Page 246 - Electronic Commerce

Marketing on the Web

serious mountain bike enthusiasts in California. He talked to the marketing consultant about
buying an address list and sending out a promotional mailing, but producing and mailing the
letters seemed too expensive. The cost of renting the list was $0.10 per name, but the printing
and mailing were $4 per letter. There were 60,000 addresses on the list, and the consultant told
him to expect a conversion rate of between 1 and 3 percent. At best, the mailing would yield
1800 new customers and MMB’s profit on the one-week expedition was only about $100 per 221
customer. It looked like the conversion cost would be about $246,000 (60,000 × $4.10) to obtain
a profit of $180,000 (1800 × $100). The consultant explained that it was an investment; because
MMB had such a high customer retention rate, the profit from the new customers in the second
or third years would exceed the one-time cost of the mailing in the first year. Jerry was not
convinced.
Nine years ago, MMB launched its first Web site. It included information about the company
and its tours, but Jerry did not see any need to include an expedition-booking function on the
site. He did think about selling caps and jackets with the MMB logo, but that idea never was
implemented. The MMB logo is well known in the mountain biking community in the upper
Midwest.
The MMB Web site includes an e-mail address so that visitors to the site can send an
e-mail requesting more information about the expeditions. Robin Davis, one of MMB’s expedi-
tion leaders, is an amateur photographer who has taken many photos while on the trails over
the years. Last year, she had those photos digitized and put them on the MMB Web site. The
number of e-mail inquiries increased dramatically within a month. Many of the inquiries were
about MMB’s expeditions, but a surprising number asked for permission to use the photos, or
asked if MMB had more photos like those for sale. Jerry is not quite sure what to make of the
popularity of those photos. He is, after all, in the mountain bike expedition business.

Required:
1. Review the five stages of customer loyalty shown in Figure 4-5 and prepare a report of
about 200 words in which you classify MMB’s customers. Estimate the percentage of MMB
customers who fall into each of the five categories. Support your classification with logic
and evidence from the case narrative.
2. In a report of about 200 words, recommend an e-mail marketing strategy for MMB. In your
recommendation, consider the results of MMB’s earlier print mail advertising campaign,
your answer to the first requirement, and the potential offered by permission marketing.
3. In about 300 words, explain how MMB could use social media-based viral marketing tactics
to gain new customers and cement its relationships with existing customers. In your
answer, be sure to discuss features that MMB should include on its Web site and its
Facebook page to support the viral marketing strategy.
4. Prepare a report of about 500 words in which you outline an affiliate marketing strategy for
MMB. Include a description of the types of Web sites that MMB should attempt to recruit as
affiliates, and present at least five examples of specific sites that would be good referral
sources.

Note: Your instructor might assign you to a group to complete this case and might ask you to
prepare a formal presentation of your results to your class.

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