Entries categorized as ‘eBiz Channel Conflict’
Förutom rena varumärkes/ awareness drivande annonsering i displayform har onlinemarknadsföringens hjärta fokuserat på försäljningar och avslut mot konsumentmarknaden. Det har drivits av ökad spårbarhet och data på användarnas aktivitet före och efter exponering av ett reklambudskap. Mest utveckling har skett på de områden där själva köpet eller aktiviteten utförs online t ex genom distributionsformer som affiliate.
Image Source: www.inmoba.com
Ren display/ banner annonsering lider av ökad ineffektivitet (lägre klickfrekvens/ CTR) i takt med att utbudet av siter och reklambudskap ökar. Därmed ökar vikten av att öka “håvens” storlek i onlineportföljen. Idag är det lämpligt att komplettera displayannonsering med en tydlig sökstrategi, ett affiliateprogram och inte minst leadsgenereringsaktiviteter. Med leads avses t ex emailadress, ifyllt kontaktformulär, sign-up på nyhetsbrev osv.
Det finns ett antal stora aktörer på leadsmarknaden. De flesta arbetar med emaildatabaser och fokuserar på inhämtning, sortering och försäljning av emailadresser. Huvudverktyget för insamling av kontaktuppgifter/email är genom intresse- och frågeformulär. Förutom TradeDoubler finns det aktörer som Come&Stay som växer snabbt på området.
Fördelarna med leadsprodukten är många och här nämns några:
- Bättre effektivitet genom att i ett första skede skapa ett frågeformulär och segmentera användare innan man sänder ett reklambudskap. Därigenom får man också opt-in.
- Själva insamlingsprocessen kan göras till en relativt billig peng i annonsnätverk – genom tävlingar och annat kan en positiv upplevelse kring frågeformuläret skapas.
- Konverteringsfrekvens och effektiviteten på resultatet, de sorterade emailadresserna, är ofta mycket hög.
- Denna produkt är utmärkt att använda för B2B affärer och affärer som kräver mer försäljning/ övertygelse innan en transaktion kan äga rum – eller rent utav köp som görs offline men som initieras online.
Leadsprodukten växer kraftigt idag och bör vara ett självklart komplement i alla effektiva onlineportföljer. Den kan också delvis ersätta dålig intern hantering/CRM system av kontaktuppgifter i företagen.
Categories: eBiz Big Picture · eBiz Channel Conflict · eBiz Demand Generation · eBiz Management · eBiz News and Trends
Tagged: Leadsgenerering online - en kioskvältare., Komplettera onlineportföljen med leadsgenerering., Effektiva emailstrategier - det går att starta från 0., Driv mer volym online genom intresseformulär., Förbättra ROI i onlinekanalen med leadsgenerering.
At some point in the development of your site, demands on up-sell and cross-sell initiatives will become stronger and stronger. Maturity in most markets means that price competition focuses on the base products or services (that are comparable substitutes) not on the wide number of accessories, options, extras or services that are offered at and after point of sale. As we all know, focus on price on the base means very low margins on low end line of businesses and a necessity to make the margins elsewhere.
This is where the challenge starts. I have previously written about the pareto type distribution of up-sells on an option with say five choices. Two options will be chosen by the bulk of customers, one of the choices often being the default itself. Include three options and you cover at least 80% of the customers. With five options you are starting to balance between addressing the long tail of demand (special needs and choices) and the extra cost involved in people simply getting tired of choices (and abandoning the process) and the cost of administration and complexities when adding options.
Ultimately the question to be asked is whether or not the customers’ willingness-to-pay increases not with the add-ons but with the option to add them. If the combination of products and packages on your site are not viewed as a clear differentiation vs. your competition, my guess is that someone else will focus on the basic products and the most common up sells. In doing so they will shave off a good chunk of opex that you continue to carry, but they still manage to address the market with the same margin%. Worst case your competitors will also benefit from a more sensible number of clicks from consideration to purchase and see a higher convergence of leads to orders.
Unless your customer is an danced super user that sees options as a unique differentiator and must have, limit your options and invest the time and cost elsewhere.
Categories: eBiz Channel Conflict · eBiz Upsell- & Crossell
Tagged: Increasing convergence with an optimized store., Limiting store options., Optimizing configurator choices.
One of the most difficult disciplines in marketing is that of pricing and elasticity of demand. In today’s article, I wanted to give my 2 cents on cross elasticity for substitute products in a portfolio. I have seen a lot of it lately. And I am realizing how easy it is to sell your stuff online such that you, by adding aggression to your low end, actually hurt your high end and total margin$ attainment.
Picture a portfolio with products A and B below. Product A is a cheaper, sometimes negative margin bearing, traffic and units driver. B is a more high end product. Because there are numerous configurations of A and B the high end target segment of product A will consider low end configurations of product B as well as high end configs of product A. Similarly, low target segment of product B will consider high end configurations of product A as well as product B configurations. As we increase margin aggression on product B we see volumes picking up (especially in lower price bands).
Problem is we also see the volumes of product B going up making impact of low-end price aggression visible both in margin and mix shift (lower chart). For most marketeers this should be an intuitive scenario.
What complicates things is that due to channel specific ownership of product prices, I cannot influence the price on product B. Had it been possible to lower the price, we would be able to sell much more units of B and thus raising the overall velocity significantly without hurting the mix too much.
The subsequent variation of margins is high. We see the organization wobbling from guard rail to guard rail in an attempt to balance unit growth and profitability. This highlights both a cross elasticity consequence but also another example of how channel specific strategies can lead to sub optimization in the on-line channel.
Key takeaway: make sure you have full freedom to adapt the full portfolio to a new pricing level for a specific product. In this case you may need to lower prices on both A and B to actually exit promo period with an optimized margin$ attainment.
Categories: Web Analytics · eBiz Channel Conflict · eBiz Promo & Pricing · eBiz Upsell- & Crossell
Tagged: cross elasticity and channel competition., Managing substitue products
Recently I have read several articles on the topic multi channel approaches. It all started with an RSS from eMarketer this week on the topic where Jeffrey Grau, eMarketer Senior Analyst, stated that ”online consumers think nothing of shopping across a retailer’s stores, Web site and catalog,” in his latest report, Multi-Channel Retailing. One of the key take aways of the article was the tremendous amount (471 billion USD) of offline sales that was influenced by online. “As a consequence, online product research is driving more in-store sales than online sales.” says Grau.
In the latest edition of World Business, published by Haymarket in association with INSEAD, Mary Brett Whitfield, Senior VP at TNS Retail Forward comments the demise of the pure-play e-retailers in an article by Laura Mazur (Brick or Click?). “The largest online retailers today are the multi-channel retailers: store or cataloge retailers who have developed online sales channels” says Whitfield.
Conversely, in Mazur’s article, Nikesh Arora, Google’s President of EMEA Operations, named the online channel as one that far too many (2/3) of retailers have failed to exploit. Some explanation is offered by Neil Saunders with Verdict Research. Firstly, Saunders points to the after the boom and bust of 2000 many retailers are learning how to develop multi channel approaches but it takes time. Secondly, he highlights the infrastructure issues involved in online retail are real and complicated.
Previously in this blog I have written about the reality of multi channel perspective from a pricing point of view. As the online retailing world grows, more and more companies are forced to find not stand alone online success, but an online strategy that fits into their other channel approaches. Because each company has a unique set of channels and strategies this suggests that execution in and management of the online channel will continue to show growing variety.
Categories: eBiz Big Picture · eBiz Channel Conflict · eBiz Management · eBiz News and Trends
Tagged: combining offline and online, matching online execution with offline channels., multi-channel retailing, variety in online strategies
The methods and teachings of Blue Ocean Strategy (BOS) are, next to Michael E Porter’s renowned frameworks, some of the most comprehensive tools you can use to fine tune your differentiated, low cost on-line strategy.
In my view, the beauty of BOS lies in the power of visualization and the creation of a strategy canvas (see below). In order to create the canvas you need to spend some time understanding what the present (and potential) competing factors are.
Competing factors have many names but easily expressed you need to understand what your present (and potential) customers’ present (and potential) needs are in your market space.
When Small & Medium customers (0-500 employees) are asked what they see as most important in purchasing a laptop computer, their answers give us some hints as to the present competing factors (according to Technology Business Research, Inc, “Corporate IT Buying Behavior & Customer Satisfaction Study: Notebooks”, Q407):
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hardware reliability,
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product design/features,
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technical support and
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customer services.
If you wish to sell this product in the online channel, you need to add some more channel specific online factors. In my view, these would be:
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ease of browse and order,
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delivery time (if applicable stock level) and
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effectiveness of payment methods.
Last you need to add Price & Promo attractivity.
Now this was a quick application of the BOS strategy canvas that serves the purpose of this discussion. Let me now plot where I think a Blue Ocean is evolving in the On-line Computer Sales SMB market space.
The key takeaways are the following:
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I believe the most successful on-line retailers should invest less in price and promo.Firstly, this is red ocean and with most of sourcing from Asia, a long term component cost advantage is difficult to sustain. Secondly, running promo activities is costly. You need creatives, extensive market communication and professionals to manage this which creates overhead. Finally, the computer/ PC market is already a low margin industry with low end lines selling at negative margins so you will hardly make any money doing it.
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Hardware reliability and product differentiation is of course important. But most computers are exchanged within 3 years and the marginal cost for being the leader here doesn’t seem as attractive to me. Good is good enough.
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Technical support and services services are two often outsourced or overlooked domains where I believe there is an open blue ocean. If you manage to maintain proximity to your customer and integrate tech support with up-sells, license renewals etc – you will leave your competition behind. Don’t mix up the cost effectiveness of the on-line channel with removing support functions. Invest and excel.
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Three key areas in the on-line space that surprisingly many don’t handle well can be unique differentiators in your strategy:
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Make your site ridiculously simple to order from - this is the best recipe for conversion and cost effectiveness (fewer sites to keep track of and longer duration of your
space station).
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Compete with fastest delivery. This is often forgotten as retailers have integrated supply chains with suppliers. Sure you save money, but you lose sales. Make sure you set the delivery (or stock) expectations up front.
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Many transactions will depend on the offered payment methods (credit in specific) but also your effectiveness of handling these processes. Invest in these processes and your business will grow.
Categories: eBiz Big Picture · eBiz Channel Conflict · eBiz Promo & Pricing · eBiz Strategy
Tagged: Blue Ocean Strategy, Computer SMB market, eBiz Strategy, Michael Porter Online Strategy, Online Pricing Strategy, Online Strategy, Price and Promo Strategy, Promo strategy online., Small and Medium Business Online Sales, Small and Medium Business Strategy
