Background
Back in 1995, Casa del Libro had been selling books on the internet, as a complement book-selling method to its established bookstores, working with a very artisan website and not integrated with the back office, running in an IBM AS/400 platform. As a result, everyday operations involved a great deal of manual processing. Since this operation obviously could not stand the growth expected under the agreement with AOL, the company decided to create a new vitual company from scratch.
At the beginning of 2000, Planeta group, who owns casadellibro.com, came up with development by investing in the best and the most expensive equipment and software available in the market. Based on Sun machines, the whole platform consists of 4 servers with 2 CPUs each, Solaris (Unix) as operating system, Oracle 8.i running in cluster as database manager, Vignette 5.6 to manage content and support e-commerce, and Excalibur v5.3 as the search engine. The superfluous design was considered the finest platform at that time, built to ensure the high performance, security, availability and scalability required for the project.
However, despite the huge efforts and money invested, this sophisticated platform, designed to support the operations, could not be integrated by the consultants, due to mistakes committed during the design phase. On top of that, the slowing down of Spanish ISP market, the dot.com crash, and the 9/11 terrorists attack were compounding, giving further tension to Planeta group to shift their priority, from a hyper-growth sales operation scenarios to cost control and loss reduction in the short term.
A discussion has been raised, should they continue with the existing platform and redesign it, or should they look for a new platform which incurs cheaper development cost and lower operation and maintenance cost? A newly proposed platform using Microsoft technology on HP servers, powered by Windows NT, with SQL Server as database engine, and Microsoft Commerce Server 2000 as e-commerce application, was considered promising enough.
Recommendation
There are several factors in evaluating these two alternatives. Planeta has made big investment in older platform, but to keep it and redesign it will definitely harm Planeta furthermore. Despite the positive projections made by analysts, the initial high ROI expected becomes a big question. Moreover, the consultants have failed to integrate due to mistakes committed during the design phase, and in my opinion, fixing system design flaws in a sophisticated platform could mean another big investment.
Another factor to be considered is cost efficiency in the long run. The UNIX platform will require high maintenance cost. Planeta could regain part of its loss from investment in older system by developing Microsoft platform, which is considered to have much lower operating and maintenance cost.
Frankly speaking, having powerful but superfluous UNIX platform at that time was somehow just like driving Ford Mustang, powered by 5.4-liter supercharged V-8 engine, in a country road. It was not at the right place at the right time, and could be completely underutilized. It is better to design the system in a cheaper platform, and develope and rescale it along with market growth.
In conclusion, I strongly suggest Planeta to redesign casadellibro.com in Microsoft platform, since they would benefit in capital and operational expenses optimization in the long term.
Tuesday, February 3, 2009
Sunday, January 25, 2009
TESCO case
The remarkable strategy change that TESCO took was the implementation of computerized checkout systems and introduction of The Tesco Clubcard. This strategy has significantly brought more customers and by 1996, Tesco has become the number one retailer in UK.
In my opinion, the introduction of Tesco Clubcard was a clever move. Customers are benefited with points they have collected to be exchanged with products and services, and Tesco has precise data on buying patterns of its consumers. With its massive volume of data, Tesco needs to handle better the information by investing in NCR Teradata data warehouse, providing Tesco with 360-degree view of its customers. With this big investment in data handling system, Tesco could generate more personalized approach to its customers. Tesco has competitive advantage in offering its customers based on their buying patterns and their last baskets purchased. Tesco offers more personalized vouchers and specific offerings to its Clubcard holders. Marketing expenditures could be more efficiently targeted on its regular customers and their need segments.
Although it is not stated in the case, I strongly believe that Tesco also has benefited in having accurate information in real time stocks movements through this sophisticated data handling, which have big impact in supply chain management. The more effective supply chain, the more cost reduced, which means Tesco could compete with further price reduction and offering with products and services.
Tesco's Clubcard IT system does not stop to that level only. To give more added value to its customers, Tesco integrates with several partners to provide another services such as telephone account and financial products.
By implementing another smart move in utilizing internet to offer its Tesco Direct service, Tesco has succesfully become the number one e-grocer. The idea is to provide Clubcard holders a different buying experience. Customers not only do groceries on internet, but they also can purchase videos, books, electrical appliances, and others. Tesco also added several features such as Price Check, which can be used by users to compare prices against several leading supermarkets; financial services; shopping services; and online customer services. Furthermore, Tesco has developed Tesco.com to be accessible for those with sight problems and hearing impaired.
I believe that, by making big investment in information system and focusing on customers, Tesco has gained position in its customer mind and firmed its position as number one in UK's retailers competition.
In my opinion, the introduction of Tesco Clubcard was a clever move. Customers are benefited with points they have collected to be exchanged with products and services, and Tesco has precise data on buying patterns of its consumers. With its massive volume of data, Tesco needs to handle better the information by investing in NCR Teradata data warehouse, providing Tesco with 360-degree view of its customers. With this big investment in data handling system, Tesco could generate more personalized approach to its customers. Tesco has competitive advantage in offering its customers based on their buying patterns and their last baskets purchased. Tesco offers more personalized vouchers and specific offerings to its Clubcard holders. Marketing expenditures could be more efficiently targeted on its regular customers and their need segments.
Although it is not stated in the case, I strongly believe that Tesco also has benefited in having accurate information in real time stocks movements through this sophisticated data handling, which have big impact in supply chain management. The more effective supply chain, the more cost reduced, which means Tesco could compete with further price reduction and offering with products and services.
Tesco's Clubcard IT system does not stop to that level only. To give more added value to its customers, Tesco integrates with several partners to provide another services such as telephone account and financial products.
By implementing another smart move in utilizing internet to offer its Tesco Direct service, Tesco has succesfully become the number one e-grocer. The idea is to provide Clubcard holders a different buying experience. Customers not only do groceries on internet, but they also can purchase videos, books, electrical appliances, and others. Tesco also added several features such as Price Check, which can be used by users to compare prices against several leading supermarkets; financial services; shopping services; and online customer services. Furthermore, Tesco has developed Tesco.com to be accessible for those with sight problems and hearing impaired.
I believe that, by making big investment in information system and focusing on customers, Tesco has gained position in its customer mind and firmed its position as number one in UK's retailers competition.
Sunday, January 18, 2009
Meneame.net
Meneame.net offers a highly democratic environment for people to post and rate news and articles. Its platform and interface basically follows Digg and Reddit model. Since the page was released on December 2005, it has attracted surprising amount of traffic and shown a huge growth. Meneame has benefited from viral marketing.
In my point of view, Meneame could be turned into economical sound project with these two most viable business models. First, by following traditional business model, Meneame could generate revenue from selling ads banners. Meneame could also utilize its user database to do targeted advertising, or content-targeted advertising (which is pioneered by Google).
Second, Meneame could follow micropayment business model by charging small amount of subscription fees to its subscribers. Meneame has already had a great advantage from its massive user base.
If I were hired as Meneame's business development manager, I will follow the second business model to turn Meneame into economical business entity. I believe most of Meneame's subscribers are loyal and willing to pay small amount of subscription fees. As added value, various discount coupons from affiliates could be offered to attract paid subscribers.
In my point of view, Meneame could be turned into economical sound project with these two most viable business models. First, by following traditional business model, Meneame could generate revenue from selling ads banners. Meneame could also utilize its user database to do targeted advertising, or content-targeted advertising (which is pioneered by Google).
Second, Meneame could follow micropayment business model by charging small amount of subscription fees to its subscribers. Meneame has already had a great advantage from its massive user base.
If I were hired as Meneame's business development manager, I will follow the second business model to turn Meneame into economical business entity. I believe most of Meneame's subscribers are loyal and willing to pay small amount of subscription fees. As added value, various discount coupons from affiliates could be offered to attract paid subscribers.
Wednesday, December 17, 2008
France Vichy Cosmetics: blog or not to blog?
Background
As part of the marketing effort to promote a new anti-aging product called Peel Microbrasion, Vichy launched a blog named "Journal de ma peau" in April 2005, following the success of its counterparts' efforts in using blogs as advertising media (Vichy Korea has proven its success by raising 9,000 members in their blogs).
A problem started to evolve soon after they introduce a fictitious character called "Claire", a women blogger who was worried about her age and wrinkles. On the other hand, her photo posted showed more a professional model than a normal woman. Moreover, her comments and languages were somehow resembled Vichy ads. Readers' comments were also under high censorship. People started to get suspicious and questioning the real existence of Claire. Soon enough, other bloggers found out that this "Claire" character is totally bogus. They felt that this fraud was a disgrace and betrayal to blogosphere where transparency and honesty is highly appreciated. Vichy and its blog soon received massive criticisms, moreover those appeared on France's nationwide newspapers.
Vichy's credibility is at stake because of this disastrous marketing attempt. As the brand's product manager, Delphine took initiative to give explanation about the thinking process behind the blog's creation, admit that she had limited experience in blogging norms, ask for public's apologies, and also ask for inputs from readers through the same blog (although in my opinion her effort is more defensive than sincere attempt). New problem emerged, readers couldn't justify whether Delphine was another bogus or not.
Suggestions
If I were in Dalphine's position, I would consider following steps to control the damage:
1. Shut down "Journal de ma peau" blog, and create direct link to Vichy's homepage. In this case, there is no point to continue communicating in blog, considering that readers already lost their trust
2. I would also put a pop-up window for sincere apology letter to reader, or more effectively, post a video on webpage which I could directly make an apology speech. This video could justify that I am exist. I would tell the readers regarding my position as product manager, what I have done, and what my reasoning was in using Claire's mask as a persona
3. I would invite nationwide media in a press conference, stating that my intention is not to betray readers' trust, admitting my lack of knowledge about blogosphere norms.
4. Learn from mistakes. A creation of new authentic transparent blog could be considered, with a help and advice from respected and well-known bloggers. As Shel Israel wrote on his blog "Sophie Kune, a French blogger with influence on cosmetics, agreed to blog -as herself- alongside the Vichy team. With Kune's help five women bloggers agreed to undergo the four-week program posting unfiltered comments on Vichy's blog."
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