INFORMATION SYSTEM

2010

Group 4

Alisha Scott

1/1/2010

Maximizing True Profit Potential

Group x

Alisha

Amber

Megan

Tom

Tonika

3/4/2011

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Table of Contents

Introduction………………………………… 3 Statement of Problem…………………… 3 Alternative and Goals…………………… 4 Details Concerning Solution…………. 7 Implementation…………………………… 8 Costs……………………………………………. 9 Benefits…………………………………….....10 Conclusion……………………………………11

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Introduction

With the rapid degradation of the atmosphere, rampant pollution of the ecosystem and

increasing health concerns more people are transitioning from purchasing industrial products to

organic products. The increased interest in chemical free products has caused retailers a need to

expand their offerings of organic products from local markets. Organic product purchaser trends

have identified a need for easier accessibility in purchasing organics.

Statement of Problem

Heaven’s Embrace, homemade cold process soap, has been in operation for the past 10

years in Tulsa, OK. Currently the only places to purchase Heaven’s Embrace are a few local

county farmers markets in Oklahoma and tourist shops in Faneuil Hall Marketplace, Boston

Massachusetts and Navy Pier, Chicago, Illinois where we have gained shelf space. This limited

availability only allows Heaven’s Embrace to yield a 1 percent market penetration rate in the

organic product market which is currently growing at a rate of 12 percent.

The soap, initially manufactured as a hobby that evolved into being sold in Oklahoma’s

local farmers markets and peak tourist shops, does generate a average supplemental income.

Heaven’s Embraces’ overwhelming popularity and customer demand have created a decrease in

overall profit sustainability. The cost associated with manufacturing the product combined with

the cost incurred in shipping it out of state to local shops is increasing to keep up with customer

demand, but it still possess logistical limitations.

Currently Heaven’s Embrace has zero penetration within the virtual marketplace. The

company’s current diminutive virtual market availability creates a shortfall in brand awareness

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and credibility. Heaven’s Embrace does not have an internet website set up where customers

who cannot visit its minimal locations can browse product information and make online

purchases. This lack of an e-commerce business to consumer model renders the company with

an inability to maximize its true profit potential.

Alternatives and Goals

Heaven’s Embrace Soap Company has many options from which to choose in attempting

to achieve its new vision—maintaining its current customer base, as well as attracting new

customers. Traditionally, especially before the pervasion of the internet, mail order catalogs

were how companies reached its current and potential customers via mass mailing. These

companies offered a wide variety of products and have identified a secure source of suppliers.

Today, this is considered old school in many regards, the method is still employed and can be

very profitable. However, this type of operation is not quite what a small company should start

with due to several factors that include high start-up costs, space considerations, product variety,

and general overhead.

Another option that was considered was direct mailing services offered to customers who

bought our product. The advertisement for this method would simply be to include a mailing

address and phone number on the product label for customers to order more soap. This,

however, would involve managing phone orders and customer databases—and changing the

vision of Heaven’s Embrace for possible little return on investment. This approach, though

viable, is short-sighted, but achievable for the small entrepreneur. A short-coming of the simple

approach lies in the inability to quickly notify and market any new products to new customers;

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sales are mostly limited to repeat customers and advertising new products involves direct

marketing approaches. Additionally, this method is not particularly convenient for the customer

as it does not offer 24-hr availability or the convenience of electronic transaction. Business is

about having a product available when the customer wants it and making it easy for potential

customers to make a purchase—no matter what time of day.

Heaven’s Embrace could also choose not to expand its business. Doing nothing, though it

may not seem like a choice, is a choice. The company could decide that it does not want to

expand its operation because it is content with its current sales volume. Of course, it could be

that the choice not to expand operations is due to the additional time, effort, and expense that

would be involved. It may be that if the company expands from a hobby to a business the fun of

the endeavor is lost. This is an important element to consider because the current staff may not

be able to handle increased production and sale. Or, the owner may not want to lose the fun of

hobby (e.g., going from fun to work).

A final option is merging old school methodology with new school technology. Today,

thanks to the World Wide Web, the traditional mail-order business can now offer as few or as

many products as the business owner desires. This means that a mail-order business today does

not have to have a large variety of products as traditional mail-order business once did. An e-

business can be offered in many formats and from a vast choice of providers. The selection of the

right format from the many that are available will depend on the needs and goals of the company,

which are identified by the new business vision of the Heaven’s Embrace

Being that Heaven’s Embrace has decided to go global rather than do nothing or limit its

scope with minimal return on investment, the hybrid system is the system of choice to help

achieve its goals. Heaven’s Embrace wants to provide a means for those who have purchased our

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soap to be repeat customers. Heaven’s Embrace has also decided that it wants to reach a larger

market by going global via the e-business route. This approach provides the ability for Heaven’s

Embrace to advertise and display its products, current and new. An e-business approach will

also provide all customers—current and future—with the convenience of shopping online by

using credit cards for purchases. This hybrid system—merging traditional catalog mail-order

method with e-business technology via the internet—offers a small business the ability to begin

small, selling a single product. However, as business improves or when the business owner

decides it is time to expand, the company’s product line can be expanded at a controlled rate that

is commensurate with business goals and objectives.

By using an e-business approach we can increase the chance of repeat customers, while

also attracting new ones. This equates simply to an opportunity to increase sales through

increased exposure, convenience, and 24-hour availability. Advertising this new business

capability and outlet can be included directly on the packaging, as well as via internet advertising

such as direct marketing approaches (e.g., newsletters and emails). Customer email addresses

will be gathered and maintained as a part of the electronic purchasing process and later used to

generate and/or maintain customer interest through a very low-cost approach.

Employing this hybrid system, or e-business approach, meets the goals of Heaven’s

Embrace by providing an avenue to (1) maintain current customers, (2) attract new customers,

while providing world-wide, 24-hour availability that offers the ease and security of electronic

transactions. Finally, this approach offers scalability in a cost-controlling format that can

accommodate the needs and goals of the company as it strives to meet customer demand.

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Details Concerning the Solution

Multiple solutions were suggested and tested but in the end it was decided that the best

means of accomplishing our aspirations as a business was an online selling space. The website

will offer our full range of products and make it easier for our customers, no matter their

location, to access and enjoy our soaps. We may want to take a look at our online competitors

and view their processes. The first step in the actual process would be to choose and register a

domain name. There are several different places we could register our domain name and most at

low cost. After deciding on the name, it’s time to choose a web host who will provide the space

and support needed for creating a website. While costs from host to host vary, it is important

that it provide reliability and security.

After covering these bases, we can begin designing our website. We have decided to

forgo the hiring of an IT specialist for now and start the website on our own. The web page will

be set up in a catalog style, meaning all our products will be featured with photos accompanied

by prices. It will be linked with PayPal for both our security and to make our customers feel

more secure in their transactions with us. Not only will these outlets include Facebook, Twitter,

Amazon, eBay, and Etsy and will give the website and the company much needed exposure.

Another way we will generate customers is to register with search engines.

Next we will need to focus on website support and all that goes in to it. We will need a

toll free number, staffed during set hours of operation, to assist customers with any technical

issues they encounter or questions about the products. Keeping customers satisfied is a very

important business practice, so feedback is also important. Satisfaction surveys and a review

section on websites is a good way to accomplish this. Shipping methods will also need to be

established. There are multiple shipping organizations such as USPS, UPS, and FedEx.

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There are small but very important details that have to be addressed as well. The

company has to make sure to comply with all the laws and regulations that apply especially to

the running of an online business. These laws are regulated by the Federal Trades Commission.

There are international trade laws that must be followed if selling overseas is to occur. National,

state, and local tax rates and rules are also vital knowledge.

The Implementation:

The first step in the implementation of Heaven’s Embrace on the web is to register our

web site www.HeavensEmbraceSoap.com. We have checked and there are no issues with the

name being taken. Next we need to find an outlet to create our site and manage it, the web site

Coffee Cup.com is a great visual designer site. The cost is minimal and it is geared towards

beginners to novice web designers.

The web hosting is another big aspect as well. In order to have a site you need someone

to host it on their server, unless you want to spend a lot more on your own servers but we don’t

feel like we are there yet. So we researched and found that Intuit.com has web hosting for the

startup company and is able to handle the larger business sites as well. Intuit will be a good

business to grow with ours; they also offer payroll and accounting services as well as credit card

transactions. The costs of the web hosting are shown below in the cost portion.

The design of the site needs to be user friendly; quite simply it needs to be just basic. But

unlike most sites we need to concentrate on the product and the customer’s convenience aspect.

As stated previously we will maintain the site in house until the maintenance gets too demanding

then we will reevaluate it at that time. Our logo needs to be on everything we send out (mailings,

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address labels and so forth).

In becoming an E-Retailer it is vital for us to be able to accept payment via the internet.

In our store we are able to accept cash or credit but with the web it will be limited to credit cards.

Again, in the start up process we need to not spend a lot on software to accept credit cards at this

time. So I feel like our best bet is to use PayPal.com. PayPal is a trusted site by most all E-

Consumers, and it is also very user friendly for the customer. The fee grid will be shown below

in the Cost portion.

We need to advertise the new web site in more ways than just by word of mouth. We

need to start a Face book page, a Twitter account, a YouTube account (showing our products), a

Wiki page would be good to tell the history of our company, and lastly we need to link our site to

a few Blogs. The blogs can be about the soap business or about our company, just really

anything to get people interested in our new catalog style web site.

Costs

Our company will start with several initial costs including increased manufacturing costs,

purchasing a couple new computers, upgrading storage space on the current computers, and

software. We will also need to upgrade some office equipment like a new fax machine, phones,

and printers. We have decided to hire one possibly two additional employees to handle the

increased orders, packaging, and shipping. The increase in sales will also lead in the increase in

shipping materials needed. We can use priority flat rate boxes through the United States Postal

Service for customers in the U.S. We will also have some increases in postage labels, printed

insert advertisements, and general office supplies.

In creating the website there will be some costs that will be necessary to get the site up

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and running. We will incur the initial costs associated with the registration, creation and hosting

the site. Then we will incur fees associated with getting more hits to the website by registering

with search engines. Although no direct costs are associated with advertising through Facebook,

Twitter, and other social sites there is time that needs to be taken into consideration. Once the

site is up and running the company will need to budget for future IT support. The inventory

system will need to be upgraded as well.

Web design www.coffeecup.com/designer/ $49

Web hosting www.Intuit.com $4.99 monthly

Two PC’s for warehouse www.dell.com $517 (x2)

E-Commerce Transaction www.PayPal.com

Benefits

There are so many benefits of the choice to move our business to the internet. We are

able to better reach our customers current and those who have never heard of us before. The

internet has the potential to reach millions of users. We are able to increase brand awareness and

loyalty. More cost effective than mail order or phone orders. It is also much more cost effective

than other potential choices that were researched.

Transaction Fees: Monthly Sales Volume:

3.4% + Fixed Fee $0.00 - $3,000.00

2.9% + Fixed Fee $3,000.01 - $10,000.00

2.7% + Fixed Fee $10,000.01 - $100,000.00

2.4% + Fixed Fee $100,000.01 and over

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With the low costs of the I.T structure of an e-commerce website and the relatively low

maintenance of the site it will allow us to be able to update and change the site with ease without

huge increases to our staffing. The communication of information via the website will be easy to

see because we will have pictures, prices, and an easy way to click and pay for orders. Finally

getting our company on the internet will allow us to gain competitive advantage over other

smaller organic soap companies

Conclusion

With the increased demand for organic products, Heavens Embrace finds itself in a

unique position. By implementing our new I.T. approach and offering our products to be viewed

and purchased online, we feel that this method could be the most profitable for our business. Our

overall goals of maintaining our current customer base as well as attracting new customers while

keeping true to our core values is important during the expansion of our company. The overall

cost benefits and low marketing costs will make the decision to expand to an on-line catalog and

website the most ideal choice for us.

By integrating our new I.T. system with a database, we can keep track of our customers

and send out special offerings to them to increase sales. Once our site is up and running, we will

have to continue to look for ways to expand exposure though online ads (banner ads) which can

appear on other related sites. By implementing and controlling the website ourselves, we can

continually be working in the maintenance phase in order to keep the most up-to-date

information for our customers. Heavens Embrace Organic Soap can reach even small homes on

the other side of the world just like they have reached small homes here in the United States for

the past 10 years.

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Works Cited

CoffeeCup. Designer. “n.d.” March 2, 2011. <www.coffeecup.com/designer>.

Dell. Shop for Small and Medium Business. “n.d.” March 2, 2011. <www.dell.com>.

Facebook. “n.d.” March 2, 2011. <www.facebook.com>.

Intuit. Build Website Online. “n.d.” March 2, 2011. <www.intuit.com>.

Paypal. “n.d.” March 2, 2011. <www.paypal.com>.

Twitter. “n.d.” March 2, 2011. <www.twitter.com>.

United States Postal Service. Postage Price Calculator. “n.d.” March 2, 2011. <www.usps.com>.

Youtube. “n.d.” March 2, 2011. <www.youtube.com>.