E-Commerce Models: Online & Offline Distribution of MM BUSI213 Dr. Ashraf Anwar

Distributing Multimedia Titles

Distributing Multimedia Titles Marketing Strategy Product Strategy Promotion Strategy Pricing Strategy Distribution Strategy Distribution Alternatives

Marketing Hurdles Consumers are reluctant to spend money for unfamiliar titles. High rate of returns. Lack of good content – too many titles are book like. Many titles for little shelf space.

Product Strategy Create titles that have the same “look and feel”, objectives, characters, and theme. Include high quality graphical images.

Product Strategy (continued) Develop brand name recognition to generate: Consumer confidence. Confidence by association.

Promotional Strategy Cooperative advertising – retailer and publisher share cost (too expensive for publisher). Point of purchase – materials on aisle (impulse buying). Publicity – review stories in magazines and papers.

Pricing Strategy Prices are steadily declining. Suggested retail price. Wholesalers – 50% discount. Retailers – 35% discount. Street price – customer’s actual price.

Break-even Example Development costs: $500,000 Per-unit Production cost: $2 Retail Price: $20 Wholesaler discount: 50% or $10

Break-even Example (continued) Per-unit revenue: $10 ($20-$10) Revenue less Production Cost = $8 ($10-$2) Units needed to cover development costs: 62,500 units ($500,000 / $8)

Distribution Strategy CD-ROM publisher typically have three options in distributing consumer titles: Wholesalers – buy from publishers and resell to others. Retailers – sell to the public. Superstores and specialty retailers.

Distribution Alternatives Given the competitive nature of the multimedia consumer market, other distribution alternatives may be used: Direct mail – mail order sales. Bundling – a title sold with another product. Catalog sales – monthly catalogs. Rentals – rental of games and entertainment. Partnerships – joint ventures.

Marketing Non-consumer Titles Reference works, corporate training titles and educational titles. Less complex to market. Do not require shelf space. Target audience is smaller, more defined, and easier to reach.

Distributing Online The Internet is a major delivery medium for multimedia. Advantages: Vast audience. Ability to constantly refresh content.

Kiosk-based Multimedia Two types of kiosks: Transactional – provide for user input. Informational – allows the user to access information.

Conclusion Online Distribution Models introduced. Pros and Cons of Models shown. Pricing issues highlighted. Marketing issues highlighted.