Small Business Management-Case Study
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Overview of Case Study
Background Social media plays a dynamic role in marketing and crafting relationships with customers. With limited obstruction to entry, small businesses are commencing to use social media as a means of marketing. The research aims to obtain a preliminary understanding of how a small business is recognised for using social media to grow the business, uses social media to engage customers. Ning, founder, and CEO of the online furniture store set up his first company in France and later expanded it to more countries. The approach used by the strong believer was cost effective as using the internet to aggregate orders helps matters. It is possible for the goods to be manufactured and dispatched when enough orders have come in to fill a shipping container.
As the business was expanding Ning himself knew that he was not a good manager anymore, but still the strategies and concepts he created led success. The speed of designing new products and renewing catalogue is important as it keeps the interest of the people alive and keeps them coming back to the website. The business was rapidly growing and not only the sales were boosted up to 200 percent but the employment also increased massively.
Utilisation of New Media in Made.com
Unluckily, many small businesses struggle to use social media and have no approaches or strategies going into it. As a consequence, without a fundamental understanding of the benefits of social media and how to use it to engage customers, countless opportunities are wasted (Qualman, 2012). It has been observed that all media was a new media at some point. Moreover, it was found that radio acquired 38 years to spread by fifty million users, television took 13 years, internet processed 4 years, and facebook took just 9 months to gather fifty million users (Missingham, 2011).
The emergence of Internet-based social media has started a new kind of conversation among consumers. Made.Com Company is challenging traditional ideas about marketing and brand management while creating new opportunities to understand customers and connect with them instantly through the internet (McWilliam, 2012). Several strategies of Ning Li have derived the business to highest. As it has been observed that many of the furniture manufacturers find it uneconomic to supply products in small quantities, therefore the owner used the internet to aggregate orders and once sufficient orders have come in to stop a shipping container, it`s conceivable for the goods to be manufactured and dispatched (Dalal, et al., 2003). This approach helped the business to keep their costs down.
Moreover, through the extensive use of the internet feature, the company used the two-way communication process to fully satisfy their customers (Grönroos, 2004). This led Ning Li to work more closely with designers to make new exclusive products as he found out that it was much harder to buy from factories. The company utilised online furniture retailing that it was capable to take more risks with new talents, design and designers (Scott, 2009). For Ning Li, placing the furniture retail market online has helped transform the furniture industry. In the past retailers were reluctant to take the risk with new designs or new designers, and talent could become stifled. But now it has been observed that internet has changed it all. As the new design comes with the risk, the company utilised the new media by putting a picture of the new design over the internet and by eradicating the risk of selling they are able to save their costs (Parasuraman, 2002). Ning Li finds that much of the investment in social is future-oriented and this is how a true entrepreneur can make his ways to success (Hanna, 2011).
Never earlier companies had the chance to talk to millions of customers, send them messages, acquire speedy feedbacks, and testing with offers at comparatively low costs (Scoble, 2006). And never previously, millions of consumers had the ability to talk to each other, they either lack with the resources or the capability of utilising them. They have now an opportunity whichever to criticise or recommend products without the knowledge or input from a company. In this way, Made.com is able to enjoy good feedbacks which are an ultimate reason of attaining both regular and new customers their side (Sharma, 2004).
Significance of Media in Made.com
It is observed that successful small businesses have long flourished on word-of-mouth to help endorse their products or services (Zimmerer, 2002). With the use of social media, small businesses are now able to use free tools to help increase word-of-mouth while diminishing the need for outbound promotion platforms like the yellow pages, expensive television ads, newspaper ads and etc. In the case of Made.com, it makes full use of online promotions and uses the internet that allows the company to launch products much faster than traditional businesses as the owner of the company states, “Speed is king” (Yan, 2011).
Media has played a significant role in the business industry (BarNir, 2002). Made.Com has made it possible for the reason mass media has an ability to divide industries, with outdated companies falling behind their competitors. Through the use of mass media, the company has expanded their business in other countries too, with the same ideas and strategies as Ning Li was suggested by Brent Hoberman an entrepreneur in London. The company was able to obtain high revenues and profits by a wide-ranging use of the internet. Although social media can also be a distraction, zapping worker productivity throughout the day, but more likely it can also be an important way to open up many opportunities that would never have existed (Safko, 2010). It will become obvious that social media is a critical part of doing business today.
For several small businesses, expensive promoting campaigns are simply aren`t a possibility that companies can implement to shape awareness between their target customers, but one area that is often disregarded by small businesses, or executed poorly, is social media (Mc Cartan-Quinn, 2003). Ning Li, when commenced the business used the strategy of building their business or brand image online. Rather going for an ad hoc user, he used social media tool effectively. Therefore, it is apprehended that social media, when used strategically, can provide direct coordination with many of the target audiences (Mangold, 2009). 89% of marketers believed that augmented publicity was the one of the major benefits of social media marketing. Made.Com now has the capability to reach out and communicate on a personal level with their target audience on a daily basis. This utilisation of social media is a game changer for businesses that are engaging in marketing, advancement, sales, customer service and other business activities. Businesses that use social media as part of a strategic business approach are 1.5 to 2 times more probable to antedate revenue growth (Qualman, 2009).
Marketing strategy of Made.com
Predictable marketing knowledge long detained that a dis satisfied customer tells ten people, but now in the new age of social media, one has got the tools to tell fifty million. For many small, medium sized and large businesses, marketing is a crucial activity for the survival and success of a business. It has been observed that businesses today have more marketing opportunities than ever (Bresciani, 2010). In small businesses, marketing heavily depends on word of mouth recommendations for customer acquisition (Stokes, 2002). It is also observed that economy of a country is distinguished by relationships, technology, and networks that favor few of the features of the businesses (Walsh, 2009). Social media enabled Made.Com to link with customers in order to form relationships and achieve a better understanding of customer needs. Ning Li wanted his message to reach as many people as possible, which could help him, increase the sales. To get the most out of this reach, Made.Com has a presence where customers are hanging out. Increasingly, they are involved and hanging out on social networking sites (Scott, 2010). Social media provided multiple opportunities for Made.Com to market to consumers and build faster, closer and more profitable relationships.
However, small businesses still struggle to reach customers. But in the case of made.com it used strategies such as heavy promotions online and building awareness among the people. This has led the customers visit the outlet first, and later they purchase it online (McCole, 2010). By placing the pictures of furniture online, they are able to advertise there, if the customer doesn’t buy it, they remove the picture; else it is speedily sold over the internet. In this way the business grew rapidly by testing their strategies shortly, ensuring the best use of total quality management, testing high traffic on their web, comprising strategies to sustain or increase the traffic, satisfying the customers fully and making customer’s life time value (Yang, 2004).
Moreover, the company was able to test email marketing, they derived repeat purchase rates by testing things like sending follow-up emails recommending items frequently purchased together, subject lines, and content to enhance the business. Made.Com marketing included many advertising methods as they needed to include a healthy portion of internet marketing strategies to be successful and maximise sales in today`s economy (Sharma, 2004).
The company is doing most or all of its business online, embraced an internet marketing strategy that helped it, be seen by online users. These included:
1- Email Marketing and raised its email list.
2- Optimised the search engine
3- Did event marketing (speaking and networking).
4- Direct Mail
5- Online ads (Google AdWords)
6- Print display ads
8- Mobile Marketing
By making the best use of social media marketing tool, the company was able to get recognised in the competitive market, they established a stronger brand, boosted their sales, shared expertise and knowledge, tapped into the wisdom of customer. Moreover, in order to get successful the company interacted with the clients and received valuable customer feedback which is always essential for business growth (Grönroos, 2004). Through the positive feedback, satisfied customers talk about the company, which is found to be the strongest word of mouth-marketing, which is also known as free advertising. In this way Made.Com was able to accomplish its aims and successfully built a community.
Pros and Cons of Decision to Split Manufacturing between Britain and China
In emerging ‘global strategy’, it is beneficial to differentiate between three forms of international expansion that arise from a company’s resources, capabilities and current international position which are global, international, and multi-national strategy (Hanna, 2011). In most countries of the world, international trade characterises an imperative share of gross domestic product. In considering substitutes to develop Made.Com Company, it was worth examining this accelerating trend which is the outcome of growing industrialisation, transportation and communication tools. International trade is expressly appropriate for the speedily mounting number of hollow corporations, which is a business without a factory and with a minimum number of employees in which manufacturing is performed by outside suppliers (Scott, 2010).
Made.Com Company has to carefully apprehend the conclusion in making a decision for either to go for the Chinese market or a British market, for the reason that they are moving internationally for the first time. It is essential for Ning Li to decide and consider a lot of potential advantages and disadvantages associated with both the countries (McWilliam, 2012). It has been observed that Ning Li confesses that speedy development posed challenges for him. Managing a surge of staff numbers and expanding product lines required skills he didn`t yet have. He was not a good manager when it comes to the size of the business, and was not sure about the expansion as he has been hesitating in increasing the size of the business (Zimmerer, 2002).
Although China has developed an "ecosystem of manufacturing" over the last 30 years, and its reputation for making goods for worldwide consumption permits the country to comprehend the global market, the manufacturing and selling costs are also low (Anand, 2003). But the place Ling Li used to live in China was a medium-sized town which is found to be one of the biggest furniture manufacturing foundations in China. Ning Li has to face a major competitive disadvantage in the country he belongs to. Therefore, rather going for pre-existing market of China, he should go for the expansion in the United Kingdom. It was observed that the British market today has a huge gap for designer furniture at a good price, creating a lot of opportunities for the business particularly in the furniture market sector. This was one of the greatest advantages for Mode.Com. Moreover, the advantage Ling Li has is his preexisting business model, which he does not need to design again for arriving in the British market.
Ning Li would certainly have advantages by targeting and commencing business in the British market. They comprise with enhanced domestic competitiveness, increased sales and profits, the company would gain global market share, and he possibly will reduce the dependence on existing market and exploit international trade technology. Furthermore, the company can extend sales potential of existing products; they might use some of these strategies to reduce the cost, through these rewards Ning Li can stabilise seasonal market fluctuations, he can also enhance potential for expansion of the business in the near future and can sell excess production in the multiple markets (Yan, 2011).
Apart from these benefits from United Kingdom, Ling Li could have several threats from beginning his business in China. The disadvantages that are more likely to exist are, he may perhaps need to wait for long-term gains, he have to hire staff to launch international trading, modify their products or packaging so that they are able compete with the existing competitors. For this they need to develop new promotional materials which would incur added costs, administrative costs and might have to wait long for payments (Walsh, 2009).
Recommendations for Further Expansion
Although it has been observed that not always companies growing internationally are profitable. Companies usually talk about going worldwide when what they really mean is that they are moving internationally, outside their home countries, or the place they are running their business from. Certainly a growing business opens many of the opportunities and spaces internationally. The business should continue growing in the international market and avail all the opportunities for enhancing the business efficiently and effectively (Bresciani, 2010).
In the case of Mode.Com, the company should further grow from the United Kingdom to other countries as well, as a preexisting business model would be used and several advantages the company would get as mentioned above. The company has to identify the country with major gaps for designer furniture as in United Kingdom. Although the company would definitely face few barriers such as language barriers, marketing barriers, legal barriers, access to raw materials and Human Resources as not every country offer same levels of access. Moreover, the barriers include government and regulatory barriers and intellectual property concerns. Apart from these concerns are doors of opportunities to augment, develop and boost the business activities successfully (Mangold, 2009). Mode.Com would surely maximize their profits by overlooking the following global strategies:
1- Economies of scope which states the average total cost of production declines when the total number of goods produced are increased.
2- Economies of scale, which comprises the extra cost savings that occur when higher volume production consents unit costs to be condensed.
3- Made.Com would have a global brand recognition which is the benefit that derives from having a brand that is known and customers are familiar with the products and services that are offered throughout the world. E.g. Disney
4- Global customer satisfaction could lead the multinational customers to demand the same product, service and quality at several places around the sphere.
5- Emergence of new markets. This would greater the sales from essentially the same products. This will also be helpful in reducing the costs. The more countries of the world where the goods can be sold mean the superior number of countries can avail the benefits.
In exercising these expansions, the business case for an international strategy will fluctuate with the product type and services; this is why the Ling Li has to emphasis particularly with the areas that more space for designer furniture for the reason that the real matter for companies is what decisions are preserved universally (Safko, 2010).
It has been perceived that businesses have a great influence on the role that media has played presently. It is now one of the mostly used strategies in marketing, which provides the benefits speedily as it is a cost effective way of promotion. Efficient and effective use of the media has maximised the progress including revenues of Made.Com. Ling Li used internet marketing to enhance his business successfully. He founded that considerable investment in social media is future-oriented. Through the use of mass media, he has extended the business in other countries too, with the same ideas and strategies he used in the commencement of the business. Media has provided numerous opportunities to small, medium-sized and large companies to perform real marketing so that they build customers faster, closer and with extra profitable relationships.