Overview/Introduction
When examining the current market environment surrounding the various universities within the UAE, it is immediately obvious that one of the main issues is the current price of textbooks and how this places a considerable burden on students. Textbooks for a variety of university courses can range between $100 to $150 on average, with some even costing $200 or more for specialised subjects. Since students within most universities within the region have 4 to 6 subjects per semester, this can result in an added burden of several thousand dollars within the course of their entire college education.
It should also be noted that in terms of utility, most of the school books bought will only be utilised for that subject alone and are then subsequently stored or discarded. It is the belief of this report that this process is inherently wasteful and can be changed by an external third party (i.e. the website service that is being proposed). The proposed website will act as a used books intermediary where students can sell/buy used books. Depending on the quality of the books which will be evaluated by the company, students can resell the book for 60 to 70 percent of the original cost while those who are buying the book will also be able to get a significant discount.
The company would of course charge for a certain percentage of the cost of the book (10%), however, this still ensures that the seller can get back most of the cost of the book that they are selling. It is based on this process that this paper will explain the type of business/revenue model that will be chosen, will showcase how such a service compares to its competitors in the market and will utilise Porter’s 5 forces and Porter’s 3 generic strategies to show the viability of the chosen business model. Lastly, an implementation strategy will be discussed on how the company will leverage its I.T. infrastructure and business model in order to gain a competitive advantage.
Chosen Business/Revenue Model
Direct selling was the business model chosen for this venture since the company, in effect, sells directly to consumers.
Evaluating Competition (2 Online Bookstores)
For this evaluation, two local websites. Both websites were examined based on their textbook content, the range of the books available as well as the price of the products. It was determined that while the websites had some of the textbooks needed for the first year of a student’s university education, they did not have the textbooks for more specialised courses.
Evaluating of Competitive Environment Using Porter’s 5 Forces
Threat of New Entrants
Unfortunately, due to the nature of the business, there are few barriers to entry and, as such, this creates issues when it comes to the long term viability of the company in the face of multiple market competitors when taking into consideration the limited supply of used textbooks (Dobbs, 2014).
Threat of Substitute Products
The primary threat of substitute products when it comes to this market comes in the form of eBooks. Within the past few years as a direct result of the popularity of tablet devices, eBooks have gained a considerable level of popularity due to their affordability (Porter, 2008). The cost savings associated with buying an eBook instead of a physical textbook is considerable and, as such, this trend would prevent the company from actually implementing its business model of selling used textbooks.
Bargaining power of customers
In the case of the bargaining power of customers, it is important to note that they are, in essence, buying a used product. As such, they may demand a considerably lower price for textbooks instead of the 30% discounted rate set by the company.
Bargaining power of suppliers
In the case of the textbook sellers, they in turn may want more money for the textbooks that they are selling. This is despite the fact that they are selling a used product since in their eyes they are selling a product that is still viable.
Intensity of Competitive Rivalry
Fortunately, there is little in the way of significant competitive rivalry at the moment in the current used books market. However, this may change in the future as the service becomes more popular.
Use of Porter’s 3 Generic Strategies
The primary generic strategy by Porter that was chosen for this study is the cost leadership strategy that focuses on appealing to price sensitive consumers. Due to the limited income of students combined with the high cost of college textbooks, a strategy of focusing on selling used textbooks would definitely be considered as a viable and lucrative one when taking into considerable the cost savings students would obtain from such a service (Karagiannopoulos, Georgopoulos & Nikolopoulos, 2005).
Implementation Strategy
The implementation strategy for the business will focus first on determining what books are specifically needed, how to properly advertise the services of the company to the desired demographic and determining how the product can get from the sellers to the buyers.
Determining what books are in demand
First and foremost, the company simply cannot take in all the different textbooks that are sent by students. The type of textbooks that are sold must match their inherent demand in order for the business to be viable. For instance, textbooks that are 10 years out of date and are no long being utilised by any university within the UAE would rarely, if ever, be sold. As such, it is important for the business to determine what textbooks are in demand during any given school year.
The business can determine this by obtaining the book lists that the school hands out to students at the start of every year and comparing it to the book lists that were used the year before. By comparing the two, the business can determine which books are most likely available and a list can be posted for books that are currently in demand. By doing so, this ensures that only books that would be in demand would be sold at any given time.
Advertising the Services of the Company
In order for the company to gain traction among members of the local student community within the UAE, it would be necessary for the business to advertise its services. However, there are a few issues when it comes to directly marketing to students that need to be taken into consideration. The first issue relates to the fact that most universities have bookstores located within the campus that specifically cater to the various textbook needs of the students.
As such, it is unlikely that they would actually condone a service that would impact their bottom-line and would take steps to prevent an external party from actively advertising from within the university. It is due to this that indirect methods of advertising would be necessary in order to properly target students. One way in which this can be accomplished is by negotiating with the various small restaurants that are located outside of the campus in order to place various flyers related to the business at the tables.
The reason behind this is quite simple, these locations are most likely frequented by students and, as such, they would be able to see the flyers and get to know more about the website’s services. Aside from this, other methods of indirect advertising would come in the form of Google Ads wherein the company would attempt to utilise online advertising as a means of attracting more people to the website. It is expected that through the use of these advertising strategies, the company would be able to properly target its desired demographic.
Getting the Product from the Seller to the Buyer
In order to get the product from the seller to the buyer, it would be necessary for the company to act as an intermediary in the sales process. To accomplish this, the company would require all book sellers to take picture of the book from a variety of angles in order to determine its overall quality. Once satisfied, the company would require the seller to send the book to the company’s address where it will be placed in storage.
The cost of shipping the book will be reimbursed back to the seller once the book is sold. Once the book arrives, its inside contents will be evaluated and if determined to be of good quality, it will then be placed on the book listings on the site. Eventually, based on demand, the book will be bought by a buyer at which point the company will ship the book to the buyer and reimburse the cost of shipping along with the cost of the book to the seller.
Use of I.T. to Create a Competitive Advantage
The use of I.T. in this case to create a competitive advantage focuses on the creation of an additional “guide service” that students can purchase along with the books that would enable them to better understand the topics being understood. Similar to the concept utilised by sparknotes.com that gives people an overview and an in-depth analysis regarding a variety of commonplace academic topics (i.e. World War 1, World War 2, etc.), this service of the company which can be purchased for an additional $10, will give them a complete overview of each individual topic of the book and will give every single answer to the questions that are normally placed after each chapter.
This particular service is not available at any of the campus bookstores nor is it available at any other used/new online bookstore. By creating this type of online service, this would result in a considerable level of demand since it would enable students to better understand the lessons being given which would give them higher grades. As such, when looking at the proposed strategy, it can be seen that it is both feasible and definitely showcases the capacity of the company to leverage I.T. to create a competitive advantage.
Reference List
Dobbs, M. E. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Karagiannopoulos, G. D., Georgopoulos, N., & Nikolopoulos, K. (2005). Fathoming Porter’s five forces model in the internet era. Info, 7(6), 66-76.
Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review, 86(1), 78-93.