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 supported
eBays 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 of digital 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
communication model.The ability to create user-generated content listing products
is also related to the one-to-one aspect and 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 facilitated by 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).
Technology scalability not referred to in this chapter, but eBay has been
successful in deployingtechnology that has supported the companys rapid growth.
Case Study 2. Boo-Hoo learning from the largest European dot-com failure

1.Which strategic marketing assumptions and decisions

a r g u a b l y m a d e B o o . c o m s f a i l u r e inevitable? Contrast these with other
dot.com era survivors that are still in business, for example, last
minute.comB o o . c o m l a c k e d t h e e x p e r t i s e , r e s o u r c e s a n d c a p a b i l i t i e s
t o m a k e a s u c c e s s f u l l a u n c h i n 1 8 c o u n t r i e s s i mu l t a n e o u s l y. Th e
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
company benefited 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
likeTes c o . c o m a n d n e w p ur e p l a y s l i k e L a s t m i n u t e . c o m. Th e s e a r e
e x a m p l e s o f b u s i n e s s e s t h a t 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-yearolds 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,
t h e r e w e r e m a ny p r o b l e ms a s s o c i a t e d w i t h l o g i s t i c s t hr o u g h o u t
t h e s u p p l y c h a i n . G o o d s w e r e delivered late and returns were mishandled.
The extended service mix
Shopping with Boo was a laborious process. Physical evidence: the user interface
had many graphicalfeatures 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 featuresthat 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.P r o c e s s : t h e s h o p p i n g p r o c e s s d i d
n o t w o r k i n a s t r e a ml i n e d w a y a n d t h er e w er e m a n y
a n g r y 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.
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
. P r e mi u m br a n d s w e r e u s e d , l e a d i n g t o pr e m i u m p r i c e s . U n c l e a r
o n m i x b e t w e e n 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, competitiveselective 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 tothe cost-base of the company, impacting on promotion. A global
launch of a new brand wasambitious and can be contrasted with the more
conservative approach from the likes of Amazonand 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 useo f P R w a s m o r e e f f e c t i v e a n d i s o n e o f
t h e s u c c e s s e s o f B o o . T h e m a g a z i n e a p p e a r s overambitious
and did not pay for itself through sales generated. At the time, the
promotionthrough online marketing techniques such as search engine
advertising and affiliate marketingtechniques 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
clunkyexperience that resulted in the low conversion rates referred to in the
article. It also seems likelythat 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 andin 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
onlineretailers web operations. The 3D images of products, sales assistant avatars
and multiple countryonline stores are examples of some of the features of Boo.com
operations that have now becomecommonplace, for example, IKEA for online
sales support through their Ask Anna facility.

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 Zopa business. On which criteria would you assess the
future potential of the business and the returns on your investment, based
on Zopas position in the marketplace and its internal capabilities?
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 consider total 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 the following: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 their loan 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 fromlenders.
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.Wil l t h e n u mb e r o f l e n d e r s
b a l a n c e t h e n u mb e r o f b o r r o w e r s d e p e n d e n t o n t h e a p p e a l o f
t h e proposition as noted above?Business model scalability can it be applied in
other countries and to other financial products or beyond?Technology costs
and scalability .

Case Study 4. Tesco.com uses the Internet to support its diversification strategy
Question
B a s e d o n t h e c a s e s t u dy a n d y ou r o w n r e s e a r c h o n c o m p e t i t o r s ,
s u m m a r i z e t h e s t r a t e g i c approaches which have helped Tesco.com achieve
success online.
The strategic decisions covered in this chapter provide a useful
framework for summarizing 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 lessrelevant for them to
use online to selectively target these with communications. However,
thearticle 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 levelof 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 offerssome unique online promotions and lower online prices for
selected products such as financialservices, which could attract a percentage
discount when purchased online. It appears not to usethe service elements of
the mix for positioning beyond the slogan You Shop, We Drop.
Butattention has been paid to improving the customer experience through
usability activities andreduction of download times.The marketing mix, which
is covered in Chapter 5, is also suitable for assessing some of the tacticalelements
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 thed e c i s i o n t o d i s t r i b u t e
Internet orders via stores unlike some rivals such as
O c a d o (www.ocado.com) who have setup distribution channels.

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
attractingvisitors to the site.

Decision 7: Online communications mix and budget

. Again, this is not mentioned, although the importance of e-mail marketing
for customer communications is apparent.

Decision 8: Organisational capabilities (7S).

Tes c o h a s a c h i e v e d f o c u s o n l i n e b y cr e a t i n g a separate Tesco.com
brand and a separate division headed by Wade Gery.

Case Study 5. The new Napster changes the music marketing mix
Question
Assess how Napster competes with traditional and online music providers
by reviewing theapproaches 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
. Th e c or e p r o d u c t i s t h e s t r e a me d m u s i c s e r v i c e a v a i l a b l e
t h r o u g h s u b s c r i p t i o n , b u t e x t e n d e d pr o d u c t o ffe r i n g s i n c l u d e t h e
s a l e o f c o mp a t i b l e M P 3 p l a y er s . Th e w i d e r a n g e o f products (more
than 1 million) indicates a broad product range contrasting with existing stores, but
smaller than some online suppliers like iTunes.

T h e ar t i c l e s h o w s t h e i mp o r t a n c e o f t h e N a p s t e r b r a n d i d e n t i t y,
i n c l u d i n g i t s p e d i gr e e a n d 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 purchasetracks by album or price, with cost reductions for volume
purchases.

Place

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

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

Promotion
. Establishing brand awareness and familiarity with Napster
a m o n g p o t e n t i a l downloaders of music is the key. Offline media are
arguably best for this. Unlike other onlineservices, 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 whenvisitors 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 experiencesuch as usability and
customer service. These are perhaps less relevant for Napster, but they
areimportant 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 downloadservices run by eretailers. This also works well as many students use such services and so will
havestrong opinions on them.

Case Study 6. Dell gets closer to its customers online

Question
Describe approaches used by Dell within their site design and promotion
to deliver relevant offers for different types of online customers.
The answer should centre on different segmentation techniques. Different
segments can then be t a r g e t e d b y d i f f e r e n t m e d i a ( e . g . , p a i d
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.

D e m o g r a p h i c D e l l c a n t a rge t d i ffe r e n t a u d i e n c e s b y a d v e r t i s i n g
o r a ffi l i a t e m a r k e t i n g o n different site types.

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

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

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

Questions
1 . S e l e c t o n e c o u n t r y t h a t i - t o- i o p e r a t e s i n c l o s e s t t o t h e a r e a t h a t
y ou l i v e . Define a persona based on the age and product needs and then identify
them a i n c u s t o m e r j o u r n e y s t h a t f o r m t h e c u s t o m e r f o r t h i s
p e r s o n a . Wh i c h routes 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-toi t o e n g a g e t h e audience to generate leads.
Engagement devices that are examples of content marketing to encourage
signup include thefollowing: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
( C h a p t e r 1 ) t o r e v i e w a n d m a k e recommendations

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 andc u s t o m e r - r e l a t e d m e t r i c s w o u l d y o u u s e t o
a s s e s s a n d b e n c h m a r k t h e current 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 notsimply users, but
active returning users and the number of pages viewed per day. The proportion
of ad 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
a s s e s s m e n t o f the main business risks which could damage the future
growth potential of the 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
i n y o u r a n s w e r t o Question 2, suggest approaches the company
could use to minimise theserisks.
Ad Revenue.
Review different forms of advertising. Test with users and advertisers
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
newaudiences

Case Study 9. Innovation at Google

Question
1.Explain how Google generates revenue and identifies
f u t u r e l e v e l s o f revenue 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 as AOL).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 suchas 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.Q u a l i t y o f s e a r c h
r e s u l t s f a l l s d u e t o s p a m m i n g , s o G o o g l e u s e r s t ur n t o a
c o m p e t i t o r w i t h a n improved search service.Further risk factors are available in the SEC
filings referenced in the case study.

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,
customer service, 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 behalf of 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 of new 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
a p p r o a c h t o m a r k e t i n g communications.
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 adv.

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
f r o m t h a t i n o t h e r organisations from your experience?
This question asks students to reflect on their own experiences. From the
case, the following arecharacteristic 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.