Case Studies Solution of Digital Marketing

7/23/2019 Case Studies Solution of Digital Marketing

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Case Study 1. eBay thrives in the global marketplace

Question: Assess how the characteristics of the digital media and the Internet,

together with strategic decisions taken by its management team, have supportedeBays continued growth. (It is best to divide this question into two parts).

1. How have the characteristics of digital media supported eBays growth?

A suitable framework for reviewing the unique aspects of digital media is Table 1.2 The 5 Ss ofdigital marketing. An interpretation of the differences between the old and the digital media.

The particular characteristics of digital media compared to traditional media that are important to eBayare straightforward. They are as follows:

Change from a one-to-many communication model to a one-to-one or many-to-many communicationmodel.

The ability to create user-generated content listing products is also related to the one-to-one aspectand is also important.

From Push to Pull eBay offerings are often visible within search engines.

From monologue to dialogue (two-way information exchange for enquiries about products facilitatedby e-mail).

Ratings for sellers are important to generate trust (although there are methods of falsifying these).

Community the sense that users are part of a community and additionally are bypassing traditional

retail channels will be important from some users.

2. How have strategic decisions supported growth?

Strategic success factors students may mention include the following:

Branding a distinctive brand the earlier brand name was perhaps less appropriate although moredirect.

First-mover advantage gaining a critical mass through the foresight of the owner.

Security and fraud realising that this is important to reputation, so investing in managing this andcontrolling PR related to this. eBay has developed Trust and Safety Programmes to manage this.

Partnerships and acquisitions, which fit/relate well to the service, that is, PayPal and Skype.

Communication of customer value proposition the case describes how eBay explains this.

Revenue model the market has judged that this gives a good balance for sellers, purchasers andeBay. Setting fees at the right level has enabled eBay to scale for some time.

Process efficiency the case describes how eBay measures and then seeks to improve the key areasof Acquisition, Activation and Activity.

Growth strategies these are covered in Chapter 4 and include market development (geographic)and product development (new categories for consumers and businesses).


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Technology scalability not referred to in this chapter, but eBay has been successful in deployingtechnology that has supported the companys rapid growth.


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Case Study 2. Boo-Hoo learning from the largest European dot-com failure

1. Which strategic marketing assumptions and decisions arguably made Boo.coms failureinevitable? Contrast these with other dot.com era survivors that are still in business, for example,

last minute.com

Boo.com lacked the expertise, resources and capabilities to make a successful launch in 18

countries simultaneously. The founders had created a successful online book business in

Scandinavia but Boo.com was a much more complex operation.

Additionally, the underlying technology infrastructures were not in place and the aspirations of

the management team for the functionality of the website were way beyond the know-how of

developers at the time.

Ultimately, Boo.com did not have a coherent strategy and so rather than building a scalable

business that could grow over time they aimed to build a global business overnight. The companybenefited from the high demand for high-tech stocks, which allowed money to constantly be

pumped into the business. However, once the company demonstrated its inability to deliver, the

launch date for the website was constantly put back. The failure to deliver on time linked with the

stock market crash it was almost inevitable that the business would fold.

In contrast, other businesses were making more scalable and sustainable plans. Companies like

Tesco.com and new pureplays like Last minute.com. These are examples of businesses that

looked at the potential in the marketplace and developed both sustainable and scalable solutions.

2. Use the framework of the marketing mix to apprise the marketing tactics of Boo.com in the areas

of product, pricing, place, promotion, process, people and physical evidence.

4 Ps product, pricing, place and promotion

Boo.com wanted to offer a product range of branded goods to the 18- to 24-year-olds who were both

fashion conscious and had good incomes. In essence, this approach was ok if the size of this target

group at the time of launch was not as extensive as predicted and there were still many barriers to

shopping online both for this group and other potential targets. This made a heavy demand on the

promotional budget as Boo had to launch a new shopping concept; establish credibility for the brand

and reinforce to the target audience that it was ok to shop online. Boo failed on the logistic side,

there were many problems associated with logistics throughout the supply chain. Goods were

delivered late and returns were mishandled.

The extended service mix

Shopping with Boo was a laborious process. Physical evidence: the user interface had many graphical

features which meant slow download speeds and was not seen to be user-friendly. When it is working,

the online environment created by Boo was sophisticated and offered many of the interactive features

that shoppers were looking for; however, this was not the case for much of the time. Furthermore,

many shoppers did not have broadband and as a consequence could not enjoy any of the benefits.

Process: the shopping process did not work in a streamlined way and there were many angry

customers. People: the website used JavaScript and Flash technology to allow Miss Boo, a sales-

assistant-style avatar to assist shoppers, but this did not work very well especially when using a 56k

modem and dial-up connection.


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More specifically, the marketing mix is covered in Chapter 5, so this part of the question should only

be set if this concept has been covered previously.

Details of the marketing mix that relate to Boo.com are as follows:

Product. Premium brands were used, leading to premium prices. Unclear on mix between

sportswear and high street fashion. Scope relatively narrow, limiting target audience.

Price. As mentioned in the case, there were issues of pricing in different regions. No mentions of

discounting are made, consistent with the brands premium positioning. However, competitive

selective promotions are today commonly used by many e-retail brands.

Place. Boo.com had a worldwide distribution, which was good for achieving reach, but added to

the cost-base of the company, impacting on promotion. A global launch of a new brand was

ambitious and can be contrasted with the more conservative approach from the likes of Amazon

and eBay.

Promotion. To build the Boo brand and drive visitors, it was reliant on online advertising, whichgave rise to a high cost per customer acquisition that ultimately led to the brands failure. The use

of PR was more effective and is one of the successes of Boo. The magazine appears

overambitious and did not pay for itself through sales generated. At the time, the promotion

through online marketing techniques such as search engine advertising and affiliate marketing

techniques was limited in its possibilities. Today, these are more effective for companies.

Process. People and physical evidence. It is well known that the technology was too advanced for

a time when the vast majority was accessing the web over dial-up modems. This led to a clunky

experience that resulted in the low conversion rates referred to in the article. It also seems likely

that the cost of providing customer service was not factored into the business model.

3. In many ways the vision of Boos founders were ideas before their time. Give examples of the e-retail techniques used to create an engaging online customer experience which Boo adopted and

in now becoming commonplace.

When boo.com collapsed, the company left a legacy of the underlying e-commerce technology.

This was bought for 250,000 by Dan Wagner, which enabled him through his company Bright

Station to create an e-commerce solution package, which runs many of todays successful online

retailers web operations. The 3D images of products, sales assistant avatars and multiple country

online stores are examples of some of the features of Boo.com operations that have now become

commonplace, for example, IKEA for online sales support through their Ask Anna facility.


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Case Study 3. Zopa launches a new lending model

Question

Imagine you are a member of the team at the investors reviewing the viability of the Zopabusiness. On which criteria would you assess the future potential of the business and thereturns on your investment, based on Zopas position in the marketplace and its internalcapabilities?

Students should be given guidance on the extent to which you require an analytic answer based on adetailed revenue model or a consideration of the strategic issues.

If a detailed revenue model is required, then some additional information will be necessary or studentswill need to state their assumptions. The relevant section in Chapter 2 that students can be asked torefer is 'Demand analysis and conversion modelling' in the section on understanding customers.

Essentially, this question is about revenue models and costs, so it requires the students to considertotal costs of driving visitors to the site and converting them to sale in comparison with revenuesources. Profitability will also be dependent on the long-term capability of the company to gainrevenue customers.

Students should mention these elements of a conversion-based revenue model, including thefollowing:

Total market size for these products based on the size of existing loans market. Sub-set of marketthat would meet Zopa's lending criteria.

Cost of customer acquisition this is a competitive market and it may be difficult to attract visitors tothe site, for example, using search engine marketing or offline advertising.

Cost of servicing sales to what extent are phone contacts needed to facilitate sales?

Conversion rate from visitor to lead to sale.

Average revenue earned from each new borrower, which is based on 'charging borrowers 1% of theirloan as a fee, and from commission on any repayment protection insurance that the borrower selects.

Lifetime value from customers based on attrition rates will borrowers continue to use Zopa or willthey use it as a one-off?

Flexibility on revenue model for example, after launch, Zopa has gained additional revenue from

lenders.


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The section in Chapter 8 on 'Conversion marketing objectives' also covers many of these concepts.

From a strategic perspective, the issues that students should consider are as follows:

Proportion of total loans market that this service will appeal to.

Proportion of savings and investments market, this model will appeal to. It is a lot of effort comparedto other savings and investments methods for a limited differential. As a result it will only appeal to alimited number of investors.

Will the number of lenders balance the number of borrowers dependent on the appeal of theproposition as noted above?

Business model scalability can it be applied in other countries and to other financial products orbeyond?

Technology costs and scalability


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Case Study 4. Tesco.com uses the Internet to support itsdiversification strategy

Question

Based on the case study and your own research on competitors, summarise the strategic

approaches which have helped Tesco.com achieve success online.

The strategic decisions covered in this chapter provide a useful framework for summarising the

strategic approaches adopted by Tesco.com.

Decision 1: Market and product development strategies. Tesco has used the Internet to extend its

market into new product markets such as financial services, white goods and DVD rental. While

these are promoted through the store, the web provides a wider choice of products, more detailed

information about products and a method of purchase. The Internet can also support entry into

new geographical markets.

Decision 2: Business and revenue model strategies. New revenue sources are available through

extending the product range online as explained above, but also with new digital revenue streams

such as those for music downloads and e-Diets. Tesco also supports advertising on its site of

related product such as financial services.

Decision 3: Target market strategy. Tesco.com has a broad market of customer types, so it is less

relevant for them to use online to selectively target these with communications. However, the

article explains how Tesco has used the web and e-mail channel to target more closely through

targeting different lifecycle groups these are customers who are grouped according to their level

of adoption of online service. Tesco also uses the web to target specific requirements such as dietsand financial services through search engine marketing.

Decision 4: Positioning and differentiation strategy (including the marketing mix). Tesco offers

some unique online promotions and lower online prices for selected products such as financial

services, which could attract a percentage discount when purchased online. It appears not to use

the service elements of the mix for positioning beyond the slogan You Shop, We Drop. But

attention has been paid to improving the customer experience through usability activities and

reduction of download times.

The marketing mix, which is covered in Chapter 5, is also suitable for assessing some of the tactical

elements of Tesco.com strategy.

Product

Price

Place

Promotion

Process, people and physical evidence.

Decision 5: Multi-channel distribution strategy. This is straightforward. Tesco.com has taken the

decision to distribute Internet orders via stores unlike some rivals such as Ocado

(www.ocado.com) who have setup distribution channels.


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Decision 6: Multi-channel communications strategy. This is not referred to in the article this

describes the mix between online and offline communications tools for driving visitors to the site.

Offline communications in store and through direct mail are clearly important for attracting

visitors to the site.

Decision 7: Online communications mix and budget. Again, this is not mentioned, although theimportance of e-mail marketing for customer communications is apparent.

Decision 8: Organisational capabilities (7S). Tesco has achieved focus online by creating a

separate Tesco.com brand and a separate division headed by Wade Gery.


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Case Study 5. The new Napster changes the music marketing mix

Question

Assess how Napster competes with traditional and online music providers by reviewing the

approaches it uses for different elements of the marketing mix.

These are aspects of how Napster.com applied the mix that students may comment on:

Product. The core product is the streamed music service available through subscription, but

extended product offerings include the sale of compatible MP3 players. The wide range of

products (more than 1 million) indicates a broad product range contrasting with existing stores,

but smaller than some online suppliers like iTunes.

The article shows the importance of the Napster brand identity, including its pedigree and

community experience in shaping the service.

Price. Different versions of the monthly subscription service are available according to whether

the music is kept on a computer or downloaded to the MP3 player. There are options to purchase

tracks by album or price, with cost reductions for volume purchases.

Place. The Internet is the place of distribution, although Napster has signed agreements with

colleges, radio stations and stores selling MP3 players to distribute the service more widely.

Promotion. Establishing brand awareness and familiarity with Napster among potential

downloaders of music is the key. Offline media are arguably best for this. Unlike other online

services, relatively few prospects will Google Online music download services; instead, many

prospects will have a consideration list and the aim of the offline communications is to get

Napster on the consideration list. Napster does use paid search marketing, particularly when

visitors are searching for the brand. It also uses affiliates to extend reach into third-party sites to

promote the service (not covered in the article).

Process, people and physical evidence. These are the different aspects of the customer experience

such as usability and customer service. These are perhaps less relevant for Napster, but they are

important to converting trial lists to subscribers and to renew their subscriptions.

This is a relatively simple analysis. For a more in-depth question and answer, students could be

prompted to look more at the Napster offering compared to rivals such as iTunes and download

services run by e-retailers. This also works well as many students use such services and so will havestrong opinions on them.


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Case Study 6. Dell gets closer to its customers online

Question

Describe approaches used by Dell within their site design and promotion to deliver relevantoffers for different types of online customers.

The answer should centre on different segmentation techniques. Different segments can then be

targeted by different media (e.g., paid search, display advertising, affiliates and offline

communications); on site through specific content for these audiences and through event-triggered e-

mail communications.

Segmentation approaches include the following:

Geographic Dell has a separate site for each country.

Demographic Dell can target different audiences by advertising or affiliate marketing on

different site types.


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Business versus consumer Dell's site offers products in each of these areas.

Value higher value consumer audiences (gaming) and business audiences (larger companies) are

offered separate content.

Vertical business markets (e.g., government, education and healthcare particularly in coremarkets such as the United States).

Lifecycle first purchase or repeat purchase.

Accessories and add-ons have they been purchased?


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Case Study 7. Refining the online customer experience at i-to-i

Questions

1. Select one country that i-to-i operates in closest to the area that you live.Define a persona based on the age and product needs and then identify themain customer journeys that form the customer for this persona. Whichroutes through the site would this user follow?

For example, a 17-year-old gap year student in Australia who is looking to teach in China. Whichbrowse and search navigation options would this site user follow to find relevant products?

2. Review the range of engagement devices on the i-to-i to engage theaudience to generate leads.

Engagement devices that are examples of content marketing to encourage signup include the

following:

TEFL taster questions and answers to gain an idea of the experience;

Ebooks advice on teaching TEFL;

Brochure;

Example courses.

3. Identify key areas for improvement for i-to-i based on your use of the site.

Use a suitable framework such as WEBQUAL or RACE (Chapter 1) to review and makerecommendations.


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Case Study 8. A short history of Facebook

Note: Since the Facebook IPO in 2012, more information is available via the Facebook Investor

relations site, including annual reports.

Questions

1. As an investor in a social network such as Facebook, which financial andcustomer-related metrics would you use to assess and benchmark thecurrent business success and future growth potential of the company?

From comments in the case study, the main revenue model is ad-based advertising (CPC and CPM).Facebook has said it will not sell customer data and there is no indication of affiliate related models.

Customer-related metrics are related to engagement, which indicates capability to sell ad space not

simply users, but active returning users and the number of pages viewed per day. The proportion ofad inventory sold is also important.

A basic answer will provide the following:

Understanding of financial metrics Revenue, Costs and Growth.

Clear framework of different metrics types efficiency versus effectiveness.

Audience engagement and satisfaction metrics such as those mentioned in the case.

A more competent answer will reference elements of profitability (e.g., ad revenue), alternativemodels, (e.g., subscription) (although clear data not sold) costs (e.g., R&D, development), operationalcosts of managing business (on a per active user basis).

2. Complete a situation analysis for Facebook focusing on an assessment ofthe main business risks which could damage the future growth potential ofthe social network.

Typical risks are as follows:

Ad revenue limited because of difficulty of engaging audience in ads;

Major privacy problem as with Beacon;

Intellectual Property Rights;

Technical problems with scalability leading to performance problems and increased technical costs;

New entrant or alternative company offers superior experience what is the likelihood of this?

Students could be encouraged to create a SWOT analysis. The likely probability and impact of eachrisk should also be reviewed.

3. For the main business risks to Facebook identified in your answer toQuestion 2, suggest approaches the company could use to minimise theserisks.

Ad Revenue. Review different forms of advertising. Test with users and advertisers


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Privacy. Explain clearly at signup. Test changes to use of data with user-group of trusted users.Explain reason for future changes clearly.

Technical problems. Testing programme focusing on load testing.

New entrants. Developing proposition to lock-in existing users, forming partnerships to approach new

audiences.


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Case Study 9. Innovation at Google

Question

1. Explain how Google generates revenue and identifies future levels ofrevenue given some of the risk factors are for future revenue generation.

Google's revenue has traditionally been based predominantly on advertising, which is divided intothese models:

Pay-per-click sponsored links within the Google Search Results (and partner search engines such asAOL).

Pay-per-click and CPM model within partner sites of the content network, which includes third-partysites such as newspapers and social networks and Google's own properties such as YouTube.Increasingly, there is a move from text-sponsored links to dynamic display ads and advertising such

as those in YouTube.

Increasingly, revenue will be from Google Applications and associated storage deployed withinbusinesses as paid services (although basic services are often free). The Google Search Appliance isa physical product sold to sites for providing their online search service.

Risk factors for future advertising revenue include the following:

Competition in bidding has traditionally driven up prices but this could fall as companies become moreeffective in optimising their investment through introducing wastage.

Advertising revenue from the content network may fall as site owners explore other ad models andclick-through rates on Google Ads fall as familiarity increases.

Ad-blocking (currently limited since not an automatic feature in browsers);.Click fraud.

Quality of search results falls due to spamming, so Google users turn to a competitor with animproved search service.

Further risk factors are available in the SEC filings referenced in the case study.


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Case Study 10. Learning from Amazons culture of metrics

Questions

1. By referring to the case study, Amazons website for your country and yourexperience of Amazon offline communications, evaluate how well Amazoncommunicate their core proposition and promotional offers.

Worldwide, the proposition is summarised by the well-known brand identity, which features from A toZ suggesting the range of products and breadth within categories. Amazon used to refer to itself asthe world's largest bookstore.

In the article, the following sentence gives an idea of the different aspects of the custom valueproposition to watch out for.

It believes the main competitive factors in its market segments include selection, price, availability,

convenience, information, discovery, brand recognition, personalised services, accessibility, customerservice, reliability, speed of fulfilment, ease of use and ability to adapt to changing conditions, as wellas our customers overall experience and trust in transactions with us and facilitated by us on behalfof third-party sellers.

Googling Amazon will show the different propositions explained in your region.

For Amazon US, the proposition is clearest the listing in Google states:

Amazon.com Books: New & used textbooks, biographies, children's Online shopping from the earth'sbiggest selection of books, magazines, music, DVDs, videos, electronics, computers, software,apparel & accessories, shoes and for books.

Amazon.com: Online Shopping for Electronics, Apparel, Computers. Online shopping for millions ofnew and used books on thousands of topics at everyday low prices.

The fulfilment proposition in different countries will revolve around the minimum order for free delivery.Discounting for different books will also vary according to their popularity.

2. Using the case study, characterise Amazons approach to marketingcommunications.

With reference to the six categories of e-communication tools described in Figure 1.10, probably thekey techniques are search engine marketing, affiliate marketing and partnerships with non-competitivetransactional websites.

In this respect, Amazons approach is selective, using the techniques that are most cost-effective. Theother facet is the use of automation to enable specific advertising through the natural and paid listingsof the search engines. Testing of the best approach is important to make these ads work.

The communications approach is described in the extract towards the end of the case starting:

Online advertising techniques include paid search marketing, interactive ads on portals, e-mailcampaigns and search engine optimisation.

The affiliate and search engine marketing approaches are described earlier in the article.

3. Explain what distinguishes Amazon in its uses of technology for competitive

advantage.


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The following are characteristic of Amazons use of technology:

Use of in-house technologies for personalisation;

Early adopter Rapid adoption of new techniques, for example, Jeff Bezos has talked about themerits of Web 2.0;

Extensive testing and optimisation to find the best approach;

Avoidance of monolithic projects, with focused teams tackling specific issues;

Infrastructure scalable to deal with rapidly increasing demand;

Approaches developed for one product must be extensible to others.

4. How does the Amazon Culture of Metrics differ from that in otherorganisations from your experience?

This question asks students to reflect on their own experiences. From the case, the following are

characteristic of Amazons approach:

Passionately driven from the top by Jeff Bezos;

Importance of metrics in governing all marketing and technology activities;

Arguments about the best marketing approach are often based on tests rather than those who shoutthe loudest: Data trumps intuition;

Accepted wisdom is not accepted tests are re-run since the approach may vary through time.

Case Studies Solution of Digital Marketing

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