Transcript Competitive Analysis - Villanova University

eBay Marketing Program
Natasha Bunch
Andrea Pie
Frank Roberts
James Ruane
Ben vonWurmb
Positioning Strategy

eBay Efforts:
– 1) providing great bargains/deals
– 2) giving 100% on improving auctioning
service
– 3) providing quality service and products

Combination of Strategies:
– Price/Quality Relationship
– Reference to Competition
Advertising & Promotion

Checklist for Marketing Communications
How
Planning
Who
What
Why
Where
When
Advertising & Promotion
WHO?

Target Market includes:
–
–
–
–
–
–
–
–
Anyone interested in service BUT
Power Sellers, Store Owners
Individuals looking for deals or to save $
At least 20 eBay transactions OR $100 shipping
costs per month
Mid 20’s to 40’s
Income btw. $35,000 and $100,000
Access to UPS drop stations
Internet Users
Advertising & Promotion
WHAT?


Inform: eBay partnership with UPS for
discounted shipping (HOW?)
Educate: (sellers) How to use new service
– Added step in selling process
– Added portion to seller page for buyers to see

Example Pages
As a seller, you can choose several optional features to help promote your listing. Please note that
these fees are non-refundable.
Listing Upgrade
Home Page Featured
Listing Upgrade Fee
$99.95 (single quantity) or $199.95 (quantity of
2 or more)
Featured Plus!
$19.95
Highlight
$5.00
Bold
$1.00
Listing Designer
$0.10
Gallery
$0.25
Gallery Featured
$19.95
List in Two Categories
Double the insertion and listing upgrades fees
(excluding Scheduled Listings and Home Page
Featured).
10-Day Duration
The longest listing duration available
$0.10
Scheduled Listings
$0.10
Buy It Now
$0.05
UPS Discount Rate
FREE
Advertising & Promotion
HOW?

Primary Target Market
– Email to all members
– Personalized notices to Power Sellers and
store owners (Example)

Secondary Target (General Public)
– Add into existing promotions
– E.g., AOL, TV commercials, billboards,
search engines, word of mouth.
(Example)
From
"eBay" <[email protected]>
Date
Wednesday, April 16, 2003 2:06pm
To
[email protected]
Subject
Spring back into action
eBay Email
eBay’s Partnership with UPS
Start Saving on Shipping NOW!!!
Advertising & Promotion
HOW?

Primary Target Market
– Email to all members
– Personalized notices to Power Sellers and
store owners

Secondary Target (General Public)
– Add into existing promotions
– E.g., AOL, TV commercials, billboards,
search engines, word of mouth.
(Example)
Web Advertisement
AND
CLICK HERE
Advertising & Promotion
WHERE?

Reach numerous geographic regions
– Via email & internet ads

Specific cities/towns near UPS stations
– Via TV commercials and/or billboards
Advertising & Promotion
WHEN?


Initially begin with United States
After measuring progress and success,
expand
Advertising & Promotion
WHY?

Positioning Strategy
– Provide great deals/bargains with quality
service, while focusing solely on our
auctioning site to continuously improve
and perfect the eBay buying/selling
community.
Mutually Beneficial

eBay Inc.
– New source of profit
– Creates definitive shipping

UPS
– Larger customer base

eBay users
– Shipping discounts
– Less confusion
Financial Implications

eBay
– Keeps 10% discount on shipping

UPS
– Offers 20% discount based on guaranteed
usage

Users
– Realize 10% shipping discount
– No possibility of overcharging
Power Seller Levels
Power
Level
Monthly
Sales ($)
Bronze
1,000
Shipping
Discount
(%)
11
Silver
3,000
12
Gold
10,000
13
Platinum
25,000
14
Titanium
150,000
15
Pricing Strategy

Value-based pricing
– Uncertainty
reduction
– Relationship
enhancement
– Cost leadership
Competitive Analysis
Auction sites vary
 Product categories
 Whether they carry inventory
 The bidding process
 Extra-services/fees
 Technical support
 Functionality
 Sense of community
Strengths





Strong brand identity
eBay synonymous with online trading
Dominates the market
Easy to use
No inventory or costs associated with
inventory
Weaknesses



Shipping costs hinder online sales
eBay’s site is sometimes “down”
Expansion of services geared toward
high volume sellers may be alienating
the individual sellers
Opportunities




Strategic alliances
Foster community affinity
Enhance features and functionality
Expand value-added services
Threats

Competition
o Direct – Ubid.com, Yahoo Auctions,
Amazon.com Auctions
o Indirect – Any online or offline retailer


Rising cost of technology
Loss of market share
Distribution


eBay- Website available to anyone
with internet access
UPS
– 200 countries worldwide
– World’s largest package delivery company
– 4000 UPS Store/ Mail Box Etc. worldwide
– Box drops can be found almost anywhere
– Retail centers
Service



Quick and easy way to save on shipping
Hotline for shipping problems
UPS- Known for quality service
Marketing Budget
Billboard
s
2003
2004
2005
2006
2007
$10,200,000
$10,200,00
0
$20,400,00
0
$20,400,00
0
$20,400,00
0
$11,800,00
0
$11,800,00
0
Televisio
n
$7,500,000
$7,500,000
$11,800,00
0
Internet
$6,187,500
$6,187,500
$9,281,250
$9,281,250
$9,281,250
Total
$23,887,5
00
$23,887,5
00
$41,481,2
50
$41,481,2
50
$41,481,2
50
Revenue
Average shipping cost
Average percentage kept by
eBay
Average amount made by
eBay per transaction
$4.11
8%
$0.329
Projected Number of
Units
Projected # of eBay
transactions
Projected percent
using UPS rate
Projected # using UPS
rate
2003
2004
2005
2006
2007
565,800,000
712,600,000
859,300,000
1,006,100,000
1,152,800,000
25%
40%
60%
65%
68.8%
141,450,000
285,040,000
515,580,000
653,965,000
793,126,400
Income Statement
2003
Net Revenue
$46,508,760
Expenses
Product Development
$3,400,000
Web Maintenance
$4,526,400
Marketing
Taxes (35%)
Total Expenses
NET INCOME
$23,887,500
$5,143,201
$36,957,101
$9,551,659
Income Statement
2004
Net Revenue
$93,721,152
Expenses
Product Development
$1,500,000
Web Maintenance
$9.121.280
Marketing
$23,887,500
Taxes (35%)
$20,724,330
Total Expenses
$55,233,110
NET INCOME
$38,488,042
Income Statement
2005
Net Revenue
$169,522,704
Expenses
Product Development
$3,400,000
Web Maintenance
$16,498,560
Marketing
$41,481,250
Taxes (35%)
$37,850,013
Total Expenses
$99,229,823
NET INCOME
$70,292,881
Income Statement
2006
Net Revenue
$215,023,692
Expenses
Product Development
$2,000,000
Web Maintenance
$20,926,880
Marketing
$41,481,250
Taxes (35%)
$52,715,447
Total Expenses
NET INCOME
$117,123,577
$97,900,115
Income Statement
2007
Net Revenue
$260,779,960
Expenses
Product Development
$2,000,000
Web Maintenance
$25,380,045
Marketing
$41,481,250
Taxes (35%)
$67,171,533
Total Expenses
NET INCOME
$136,032,828
$124,747,133
Contribution Margin
Analysis
2003
2004
2005
2006
2007
$46,508,760
$93,721,152
$169,522,704
$215,023,692
$260,779,960
$4,526,400
$9,121,280
$16,498,560
$20,926,880
$25,380,045
Contribution Margin
$41,982,360
$84,599,872
$153,024,144
$194,096,812
$235,399,916
Contribution Margin
Percentage
90.27%
90.27%
90.27%
90.27%
90.27%
Revenue
Variable Costs