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E-Business Strategy for Video Rental Company: Online Business Expansion Proposal Online expansion of any business, from retailers to wholesalers, is gaining rapid momentum. This is owing to a new trend: Cashless and sometimes cardless transactions preferred by the customer. The video rental company in this case is in dire need of a web presence to compete with the growing market share acquired by other video rental companies that have a level 5 web presence. The purpose of this proposal is to present the urgent need of online expansion of the business by justifying the product viability, expansion budget, logistics, competition and market demand. In order to function as an e-business company, Hollywood Video needs a fully interactive web presence.
E-Business Proposal for Hollywood Video Rental
Based on thorough analysis, the strategy model below is of great importance to this company:
Level 5 Web presence from level 0. Chaffey et al. (2003) mentioned in Katler's Marketing Management, describes the 6 levels of web presence of online companies:
Level 0: No web site or presence on web. The market will be limited when Hollywood Video Rental will operate at such level since customers will not be able to access information from the internet yet most of the customers can be found on the internet.
Level 1: Basic web presence. Company places an entry in a web site listing company such as www.yell.co.uk to make people searching the web aware of the existence of the company or its products. There is no web site at this stage since people are not aware of the company's products, as they do not know the company yet. The clients at this stage are strangers but can be transformed to visitors by Hollywood company using easily indexed site architecture and relevant content since it is easy to include in results pages. Paid advertising web program can also increase the visitors to company basic web over time.
Level 2: Simple static informational web site; Contains basic company and product information sometimes referred to as 'brochure ware'. At this level, visitors can be made to be prospects of Hollywood company since the visitors can give their contacts to the company. Prospects can signup for new newsletters, use special tracking number to call, offering contact information and later own end up frequenting Hollywood Video Company, providing coupons that accesses them to incentives such as discounts.
Level 3: Simple interactive site; Users are able to search the site and make queries to retrieve information such as product availability and pricing. The company may also answer to queries by e-mail. This is a level of converting prospects to customers; is the ultimate goal of any business since it is a measure of success to the company.
Level 4: Interactive site supporting transactions with users; the functions offered will vary according to company. They will usually be limited to online buying. Other functions might include an interactive customer service helpdesk that is link into direct marketing objectives. This is a level of conversion of customers to references since advertisements will reduce, as website is a single component in complete internet.
Level 5: Fully interactive site supporting the whole buying process; it provides relationship marketing with individual customers and facilitating the full range of marketing exchanges. The following activities are carried out at this level:
1. Advertising the products of Hollywood company
Establishing communications with competitors to bench mark best business practices.
Establish online relationship with customers.
Networking with potential alliances (International Joint Ventures)
Researching and exploring social media to advertise the company in (Facebook, Twitter, and LinkedIn etc).
Applying loyalties to existing products through credit cards to attract more customers (use your VISA card to rent 5 movies and get the 6th one free, or get $10 voucher for banana republic).
Empowering and educating employees about the technology operations through training, recruiting new IT personnel to operate on new infrastructure (Hire SME - Subject Matter Experts to create technology training for current employees).
Calculating the lifetime value of a customer; knowing how you can monetize a relationship with a customer.
Creating a strong online reputation; talking to people about the services offered by your company and looking at who can raise the company's profile in your community.
Evaluating current website to discover what is working, what is not working and what need to be done to enhance the success of e- commerce.
Online marketing suggestions and strategies: The Online customer Base: Potential Customers for Hollywood Video Rental Company
The following points explain the growing customer base in the cyber space:
Cashless, plastic-free, online transactions: Increased customer privacy, security (no ID or credit card theft or fraud anymore) and customized services, which are provided by online payment accounts at PayPal. Catching with the trend, MasterCard acquired Data Cash (a UK company) in August 2010. MasterCard is also talking to China Union Pay to explore mobile payment options. This trend is to keep up with the massive shift of consumers from a physical medium to the online medium of transaction (Hasan, 2010).
Credit Card and Debit Card Loyalties: Advertisements on televisions and Internet are considered as "spamming the customer". Much of the efforts of advertisements to entice the customer to showrooms and retail stores are wasted. Customers want incentives and value for their purchase. Credit cards jumped at the opportunity by providing a liaison between the customer and the merchant (business or service providers). Credit cards provide discount rates and several other loyalties if customers purchase products from selected businesses. Most of the cards select companies with an online presence. The impressive or more responsive the presence of a company over the Internet, the more likely they form an efficient partnership with each other. According to CNN, credit cards spend $200 per cardholder to create a new account. They are looking for brands that are on demand by the general customers. E-businesses should compete for business from these credit card issuers (Hasan, 2010).
Online e-business monitoring clearinghouses such as BI (Business International) provide real time data on company performance on various criteria. A physical company needs to acquire qualities within the monitoring system to succeed in the market.
Virtual Bank Accounts: MyCard is another online innovation that allows companies to pay salaries into their employee MyCard accounts. This is regardless whether the individual owns a bank account or not. This card has no annual fees or minimum balance requirements. This salary payment method will drive the "unbanked" population towards the internet. This is another incentive for physical companies to virtualize and serve their customers (Hasan, 2010).
The more the consumer demands a cashless transaction, the more companies need to convert their operational strategies to suit consuming behavior. Hollywood Video needs to follow the market trend if it wants to succeed in the rental business.
Current online competitor assessment
Competitors like Blockbusters and Netflix have already implemented a Level 5 web presence. More customers like to order movies online. Also, with the winter season in full swing, weather hazards discourage customer trips to the "mortar and brick" rentals. They prefer ordering and receiving the movie at home through rental delivery systems. The competitors have a "live" online presence that detects customer orders and delivers the movies or games within an hour. The competitors have tapped into the massive customer base that is currently present online. Hollywood Video will need to beat the delivery time as well as re-define its technology use for its online expansion. One advantage Hollywood Video has over other competition is that it boasts the copies of oldest versions of games as well as all black and white Hollywood movies. The best customer supply strategy by Hollywood Video is catering to the diverse customer base according to the region. They determine the demographics and place regional movies from India, Mexico and Middle East (Arabic Movies) at a slightly higher cost (5% of the total cost of a normal rental).
Search engine considerations and optimization strategies
Search Engine Marketing (SEM) strategies for internet marketing dictate the use of "web bots" through purchasing paid listings appended to the company web portal HTML code that enhance its visibility to the search engine and place it at the top of the search list (Greegard, 1998). Search Engine Optimization Professionals (SEOP) on the other hand focuses on optimizing on website in order to improve rankings and to attract attention of search engine spiders. The higher the searched product on the list, the more likely it will be visited by the online user. A good Search Engine Organization can make the website achieve greatly; this practice enables higher visibility of a web presence and attracts more customers to the business. When choosing search engine the following are considered by the company (Steve and Stephen, 2000):
Hiring search engine optimization professionals who guarantees top ten search engine ranking during which previous market and current market will be considered.
Avoiding a company that uses secret techniques since they might be using techniques which are dead end or they might want to boast so as to hook the company.
Not bowing to pressure group for example not signing until you have confirmed that what you are signing is worth signing.
Asking competitors about clients before signing since competitors have experiences about several clients and can know who is good and who is not good.
Having a very good understanding of the company will assist in considering the clients since the company will be in a position of choosing the clients who offer services that suit the company needs.
Search engine optimization which refers to making the best of what you have ensures that the business is ranked well .Several strategies are applied in optimization as highlighted below; To begin with is ensuring that the content is relevant to your subject where popular keywords like "Hindi" and "Farsi" can be appended to movies for easy finding of website for viewing (Steve and Stephen, 2000). Secondly, using relevant folder names and file will assist to identify the page faster and to enhance good ranking. Thirdly, use of correct Meta tags which are sections of (HTML) that provide direction and also information that is of great help to search engine robots and also for ranking.
In every web page unique keywords, description and title tags will be used. In every web page formatting the text for search engines and to help visitors will be considered done by Hollywood Video Company Source code of pages will be given by the company to view keyword tags and to describe Meta (Steve and Stephen, 2000). Fourthly, inbounding linking to be ranked in major engines will be considered by Hollywood Videos Company; ensuring the company is linked by more popular sites and that it is linking to good site or neighbored will be considered. Fifth, keeping the site fresh should be taken care of to enhance return visit, to act as signal to search engines and to act as signal of relevancy of search engines .Sixth, using social pages like facebook and twitter account since visitors can spread the word concerning the content of Hollywood Video Company thus marketing the company. Lastly, the company should ensure that images are linked to relevant pages during which page loading speed will be checked for visitors to appreciate optimizing web page speed thus giving the company a bit of edge in rankings. Shopping card feature can be used to enhance the website exposure to the search engine (Deresky, 2007)
Social media integration
Cloud Computing is a concept that renders the consumer to be present online almost 24/7 (Hasan, 2010). If the online user is not paying bills or attending an online class, they are sure to be chatting or collaborating with friends and family or colleagues at a Social Networking Site (SNS). Advertisements of the company over these sites will be very fruitful in attracting more customers. Statistics show that currently sixty six percent of the worlds population will be investing on social media come 2010. Marketers use facebook and twitters to reach customers as a result of customers demanding greater social media engagement from brands they follow mostly. Marketers use message boards, podcasting and forums -video sharing because they need to integrate new media consumers (Steve and Stephen, 2000). This is a win win relationship since customers demand greater social media engagement whereas marketers change the way they connect and engage with their customers (offline to online).
In return, Hollywood Video can advertise the SNS companies to its current customers. A new customer addition to either Hollywood or the SNS will receive an email of an introductory offer to join either company. Cultural background information of the customer can be tracked easily through their registration pages (privacy and data protection pact is present between Hollywood and the SNS companies), and Hollywood can offer culture specific movies "just a click of a button away" from the customer.
Online customer relationship management
Understanding consumer behavior is the key to improving e-business strategy (Donnelley, 2000). Each time a transaction is made, Hollywood Video will save customer movies already ordered to understand the rental preference (romantic, action, games etc). The system will personally inform the customer through email and text messaging of the availability or a suggestion of a movie or a game. This allows the company to personalize its service according to its customers. The customers are in a position to research on companies using online and make decisions without contracting the company. Measuring and analyzing response time, quality of service, performance of agents, and improvement of issues is easily recognized by the customer at the touch of the button (Katler, 2003).
All rentals and videos will be categorized according to language, data and availability and delivery time. Customer will select an item, pay the price using VISA, MASTER and DISCOVER cards (DISCOVER is not accepted by any competitor currently). Students get a special discount after entering their college ID (this will give Hollywood Video another edge over its competitors. Hollywood can validate students IDs' by finding out if the customer is currently a student at a university, this can be done by collaborating with local colleges and universities). Customer can also sign up for a new card (according to card provider marketing gimmicks). As soon as the payment is processed, the customer is notified of the approximate time of delivery. Sales of videos and books will be boosted by posting books and videos to shopping sites like eBay, yahoo, Google among others (Steve and Stephen, 2000). Search Engine Organization will then assist in what to be done in order to store the information in the first page of Google to avoid heavy fines for non compliance and to ensure company data is secured; PA-DSS compliant software with free PCI certification by MacAfee will be handy. Advanced support and unlimited customization for example life time warranty and full access to databases.
Hollywood Video will definitely benefit in terms of revenue and increased market presence through International Agent presence across the globe. English movies are watched world wide. Also opening up support centers in new countries will allow the import of regional movies that will add to its diverse movie base. The following changes will be needed:
Market Penetration: Improving market position by improving products with loyal customers (Deresky, 2007): provide personalization through front end interface (providing more regional rental items to linguistically diverse customers).
Market Development: Hollywood Video can capitalize on the popularity of English movies available locally, sooner than the local rentals.
Product Development: E-business often demands companies to explore the customer behavior and offer new products to them. This provides value to the existing customers and helps retain business by preventing switching (B2B) (Donnelley, 2000). Hollywood Video will need to determine the social, cultural, ethnic, economic, legislative, government taxation and other cross-cultural factors that may effect product marketed in a new country (for example, Muslim conservative countries do not allow the rentals of adult movies in their countries. Some countries need censorship criteria before they can market a foreign movie, these have to be explored).
Diversification: Converting into an e-business is an excellent opportunity to re-invent the business product lines. Hollywood Video can rent DVD players or Playstations to communities that are economically below the normal standards to attract more business).
Procurement and Logistics: These two areas have to be explored in a new way. Nowadays anything of any size can be delivered. Delivery channels have to be assigned to intermediaries that typically cater to e-business, like, FedEx and UPS. This outsourcing of logistics and procurement will be expensive but a safe way to start out initially and to learn best practices of these intermediaries. Product delivery on time, with tracking facilities is of prime importance. Customers respond well to brand names of these transportation means. They will feel secure and reassured that costly or fragile products will be delivered on time. The information collected can be later used to implement company owned transportation (to undermine the power of distributing intermediaries).
Projected web development and maintenance costs
Budget Requirements: Hollywood Video needs to analyze and explore the capital requirements in these main areas:
Direct investment needed in user interface technology development (or ICT). Sourcing will be expensive in the long run. Hiring actual software development personnel will be cheaper than hiring contractors to plan, design, and launch and upgrade web portals. This type of budgeting will be in line with a backward vertical integration that will allow the newly formed e-business to work independently of its service suppliers (rendering them less powerful) (B, Greegard).
Database formation for example E-commerce website for recording customer characteristics and purchasing behavior will assist the company from running in to unnecessary loses caused by poor handling of customers. Custom programming and integration of some kind of payment gateway will be used.(Steve, 2000)
Storage systems to store massive data on customer and product in order to:
Improve services - create customized services for the individual.
To differentiate the product (find out more ethnicities they can rent regional movies to)
To re-order inventory
To form improved liaisons with the distribution channels over the buy end.
Human Resources: Hire appropriate employees for technology operations since highly skilled labor is required when handling online trade. Train existing employees to work with new infrastructure by allowing them to attend seminars or conferences a part from attending full time courses. Hire SME's to create company specific training programs(Katler, 20030)
Projected costs for online expansion can be controlled if the company can use a considerable section of the website for advertising local business and culture specific business (business synergies). Credit card companies can also offer their latest marketing advertisements. Website maintenance will be outsourced because adding a new movie to the interface database is an easy task for the novice technology user employees. Technical expertise and expensive infrastructure can cost a lot of dollars thus necessitating developers who are experienced in the field; the company will employ experienced staff in e- commerce that will complete their work within a short period of time or within the given time frame. Maintenance cost will be incurred as needed through outsourcing. A good idea to keep registration and maintenance costs down is to form a liaison with the DNS provider companies in the form of exchange of products, services and advertisement placements with positive testimonials (Deresky, 2007)Website development is will be achieved when website programming will be achieved. Development work in website include development of job portals, e-commerce website and integration of payment gateways using shopping cart as it will be done by Hollywood Video Company.
Given the popularity and aptitude of consumers towards online technologies, an online expansion of a mortar and brick company is inevitable. Companies failing to take the leap hold fewer chances of survival in stocks and business share in the market. Customers love to bargain. They want to pay less and get more. This behavior is evident from the high end market to the low end. Internet responds to this general consumer habit by providing transparency in comparing business to business prices. Internet is a great information processing tool. If Hollywood Video can hook into this tool through online expansion and effective e-business strategies, they have a win-win scenario with the customer.