Case Study – Montana Mountain Biking
Jerry Singleton founded Montana Mountain Biking (MMB) 18 years ago. MMB offers one-week guided mountain biking expeditions based in four Montana locations. Most of MMB’s new customers hear about the company and its tours from existing customers. Many of MMB’s customers come back every year for a mountain biking expedition; about 80 percent of the riders on any given expedition are repeat customers.
Jerry is happy with this high repeat percentage, but he is worried that MMB is missing a large potential market. He has been reluctant to spend a lot of money on advertising. About 10 years ago, he spent $80,000 on a print advertising campaign that included ads in several outdoor interest and sports magazines, but the ads did not generate enough additional customers to cover the cost of the advertising. Five years ago, a marketing consultant advised Jerry that the ads had not been placed well. The magazines did not reach the serious mountain bike enthusiast, which is MMB’s true target market. After all, a casual mountain bike rider would probably not be drawn to a week-long expedition.
Another concern of Jerry’s is that more than 90 percent of MMB’s customers come from neighboring states. Jerry has always thought that MMB was not reaching the sizable market of serious mountain bike enthusiasts in California. He talked to the marketing consultant about buying an address list and sending out a promotional mailing, but producing and mailing the letters seemed too expensive. The cost of renting the list was $0.10 per name, but the printing and mailing were $4 per letter. There were 60,000 addresses on the list, and the consultant told him to expect a conversion rate of between 1 and 3 percent. At best, the mailing would yield 1800 new customers and MMB’s profit on the one-week expedition was only about $100 per customer. It looked like the conversion cost would be about $246,000 (60,000 × $4.10) to obtain a profit of $180,000 (1800 × $100). The consultant explained that it was an investment; because MMB had such a high customer retention rate, the profit from the new customers in the second or third years would exceed the one-time cost of the mailing in the first year. Jerry was not convinced.
Nine years ago, MMB launched its first Web site. It included information about the company and its tours, but Jerry did not see any need to include an expedition-booking function on the site. He did think about selling caps and jackets with the MMB logo, but that idea never was implemented. The MMB logo is well known in the mountain biking community in the upper Midwest.
The MMB Web site includes an e-mail address so that visitors to the site can send an e-mail requesting more information about the expeditions. Robin Davis, one of MMB’s expedition leaders, is an amateur photographer who has taken many photos while on the trails over the years. Last year, she had those photos digitized and put them on the MMB Web site. The number of e-mail inquiries increased dramatically within a month. Many of the inquiries were about MMB’s expeditions, but a surprising number asked for permission to use the photos, or asked if MMB had more photos like those for sale. Jerry is not quite sure what to make of the popularity of those photos. He is, after all, in the mountain bike expedition business.
MMB has had the same basic website for 9 nine years, and Jim has recognized that technology has changed and become more affordable. As such, he decided that a digital marketing program should be created to attract new clients to his Montana Mountain Biking (MMB) business. With his past success and reputation, he wants to leverage his website to not only sell his mountain biking expedition packages, but to also sell mountain biking accessories and apparel items that are branded with MMB logo. MMB profits hit a new record high last year, so Jim has the funds to invest to launch his new expanded product offerings and develop his digital marketing program.
Jim has hired you as a marketing consultant to create a report that highlights what you would propose to create an effective business presence online, and the means to process payments and sell merchandise on his website. Additionally, he is also requesting that you include the web marketing strategies you will use to generate leads for his expedition service, and the social platforms that will be used to generate traffic to the website and enhance his overall branding efforts.
Your assignment this week is to review the five stages of customer loyalty shown in Figure 4-5 and prepare a report in which you classify MMB’s customers. Estimate the percentage of MMB customers who fall into each of the five categories (Support your classification with logic and evidence from the case narrative) and then develop your recommendations that address the specific material he has hired you for. You will want to convey the importance of presenting an image consistent with MMB philosophy, principles, and identity that also meets the accessibility goals and the needs of the website visitors. In addition, an outline of the elements (such as branding, product characteristics, product use benefits, and comparison to competing products) you would include in the online communication media (Web page, e-mail, social networking, and so on) that is used to introduce new customers to Jim’s MMB business.
The following requirements must be met:
· Write between 1,000 – 1,500 words using Microsoft Word in APA style.
· Use an appropriate number of references to support your position, and defend your arguments. The following are examples of primary and secondary sources that may be used, and non-credible and opinion based sources that may not be used.
o Primary sources such as government websites (United States Department of Labor – Bureau of Labor Statistics, United States Census Bureau, The World Bank), peer reviewed and scholarly journals in EBSCOhost (Grantham University Online Library) and Google Scholar.
o Secondary and credible sources such as CNN Money, The Wall Street Journal, trade journals, and publications in EBSCOhost (Grantham University Online Library).
o Non-credible and opinion based sources such as, Wikis, Yahoo Answers, eHow, blogs, etc. should not be used.
· Cite all reference material (data, dates, graphs, quotes, paraphrased statements, information, etc.) in the paper and list each source on a reference page using APA style. APA resources, including a template, are provided in the Supplemental Materials folder.
CH. 3 Summary
In this chapter, you learned that businesses are using six main approaches to generate revenue on the Web, including: the Web catalog, digital content sales, advertising-supported, advertising-subscription mixed, fee-for-transaction, and fee-for-service models. You learned how these models work and what kinds of businesses use which models (or combinations of these mod-els). You also learned that some companies have changed revenue models as they learned more about their customers and the business environment in which their Web sites operate. Changes in technology have also driven shifts in some companies ‘choice of revenue models. Companies sometimes face the challenges of channel conflict and cannibalization either within their own organizations or with the companies that have traditionally provided sales distribution to consumers for them. In accordance with the network model of organization that you learned about in Chapter 1, companies doing business online sometimes form strategic alliances with other companies to obtain their skills in Web site operation. By understanding how the Web differs from other media and by designing a Web site to capitalize on those differences, companies can create an effective Web presence that delivers value to visitors. Every organization must anticipate that visitors to its Web site arrive with a variety of expectations, prior knowledge, and skill levels, and are connected to the Internet through a variety of different technologies. Knowing how these factors can affect the visitor’s ability to navigate the site and extract information from the site can help organizations design better, more usable Web sites. Enlisting the help of users when building test versions of the Website is also a good way to create a Web site that represents the organization well. Firms must understand the nature of communication on the Web so they can use it to identify and reach the largest possible number of customers and qualified prospects. Using a many-to-one communication model enables Web sites to effectively reach potential customers.
In this chapter, you learned how companies can use the principles of marketing strategy and the four Ps of marketing to develop a marketing mix that achieves their goals for selling and promoting their products and services online. Some companies use a product-based marketing strategy and some use a customer-based strategy. The Web enables companies to mix these strategies and give customers a choice about which approach they prefer. Many companies are using storytelling techniques to establish consistent branding messages across all media (online and offline) channels they use to connect with customers. Market segmentation using geographic, demographic, and psychographic information can work as well on the Web as it does in the physical world. The Web gives companies the powerful added ability to segment markets by customer behavior and life-cycle stage, even when the same customer exhibits different behavior during different visits to the company’s site. These additional segmentation capabilities can lead to one-to-one online marketing approaches that result in greater relationship intensity than most non-online approaches. Companies have developed a number of ways to categorize customers in these relationships and can design marketing messages tailored to customer needs. Online advertising has become more intrusive since it was introduced in the mid-1990s, even though research has shown that users find such ads to be irritating. You learned how companies are using various types of ads, including banners, pop-ups, pop-behinds, text, inline text, and interstitials to sell products and services online. Permission marketing and opt-in e-mail offer alternatives that can be used with or instead of Web page ads. Context-sensitive text ads are a rapidly growing form of online advertising that users find less intrusive than other online advertising media. Many companies are using the Web to manage their relationships with customers. By understanding the nature of communication on the Web, companies can use it to identify and reach the largest possible number of qualified customers. Technology-enabled customer relationship management can provide better returns for businesses on the Web than the traditional unaided approaches of market segmentation and micromarketing. Firms on the Web can use rational branding instead of the emotional branding techniques that work well in mass media advertising. Some businesses on the Web are sharing and transferring brand benefits through affiliate marketing and cooperative efforts among brand owners. Others are using viral marketing strategies in online social media to increase awareness of their brands and the size of their customer bases. Successful search engine positioning and domain name selection can be critical for many businesses in their quests for new online customers. The most important theme in this chapter is that companies must integrate the Web marketing tools they use into a cohesive and customer-sensitive overall marketing strategy.
Schneider, G. P. (2015). Electronic Commerce (11th ed.).
Stamford, CT: Cengage Learning.
Boston, MA. ISBN: 9781285742298
The Revenue Model for Ecommerce is rooted in the development of the catalog beginning in 1872 (Schneider, 2015).
The catalog concept allows shoppers to view what they want to buy and the cost of the each item. Ecommerce websites are similar in that they provide information, pictures and prices for items for purchase.
Discounts and shipping information are also provided (Schneider, 2015).
Fee for content Ecommerce sells the rights to access information.
Such websites provide legal, academic, business, technical content, electronic books, online music and video (Schneider, 2015).
Figures 3-2 and figure 3-3 provides examples of revenue models (Schneider, 2015).
Selling on the web
Creating an effective web presence is essential.
Figure 3-5 (Schneider, 2015) list the objectives and strategies for effective web presences.
Establishing an effective brand image is essential such as Coke and Pepsi (Schneider, 2015).
Building flexibility into the website is the best way to meet the needs of all clients (Schneider, 2015). Some visually impaired clients may use special web browser software for reading text from web sites.
“The W3C web accessibility initiative includes a number of useful links to information regarding these issues” (Schneider, 2015). Visit the W3C web site at http://www.w3.org/WAI/ for more information.
Selling on the web
Connecting with customers may be accomplished in a combination of three ways;
Mass media is a one-to-many model
The web a many-to-one and many-to-many model
Personal contact, a one-to-one model
(Schneider, 2015, figure 3-9).
Selling on the web
Effectively communicating with different web segments requires identifying potential customer groups.
Media selection that a particular customer group may identify with is essential.
Due to consumer becoming desensitized to many TV commercials, mass media messages are not as effective as they once were.
Developing a loyal following for a web site is critical and mass media type banners and advertising is may be effective for web sites if the banners are not intrusive.
Building customer loyalty is essential.
Schneider, 2015, figure 4-4, provides an illustration of the relationship between customer level of loyalty and time.
Marketing on the web
Technology-enabled Relationship Management is a form of managing customers relationship with a company when the company . . .
“obtains detailed information about a customers behavior, preferences, needs, and buying patterns, and uses that information to set prices, negotiate terms, tailor promotions, add product features, and otherwise customize its entire relationship with the customer” (Schneider, 2015).
This process is refined into Customer Relationship Management (CRM). The CRM process is illustrated in figure 4-9 of Schneider, 2015.
Marketing on the web
Viral marketing through social media is a departure from the traditional marketing model that has companies communicating directly with customers or through an intermediary.
Social media provide a means in which the customers can promote, or demote, products and services from companies on the web by tagging and connecting to friends and family through social media.
Figure 4-1, (Schneider, 2015) illustrates viral marketing through social media.
Domain selection and positioning within search engines are critical for potential customers to find your web site and products on the web.
Paid search engine placement varies in price and can be expensive depending on the name and domain. Figure 4-14 (Schneider, 2015) lists Domain names that sold for over $2 Million. A more affordable means of advertising on the web is available through purchasing banner time for advertising on more popular web sites.
Marketing on the web
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