Running Head: MEDIATRADER
Mediatrader: A marketing plan
Amber Brooke Kyler
Vincent Simeon Barronette
Lauren Robey Morris
University of Maryland University College
Dr. Newell Chiesl
AMBA 603.9015
April 7, 2008
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Table of Contents
Contents
1. Executive Summary 3
2. Situation Analysis 3
2.1. Market Needs 4
2.2. The Market 4
2.2.1. Market Demographics 5
2.2.2. Market Trends 5
2.2.3. Market Growth 7
2.2.4. Macroenvironment 8
2.3. The Company 8
2.3.1. Mission 8
2.3.2. Service Offering 8
2.3.3. Positioning 9
2.3.4. SWOT Summary 9
2.4. Competition 11
2.4.1. Direct Competition 11
2.4.2. Indirect Competition 12
3. Marketing Strategy 13
3.1. Value Proposition 13
3.2. Critical Issues 13
3.3. Financial Objectives 14
3.4. Marketing Objectives 14
3.5. Target Market Strategy 15
3.6. Messaging 15
3.6.1. Branding 15
4. Marketing Mix 17
4.1. Product Marketing 17
4.2. Pricing 17
4.3. Promotion 18
4.4. Service 18
4.5. International Markets 19
4.6. Implementation Schedule 19
5. Financials 20
5.1. Break-even Analysis 20
5.2. Sales Forecast 21
5.3. Expense Forecast 23
5.4. Linking Expenses to Strategy and Tactics 24
5.5. Contribution Margin 25
6. Controls 27
6.1. Implementation 27
6.2. Keys to Success 28
6.3. Market Research 28
6.4. Contingency Planning 28
Mediatrader 37
1. Executive Summary
The Internet is plentiful with websites that sell media through online auctions or sales. Some web-based companies even provide customers with the option to purchase various forms of used media. Mediatrader media exchange service will provide the online community another option, to the typical purchase or auction website, by providing an avenue to exchange media. Many individuals possess books,videos/DVDs, gaming software, and music media that are no longer of interest or use to them, but still in excellent working condition. For these individuals, the idea of using eBay, or other online auction forums, to sell such items outright, may appear daunting and expensive.Mediatrader exchange gives people from various communities around the world access to a platform that posts items online for exchange with other members. People will have a viable option for dealing with older or unwanted items that they have accumulated over the years. Online customers will benefit from Mediatrader’s point system that can be utilized to “purchase” goods on the site. Media traded on Mediatrader will be assigned points instead of prices. Members will be able to “buy” media with the points they earn from selling their unwanted media.Moreover, a points system will rid the site of professional sellers, allowing the site to cater only to consumers looking to trade high quality goods. This document shall introduce, expose, and exploit the benefits of Mediatrader through an in depth review of Mediatrader’s marketing plan.
2. Situation Analysis
Mediatrader's goal is to give our customers the finest quality of online media exchange service. Although, there are several niche trade sites offered throughout the Internet, many of them only allow trading within one field or genre.
Market leadership. Mediatrader's greatest strength is being the first broad-based online media exchange website. There is great potential for Mediatrader to become a household name across the world for the exchanging of used media materials.
Business Model. A further strength is the lack of inventory and low capital requirements. Mediatrader helps link customers to other customers, no inventory is maintained and operational costs can be kept low.
Ease of access. Mediatrader can be accessed from anywhere in the world. Customers will be able to form a loyalty to the service through dependence upon the website.
Client relationships will be of paramount importance to the success of Mediatrader. Mediatrader must be immediately welcoming to the new client and encourage ease of use and long-term working relationships. Through the development of strong client relations, turnover of accounts will be low and repeated use will grow exponentially.
Unknown name and service. The exchanging of a variety of "hard" media online has never been done in an online trading platform. Marketing the service and establishing the brand name in the marketplace will be an issue in the beginning.
Gaining Advertisers. Because a portion of the revenue is expected to come from advertisers, it is crucial to gain advertising relationships early in the business. Advertising revenue will truly grow only after the service has gained acceptance by the trading community.
Competition. Mediatrader has no perfectly direct competitor, but other companies provide similar services that potentially cater to the same market. Mediatrader will have to stress the ideology of exchanging media without a price, in order to stand out in the marketplace. The critical issues for the Mediatrader venture include:
· Expansion of operations based upon steady growth
· Constantly maintaining theability to serve existing customers
· Prompt deliveries worldwide.
· Monitor user satisfaction, a large percentage sales will be from returning customers
· Develop partnerships with advertisers, as a percentage of revenue is based upon advertising
· Investing in web based technology. This will ensure Mediatrader's infrastructure remains consistent as technological advancements in Internet based sales develop.
Advertising fees will also sustain profits and revenue from the website. Advertising revenue, from companies marketing products for $500 per month, will bring in additional profits.
Overall revenues for the service will be based upon assumptions made for Mediatrader's average per unit revenue and average per unit variable costs. These were estimated in the sales forecast and the estimated monthly fixed costs. Our analysis resulted in an estimate that suggests that Mediatrader will break even with 4,919 listings per month, or $13,713 in revenue each month.
2.1. Market Needs
The current need for an online marketplace that allows for consumers to trade various forms of media is great and relatively unmet. Many individuals possess books,videos/DVDs, gaming software, and music media that are no longer of interest or use to them, but still in excellent working condition. For these individuals, the idea of using eBay, or other online auction forums, to sell such items outright, may appear daunting and expensive.
Mediatrader allows consumers to trade unwanted media for relatively little cost. Furthermore, Mediatrader will address several market needs: inexpensive media trading and the ability to trade multiple forms of media at one time. While, websites such as eBay and Amazon.com charge high percentages for the sale of each item, there is no trade function at play. A seller posts an item for a set price, or auction formatted sale, receiving funds, in various forms, in return.
Mediatrader allows for a consumer to find multiple forms of media and trade for them. Paying a small listing fee, each individual is able to trade an unwanted item for something more desired, accruing points that enhance the potential for future trades. Thus, the consumer does not have to directly buy or give a percentage of sale proceeds to the company, only the initial listing fees.
The main advantage of the Mediatrader venture is the ability to allow consumers to trade books, movies, gaming software, and other media for a small cost. Customers pay a listing feefor as low as $2.00and use apoints system for trading.
In addition, the points system ultimately eliminates the cost of purchasing the media from a trader. The points system encourages consumers to trade high quality and new media in order to receive more points for purchasing goods. Points are determined based upon the item and its current market value. The condition of the item is determined by the seller, but must be confirmed by the purchaser upon receipt for the seller to receive the maximum points available.
Although, there are several niche trade sites offered throughout the Internet, many of them only allow trading within one field. Mediatrader satisfies the consumer's need to be able to trade a video game for a movie or for music.
2.2. The Market
Based upon current trends within the online marketplaces, anticipated growth, and the demographics of the targeted consumer, it is anticipated that Mediatrader will serve the market in an entirely new way. Potential factors in the macroenvironment are discussed, but are not anticipated to hamper the venture's progress (Table 1).
Table 1 - Market AnalysisYear 1 / Year 2 / Year 3 / Year 4 / Year 5
Potential Customers / Growth / CAGR
Male Consumers between 44-49 years / 10% / 5,000 / 5,500 / 6,050 / 6,655 / 7,321 / 10.00%
Female Consumers between 44-49 years / 15% / 7,500 / 8,625 / 9,919 / 11,407 / 13,118 / 15.00%
Other / 5% / 1,000 / 1,050 / 1,103 / 1,158 / 1,216 / 5.01%
Total / 12.54% / 13,500 / 15,175 / 17,072 / 19,220 / 21,655 / 12.54%
2.2.1. Market Demographics
Demographics:
The service of online trading offers room for a wide range market demographic. Mediatrader's specific demographic will include consumers with an average projected age of between 44 and 49 years old (Black, 2007), both male and female. Generally, the market will include moderately to highly educated individuals from various occupational backgrounds and income levels. These individuals will have computer and Internet experience and access.
Geographics:
The physical location of Mediatrader's clientele is irrelevant due to the online nature of the service. Consumers will be located around the world. The focus will begin in the United States market for the inception of the service, as this is the home base of the venture.
Psychographics:
Mediatrader will target individuals interested in reading books, watching movies, listening to music, or playing video games. The target psychographic will include those individuals and families that involve entertainment into their lifestyles.
Behaviors:
The target behaviors will include clients who are knowledgeable about the Internet; those familiar with the online purchasing process; those who frequently read, watch movies, listen to music, or play video games; those who wish to trade used media; and those who will benefit through the trade process by making many transactions.
2.2.2. Market Trends
Mediatrader will be operating within the global Internet marketplace and will be made available to all adult individuals with Internet access. All members must be at least 18 years of age and have a credit card or checking account available for address verification. All members must agree to posted membership terms and be willing to promote a safe and honest trading environment. Current trends within the target population suggest that the availability of the online marketplace will encourage usage and that as the diversity of the clientele increases, the popularity of the service and the ability of Mediatrader to offer "something for everyone" will follow suit (Black, 2007).
Based upon current research in the demographics on online auction sites, it is anticipated that the target clientele will have an average age of between 44 and 49 years, an education level that is above the national average, an interest in shopping from their home or place of business in contrast to using a standard retail establishment, an awareness of the potential risk of online shopping, and an interest in getting the best value in a given purchase (Black, 2007, p.95). Such trends also suggest a slightly uneven distribution of female to male online purchasers, with females representing approximately 51% and males 49% (Black, 2007, p. 98) (Figure 1).
At present, the economic forecast for the United States, the home base of Mediatrader, appears unsettled with the potential for future recession. Such domestic issues can also impact foreign markets, global stock holdings, and the spending habits of the global public. These potential issues are a trend of great concern to Mediatrader, as instability in the economy discourages the personal spending on entertainment. It is possible that such trends could negatively impact the profits of the venture upon startup and stifle initial growth. It is expected, however, that such trends will eventually shift toward economic rebound, making the marketplace positive, once more.
It is in the best interest of Mediatrader to appear immediately welcoming to the new client and encourage ease of use and a long-term working relationship. It is hoped that through the development of strong client relations, turn over of accounts will be low and repeated use will grow exponentially. Further, it is hoped that the social climate of the online marketplace will encourage referrals from clients to others to enhance the view of the company in the eyes of the online world.
To further enhance Mediatrader’s global reputation and work toward maintaining status as a responsible corporate citizen, staff members will seek out opportunities to contribute to the global community, with the use of recycled shipping materials as a possible example. Marketing strategies may also choose to focus on the overall "recycling" nature of the company. Through the use of Mediatrader, the individual will be trading unwanted entertainment products for desired products from another individual. Products will be used, but in good condition, eliminating the need to purchase new products made from further new materials.
The online nature of the venture allows for constant evaluation and updating with the newest technological trends and innovative products and ideas. Mediatrader will be updated in intervals as determined by the system administration staff. These individuals will be responsible for researching the latest innovations and their feasibility for inclusion in the marketplace.
Mediatrader will be committed to the client and will encourage safe trading to the greatest possible extent in response to current trends in identity theft and fraud. No personal information or banking information will be stored on the site, instead relying on the use of online payments services, such as PayPal, to store and distribute information and funds on encrypted and insured frameworks.