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[IT1004 Tutorial 6] Case B Presentation

[IT1004 Tutorial 6] Case B Presentation

IT1004 L.L.Bean Case Presentation prepared by May Lee, Tan Wei Jie, Calvin Lim, Ebel Lam and Yew Jia Le for Tutorial group 6. Uploaded with kind permissions from the abovementioned authors.

Kelvin Tay

March 07, 2013
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  1. None
  2. How L.L.Bean Started: 1911 to 1959 • Founded in 1912

    by Leon Leonwood Bean • Maine Hunting Shoe • Stitching leather uppers to workmen's rubber boots • Functional boot
  3. How L.L.Bean Started: 1911 to 1959 • No immediate success

    • Rubber bottoms separated from leather tops o 90% of original production returned o Refunded purchase price • Reliable brand • Factory size increased • 52-page catalog
  4. Growth of L.L.Bean: 1960 to 1999 • Aligned itself with

    growing outdoor recreation market • Old mailing list converted to computerized database • 24/7, 365 days service
  5. Growth of L.L.Bean: 1960 to 1999

  6. Growth of L.L.Bean: 1960 to 1999 • Education Programs for

    customers o Outdoor Discovery Schools • Employees benefits: o Fitness centres and walking trails o Enjoy active outdoor pursuits • Expansion into e-commerce market in 1995 o www.llbean.com
  7. 2000 to Today: • Expansion of retail stores: o 18

    outside Maine o 10 in locations throughout New England and Mid-Atlantic region of U.S. • E-commerce business shown tremendous growth
  8. 2000 to Today: • Customers enjoy various improvements from L.L.Bean's

    website o Order-tracking o Up-to-date product availability o Customer order history o Ratings and reviews • Recognized with numerous industry awards
  9. 2000 to Today: • Ranked in the top 3 for

    5 consecutive years by the National Retail Federation Foundation/American Express Customer Service Survey for top-rated multi-channel retailer in customer service. • Ranked #1 Bloomberg BusinessWeek Customer Service Champs. • Catalog of the Year for 2010 in the 25th Annual Multichannel Merchant Awards. L.L. Bean also took the Cross Channel Merchant of the Year honors. • ForeSee E-Retail Satisfaction Index Survey placed llbean.com among the top 5 Web sites for customer satisfaction and #1 in apparel. • Ranked #1 outdoor outfitter by Forrester for Website Functionality Benchmark. • Ranked #6 as one of New England's Most Powerful Brands for 2010 from Protobrand.
  10. 2000 to Today: • Industry leader o B2C o B2B

    • Well-recognized world leader in mail order • Multi-channel approach o Catalog, retail stores, Web
  11. Why did L.L.Bean decide to step up its web presence?

    • In line with the company’s motto to maintain superior customer service, because of the 24/7 availability of the internet • Did not require any extra costs, be it in retraining human capital or building additional infrastructure • Ability to cross-sell complementary products o Overall, more potential revenue without any significant capital
  12. What do you think are some of the customer loyalty

    issues that L.L.Bean managers face as they grow online sales?
  13. Sustainability • Free shipping without minimum cost. Re-introduced in 2011.

    o In the future, might have to increase product prices to cover shipping cost, or remove free shipping option altogether. This might discourage purchases and weaken customer loyalty.
  14. The Digital Divide • Older customers might not be able

    to relate to online shopping even though the website is "clean, clear, crisp and usable". o Disjunction between platform and advertising appeal Website features goods that are more likely to appeal to older folks while catalogues are in line with L.L. Bean's objective to target younger trend-conscious consumers.
  15. However... • L.L. Bean has been making continuous efforts to

    retain their customers: “lifetime value of L.L. Bean’s online customers is about 30% greater than the industry average”. • L.L.Bean's catalog customer is 50 years old on average, but its Web customer is 40 years old on average. Shows that customer base is still quite old, still need to put in more effort to attract younger generation. • L.L. Bean encourages consumers to upload videos of their experiences with L.L.Bean products. On one hand this is testimony to the quality of their products; on the other hand, it builds customer loyalty in that it makes customers feel important
  16. • L.L. Bean does not prioritize online advertizing over catalogues.

    • Even though catalogues cater to younger generation, it is ultimately the products that matter. Inelastic demand, if products are good, people will still buy them anyway. • Digital divide will also lessen as the years go by. Increasing number of older folks are becoming IT-savvy. The problem that remains might be a lack of trust in online purchase. L.L. Bean should still continue to grow online sales, and at the same time keep ensuring the security of their e-commerce platform
  17. How can L.L.Bean best pursue a multi-channel retailing strategy? Is

    the current management making the right judgement about developing online capabilities slowly over a long time?
  18. Case Study • The company should continue with its current

    three channel approach to retailing. • The channels are supportive of each other. • Customers prefer to shop in different ways.
  19. Case Study • L.L.Bean can save cost from reducing catalogue

    sizes and encouraging customers to view products online. • Keep phone ordering channel open. • Physical shops are important for many first time buyers and encourage people to go online.
  20. Case Study • L.L.Bean's management should speed up the development

    of the company's online capabilities. • More consumers are going online. • The company might not be able to keep up.
  21. Case Study • Developing online capabilities, does not mean cutting

    off other channels. • The current strategy is suited for the present trends.
  22. Critics argue that L.L.Bean should be expanding its total retail

    operations including stores at a much faster rate in order to meet the competition.
  23. L.L Bean Total Retail Operation Fast Rate Slow Rate Fast

    Rate
  24. Fast increase in number of stores •Decision based on shopping

    habit •6 in 10 prefer to shop in store than online •Continuous growth in US retail sales
  25. • L.L. Bean stores concentrated on eastern part of USA

    whereas competitors are everywhere. • Expand to other parts of USA. • Opening more stores at other parts of USA can improve sales and customers loyalty. Fast increase in number of stores
  26. Fast increase in number of stores • Allows more consumers

    to visit the store to view the product. • Improve customer loyalty by: o Provide better consumer service (1 to 1 exchange at stores) (Product differentiation) o Shorten delivery time for goods to reach the consumers. (Clicks and Bricks model)
  27. Fast increase in online shopping • 44% update information about

    brands via social networks • Market strategy to win competitors: Web 2.0 Marketing by generating reviews. Be more visible online. • L.L Bean publish catalogue and buy products via mobile apps
  28. There is no channel of conflict

  29. Slow decrease in number of catalogue • Older generation people

    have access to internet • Catalogue printing expensive (Cut Cost for L.L. Bean) • Reduction in the number of staff in call centre. • Providing opt out catalogue option on the website • Lesser pages in catalogue Thank you!
  30. Q & A

  31. Question 1 Which other industries are best positioned to utilise

    the multi-platform marketing channels? Which of the 3 platforms (catalog, web, stores) should more emphasis be put on in the event of limited resources?
  32. Question 2 Should L.L.Bean expand their product line in depth

    or in breadth, ie by allowing smaller lesser known retailers to include their products under the L.L.Bean brand that are previously not available?