Marketing Structure

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Executive Summary
Webvan was founded by Louis Borders, the co-founder of the Borders bookstore in 1971. He envisioned an Internet business model that would provide consumers with a grocery shopping solution that saved time and effort without sacrificing the quality, selection or low prices that they had come to expect of traditional grocery stores. With this idea, Webvan came out. This company is certainly one of the most publicized ventures in e-business. The current problems Webvan face are how to seize the big market opportunity of e-commerce market, how to increase the acceptance of online grocery shopping by customers, how to fulfill the challenge after generating 8 bn during IPO, and how to overcome the special problems online groceries face compare with traditional supermarkets. This paper analysis the company in terms of situation, marketing strategy and finance plan. For situation analysis, the result is positive. This industry has a huge potential, 55% of U.S. population will be online user by the end of 2003. And research found people think grocer the least like every day activities. Combine these trends together, online grocer seems reasonable. With a total market size of 2.7 bn, and average industry margin of 27%, the high profitability encourages new entrants to come. Among all the five forces affect a business, rivalry of competition is the most severe one. Peapod is the competitor that worth most attention of Webvan, because of its big similarity. The operation model of Webvan is one centralized distribution serves a big area with 10-12 station under the help of temperature control trucks and automated system of conveyers and carousels. It is also called two-truck, hub-and spoke system of distribution. The SWOT analysis of Webvan shows the biggest strength of Webvan is 30 minute window delivery while the weakness is the goal maybe too ambitious to achieve. The biggest opportunity is to seize the social trend of online service and the biggest threat is the guarantee of continuous investment. With the past success in San Francisco area, high customer satisfaction with deliver speed and order accuracy, Webvan want to expand its business to Atlanta, the home for second DC. The object analysis estimate 1yr and 5yr market share, operation scale and profitability. All the estimation is based on current data. Busy mum with jobs are primary customer segment for target market, followed by college student. To meet the need of target customers’, Webvan offer several benefit like fast delivery, free shipping on order over $50 and no member ship fee. The highest cost to provide the benefit is wide variety of products. To offer this benefit, each distribution has to cost $25 to $35 million. The value proposition conclude the distinct competency of Webvan is operational excellent. The Webvan is positioned as: For customers who valued their time a lot and who think grocery shopping a thankless task, Webvan offers as convenient as clicking a mouse, as fast as 30 minute window delivery, online grocery with huge variety of selection, high quality service and product with the help of friendly and professional employee and safe secure system among all online retailers. With this positioning, certain marketing mix strategy are set. Price is the most important mix.

Situational Analysis
Market Opportunity
Unsolved Problems-For WebVan, the unsolved problem is how to capture the opportunity of big e-commerce market. According to the case, by 1999, almost half of U.S. homes own a personal computer, and 63 million Americans have access to the Internet. Experts predict that 177 million Americas would be on-line by 2003. For all users, internet is becoming increasingly important. Not only the potential customers are huge, the market pie is big as well. Consumer purchases of online grocery are estimated to grow from $12.4 billion from 1998 to $75 billion in 2003. With such huge potential, it is wise for Webvan to start an on-line...
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