Marketing concepts and applications

Marketing

The product we are selling is an e-reader that comes with a library subscription. The product faces an uncertain market for e-readers, but it has been demonstrated that there are opportunities for companies in this market if they have a unique offering, which we do. We will market specifically to groups, either hobby groups or reading groups, wherein each group member would receive an e-reader and a subscription to a library of content pertaining to their interests. This offering is unique, and we feel substantially differentiated to succeed.

The company has an ambitious target for sales, and figures to reach an audience of 2 million within the first couple of years. The budget for marketing is $243,000 for the first year, including costs associated with the launch, and a number of seasonal promotions. The overall strategy will also require, in order to be successful, partnerships with content providers (publishers) and distributors so that we can provide the library subscription. Attention will also need ot be paid to our supply chain, so that we can continue to have an innovative product offering.

Situational Analysis

My company is a marketer of an e-reader and accompanying digital library that can be customized for groups. Groups would be able to load books that were relevant to their interests, for example a birding club could be able to load books on that subject. A reading group would be able to load their weekly or monthly books. The company is a start-up, which presents significant challenges. We have a product and a concept, but no established brand name, and no assets. The market position therefore is none, and we need to launch and grow our market position.

Market Overview

The market for e-readers is struggling in recent years, as tablets have taken over much of this market. That said, there is still room for new entrants to grow their business -- one example being Kobo, which has grown to 14.5 million users even when the rest of the market has been declining (CP, 2013). The Kindle is the biggest competitor in the e-reader market, with a dominant market share well over 50% (Biba, 2012). The Nook from Barnes & Noble is another major competitor in this market. Many people have substituted tablets in recent years. They have the advantage of having far more features, but they are also more expensive, and not specifically designed for e-reading. Having a next gen e-reader with the library feature represents innovation and differentiation that will allow us to enter this market successfully.

While competitors are a major threat, we must also be aware that one of our target partners, Amazon, is also a major competitor. A significant hurdle that we will need to clear to find partners within the publishing industry and among booksellers who can deliver content with us -- and many are going to see us as competitors. The opportunity that we are seeking to leverage is social reading, something that people have long done, but for which there was never a credible e-reading platform.

There are two major target markets for our product. The first is groups -- social groups either with a common interest or for a reading club. In either case the groups benefit from buying the e-reader with a bulk discount and then receiving access to a library that is specifically tailored to their interests. The low cost per person per book will make this offering attractive to such groups. There are tens of thousands of interest groups in the United States, many of which have a need for a collective library, and all of which have significant buying power. The decision-makers for such groups will likely be over 50, and the psychographic is that they will have a common interest and a high desire to make purchaeses that enhance their ability to read about subjects that interest them the most.

There is also a secondary target market, in students. A classroom is a group of people with a common interest, and academic texts are expensive. Digitalization is a critical element in education these days, and if students can carry all their texts on a single e-reader, and lower their costs while doing so, we believe that there is significant unexplored potential in the academic market. While this is not our primary target, we believe that the education market can constitute a sizeable secondary target market.

Objectives and Goals

The ultimate objective is that we want to have a successful launch, and then get the company past the breakeven point and into profitability. Market characteristics can change quite quickly in the technology business, so the long-range plan is nothing too specific -- it is the short-term market entry plan that matters right now. We are targeting profitability in the second year of operations, which implies that we will be able to sell beyond the breakeven point at that time. The launch targets are in units, and they will escalate over the course of each month, with an expected seasonal spike in November/December. We believe that 2 million units is entirely reasonable within the first two years, with 750,000 of those units being sold in the first year.

Another category of objectives are the market goals. Each sale represents one customer, and we believe that we will need to sign up around 300,000-350,000 groups in order to reach this goal, with the average group size being around 6 people. We also want to create significant brand awareness for the product. In terms of collaborator goals, the objective is to sign up as many publishers as partners as possible, and at least one major distributor. These partners will be critical to the success of the business.

In terms of internal goals, the company wants to refine its marketing efforts so that it is able to better understand buyer behavior. This will be the focus for the marketing department, in order to ensure that our company will achieve its aggressive sales targets. The company will also have a product objective, in that we want to have a 2.0 version available within two years of the initial launch. This will dovetail with our competitive objective which is to become the number one e-reader, both in terms of sales but also in terms of customer satisfaction by delivering a unique, differentiated e-reader experience.

Strategy

The target market will benefit from this product in that they will gain access to a library. The lower cost of the e-reader/library combination vs. A conventional e-reader experience will help to attract the market, as will the social/collaborative aspect of the offering.

The key collaborators will be the channel partners -- the publishers and at least one distributor of digital book content. These partners are essential to the library component of the offering. We will also need a supplier of e-readers, which will have mainly off-the-shelve technology but with some unique 2.0 sort of features that will differentiate the product. The entire company is built around this offering - it is a new company. The key stakeholders are the owners and everybody that works for this company.

There are several e-readers already on the market. None offer the unique library feature. The Kindle has the dominant market share, and will be a major competitor, because it has the brand name and of course the distribution through Amazon. Amazon is also one of the potential collaborators as a publisher and distributor of e-book content. Barnes & Noble with the Nook has a similar position, if a much smaller market share. Tablets are also competitors, as our paper books; though they are different markets they are also methods by which people read, so an important consideration.

Value Proposition

The company's value proposition lies with the differentiated product and the library offering. We are targeting a specific and unique demographic because of this. The value we offer customers ends up being a combination of convenience and low cost. For collaborators, we think that the value of our offering will bring in a large number of custmrs, and collaborators will want in on this market. For stakeholders, this is an opportunitiy to grow and earn a healthy return. For staff, it's a good job with a great company.

Tactics

The promotional calendar will focus on how the e-reader will be rolled out. The twelve-month calendar will encompass the pre-launch, launch and post-launch periods. The calendar will include the different elements of the promotional mix. The promotional calendar recognizes the importance of both the launch period and the holiday season, and focuses most of the spending and energy on those two areas.

May

Press release announcing product

$1,000

Send promo materials to stores for pre-order

$30,000

Develop ad copy and prepare for launch

$2,000

Launch first YouTube ads

$4,000

$37,000

15.23%

June

press release announcing the E-Reader Club

$1,000

take orders

Launch product

Launch ads with Summer of Reading promotion

$10,000

focused mailouts to colleges to adopt the product

$10,000

Seek out PR opportunities; daytime talk, radio

$5,000

$26,000

10.70%

July

Heavy Internet ads "Summer of Reading"

$15,000

Follow-up mailouts to colleges

$10,000

Targeted online ads and mailouts to book clubs

$5,000

Seek out PR opportunities

$2,000

$32,000

13.17%

Aug

heavy promo at the education market

$10,000

targeted ads to students

$10,000

wrap up "Summer of Reading" and other introductory promos

$20,000

8.23%

Sept

Fall promotion begins "Turning Leaves, Turning Pages"

$4,000

Continuation of online marketing campaign

$5,000

Find holiday promo partners

$3,000

$12,000

4.94%

Oct

Fall promo continues

$3,000

Short Halloween promo on horror novels

$4,000

$7,000

2.88%

Nov

Fall promo ends

Holiday promo begins

Discounts for group signups

$10,000

Special Black Friday promos on books

$15,000

Aggressive advertising and PR campaign

$15,000

$40,000

16.46%

Dec

Continue Holiday promo "Give a Library for Christmas"

$10,000

Continue aggressive advertising

$15,000

Boxing Day promo (Canada)

$3,000

Continue holiday discounts for group signups

$10,000

$38,000

15.64%

Jan

Winter Promo "A fireplace and a good book" $5,000

Promo support for new group signups

$3,000

$8,000

3.29%

Feb

Winter Promo "A fireplace and a good book" $5,000

Short Valentine's promo on romance novels

$5,000

$10,000

4.12%

March

Spring promo "Spring to Life"

$4,000

$4,000

1.65%

April

Spring promo continues

$4,000

Short Easter promo for young readers "Hop into a good book" $5,000

$9,000

3.70%

$243,000

On the promotional calendar, in addition to the heavy spending over the holidays and for the launch, there are a few different regular promotions. Book clubs are the primary target market for the e-reader, and they will receive the majority of the regular promotional budget. The student market is the secondary target market, and will receive less spending. That market is also seasonal, so the spending is focused on the Aug/Sept time period, whereas the book club market receives support year round. Moreover the book clubs will receive special discounts for volume sign-ups as part of a promotion to build the installed base of users.

In addition, there will be a number of seasonal promotions. These are, as always, going to focus on online ads, such as per-per-click, so that a large number of readers will be reach for a low cost. The seasonal promotional schedule will include summer, fall, Hallowe'en, Holiday, Winter, Valentine's, Spring and Easter. These will be the regular slate of promotions to build brand awareness and drive traffic to the company's own e-commerce site.