other competing brands in the marketplace. Assuming that Olympics Web TV will not be developing original content but aggregating to create a wider product portfolio that shall have high social interactivity capabilities, it would be best to take an expressive position and employing a benefit strategy. Under the benefit strategy, the marketing team will develop messages that proclaim the benefits that usage of Olympics Web TV confers on those that consume. The greatest cost for video streaming is content licensing. As a secondary content licensee, Olympics Web TV should be in a position to offer its clients lower prices. Furthermore, using a pay-on-demand and product-based pricing strategy, Olympics Web TV could be able to also offer a wide pricing range. Another tactic that Olympics Web TV could pursue is bundling its service with service providers such as Virgin Mobile so that Olympics Web TV comes as an integrated free application in smartphones, PDAs and other internet-enabled handhelds. Working with renowned service providers also gives Olympics Web TV a platform to conduct promotions. As an online-delivered service / product, Olympics Web TV could combine promotion with distribution. This is possible by ensuring that customers sign up before they are able to receive the service/product. Here Olympics Web TV could use business intelligence to function much like YouTube or Amazon which suggests similar products / services for the customer based on his/her profile. On the promotion marketing mix element, Olympics Web TV will have to take into account the fact that its product has a short lifecycle which leaves little room for post-launch adjustments. In such instances, Luan and Sudhir (n.d.) suggest that the organisation use a promotional mix that has high impact in the shortest time due to the short product-lifecycle. In this case Olympics Web TV could use the following: (1) advertising in popular sports blogs and websites; (2) carrying out joint sales promotions with service providers (e.g. Virgin Mobile) and/or device manufacturers (e.g. Apple); and (3) directly marketing to targeted sports consumer groups (e.g. Professional Football Fans Association). People are an important constituent of any marketing tactic whether for physical products or online products. Inasmuch as there could be optimal automation when it comes to online offerings, customers prefer being attended to by people. Olympics Web TV will need to seek a balance with regards to staffing for its customer service department. Outsourcing the helpdesk duties may be affordable in terms of cost but may be counterproductive in the sense that they cause customers to leave for a competitor. If Olympics Web TV does outsource its help desk then the firm needs to develop and manage strong SLAs with the third party so as to maintain good levels of customer service. Finally, whereas physical evidence may not be as strong a determinant for winning customers for an online-provisioned product as to a physically-provisioned product,The Chartered Institute of Marketing (2009) states that an online firm also has to ensure that the image portrayed by its facilities and staff is consistent with the type of product / service it offers. In summary, Olympics Web TV’s marketing tactics would appear as follows: (1) a premium Olympics coverage aggregator that offers live coverage and recorded coverage with expert analysis from top critics globally; (2) different price packages are offered for the on-demand service depending on client-needs; (3) promotional mix of online advertising, sales promotions and direct marketing on consumer lists obtained from key sports service databases will be employed; (4) service will be sold directly to consumers via the Internet; (5) Olympics Web TV will offer high level of pre-sales and after-sales support and advice to help consumers navigate through its service portal and enhance their consumer experience; (6) the service will be accessible round-the-clock; and (7) the image portrayed by Olympics Web TV staff, premises will be consistent with the type of service offered. Part 3: Control The control aspect of SOSTAC e-marketing planning model seeks to enable the business monitor its performance. And performance measurements can only make sense where they are related to the company’s business objectives. To enable the business know whether its meeting its objectives a metric system is required to define and measure progress. Measurements and ratios help marketers forecast, track and discover trends, monitor, and control four things: (1) e-customer behaviour, cost, value, and acquisition; (2) web site traffic, performance, revenue and other significant results; (3) e-promotional and advertising campaign performance; and (4) web site success (Embellix Software 2000). One metric system that can be used is referred to as using Key Performance Indicators (KPI) such as page views per session and time visitors spend on the website (Jackson n.d.). Page views denote the amount of times pages are viewed by visitors to a particular website. On the other hand, sessions represent the number of visitors to a given website over a given period. Combining these two metrics into page views per session gives the organisation a better tool to monitor how effective the website is with regards to closing a sale or meeting its objective (Jackson n.d.). The second KPI that Olympics Web TV should measure is time spent on the website. This KPI will depend on the major activity that Olympics Web TV would like its customers to take when at the website – in this case to watch the Olympics. Combining these two KPIs or any other KPIs the organisation can get a more complete picture of whether customers are finding what they need on the website (Jackson n.d.). There are several other e-metrics that Olympics Web TV could employ to get a more accurate picture on its customer life cycle, e-customer behaviour, return on investments and promotion calculations (such as acquisition cost, cost per conversion and so on.). The organisation selects the best metrics dependent on that which it seeks to evaluate for example tracking the life cycle status of each Web site user allows the organisation to personalize the site for each consumer and also provides continual insight into the health of the organisations customer life cycle funnel. From a top-line perspective, Web site metrics provides the organisation with the required information to make decisions about staffing, quotas, promotions, and production capacity (Cutler & Sterne 2000). Another major decision that Olympics Web TV will have to make with regards to control involves allocating resources for doing the performance measurement exercise. Conducting e-metrics has become an expensive process not only because of the needed sophisticated technology but also because of the highly skilled manpower that is required. The question of who will be responsible for conducting measurements and the frequency within which measurements are to be collected directly impact the cost of performing e-metrics. The trick of e-commerce is to focus on the right numbers so as to make accurate decisions about how to improve one’s e-services or portal and ultimately the conversion rate. This means that Olympics Web TV will also have to develop a plan on how they will analyse the data that they collect. The organisation must have structures in place on how the measurements collected will be used to guide decisions about future activities or else the entire process is a waste of time. Finally, Olympics Web TV will have to institute structures on reviewing of measurements and actions to be taken upon identification of variance. Much of e-metrics is built on units, terms and concepts that are jargon to staff in other domains of expertise. This means that the organisation would probably have to set up policies on reporting of e-metrics to make it easy for business, finance or marketing managers to review the measurements, comprehend the impact of ant variance and make recommendations on how to remedy the situation. Due to the huge data intensity of online applications, this task of reporting may require acquisition of software to translate the web analytics into reports that are much easier for management to comprehend. With regards to variance, Olympics Web TV should have a broad set of contingencies that can help get the online business through difficult periods or unexpected disasters. References Baines, P., Fill, C. & Page, K., 2008. Market Segmentation and positioning. In Marketing. Oxford: Oxford University Press, pp. 214-263. BBC, 2010. BBC objectives 2010/11. About the BBC. Available at: http://www.bbc.co.uk/aboutthebbc/purpose/objectives.shtml [Accessed August 21, 2011]. Cutler, M. & Sterne, J., 2000. E-Metrics: business metrics for the new economy. Embellix Software, 2000. eMarketing Planning: Accountability and eMetrics. ITV, 2011. ITV 2011 Interim Results. ITV plc. Available at: http://www.itvplc.com/media/newsrelease/?id=45646 [Accessed August 21, 2011]. Jackson, S., How Measuring Key Performance Indicators Can Improve E-Commerce Strategy. Part one. business know-how. Available at: http://www.businessknowhow.com/internet/kpi1.htm [Accessed August 21, 2011]. Kim, W.C. & Mauborgne, R., 2005. Blue Ocean Strategy, Boston, MA: Harvard Business School Press. Luan, Y.J. & Sudhir, K., Forecasting Marketing Mix Responsiveness for New Products. Available at: http://faculty.som.yale.edu/ksudhir/papers/JMR-07-0407-Manuscript_final.pdf [Accessed August 20, 2011]. Porter, M.E., 1998. Competitive strategy: Techniques for analyzing industries and competitors 2nd ed., New York: Free Press. The Chartered Institute of Marketing, 2009. How to achieve an effective marketing mix.  Read More