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Strayer University

BUS/521

August 12, 2019

Business Plan II

Competitive Analysis, Differentiation Strategy, and Risk Assessment

Benzino Inc's competitive analysis is most pronounced in the company's marketing strategy. Based on the fact that the company has a diversified business portfolio, the company can differentiate itself and stay competitive in an e-commerce market which is crowded with both local and international organizations. In this light, the competition present in the e-commerce field is formidable.

In the e-commerce industry, eBay is a top competitor. The firm's website engages both businesses to business as well as business to consumer sales. The company acts as an online marketplace where people engage in the buying and selling of a myriad of goods and services. Buyers use eBay's platform for free while sellers are charged a fee from the sales they conduct on the platform in exchange for the provision of free listings. Moreover, another company that provides strong competition to Benzino is Jumia. The firm deals in consumer electronics as well as fashion accessories online. In terms of brick and mortar physical stores, Walmart and Amazon are the global leaders in the field. Amazon has a strong online presence and strengthened this position by acquiring a whole foods segment. Other competitors in the e-commerce field are Alibaba and Kilimall. The aforementioned companies have a strong physical presence with several stores distributed all over the continent.

The differentiation strategies that Benzino Incorporated will apply include a mixed approach. The marketing approach will include campaigns that run all through the holiday seasons targeting the youth. Furthermore, the company will take advantage of both local and international holidays to market goods and services tailored to target audiences affected by the holidays. Days such as Christmas, Halloween, or Islamic Bayrams will have goods and services discounted. Also, Benzino will differentiate itself from the competition by emphasizing on customer service experience by setting up a call center and having the e-commerce platform available for mobile phone users (Wang et al., 2019). In this light, the company also intends on reducing the amount of paperwork required from sellers to have them use the platform for online services. The company will also use the standardization of products and services to differentiate itself. Only sellers who can offer an assurance of the authenticity of their products, will be approved to use the company's platform to sell their products thereby offering quality products to customers.

In terms of risk assessment, the venture poses several potential concerns. The first and most glaring is the issue of online security. Since there is a whole range of threats to be aware of such as malware, phishing attacks, hacks, and spam mail. Also, system reliability needs to be steadfast. The company needs to have several internet service providers in the event of a downtime. Besides, warehousing and logistical issues such as running out of stock in particular warehouses or delay of product shipments can be a recipe for problems. Against this backdrop, Benzino Incorporated can carry out the venture and scale it.

S.W.O.T Analysis

One of the company's strengths lies in the large selection of products and services offered, to cater to a variety of market segments. Also, Benzino Inc. will offer cheaper and faster shipping compared to the competition. The company will also have financial transactions through electronic payments available and online thereby making it convenient and easy for customers to transact from any part of the world. Another strength to the company lies in the fact that advertising products are even easier compared to carrying it out physically. Furthermore, the company will sell products directly to customers at a lower price compared to the market value (Grewal et al., 2017). That will be achieved by reducing the number of distributors or middlemen involved in the transactions. Another strength to the company is in the startup cost involved which is much lower than a regular offline business venture. In this light, the barrier to market entry is also reduced.

In terms of opportunities, the business will offer the chance to round the clock availability. This implies that selling products on the internet does not provide the chance to allow orders to be taken all the time. Additionally, the online retail industry has shown massive growth between the year 2001 and 2011 growing from $ 730 billion approximately $ 9 trillion in the business to the business sector (Duch-Brown et al., 2017). The growth is expected to continue, hence having a merchant online is a lucrative opportunity. Furthermore, the online market is constantly growing with new internet users every day.

From a weakness perspective, customers’ expectations can prove impossible to match up since they expect the same level of service as offered from companies such as Amazon. Also, customers prefer buying products personally from physical stores rather than doing so online. Worst of all, the shipping cost in some aspects is much higher compared to the production cost.

Threats to the business exist in the form of established competition from companies such as low barriers to market entry. The low barriers to market entry increase the level of competition and bring about a reduction in prices and consequently profit margins. Online fraud has emerged as a concern among consumers who feel dismayed about divulging personal information online. This can impact on market outreach and reduce sales.

Strategic Position Statement

Benzino Inc.'s strategic position statement states ‘customer-focused quality service'. The company's marketing strategy will comprise search engine optimization (SEO), affiliate marketing, direct marketing, and online reviews. Furthermore, the company will make use of an online community to share insights about the company's services and content marketing.

Potential Business Risks and Mitigation Strategies

Ecommerce online insecurity is a major business risk. The online security in this regard will comprise of a set of protocols that safely guide online transactions. Tight security requirements must be set in place to protect the company from prevalent cybersecurity threats. Cybersecurity threats that are in existence include phishing, credit card fraud and data errors which bring about transactional losses (Quyet, and Cuong, 2017). Against this backdrop, Benzino Inc. intends on multi-layered security on the platform. Furthermore, all transactions from ordering to delivery will be monitored and recorded, and deployment of the payment card industry (PCI) and get trust marked with secure socket layer (SSL) certification.

Moreover, risks to intellectual property and company identity such as logos and marketing methods are rampant. Therefore, safeguarding intellectual property and avoiding the risk of violating other companies’ properties remains paramount to the company’s operations. Benzino Inc. will undergo an intellectual property audit then patent the website.

Another potential risk comes in having customer disputes and incurring chargebacks which occur as a result of goods never arriving, or purchases being made with stolen credit cards or having the wrong product shipped (Pooja, 2014). Benzino Inc. will ensure full authorization is carried out before shipping, swiftly respond to chargeback notices and avoid charging customers until goods are shipped. The final risk involved comes in the product warehousing and logistical process. If it is not carried out correctly it brings about a loss of time, money and customer satisfaction. The company will, therefore, mitigate the potential risk by using bar code scanners to speed up the process and using stock management software to automatically update across sales channels.

References

Duch-Brown, N., Grzybowski, L., Romahn, A., & Verboven, F. (2017). The impact of online sales on consumers and firms. Evidence from consumer electronics. International Journal of Industrial Organization, 52, 30-62.

Grewal, D., Roggeveen, A. L., & Nordfält, J. (2017). The future of retailing. Journal of Retailing, 93(1), 1-6.

Pooja, K. (2014). Risk management- an analytical study. Journal of Business and Management, 16 (3), 83-89

Quyet, C. B., & Cuong, H. C. (2017). Ecommerce risk management: analyzing the case Vietnam airlines incident. Open Science Journal, 2(4).

Wang, Z., Zhu, C., Tian, S., & Li, P. (2019). Differentiation and pricing power of online retailers. Frontiers of Business Research in China, 13(1), 5.