What do I do when I’m not working?
A)Practice my digital photography, play the sitar, and spend as much time as possible reading to my daughter.
First job out of school?
A)In management consulting at McKinsey & Company.
Career high?
A)Pitching a new marketplace business concept to eBay’s founder and chairman, Pierre Omidyar.
A job-related mistake I wish I hadn’t made?
A)Brought in an outside CEO to run a software company that I co-founded—he had relevant experience, but he was the absolute wrong cultural fit for the organization.
Business book I’m reading now?
A)The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Elseby Hernando De Soto.
My hero?
A)My father, who always taught me the importance of integrity.
My motto to live by?
A)True success is best achieved through humility, fierce resolve, and a focus on doing what’s right for others.
What drives me?
A)Creating new technology businesses, particularly when it involves ideas that are untested, but hold tremendous potential for creating economic value and social impact.
A small, entrepreneurial group of eBay employees was developing a new online marketplace to help small producers and artisans throughout the world gain improved access to global consumers.
The group was particularly interested in creating a marketplace for products that were ethically sourced, ensuring that the people and organi- zations that created them could directly ben- efit from the income generated from sale of the products. The team’s research showed that there was an abundant supply of prod- ucts such as handcrafted artisan goods and consumables such as coffee, tea, and choco- late. The group referred to these products as “People Positive” goods, meaning that the sale of the products positively impacts the producers and their community.
The group faced a key business ques- tion: Should it create a new, separately branded online marketplace or should it inte- grate the concept directly into eBay’s existing online marketplace?
Robert’s role as general manager of the business was to ensure that the team made a decision that could maximize both long-term revenue and social impact. And because eBay Inc. typically added new marketplace busi- nesses to its portfolio through acquisition rather than by developing them internally, there was not much of a precedent for the decision he needed to make.
Robert considered his Options
1
•2
•3
Customize the existing eBay shopping experience on eBay.com by adding additional categories to accommo- date the supply of artisans’ products, and do not create a separate brand. The listings could be highlighted or marked in some way to indicate that the products were ethically sourced and a benefit to the producer. This would ensure that all listings would be visible to millions of eBay users who currently shop on eBay.com. In addition, existing eBay users would not have to register on a new site. Custom page designs could be created to highlight inventory, and merchan- dising and marketing could be easily featured on the eBay home page that millions of unique users visit each day. And the availability of socially respon- sible products on eBay.com, such as fair trade and ethically sourced artisan goods, could help shed positive light on the eBay brand and lead to in- creased intangible brand value for eBay Inc. The financial risk of this ap- proach was also low due to the quick development and rapid time-to-market for the solution.
On the other hand, this option would position the business primarily as an incremental extension of eBay rather than a whole new business with an in- dependent identity and its own customers. Plus, historically, artisan goods and fair trade products have sold on eBay with only moderate success; simple cus- tomization to eBay’s current shopping experience might not significantly im-
prove sales volume. See what option Robert chose on page 93
Create a completely separate, custom-branded market- place. It would exist as a separate new brand and offer a unique and highly tailored online shopping experience for consumers. There was some precedent for this among eBay’s competitors. For example, Amazon.com had recently launched a newly branded marketplace for designer shoes and handbags called Endless.com. By developing a new brand identity, the business might attract new users who currently did not shop on eBay Inc. properties. This option also would allow for the creation of new, stand-alone marketing and mer- chandising campaigns, as opposed to marketing efforts that were simply “tacked on” to current eBay marketing programs. The unit would have the ability to fully customize a shopping experience that would be specifically de- signed around the needs of consumers who shop for “People Positive” goods such as home décor, furniture, artwork, paintings, and other hand- crafted and fair trade goods and consumables. It would also provide the op- portunity to create a custom online community specifically targeted toward socially conscious consumers who purchase fair trade and ethically sourced handcrafted artisan goods.
But this option would be very expensive. Developing a new brand and in- dependent marketplace from scratch requires a large investment. It would also be time-consuming, because the team would have to recreate many existing eBay functions and features for the marketplace such as a billing infrastructure, a search and browse experience, and checkout flows. And it was risky because there was little precedent for creating entirely new marketplaces within the company, and it would be hard to predict how this new business would work. Create a hybrid model to take advantage of everything that the core eBay.com platform and brand offered with the flexibility and customization of an independent mar- ketplace with a different brand. License a brand name that socially responsible consumers were already familiar with, and that was reinforced by eBay as the ingredient brand (e.g., XYZ.com by eBay). Sellers’ listings would appear in both the newly branded market- place as well as the core eBay.com marketplace. The new marketplace and its listings would have an entirely distinct visual experience, while the exact same listings on eBay.com would look just like all other eBay listings. This option might attract a new market of socially conscious consumers who buy ethically sourced goods, but who are not currently active on eBay. The mar- ketplace experience could be customized, but the business unit would avoid the heavy investment that an entirely new platform would need. And nearly 300 million registered eBay users would automatically be users of the new marketplace because they would retain the same username and password information. On the other hand, the brand licensing option would require the unit to establish a brand alliance with another company to co-brand the marketplace. This would present complexities in terms of a licensing agree- ment and a need to adhere to certain trademark and brand quality standards of another organization.
Now, put yourself in Robert’s shoes: Which option would you choose, and why?
You Choose
Which Option would you choose, and why?
1.
YES
NO
2.
YES
NO
3.
YES
NO
67
OptionReal People, Real Choices
Option
Option Things to remember
It’s difficult enough to start a new business; having an unknown brand doesn’t help matters. One consideration is whether the well-known eBay name will help the new enterprise get on its feet quickly.
Just because a country is poor doesn’t mean there aren’t many business opportunities that can benefit foreign companies as well as its inhabitants. As consumers are increasingly exposed to other cultures via the media and travel, their interest in locally made products grows as well.
Decisions, Decisions
As we discussed in Chapter 2, in order to plan for the future, marketers need a clear picture of where they are now. When marketers understand what’s go- ing on NOW in both their internal and external environments, they can make good decisions about where they should go in the future. In this chapter we’ll better understand the worldwide marketing playing field and look at the de- cisions firms face when they think about global opportunities.
Whether they’re at home or moving into the global marketplace, marketers know that it’s critical to clearly understand what’s going on around them in or- der to make good decisions. Otherwise they’d be “flying blind” as weather con- ditions change constantly and other planes (i.e., the competition) maneuver around them. That’s why they include information about their external environ- ment in the Situation Analysis section of their Marketing Plan. For example, when the planners at Walmart think about their future efforts at home or in a for- eign country, they need to understand the economic picture, their competition, the legal and political climate, and a host of other factors that can make or break their future marketing efforts. In the Appendix at the end of this book, we can see how the Marketing Plan our (fictional) friends at S&S Smoothie wrote de- scribes the firm’s external environment. We’ll also see how they use the analy- sis of both their internal and external environments to develop a SWOT analysis.