enTourage eDGe
Courtney Hughes
Mario Massimino
Natalia Kravtsova
Luther Yee
Final Paper
MGT 429-AE
Suffolk University
November 27, 2010
Market Overview
The digital text industry is one that is comprised of various aspects. It includes, digital
books, textbooks, and articles as well as the devices in which the documents are read,
ereaders. Although not as large as other digital forums, the ereader industry is growing
and is expected to expand further in the near future. There are currently only several key
competitors in the market making the industry considerably small. Included in this are the
Amazon Kindle, Sony Ereader, Apple iPad, and enTourage eDGe. Also in the
competition, but not associated with any specific device are the publishers in both the
digital and print industries and Course Smart, a provider of digital textbooks online.
Technology Disruption
Technology disruption can be described as the effect product innovation or development
has on the industry. In the ereader market, this occurs each time a new product is
manufactured and introduced for sale. Currently the technology disruption is focused on
devices with both ereader and tablet functions. The eDGe is at moment the only device
with separate, but both capabilities creating an environment for higher competition and
increased technology disruption.
Five Forces and Complements
Rivalry
Exit barrier – 3
Industry concentration – 4
Fixed costs – 2
Industry growth – 4
Overcapacity – 4
Product differences – 4
Switching costs – 4
Brand identity – 5
Diversity of rivals – 4
Corporate stakes – 3
Average – 3.70
The rivalry in the e-reader industry is very high. There are a large amount of companies
that are offering similar products at comparable prices and the industry continues to grow
as companies look to make new and improved devices. Brand identity is an extremely
important factor when looking at the rivalry in the industry because consumers are drawn
more to a product because of its associated brand name and image than the physical
device.
Power of Suppliers
Supplier concentration – 3
Importance of volume – 4
Input differentiation – 2
Input effect on differentiation – 2
Switching costs to industry – 3
Presence of substitute inputs – 3
Threats of forward integration – 2
Cost relative to total purchases – 3
Average – 2.75
The power of suppliers can be considered mid-range because although there are several
different companies that serve as suppliers to the industry, all companies are using similar
products to create the devices. In the e-reader industry there are average costs relative to
the total purchase and switching costs, which allow companies to produce their devices
without volatile cost fluctuations. The threat of forward integration is also low because of
the increasing and continuously improving technology being used to create the products.
Power of Buyers
Buyer concentration – 3
Importance of volume – 5
Differentiation in industry – 5
Switching costs to customers – 3
Presence of substitute inputs – 5
Threat of backward integration – 2
Price sensitivity – 4
Buyer information – 4
Average – 3.9
The power of buyers is valued at a higher level because of the many options consumers
have when purchasing in the e-reader industry. There are many products in the market
that offer both similar and different features. Different consumers require and want
varying capabilities in the device allowing for a greater range of decision options. The
threat of substitute inputs is extremely high in this industry because there are many
devices a consumer could choose from that do similar things. When in the market for an
e-reader/tablet device consumers want the most affordable price for what they require and
will base most of their decision on this giving buyers a greater amount of power in which
product is successful.
Threat of Substitutes
Switching costs – 4
Buyer inclination to substitutes – 4
Price performance tradeoff – 4
Variety of substitutes – 4
Necessity of product – 3
Average – 3.80
The threat of substitutes in the industry is very high because there are many options to the
consumer on which e-reader product they wish to own. Consumers have the choice of
various e-reader and tablet devices that allow for digital reading of books as well as the
option of purchasing or renting an online text. Traditional products can also be used such
as print books, laptops, and netbooks. The variety of substitutes in the industry is also
very high with different companies offering various product types and the cost to switch
between an e-reader to a substitute can be either higher or lower depending on where the
consumer chooses to move.
Threat of Entrants
Average profitability of incumbents – 3
Incumbents have a cost advantage – 4
Learning curve advantage of incumbents – 4
Access to inputs – 3
Government policy (regulation) – 2
Economies of scale – 3
Capital requirements – 4
Brand identity – 5
Switching costs – 4
Access to distribution – 3
Expected retaliation – 4
Propriety products – 3
Average – 3.50
The threat of entrants in the e-reader industry can be considered mid-range for various
reasons. Although incumbents entering the market have a high value in the learning curve
present from previously established companies and a cost advantage from being the
newest innovation, consumers rely greatly on the brand identity and reputation of the
company. Another problem that may arise would be from already existing brands that
will compete with new incumbents to retain their market share and retaliate against the
new firms.
Company Overview
The enTourage organization was established in 2008 as a privately held company selling
consumer goods. enTourage was founded by Asghar Mostafa and currently works under
a limited number of twenty-five employees. Prior to founding the company, Mostafa, an
entrepreneur and manager, had worked in various other occupations all involving
technology and business. Included in this are his CEO, President, and/or founder
positions in Vinci Systems, Advanced Switching Communications, and Integrated
Services Digital Network, which were all largely successful operations. Asghar Mostafa
founded enTourage with the goal of providing students affordable and innovative
products to improve the process of their education and the methods in which people
work, live, and learn.
Currently enTourage specializes in consumer electronics and has recently developed the
device eDGe. The eDGe is the first created dual-book that contains an Android tablet, ereader, notepad, and audio/video player and recorder. The eDGe is equipped with
numerous features including integrated screens, Wi-Fi and email capabilities, technology
integration with USB and SD ports, and E-Ink technology that allows for handwritten
notes on the reader. The device is also eco-friendly in reducing the trees used to create
traditional print books, long lasting with a 16-hour lithium ion battery, and features many
personal functions to assist and alleviate everyday hassles.
Mission
To provide initiative and direction to the organization (enTourage, eDGe) in the effort to
evolve methods of traditional learning and the increased use of e-readers.
Vision
To assist students in reaching their highest potential through improved technologies
Strategy
In order to succeed, a company must determine what it takes to win and the method of
how this will be accomplished. Although not always clear, and at times volatile, this
statement provides direction to the company in regards to things to accomplish. Winning
for enTourage would be to maintain stable growth of market share in the ereader industry
and increase sales to profitability. The suggested strategy for which enTourage is to
achieve this includes: creating a new market segment to target; establish brand
recognition; provide an attractive product at an affordable price; and create a hybrid
disruption strategy.
VRINE Model
The VRINE model is a strategic analysis used for examining the internal environment for
a particular industry. The model lists the values, rarity, inimitability, non-substitutability,
and exploitability of the resources and capabilities that are associated with the product.
The VRINE model is used to analyze how a company could use their resources and
capabilities to differentiate from competitors and determine when it is necessary to
introduce new or different methods.
Value
A resource is considered valuable when it allows a company to take advantage of
opportunities and lessen threats in the industry environment. The eDGe is considered a
valuable resource to enTourage for numerous reasons including the cost, capabilities,
features, and convenience of the device. The cost of the eDGe is regarded as valuable
because of the opportunity it opens in the market for consumers looking for a high quality
product with a large amount of features. The cost of the eDGe is set at $549.00 USD,
which is below that of competitors’ products with comparable features. Individuals
looking for an innovative product would be more inclined to purchase the dual-book
device because of its many functions and possibilities of use. The capabilities of the
eDGe are also considered valuable due to the amount that can be done through only one
device. Instead of requiring two or several devices in order to get done what is needed,
the eDGe has a convenient dual screen view that allows for computer functions as well as
reader capacity. The eDGe has the ability to hold many books as well as documents for
view and work, making the device valuable to both students and professionals. Another
major value factor of the eDGe is its convenience in use and portability. The eDGe is
weighs approximately 3 pounds and has dimensions of 8.25” by 10.75”, which is similar
to the size and weight of a small netbook. This adds greatly to the value because
consumers are looking for products that are hassle-free and require little effort. Also
included in the convenience of the device is the extended battery life. After charging, the
eDGe can be used for up to 16 hours before requiring additional battery allowing users to
operate for a longer period of time. Wi-Fi, email, and documents viewing allow users to
complete everything in one location.
Rarity
The enTourage eDGe is a combination of both a tablet and an eBook reader. The two
technologies are not rare when separated, as there are huge markets for both. The
advantage that the eDGe has is the combination of both technologies in one. The eDGe is
comparative to and in some cases above the competition in the both e-reader and tablet
markets due to the many features available and convenience of the product. This device,
as well as others in this industry, is conveniently available online, however it is unlike
any other.
Inimitable
A resource is considered inimitable if it is difficult for a competitor to acquire the
resource easily or do so without significant cost. The eDGe can be considered inimitable,
even though there are products that include similar features, because of the device’s
status as the first (and currently only) dual-book in the market. The eDGe has the
advantage of combining both the tablet of similar products such as the iPad and the
reader, like that of the Kindle, because no other company has thought to combine the two
and make it one device. The eDGe can also be considered inimitable because of the new
technology used within the device and the ability of enTourage to frequently update and
alter the technology used.
Nonsubstitutable
Similar to inimitability, a resource can be considered nonsubstitutable if a competitor
lacks the ability to easily substitute the product with another resource or combination of
resources. The level of nonsubstitutability of the eDGe, although unique a product as it is,
could not be considered very high because competitors can and have used other resources
to create similar products. Other competitors have included the technology used in the
reader as well as tablet in the associated devices making the eDGe easily substituted.
Consumers could also substitute the product with a laptop, netbook, or computer, which
have many of the same capabilities of the eDGe.
Exploitable
The eDGe is targeted at and desired by those who value the convenience in having both
and e-reader and tablet in the same device. This makes the device exploitable by
enTourage because of its universal attractiveness to consumers. Although enTourage has
the resources, the company requires a greater significance in marketing and making the
device known to the public. When marketing the eDGe the key is to focus on the
importance and convenience of the product to both students and professionals. Once
enTourage has found the proper path in which to market and make the product widely
known, the product can be completely exploitable.
PESTEL Model
The PESTEL analysis is a strategic model used for examining the external environment
for a particular industry. The model is used to describe the political, economic,
sociocultural, technological, environmental, and legal aspects of the environment
associated with a product. This model focuses on the potential influences that may affect
the company and allows for greater understanding of threats and opportunities that may
arise.
Political
Political factors are the area of the PESTEL analysis that determine the degree of
intervention by the government in regards to the standards and guidelines of the industry.
Political factors can be seen as in favor of the eDGe due to the recent increase of
investment in the high-tech industry. Because the eDGe is a new and innovative device
the product will benefit from government tax programs and incentives to get the product
distributed. There is also a lack of current regulations that greatly decrease the
distribution of the eDGe and other devices in the same industry, other than those that
protect against copyright infringement and piracy.
Economic
The economy factor determines the effect the current economy both in the home country
of the device as well as the global economy has on the sale of the product. In the case of
the eDGe economy can be viewed as a negative influence. The consumer confidence
index, which fell in September, indicates that consumers do not know what is going to
happen tomorrow, and are less inclined to spend excess money. It would be extremely
difficult to persuade consumers to buy the eDGe in the current market, however at the
point in which the economy improves, consumers will be more willing to spend.
Sociocultural
The sociocultural aspect of the model looks at the impact that social trends have on the
demand of a firm’s product. In the United States the level of consumerism is high with
teenagers, students, and young adults controlling a large portion of the market in
spending. These groups have excess money to spend on devices, like the eDGe, which
leads to the favor of sociocultural factors. Another major factor of society that would
have a high impact on the sales of the eDGe is the norm and requirement for students to
have work capable devices with them when in school. The eDGe would be a great
alternative to a laptop or netbook because of the many features it has including the e
reader, tablet, and Internet capabilities.
Technological
The technological aspect of the PESTEL analysis looks at the level of influence that
exists in the industry with regards to technology. In the current market, technology is
expanding exponentially and changes extremely fast. New products are being invented on
a continuous level and new systems of operation are being created in order to compliment
the new products. The focus of the industry on technology is very high due to the
competition between the brands. Everyone is looking for the newest and most innovative
product that is going to attract the majority of consumers and will invest in that. In
creating the eDGe, enTourage has invested many of its efforts and resources to the
continuous upgrade of technology and maintaining the most innovative product.
Environmental
The environmental aspect of the PESTEL model determines the level of influence that
environmental awareness will have on the product as well as the industry. As the current
level of environmental issues continue to rise, more regulations are being established
towards the amount of environmental affect a company can have. Following along with
this trend many consumers are becoming more environmentally aware and are requiring
more products that are eco-friendly. Based on this knowledge, enTourage has created the
eDGe with the idea to reduce its environmental impact. The eDGe is made with the least
amount of products possible, is recyclable, and saves paper with its integrated e-reader.
The digital integration of eBooks provides for both money and resource conservation,
which will in turn, decreases the destruction of habitats, ecosystems, and environment of
the world.
Legal
The legal parameters detailed in the PESTEL model look at what is happening in the
legal environment of the particular industry. In the technology/e-reader/tablet industry
several legal issues are being given great significance including the use of copyright laws
and piracy prevention. These laws are standard throughout the entire industry and are not
specific to any particular product. enTourage as well as the eDGe follow all given
guidelines and regulations and do not provide software or abilities that go against these.
Trademark laws also exist and the company has established contracts for distribution and
warranties for its consumers.
Profit Pool
The profit pool is a dynamic and changing tool that evaluates market opportunities in an
industry. In order to map it, a company has to identify the size of the value chain
(according to total sales) and the attractiveness of each segment (according to segment
profitability comparison). This ensures that all profit producing items are represented in
the value chain.
In the profit pool’s chart most profitable segments are the highest, while segments that
have lower profit margin, but higher volume are wider than others.
Until recently publishing and printing companies were very important participants in the
textbook market, however technology disruption has rearranged the structure of the profit
pool. This disruption was caused by introduction of e-readers, and adoption of this device
by providers and online sellers of digital textbooks. Currently more students choose
digital formats of textbooks than traditional paper texts.
Digital textbooks have made e-readers more attractive because the significance of owning
a mobile device in which students can download and store all of their books and be able
to access them anywhere at any time. This allows the elimination of carrying heavy
textbooks and provides an option to buy books at the lower price from the online sales
forums.
Profit Pool – Before technology disruption
Before technology disruption publishers and authors dominated the industry with owning
60% of profit margin; the remaining market share was divided between other players.
The publisher’s role was to convert the content into the product and deliver it to the
consumer and participants, such as printing companies and book stores. Another very
important component of the value chain was the evaluation/editing step, which allowed
feedback on a particular book and introduction to potential users. These potential users
were faculty members, who have access to customer pools that are continuously
renewing each semester. The size of this pool depends on the amount of classes the
professor instructs and the amount of students in each class.
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Author
publisher
printing book store
online
company
distribution
faculty
The above chart demonstrates the distribution of profits before technology disruption
occurs in the market. In this the majority of the profit was made during the transformation
of the textbooks’ content into the actual product. Due to this the publishing companies
receive most of the money by selling this content in the form of the book. Publishers
generate profit when rights to publish the material are acquired, which are expensive. The
more books the publishers sell, however, the less these rights cost per book which in turn
reduces royalty fees per unit. Printing companies and book stores were also making a
considerable profit before technology disruption because this was the most popular form
of distribution and most products of the publishers were going through them. Due to this
high volume were provided with smaller profit margins. Another segment of the pool is
marketing technique, which includes the process of asking faculty of schools and colleges
to read the books and provide feedback. This strategy is very profitable; however time
consuming making this segment not as wide as the others. The weakest segment of the
profit pool before disruption was online distribution. Online textbooks were not popular
previously due to students’ preference for print texts in the classroom as well as a lack of
computer or web access. When e-readers entered the market, this all changed.
Profit Pool – After Technology disruption
After disruption and establishment of e-readers in the industry, new profit pools will exist
built around device. This will create new opportunities for business for various products
and services from the sales of textbooks, accessories, applications, and games for the
device. Additional services will also be provided including broad-band coverage,
extended warranties, financing and cloud storage of information saved on the device.
The shift from traditional textbooks to digital versions will stimulate the change of the
profit pool, causing some segments to disappear or lose its profitability. For example
book stores and printing services’ profit pools will either be eliminated or restructured,
after which textbooks will not be main source of money.
After the industry has changed due to technology disruption, the value chain will be as
follows:
After technology disruption the key players of the industry will remain the same: the
authors will still provide the content and the publishers will continue to buy the rights to
publish and distribute the material, which will need evaluation for quality control and
distribution opportunities. The biggest change will be at the distribution stage. In this
digital textbooks will become a much more attractive alternative to print copies and
traditional distribution channels will lose their share of the profit pool to new players.
New players will include e-reader manufacturers and websites that will sell the textbooks.
This change will offer end customers more alternatives in receiving textbook content in
various forms. It is also possible that going further, the websites that sell textbooks will
integrate into publishing enterprises and combine publishing and distribution functions.
This will allow a reduction in the cost of the textbooks, increase the margin, and shorten
value chain.
This is how industry’s profit pool would look like after e-readers are established:
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From this chart it is apparent that e-readers entering the market will restructure the profit
pool of the industry. Some profit segments remain close to prior numbers (author,
publisher/content owner, and faculty), and some players, such as printing service and
book stores (in this context) will be close to elimination. These sections not only are
losing the sales volume but also losing profitability. At the same time a new will appear
and will start gaining a larger share of the profit in the industry. This new player would
be an e-reader device, which is a complementor to digital textbooks. Authors will also
receive more profit than before because the distribution process will become less
complicated and publishers may begin to lose power when websites acquire publishing
rights.
Where is your company in this picture?
The enTourage eDGe is a new entrant to the market and is currently competing against
other e-readers, and tablets. Edge’s advantage is that it has a lot more to offer than a
regular e-reader, it will not only allow to download and read textbooks, but it also is a
research tool that will enhance learning process and make it more effective and
interactive. All this thanks to capacities like surfing web while reading the book, or
highlighting in the text, and making notes. Edge doesn’t have a big market share, because
it isn’t part of its current strategy. Edge is going after specific group of customers who
are school and college students, who are technology savvy and will appreciate what
device has to offer.
In order to describe the new profit pool that has been created due to the disruption in
publishing industry I would like to use the example of Entourage Edge.
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Manufacturing of the device is done in China, and according to industry numbers it could
have been 20% of the cost, but because it’s a startup company, and their sales volume is
low, cost of the manufacturing might be around 30%, despite the fact that transportation
usually very cheap for small devices like Edge (that is why profitability for transportation
is high), combined result of this 2 segments isn’t very profitable, but they bring revenue
every time device is sold.
Software Edge uses is provided by Google and free, so here is a room for making good
money.
Distribution also allows company to make good profit because it isn’t distributed in a
retail store, and customer can order it online.
Marketing segment will consume most of the expenses, and it’s goal is to build brand
awareness, which is great in a long term, but not so profitability right now.
And there are also few complementors, which consist of additional products and services,
like accessories, e-books, broad-band coverage, financing of the device and so on. These
segments show great profitability, but because they aren’t necessity they aren’t significant
part of the profit pool yet. This number will increase with number of sales of the device.
And this way Edge will be able to reduce the price for the device in order to win over the
customer, because ones customer chose the e-reader, he becomes a captive of the
company and he/she can only buy product that will work with/on device.
Value Chain
User Friendly
Size/Weight
Appeal
Capabilities
Energy Efficient
Cost
User Friendly - 10
The main goal is to make the eDGe easy to use for every consumer. The iPad is given a
10 as well. This is our product as well as our competitor’s highest valued feature because
without a simple interface and easy to use features, consumers will be uninterested in the
product.
Size/Weight - 7
The eDGe is the world’s first dualbook, requiring the device to be large enough for
comfortable and adequate use, but small enough for travel and portability. Our original
thoughts were that size wouldn’t have as much a weight than it actually holds. So we are
going to innovate and create a sleeker version that provides all of the same features as the
original model. This is why the iPad might be a little sleeker, but it doesn’t have as many
features that our product includes.
Cute/ Appeal - 8
When looking at the attractiveness of the eDGe, it must be taken into consideration that
the device is a working machine. It has all of the capabilities to be used for enjoyment,
but the design stresses the fact of its various capabilities. Ultimately being a user friendly,
efficiently designed product is more important to our consumer then having something
that looks cute. When making our product smaller, however, a new attractiveness will be
provided to the product.
Capabilities - 10
The eDGe is the first device to offer both a tablet and e-reader in one. It also offers
numerous capabilities and features that are not normally associated with an e-reader or
tablet device. Some features include: eBooks, Wi-Fi, video camera, picture taking,
electronic journal for note taking, Docs to go (Microsoft Word PowerPoint and Excel
viewing capabilities, and more.
Energy Efficient – 5
When fully charged and used to its highest extent, the eDGe has 16 hours of battery life
when using only the reader. This is significant to consumers because many are looking to
use a device for an extended period of time without having to charge the unit when
traveling or just using the product where access to outlets are not available. When using
the tablet battery life is slightly diminished, which is the reason for the lower rating.
Cost - 7
The eDGe is priced at $549, which is reasonable for the capabilities and convenience
offered. Although not considerably inexpensive, the eDGe has many useful functions that
are worth the investment. When comparing the device to the iPad, our product is given a
7 as opposed to a 5. Our product has one flat rate of $549, while the iPad starts at $499
but its best product is $829. Long-term goals also will drive the price of the eDGe lower
as time goes on. As mass production of our products occur and enTourage gains more
national/global attention, cost will be decreased considerably.
Generic Strategies
The goal of generic strategies is to reduce the effect of rivalry, which can be achieved
through several factors including: low-cost, differentiation, focused cost leadership,
focused differentiation, and integrated positions. Factors that define these strategies are
economic logic and scope of arenas. The economic logic dimension determines if a
company will compete by offering lower prices to its customers than competition, or if it
will offer customers a service or product that is different, valuable, and unique.
Companies are typically able to charge a higher price for a product that offers consumers
a greater value. Scope of arenas is a dimension of the strategic positioning model that
determines which consumers the company will target, and how broadly it will compete
for a customer. Some companies offer products for everyone, or a product that is used by
wide variety of customers, while other companies concentrate on targeting a specific
group of customers. Through this it can be seen that niche positioning does not always
result in greater profitability than broad target marketing; it is just a different approach.
Entourage Edge is currently in a focused differentiation strategic position, which means it
offers the associated products to a specific consumer group, focused on technology. The
eDGe device is a unique product because it is the first dualbook, which combines an ereader and a tablet. Due to the enhanced learning or working experience, the eDGe is
targeted towards students and young professionals. In the future Edge is looking to
achieve an integrated position in the industry in which the price of the Edge will be
lowered due to decreased production costs and improved production efficiency. Although
this is the future outlook of the company, entourage will continue to improve the existing
eDGe device by creating additional values for a customer and adding new features. The
company will also strive to add more devices and services to its portfolio as a greater
market presence is achieved. Integrated strategic position is going to help gain leadership
in the market segment that eDGe targets and will increase profitability.
Strategy Components:
Strategic Objective - growth and gaining greater market share. Expected growth rate is
approximately 30% a year, and will be achieved by creating a new market segment for
the device. In five years or less enTourage will become a leader in this niche.
Scope - the target customer is a focused, intelligent individual who requires consistent
and innovative technology in a device. The needs of this group will be met by providing a
device with wide variety of features and reliable technological platform.
Competitive Advantage - eDGe is a unique product that offers users particular features
not available in other devices (i.e. reading the book and searching the web concurrently).
Offensive Strategies
As a new company with little brand recognition, it is significant for enTourage Systems
to increase presence in the market. The main plan of the company should be to dedicate
more funds in marketing, both online and off. enTourage should also set up billboards of
their product that are in close proximity to colleges and universities. This will inform
targeted markets of college students and young professionals of the new product, which is
aimed directly to meet their needs in this competitive world. EnTourage Systems is
currently in alliance formation with mass-market stores like Best Buy, Target, and WalMart in order to sell the Pocket eDGe. The brand recognition provided through these
endeavors will bring both enTourage Systems as well as the eDGe the required publicity
to become a key market figure.
Alliances
In the ereader industry there are many opportunities for alliances and partnerships. For
enTourage it would be significant to establish an alliance with the schools, universities,
and colleges of the associated target markets. This would increase the publicity of the
product as well as produce increased sales. Students will become skilled users of the
eDGe from the extensive time spent working both in and outside school. It would also be
important for enTourage to have an alliance with another provider of digital books and
textbooks such as Course Smart. This would provide enTourage access to many books for
their device and create further alliances of those associated with the partnered company.
Balanced Scorecard
The four main objective measures for the eDGe based on the Balance Scorecard include:
Financial Goals, Customers Satisfaction, Internal Business Process, and Innovation and
Learning.
Financial Goals:
As a relatively new company to the e-reader market, enTourage must affirm that the
combination of an e-reader and tablet is a viable business practice and in order to do so
the company’s financial goals have to be in the appropriate place. The two main goals
included in this are: gain profit per unit and sell a large number of units. In order to
increase profit from every unit sold a price point will need to be set for the eDGe as well
as increase research and develop options for new manufacturing capabilities. These
capabilities will lower the cost in manufacturing the traditional eDGe as well as the new
Pocket eDGe. In order to increase sale and recognition, innovative TV and online ads will
need to be created in order to attract consumers to the device. If sale expectations are
unable to be met, the price of the eDGe should be lowered by approximately $100 in
order to keep profitability.
Goals
1. Increase profit per unit (eDGe)
2. Sell more units/gain market share
Measures
1. Profit per-unit
2. Number of total sales per month
Targets
1. Profit per unit = (sale price - manufacturing cost)
2. 300,000 units per month
Initiatives
1. If sales expectations are not met, price should be lowered by approximately $100
2. Increase marketing of the eDGe including promotional deals and discounts
Learning and Growth:
Knowledgeable employees boost customer satisfaction in an organization. Customers
depend of employees to be well informed about the products they sell and to be able to
provide information regarding any questions/concerns they may have. Due to this the two
main goals for the Learning and Growth sector include continuous training of enTourage
employees and constant innovation. enTourage will require the best employees in order
to sell the product accordingly and will need to teach employees how to reach this level
of satisfaction. Innovation will be achieved through knowledge of future possibilities of
the company and product as well as provided incentives for new endeavors that are
successful.
Goals
1.
2.
3.
4.
Have knowledgeable and service-oriented employees
Maintain a high rate of continuous innovation
All employees must be trained about the eDGe
All employees must master skills for the products in order to sell to customers
Measures
1. Randomized testing every other month about the product
Targets
1. 100% of employees must have complete knowledge of products and product
functions by year-end 2011
Initiatives
1. Keep all employees aware of current and future changes in product features and
capabilities
2. Research and develop new manufacturing capabilities in order to lower
manufacturing cost
Internal Business Process:
In order for a company to sell a product and maintain successful operations, a high
quality device must be produced. A high quality product would be one created from
specialized labor, equipment, and materials and is something that enTourage must
produce in order to succeed. By testing a sample size of the products, enTourage will be
able to calculate the percentage of defective products with an end goal of 1% of product
defects by the year-end 2013. enTourage will also need to have an efficient and effective
research and development process in order to continue the development of a higher
quality product. Although this is true, a high quality product is not what all consumers
desire. Some now prefer products that are environmentally conscious and enTourage
must adjust its strategy to include this as well. Developing new recycle processes,
removing toxic chemicals, and implementing environmentally friendly materials can
accomplish this goal. These three initiatives will help toward our goal of being a
company that is environmentally conscious and establish a positive reputation with
consumers.
Goals
1.
2.
3.
4.
Generate high quality products
Create an efficient and effective R&D process
Have environmentally friendly products and production
Create a group that specifically targeted marketing online and off
Measures
1. Create each product to have 50% of recycled material
2. Test a sample size of the products released for defects
Targets
1. Recycle 75% of all scrap aluminum from production
2. Defective products in sample size: 2011 - 6%, 2012 – 4%, 2013 – 1%
Initiatives
1. Create and develop new recycle processes
2. Remove toxic chemicals from their manufacturing process and replace with
non-toxic materials.
3. Implement environmentally friendly materials into the manufacturing process
4. Creation of innovative TV and online ads
External – Customers:
Although separately a tablet and an e-reader are not new technology, the two in
combination is something that has not been done before in the market. Due to this a new
market segment will be established, which will be the focus of enTourage. This is
significant to the customer’s of the company because it will determine brand image and
the main use of the product. enTourage will want to create a brand image of a
professional business that manufactures reliable products. The products will need to be
delivered in a timely manner and to the highest degree of quality. enTourage should also
exploit the fact that the associated products will make the lives’ of consumers easier
because of the many features associated with the product. In order to reach these goals,
enTourage will need to track the number of units sold, new customers, and the level of
satisfaction they hold. Market share will be gained by drawing customers of other
products to the products of enTourage, specifically the eDGe. Customer satisfaction will
be determined by continuous efforts in customer service and research. The responses
received, will affect how the company will market its products and what updates will be
provided.
Goals
1.
2.
3.
4.
Promote enTourage image as a reliable, business oriented brand
Market affordable product that enhances quality of life
New, innovative technology that replaces outdated technologies
Decrease amount of time customers wait for delivery and assistance
Measures
1.
2.
3.
4.
5.
Number of units sold monthly
New customers
Survey results of consumer attitudes towards enTourage
Shipping time
Response time on forum
Targets
1.
2.
3.
4.
5.
Customer acquisition management
Attract 70% of new cliental from existing competitors
30% focus on consumer relations management
Decrease package shipping to average of 3 days
Maximum 4 hours to respond to inquiries
Initiatives
1. Convert 70% of existing competitors’ customers to the eDGe
2. Use feedback from CRM software to increase sales 30%
3. Have employees on hand to response to inquiries
Financial Goals
1.
2.
Goal(s)
Increase profit per unit
Sell more units/gain
market share
1.
2.
Measure(s)
Profit per-unit
Number of total sales per
month
Learning and Growth
1.
2.
3.
4.
1.
2.
Target(s)
Profit per unit = (sale
price - manufacturing
cost)
300,000 units per month
1.
2.
Initiative(s)
If sales expectations are not
met, price should be
lowered by approximately
$10
Increase marketing of the
eDGe including
promotional deals and
discounts
1.
2.
3.
4.
1.
2.
Goal(s)
Generate high quality
product
Create an efficient and
effective R&D process
Have environmentally
friendly products and
production
Create a group that
specifically targeted
marketing online and off
Target(s)
Recycle 75% of all scrap
aluminum from
production
Defective products in
sample size: 2011 - 6%,
2012 – 4%, 2013 – 1%
1.
2.
Measure(s)
Create each product to have
50% of recycled material
Test a sample size of the
products released for
defects
2.
3.
4.
Initiative(s)
Create and develop new
recycle processes
Remove toxic chemicals
from their manufacturing
process and replace with
non-toxic materials
Implement environmentally
friendly materials into the
manufacturing process
Creation of innovative TV
and online ads
1.
Measure(s)
Randomized testing every
other month about the
product
Initiative(s)
Keep all employees aware
of current and future
changes in product
features and capabilities
Research and develop new
manufacturing capabilities
in order to lower
manufacturing cost
Customers Satisfaction
1.
2.
3.
4.
1.
Target(s)
100% of employees must have
complete knowledge of products
and product functions by yearend 2011
1.
2.
Internal Business Process
1.
Goal(s)
Have knowledgeable and
service-oriented employees
Maintain a high rate of
continuous innovation
All employees must be trained
about the eDGe
All employees must master
skills for the products in order to
sell to customers
1.
2.
3.
4.
5.
Goal(s)
Promote enTourage image as a
reliable, business oriented brand
Market affordable product that
enhances quality of life
New, innovative technology that
replaces outdated technologies
Decrease amount of time
customers wait for delivery and
assistance
Target(s)
Customer acquisition
management
Attract 70% of new cliental from
existing competitors
30% focus on consumer
relations management
Decrease package shipping to
average of 3 days
Maximum 4 hours to respond to
inquiries
1.
2.
3.
4.
5.
1.
2.
3.
Measure(s)
Number of units sold
monthly
New customers
Survey results of
consumer attitudes
towards enTourage
Shipping time
Response time on forum
Initiative(s)
Convert 70% of existing
competitors’ customers to
the eDGe
Use feedback from
consumer relations
management software to
increase sales by 30%
Have employees on hand
to response to inquiries
Strategy Justification/Conclusion
As a newly created company, enTourage Systems, Inc. is at a disadvantage
compared to many of the well-known brands in the market. The most significant
relationship of the company is with the customers, which determines reputation. As the
manufacturer of the world’s first dualbook, combining an ereader and a tablet, enTourage
must strive to make the eDGe the best product possible. With the finished product
available for sale, enTourage will be able to meet set goals of evolving methods of
traditional learning and increasing the use of ereaders. When both of these goals are
complete, the eDGe will assist students in reaching their highest potential through
improved technologies. Although difficult in the beginning, from this enTourage will
maintain stable market share growth within the ereader industry and increase sales to
profitability. In order to achieve this, our strategy includes creating a new market
segment to target, establish brand recognition, provide an attractive product at an
affordable price, and create a hybrid disruption strategy.
The market segment enTourage will create includes young professionals and a
mixture of elementary and higher education students. As determined in the VRINE
model, the value of the eDGe is high as compared to the devices of competitors. The
capabilities included and cost of the eDGe are unique to the device, which should entice
the targeted market. A complete package with the ability to read eBooks, email, and
documents in a product that when learned is easy to use, generates interest for individuals
who are on the go and value convenience.
Establishing brand recognition is one of the most important elements as a new
entry into the ereader industry. Because enTourage is in the technology industry and has
increased investment, the incentives provided should push the products into the mass
market. A major factor in this will be the introduction of the Pocket eDGe. As teenagers,
students, and young adults become aware of both of the products and the many features,
sales should have a massive increase. With the eDGe and Pocket eDGe, enTourage will
provide attractive products at affordable prices while increasing brand image.