Chapter Six Case Study Two

Company Two Background –Steel Manufacturer Mini-mill concept Management owned Distribution Channel –Through intermediaries Customer base –Trade area localized Suppliers Distributors Pre-fabricators Industry trends-global factors –Large manufacturers –Foreign pressures – dumping –Asian financial Crisis –Flat prices-increasing demand Company Challenges –Competing in a Commoditized market –Customize product and CRM

E-Business Marketing Goal E-Commerce –Pricing –Lower cost of Sale and production CRM –Relationship enhancement –Creating a Valuable exchange Six step pricing decision process employed –Hut and Speh 1998

Pricing Decision Process Pricing Objectives Demand analysis Cost analysis Competitive analysis Impact on firm’s other products Legal Considerations

Step One: Pricing objectives –Pre-determined return –*Increase Market share* –Competing on price Step Two: Demand Analysis –Evaluate the marketplace –Customer segments Price sensitivity versus Size of Distributor –Customers perceptions of value Delivery, quality and locality Step 3: Cost Analysis –Issues and decision Under-price competition?? *Provide volume & loyalty incentives* *Customer service*

Step 4: Competition –differentiation strategies Increased service Lower production costs –Harder to duplicate Step 5: Impact on product mix –commodity vs. customized –Job order manufacturing Step 6: Legal –executive suite involvement –Robinson-Patman Act Pricing in commodity markets

Stakeholders –customers (existing and potential)

Value Bubble Attract phase –offline focus Small marketing budget Localized and easily targeted customer base –Links Trade organizations Web designer issues –Brochure-ware –Antialiasing –Color mix Impact on the attract phase “Fix-able”

Value Bubble Engage (Step 2) –3-click order process –online support –Availability of inventory –Library of Case Histories (PDF) –conversion charts (static) Retain (Step 3) –Site Personalization –order status & delivery tracking –billing –refresh content with announcements –Link “hell” –No

Value Bubble Learn (Step 4) –pop-up survey feedback form –Clickstreams and log files possible but not implemented –Online orders drive production data –No database Relate (Step 5) –personalization –integration of offline/online customer databases Ultimate goal –Competitive pricing in the online environment

Summary Success ?? –Not likely –Good strategy – bad actualization –Limited budget –Adds value to existing customer base with little opportunity to increase market share Marketing Theme –Valuable exchange process Questions