QuickTrophy.com.

Brunswick, Gary J. ; Dehring, Terry

CASE DESCRIPTION

The primary subject matter of this case concerns the growth and development of a web-based trophy and awards retail business, with primary focus on marketing strategy issues. Secondary issues examined include the identification and measurement of relevant performance metrics for an upstart firm such as QuickTrophy.com, and the relationship between strategic goal setting and the implementation of relevant strategies designed to achieve those goals. This case has a difficulty level of 3-4, and would be appropriate for junior-to-senior level students. The case is designed to be taught in 3 class hours, and is expected to require 4-6 hours of outside preparation by students. It might be helpful for students to examine other successful and failed web-based business models for comparison purposes.

CASE SYNOPSIS

The case centers around a group of entrepreneurs who recognized, develop and implement a unique web-based business model applied to the sports trophy business. QuickTrophy.com offers customers levels of customer service unparalleled in the trophy business, including an easy-to-use website, next day shipping, and a money-back guarantee. The company faces some unique challenges in developing and maintaining a consistent customer base, and is looking for additional ways of expanding their business through complimentary products and services. QuickTrophy.com is a small company, which has an interesting value proposition and the potential for significant growth.

INSTRUCTORS' NOTES

Recommendations for Teaching Approaches

This case is designed for use in a variety of different courses, including Marketing Strategy, Strategic Management, Business Policy, and E-commerce, although the case is probably most relevant to courses such as Marketing Strategy and E-commerce. Students will probably be motivated to investigate the company purely based upon the name of the case (QuickTrophy.com), and may have some experience with the product, either having been on a sports team, or having served as a coach of a sports team. The case is also designed to get students to think about what it would take to start a small web-based business such as QuickTrophy.com, and to think about the links between plans and action, or strategy and implementation.

The case can be assigned as an individual assignment, or as a group or team assignment, and could be coupled with another web-based case (either a successful or unsuccessful firm), allowing students to compare and contrast. For example, how does QuickTrophy.com compare to successful web-based ventures such as Amazon.com or Travelocity.com, or how does QuickTrophy.com compare to failed ventures such as Webvan.com ? A number of web-related references (most competitors) are also mentioned in the case. In using this case, students will also be expected to use some (limited) quantitative skills, focusing on revenues, costs, margins, and break-even; in some courses, this case could be used as an initial exposure to these types of issues. Additionally, it might be both helpful and interesting to invite a local entrepreneur to either discuss the case, or to comment on student case presentations. Students would probably find the perspective of the entrepreneur both interesting and challenging.

TEACHING OBJECTIVES

There are a number of teaching objectives linked to this case, including the following:

1. To expose students to the challenges and opportunities of starting and growing a new business.

2. To challenge students to make the connection between developing strategic marketing plans and successfully implementing those plans.

3. To provide students with the opportunity to better understand a web-based business model, and to draw similarities with "traditional" business models.

4. To give students a limited opportunity to explore the financial issues associated with an upstart business.

CASE TEACHING QUESTIONS AND ANSWERS

1. How can QuickTrophy.com achieve brand recognition in a rapidly congested internet marketplace ? How can a national brand be built on a local marketing budget. When a volunteer coach needs to get trophies, what can be done to make sure he or she thinks of QuickTrophy.com ? What methods of brand-building can be employed that are effective and yet inexpensive ?

Although the focus of this question is on branding, there are implications for many aspects of QuickTrophy.com's operations. Building a national brand on a small (local) budget can be problematic. One strategy might be to have QuickTrophy.com target one, or a small number of specific geographic markets (i.e., major metropolitan areas, Chicago for example) to initially target their brand-building activities. For example, spending money on advertising (print, radio, billboards, transit signage) for a period of 1 year might yield considerable results in a major metropolitan area. Partnering with various youth sports leagues is another strategy which might be employed; can QuickTrophy.com's name be featured on league information or websites, or be designated as a "preferred" trophy provider for the league ? Sales promotional items, such as refrigerator magnets, pens, notepads might also be used. Another simple approach might be for QuickTrophy.com to invest in a simple "yellow-pages" advertisement and listing in a major metropolitan area, and then measure the increase in orders coming from that area (for a period of a year following the placement of the "yellow-pages" listing). Given QuickTrophy.com's limited resource base, a targeted approach to brand-building would seem to be the most cost-effective.

2. Search engine placement is rapidly increasing in price to ridiculous levels. How can more traffic be driven to the web site on a cost-effective basis ? What will it take to double the number of web site visitors ? Quadruple ? Increase the visitors by an order of magnitude ? What methods are available and what will each method cost--in total an on a per customer basis ? In other words, what are the customer acquisition costs per method ?

A good analogy here is to use the example of a normal shopping mall (and the parking lot surrounding the shopping mall). The internet is like a huge shopping mall that is tailored for each customer. It is easy to get a space in the shopping mall. But the most desirable locations appear to be right by the front door. There is only so much retail space by the front door, so search engines have been auctioning off the real estate and the prices have been bid to absurd, almost irrational levels. Strategies to try would be to search out less utilized CPC (cost per click) vendors where key words have not been bid as high (bidding for a location at a secondary mall entrance--the back or side door). The volume is less so traffic, although more reasonably priced, will be less as well. Another strategy is to bid on less frequently used key words (alternative mall entry points). Prado's Principle (80/20 rule) is certainly applicable to keyword bidding. Approximately 80% of the customers use the obvious keywords and these are the words bid beyond sensible levels. Thus, it takes a lot of auxiliary keywords and CPC vendors to compensate for the 80% of customers going to the "other guys".

Another strategy is to "get to the customer in the mall parking lot", via e-mails. A good strategy would be to send e-mails to existing customers on a regular basis, encouraging repeat purchases. E-mails can also be sent to potential customers who have been to the web site and opted-in to a mailing list. E-mail lists can also be purchased or rented from leagues, portal sites, other web opt-in vendors, or harvested from pertinent web sites.

Yet another strategy to "attract the customer in the parking lot" would be to form alliances with sports leagues in return for "commissions". This would involve setting up a link on the league website funneling customers directly to the web site, by-passing the search engines altogether.

Search engine optimization will help secure space near the front door of the mall (on the first page of the search results), but it is difficult, time consuming, and constantly changing. It requires either a dedicated person, or a contract with an outside agency with costs competitive to CPC. The results can often be a higher closing ratio and more credibility with customers.

Students should estimate costs for the strategies as well as the expected number of additional customers. The results should be quantitative. Emphasis should be placed on

Return on Investment (ROI) for each strategy. Estimates should be reasonable and students should offer supporting material.

3. People only coach for a few years, and only purchase trophies once or twice a year. How can QuickTrophy.com get to the decision-maker at the right time? How many new customers need to be added each month to replace "lost" coaches and still achieve a significant level of growth ? How can "new" customers be identified and cultivated by QuickTrophy.com ?

Initially, this would seem to be a daunting challenge for QuickTrophy.com, particularly when the brand name is still relatively unknown. One possible strategy would be to develop ongoing contacts / relationships with various types of youth sports leagues, regularly obtaining current mailing lists of coaches, or to become the "preferred" trophy vendor for that league. Having high levels of customer service will also lead to positive word-of-mouth, and in turn "retiring' coaches who have used QuickTrophy.com will have positive things to say to their replacements.

The turnover issue among "lost" coaches is an interesting one to continue. What is the average tenure of a youth sports team coach; 1 year ? 2 years ? Student should be encouraged to develop a series of "what if" analyses to factor in a range of possible turnover assumptions (i.e., for example, assume QuickTrophy loses 50% of their customer base every 2 years). Estimates on turnover rate can be obtained from personal experience, conversations with coaches, or surveys.

4. Are there other market channels that should be exploited ? Other product lines that should be added? How can QuickTrophy.com build sales to $1 to $2 million in 2 years? How can sales be increased to $10 million in 5 years?

Adding additional channels of distribution is mentioned in the case, and might take a variety of different forms; the "easiest" approach would be to have partnering agreements with other complimentary websites, such as sports leagues, sporting goods firms, etc. Other possible method of channel expansion would include franchising, having QuickTrophy.com open a limited number of store-based retail sites, and partnering with existing store-based trophy retailers (who would serve as "order getters" for QuickTrophy.com--a "bricks and clicks" strategy). Some logical additions to the QuickTrophy.com product line would include plaques, engraved gifts, and perhaps a line of corporate motivational (engraved) gifts.

With regard to building QuickTrophy.com's sales over time, one argument might be that the firm is already showing signs of health and steady growth, and assuming they continue with the same strategy, the firm will eventually grow to a $2 million a year firm (and beyond). Alternatively, in answering questions 1-4 found in the case, students will develop a virtual cornucopia of ideas with regard to brand-building, increasing traffic to the website, developing and maintaining a strong customer base, and possibly expanding the firm's channel and product strategy. As an epilogue to the case, the professor could contact Terry Dehring at QuickTrophy.com for an update on successful (and unsuccessful) strategies, and an estimate of current levels of sales, customers, etc.

Gary J. Brunswick, Northern Michigan University

Terry Dehring, QuickTrophy.com