Discuss the extent to which the nine key strategy decisions are important to a new online retail business.
The management of business planning processes is important for organisations operating in a competitive business environment.
Business decision making occurs throughout the lifecycle of a business, from the planning and development stages through to the implementation and evaluation stages of strategy.
- Market and product development strategies
Product development and launch is faster in the digital economy, accelerated by technology.
For new businesses, there are many considerations in determining market and product development strategies.
Feedback gathered throughout the organisation can inform and evolve development over time and product strategies should be informed by market research and testing.
Mass customisation is a way of creating personalisation for many customers and extending products with additional features to consumers creates a diversified offering for bundling (Chaffey, 2019).
Pricing, how much can consumers pay for the product, their ability to pay and estimation of the value of the brand to the competition and congruence are all factors that affect market strategies.
The degree of competition and price as a barrier to entry, demand versus supply and market pervasiveness, all determine price (Percy and Elliot. 2016). Resource evaluation also informs decision making.
- Business and revenue models strategies
A new business should innovate and use a reshaped business model that will allow them to defend market share from competitors.
The business model should support research and development for strategic agility. Common models include commission, transactional e-commerce models, retail and media (Chaffey, 2019).
- Target markets strategy
The two key issues relate to target markets strategy, segmentation and differentiation strategy, focusing on the customers the business can serve best.
A new business should understand the competitor market share, unmet needs, competitor offers, current market size and future value, cost effectiveness and likelihood of increased engagement to create brand loyal customers and convert non-users (Chaffey, 2019).
Data driven approaches are appropriate for benchmarking, to inform further decision making.
(Smart Insights, 2020).
- Positioning and differentiation strategy
Positioning, identifying and defining the market in which the business competes, informs the overall marketing strategy and determines choice of target market segments and competitive advantage.
Positioning the brand in marketing communication links the brand to the category need.
This is really important and informs the overall marketing plan, which is revised based on changing market conditions and goal attainment.
- Customer engagement and social media strategy
Lifetime brand engagement goals, measured through lifetime value, loyalty and customer interactions require both online channels to support offline brand activities. Technology is a variable in the long-term.
A fully activated social media strategy can help to acquire new customers, enhance and inform feedback loops for anytime, anywhere customer service and integrated channel distribution.
- Multichannel distribution strategy
Social commerce models emphasise the use of different channels to communicate user and brand information.
Managers should consider the choice of distribution channel, for example, the internet and potential channel conflicts online and offline.
This is a geographic consideration based on physical distribution channels that are already in existence.
New businesses should focus on developing distribution channel infrastructure.
Quality models for e-businesses focus on:
Based on E-SERVQUAL (Chaffey, 2019).
- Multichannel communications strategy
New businesses should focus on integration and digital brand development to create a digital identity that is consistent across traditional and online mediums.
A multichannel strategy means that brands are accessible to different audiences through different platforms when they want them (on demand brands).
The personalization of inbound and outbound customer service communication can improve service delivery by stepping through customer’s contact with the organisation for sales related enquires, for information or purchasing.
Influences on channel choice include:
Types of channels include:
Accessibility, the cost of switching and convenience are also factors.
- Online communications mix and budget
The positioning strategy informs the marketing mix and this involves the control of variables and tactics to achieve the overall objectives.
There are questions for managers around the promotion element of marketing plans, whether to invest in site promotion, offline promotion and online promotion techniques.
Using new approaches, creating a user experience based on the buying process, and using CRM for customer acquisition and retention are all issues that should be considered.
- Organisational capabilities (7S framework)
Organisations need proper governance in order to facilitate digital transformation agendas.
The McKinsey 7S framework can be used to implement a proposed strategy and to align business functions with the existing business strategy and structure.
McKinsey 7S Model. (McKinsey, 2020).
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Corporate Finance Institute. (2020). McKinsey 7S Model. https://corporatefinanceinstitute.com/resources/knowledge/strategy/mckinsey-7s-model/
McKinsey. (2020) Agile marketing: a step-by-step guide. https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/agile-marketing-a-step-by-step-guide#:~:text=Agile%2C%20in%20the%20marketing%20context%2C%20means%20using%20data,tests%20quickly%2C%20evaluating%20the%20results%2C%20and%20rapidly%20iterating.
Percy, L., & Elliott, R. (2016). Strategic advertising management (Fifth edition.). Oxford University Press.
Roberts, M., & Zahay, D. (2013). Internet marketing : integrating online and offline strategies (3rd ed.). South-Western, Cengage Learning.
Smart Insights. (2020). The segmentation targeting and positioning model. https://www.smartinsights.com/digital-marketing-strategy/customer-segmentation-targeting/segmentation-targeting-and-positioning/
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