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Communications and Marketing Environment

 

 

1.                  Introduction

Amidst opportunities emerging services like multimedia and e-commerce offer to entrepreneurs, at the same time they also pose many challenges since they are prone to the technological changes and consumers preferences. Under such circumstances, therefore, competition, markets, and technology are among factors that shape competitive strategies of any enterprises in the industry.

Interestingly, we witness that multimedia industry has spawn many small start-ups that spun-off from larger organizations. This is because multimedia services have many branches that encourage the birth of specialized enterprises that serve particular purposes.

The situation suggests that customer-oriented firms dominate the multimedia industry since such firms typically have outstanding characteristics such as flexible structures and endless efforts to innovation. In short, emerging industry like the multimedia industry, promote many opportunities for innovative approaches despite the present risk of failure in a fast moving technological industry.

Concerning the media industry in the UK, this paper will provide understanding of the developments facing new media businesses in the rapidly changing communications environment, including some of the key market characteristics and trends.

To be specific, this paper will explain the understanding of market research, the importance of marketing and business planning, and the meaning of communication in a multimedia environment.

 

PART ONE

1.                  What do you understand by the term online retailing?

Online retailing, also known as electronic retail or e-retail, refers to the selling of retail goods over the Internet as the medium instead of high street stores. The e-retailing is widely used terminology especially since Mid 1990s where the development of internet as media develops at fast pace, following the use of internet for correspondence purposes like writing electronic mails (e-mails), electronic commerce (e-commerce), and electronic business (e-business).

Since online retailing targets retail customers (end users), therefore the transaction mode in e-retailing is somewhat similar to business-to-consumer (B2C) transaction (Bitpipe, 2007). The pioneer and the famous e-retailer is Amazon.com. this company becomes the role model of e-retailing. They commenced e-retailing since the end of 1990s by selling books and gifts and now sell various goods such as electronic gadgets (camera, video games), jewel, and toys, to name a few.

 

2.                  What percentage of the U.K. population is now buying online?

Table 1            Internet rate Penetration Rate in Some European Countries

COUNTRIES WITH THE
HIGHEST INTERNET PENETRATION RATE
#
Country or Region
Penetration
(% Population)
Internet Users
Latest Data
Population
(2006 Est.)
Source and Date
of Latest Data
3
Sweden
74.9 %
6,800,000
9,076,757
ITU – Oct/05
15
Switzerland
66.0 %
4,944,438
7,488,533
Nielsen//NR Jan/06
16
Netherlands
65.9 %
10,806,328
16,386,216
Nielsen//NR Jun/04
18
United Kingdom
62.9 %
37,800,000
60,139,274
ITU – Oct/05
22
Germany
59.0 %
48,721,997
82,515,988
Nielsen//NR Jan/06
24
Portugal
58.0 %
6,090,000
10,501,051
C.I.Almanac Mar/05
29
Ireland
50.7 %
2,060,000
4,065,631
C.I.Almanac Mar./05
World Total Users
15.7 %
1,022,863,307
6,499,697,060
IWS – Mar/06
Source: www.internetworldstats.com

 

The development of electronic commerce drags many attentions from customers since it provides customers with easiness to shop without the need to visit the stores that located several miles away from home. Due to the increasing features of Internet technology, the number of internet users that shop online continues increasing.

Table 1 exhibits the number of Internet users in UK and in other countries across Europe is. The table also shows that UK has large penetration rate in the Europe that suggests the opportunities to establish online stores.

 

3.                  What protection is there for the shopper online?

According to Online shopping ‘safer than high street’ (2005), factors that prevents customers to shop online are security issue. This is because there is still perception that shopping over the Internet is not secured and prone to personal information stealing.

In addition, a research also found that customers are not comfortable enough since they often found fraud case in online shopping. The situation discourages customers to shop online and some of the customers become unresponsive to online offering because they fear of their rights when buying online.

 

4.                  What area of retailing is popular with online shoppers?

The famous area I online shopping is consumer goods retailing such as books, electronic gadgets, and cosmetics since consumers can buy the goods without the need to fit them. One example of retailer that succeeds in online retailing is Argos. The major features of the online store are the provision of in-store returns of online purchases, free home pick-up, and online stock checking.

In addition, Argos’ counterpart, Tesco, also becomes profitable online retailer since they sell various products as if customers come directly to Tesco stores that located throughout the UK (Infoconomy Staff, 2007).

 

5.                  How many people are likely to spend through the internet in 2006?

According to a research by Verdict Research, the number of online shopping continues increasing. The Verdict Research reveals that the total money spent by consumers online reached £10.9bn in 2006 or represents a 33.4% increased than the previous year.

 

 

Figure 1          Total Online Spending

 

6.                  Is there any evidence that online retailing is having an impact on the high street retail trade?

The increasing number of online shopping users and the money spent suggests that online shopping has impact on high street stores. However, according to a research, there is no evidence that online shopping will bring down the total money spent in high street stores. This is due to UK shoppers of cellular phones, for instances, still spend more on high street stores than on online stores.

At Carphone warehouse, for instances, the revenue made from high street stores and online stores both increase, suggesting that online retailing does not replace or eliminate high street stores (Table 2)

 

Table 2        Revenue Comparison of Carphone Warehouse

Retail
Year to March
2001
2002
2003
2004
2005
2006
Revenues (£m)
650.4
623.3
738.3
946.4
1,160.2
1375.5
Stores
1,059
1,104
1,140
1,214
1,461
1,778
Online

Revenues (£m)
32.6
36.7
41.9
64.5
128.2
203.5

Source: The Carphone Warehouse, 2006a

 

7.                  What is the consumer profile of those shoppers online?

According to a survey on more than 3,000 customers, it is found that about two thirds of online consumers made a purchase by using broadband internet connections. The availability of broadband connection becomes major factors that encourage customers to shop online (BBC, 2007)

 

8.                  Is online shopping cannibalizing the high street retail trade?

The case on Carphone Warehouse in the UK becomes the fact that online retailing would not cannibalize high street stores since consumers are segmented into two three groups; they are: those who shop online, shop on high street, and consumers who shop at both online and high street stores.

 

9.                  What do analysts say about the distribution methods currently used by online retailers?

The key distribution method that online retailing performs is the delivery of goods to consumers’ home quickly. For the reason, many online companies are attractively finding the best way to provide excellent customer services by offering customers the same-day delivery scheme. Some of them provide specialized features like the delivery of goods within an hour under particular terms and conditions (Sandoval and Wolverton, 1999).

 

10.              Do you think that online retailing will do to the high street what the mobile phone did to the phone box?

 

 

 

 

 

 

 
Figure 2          Revenue Composition of Carphone Warehouse Distribution Division

Source: Source: The Carphone Warehouse, 2006b

 

I do not think that online retailing will do like mobile phone do to phone box. This is because, as depicted in the Figure 2, that  both online shopping and high street stores grow in the amount of money spent.

 

11.              How much was TESCO’s online grocery sector worth in 2005?

In 2005, Tesco grocery sales grew by 5.9%. The growth occurs since the company’s online store, Tesco Direct, increases the internet sales by 30% in the same period and reached £150 million.

 

12.              What is the standard cost of having your groceries delivered to your home?

Standard delivery costs depend on the partners that online store use and type of services for example, Maplin Electronics charge standard delivery for only £2.99 for order less than £35.00 sterling. Meanwhile, for orders above £35.00, the standard delivery is free of charge.

 

13.              Can U.K. residents buy in other European Union states and have them delivered to their home?

Yes, the nature of online shopping is borderless commerce, which means than any consumers in the world can shop online and have the bought goods at their home. However, in some cases, there is restriction to deliver some goods to foreign countries due to technical difference between the country where online store located and the destination countries.

 

14.              Can U.K citizens buy duty free on line?

Yes, for example, consumers can buy duty free cigarettes through online stores such as at

Smoke.com. The online store is attractive since they provide amazing fast delivery, low prices, and have cast range of products.

 

15.              Do customers trust online retailing?

The challenge of online shopping is to increase the customers’ trust since many customers do not comfort enough to shop online due to security factors like phising, personal information stealing, and credit card fraud. Fortunately, the use of chip and PIN online becomes the invention to increase the consumers’ trust to shop online (CBR Staff Writer, 2007)

 

 

PART TWO

2.1 Company analysis: Here a table is needed, a SWAT table with strengths, weaknesses, opportunities and threats.

Amidst the business competition, the use of analysis tools become important factor since it helps corporations to determine their position in a market. to be specific, SWOT analysis composes of four items; they are strengths, weaknesses, opportunities, and threats.

 

2.1.1        Strengths

Strengths become factors that provide benefits to a company. Concerning the strengths of Speida Design, we find that the company vast services including website design, animation, 3D animation, graphics, advertising, etc. This kind of one-stop shopping in media industry will encourage customers to assign their media objectives just to one single company; therefore, it lessens the company’s burdens in dealing with partners or vendors.

 

2.1.2        Weaknesses

The weakness of Speida Design is the fact that they are new company and have weak brand image in consumers’ minds. The situation suggests that Speida Design must provide extensive marketing campaign to increase their brand equity.

 

2.1.3        Opportunities

The major opportunities for Speida Design is the increasing number of online companies, which suggests they need specialized online consultant like Speida Design to develop the companies’ website, e-commerce tools, and grabbing advertising campaign.

 

2.1.4        Threats

Amidst the opportunities that Speida design has, the company also faces threat especially from Internet Service Provider (ISP). This is true since usually ISP does not only provide internet connection to customers but also develop website design according to customers’ requests.

 

2.2 The mission statement

This statement describes what a company does today to reach the company’s goal, purpose, or mission (“Strategic Planning”). Therefore, the mission statement should not wordy since people might consider and implement it in different ways. For new media businesses in the rapidly changing communications, the mission statement could be “To provide the highest quality programs and achieve greater predictability, efficiency, and quality”

 

2.3 Aims and objectives of the company (it could be described with a graph of desired profit in the first 5 years, this would be shown with a straight line, in a graph year over millions)

In business world, the definition of goals is statements that are formulated and lack of specificity while objectives tend to come in exact form (“Strategic Planning”). Concerning the goals of multimedia companies, the suggested goals are:

Achieve 80% of CAGR within the next five years
45% of sales are generated from international business in 2006 (in 2005 only 33%)
2.4 Increase sales revenue

Assume that the growths of business are 5% in the 2nd year and 15% in the 3rd year due to network expansion, Table 3 describe the increase in the volume of sales within the coming period would result in the following profit plan:

 

Table 1            Profit Forecast of a media company
1st Year
2nd Year
3rd Year
Total
Turnover
$     338,016
$     354,917
$     408,154
$      1,101,087
Total Fixed Cost
$     135,206
$     141,967
$     163,262
$         440,435
Total Variable Cost
$     101,405
$     106,475
$     122,446
$         330,326
Cost of Sales
$     236,611
$     248,442
$     285,708
$         770,761
Gross Operating Profit
$     101,405
$     106,475
$     122,446
$         330,326
Assuming that there is no additional purchase of fixed cost then the 5% increase in sales in the 2nd year and 15% in the 3rd year will also increase the total variable cost by 5% and 15%, respectively. The calculation revealed that an increase in sales and cost of sales by 5% and 15% in the 2nd and 3rd year would create a 30% increase in gross operating profit.

 

2.5 Constantly observe costs to ensure they are kept to a minimum (please re-read the initial instructions when I mentioned the O2 investment)

Costs in digital business cover many things from employees to network costs. Therefore, costs reduction may address each of the generated costs. For instances, the digital company may reduce costs associated with procurement.

The major costs reduction occurs by simplifying the procurement process by setting up the e-procurement method. This step accounts for main procurement costs where engineer and consultants spend their time to determine their needs and develop works. In addition, the costs saving occurs due to the reduction of invoice matching costs since e-procurement can shows all purchase made each month.

 

3            Marketing Plan

Several factors characterize the development of marketing plan. Usually a marketing plan composes of several items as following:

§  Market Situation. It describes current situation that influences a company and it composes of several items such as description of products/services, market value, geographic area, competitors etc.

§  Threats and Opportunities. This factor explains the bad and good impact of current market situation including market trends, changes in consumers’ preferences.

§  Marketing Objectives. Setting objectives aim at providing a company the desirable future. Therefore, marketing objectives should be measurable, specific, and time constraints.

§  Marketing Goals. It is a part of marketing objective that specifically address the “why” and “what” of marketing.

§  Budgets. It explains the need to setting the budget in order to estimate the expenses including external costs (out-of-pocket expenses) and internal hours (staff time)

(Kassel, 1999)

 

PART THREE

Below is the proposed communication plan for a company that competes in media industry as shown in the table 3.

 

Table 3            Communication Plan

Works Cited

 

BBC. (2007). Online retailing ‘surging ahead. Retrieved June 3, 2007 from http://news.bbc.co.uk/1/hi/business/6690397.stm

Bitpipe. (2007). eTailing. Retrieved June 3, 2007 from http://www.bitpipe.com/tlist/eTailing.html

CBR Staff Writer. (2007). UK online sales to almost triple over next five years. Retrieved June 3, 2007 from http://www.cbronline.com/article_feature.asp?guid=069CECD8-DB17-4C1C-90C2-48ED3AB0B10D.

Euromonitor International. (2007). UK. Retrieved June 3, 2007 from http://www.euromonitor.com//FactFile.aspx?country=GB

Infoconomy Staff. (2007). Online shopping most popular in UK. Retrieved June 3, 2007 from http://www.information-age.com/article/2003/december/online_shopping_most_popular_in_uk

Kassel, Amelia. How to Write a Marketing Plan. Retrieved June 3, 2007 from <http://www.infotoday.com/mls/jun99/how-to.htm>

RD Marketing. (2005). Creating an Integrated Marketing Communications Plan Retrieved June 3, 2007 from http://www.rd-marketing.com/communications-plans.htm

Sandoval, Greg and Wolverton, Troy. 1999. Troy. Net retailers use same-day delivery to compete. http://news.com.com/2100-1017-232026.html

The Carphone Warehouse. 2006a, ‘Distribution’. Retrieved June 3, 2007 from http://www.cpwplc.com/cpw/about/ops/distribution/#retail

The Carphone Warehouse. 2006b, The Carphone Warehouse: Preliminary results for the year to March 2006.

E-consultancy.com. (2006).   Online sales add to Tesco’s profits. http://www.e-consultancy.com/news-blog/362485/online-sales-add-to-tesco-s-profits.html

 

‘Strategic Planning’, [Online] Available at: http://www.answers.com/topic/strategic-planning

 

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