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Strategy Project
Dorothy Winkler
March 3, 2013
Dorothy Winkler
Strategy Project
1
Each of these web storefronts have market segments that overlap in some way. How do the
company’s market segments differ?
www.sportsauthority.com vs www.soccer.com
Sports Authority and Soccer.com have similar market segments; however, they have
some differences in their market segments as well. Both companies target athletes or
those interested in sports or fitness. However, Sports Authority is a retailer that targets
a wide variety of consumers interested in many team sports or fitness activities;
whereas, soccer.com focuses on a smaller group of consumers interested in soccer
products. Soccer.com specializes in soccer.
www.target.com vs. www.sephora.com
While Target a variety of home and fashion goods, it also sells cosmetics and health and
beauty aids; however, Sephora specializes in cosmetics and beauty aids industry.
www.woot.com vs www.amazon.com
Amazon is the parent company for Woot; however, they market to different groups.
Woot.com is a site that offers a daily deal. Once the deal is over, the item is gone. Once
you buy the item it is yours, not refunds allowed. They are marketing to the person
looking for a big bargain. Amazon is marketing to the general internet consumer. They
sell a wide variety of items from books to streaming videos to coffee pots. The list is
endless. They offer a flexible return policy for customer satisfaction.
www.petco.com vs www.heathfoodforpets.com
Petco sells a variety of pet products at a reasonable price; whereas Health Food for Pets
specializes in healthy, high quality pet food at a premium price.
www.llbean.com vs. www.rei.com
LL Bean offers sportswear and gear that is high quality, however, the prices may be
higher than other retailers. REI on the other hand offers more specialized or hard to
find items. They also focus on being green and the environment.
How do their competitive pressures differ? Figure 2 and 3
As evident in figures 2 and 3, llbean has pressures that arise from brand loyalty. They
produce a high quality product at a more expensive price than competitors. They must
maintain their customer base to keep growing. Rei.com on the other hand, has
competition from other stores in the market, like LL Bean, Sports Authority and Dicks.
They offer products that are high quality. They have products that may not be available
at these other sources. They must keep high customer service as well as high quality
merchandise standards to keep the shoppers returning.
Dorothy Winkler
Strategy Project
2
How do their competitive strategies differ?
As shown in figure 1, REI, Health Food for Pets, LL Bean, and Sephora use a focus
strategy that offers a better product or service within an industry at a premium price.
They focus on a specific customer. Although the price may be higher than their
competitors, they claim to offer higher quality products for that price.
Also in figure 1, Woot and Soccer.com use a focus strategy; however, they offer low costs in
their industry. As opposed to other sporting goods stores like Sports Authority, soccer.com
offers products for a specific consumer; a consumer interested in soccer. The prices are
competitive in the marketplace. Woot offers a lower cost of items, however the variety and
selection of goods fluctuates.
Amazon, Petco, Target, and Sports Authority (figure 1) are all big retailers who market to a large
variety of consumers in the industry with competitive prices. Target, Petco, and Amazon also
differentiate themselves across their industries. Amazon offers a wide variety of products and
services. They have been highly successful with their Kindle and e-books. They also offer
almost any product a consumer is looking to purchase. Target’s slogan is “expect more, pay
less”. This indicates that they offer high quality goods at low prices. This could be compared to
Wal-Mart that notably offers low prices whereas Target differentiates itself by offering higher
quality products.
How is the “feel” of the content on their web sites different?
www.sportsauthority.com vs www.soccer.com
Soccer.com seemed all things soccer. Sportsauthority.com on the other hand seemed
more athletic. The content was directed at different sports or active wear for those
sports.
www.target.com vs. www.sephora.com
The target.com website is user friendly. It has categories across the top to choose which
department that a customer would like to view. The front page offers suggestions for
the current season, like swimsuits. It is very fun with the red and white theme.
Sephora.com has an elegant feel. They have options for shopping and a search box.
www.woot.com vs www.amazon.com
Woot.com seemed offered a few items. It had the featured sale up front on the page.
Amazon.com on the other hand had a lot going on. It had many categories of items and
many items suggested for purchase based on previous purchases.
www.petco.com vs www.heathfoodforpets.com
Dorothy Winkler
Strategy Project
3
The petco.com website bursts with a variety of pets on the front page. It boasted
different types of pets from fish to cats and dogs. Healthfoodforpets.com was just food.
It had pictures of fruits and vegetables on the home page. If had videos as well about
new stories about pet food issues.
www.llbean.com vs. www.rei.com
llbean.com and rei.com seemed similar in their presentation. The LL Bean website
seemed more geared toward apparral than sports items. However sports items could
be found on the tabs across the website. Rei was all fitness on their homepage.
How is the “feel” of the user interface of their Web sites different?
While looking at each of the websites, they all offered search boxes to locate items
except for healthfoodforpets.com. They all seemed user friendly in the approach to
finding an item or just browsing. Amazon.com offered suggestions on their page based
on purchase history. Most offered accounts where users could sign in to the website.
Most websites offered shipping deals or promo codes. Amazon did not offer this.
Petco, Target, and Sports Authority had sale items readily listed on their front pages.
Use your answers in step 2 to explain the following statement: “The structure of an
organization’s information system (here a Web storefront) is determined by its competitive
strategy.” Structure your answer so that you could use it ina j ob interview to demonstrate
your overall knowledge of business planning.
The web storefronts in companies like LL Bean, REI, Sephora, and Health Foods for Pets
should be informative and easy to navigate. It would also be beneficial if the companies
could store the users information so when they log back on to the system, they are
ready to make their purchases. Since they do offer products at a more expensive price
point than competitors, they must provide high quality customer service on the
websites. I think that offering things like free shipping and easy return policies
encourage customers to make purchases from them. These storefronts must also
remain in their focus market by specializing in particular goods.
Storefronts like Target, Petco, and Sports Authority can offer special sales and coupons
for their customers. Their customers are looking for products at a reasonable price and
will search elsewhere to find them. They do not have the brand loyalty that places like
LL Bean.
Figures 4 and 5 demonstrate the value chain for target.com. They must have a
storefront (website) that consumers can easily navigate to make their purchases. Then
the actual system for placing on-line orders should not be cumbersome. Perhaps a
Dorothy Winkler
Strategy Project
4
system when the consumer logs in, they have the option to save their information for
future purchases. They must accept many methods for payment. They must also have a
method for getting the orders out to the customer in a fast and cost effective manner.
Their website should be easy to navigate. They can promote particular items on their
pages to encourage customer purchases. Finally, they should be able to manage
customer trends in purchases in order to keep inventory and make future purchase
decisions.
Dorothy Winkler
Strategy Project
5
Figure 1
Porter’s Four Competitive Strategies
Industrywide
Focus
Cost
Lowest Cost across
the industry
Differentiation
Better product/service
across the industry
Amazon
Petco
Target
Sports Authority
Amazon
Target
Petco
Lowest cost within
an industry
segment
Better product/service
within an industry
segment
Woot
Soccer
LL Bean
REI
Sephora
Health Food for Pets
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Strategy Project
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Figure 2
Five Forces – rei.com
Type
(Strength Factors)
Competitive Force
(Strength Factors)
Substitutes
Competitive
(Switching costs,
customer loyalty)
New Entrants
Rivalry
Supplier
Supply chain
bargaining power
(Availability of
substitutes, relative
size)
Customer
Threat
(Factors Assessment)
Shoppers can choose
other sporting goods
stores easily, no
barrier costs to switch
shopping preference
Capital requirements
are high
Many sporting goods
stores like LL Bean,
Sports Authority,
Dick’s, etc. with
differing prices and
quality
Equipment and
supply vendors
(Focus on high quality
brands available)
Individual
shoppers/consumers
(Relative size:
bargaining power of a
single customer is
weak)
Strength Assessment
Strong
Weak
Strong
Weak
Weak
Dorothy Winkler
Strategy Project
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Figure 3
Five Forces – llbean.com
Type
(Strength Factors)
Competitive Force
(Strength Factors)
Substitutes
Competitive
(Switching costs,
customer loyalty)
New Entrants
Rivalry
Supply chain
bargaining power
(Availability of
substitutes, relative
size)
Supplier
Customer
Threat
(Factors Assessment)
Customers can
choose to purchase
other brands
Llbean offers their
own high, quality
product line
Brand loyalty is a
factor
Customers can
choose to purchase
other brands
Brand loyalty is a
factor
LL Bean manufactures
their own products
LL Bean depends on
customer loyalty
Strength Assessment
Strong
Weak
Strong
Weak
Weak
Strong
Dorothy Winkler
Strategy Project
8
Figure 4
Value Chain – target.com
Website
On-line
ordering
system
Inventory
Management
Marketing
and sales
operations
Figure 5
Task Descriptions for Primary Activities of the Value Chain – target.com
Primary Activity
Inbound Logistics
Operations/Manufacturing
Outbound Logistics
Sales and Marketing
Customer Service
Description
Receiving orders
On-line system to place orders
System to manage inventory
Website marketing of goods
Tracking customer trends and quality customer service
Customer
Support