New Wave Chance Youth Club - Essay Example

Exam Paper Question i) New Wave Chance Youth Club would benefit a lot from a Web site as it would publicize the club, help in establishing customers and creating a good customer following, and instill an interest for gym in site visitors, which would mean more customers. In addition, it would create a good room for reaching out to more donors, present to customers an efficient way of booking gym sessions, and give customers an opportunity to air their views on the club’s progress and services, which would be vital to the club’s management for the purposes of improvements (Simms, 2005). There are various factors that determine how the Web site would benefit the youth group, one of them being the way in which the youth club would exploit the Web’s interconnectivity as well as the opportunities it would create to make better the relationships with its vendors and suppliers, its customers plus other external stakeholders. Another factor is the nature of the club’s relationship with its customers. Developing deep, long-life relationship with customers is of greater significance on the Web. It would cost the youth club money to attract customers to its site and maintain them. The youth club’s plan for incorporating the Web in its overall strategy is another factor that would determine whether it would realize Web success. The issues that the plan should address include site design and maintenance, strategies for marketing ad promotion, customer service, sales, and generating and managing a brand name. Another factor that would determine how the Web site would benefit the youth club is its relevance to the customers whose needs, tastes and preferences are dynamic. If the youth club is to remain relevant to its customers, then the success of its Web-based transactions effort is indispensable. The nature of resources including time, energy, talent, and money that the club would invest would also play a part in determining its Web success. This is because creating a meaningful Web presence necessitates a progressive investment of resources. In fact, an attractive Web site with catchy photographs plus products and services’ descriptions is just but a beginning (Zimmerer, 2010). Question 1 – (ii) The Web site would be of great importance in assisting Mr. Grove, the building fund manager, in organizing donation requests as well as in determining the kind and quality of the necessary building supplies. He can utilize the site well-constructed e-mail messages to direct customers to the site, where they can respond to donation requests – he can avail donation request forms at the site where they can register their commitment to offer donations to the club. The building fund manager can also utilize chat rooms as well as message boards to gather views from customers pertaining the type and quality of the building supplies needed. Here, he would give customers an opportunity of having conversations about the best type building supplies, the availability of supplies and their various qualities. He can as well develop customer pools where customers can respond to queries such as “what is your favorite type of building supply?” or “what determines your choice of building supplies’ quality?” This is in addition to requesting them to compete in post gym designs, where New Wave Chance would prize the design that members would deem best by voting for it. Using these tools, the manager can be in a position to gather excellent information that would guide him in making informed decisions that pertain to the type and quality of the building supplies (Zimmerer, 2010). Question 1 – (iii) In order to build a successful e-commerce strategy for New Wave Chance, the leaders should be guided by a number of principles: instead of trying a head-to-head competition with dominant players on the Web, who are already established, well-recognized and have resources, which they use to squash smaller contenders, they should focus on a niche in the market – in fact, numerous entrepreneurs serve market niches and find much success. A niche can be defined by geography, product, product usage, customer profile among others. New Wave Chance should refrain spend her limited sources trying to be everything to everyone and instead focus on niche markets – the logic behind it is concentrating her service in a small corner of the market that the giant players have overlooked. New Wave Chance should implement a focus strategy to enable her tap numerous customers with a common interest as the Web offers an ideal mechanism to do so (Arundel, 2005). The youth club must also develop a community for it to attain a killer Web site. Generally, internet users frequently visit those sites that embrace Web’s social aspects, thus enabling them to interact with other customers as well as the company employees as part of a community. New Wave Chance should learn offering their customers more than just excellent customer service and quality products: they should use their Web site as the nucleus and establish a community of akin-interest customers. This would give their customers a chance of interacting with other like-minded individuals visiting the website as well as with professionals, with whom they can discuss and learn more on their topics of interest, thereby enhancing customer loyalty and retention. Some powerful tools for building a community of visitors at the Web site include e-mail lists, customer pools (e.g. what is your favorite ball game?), chat rooms, product ratings and reviews, guest books, message boards and blogs. These tools offer visitors a chance of having conversations on topics that interest them as well as products and services (Bluejay, 2009). New Wave Chance should also make creative use of e-mail, but avoiding becoming a ‘spammer’ – they should rely on permission emails. E-mail can be an efficient and cheap way of building traffic on a site if used properly and creatively. In effect, the most prevalent tactic in marketing that e-commerce utilizes is sending e-mail messages to already existing customers. They should collect email addresses from customers and visitors, seeking their consent to send them e-mail messages upon their registration on a site. Making it clear to customers that they will send them meaningful messages and that New Wave Chance will not sell their e-mail addresses to other companies is imperative in order to maximize on the number of email addresses corrected. Additionally, e-mail content ought to offer something of value to their recipients, just as is the case with newsletters. To attract many customers, New Wave Chance can embark on giving away ‘freebies’ to visitors on their site – this is one of the most efficient tactics that many successful e-merchants utilize by giving visitors and/or customers something free and then selling something else to them. This cycle can be termed as ‘the rhythm of the web.’ It is important for the youth club to ensure that whatever they give freely is something that their customers value (Christopher, 2010). All the same, it does not have to be a product, nor does it have to be expensive. Information is one such gift on the Web and is among the most common giveaways. Considering that majority of people on the Web are majorly after information, New Wave Chance can establish a free e-mail or online newsletter with links to its site as well as to others of interest, which subsequently can efficiently drive potential customers to the site. It is important to note that in order to yield success through this tool, there is no choice but to present meaningful content and in a clear, precise and professional way (Hale, 2007). The New Wave Chance staff members should also embrace the responsibility of ensuring that the web site communicates to its customers a message of trust and credibility. Owing to the fact that majority of online shoppers do not trust Web sites, there is dire need for New Wave Chance to develop/build visitors’ trust in their Web site. Upon arrival to a site, visitors start by evaluating its credibility. Some of the aspects they evaluate include whether there are typographical errors and misspelled words in the site; and whether the site acknowledges the sources of the information it gives if any as well as the legitimacy and trustworthiness of those sources. They also evaluate whether the site presents information fairly and objectively, or it is biased; whether there are dead links on the site; whether the company has prominently posted its privacy plus merchandise return policies and whether the site looks professional. New Wave Chance should major on establishing credibility with customers on the site. One way in which it can achieve this is by joining an online seal program, for example BBBOnLine or TRUSTe – these are online equivalents of the ‘Underwriter Laboratory stamp’ or ‘the Good Housekeeping Seal of Approval’, which acts as a proof that a company meets particular standards regarding customer complaints’ resolution as well as the privacy of customers’ personal information. Also, akin to the way in which companies that sell nationally-recognized brands or even their well-known private brand use those brand names on their sites to create a sense of legitimacy, New Wave Chance should use customer testimonials along with endorsements, of course with their consent, on their products and services. Something else that can do New Wave Chance much good in helping their customers build confidence with the site is providing its e-mail address, street address, and if possible, a toll-free telephone number at the site, which would send a subtle message to visitors and customers that the business behind the Web site is legitimate, thus developing in them confidence in the site. In addition, New Wave Chance can including an ‘about us’ page on the Web site, wherein customers can read the youth club’s history – for example the way it started, its founders, the challenges that they have overcome among other relevant details. This would be a perfect chance to help them establish a connection with the club and thus becoming loyal supporters as majority of customers enjoy giving their support to small organizations with which they feel a connection. Moreover, New Wave Chance can include in its site photographs of its founders, leaders or employees, or even of some of its significant events, which would combat the Web’s anonymity as well as giving customers the feeling that they are associated with a friendly organization (Zimmerer, 2010). Question 2 Something of concern in the world of business today is the high rate of failure of small businesses. Recent studies reveal that a constant ‘churn’ exists as entrepreneurs establish new businesses while others close. A report from one recent study indicates a thirty-four percent failure of new businesses within a period of two years, and a fifty-six percent failure within a period of four years. One of the primary causes of small business failure is their limited resources which makes them unable to compete effectively in their markets of operation. Another major cause as Schaefer (2006) points out is inexperienced management: many small businesses are usually managed by incompetent individuals (devoid of management skills) who employ poor management as well as making uninformed decisions, thereby impeding successful operation of the business. Poor/inexperienced business management culminates to their closure. Financial instability is another major cause of failure of small businesses. Due to their tenderness in operation, they are greatly prone to influence of financial instabilities in the market which if severe leaves majority of the small business entrepreneurs either at the verge of closure or already backed off (Luann, Auken and Manning, 1993). In addition, there are five forces that majorly contribute to the failure of small businesses in a particular industry. These forces includes rivalry among competing companies/businesses within the industry; bargaining power of suppliers within the industry, buyers’ bargaining power; threat of new entrants into the industry; and the treat of alternative/substitute products or services: A small business is at a higher risk of failure if quality substitute products are readily available in the market; if substitute products’ prices are considerably lower as compared to those of its products; and if the cost of switching to substitute products on the side of buyers is low. These five forces are illustrated below: Threats of new entrants Buyers’ Suppliers’ Bargaining power Bargaining power Threat of substitute services or products Adapted from: Zimmerer (2010). Essentials of Entrepreneurship, 6th Edition. Nevertheless, entrepreneurs can take various steps in order to avoid becoming part of business failure statistics. First, entrepreneurs should embrace the fact that failure is probable to be part of their undertakings, since they are establishing businesses in an uncertain and dynamic environment, but at the same time resist fear to paralyze them. They should focus on the excitement of establishing a business from scratch, which of course supersedes the fear of failure. They should perceive failure for what it is in reality: a chance to learn what does not work, and should therefore use their failures both as a rallying point and as a means through which they can refocus their business endeavours for accomplishment. Actually, every successful entrepreneur embraces the attitude that along the path to success, failures are just but stepping stones. Put in other terms, in every creative process, failure is an ingredient and only those who never attempt anything new or never do anything that does not fail. Moreover, failure is an unavoidable part of being an entrepreneur and no matter what, true entrepreneurs do not quit. To overcome the challenge of inadequate resources, new business entrepreneurs ought to have their focus on investments that have low capital requirements. They should major in businesses where cost advantages are in no way related to company/business size. They should also, in addition to cultivating customer loyalty, aim at investing in markets where buyers are not utterly loyal to specific brands – This would make it easier for them to draw customers away from the already existing businesses. New businesses’ entrepreneurs can also take advantage of the fact that governments do not restrict new businesses from entering the industry by loosening their regulatory as well as international trade policies. Additionally, they can focus on investing in markets where the advantages of economies of scale are absent (Zimmerer, 2010). It is also important that entrepreneurs evaluate their business’ potential of generating sensible profits in a given industry – they should try to locate/identify the most appropriate industry to be ‘home’ for their businesses. An entrepreneur therefore should ensure that he/she settles for the industry that exhibits low rivalry among competing companies within it, one whose bargaining power of suppliers as well as that of buyers within it is low, one with the least threats to new entrants, plus one that has least threat of alternative products or services. Further, entrepreneurs should identify, as Mendoza (2010) explains, focus on potential niches present within the industry – they should not despise the fact that majority of small enterprises excel by sticking to niches that are too small to attract large competitors’ attention, yet present within the same market. By occupying niche in a particular industry, a business to some extent shields itself from the power of the aforementioned forces. Entrepreneurs therefore ought to ask themselves questions such as the particular niche(s) to occupy in a market; the size and growth rate of the market; the basis of differentiating their products or services from those of their competitors; in addition to having a superior business model, difficult for competitors to reproduce. In deed, entrepreneurs can shield their businesses from several of the negative effects of these forces (Zimmerer, 2010). Question 3 Life cycle pricing: this is one variation of the skimming price strategy. The small company, using this tactic, introduces a product or service at a high price, and then technological developments permit the company to reduce its cost swiftly as well as the price of the product ahead of its competitors. The small company therefore, by beating other firms in a price decline, discourages competitors and over time, gradually becomes a high-quantity producer. This strategy is short-term and presumes that eventually, competition will surface. It is important to note that the small company nearly always reduces the price of the product, even if no competition emerges, in order to attract a larger market segment. Nevertheless, the initially-introduced high price contributes to a drastic return of start-up costs – it generates funds to finance technological developments as well as expansion (Allen, 2010). Price lining: this is a technique that by pricing diverse products in a product line at varying price points on the basis of their features, quality and cost; greatly simplifies the pricing function. Under this system, investors stock merchandise in many dissimilar price ranges with each category comprising items that differ in quality, performance, cost or other features, but are similar in appearance. Many such products appear in sets of three namely good, better and best, at prices that target satisfying various needs and incomes of the market segment. Price lining boosts sales in that it not only avails goods to a broader range of shoppers, but also simplifies customers’ purchase decisions, allowing them to maintain their purchases within their budgets. Odd pricing: majority of small business managers utilize this technique. They prefer to establish prices ending in odd numbers including 5, 7 or 9 in belief that merchandise selling for $19.69 appears much cheaper as compared to the item priced $20.00. They design such psychological techniques with an aim of appealing to particular customer interests, although research on their efficiency is mixed. Additionally, omitting the symbol ‘$’ from pricing may do some good (Zimmerer, 2010). Leader pricing: this involves marking down a popular product’s normal price (a leader) in efforts to attract more customers who incidentally purchase other products at regular prices. Although the business earns a much lesser profit on each unit owing to the fact that the mark-up is lower, other merchandise’s purchases by customers in pursuit of the leading item frequently boosts sales and profits/offsets the leader’s lower profit margin. Multiple unit pricing: this is a promotional technique offering customers discounts upon a purchase in quantity. A company can use multiple unit pricing for products with relatively low unit value especially. A good example is where a small business sells 5 items for $3, instead of selling each item at 50 cents. Optional-product pricing: this entails selling the base merchandise for one price, but selling its accessories/options at a much greater mark-up. A good example is in the sale of automobiles (Marketing teacher.com, 2010). Discounts/markdowns: these are reductions from regular prices in order to move outdated, stale, slow-moving or damaged goods. This price reduction encourages shoppers to purchase goods prior to the coming of another season. This is in addition to trying to establish a faithful clientele as well as generating repeat business. All the same, excessive discounting can ruin a business’ reputation for superior quality, service and exclusivity. Captive-product pricing: in this pricing strategy, the vase product cannot function devoid of the suitable accessory. Entrepreneurs utilize this strategy thus earning low profits from the product, but substantially higher margins on the accessory. For instance, introducing a printer at a low marked price and then earn high margins on replacement cartridges (Marketing teacher.com, 2010). Byproduct pricing: in this technique, revenues realized from products’ sales permit a business to be more competitive in its main product’s pricing. A good example is with sawmills who formerly used to throw away barks from trees, but nowadays they package them for sale to gardeners. Below-market pricing: some small businesses employ this strategy where they offer merchandise at below-market prices. They hope to attract adequate volume level to offset the lower profit margins by setting prices that are lower than their competitors’. For example, they trim costs of operation by eliminating services such as credit granting, delivery, installation and sales assistance. It is important to note that below-market pricing can be a risky strategy for small companies since they demand that thy constantly realize high volume of sales so as to remain competitive (Zimmerer, 2010). References Arundel, R. (2005). Small Business Marketing Tip - Focus on a Niche Market. Retrieved from http://www.speakingandmarketingtips.com/niche-market.html Bluejay, M. (2009). Website Design Tips. Retrieved from http://websitehelpers.com/design/ Christopher, A. (2010). Little Freebies That Will Help You Attract Customers. Retrieved from http://filipkondovski.com/gifts/little-freebies-that-will-help-you-attract-customers.html Hale, D. (2007). Social Networking Strategies - How to Attract Customers Through Social Media Search Engines. Retrieved from http://ezinearticles.com/?Social-Networking-Strategies---How-to-Attract-Customers-Through-Social-Media-Search-Engines&id=4616677 Luann, R. G., Auken, H. E. & Manning, R. A. (1993). Factor Analytic Study of the Perceived Causes of Small Business Failure. Journal of Small Business Management, 31. Marketing teacher.com, (2010). Pricing Strategies. Retrieved from http://marketingteacher.com/lesson-store/lesson-pricing.html Mendoza, M. (2010). Focus on Your Niche. Retrieved from http://www.powerhomebiz.com/vol62/niche.htm Schaefer, P. (2006). The Seven Pitfalls of Business Failure. Retrieved from http://www.businessknowhow.com/startup/business-failure.htm Simms, J. (2005). Benefits Of Having A Website. Retrieved from http://www.webworldindex.com/articles/12-Benefits-Of-Having-A-Website.html Zimmerer, T. W. (2010). Essentials of Entrepreneurship andSmall Business Management. 6th Edition. New Jersey: Prentice Hall. Read More