FREE ESSAY ON ECOMMERCE MARKET STUDY

ECOMMERCE MARKET STUDY

June 10, 1999 Student Number: 100077846
Executive Summary
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.