E-Marketing Environment and Strategy of Michael Hill - Assignment Example

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MICHAEL HILL Table of Contents Brief Introduction of the Organization 2 Industry Analysis 3 Strengths (In Michael Hill) 3 Weaknesses (In Michael Hill) 3 Opportunities (for Michael Hill) 4 Threats (On Michael Hill) 4 Past, current and future trends of the industry 4 Michael Hill’s Present e-Business Objectives, Strategies and e-Business Model 6 E-Marketing Environment 7 Global Markets – the opportunities of selling to overseas market 7 Ethical and legal issues 8 E-Marketing Strategy 9 Marketing Knowledge - how the existing website be part of marketing information system. 9 Consumer Behaviour - the applications of the internet on addressing the Internet Exchange Process 10 The applications in the internet environment 11 Segmentation and Targeting Strategies 12 Design the offer, value, distribution, communication, and market/partner relationship strategies 13 Objectives (measurable) (learning outcome 2) 14 Identify general goals flowing from e-marketing strategy. 14 E-Marketing Mix Tactics 14 Price – the strategy 15 Internet for Distribution – the length, the functions, members, B2B, B2C and C2C and management 16 Communication – the applications of Integrated Marketing Communication (IMC) in the E-environment including Texting, Blackberries, IPhones, wireless network etc. 17 Customer Relationship Management – the contribution of the website in CRM (Personalisation) 17 Organisational structures for implementing the plan 18 Budget (learning outcome 3) 18 Forecast revenue 18 Evaluate costs to reach goals 19 Evaluation Plan (learning outcome 3) 20 Identify appropriate performance indicators 20 References 21 Brief Introduction of the Organization Our organisation is called Michael Hill; this company generally provides jewellery. Michael Hill is an international company; it started in New Zealand since 1979. This business has been started by Sir Michael Hill and his family in Whangarei. However, Michael has extended his stores in all over New Zealand. In 1987 the company has been extended into Australian market. In 2002 the company has opened its first three stores in Canada as well as the company has established in United States. In the end of 2009 the company had 242 stores in New Zealand, Australia, Canada and the United States. The robust growth of the organization since its inception in 1979 was marked by successful accomplishments that included the awarding of its originator, Michael Hills, as one of Ernst & Young’s Entrepreneur of the Year in 2008 (Michael Hill: About Us, n.d.). Its craftmanship in diamonds and watch making are the organization’s core competencies, in conjunction with focus on exemplary customer service. Industry Analysis Strengths (In Michael Hill) Michael Hill Jewellery has some strength which can help them to get better position in their E-Marketing. People in New Zealand know Michael Hill since 1979, so they trust Michael Hill Company. As well as people believe that Michael Hill applies a pricing strategy that focuses on providing low prices through price promotional strategies, yet, good quality. Another reason that makes the firm to stand out is the continual revenue growth, which is a successful outcome of the organization’s core competencies in watch making and diamond craftsmanship. Weaknesses (In Michael Hill) The weaknesses that were noted in the organization includes locating New Zealand stores close to each other, particularly in the northern part of the country (in Glenfield, Pukekohe, and Sylvia Park), as well as in the middle portion (Upper Hutt and Johnsonville) where potentials for increasing market shares are diminished. Likewise, due to the number of stores in New Zealand, the organization carries high inventories which are cost intensive and thereby reduces maximizing income potentials. Opportunities (for Michael Hill) The opportunities open for Michael Hill are areas to expand in the international markets particularly in emerging markets where economic growths are being exemplified; for instance in markets of China and in India, as well as in other parts of the Unites States where a Michael Hill Jewellery shop has not yet been established. Threats (On Michael Hill) The threats that pose risks of decline in market share or in leadership position would be fiercer competition and the decline in the economic condition of a country. As stiffer competition puts pressure on the organization, there might be a need to re-evaluate strategies in the marketing mix. Likewise, a decline in economic condition of the local market could affect the purchasing power of the buyers and thereby limit their potentials for purchase of jewelleries, noted as luxury products. Past, current and future trends of the industry Trends in the global jewellery industry are on the uptrend, especially those who purchase jewelleries online. In an industry report, it was revealed that “according to Google trends graph of searches for “jewellery store”, 2006 was the tipping point for when people began searching online for jewellery stores, despite data existing for people searching for jewellery as far back as 2004” (Lasoo Pty Ltd., 2007, p. 8). As shown in Figure 1 below, New Zealand placed 4th in the most active group of online pre shoppers. Figure 1: Online Preshoppers by Region and Cities Source: (Lasoo Pty Ltd., 2007, p. 8) Accordingly, the current and future trend poses opportunities for jewellery makers, like Michael Hill, to focus on online promotions and advertising strategies to market their products and services. More importantly, the industry report indicated still an upward trend until 2015, as revealed in Figure 2 below, to potentially reach levels of $280 billion by 2015. Figure 2: Jewellery Sales, Projected until 2015 Source: Lasoo Pty Ltd., 2007, p. 5 Michael Hill’s Present e-Business Objectives, Strategies and e-Business Model Michael Hill’s present e-business objective is clearly and explicitly indicated when users view their official website. It simply indicates “Michael Hill shop online” (Michael Hill, n.d.). By using Rich Internet Applications (RIAs) through the Microsoft Silverlight, defined as “a free web-browser plug-in that enables interactive media experiences, rich business applications and immersive mobile apps” (Microsoft Silverlight, n.d., p. 1). The e-business model being used is the customer value proposition where Michael Hill proposed offering value to the customers through enabling them to view their products online, as well as the prices and enable the customers to appreciate the jewelleries being offered on an interactive setting. E-Marketing Environment Global Markets – the opportunities of selling to overseas market As learned from Chapter 4, global markets provide opportunities to sell products online overseas since previous studies have disclosed that internet users have been consistently increasing at an identified rate of 45% from 2007 to 2009 (Strauss & Frost, 2012, p. 4-8). It was also revealed that Asia apparently exhibited the most number of internet users; yet, Africa exemplified the greatest growth in internet use. There were also emerging markets or economies, noted as “a rapidly developing middle class, which creates demand for products and services” (Strauss & Frost, 2012, p. 4-9). The identified countries classified as emerging economies reportedly include India, China, Brazil and Russia. Using these information, Michael Hill could see opportunities to strategically locate new stores in emerging markets, particularly in Asia, where there have been noted larger volumes of internet users. Since their e-business goal is to invite their target customers to purchase online, the organization should pursue investing in areas such as China or India, both emerging markets and where there are vast opportunities to tap the online medium. Using the trends information, it was revealed that India is one of the most active groups of online pre-shoppers, ranked 7th and even surpassed the United States (Lasoo Pty Ltd., 2007). In this regard, this data could be a potential factor in Michael Hill’s exploration to evaluate opportunities in the global market. Likewise, as noted above, some states in the United States remain untapped where Michael Hills stores could be strategicially established as added opportunities to increase revenues and market share. Other factors should be evaluated in terms of considering establishment of stores in these locations to include language, culture, business practices and any market similarities. As emphasized, “marketers in emerging economies must find market similarities in order to be successful in selling products” (Strauss & Frost, 2012, p. 4-11). Likewise, macro-environmental factors should also be evaluated, to include: political, technological, social, economic, legal, and demographic factors prior to deciding on the potential locations for Michael Hill’s stores within any of the potential emerging markets. Ethical and legal issues From the discussion of ethics and legal issues in e marketing (Strauss & Frost, Chapter 5: Ethics and Legal Issues, 2012), it is important to consider technological issues that include: “ownership of intellectual property; the role of privacy in a virtual world; freedom of expression; use of data and its collection; and status of children and digital network” (p. 5-26). Especially since Michael Hill’s products are high quality luxury products, it is of utmost importance to take into account privacy and confidentiality of the customers, as well as to ensure that personal information that would be required during the sales transaction process are safe and secure. Therefore, aside from researching the relevant factors above noted, issues pertaining to security breaches within the emerging markets must be comprehensively evaluated as inputs in the decision-making process of Michael Hill. E-Marketing Strategy Marketing Knowledge - how the existing website be part of marketing information system. The existing website of Michael Hill is a crucial source of information that includes browser options such as: Diamonds, Engagement, Jewellery, Men, Watches, Catalogue/TV, About Us, Careers, and Fast Shop. Under About Us, for instance, customers or potential target consumers could view information relative to the company history, finding a store from four distinct locations (Australia, New Zealand, Canada and the United States), sponsorship, company news, investor centre, craftsmanship, customer service, and education. Through providing opportunities for consumers and clients to contact the organization through diverse subjects (feedback, customer service, recruitment, merchandise enquiry, and website feedback), Michael Hill is able to obtain relevant information and data on their customers’ preferences and comments about their products and services. As emphasized in Chapter 6 on E Marketing Research, “a marketing information system (MIS) is the process by which marketers manage knowledge” (Strauss & Frost, Chapter 6: E Marketing Research, 2012, p. 6-7). The site explicitly defines terms and conditions, as well as privacy policy that would ensure customers of the safety and security of their personal information when disclosed through the website. The information gathered, known as primary data or internal records, would be used by various departments (accounting, marketing, finance, information technology) to design e marketing strategies that would be applicable to the organization’s marketing mix. The kinds of information that could be generated from the website include “tracking of user movements through web pages” (Strauss & Frost, Chapter 6: E Marketing Research, 2012, p. 6-9), especially in terms of identifying fast moving products, those which are most preferred according to locations, and what types of products cater to customers of different demographic profiles. Their fast shop browser, for instance, contains information of products in various categories (rings, charms, bracelets, earrings, pendants, among others) and gender, material, style, gemstone, and collection which could are collected, tabulated, and analyzed by the marketing research department for inputs into strategies for the marketing mix. Consumer Behaviour - the applications of the internet on addressing the Internet Exchange Process According to Chapter 7, the internet exchange process was explained as a basic marketing concept where exchange was expounded as referring “to the act of obtaining a desired object by offering something in return” (Strauss & Frost, Chapter 7: Consumer Behavior Online, 2012, p. 7-30). Likewise, it was noted that the process of exchange apparently occurs within the diverse contexts, ranging from technological, legal, and socio-cultural. From the point of view of Michael Hill, their official website provides opportunities for clients to specify the location of their target stores to enable the organization to identify the particular cultural dimensions that are actively applicable to the consumers’ settings. For instance, consumers in New Zealand could exhibit a particular preference which would be manifested as an identified pattern of purchase for a particular watch or jewellery, for instance. The organization could also trace price sensitivities as against demand; and the demographic profile of consumers who are most likely to purchase what particular kinds and categories of jewelleries online. From the industry report, “according to Hitwise New Zealand, the top three websites visited by New Zealand internet users via the search term ‘jewellery’ for the 24 week period ending 04/08/07 were Hanne Andersen Designer Jewellery (www.hanne.co.nz), Christies Palmerston North (www.jewellerywatches.co.nz) and Walker and Hall (www.walkerandhall.co.nz)” (Lasoo Pty Ltd., 2007, p. 5). As such, this secondary source of information reveals that Michael Hills should take more aggressive online strategies by evaluating the strategies of these competitors who were deemed most visited by the New Zealand internet users. By analysing consumer behaviour, Michael Hill could incorporate factors that these consumers are looking for at online jewellery shops to improve online visits to their organization, as one of its objectives. The applications in the internet environment Under e marketing strategic planning, discussed in Chapter 3, it has been presented that the concepts of “market and product strategies, called Tier 1 tasks or strategies, are outcomes of strategic planning” (Strauss & Frost, Chapter 3: The E Marketing Plan, 2012, p. 3-11). Likewise, strategies include areas such as ssegmentation, targeting, differentiation, and positioning. Segmentation and Targeting Strategies In the case of Michael Hill, segmentation and targeting strategies were applied through the identification of the locations of its stores in areas where there are potential customers who have signified intention to purchase and repeatedly avail of the organization’s products and services. In New Zealand, there are approximately 50 stores in strategic places such as Whanjarei, Whakatani, Hamilton, Potorua, Taupo, Gisborne, New Plymouth, Napier, Hastings, and Wanganui, among others. As noted, segmentation is the process of grouping or segmenting individuals, groups, or businesses according to the perceived use, consumption or benefits of the product (Strauss & Frost, Chapter 3: The E Marketing Plan, 2012). At the same token, targeting means selecting potential or prospective consumers which are deemed most attractive to the products and services offered by the organization. As such, the selection of target store locations of Michael Hill was premised on the concepts of both segmentation and targeting after identifying the consumers (target market) who are mostly viewed as individuals or groups who would purchase their products on a regular basis. These are people from middle to high income group, professionals, celebrities, from both male and female genders, and with ages ranging from as early as 20s to about 40s and above. Differentiation and Positioning Strategies Michael Hill applies differentiation and positioning strategies through the online medium by focusing on product and services differentiation through their exemplary craftsmanship. As emphasized by Strauss & Frost (2012), differentiation through the internet provides opportunities for the organization to increase their revenues through tapping online customers and using the Silverlight application to create and enhance distinctive customer experience through the organization’s official website. On the other hand, positioning strategies that were employed by Michael Hill includes exuding a sophisticated image through exemplary craftsmanship in their jewellery collections. Design the offer, value, distribution, communication, and market/partner relationship strategies When one accesses Michael Hill’s website, the initial message was inviting customers to shop online and have recently provided a strategy that offers no deposit and no interest until 2015, as shown below in Figure 3. The offer strategy captures the attention of current and prospective customers to avail of a limited time promotional offer that would make purchases affordable and convenient. The advertisement and promotional campaign is shown both in the Greensborough website, as well as in the Michael Hill’s website through an intermittent flash of the caption upon accessing the site. Figure 3: Pricing – Promotional Strategies Source: Greensborough Plaza, 2012 Objectives (measurable) (learning outcome 2) Identify general goals flowing from e-marketing strategy. From the e-marketing strategy of Michael Hill, the following are the objectives that were deduced to be accomplished: To increase online purchases; To expand into emerging markets; To increase market share in New Zealand; To be named among the top viewed online jewellery shops in New Zealand; To enhance brand and corporate image. E-Marketing Mix Tactics Product – the offer/benefits, the suitability in the E-Marketing context. Currently, Michael Hill offers various categories of jewelleries, as presented in the following Table 1. Table 1: Product Categories and Quantities Offered, Michael Hill Product Categories Quantities Offered Rings 526 Charms 402 Earrings 250 Pendants 229 Watches 127 Chain 49 Bangles 29 Clip-On-Chains 25 Lockets 13 Box Sets 6 Source: Michael Hill, n.d. The options to access and view these products are made available through the Microsoft Silverlight application and customers could even specify their gender, the materials preferred (yellow gold, sterling silver, white gold, two-tone, and gold and sterling silver), the gemstone (plain/unset, diamond, other coloured, ruby and sapphire). The site likewise includes browsers for diamonds (rings, pendants, earrings, bangles, bracelets); engagement (solitaires, shouldered solitaries, bridal sets, invisible settings); and watches for men and ladies. Price – the strategy At the onset, Michael Hill stipulated the price of a diamond ring to range from the noted $299 for ? carat to $799 for 1 carat. At the high end category, 3-carat diamond solitaire ring was pegged at NZ$ 42,999. Buyers are most aware that jewelleries are luxury items and their prices differ depending on the stone, the cut, and the quality of craftsmanship. At Michael Hill, although the corporate image that is being projected to online consumers is its sophisticated high-end quality of products being offered, it is commendable that through pricing strategies, promotional discounts are offered through the no interest, no deposit scheme that has been recently instituted. Using this strategy projects the image that Michael Hill wants to make their products affordable to consumers of various income groups. Likewise, by making a no deposit, no interest strategy, consumers are given the leeway to purchase on a longer-term basis. As observed, the organization also uses the psychological pricing scheme that pegs their prices based on dollar amounts that end in 999 instead of a full 1000. The organization likewise applies segmented pricing where prices differ according to geographic locations. Internet for Distribution – the length, the functions, members, B2B, B2C and C2C and management Michael Hill’s official website provides various opportunities for e marketing through interacting with businesses and consumers alike. In B2B (businesses to businesses), consumers who are business organizations could access and order products from Michael Hill using the same portal and by contacting them through email or through any of their contact numbers. In B2C (businesses to consumers), the same official website could be a viable medium for business organizations, such as Michael Hill, to directly contact consumers by replying through the contact details provided (either through email, through responding on the same portal, or through a formal correspondence, as required). In C2C (consumer to consumer), Michael Hill’s disclosure that they could be accessed through any of the social networking sites: Facebook, Twitter, YouTube, Pinterest, Linked in, Google +, and Michael Hill Blog, enables consumers (both buyers and sellers) to exchange ideas, comments, and share relevant information pertinent to contracting business with the organization. Communication – the applications of Integrated Marketing Communication (IMC) in the E-environment including Texting, Blackberries, IPhones, wireless network etc. Through social networking sites that were abovementioned, communication and correspondences are exchanged. As stated in the organization’s mission statement: “to be the most people focused jeweller in the world” (Michael Hill Blog, 2012, p. 1), their dedication to perfecting the craft of jewellery making has provided the generation of a exemplary and sophisticated image to consumers. The organization’s various social networking sites and official website offers opportunities for communication through email and through leaving feedback, comments, and inquiries in which ever option the consumer deems appropriate. Customer Relationship Management – the contribution of the website in CRM (Personalisation) According to Strauss and Frost (2012), “relationship management strategies (include the use of) CRM (customer relationship management) or PRM (partner relationship management) software to integrate customer communication and purchase behavior into a database” (p. 3-15). In Michael Hill’s case, the organization evidently provides vast opportunities for CRM through indicating the various social networking sites where they could be contacted. In so doing, the organization aims to ensure that customers could communicate with the organization in which ever social networking sites they are potentially using. The unlimited potentials provided for e marketing were comprehensively evaluated and applied through opening all available portals for communication. Organisational structures for implementing the plan To implement the e marketing plan, Michael Hill is in fact governed by Michael Hill International Inc. with offices at Offices of Kensington Swan, Level 9, 89, The Terrace, Wellington, 2922, New Zealand. Its roster of key executives is shown as Table 2 below: Table 2: Key Executives for Michael Hill International Ltd (MHI) R Michael Hill, Chairman Emma J Hill, Deputy Chairman Michael Robin Parsell "Mike", Chief Executive Officer Philip Roy Taylor "Phil", Chief Financial Officer Ross McKinnon, Chief Information Officer Andrew Sparrow, Financial Controller Wayne K Butler, Secretary Source: (Bloomberg, 2012) Budget (learning outcome 3) Forecast revenue From the financial statements provided by Bloomberg BusinessWeek (2012), the following highlights are cited to enable the forecasts of a 12-month revenue based on historical figures, as shown in Table 3: Table 3: Financial Highlights, Revenues for the Comparative 2009 to 2012 in $USm Currency in Millions of New Zealand Dollars As of: Jun 30 2009 Restated NZD Jun 30 2010 Restated NZD Jun 30 2011 NZD Jun 30 2012 Revenues 412.7 443.7 489.3 511.5 Other Revenues 0.2 0.2 0.2 1.5 TOTAL REVENUES 412.9 443.9 489.5 513.0 Source: (Bloomberg BusinessWeek, 2012) Using the historical figures, it could be deduced that the total revenues are increasing at an average growth rate of 7.52% (or 0.63% per month) over the 2009 to 2012 time frame. Using this average rate as the standpoint, the 12-month projected revenues from July 30, 2012 to June 30, 2013, are as follows: Table 4: Forecast Revenues, 12-month period Monthly Revenues (Forecast) Amount in Millions of US$ July 2012 43.02 August 2012 43.29 September 2012 43.56 October 2012 43.83 November 2012 44.11 December 2012 44.39 January 2013 44.67 February 2013 44.95 March 2013 45.24 April 2013 45.52 May 2013 45.81 June 2013 46.10 TOTAL FORECASTED REVENUES 577.25 Evaluate costs to reach goals There are costs to reach the identified goals such as: to increase online purchases; to expand into emerging markets; to increase market share in New Zealand; to be named among the top viewed online jewellery shops in New Zealand; and to enhance brand and corporate image. To be able to accomplish this, Michael Hill should earmark at least 10% of the net income recorded for the period ending June 30, 2012 amounting to $36.5 million or $3.65 million. Assuming that net income is about 7.11% of revenues, from the forecasted revenues of $577.25 million as of June 2013, a projected net income of $41.04 would still be generated which is just enough to cover the costs. Likewise, with the goal to increase online purchases and market share, the average growth rate of 7.52% per annum is only conservative and could relatively increase as a result of e marketing strategies. Evaluation Plan (learning outcome 3) Identify appropriate performance indicators Performance indicators are standards that have been identified by the organization to measure the progress of the strategies applied. For Michael Hill’s situation, since the goals were explicitly identified as: to increase online purchases; to expand into emerging markets; to increase market share in New Zealand; to be named among the top viewed online jewellery shops in New Zealand; and to enhance brand and corporate image; the performance indicators that would effectively measure the significant progress towards the accomplishment of these goals are: (1) number of online viewers to their official website and to other social networking sites; (2) market shares in current markets as well as in the identified emerging markets where strategic locations for stores would be established; and (3) brand recall and brand awareness to be determined through customer satisfaction feedback or surveys and in identified secondary industry reports. Finally, a good gauge of performance is the financial statements which would indicate in monetary terms the impact of the strategies that were implemented during the year. Through past historical figures and growth rates, it was deduced that an average monthly growth rate in revenues of 0.63% or 7.52% per annum would be realized. This is the most conservative rate that Michael Hill is expected to grow at status quo or without implementing the e marketing strategies and goals that were identified. However, since efforts on products, pricing, promotions, distributions, communications, and consumer relations marketing have been clearly identified to be pursued, a more optimistic forecast of say, from 10 to 15% annual growth in revenue could be realized. This could effectively be measured using the forecast figures and to be compared to the actual financial figures at the end of the fiscal year June 30, 2013. References Lasoo Pty Ltd. (2007). Jewellery Industry Analysis. Retrieved August 30, 2012, from damiendonnelly.com: http://damiendonnelly.com/wp-content/whitepaper/Jewellery_industry_analysis.pdf Michael Hill. (n.d.). About Us: Company History. Retrieved August 29, 2012, from https://www.michaelhill.com/#companyhistory Microsoft Silverlight. (n.d.). About Silverlight. Retrieved August 30, 2012, from microsoft.com: http://www.microsoft.com/silverlight/what-is-silverlight/ (2012). Chapter 4: Building Inclusive E Markets. In J. Strauss, & R. Frost, E Marketing 6/E. Pearson Education, Inc. (2012). Chapter 5: Ethics and Legal Issues. In J. Strauss, & R. Frost, E Marketing 6/E. Pearson Education, Inc. (2012). Chapter 6: E Marketing Research. In J. Strauss, & R. Frost, E Marketing, 6/E. Pearson Education, Inc. (2012). Chapter 7: Consumer Behavior Online. In J. Strauss, & R. Frost, E Marketing, 6/E. Pearson Education, Inc. Read More