Casadellibro.com was an attempt to achieve world leadership in the Spanish books market and Internet was a channel of distribution to reach consumers. Under previous conditions (high expected growth and consumer demanding on line services), Casa del Libro decided to build a platform in which they could achieve high performance, security, availability and scalability. However, the conditions have changed; the platform cannot integrate effectively, the market is not increasing as it was expected and the Internet bubble exploded.
Looking at the current context, it seems illogical to keep investing on the UNIX platform. First, huge investment has already been done and not any return has taken place. Second, since cost control and loss reduction are the key factors for the short term, modifications to the UNIX platform will certainly raise short-term costs because of its inherent deficiencies. Third, since the market as a whole is experiencing bad conditions, if the company takes a look to the long term, it seems reasonable to switch to the Microsoft one. This decision has to be made for sure; the question is whether it has to be done now or in the future. Trying to apply my financial accounting concepts, calculating the Net Present Value of Option 1 (UNIX) and Option 2 (Microsoft), switching to the Microsoft Option becomes the best option because it´s seen as an investment instead of as an expense, like in the first option.
The criterion that has to be evaluated by Casa del Libro is the following:
1. Participation of sales depending on the channel of distribution and the profit margin for each channel. If on line sales have the highest profit margin, focusing on the platform will provide a welcome flow of “profitable” cash.
2. Strategies being taken by the competition. Under such difficult conditions for the industry, Casa del Libro cannot risk its position on the market. It has to be aware of competitors´ initiatives.
3. Projections for the long term, after the crisis has finished. Even though the company is experiencing bad times, it won´t last forever, so it has to keep it mind the “B” plan when the crisis is over and be prepared to take as much as it can from the market.
martes, 3 de febrero de 2009
domingo, 25 de enero de 2009
IT-generated competitive advantage at Tesco
When launching Tesco.com, Tesco partnered with an IT solution provider with the technology and support services to meet a significant rate of growth in its business in order to maximize the uptime of its website. In addition, TESCO´s model to use in store staff to pick orders over the internet off the shelves seems to be a strategic decision. According to John Browett, Chief Executive of Tesco.com, “Running our home delivery service from the stores gives customers the best service and value.
Delivery times can be kept below 30 minutes from store to house, keeping costs down, and the range is huge because stores stock so many products”. Another competitive advantage is to target its service at customers willing to pay a 5euros delivery fee and to add online services, so that customers will receive an incentive for shifting from regular grocery shopping to e-shopping. If you want to change a consumer habit, the trade off needs to look convenient and valued by the customer in order to do that change. Finally, the Club Card, a loyalty card that -although it was created at the beginning as a means of giving something back to the customer- it allowed TESCO to collect customer data and send the customers targeted offers.
While facing a mature UK retail industry, TESCO wanted to maintain market share and increase profitability. On one hand, TESCO looked at China as the country with the biggest growth potential in the world. On the other hand, maximizing the use of Tesco Direct Model, already an Internet success would increase its participation on total TESCO´s turnover.
Definitely, when introducing in a different market, the best initial strategy seems to be the joint venture or any mean of controlling interests in local retailers in order to get its local knowledge and operating expertise. It was already a common practice in TESCO´s expansion strategy. China has been irresistible to foreign retailers even since the government started allowing them to set up there in 1995. When TESCO decided to enter the Chinese market, it was already late by world standards. Hence, the acquisition of a stake in a leading retail group seems to be a good idea. Chinese consumer habits are different, and Tesco shouldn’t try to change them. Instead, try to adapt to them, improve the shopping experience and see through cultures to supply what shoppers really want. Even though TESCO has the expertise, they lack local experience. The Club Card becomes a useful tool to identify the different patterns when shopping in order to bring new management expertise and technology know-how to help grow the business further. Moreover, TESCO.com becomes an important way to get in touch with customers and reaching new ones.
If e-grocery market is more profitable than the regular market and your main goal is to be profitable, you want to move your customer from one point to another. If this statement is true, then cannibalization through the retail channel shouldn´t worry TESCO. As a result, they might have the same volume of sales but with higher profits. But if online profit margins are smaller than that of the traditional business, then it becomes compulsory to impose a minimum order level to encourage larger orders to off-set the cost of delivery and make sure that with this service charge, the market will not stomach.
Delivery times can be kept below 30 minutes from store to house, keeping costs down, and the range is huge because stores stock so many products”. Another competitive advantage is to target its service at customers willing to pay a 5euros delivery fee and to add online services, so that customers will receive an incentive for shifting from regular grocery shopping to e-shopping. If you want to change a consumer habit, the trade off needs to look convenient and valued by the customer in order to do that change. Finally, the Club Card, a loyalty card that -although it was created at the beginning as a means of giving something back to the customer- it allowed TESCO to collect customer data and send the customers targeted offers.
While facing a mature UK retail industry, TESCO wanted to maintain market share and increase profitability. On one hand, TESCO looked at China as the country with the biggest growth potential in the world. On the other hand, maximizing the use of Tesco Direct Model, already an Internet success would increase its participation on total TESCO´s turnover.
Definitely, when introducing in a different market, the best initial strategy seems to be the joint venture or any mean of controlling interests in local retailers in order to get its local knowledge and operating expertise. It was already a common practice in TESCO´s expansion strategy. China has been irresistible to foreign retailers even since the government started allowing them to set up there in 1995. When TESCO decided to enter the Chinese market, it was already late by world standards. Hence, the acquisition of a stake in a leading retail group seems to be a good idea. Chinese consumer habits are different, and Tesco shouldn’t try to change them. Instead, try to adapt to them, improve the shopping experience and see through cultures to supply what shoppers really want. Even though TESCO has the expertise, they lack local experience. The Club Card becomes a useful tool to identify the different patterns when shopping in order to bring new management expertise and technology know-how to help grow the business further. Moreover, TESCO.com becomes an important way to get in touch with customers and reaching new ones.
If e-grocery market is more profitable than the regular market and your main goal is to be profitable, you want to move your customer from one point to another. If this statement is true, then cannibalization through the retail channel shouldn´t worry TESCO. As a result, they might have the same volume of sales but with higher profits. But if online profit margins are smaller than that of the traditional business, then it becomes compulsory to impose a minimum order level to encourage larger orders to off-set the cost of delivery and make sure that with this service charge, the market will not stomach.
domingo, 18 de enero de 2009
Meneame
According to the BCG matrix, I believe Meneame.net is a star, with a high rate of market share and business growth rate. BCG matrix has also cows and dogs that want to become stars. So, Meneame.net becomes a cheap way for them to become stars. The effect of me recommending an IS article on my blog and Enrique Dans recommending the same article on his blog will certainly have a different impact. I believe that the latter will get a highest rate of traffic.
So, how to take advantage of the “Meneame” brand that is already positioned at potential customers minds with a high rate of traffic? How to make a profit out of it?
Becoming a star is costly and can also take a long time. "Meneame" is already a star and companies are willing to become stars and it becomes even better if it is achieved in a short term. Moreover, small and not well known blogs that experience the “meneame effect” can have positive effects, such as an increase in subscriptions or links from other webs. Therefore, using a resource as AdSense, will provide advertisement revenue from each page on “Meneame” web page with a minimum investment on time and without additional resources. Mename should focus on blogs in which they can meet their requirements, and not in every blog that asks for it.
It is important to notice that the blogs that pay for it should be prepared for the increase on traffic. Otherwise, the “meneame effect” will have a negative impact. It might be recommendable for "Meneame" to ask for certain requirements, so the blog´s server will be able to support the increase on traffic. And it´s blogs responsibility to be aware of making this traffic maintained over time. “Meneame” is just giving a big help from a starting point.
“Meneame” can also use social filters for issues that can be applied to profitable business, such as selling academic services or even job hunting through the selling of banners.
As every business, taking advantage of its strengths (already has a strong name), and converting them into revenues could make “Meneame” a profitable business. There is a phrase in my country. Once the customer has tasted the candy, you can charge a fee and the customer will be willing to pay since the sweetness is already in his or her mouth. I was a heavy user of cinetube.es, which was for free. Now they are charging a fee for watching the movies, and I am willing to pay because I already have the feeling of tasting the sweetness. I believe the same could happen with “Meneame” since blogs already know the feeling of seeing an increase on traffic on their blogs.
So, how to take advantage of the “Meneame” brand that is already positioned at potential customers minds with a high rate of traffic? How to make a profit out of it?
Becoming a star is costly and can also take a long time. "Meneame" is already a star and companies are willing to become stars and it becomes even better if it is achieved in a short term. Moreover, small and not well known blogs that experience the “meneame effect” can have positive effects, such as an increase in subscriptions or links from other webs. Therefore, using a resource as AdSense, will provide advertisement revenue from each page on “Meneame” web page with a minimum investment on time and without additional resources. Mename should focus on blogs in which they can meet their requirements, and not in every blog that asks for it.
It is important to notice that the blogs that pay for it should be prepared for the increase on traffic. Otherwise, the “meneame effect” will have a negative impact. It might be recommendable for "Meneame" to ask for certain requirements, so the blog´s server will be able to support the increase on traffic. And it´s blogs responsibility to be aware of making this traffic maintained over time. “Meneame” is just giving a big help from a starting point.
“Meneame” can also use social filters for issues that can be applied to profitable business, such as selling academic services or even job hunting through the selling of banners.
As every business, taking advantage of its strengths (already has a strong name), and converting them into revenues could make “Meneame” a profitable business. There is a phrase in my country. Once the customer has tasted the candy, you can charge a fee and the customer will be willing to pay since the sweetness is already in his or her mouth. I was a heavy user of cinetube.es, which was for free. Now they are charging a fee for watching the movies, and I am willing to pay because I already have the feeling of tasting the sweetness. I believe the same could happen with “Meneame” since blogs already know the feeling of seeing an increase on traffic on their blogs.
miércoles, 17 de diciembre de 2008
Blog or nor to blog
I will start this assignment providing a brief description of the situation for all those bloggers, and I hope there are as many as I can imagine, that are non IMBA readers and are not part of Professor Enrique Dans’s Information Systems course.
Here is the situation: Delphine, product manager for Vichy´s French subsidiary had to present public apologies to her clients for the false blog created due to the launching a new anti-aging cosmetic product. They created a fake character named Claire, who lamented her advancing years and wanted to talk to people that share her same worries about her skin´s freshness. Now, the decision is whether Vichy should use a blog for this commercial purpose.
The decision to create the character of Claire was intended to be part of a marketing program with the purpose of creating a strong emotional bond with customers. This is what companies usually do, they want to get closer to their customers and create loyalty. But in this case, Vichy certainly achieved the opposite, bloggers started to doubt about Delphine´s real existence, and hence, the source of information, meaning Vichy.
The modern world provides us with interesting tools, mostly related to technology. Some companies take advantage of them, others just ignore or underestimate their benefits, and there are also those who overexploit the concept. I remember when I was at high school; I faced the boosting of E-Business. I could see e-enterprises everywhere. This was certainly a tool to exploit, a new way to get in touch with customers. From my point of view, the problem was that costumers got exhausted from this huge information flow, sometimes, without knowing the real purpose of the web platform. I remember a web page from a major bank in Peru; they wanted to act as an e bay platform. In one year, they realized that they had to focus on their core business, and not follow a trend just because it was “in”.
I am not trying to give morality lessons to Vichy as a blogger, I don’t know much about blogging. Actually, I just created my blog yesterday, and I am just discovering this fascinating world. Blog or not to blog, I will just use my common sense, not biased by my weak knowledge of technology, in which I am not certainly being an active actor by now. The case is not fully clear on Vichy´s blog aim. If we want to approach clients, we can still use the traditional marketing tools. Why the necessity of a blog? Is it because it is fashion? Or is it because the competitors are using it? The purpose of using a blog should be clear. Is the company prepared for it? If I were Delphine my final response would be the “depend on” answer. Doing a blog without knowing the real goal of it, could have a negative impact on customers. Moreover, if the company does not adapt itself to a new and different way to communicate with clients, they better stay with traditional tools. The problem they will face, for sure, will be not addressing potential clients that are “heavy blogger users”, or maybe loosing clients that are being attracted by competitors using blogs properly.
martes, 16 de diciembre de 2008
Some Google Info
I have some interesting points I got from a Google speaker who came from Sillicon Valley to Peru to give us a lecture about marketing in Google, directly related with techology.
According to Google,
* The change of investment in publicity (2007 vs. 2008) will be the following:
Newspapers: 0%
Radio: 2%
TV: 3%
Magazines: 4%
Internet: 19%
* Data Techological Tools
7 billion people in the world
1.4 billion on line
3 billions of mobiles
Certainly, still an opportunity to grow...
* IPOD
In 2014, it will store the equivalent of 1 year video
In 2016, it will store all the music of the world
In 2024, it will store the equivalent of a 85 year video
In 2025, all the information in the world
I hope you take advantage of this information!!
According to Google,
* The change of investment in publicity (2007 vs. 2008) will be the following:
Newspapers: 0%
Radio: 2%
TV: 3%
Magazines: 4%
Internet: 19%
* Data Techological Tools
7 billion people in the world
1.4 billion on line
3 billions of mobiles
Certainly, still an opportunity to grow...
* IPOD
In 2014, it will store the equivalent of 1 year video
In 2016, it will store all the music of the world
In 2024, it will store the equivalent of a 85 year video
In 2025, all the information in the world
I hope you take advantage of this information!!
Welcome!
I was asked by the Professor of Information Systems to look for a way to show digital presence during the course. During classes, it seemed so natural for everyone to talk about blogs. To tell you the truth, I was kind of lost and when the class finished, I decided that I was going to deliver the papers just by e-mail. I am not much into technologies but class after class I realized that it was my last chance to get involved with technology. I was escaping from it. I don’t have a digital camera, I am use to buying the disposable ones, and I still have six of them to develop since last year. I don’t have an IPOD; when I go to the beach and all my friends are listening to their IPOD`s, I just leave them and make sand castles.
So, here I am, writing down the introduction of my blog. Let´s see how this experiment goes.
So, here I am, writing down the introduction of my blog. Let´s see how this experiment goes.
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