Amazon.Com

INTRODUCTION There was a dynamic development in the role of bookshops in South Africa since the early 1980s. The customer’s changing expectation has led to bookshops in South Africa to change their focus and presentation. This has inspired bookshops to reassess their marketing and branding strategy by developing bookshops into destination stores serviced by knowledgeable staff and stylish interiors. This study will aim to analyse the South African book industry by conducting a Situational Analysis. It will further discuss the pricing strategy, positioning strategy and the reason why Exclusivebooks.Com is so successful. Analysis of the South African book industry: INTERNAL ANALYSIS: The South African book industry comprises of locally published school text books and general book market. This in turn generates huge income to the local South African publishers. The South African general book industry is dominated by three bookselling chains i.e. Exclusive Books, CAN and BMA. This comprises 70% of the market concentration which work to the advantage of multinational publishers who are able to make titles fairly widely available even though they are dealing with three leading book sellers. This allows for low cost entry by small local publishers if their titles are accepted by one of the three leading book sellers. To carry out its core business the South African book industry looks very closely at the core competencies of the organisation which includes resources such as labour, materials, machines, information and energy. Staff is trained to have in-depth knowledge of the books they sell, which insure that customers receive first class service as “buying a book is a personal experience”. CUSTOMER ANALYSIS One of the largest chains of book sellers is Exclusive Books in the South African book industry. By use of the service quality model the following determinates have been identified and explained. At start-up, Exclusive Books focused largely on customers that were serious about reading that is the book enthusiasts. The innovative architecture and interior design, coupled with the coffee shop setup created an ideal setting for readers that were passionate about books. This also seemed to cater for the upmarket, higher earning customers that could visit and enjoy perusing through books in comfort and a relaxed atmosphere. The location of the stores during the growth period of 1980’s also indicated their customer target, namely above average customers, status orientated, due to locations like Johannesburg International, Cape Town International, Sandton Square and Hyde Park. Exclusive Books concentrated on providing a diverse range of books to meet their customers specific interests, however did not deal largely with school and tertiary education books. They also realized the need to become more community responsive and to appeal to a wider market, thus revisiting their brand identity to increase their customer base and increase sales. They focused on the shopping culture of South Africans and built in the bookshop as a cultural experience for shoppers, thus attracting a wider variety of readers in terms of age and numbers through the launch of the loyalty program. (As depicted from the Fanatics Member Age Profile Graph from case study). Their customer base is quite attractive with much more female customers than males. They have also covered the online customer quite well in terms of service, distribution and payment method and options which brings in a large amount of revenue to Exclusive Books. They cater for customers that would rather get information of books from the internet and then purchase it from the store. They also boast their effectiveness in sourcing any book from anywhere in the country, therefore taking the needs of customers that shop online into consideration. They have a user friendly website with simple navigation bars so that almost anyone that is computer literate can access their site. Customers that feel insecure to do transactions via the internet are assured of the security and privacy by Exclusive Books and also offer a refund which goes a long way to attract even the scared, sensitive customer. Exclusive Books promotion strategy is also a good one, in which a local television station is used to promote reading. The use of the local radio station also assists in creating awareness and promoting reading as a pastime amongst the South African population, more especially amongst the previously disadvantaged societies. The aim is to bring them on board and to become customers as well. Homebru, the bookstores event also creates a platform for all races, genders and cultures to join and become part of the reading trend by offering customers books that are set in a South African context and that consider different reading habits, cultural differences, writing styles and genres. This is to attract the local customers and to thus increase their customer base. The publisher’s choice also seeks to ensure that the customer’s needs are met in terms of having a wide variety of literature available for all ages and interests. They have also covered the children’s section of reading material well by offering promotional items with their books. Exclusive Books have gone out of their way to satisfy their customer needs and have even embarked on selecting top books that appeal to the readers. They have even shortlisted these titles to ensure that the customer is not inconvenienced in looking for absolutely interesting literature. By promoting their uni-sales concept and making books available at discounted prices, still maintaining its high standards, they are looking to attract even the poor or financially disadvantaged reader to become a customer. This also aims at providing a large variety to choose from at a fraction of the cost. Exclusive books have really outdone themselves in terms of stocking books for all tastes and over a variety of age groups. They have also considered and made provision for local, below average earners to take up reading. Their drive to promote reading amongst children and their different branding strategies to attract customers across multicultural dimensions and race groups is excellent. The way they cater for the e-commerce market is also exemplary, however, they should drive to gain more male fanatics on their customer base. This can be done by offering a wider variety of magazines, videos, music, DVDs. There has been a lot of focus on the female customer and maybe similar promotions should be conducted to appeal to male customers. There is also a need to maybe look at the school and tertiary level Literature as this will attract the younger customers to frequent the bookstores and purchase these books required as well as other literature of interest. More sales and bargains need to be introduced to the customers, instead of twice a year. This can be held all year round to attract customers from all backgrounds and will also serve to market other books to these customers. COMPETITIVE ENVIRONMENT Competitive environment can be analysed using Porter’s five forces analysis. Barriers to entry in the South African book industry are low as it allows for relatively low cost entry by small local publishers. The barriers to entry of local booksellers are low and this is evident by booksellers such as Estoril Books and Wordsworth as well as a growing number of discount businesses being able to compete with large book chain sellers. The other threat of major booksellers is Amazon.com and Kalahari.net, to name a few which are internet based. In general a company should monitor three variables when analysing competitors – share of market, share of mind and share of heart. Share of market of booksellers in the South African book industry is demonstrated by the 70% of market share of the three leading booksellers. Share of mind and share of heart can be equated to Exclusive Books who strive to provide a memorable customer experience where it is known for its intamite atmosphere and ability to anticipate customers reading needs. More than just selling book the shop offered a cultural experience. INDUSTRY ANALYSES An Industry is a group of firms that will offer a certain product or class of products that are very close to or substitutes for one another. Different industries will be classified according to the number of sellers and whether the product is Homogeneous or highly differentiated. Exclusive Books are in the bookselling industry that became known for its intimate atmosphere and ability to anticipate the customers reading needs whilst offering a cultural experience. Operating in a dynamic industry, Exclusive Books became one of the very first shops to open for trading hours at night, over weekends and on public holidays. The shop was also known to sell reading material that is unavailable to purchase anywhere else. The Exclusive Books Stores caters for all walks of life mainly targeting the 25-44 year age group. As part of a strategy, Seattle Coffee Company was introduced to 14 Exclusive Book Stores, offering customers the opportunity to enjoy a cup of coffee and croissants while paging through their purchase. The Fanatics Programme has been launched which has 470000 members, who accounted for 45% of their sales in 2005. The industry is growing dynamically, they have sold 5,183,856 books in 2005 and was rated the best book retailer in South Africa in 2005. During 2002-2004 Exclusive Books achieved a 20-30% year on year growth in book sales. Exclusive Books focuses more on adding value to customers rather than price cutting. They also offer a service to international customers, getting their books delivered to them between 3 to 7 working days. The competitors in the industry includes CAN, BMA, Estoril, Wordsworth, Kalahari.net and Amazon.com. Once again Porter’s five forces theory is used to analyse the industry. It is relatively easy to open a book shop and this is justified by the number of small bookshops opening up. MACRO ENVIRONMENTAL ANALYSIS Political / Legal Exclusive Books embraced the defiant ethos of the time by stocking reading material that catered for the market during the 1970s which was the era of the Soweto uprising. Economic Globalization has introduced international trading which the book industry purchase books from other countries and sell to other countries via their online store. Social Cultural To promote social and cultural awareness booksellers participate in numerous corporate and social investment projects. The establishment of the Fanatic club was formed to bring book readers together and take advantage of the benefits and rewards that was offered by the book seller. The Charismas spirit was engaged by Exclusive Book through the Christmas Activation campaign as a marketing tool. There was also an inclination exclusive Books towards multicultural story telling and consideration of people with different reading habits, cultural differences and writing style.(Homebru) Technology: Online shopping (e-commerce) offered upgraded and state of the art security and payment options with minimum risk of fraud. Post apartheid era has led to an increase in the education standards of previously disadvantaged groups. This trend of increase literacy directly impacted on the increase of readers to visiting book stores and online purchasing. CONCLUSION: Due to the emerging South African “shoppertainment culture” more emphasis has been placed on the purchasing of literature. The booming book market is lucrative due to the previously disadvantaged population being afforded the opportunity to education. This had favoured an increase demand for general and educational literature. DISCUSS THE PRICING STRATERGY OF EXCLUSIVE BOOKS Exclusive books adopted a product quality leadership objective. They aim to be the product quality leader in the market. This is evident by Exclusive books being the largest book chain in South Africa. There pricing methods that Exclusive Books have embraced is one of a perceived value pricing strategy. They must deliver the value promised by their proposition and the customer must perceive this value by using other marketing mix elements such as advertising and sales force to enhanced perceived value in buyers minds. This is clearly evident in the way in which Exclusive Books is operating by offering customers a superior experience and therefore customers perceive this as an added value and are willing to pay the stipulated price. Geographical pricing structures are also evident through the addition of shipping costs, namely shipping to street addresses, shipping to PO boxes and shipping to one of their physical stores and shipping to international customers. These however include a cost of between R30-00 upwards depending on the number of shipments or books purchased. DISCUSS EXCLUSIVE BOOKS POSITIONING STRATERGY Positioning is the act of designing the companies offering and image to occupy a distinctive place in the mind of the target market. The goal is to locate the brand in the mind of consumers to maximise the potential benefit to the firm. This can be demonstrated by exclusive books reinventing their brand identity, creating a younger more friendly and accessible image. As part of this strategy, Seattle Coffee company cafes have been brought in to a strategic alliance offering customers the opportunity to have coffee and croissants as they page through their possible purchases. Fanatic’s prime aim is to learn about customer’s needs and wants to eneable them to render a better service. This in turn encourages people to buy from Exclusive Books rather than elsewhere. WHY IS EXCLUSIVEBOOKS.COM SO SUCCESSFUL: ExclusiveBooks.com is a subsidiary of Exclusive books. Their advantage is that, they not only have an established brand, but have the “clicks and mortar” combination – real stores and a virtual one. The benefit of the customer is that a potential purchase can be viewed online and purchased in store. This means that they have a good distribution network in place, so that they can provide customers with any book from anywhere in the country. The site is certified secure by THAWTE to insure a safe e-commerce environment. This results in customers having ease of mind of disclosing personnel or financial information as Exclusive Books guarantee a refund for any fraudulent use of customer use of credit cards resulting from a purchase on their site. The will never sent unsolicited advertisements via e-mail or disclose this information to any other service provider.