Market Analysis for BzzAgent - Case Study Example

Market Analysis for BzzAgent – A WOM Marketing and Promotional Agency Analysing the case of BzzAgent BzzAgent is a technology based promotional agency launched by David Balter in 2002. The agency was established to provide the companies with new ideas of building brand affinity using modern tools of communication and marketing. Based on the idea of “word-of-mouth marketing (WOM)”, the company first worked for the promotion of a book published by Penguin Book. At present the agency works with over 400,000 agents for the promotion of the products and services of over 250 companies. The company promoted the products though its agents that pass the information through different forms of human communication including face to face, text messaging, blogging, email or telephone. The following discussion aims to discuss the market situation in which BzzAgent operates using some widely established models and theories of organizational studies. Analysis of Market Competitiveness BzzAgent operates in a crowded marketplace and had to adopt some innovative strategies to enter and succeed in the industry. The attractiveness of the marketplace in terms of competitiveness is analyzed below using the Five Competitive Force model presented by Michael Porter in 1980. The tools of analysis presented in the model provide a structure that can be used to conclude the competitive strength of an industry. These tools are simple but allow having clear and strong understanding about the importance of power within a business circumstances and help in gaining the understanding about the strength of any organization within a competitive situation. Threat of Entry Threat of entry depends upon the extent to which there are barriers to entry in the market. The environment where BzzAgent operates is an easy to access marketplace. There are little barriers of entry in the field of WOM marketing and the agencies generally have wide range of options to start their operations depending upon their financial base and workforce. The failure of the traditional means of marketing has already opened up the doors for innovative marketing ideas. Moreover, the rapidly increasing trend of online, telephonic and text messages’ interactions have broadened the prospects for new ways of WOM marketing. The companies operating in different industries and sectors fervently look towards the different and unique ideas to promote their brands and the WOM strategy seems attractive to many of them due to the growing importance of internet, email and sms as marketing tool. It implies that there is greater scope and little entry barriers in the field of WOM marketing. Hence, BzzAgent also faces high level threat of entry of the competitors of the field. Power of Suppliers Porter (1980) explains that suppliers also have the potential to influence the productivity of the firms and their availability and cost affects the firms’ business. In the case of BzzAgent, the company doesn’t require any raw material but just needs agent to fuel its business operations. The increasing trend of internet usage has made it possible to recruit large number of online agents for wide range of marketing services from all over the world. BzzAgent faces no major problem in hiring the services of marketing agents and everyday new agents are included in the work force of the agency. The hiring process is simple and the company always succeeds to have the required number of agents to accomplish a particular task. It implies that the supplier power is very weak in the case of BzzAgent because it can easily switch over or hire new agents anytime in exchange for trivial cost of hiring. Power of Buyers The power of buyers is determined through the influence that the consumers have upon the production industry. The BzzAgent operates in a marketplace where there are fragmented buyers and they tend to have little or no influence upon the product or its price. The numbers of online visitors, parties in face to face interactions and attendants of public gatherings are also greater than the number of WOM marketing agents due to which the market conditions rejects the situation of few buyers and more suppliers. Thus, it implies that the market for BzzAgent has very week buyer power because the buyers are not concentrated neither most of the consumers tend to have strong influence with any particular agency or marketing agent. Threat of Substitutes Porter (1980) suggests the concept of substitution threat that comes when the consumers have the option to access same products from outside the industry. BzzAgent provides promotional services to the using oral and other communication means as marketing tool. There are other tools of marketing that have proved their significance over the time like print media, TV and radio commercials, billboards, sports or entertainment event sponsorship, point of sale advertising etc. It shows that there are wide ranges of substitutes available to the consumers as well as the companies for the promotion of the products and services and it is easy to get hold of similar type of information from any other resources. Though, the traditional marketing tools are losing their significance but still these mediums are widely used to promote the products and services employing innovative ideas and strategies. In this scenario, it could be said that BzzAgent faces high level of substitution threat because there are many other powerful and popular medium of promoting the products and service. Competitive Revelry The intensity of rivalry is the most palpable of the five forces in any corporate environment. If there are many competitors offering equally attractive products and services, then all of them might have little power in the situation. It helps to establish the extent to which the value created by firm will be dissolute through nose to nose competition. BzzAgent operates in environment where there is greater demand as well as awareness regarding innovative and different ideas of marketing and promotion. The scope of WOM marketing has widely attracted the marketers and promotional agents towards the field and the companies now have many options to select their promotional agency from. It implies that there is high level of competitive revelry exists within the field of technology based promotional and marketing service. The analysis of the BzzAgent market situation using the Porter five force competitiveness model shows that BzzAgent operates in a market place where the threats of new entry, substitution and competitive rivalry are very high. At the same time, there exist very weak suppliers and buyers power that broadens the scope of competitiveness in the field. The analysis reveals that WOM is a very attractive market to compete in because the field is gaining importance due to the ineffectiveness of traditional marketing means and the presence of many promotional agencies has made it a highly competitive marketplace. Target Consumer Group for Blogging BzzAgent Blogging has become an important segment of BzzAgent promotional agency. The primary blogging service of BzzAgent was launched in 2003 where the agents use to share their experiences about the internal working and experiences working with BzzAgent. In 2005, the management realized that importance of blogging as tool of expressing internal transparency in 2006, the first experimental blog was appeared that mainly shares the internal working environment of the agency with the people. By the end of 2008, the agency operates with the workforce of 400,000 agents that use different communication forms to convey the messages regarding the product promotion and they are been provided by the firm BeeLog as an option to share their experience. All of these blogging services run under BzzAgent basically target the existing as well as the potential clients of the agency. Moreover, the blogs intend to target the competitors, promotional agents working at BzzAgent or any other promotional agency, the partners of the firm and the general public. The blogging basically attempt to provide the people an insight to the inner working environment of the agency and also to impart certain ideas and concept of marketing and promotion with other people operating in the field. The blogging was started as the platform to exchange ideas and experiences of the agents and employers. The blogging targets the clients, competitors, partners and people in general but does not focus upon any particular consumer group. This is because the blogging service is selected by the firm as a tool to reflect own organizational culture and not for the promotion of any specific product or service. Thus, the consumers of different products and services are not directly the targets of the blogging at BzzAgent. However, by showing transparency and internal working of the agency, the management tends to establish the presence of trust behind the actions taken by the company and through it, the management attempted to built good will and reputation for the agency in front of the clients as well as the general public. The clients are important targets of the blogging at BzzAgent because the insight over the working patterns of the agency could be great source of influencing the decision making of the companies about the selection of promotional agency for their products and services. The blogging builds a transparent image of the agency that allows the people to have understanding of the way how the agency really works and what innovative ideas do they have in their promotional kits. The blogging acts as promotional tool for the BzzAgent agency because it claims to show the truth behind their marketing strategies within the intention to maintain good company image. Though the blogging segment runs very successfully by the BzzAgent for some years and the company has been sharing the ideas and marketing concepts with the competitors, partners, agents and people in general but there are certain risks also associated with this mode of expression. It is thus recommended that the blogging at BzzAgent should focus upon particular group of clients and customers rather departing ideas in open forums. It would be better for the agency to manage the blogs according to the nature of the blogs. The blog focusing upon the internal working of the agency should be grouped together whereas the blogs departing the experiences of the agents working for particular brands should be grouped separately. Similarly, the ideas and concepts about marketing and promotions should also be transmitted under a separate head so that the people can view the blogs that the more relevant to them. The classification of the blogs of BzzAgent under different headings will allow the agency to target specific segment of market through specific group of blogs. For instance, the blogs sharing experiences of agents working with existing clients could work to influence the potential clients. The blogs sharing new ideas could act to built good image and reputation of the agency whereas the internal working insight could work to satisfy the existing clients that they have hired competent promotional agents for the promotion of their products and services. Thus, the blogging at BzzAgent should be more target oriented rather being for general visitors and different categories of blogs should be form to target specific market segments. References Porter, M. E. (1980), Competitive Strategy, New York: The Free Press, Read More