Research Proposal on "E-Retail Plan"

Research Proposal 8 pages (3982 words) Sources: 12 Style: APA

[EXCERPT] . . . .

E-retailing Plan for Made-to-Order Athletic Shoes

Made-to-Order Athletic Shoes e-Retailing Plan

Brand, Product and Service offering

Situational analysis

Existing plan and other information

Analysis Models

Boston Consulting Group Model

e-retailing metrics

Situational Summary

Revenue streams

Market opportunity analysis

Segmentation & Target

Brand differentiation

Market positioning strategy

Market/partner distribution strategies

Distribution

Communication

Implementation plan

e-retailing mix (7C's)

product/service offer

Pricing strategies

Distribution/supply chain

Integrated Marketing Communications

Relationship management

Organisational structure/integration

Implementation Summary

Budget

Revenues

Budget comments

Evaluation and control

Contingency plans

Monitoring procedures

Overview

The growth of mass customization as a strategy for more closely aligning product strategies with the specific needs of consumers has been shown to increase the potential for greater profits and the ability to create higher levels of customer loyalty over time. The propensity of mass customization strategies to alleviate the inhibitors to consumers becoming more loyal to companies over time is accentuated and strengthened by e-retailing and online product customization selling strategies (Salvador, de Holan, Piller, 2009). The connection between customer loyalty generated from solidly executed mass customization strategies and the success of e-retailing strategies to stay relevant to consumers over time is the basis of the analysis presented as the foundation of this e-retailing plan for a line of build-to-order athletic shoes.

For e-retailing strategies to succeed in mass customization market arenas there must be support for multiple channels, often called multi-channel management, integration of e-retailing applications flexible enough for customers to personalize yet robust enough to scale globally, and tight integration of the e-retailing systems with supply chains (Leonard, Cronan, 2003). On this last point the critical need for e-retailing systems and strategies to be supported by catalogs containing the specific product attributes of those products being customized and tight integration with pricing systems has proven critical (Ba, Stallaert, Zhang, 2007). What emerges from this plan for a line of build-to-order athletic shows is a highly synchronized series of systems that include e-retailing Web-based front end systems, catalogs and product data management (PDM) systems that serve as the foundation of the product configurator, and integration to pricing systems to ensure profitability is achieved. All of these systems working in conjunction with each other and the real time integration they require are one of the most difficult constraints for e-retailing strategies to overcome (Hofacker, 2008). Yet if this level of interprocess system, strategy and role-based integration can be achieved, e-retailing strategies have been shown to generate significantly higher levels of trust and revenue over time (Jin, Park, Kim, 2008). All of the effort in other words is worth it. Creating a line of build-to-order athletic shoes customers can order 24/7 over the Web is entirely dependent on how well an e-retailing strategy is executed and maintained over time.

2.0

Brand, Product and Service offering

Athletic shoes is an industry that continues to face significant consolidation over time, as industry leaders Nike and Adidas continually dominate this industry globally. The global recession and the resulting drop in discretionary income has forced the consolidation of this industry, and led to a fragmentation of competitors globally. Figure 1, Global Market Share by Athletic Shoe Manufacturer, provides an analysis of how fragmented industry has become with 74.5% of total sales from manufacturers smaller than Timberland, who has a 1.5% market share, generating $1.3B in revenue (IBIS Research, 2009).

Figure 1: 2008 Global Market Share by Athletic Shoe Manufacturer

Major Player

Market Share Range

Nike, Incorporated

12.0%

Adidas AG

9.0%

Jones Apparel Group, Inc.

3.0%

The Timberland Company

1.5%

Other

74.5%

Source: (IBIS Research, 2009)

As this industry is characterized by heavy price competition and intensely competitive distribution channel strategies, the use of e-retailing as a differentiated selling strategy is critical in this market. Due to intensive price cutting and the majority of manufacturers lacking innovation in their product designs with the exception of Nike, the industry has continually contracted over time. This contraction of the market is leaving many strategically important areas of the industry wide open for innovation and growth. Paradoxically the majority of manufacturers are not addressing mass customization through e-retailing, choosing instead to sell what is produced in large quantities in their manufacturing centers, often called make-to-stock inventory positions (Leonard, Cronan, 2003). This commoditization of product feature sets in conjunction with pricing being used as the differentiator of choice leads to an increasingly fragmented market that relies on e-retailing not for delivering an exceptional online shopping experience, but to push product out at significantly reduced prices. E-retailing has become a strategy for quickly moving end-of-life shoes at low prices over the Internet. This strategy, while industry-wide, leaves significant room for opportunity in creating a line of athletic shoes sold entirely over the Internet, completely customizable.

This dichotomy between the full potential of e-retailing and the uses of it today in athletic shoes is the basis of Eleftria Athletic Shoes. Eleftria will capitalize on the very large disconnect between what a mass customization strategy for shoes combined with an effective, globally-based e-retailing strategy can accomplish. By concentrating on capitalizing on this paradox, Eleftria Athletic Shoes can get beyond selling only on price and availability, and create a unique purchasing experience online for its customers instead, where each customer can customize their shoes and have them within 7 working days. Mass customization thought leaders have often commented that the e-retailing process as it applies to consumer durable products can be easily transitioned from a transaction to a purchasing experience (Pine, Gilmore, 2000). That is the essence of the unique value proposition for Eleftria Athletic Shoes, to transform the athletic shoe process online through e-retailing into a shopping experience instead of merely being a transaction.

3.0

Situational analysis

The intent of this section is to use analytical models to evaluate the potential for Eleftria Athletic Shoes to gain market share in a declining market using a highly unique value proposition and transforming online purchasing from a transaction to an experience. The most comparable program today is from Nike and their NikeID Program, designed specifically to circumvent Wal-Mart's insistence that their highest end shoes be cost-reduced to be sold through the company's over 500 stores in the U.S. And over 60 stores globally. Nike pioneered the mass customization of athletic shoes with NikeID, and today has seven different language variations of their website and e-retailing applications. English, Spanish, French, German, Italian, Chinese and Korean are all supported today on the site. This is the most formidable competitor to Eleftria Athletic Shoes today. Nike has successfully used NikeID as a site for transitioning away from competing purely on price and transactions to creating a unique purchasing experience, hence the success of the site. By allowing its customers to have a fully collaborative experience online, Nike is creating even greater loyalty than just their brand alone would provide. This aspect of e-retailing that invites a high degree of customer interaction and collaboration also signals a fundamental shift in the balance of power between consumers and manufacturers (Moynagh, Worsley, 2002).Adidas, Converse, K-Swiss, Timberland and regional shoe manufacturer Van's located in California also have e-retailing strategies in place, yet NikeID is the most comprehensive and integrated with Nike's pricing, catalog management, manufacturing, and fulfillment systems globally. Eleftria Athletic Shoes intended to focus on men's and women's casual and athletic footwear. The market positioning Eleftria will rely on is capitalizing on cross-over of shoes for casual use and also athletic use.

3.1

Existing plan and other information

As Eleftria is a start-up, there is no existing plan. The industry-wide data presented throughout this report comes from the literature review prior to its development.

3.2

Analysis Models

The Boston Consulting Group Growth/Share Matrix assess profitability of product markets by growth potential, hence its use in planning the development of the Eleftria Athletic Shoe product line.

3.2.1. Boston Consulting Group Model

Critically important to the development of Eleftria's product strategy is the development of cross-over products today, and the development of plans for enabling these strategies to succeed in the future. To concentrate purely on just athletic shoes significantly limits the market, and this can be seen using the BCG Growth/Share Matrix shown in Figure 2.

Evident from using this type of analysis is the point that for Eleftria to gain market share quickly, even in a declining and consolidating market, it needs to develop the e-retaining strategies it relies on to sell build-to-order shoes so it can manage orders from men, women and children looking for shoes aligned with pure-play athletic footwear first. Second, the greatest growth opportunities for the company are in tailoring through their build-to-order e-retailing strategy footwear for women's fitness, and also fitness and dance as well. Using the BCG Matrix it is evident these shoes are in the highest growth categories of the industry today. There is also significant growth in build-to-order tennis shoes that have the more advanced features that many tennis players, semi-pro and pro-players look for as well. Finally the highest growth area is in highly personalized shoes. Correspondingly this is a smaller market, yet a very profitable one.… READ MORE

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