Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Team One
Jan Brown, Shekinah Hardeman, Djenaba Ka, Natasha R. Spears
MSM095
08/02/2010
Table of Contents
I. Situational Analysis……………………………………………………………………………….1
A. External Environmental Analysis
1. General Environmental Analysis……………………………………………………………1
2. Industry Analysis – Economic, Social, Political, Technological…………………………….2
3. Market Analysis………………………………………………………………………………3
B. Internal Environmental Analysis
1. Evaluation of the Mission……………………………………………………………………4
2. Evaluation of the Objectives………………………………………………………………….5
3. Evaluation of the Functional Areas
a. Marketing……………………………………………………………………………..6
b. Finance………………………………………………………………………………..7
c. Production…………………………………………………………………………….8
d. Human Resources……………………………………………………………………..9
4. Evaluation of Marketing Strategies
a. Target Market…………………………………………………………………………10
b. Product Strategies………………………………………….……… ………………..10
c. Pricing Strategies……………… ……………………………………………………11
d. Distribution Strategies………………………………………………………………..13
e. Promotional Strategies……………………………………….……………………….14
i. Advertising Strategies……………………………………………………...14
ii. Selling Strategies……………………………………………………………16
iii. Public Relations/Publicity Strategies………………………………………..17
iv. Sales Promotion Strategies………………..………………………………...18
C. Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis………………………20
II. Identification of the Problem………………………………………………………………….21
III. Development of Strategic Alternatives………………………………………………………..21
IV. Evaluation of the Strategic Alternatives………………………………………………………22
V. Recommendations……………………………………………………………………………..24
VI. Implementation……..…………………………………………………………………………25
VII. Works Cited…………………………………………………………………………………...28
I. Situation Analysis
Liz Barret launched CanGo in 1996, as a small internet music and book retailer. CanGo has
grown into an entertainment focused ecommerce site with products that include books, CDs, and
online games. Gen Xers comprise CanGo’s primary audience with some presence of Baby Boomers
and Gen Yers. With a successful IPO launch and entrance into online gaming, CanGo is poised for
growth.
According to the International Monetary Fund, world economic recovery will proceed at a
faster rate than previously expected; the world growth rate is now set at 4.5 percent (IMF, 2010). The
United States leads the industrilized nations in recovery rate and Asia leads the emerging nations.
However, speeds of recovery vary with the industrialized nations proceding at a modest rate while
recovery in emerging nations is taking off at a faster pace. The coupling of faster economic growth in
emerging nations with lower interest rates in advanced economies has revived the flow of capitol into
the developing world. CanGo will need to consider these factors within their growth plans.
High unemployment rates hovering at about 9% could spell trouble for CanGo. These rates
are expected to continue into 2011 and then begin to slowly decline. These rates hint at the true
problem facing organizations and society---what about the chronicly unemployed and
underemployed? High rates in these segments would decrease the amount of consumers willing to
In 2000, when CanGo made their IPO debut there were less than 50 licensed music services;
In 2010, there are now more than 400 licensed services. In the U.S alone digital music revenues have
grown from $20 million in 2003 to over $4.2 billion in 2009 (Ifpi.org, 2010). However, those
positive numbers are not nearly as rosy when we consider the effect of piracy upon musical revenue.
“Despite the successes, digital is not offsetting the overall decline. Digital sales grew 940% since
2004, but the overall music market fell by around 30% in that period. Sales were down 12% in the
first half of 2009 and the full year figure is likely to show a similar trend” (Ifpi.org, 2010).
Piracy has hit the French, Spanish, and Brazilian markets hard. France has seen a 9% decline
in marketing and promotion for recording artists. In Spain, the government is apathetic towards
piracy, which has translated into a 65% drop in sales of Spanish artists between 2004 and 2009
(Ifpi.org, 2010). Today, 32% of Spanish internet users participate in illegal file sharing. That rate is
more than double the European rate of 15% (Jupiter Research, 2009). In Brazil, music sales have
demographic mixes vary between each nation, the global trend is towards an aging population. Due
to advances in medicine, most people can expect to be healthy and active long into their elderly
years. Although CanGo’s primary market is Gen Xers, those born 1961-1981, they cannot ignore the
significance of the Baby Boomer market. CanGo must employ different strategies to reach this
Rapid changes in technology create opportunity for CanGo. Worldwide sales of Smartphones
reached 172 million in 2009, which is a 24% increase over the previous year (Gartner, 2010). This
represents an opportunity for CanGo to provide free streaming internet radio to Smartphone users.
CanGo can sell advertising to cover the cost of the free service. In addition to streaming radio,
CanGo can offer a subscription plan providing subscribers with free MP3 downloads and discounts
on future purchases.
Ben Bernanke says that the U.S. economy will recover in 2010 as the unemployment and inflation
rates have started to decline. The nation's gross domestic product, the broadest measure of economic
activity, rose at a 5.7% annual rate in the fourth quarter, which is much stronger than expected and
Politically, there are two areas of concern. CanGo has seen an increase in the number of
political action groups seeking to control pornography, gambling, and violence on the internet. For
instance, in 2006, the U.S. House of Representatives passed H.R. 4411, the Internet Gambling
Prohibition and Enforcement Act, to make most types of online gambling illegal. The primary reason
for the bill is to curb criminal activities, which used online gaming as a front. Unfortunately, for
CanGo, although many videogames and entertainment products do not meet the criteria, interest
CanGo must also take sound action against copyright law infringement. Piracy, specifically
peer-to-peer affects record labels and retailers. Copyright infringement increased as use of the
internet began to grow in the early 1990’s and has brought about significant legislation.
Consumers are also becoming more concerned about theft of personal information as a result if
internet use. The Federal Trade Commission (FTC) is considering solutions and regulations to
protect consumers. However, these safeguards may make it more difficult and time-consuming for
3. Market Analysis
CanGo’s Gen X target market appreciates a website that is easy to navigate, makes use of the
latest technology, and is up on trends. While price is important, it is not the determining factor for
purchases. CanGo consumers are primarily achievers and experiencers. The achievers gravitate
toward prestige products and the experiencers want the newest and the coolest items. Both groups are
sophisticated buyers who are suspicious of hard sells and products that promise more than they can
deliver. In order to maintain loyalty CanGo must design and market products towards both groups.
The market for CanGo’s products is geographically diverse because almost everyone likes
music, books, movies and games. However, most of the buying power will be concentrated around
the major metro areas. This would translate into the top ADIs; therefore, CanGo could consider
television ads during programs viewed by Gen XY. Advertisements on the G4, Style, Comedy
Central, and the Toon Network’s Adult Swim would all reach the target market.
Mission statements are one of the most critical organizational documents that need to be
developed and shared with all stakeholders. “A clear thoughtful mission statement provides
employees with a shared sense of purpose, direction and opportunity,” (Kotler & Keller, 2007). The
enterprise mission statement is an important aspect in defining whom the company is, what it stands
for, and how it envisions itself in relationship to the corporate environment, it operates within.
As CanGo enters into the online gaming industry, new and existing stakeholders will be
anxious to review and understand the executive vision for the organization. Leadership should not
under estimate the critical step of casting vision. Although CanGo does not clearly articulate its
mission statement episodes, it appears to be to connect trendsetters to quality entertainment using the
latest and most innovative technology. This becomes more evident as CanGo prepares to launch into
the world of online gaming and as it seeks to adequately market to its primary and secondary
The challenge, as Warren so adequately points out, CanGo does not have the capital to
compete against competitors like Amazon, CDNow and Barnes & Noble who also boast distribution
systems that can move five times the product that CanGo can. The CanGo team assumes the
impending IPO will help them close the capital gap and fund its launch into online gaming. This is a
risky approach to business and a clear indication that CanGo has done no strategic planning since its
A strategic planning process will help the entire CanGo team align itself to the mission and
vision for the company. Strategic planning is an organization's process of defining its direction, and
making decisions regarding the allocation of resources to pursue the strategy, including its capital
and people. A strategic plan is the road map that ensures everyone from the CEO to the custodian is
heading in the right direction. A focus on this will provide the staff clarity, remove the silo – people
and teams working in pockets without real consideration for others - approach adopted by some,
identify support systems, and provide an opportunity for members of the CanGo team to link the
CanGo’s objectives are to retain their primary market of Gen Xer’s or people 22 to 35 who
comprise 30 to 40 million of the population. They also wish to capitalize on their secondary and
tertiary markets - Baby Boomers, which are adults ages 36 to 51 totaling some 70 to 80 million
people and Gen-Yers, or children and young adults 9 to 21 of which there are 60 to 80 million. To
accomplish this goal CanGo must know the internal and external environment, which includes
conducting a demographic analysis. “Detailed population statistics identify and interpret the
economic and social/cultural factors that affect consumer behavior. Demographics can include
quantitative information on a variety of characteristics such as: age, education, income, gender, and
weaknesses, opportunities and threats and assessing the economic, scientific and technological,
political and legal, and social and cultural environments in order to strategize how best to reach,
acquire and retain customers. Andrew, CanGo’s Marketing Director, suggests a diversification
approach to a growth strategy that would introduce new products with technological or marketing
synergies alone with their current product offerings that may appeal to different demographics
brand recognition among Gen-Xers, and competitive pricing. To eliminate weaknesses CanGo plans
to create hassle free merchandise return policy for unhappy purchasers and revamp the distribution
system to become more competitive with larger firms. CanGo plans to capitalize on industry
opportunities that include providing product bundling services and targeting a broader crossover
segmentation of Boomers and Gen-Yers. To minimize threats, CanGo must remain current and use
data mining to capture consumers’ buying habits, use the increased number of shop bots to their
advantage, and remain current on copyright infringement laws. In the final analysis of objectives
CanGo is attempting to increase its product offering, of books, music, movies, videos, CD’s and
online gaming while providing better customer service and offering rewards and incentives.
a. Marketing
The marketing strategies CanGo is trying to adopt seem appropriate as the organization has
demonstrated the ability to bring into focus a variety of issues important to businesses in general, and
particularly those engaged in the challenging world of e-commerce. The management team was
effective in reviewing CanGo’s product strategy and identified necessary changes and enhancements
of its product offering based on market research. In terms of marketing activities, the organization
has been responsive to issues pertaining to customer service satisfaction. CanGo has also been
flexible in developing a marketing plan to promote CanGo's products while overcoming consumers'
expanded delivery options and handled customer service. One of CanGo’s strategies included
meeting with a representative of CanGo’s advertising agency to review its current marketing strategy
and evaluate needed changes to improve the product line. This evaluation will allow CanGo to
CanGo has identified a growing trend in the gaming industry that will bring the company
added success. While CanGo retails an exciting array of products and services, ranging from books
and videos to online gaming, the best approach for the company is to continue its current products
and services and combine it with a detailed knowledge of the market with established market analysis
theories like SWOT, Porter and Kotler. By using information sources like printed literature, sources
available on the internet and branch organizations, interviews and questionnaires with qualities and
quantities methods, CanGo will be able to determine whether to expand internationally and make the
right marketing decisions aiming for a larger share of the market by using different marketing
models.
b. Finance
CanGo is a fast growing company experiencing the problem that a fivefold increase in
revenues year-on-year can produce. It has had some problems navigating the logistics of its growth
and it has some financial decisions to make. Key financial ratios to determine the financial health of
Earnings per share (EPS) defined as net income divided by the number of shares of stock
issued to stockholders. Higher EPS values indicate the company is earning more net income
Return on average equity (ROE) ROE is defined as net income divided by the average
of the year divided by 2. CanGo ROE: Not yet available as this was the first year stocks were
issued.
operating profit margin is a sign of competitive strength and cost competitiveness. The higher
the percentage of operating profits to net revenues the higher the margin for covering interest
payments and taxes and moving dollars to the bottom-line. CanGo OPM: $8.44/$50 = .1688
Net profit margin defined as net profit or after-tax income divided by net revenues. The
bigger a company’s net profit margin (its ratio of net profit to net revenues), the better the
company’s profitability in the sense that a bigger percentage of the dollars it collects from
sales flow to the bottom-line. A company’s net profit margin represents the percentage of
c. Production
CanGo’s operation is not working at capacity in the area of customer service. The latest
indicators from the Forrest Power index show CanGo’s ranking dropped from second place to sixth
place. CanGo’s management projected a slight drop in cost rankings, but the unexpected drops in
usability and delivery transactions are a major concern and of the utmost importance. Customer
complaints from the Christmas season are concentrated in operations with a wait time on the line for
a customer service agent and computer download crashes. Warren accuses Andrew of making
promises to customers that operations cannot keep. Liz concedes there is a service problem related to
a breakdown in what the customer is expecting and what they are actually receiving. She instructs
them to work together as a team on a GAP analysis to determine where the breakdown is occurring.
“Analysis builds on the idea that delivering quality service depends on successfully executing several
steps. Whenever a step fails, a gap develops that prevents the full service from reaching the
The GAP analysis revealed CanGo’s marketing strategies has been over stimulating
customers and operations needs to improve in the level of customer service and design a system to
resolve issues quickly. CanGo will institute new performance guidelines, standards of operations, and
monitor the quality of service provided. As CanGo continues to improve customer service issues a
Operations System Engineer, Jack shares with Warren that the warehouse should stock more
inventory for faster shipment and the need to update equipment by installing an automated system
that can retrieve items for processing faster. The installation of an AS/RS system could improve
inventory management, space efficiency, reduced labor costs and reduced costs of loss by theft and
CanGo is an e-commerce company whose products are more than the tangible items and
services they sell. CanGo's product includes the consumer's experience on the site. The features and
design offered on the website are the first introduction the consumer has to CanGo. Appealing to the
senses is a key component of the CanGo experience. Attractive packaging for shipments and of the
online gaming site is another opportunity for the company to reach the consumer. Features, design,
packaging, branding and quality all are a part of the CanGo product. CanGo must improve customer
service and support offered both during and after making a purchase. This means the company must
focus on the augmented products they provide. This includes auxiliary services that come with the
product. "This includes many elements, such as: Warranties, Credit, Delivery, Installation, After-sale
d. Human Resources
Human Resource policy includes compensatory and non-compensatory benefits that attract
performance management have no formal policies in place. For example, one employee had over the
average amount of server failures; however, he did not receive the proper coaching to address the
issue. The manager was uncomfortable with giving honest performance appraisal. Poorly designed
At the current time, all employees seem to have the proper knowledge, skills and abilities
needed to complete their jobs. Moreover, CanGo does not have a problem with high turnover. Most
employees are willing to build a career with CanGo. Nevertheless, some problems are beginning to
emerge. Issues with job design are resulting in a low motivation and morale. In addition, formal
policies to govern selection, training, and performance management are vital for protecting the
a. Target Market
The majority of CanGo’s customers are the Gen-Xers and the Gen-Yers, who enjoy the latest
in online gaming and entertainment. CanGo services consumers under 18 years of age responsibly by
While CanGo has heavily targeted the Gen-X consumer segment, it recently realized that
another market could generate a significant amount of revenues: Baby boomers. With 60-70 million
people born between 1946 and 1964, baby boomers constitute one of the largest population groups
ever to flood the marketplace, and some members of this group have shown interest in CanGo. As a
result, the organization’s marketing team has developed segmentation alternatives and a marketing
CanGo must determine how to divide the entire market into segments of consumers they define on
the basis of demographics, psychographics, usage and benefits as precisely as possible. Only by
doing so are they able to focus their marketing efforts effectively and maximize resources.
b. Product Strategies
CanGo offers a product mix that includes books, music—CD’s and Mp3s, DVDs, and online
gaming. While their product mix does not conflict, there are gaps in their offerings. This organization
should offer a wider product mix—specifically complementary products. For example, the
Smartphone market has grown by 56.7% over one year, according to research by the International
Data Corporation (IDC, 2010). The company must take advantage of the diverse ways to access
CanGo can become an e-tailer of Smartphones, and Mp3 players. In addition, CanGo needs
their online gaming segment to encompass apps for two of the fastest growing Smartphone
manufacturers: Apple and Android. The use of Smartphone apps are currently the fourth most
mobile device is of vital importance. The site would be similar to Pandora.com, so it would make
music suggestions through the music plasma project. The key difference is that the subscriber can
choose when each song plays and can access them without being online. CanGo would house each
subscriber’s unlimited music library and a user could upload music to any device for a monthly
subscription fee. The free version of the site could be supported via ads and would not offer
cataloging or a choice of when each song plays. The success of the indexing site depends upon the
c. Pricing Strategies
After CanGo’s IPO, they spent millions of dollars acquiring Webjouster, which is not a
physical product, making it difficult to determine price per unit. Games played, subscriptions
purchased, or evaluated units in dollars or by minutes. CanGo’s initial pricing strategy should begin
with determining what constitutes a unit of item in their online gaming offerings. Once this is
accomplished, the next considerations for CanGo are selecting pricing objectives.
CanGo must evaluate demand and determine which pricing levels lead to different levels of
demands for their online gaming offerings. Associated with evaluating the demand for products and
services are the demand curves and the elasticity of the demand. CanGo must also estimate
production costs. There are several types of costs and production levels. Organizations consider fixed
costs or overhead, variable costs, total costs and average costs as factors when developing a pricing
strategy. CanGo’s production costs are extremely limited because of their online gaming.
CanGo needs to analyze competitors’ prices. Since market demands help determine prices
which are flexible and wide ranging CanGo must remain flexible in changing their prices as well,
realizing their competitors will do the same. CanGo will choose one of the following methods for
pricing before selecting the final price; Markup pricing, Target-return pricing, Perceived-value
There are ethical considerations to pricing. Pricing objectives are not all just profits verses
loss. CanGo must remember its customers and not price gouge. CanGo must also follow government
rules and regulations on pricing to avoid any legal charges that may result in serve fines and penalties
that might lead to financial ruin or even prison. CanGo must never participate in any illegal pricing
practices.
CanGo needs to price their product offering at a level sufficient to cover cost of production
and marketing, and that will generate a profit. What consumers are willing to pay drives prices. We
refer to this concept as “the price the market will bear”, a term used to describe the perceived value
of products and services through the eyes of the consumer; CanGo needs to analyzes and/or survey
the market and evaluate what their perceived value is to their targeted consumer. “The perceived
value is created by a product or services established reputation, marketing messages, packaging, and
sales environments, when advertising campaigns are successful they create customer demands which
CanGo needs to redefine their distribution channels after the debacle they experienced during
their first big e-tail holiday season. Getting the products from the producers to the customer proved to
be a challenge for which CanGo was not entirely prepared to handle. Running out of shrink-wrap,
CanGo used rushed order shipments for items at a much higher cost. Andrew and Warren team up to
review CanGo's distribution structure in order to devise a new strategic distribution system.
Enhanced performance and cost savings are also important elements both managers consider while
During the interview process with an intermediary who would serve as a distribution, channel
partner with CanGo, a representative from Amusink points out several time wasting practices in
CanGo’s distribution process. CanGo’s dealings with multiple publishers means they have multiple
sales meetings, with different sales representatives, placing multiple orders, receiving and stocking
multiple orders from multiple shipments, and then repacking and shipping to customers. Amusink
offers to streamline CanGo’s distribution functions cutting CanGo out of the distribution process
entirely. If CanGo selects this type of distribution channel, they will save time and capital in the end
with the added efficiency of the overall distribution process. Amusink’s claim of proficiency in
product delivery is due delivery focus only approach to business; a niche they have cornered in the
market. Selecting a distribution channel partner CanGo needs to consider costs, fit with the firm’s
products and marketing strategy. Amusink would be responsible for break and accumulate bulk,
Warren’s team discovers one of their competitors has gone to a value-chain management
system online, which means in addition to collaborating with Amusink CanGo needs to research
additional alternate distribution channels. Owner of the channel is an important factor for CanGo
because it entitles them to contribute to the distribution process in differing stages in an effort to
reach customers with their competitive advantage including. This process includes merchandise
selection and presentation, specialty stores, department stores, cost efficiencies, discounters/mass
CanGo needs to utilize selective distribution strategies to sell their products in the best
performing outlets. Selective distribution tailors consumer preferences to specific products. Unlike
intensive distribution, which focuses on a range of brands to choose from, or exclusive distribution,
used certain geographical areas, CanGo’s specialized product offerings align with the selective
distribution processes.
management analysis recognizes the need to revamp their overall method of distributing material and
considers finding a warehouse to carry larger inventory and cut out the middleman (wholesaler).
Warren is successful at selecting a location that is close to CanGo’s major vendors and shipping hub.
e. Promotional Strategies
i. Advertising Strategies
In an effort to increase market share and build a strong customer base, CanGo must dedicate
some significant effort to market research, branding and strategies on ways to attain its target market.
Market research is a critical component needed to make good decisions. CanGo must perform some
preliminary research on its product line and its focused area including online gaming. What do the
different groups targeted really want? Effective research could suggest multiple options for CanGo
for introducing new products or entering new markets. Just as a well-built house requires a strong
foundation to remain solid, CanGo’s marketing decisions need the support of research to be
perceived favorably by customers and to stand up to competition and other external pressures.
Product branding is a one of many key parts of advertising and marketing. It is about creating
an image for your product. One of the difficulties in advertising products corresponding to CanGo’s
product line as an online retailer is that the company must convince buyers to purchase a product,
which does not exist in bodily kind. For this reason, CanGo must develop a reliable and effective
website that nicely displays the credibility of its products. In contrast to physical books, consumers
are unable to flip through pages when purchasing online. Therefore, CanGo must assure a properly
designed cowl that touches on the benefits of the products and what options those supply to ensure
success.
One area CanGo needs to focus on is to find parties to promote their products. One strategy
to find partners is to affix Affiliate Marketing Network such as ClickBank.com to advertise and
promote their products. Click Bank is a successful digital product distribution service, which is on
the market to everyone who both wishes to advertise the vendors' merchandise or promoting
individual digital products. It is extremely easy to create a personal affiliate product account with
Click Bank. Although a nominal processing payment of $50 is charged to arrange an affiliate product
account, the service offered will allow CanGo to create a hyperlink system for affiliates and statistics
Similarly, other ways of advertising CanGo’s products can be done through radio and/or
newspapers ads. In her article on radio advertising, Michele Pariza Wacek, owner of a Marketing
Communications and creative agency, asserted, “Regardless, radio should not be ignored because it
does work. And many marketing consultants will probably tell you radio is an excellent medium to
relationships; converting one-time purchasers into loyal customers. This begins with the shopping
experience. Buyers begin to form an impression about a brand while they research products, skim
catalogs, and make a purchase. Relationships are a two-way street, it is just as important for the
customer to remember CanGo as it is for CanGo to remember the customer. CanGo must establish a
clear path of communication to its customers. This will allow them to serve better the customer by
interest to them. It will also help you to treat them not as a new customer, but a valued, loyal
returning customer on their next visit. Customer newsletters, preferred customer coupons or
discounts and other customer retention strategies are all ways of accomplishing this. Understanding
CanGo must understand what products are selling, the percentage of shoppers that become
buyers, the percentage of online shopping carts that are left open, and other vital statistics about the
selling process. The CanGo marketing team must also understand what products are selling for how
much and how often, to guide merchandising. Finally, CanGo must tie sells activity to inventory and
Smart merchandising requires that CanGo utilize the information above and design the
appropriate offers that optimize price-points and target markets to maximize profits. Create listings
that use the four P´s - price, promotion, place, and product - to create a unique offer that will help
them maximize profits. CanGo should incorporate branding in the promotion of any offer to help
customers identify and find additional value in the offer. CanGo cannot afford to give away the farm
in an attempt to attract customers. The motions offered must attract customers and allow CanGo to
make a profit.
iii. Public Relations/Publicity Strategies
“A public is any group that has an actual or potential interest in or impact on a company’s
ability to achieve its objectives,” (Kolter & Keller 2007). Public relations (PR) involve the
cultivation of positive relationships for organizations and products with its key stakeholders using a
mix of communication channels and tools. Publicity can build positive consumer responses in ways
advertising and promotions cannot. Advertising and promotions can get lost in the flood of today's
available information. In addition, advertising and promotions can suffer from consumer skepticism.
Since companies themselves pay for ads and promotions, the messages they convey can seem tainted
by an organization’s personal interests. Publicity reaches consumers through an unpaid third party,
such as a newspaper or radio station. Since the third party decides whether to distribute the message,
its contents appear more genuine. However, organizations lose some control with publicity and have
Public relations is used to address several broad objectives including building product
awareness, which is important when introducing a new product such a online gaming or relaunching
an existing product. CanGo can use PR to generate consumer attention and awareness through special
events that attract the online gaming community. CanGo can provide customers with more in depth
information about products and services using articles, collateral materials, newsletters and websites,
which will provide information to customers that can help them gain understanding of online gaming
and free licensed downloads. A positive article in a newspaper, on television news shows or
mentioned on the Internet, often results in an increase in product sales. Public relations can also assist
CanGo with brand reinforcement. Maintaining positive relationships with customers and company
stakeholders will aid in building a stronger image as the team prepares for the IPO. CanGo has so
many irons in the fire that it is even more important that they increase their brand equity. A strong
image helps the company build its business and it can help the company in times of crises as well.
CanGo’s product offerings are primarily electronic which often requires technical support.
CanGo may elect to either provide tech support themselves or outsource it to a private firm. To
reassure customer’s post-purchase confidence CanGo should employ the most important elements of
the IMC mix public relations, direct marketing, personal selling, events and experiences. The
integrated approach will best serve CanGo and secure post-purchase reassurance if used as follows:
Direct Marketing Post purchase customer reassurance could entail sending postcards, follow up
phone calls, and/or email inquires of customer satisfaction.
Personal Selling Post purchase stage involves communications designed to solicit other
purchases. Personal selling post purchase added a familiar and comforting
touch
Post-purchase reassurance may include, networking, meet and greet, trade
Events & shows, other promotional and advertising events.
Experiences
Marketing campaigns should include sales promotions. “Promotion is now more accepted by
top management as an effective sales tool, more product managers are qualified to use sale
promotion tools, and product managers are under greater pressure to increase current sales” (Kolter,
Keller 2007). Sales promotions are a collection of strategically calculated short-term incentives
designed to stimulate sales of a firm’s products and/or services. Sales promotions develop customer
preferences and stimulate purchase behavior. There are specific tools intended to provide incentives
for consumers known as promotional tools. Marketing promotional tools consist of three major
Marketers use the consumer promotion tool of sales promotions combined with advertising
campaigns, which is found to be most effective. Types of sales promotions would include; discount
coupons, samples, cash refund offers, rebates, prizes, rewards, free trials, point-of-purchase displays
and demonstrations. “In one study, a price promotion combined with feature advertising boosted
sales volume by 19 percent; when point-of-purchase display was added, sales volume increased by
24 percent. CanGo is offering buy 5 books get one free deal as a consumer promotion tool and 10
free minutes of online game time as an introductory sampling and when customers return to the
Trade promotion tools include prices off, advertising allowances, display allowances, and
free goods. Other forms of trade promotions include persuading an intermediary to carry the product,
persuading an intermediary to carry more units, inducing retailers to promote the brand by fearing,
display, and price reductions, and stimulating retailers and their salespeople to push the product
(Kolter & Keller p. 304). Trade promotions can be an effective sale-promotion tool; however, they
are filled with complexities, difficult to administer and manage, and may produce lost revenue.
Business and sales-force promotions are ideal for trade shows; this type of promotional tool
produces business leads, impresses and rewards customers. Contests for sales representatives and
specialty advertising are typical for this type of sales-promotion tool. The purpose of sales promotion
is to attract new customers, reward loyal customers, to increase the rate of repurchases of occasional
customers, and entice consumers to try new products. The benefits of sales promotions to
manufacturers include adjusting to short-term variations in supply and demand, adapting programs to
different consumer segments, testing how high a list price they can charge, and selling more than
CanGo has major decisions to consider when strategizing sales promotions campaigns.
Establishing objectives they need to convince retailers to carry high levels of inventory, offset
competitors’ promotions, build brand loyalty, and gain entry into new retail outlets. As the marketing
department at CanGo develops promotional programs, they need to consider the following program
size, conditions for participants, length or duration of program, timing, total sales-promotion budget
costs.
CanGo has secured an underwriter to sponsor a gaming contest and game designers to
conduct chat sessions as part of their business promotions. The next stage for CanGo is to pretest the
promotion program by using consumer information data to rate or rank special deals they offer in
specific geographical locations with trial offers. Once a pretrial promotion program is successful the
program is ready for implementation on a more wide spread basis. Finally, CanGo should conduct an
evaluation to measure the successes and/or failures of the program. CanGo’s philosophy is promotion
does not equate to discount, they are not a discount house. CanGo views promotion as added service
benefits; customers should pay full price. To test their theory CanGo can use sales data, customer
surveys and experiments to evaluate the effectiveness of a sales promotion program and can conclude
if the promotional sales program is successful if they win over or attract competitors’ customers.
Internal
Strengths Weaknesses
Technologically savvy, understands far Unlike larger companies such as iTunes
better than its competition what kinds of and Amazon, CanGo does not have the
technological features its target advantage of economies of scale so it can
consumers want to see on the e-tailing pass on lower prices to its customers
sites they frequent. It employs the latest Minimal capital for research and
technology in Web site development and development, relying heavily on the
product innovation. success of the IPO for a shift in this area
Data mining allows for updated customer Customers are both Experiencers and
profiles, which results in stocking the Achievers, which could divide CanGo’s
latest products customers want and need. value chain focus
CanGo has strong brand recognition with
target market--Gen-X &Y.
External
Opportunities Threats
Stable inflation rate at 3% will allow The increase in the number of shop bots
CanGo to stretch their dollar and will increase consumers’ price sensitivity
purchase more goods. and decrease loyalty.
Implementation of a product bundling Because of an increase in copyright law
and customer recognition/incentive plan infringement and lawsuits for online
could increase profits providers, CanGo must take extra steps to
Emerging markets – “crossover” with ensure material is being properly licensed
Baby Boomers and Gen Next and protected from being illegally copied.
Failure to understand surge of interest in
Japan indicates CanGo needs to better
research consumer behavior in emerging
markets.
Success begins with planning and CanGo lacks a strategic plan, which is an organization's
process of defining its direction. Strategic planning is the analysis of the threats and opportunities
facing a business, the process of creating a vision of the company’s desired future position, and
identifying actions to bring about the desired outcome. Simply put, strategic planning takes into
consideration the environment, creates a new vision, and develops an action plan. A strategic plan is
important to a successful company because it guides and focuses all staff to specific goals and
establishes a course of action to achieve them. Strategic planning also serves as a way to ensure that
all departments within the organization share a common goal. A strategic plan is the road map that
ensures everyone from the CEO to the custodian is heading in the right direction.
Strategic planning defines and creates a future for the organization. The strategic planning
process allows leaders to look into the future and attempt to understand the internal and external
business, political, and legal environments that will face an organization. Once the success equation
for the future is defined, an action plan is created to make the CEO’s vision become a reality. It is the
responsibility of the CEO to cast vision as part of the strategic planning process and the vision needs
to be shared by all the stakeholders. Strategic planning is a powerful tool that links resources –
capital and human, activities, strategies and finally the vision, which all work together to meet the
Our team considered three strategic alternatives for CanGo. They are presented here in summary.
Alternative One
To review effectively CanGo’s product strategy, the management team must reevaluate its
product offering to identify changes and enhancements to institute as those will affect all layers of
CanGo's product line its core product, its actual product, and its augmented product. Furthermore,
CanGo must aggressively continue to focus on providing outstanding customer service through
Alternative Two
CanGo’s fundamental internal challenges include the absence of a strategic plan to guide
growth and allocate resources, adequate and consistent measurement of consumer buying behavior,
and fulfillment process flow. The absence of a strategic plan causes senior management to entertain
all new ideas instead of aligning them with the goals of the organization. Additionally, Marketers
must continually revisit the consumer buying process, refresh their understanding of it, and use their
ever-evolving insights to construct messages that appeal to consumers' developing needs. CanGo is
not in a position to spend a great deal of capital on this type of research only to find out what they
already know. Finally, CanGo could benefit greatly from technology that will improve lead times,
cost, and flexibility. Other challenges include the decline in CD purchases and digital media and the
ability to compete with online retailers like Amazon.com and CDNow.com (an Amazon company).
Alternative Three
Key internal challenges at CanGo include an insufficient performance appraisal system, a lack
of consumer behavior research into emerging markets, and problems with customer service and order
filling. Key external challenges include the proliferation of shop bots, illegal downloading of
copyrighted material and competitors’ expansion into gaming and music markets. CanGo’s core
competencies are its technological capabilities, innovation, and understanding of the Gen X market.
To meet critical internal and external challenge and grow CanGo must stay at the cutting edge of
technology.
Delphi method to increase consensus we have blended the best of the preceding alternatives to
Lack of a Strategic Plan - CanGo must implement a strategies team composed of leaders from
each business unit. This team will conduct regular SWOT and GAP analysis to stay ahead of trends
and identify deficiencies before they become strategic weaknesses. Line employees will regularly be
polled to gauge their feelings on company strategies and suggestions on how to improve.
Logistics and Distribution Gaps - A 24hr Customer Call Center will be outsourced to
reduce costs. An AS/RS (automated storage and retrieval system) will provide improved inventory
management, space efficiency, reduced labor costs and reduced costs of loss by theft and misplacing
(Aslam, Gardezi, & Hayat, 2009). CanGo will also implement 24-hour shipping and expand their
Illegal Downloads and Copyright Infringement – To combat the losses incurred by illegal
downloads the company must build a subscription and free music cataloging/introduction site that
can be accessed via desktop, Smartphone, or mobile device. This site will introduce users to new
music and allow unlimited music catalogs to subscribers. Subscribers will receive 10 downloads a
month; additional downloads will cost between .50 - $1.69 a song. He thinking behind this plan is to
wean consumers back into purchasing music. In addition, CanGo must join others in the industry in
department will build an internal team dedicated to data mining in emerging markets. This will
ensure that CanGo is not surprised by growing demand in new markets. The backbone of this
marketing system will be the VALS system (SBI, 2010). This system identifies and predicts future
opportunities by segmenting the marketplace based on the personality traits that direct consumer
behavior.
The Proliferation of Shop Bots - To combat the loss of loyalty that shop bots encourage
CanGo needs to establish a buyers' club. By providing subscribers with 'insider' information on new
music, video, and book releases, along with discounts on purchases CanGo can build loyalty. The
development of online gaming sites linked to social networking and Smartphone apps will help
CanGo garner more of their target market. A focus on its brand equity, which includes positioning,
service mix, visual impact, pricing, customer service and marketing will help CanGo compete.
Customer Service Gaps - The majority of CanGo’s customer service problems stemmed
from the failure to meet the next day shipping promises and underestimating consumer interest in the
Asian Pacific market. If CanGo implements the aforementioned suggestions, a great deal of their
customer service issues will vanish. CanGo must stick to its focused differentiation strategy and
CanGo’s core competencies are its technological capabilities, innovation, and understanding
of the Gen X and Y markets. To build a sustained competitive advantage CanGo needs to be where
their target market is—namely on social networking sites, and on the app stores of Apple and
Android. CanGo marketing needs a social networking department to build buzz on sites like
Facebook and Twitter. The online gaming department needs to build gaming apps for mobile
devices.
An employee rewards program will be instituted that rewards employees for exceeding
customer service and departmental standards. Catering to consumers will naturally improve customer
service. Lastly, an employee rewards program will be instituted that rewards employees for
exceeding customer service and departmental standards. By implementing these suggestions CanGo
CanGo’s senior level management should develop a strategic plan design to incorporate
online gaming with their current product offerings. Advertising and sales programs should be
implemented to promote products and services to new customers. In addition, customer retention
measurement for success. To increase sales, CanGo must ensure customers are happy with their
experience. Otherwise, it must try to turn them around with a discount, a free product, or some other
benefit. This is especially important with online purchases where customers are nameless faces.
We do not recommend CanGo to conduct any further market research at this time, a GAP
analysis should be conduct semi-annually to keep them current on the latest trends. It is further
Web developers should redesign CanGo’s site to be more attractive to Baby-boomers and
Gen Yers without alienating their market segmentation of Gen Xers, their current source of income.
A good quality web site design can improve the chances of achieving higher profits in the
international site region and for CanGo to begin an overseas marketing campaign. They have
successfully researched the general e-Tailing marker in Japan, Music and video e-tailing in Brazil,
online e-Books in India and the MP3 market in China call of which show promise if CanGo enters
In spite of the different types of challenges CanGo continue to face, CanGo is ready to
expand and has the most current technologically advanced systems required to succeed. We
recommend that CanGo be innovative in every part of their business including pricing, personnel
latest and most innovative technology. However, the absence of a strategic plan causes senior
management to entertain all new ideas instead of aligning them with the goals of the organization. In
conjunction with the IPO, the launch of the online gaming site and other emerging markets, Liz
should tap into her Board of Directors and senior management team to execute a strategic planning
process. The process should take no more than 60 to 90 days and will include SWOT and GAP
Upon completion of the strategic plan, Andrew and his team must draft a Marketing Plan that
details how CanGo will track consumer behavior and monitor emerging markets. Developing this
plan should take no more than 30 days, as much of the work will have occurred during the strategic
planning process. CanGo can ensure no surprises occur by growing demands in new markets by
establishing a team whose focus is data mining. Using the VALS system, which classifies people into
eight basic lifestyle groups CanGo’s marketing team can develop messaging appropriate for its most
CanGo’s core competencies are its technological capabilities, innovation, and understanding
of the Gen X market. To build a sustained competitive advantage CanGo needs to be where their
target market is - on social networking sites, and on the app stores of Apple and Android. CanGo
must create a social networking department whose focus is to build buzz on sites like Facebook and
Twitter.
Once CanGo has clear plans regarding the mission and vision of the organization, how to
track consumer behavior and monitor emerging markets, they can focus on logistics and distribution
gaps. CanGo can outsource a 24-hour call center to reduce costs. An automated storage and retrieval
system (AS/RS) will provide improved inventory management, space efficiency, reduced labor costs
and reduced costs of loss by theft and misplacing (Aslam, Gardezi, & Hayat, 2009). CanGo will also
implement 24-hour shipping and expand their receiving department to handle increased demand;
however, to minimize employee costs, this division of CanGo will operate using three shifts. Each
shift will have no more than two full-time supervisors and will rely on part-time employees working
rotating schedules. Instituting the storage and retrieval system and increasing the number of bodies in
Upon completion of critical issues such as strategic planning, marketing and distribution,
CanGo can focus its energies and resources on the areas of customer service - where the primary
issue of failing to meet next day delivery will be resolved with the new AS/RS system – illegal
downloads and copyright infringement, and proliferation of shop bots. As noted by Liz’s
management team, no real planning has occurred sense the company’s launch more than ten years
ago. If CanGo wants to compete with Amazon, CDNow and ITunes, it must do so strategically and
not jump on the “what’s hot” bandwagon. Doing saw will exhaust capital and alienate CanGo’s
current customers. Implementing the above detailed suggestions will provide CanGo strong footing
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