9. Learning from Others
9.1 Introduction: Grouping by Business Models
9.2 A Start
9.3 Coins International
9.4 Fine Art Ceramics
9.5 Halberd Engineering
9.6 Ipswich Seeds
9.7 Seascape e-Art
9.8 Whisky Galore
9.10 Andhra Pradesh
9.11 Apple iPod
9.12 Aurora Health Care
9.14 Commerce Bancorp
9.17 Early Dotcom Failures
9.18 Easy Diagnosis
9.23 Google ads
9.24 Google services
9.32 Nitendo wii
9.33 Open Table
9.35 Procter & Gamble
9.36 SIS Datenverarbeitung
9.6 Ipswich Seeds Ltd.Ipswich Seeds Ltd. is a traditional family business owned by the Thomsons. The company supplies horticultural seeds to specialist gardeners throughout the UK, marketing these through selected garden centers and a seedsman's catalog. The latest Thomson to take control, young (43 year old) Peter Thomson is a man of new ideas, however and his first innovation has been to take the company online. In place of the traditional catalog, which cost £21,000 annually to print and mail, he has placed the entire range of the company's products online. The company's £25,000 website catalog provides the same information as the printed version, and invites orders from new customers by phone (credit card) or letter (check). The first year expectations were for a 30% reduction in demand for the traditional catalog, and a 20% increase in orders. In fact, demand for the printed catalog has increased by 40% and orders have dropped by 5%. What has gone wrong?
Market Research Study
Peter Thomson employs a local market research company to assess the situation and advise. Three months and a £8,500 bill later, the Thomson Board reviews their report, which concludes:
1. Being traditional folk, gardeners prefer a printed catalog. Even when online (and only 63% are) they still ask for the printed version.
2. Increased demand for the catalog has come from mere visitors to the website, many of whom are competitors and/or not specialist gardeners intending to make a purchase.
3. Sales have fallen because gardeners have found it easier to make price comparisons. Some ISL products are priced 30% more than those of the larger suppliers.
4. ISL should upgrade their site to take online orders.
5. The gardening world has changed in recent years, and ISL need to identify their market segment more exactly. The market research company will be pleased to undertake a further study for £17,500.
Updated Website: Online Ordering
'Nothing we didn't know or couldn't have guessed' is the response of Board members to the research work, and they will not sanction further expenditures in this direction. Peter Thomson does win approval for an improved website, however, and the Board agree to spend another £10,000 on improving site content and adding online payment facilities.
The Board Meeting a year later sees much shaking of heads when Peter Thomson reports that:
1. Sales have increased by 8%.
2. Profits overall have fallen by 2% now that ISL have brought their prices more into line with other suppliers.
3. The website still only accounts for 12% of ISL sales.
Unabashed, Peter Thomson has a further suggestion to make. He wishes to employ a young ecommerce consultant to make an initial assessment of the site for a fee of £1,000. Anxious to establish himself, the young man will waive his fee if the Board do not feel his recommendations make sense, and if they do not result in significant improvements. With some misgivings, the Board agrees.
A week later the ecommerce consultant presents his report, which says that though there's much wrong with the site, all can be fixed very cheaply. The main problems are:
1. No competitor research seems to have been undertaken, and the site is not positioned effectively in the ecommerce seed catalog world.
2. Site traffic is only 1,500 visitors/month, when a respectable figure would be 5,000/month.
3. The web design company that built the site presents a monthly report that no one at ISL understands. There needs to be closer liaison which allows technical matters to be seen from a business perspective. Ideally, ISL should manage their own site.
4. Keywords have not been chosen wisely. For example, seed catalog is used rather than seed catalogue. Though the keyword increases the chance of the site being found by US gardeners, it faces too much competition from other sites (25,000 on Google alone) ever to rank well on the search engines. By being too ambitious, ISL have failed to achieve any online showing at all. Use catalogue, and the number of competing sites falls to 8,000, which is manageable.
5. Content on most pages is supplied by a database, which assists site maintenance but makes it practically invisible to the search engines. Some straightforward HTML pages should be added.
6. Pages need to be rebuilt about specific products a single page about cactus seeds, for example, could generate an additional 1400 visitors/month.
7. Content has been lifted from the traditional catalog, and assumes long familiarity with the company. For new web visitors, however, the specific selling points of ISL's products should be highlighted in a snappy and memorable way.
8. More should be made of the 'about us' page: when the company was founded, awards won, stately homes listed that use ISL products, etc.
9. The site is too impersonal. Visitors like to see real people behind companies, and the site should feature photographs of staff members, seed nurseries and the smiling winners of local horticultural shows.
10. The site lacks a legal disclaimer, a returns policy and clearly stated guarantees.
The Board accepts the recommendations, voting an additional £3,000 to make the changes needed. These will be done by the consultant in cooperation with the web design company, £2,000 of fees being withheld until sales actually improve.
A year later, Peter Thomson is able to report that:
1. Site traffic is 6,500/month.
2. Sales have increased 5% per month for the last six months.
3. Profits are also up, and show a 10% increase over six months. A 20% increase over the coming year is projected.
4. ISL have received two proposals to increase their marketing outlets, one from a US garden center.
5. Consultant recommends that ISL investigate affiliate schemes.
The Board grant the consultant his outstanding fees, and congratulate themselves on their business caution.
How has ISL done? Better than could be expected, making gains in these areas of the business model:
1. Customer segments: unchanged but more successfully targeted.
2. Customer channels: changed: Internet-facilitated.
3. Customer relationships: improved with the 'about us' page. Could be extended with gardening help pages and a social media representation.
4. Key resources: no change: horticultural knowledge and seed facilities.
5. Key partnerships: unchanged, but could be strengthened with input to garden center websites:
6. Key activities: unchanged: horticultural seed suppliers.
7. Value proposition: improved: rapid selection of a wide variety of horticultural seeds.
8. Cost structure: slight improvement that will eventually produce substantial economies when the printed catalog is entirely replaced by web pages and an ecatalog.
9. Revenue streams: slight improvement, which should continue as ISL becomes established online.
1. What is the key point made by this example?
2. Describe ISL's performance in terms of the Osterwalder and Pigneur model.
3. What other marketing platforms are now available?
4. Outline a more effective marketing strategy than Peter Thomson's.