INFIBEAM

GROUP- A5
Objective:
To increase market share and profitability of the company.
To generate target revenue of Rs 2,000 crores
To increase off-line awareness and trust by acquiring customers.
Decision problems
Advertising- How to allocate the advertising budget of Rs 5 crores across different avenues?
Advertising agents- How and which ad agencies should be selected?
Acquisition cost- Whether to maintain the acquisition cost per customer Rs 100 as
compared to industry standards of Rs 1000 and if it is increased it by how much?
Analysis:
Consumer Buying Behavior:
Features
Online
Offline
Problem
Internal stimuli- Consumer search for Internal stimuli- Consumer search
Recognition the products if needed.
for the products if needed.
Consumers those who have habit of External stimuli- Advertising, Store
buying online, search for latest offers Display of products
and products
External stimuli-Advertising through
TV, direct e-mails etc.
Information Convenience- On road heavy traffic ConvenienceHas to face heavy
Search
can be neglected
traffic to reach the store
Evaluation Pricing- Ease of comparing prices PricingComparing
price
is
of
across brands
cumbersome
Alternative References- User reviews available
References- User reviews
not
s
Variety- Wide variety compared to available
physical retail
Variety- Less variety compared to
online store
Purchase
Feedback-Feedback from friends and Feedback- Feedback from friends and
Decision
relatives.
relatives
Salesperson- Suggestions of the
sales person affects purchase decision
Self evaluation- Satisfied after
seeing the product
Brand loyalty, Store loyalty
Post
Degree of satisfaction- If expectations Degree
of
satisfactionIf
purchase
from the product is met, it affects expectations from the product is met,
behavior
positively on consumer online buying brand loyalty increases
behavior
Exchange or Return- Process of
Exchange or Return- Process of exchange or return of defective
exchange or return of defective products products is quick.
is time consuming
Challenges for survival:
1. In addition to maintaining an interactive and easy-to-use website, an online retail company
has to manage supply chain from the manufacturer to the end customer. A high degree of
coordination is required between suppliers, online retailers and delivery service providers.
2. Low penetration of Internet and lower availability of payment options lead customers away
from online shopping. In the year 2007, only 3.7% penetration was achieved in Indian
population and 31% of the Internet users had credit cards in 2008.
3. There exists high level of competition in the online retail business. Low entry barriers and
low initial fixed cost resulted in huge number of websites coming up. Also the industry is
characterized by high probability of replication by new entrants.

4. As the goods are sold across different states, the firms face complex taxation process
specially when they are experiencing high growth.

Economic Logic:
Year
Avg. Transaction
Avg. no of transaction /
customer
Revenue/ customer
Gross margin/ customer (9% of
revenue)
Customer Lifetime Value (COC
8%)
Customer
(All figures in Rs.)

2007
1500
3

2008
1500
3

2009
1500
3

2010
1500
3

4500
405

4500
405

4500
405

4500
405

1,341.4
1
Lifetime

Value:

Competitor Analysis:
Website

USP

Product
Categori
es

No. of
Users

Infibeam

Flipkart

eBay

Viewer Friendly
interface,
Product
available at
lowest possible
price
throughout year
Books,
electronic
gadgets, health
equipment and
gifts

Word of
mouth
publicity

Auction
and Buy
it Now
option
for
purchase

Reliable
operation
at low
prices

Attractive
deals on
new
consumer
services

Books
and
electroni
c
gadgets

Around
50,000
product
categorie
s

Electronic
gadgets,
books,
videos,
music and
gifts

Books,
apparels,
car
accessories
, health
and
beauty,
gifts

0.5
million

90
millions

4 millions

Indiaplaza

Advantages over competitors

1.
2.
3.
4.

Viewer friendly interface

Average time taken in delivery is less than two day
Lowest possible price throughout year
Launched Magic Box, in which one specific product was
offered at heavily discounted price
5. Higher repeat purchase than industry average
6. Cash on delivery payment mechanism
Recommendations

Redif

Indiatimes
Shopping
Good
distribution
network and
different
payment
options
Branded
apparels and
Electronic
gadgets

47 millions
Disadvantages
over
competitors
1. Limited product categories
offered as compared to eBay
2. Trading facility is not available
3. Less no. of active users than
competitors
4. Less promotional activities

1. As per the calculation, the customer life time value will be Rs. 1,341.41. So, it is logical to
increase the acquisition cost per customer
2. Total ad budget of Rs. 5 Crores is allocated on the basis of actual reach per unit ad expense.
Total reach that can be achieved will be 3660000.
Reach/ Rs.
Conversion
Actual Reach/
Allocated Ad
Media Channel
Total Reach
100000
Rate
Rs. 100000
Budget (Rs.)
1000000
0.01
10000
20000000
2000000
TV/ Direct Mail
100000
0.05
5000
10000000
500000
Internet
100000
0.07
7000
14000000
980000
Email
50000
0.06
3000
6000000
180000
SMS
50000000
3660000