The Key Traits and Bases of Success of the Marketing Strategy of Online Retailers - Coursework Example

Report Online Marketing Module Module SID Number: Executive summary The Internet, Intranetand call centre technologies have changed strategy and marketing strategy practices. They have sparked the growth of new types of business and have affected the business models, strategies and tactics of competitors, across industries and sectors. One sector that has profited from this technological revolution is retailing. Online retailers have become a success story in terms of marketing management and strategic marketing. This paper identifies and analyses the key traits and bases of success of the marketing strategy of online retailers. It critically assesses the distinctiveness of the marketing strategy approach of these companies, when compared to traditional retailers. It analyses areas such as segmentation, targeting, positioning, relationship management fulfilment strategies and tactics, relationship marketing and marketing communications. It also tries to predict the likely future of retailing and the role on online retailers. It finally discusses more general implications for strategy theory and practice of the growth of online retailers. Table of contents Introduction Online retailing refers to the process enabling consumers to buy goods and services through the Internet, with the retailer being referred to as a virtual store, online store, web-store, web-shop, internet shop, e-store or online shop. It is a type of electronic commerce used for business-to-consumer (B2C) and business-to-business (B2B) transactions. This form of shopping has penetrated many aspects of our life, especially since the 1990s, linking us to a capitalist way of life in our everyday living. It enables us purchase whatever we require, whenever we require it. Online stores have the advantage of convenience since they are available round the clock and the buyers can access them from at the convenience of their homes and work. This is unlike the traditional physical stores that can only be accessed during the official working hours. Moreover, many online stores give links to supplementary product information like manufacturer’s specifications, demonstrations, safety procedures and instructions. This form of shopping also enables a consumer to search and compare prices among various vendors by use of search engines. Backcountry’s success story: A case study Backcountry was founded in 1996 with a mere $2,000 capital as a pure online retailer focusing on outdoor gear. It stated making profits in 1997, exactly a year after its founding, experiencing a triple digit growth six years in a row that culminated to 134 per cent in 2003. In 2004, Backcountry’s sales revenue was $27.5 million dollars, an 84 per cent increase from the previous year’s $14.7 million. These figures further rose by 89 per cent in 2005, settling at $52 million. The company earned great reputation for providing good quality outdoor gear on its website www.backcountry.com. Moreover, the company created niche sites aimed at addressing specific needs for of target groups and catering for distinct customers. For instance, the price-sensitive athletes had www.explore64.com, bargain seekers www.SteepandCheap.com and www.backcountry.com, snowboarders www.dogfunk.com while hardcore skiers had www.tramdock.com. In 2002 Backcountry implemented a new customer service solution known as ‘click-to-chat technology.’ This earned the company many chatting interactions that resulted to improved customer satisfaction ratings as well as increased sales volumes. The company was therefore among the very first online retailers to adopt the live chat technology, earning itself the title of an established industry innovator. The company however soon realized that this technology only improved customer satisfaction levels without translating to increased sales. In order to leverage its employees’ expertise and maximize its profitability, the retailer ventured into transforming the chat deployment to a proactive sales tool from a purely customer service one, which had a big impact on its sales (Silverstein, 2001). Traits and bases of success of the marketing strategy of online retailers Success of online marketing companies highly depends on a number of factors such as developing good business plans, having simple websites, involvement of customers in the design of the website, choosing suitable technology and using online marketing tools. Moreover, the online retailer must establish correct relationships, adopt end-to-end solutions, acknowledge legal responsibilities, properly utilize customer data and incorporate the online channel (Huang, 2000). A realistic business plan, which answers the question of why the proprietor is doing whatever he is doing, is essential for success in online retailing. These proprietors must understand how online retailing strategically fits with the other aspects of the business and understand the objectives and how they will be measured. For instance, one may pursue the objective of simply generating online revenue while another may be striving to maintain a market share or improve customer service (Meyerson, 2005). Online retailers should maintain simplicity of their websites and not be swayed by the latest web features in the market since the most important thing is to ensure that customers purchase products or services with the fewest clicks possible. Before one makes any changes to his website, he should ask himself whether this will translate to improved sales or not. In addition, he should bear in mind whether this advancement will improve meet a legal obligation or improve customer surfing through the site (Kumar et al, 2004). Online shops must involve their customers when designing their sites and assess the customers’ interaction with the site to make it easily understandable. This is because the customers can point out the flaws for elimination, hence reducing the number of customers leaving the site dissatisfied. This will go a long way in increasing average order values and the amount of orders taken through the website (Peterson et al, 1997). Online retailers must choose a suitable technology since each one of them has different specific needs and what works for one retailer may not work as effectively for another. The choice of technology for online retailers entirely depends on the size of the business as well as its needs. For instance one retailer may require an incorporated solution linking into other aspects of the business such as the back office system while another may find a till system providing basic Internet services sufficient. Online retailers adopt a proactive approach with their clients by utilizing online marketing tools alongside other tools. Online marketing tools recommend some of the products or services that customers are likely to be in need of and even go a step further by predicting when the customer is likely to purchase them. The retailer does not have to be a big one since this software can be bought cheaply and integrated into the site. Online retailers will do themselves a big favour by making good use of customer data since this facility offers immense data on customers including their patterns and habits of shopping. The retailers can group this data and target the customers better with regard to personalizing marketing activities as well as timing. By improving the content, personalizing and timing of marketing materials, the retailers will have ensured utmost return on their investment and increased loyalty. Online retailers must furnish themselves with the various regulations in the online trading sector. For instance some regulators demand that SMS on online marketing can only be offered to a customer who willingly opts in and has the opportunity of opting out. Some more regulations insist that these services must also be accessible to persons with disability, particularly those with visual impairment. Companies that do not make deliberate attempts cater for these provisions risk being prosecuted. Retailers who wish to go to online trading must integrate it with the other business units such as the catalogue and store in order for customers to get the same feedback regardless of the channel they use. Moreover a well developed online strategy takes into account the complete customer experience needs from initial stages of ordering to delivery and returns if necessary. Online marketers should create the right relations with their partners especially if they lack resources, knowledge and skills for integrating their online retailing. This is because third party professionals can make online trading to succeed since they have the necessary infrastructure, expertise and skills. Online retailers versus traditional retailers Traditional retailers have a segmented market while their online counterparts have a worldwide market. Whereas the traditional retailers only target a particular physical market, the online retailers cross boundaries to access a global market (Peterson et al, 1997). The traditional retailers must be positioned in a particular place of operation unlike the online retailers who can operate from anywhere including the convenience of their homes and reach a global market. Online marketing has the privilege of customer data, which can be used to predict when and what they are likely to buy, and then communicate with them (Jarvenpaa et al, 1997). On the other hand, traditional retailers are not in touch with their customers and cannot accurately predict their customers shopping habits and patterns. Online retailers therefore utilize this special relationship with their customers to market themselves, unlike their traditional counterparts (Bigne, 2005). Future of strategy in retailing and the role on online retailers Information and Communications Technology, ICT is having a great impact on businesses of various forms, including the retailers. Retailing is experiencing big changes in technology that it must adopt to remain in business (Chen et al, 2005). EPOS equipment, widely used in banking has found its way into the retail business. This is a very sophisticated digital positioning technology that brings positioning technologies to domestic electronics. This is going to revolutionize this industry just like it has done in the financial services and the banking sector (Cumming et al, 2006). Conclusion Retailing is rapidly experiencing great technological changes that will see online trading more common than it is today. These retailers have come to the realization that this is the only way to survive today’s cut-throat competition and widen their market base. Retailers who go online are set to reap greatly from it owing to its global market and efficient management information systems. However, they must also take the necessary measures to avoid the negative effects of the technology such as privacy concerns and security issues. These challenges not withstanding, online retailing seems to be the future trend and the sector must fully embrace it. 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