Essay, Research Paper: E-commerce Market


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The firm’s objectives can be met and a go–ahead is suggested subject to
addressing the recommendations. Macrosegmentation of the market identified
machinery, wood, base metals and plastics as target markets for the firm.
Revenue expectation based on a 0.4% market share is $329,000. Break even is
$259,000 and requires contributions from 17 customer projects at an average
billing of $15,000. The budget set for implementing the promotional mix is
$100,000. Target ROI = 15%. The following recommendations must be considered
before start-up: 1. Protect service names and marks. 2. Conduct a
microsegmentation analysis to refine market segment intelligence. 3. Develop
multisegment targeting strategies for the chosen markets. 4. Ensure that funds
are in place for first year’s operation. 5. Develop a decision support system
including customer details, candidates for networking and reciprocity. 6.
Complete 3 – 4 assignments at cost to establish a credible portfolio. Use as a
source of referrals. 7. Obtain ISO 9000 certification – “walk the talk”.
Apply benchmarking standards. 8. Develop assessment and promotional tools using
the firm’s service. If the service is to work for the client it should work
for the firm. 9. Finalize details of the promotional plan. 10. Develop influence
as a trade mission co-ordinator. Organizational Mission The firm’s mission is
to provide innovative and effective global marketing services to British
Columbia industries. They focus on E-business as a primary means of achieving
client objectives and measure their effectiveness in terms of customer
satisfaction and referral business. Market Opportunity Analysis Analysis of the
size and sustainability of various market segments. The segmentation basis used
is demographic. Primary descriptors are geography, customer type, growth rate
and size. Demographics – (BC Statistics)  There are 13,700 small and
medium exporters in BC – 4.6% of all businesses in British Columbia. They
account for $3.7 billion or 13% of British Columbia’s total export value. The
average small and medium exporter typically exports $269,500 annually. 
Rising trend – small and medium exporters  1000 per annum and export
 $200+ million per annum.  British Columbia’s small and medium
exporters typically ship “value added” products – less susceptible to
economic slowdowns. During a recent slowdown they actually increased their
exports by $12 million.  79% of small and medium exporters are dependent
on the United States as their primary export market. Environmental Scan
(Purchasing On-line) Social Forces  Increasing competition is forcing
higher standards in the global marketplace – TQM, ISO 9000. 
Globalization of trade increasing competitive pressure on domestic producers due
to foreign competition – simultaneously offering new opportunities for export.
 Small and mid-sized businesses often lack vision and resources to
develop world class enterprises – need help. Political/Legal Forces 
Various Governments are attempting to stimulate business on the Internet –
taxation moratorium, privacy protection, copyright protection and fewer
regulations. Technology  Dramatic increase in Internet use for business
– 73% of corporate buyers use the Internet.  Opinion leaders such as
IBM are shifting their entire purchasing systems onto the Internet. 
Vendor analysis is more efficient – faster and more comprehensive comparison
of supplier alternatives.  Distribution improvement – intermediaries
become redundant as suppliers and buyers connect directly.  Purchasing
cycle time reduced – RFQ’s that used to take 20 days to process now take 20
minutes.  Shipping/Logistics – tracking, price brokering,
inventory/shipping integration are streamlined.  Real-time
Supplier/Purchaser dialogue and co-operative design over the Internet eliminates
waste, reduces costs and speeds up new product development.  Internet
not expected to be significantly affected by Y2K problems in either North
America or Europe.  Perceptions of transaction security remain a
concern. (This perception is rapidly diminishing)  Suppliers are ill
equipped to provide E-commerce – (Actually a plus for Global Reach Inc.)
 Heterogeneity of service is a concern as buyers are confronted with
numerous unfamiliar suppliers and engage in extensive, high-involvement
decision-making. – (Actually a plus for Global Reach Inc.) Competitive
Analysis (Business in Vancouver, The AD Pages, telephone survey) There are 51
Marketing Consultants operating in the Lower Mainland. Average market share of
1.9% is inferred – no data available. Web page development and media promotion
are standard. Larger firms have the capacity to develop E-commerce solutions but
are focusing on expensive EDP and Intranet strategies – suitable for only the
larger exporting firms. Some are involved in E-commerce on the Internet – no
significant impact on the market. Methods of charging for services are fixed
price quotations, cost plus arrangements, often with performance bonuses. Assume
average annual billing per client is $15,000. Fee range = $25 – $200+ per
hour. Target Market Profile and Analysis  16% Machinery  11%
Wood  7% Base Metals  6% Plastics Total Firms = 5,500 We have
targeted the above market segments for the following reasons.  They
include four sectors that involve the greatest number of small and medium
exporters.  Their products are non-perishable, usually standardized and
can be transported with safety.  Their products are readily catalogued
and adaptable to the Internet.  They are value-added products and are
relatively immune to economic slowdowns.  The average size of firm lies
within the lower end of the small and medium exporter range thereby lessening
direct competition from large marketing consultant competitors, yet they are
sustainable as market segments and they show growth of more than 10% per annum.
 They are already involved in export and have strong unfilled needs and
wants in this area. They are often early adopters of technology and are
customers with a strong tendency to rebuy. Target market Strategy  To
stimulate recognition of Global Reach Inc. as an innovative and credible
enterprise from the target markets and to stimulate learning and acceptance of
the marketing methodology used by the firm.  To build strong client
loyalty by branding the firm’s services and providing verifiable assurance
through ISO 9000 certification. Marketing Objectives (1st year – build
awareness and market share)  Develop strategic alliances and reciprocal
agreements with key reference groups, opinion leaders, suppliers and buyers.
 Achieve a 0.4% market share and gain name recognition as a premium
service by 30% of the target markets.  Develop a viable
micro–marketing database.  Build a credible project portfolio 
Exploit differential advantages of unique attributes  Cover costs of
operation. Marketing Mix Product A comprehensive marketing service offering
effective strategies for global trade. Unique attributes are:  ISO 9000
certification  E-business specialists  Global marketing focus
Distribution  The distribution channel is direct to the consumer. The
core service of the business is information processing using high technology.
Service delivery involves high-tech media such as video conferencing and
real-time consultation over the Internet. High-tech distribution is balanced
with personalized, pre and post-sale services conveying tangible cues affirming
the firm’s positioning as a premium service. Seminars, workshops and video
conferencing provide much of the education and assurance components. Pricing
strategy Pricing includes fixed price and cost plus contracts and may
accommodate performance bonuses where practical. Pricing is based on an hourly
rate of $79. Fixed price contracts to include a 15% contingency reserve. Pricing
is significantly below larger consulting firms ($100–200+) but above smaller
limited service firms’ ($25–$50) establishing an aggressive, yet
prestigious, pricing strategy for Global Reach Inc. as a new premium service
company. Revenue/expense & breakeven analysis Assumptions are: * market
share of 0.4%. * 80 billable hours per week (net of sales and administration
time) * contingency = 15% * No variable costs. * Avg. Project = $15,000 Market
size Market share Billable hours Billing rate per hour Expected revenue No. of
projects Avg. hours per project Fixed cost contribution 5,500 0.4% 4,160 $79
$329,000 22 projects 189 $15,000 Fixed cost Office expense Promotion budget
Partnership draws ISO 9000 certificate 15% contingency Total costs $25,000
$100,000 $80,000 $20,000 $34,000 $259,000 Breakeven point 17 projects Desired
profit @ 15% $39,000 Breakeven point ROI 20 projects Promotion  Image
development as a progressive high quality firm offering premium customer
services.  Relationship marketing is emphasized and education services
provide the opportunity to heighten learning and awareness of the firm’s
credibility, customer focus and methodology.  Trade missions and
Internet trade portals demonstrate the firm’s ability to connect with the
global community.  Use AIDA concept to stimulate attention, interest,
desire and action for the firm’s services. Promotional Mix Est$ Media
Purpose/Expected Result 30K Advertising Trade journals – frequency –
pulsating – coincide with seminars, workshops and trade missions. Build
awareness and generate interest/leads. 10K Direct Mail Interactive CD-ROM
technology – stimulate preference, conviction, lead generation. 5K
Telemarketing Follow-up, reinforcement and post-sale assurance and empathy. 5K
Invitations To solicit response to trade missions and special events. Build
brand loyalty. 5K Web Site Rich content with useful application aids, trading
portals. Lead generation. 10K Workshops Learning and acceptance of new
technologies. Develop preference, conviction. 5K Video Conferencing Educate and
provide better diffusion throughout target markets. Follow-up and post sale
support. Build customer loyalty. Generate referrals. 10K Sales Promotion Free
seminars. Stimulate need recognition and develop preferences for the Firm’s
services. Lead generation. Qualify prospective customers. Build commitment. 15K
Personal selling Consultative and need satisfaction approaches. Strong
relationship sales focus. 5K Public Relations Computer camp for disadvantaged
children – Network for a good cause. Suggests a caring, progressive
orientation. Strong relationship builder. Recommendations 1. Protect service
names and marks “Global Reach”, “Compete With Big Business By Building
Community”. 2. Conduct microsegmentation analysis. Determine customer
purchasing strategies, criteria importance and unfilled needs and wants. 3.
Develop multisegment targeting strategies for chosen markets. 4. Ensure that
funds are in place for first year’s operation. Capital obtained from family
connections. 5. Develop a decision support system including customer details,
candidates for networking and reciprocity. 6. Complete 3 – 4 projects at cost
to establish a credible portfolio. Use as a source of referrals. 7. Obtain ISO
9000 certification – “walk the talk”. Apply international benchmarking
standards. 8. Develop assessment and promotional tools using the firm’s
service. If the service is to work for the customer then it should work for
Global Reach Inc. 9. Finalize details of the promotional plan. Use results of
microsegmentation analysis. 10. Develop influence as a trade mission co-ordinator
for small and medium exporters.
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