Case Study: Marketing the Farrells

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Marketing

The Farrells have a few objectives that they need to meet with this strategy. The big picture objective is to increase the wealth of the company. They face a situation where they have depleted their cash reserves and there are seeking to capture the new market growth. They have targeted the e-book market because they see that technological change is reshaping their industry and they prefer not to be left behind. So shifting the strategy of the organization is a key component of the objectives.

They are facing intense competition and a rapidly changing operating environment, so they want to stake out an area of the business that is not likely to change as much -- in other words they want to invest in something that has some long-run profit potential. The volatility of the business right now provides significant opportunities but clearly it also represents a major threat to their business as well, and that is why they need to respond quickly, but with the right decision.

There are strategy-specific objectives as well that need to be taken into consideration. The first is that they want to build market share, which means building sales volume. To do that, they need a strategy that gets their products in front as many customers as possible. The company also needs to build its brand. If the publishing industry, especially textbook publishing, is going to be turned on its ear by new players and new technologies, then the existing firms who want to capture some of this business have the opportunity to do so. But that requires having a clear objective relating to which markets are going to be pursued, and how the brand will be built and how much market share can be captured.

Constraints

There are a number of constraints here. The small size of the company is responsible for many of these constraints First, there are capital constraints. The Farrells spent most of their money buying their way out of a contract, and this is inherently limiting how much capital they have to rebuild the business. Furthermore, there is a constrain in terms of what they are personally capable of doing. John's health issues and enrollment is school were constraints on how much he was able to contribute to the business. Thy have made the decision to blow up their business so that John can continue his studies, which has now left them without a viable revenue stream, but with costs and still limit contributions from John. This is an interesting tactic, but regardless of how much sense it makes this is what they have done, and now they are basically trying to start their business over.

The partners may have some abilities, but they have essentially boxed themselves into a corner here. They are trying to enter a business that they know little about, and that alone presents challenges, but they are trying to do this with a frazzled Helena and minimal contribution from John. So unless they have other people on board who they can trust to shoulder some of the work that needs to be done, the Farrells need to limit the scope of what they can do to rebuild the business. They are not in good shape for this.

There are also constraints with respect to the different external partners as well. Apple, Android and Amazon are three major partners who control much of the e-book business, with Barnes & Noble as another player of note. These companies each operates slightly differently with respect to how they manage the e-publishing business. All three have tremendous bargaining power over the Farrells, and the Farrells will be completely dependent on these partners for their business, as e-book distribution without these companies is almost impossible and would be severely limiting to the in terms of their market.

The root problem here is that the Farrells have a very limited business now, a lot of constraints on what they will be able to do, and they have a need for a new, simplified business that generates a lot of cash flow. The Farrells probably should have taken a different course but now that they are here they must address the root problem -- they have no idea what their new business model should look like and they have spent hundreds of thousands of dollars to arrive at this point.

Solutions

The status quo solution is no solution at all. Right now they have no viable business, so the status quo would be to fold the business, or maybe get back into consulting, begging for their old customers back. The status quo is not really an option at all in this case, because there is no viable business. The Farrells left themselves in a position where they need to make dramatic changes, immediately and those changes need to be successful just as quickly. Similarly, the idea of a minimum fix problem is not much of a fix at all. There is no "minimum" fix -- they need an option that generates revenue and right now they do not have a pathway to revenue.

To get to the root of the problem, they need to push forward aggressively with whatever solution it is that they think is going to deliver the most value. Their inability to make anything happen in the last six months is a big part of the current problem, as they have opted for a risky overhaul of their business but then not taken the final steps to getting something on the market.

First, they should produce interactive books. Apps are more expensive to design, and do not necessarily increase functionality. Consumers expect interactive books more than apps, and the books can be zoomed in and out making for better readability. Furthermore, it is harder to develop apps across the multiple platforms. This is a challenge because the company wants to gain as much market penetration as possible with a limited budget. So interactive books, but across multiple platforms, will help to achieve that.

With respect to platform rollout, they need a plan for that. Amazon is arguably the most important because that is where consumers look for books first, even before they look at things like the iBookstore. If nothing else, they are going on Amazon to read reviews, so having a Kindle book is the most important. Kindle operates on Android, so it flows naturally that the Android books should be developed alongside the Kindle book. The same goes for the Nook, which is also Android-based. Apple still has a substantial market share in tablets of 45.6% so dealing with Apple is critical, but this share is declining so Apple should be dealt with once the Kindle and Android versions have been completed (Siegal, 2013).

The company needs to cover costs but keep the price down. Right now it has no direct information about the price elasticity of demand, but the market does, and the market seems to indicate that pricing at the lower end is optimal. Pricing depends on positioning, but until the company builds a reputation in the business it much recognize that it needs to be price competitive.

Lastly, the company should outsource as much as possible. This maximize efficiency rather than having a number of staff members whose time must be managed effectively. It is likely that buy acquiring content and by outsourcing a lot of the work, the Farrells will be able to focus their energies on running the business and doing the accreting. There are only 1.25 Farrells working on this right now, so they cannot assume that they will be able to manage a staff with all the extra work that entails while at the same time growing the business. One or two staff members to help with the… [END OF PREVIEW]

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Marketing the Farrells.  (2013, November 29).  Retrieved May 20, 2019, from https://www.essaytown.com/subjects/paper/marketing-farrells/7594552

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"Marketing the Farrells."  Essaytown.com.  November 29, 2013.  Accessed May 20, 2019.
https://www.essaytown.com/subjects/paper/marketing-farrells/7594552.