Introduction The Internet has become increasingly popular. The number of Internet users is estimated to reach approximately 300 million by the end of 2002. (http:// www.sohu.com) With widespread acceptance and low-cost entrance, it is changing the world’s economy. Developing business opportunities in the Internet has grown considerably. “The impact of the Internet on business is akin to previous innovations that transformed not only one business sector but every business sector.”(Jaworski and Rayport, 2001) These significant changes in the environment require new approaches to think about business strategies.
The Internet greatly impacts on the media industry in recent years. In the wake of Internet environment, traditional media are going through a shakedown. The Internet can combine all the functions of traditional media such as newspaper, magazine, radio and television, as well as offer new functions of e-commerce, distribution and interactivity. “There are strong grounds for believing that contemporary media are undergoing particularly dramatic technologically driven change, …… This will be an era characterized by media interactivity, accessibility and diversity, with new freedoms for the customer.”(Briggs and Cobley, 1998) The rules of competition have changed in the new economy. Therefore, it is necessary to explore the business strategies of media companies on the Internet. In this essay, iVillage.com and Oxygen.com are chosen to analyze their e-strategies from a customer’s point of view.
Backgrounds of iVillage and Oxygen
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iVillage Inc., established in 1995, is recognized as a leading women media company and the number one source for women’s information online. iVillage.com is organized into branded communities across multiple topics of high importance to women and offers interactive services, peer support, content and online access to experts and tailored shopping opportunities. Content areas include Astrology, Babies, Beauty, Diet & Fitness, Entertainment, Food, Health, Home & Garden, Lamaze, Money, Parenting, Pets, Pregnancy, Relationships, Shopping, and Work. (http:// www.ivillage.com) Oxygen Media is an integrated media brand that combines the best qualities of cable television and the Internet to serve women. Founded in 1998 by Geraldine Laybourne, Marcy Carsey, Tom Werner, Caryn Mandabach and Oprah Winfrey, Oxygen consists of web sites including oxygen.com and Oprah.com, and a 24-hour cable network, available in 42 million homes, featuring music, talk, comedy, movies and sports. (http:// www.oxygen.com)
Target market: Women Both iVillage.com and Oxygen.com focus on a specific niche market – women aged 25 to 49. According to the Women’s Consumer Network, women control 85 percent of all personal and household goods spending. Women also consume more media than men per day (8.8 hours versus 8.2 hours), and they currently account for 43 percent of Internet and online service users. As Jewish businessmen conclude: do business in children and women’s market.
Furthermore, according to an iVillage Women’s Net Monitor poll taken in February 1998, the Internet is no longer a place to gather information passively. In fact, women are using it to solve problems in real life. 77 percent of women go online primarily to explore, but 86 percent stay because they find information that helps them get through their daily lives. In addition, more women rated the online community as an important part of their life.
The Internet is going to be the mode of discourse for the 21st century…. If women stay with the telephone, which is too costly, and letter writing, which is too slow, we will be left behind and we will be left out of the discussion, decisions and conversations. (Tucker, 1995) Thus, we can understand why women’s websites have grown and flourished. iVillage and Oxygen Media have attempted to occupy this powerful niche market. Each company develops a special strategy to attract more consumers.
Internet business model
The Internet business model is the system – components, linkages, and associated dynamics – that takes advantage of the properties of the Internet to make money. (Afuah and Tucci, 2001) A company’s business model gives it a competitive advantage and enables the company to make more money than its competitors. Business model indicates what value a company offer to its customers and what strategy to choose in providing the value.
iVillage makes most profits by selling banners, text-links and sponsorships from other business. This business is known as the “volume-based” model because volume is a vital factor to attracting advertising clients. However, more and more websites are competing for the advertising business, advertisers are unwilling to post ads on pages that are full of other ads. According to Jupiter Communications, Internet advertising is expected to approximately 1 percent of the total advertising spending in US. In order to survive in the fierce competition iVillage ventures e-commerce business model. Thus, this combined business model offers iVillage greater competitive advantage as well as provides more value to the customer.
Oxygen media combines the television and the Internet to create interactive websites. It plans to raise money through charging operators license fees and by attracting advertisers. Oxygen’s business model is unique and innovative. “The combination of Oxygen online and Oxygen cable is a futuristic and visionary approach that will shape the future of the new media industry.” (http:// www.oxygen.com) Each business model is the basis of company’s strategy. A simple definition of strategy is “How to beat the competition.” (Ries and Trout, 1986) iVillage and Oxygen are competitors in terms of same target market and on-line service. The more value they provide to the customer, the more attractive their websites are. Thus, the company who owns a large number of customers would have greater competitive advantage.
Evaluation of competitive strategy
Web site as a Brand For the Internet business web site is the most important brand because the web site is what everyone can remember and access with a simple browser. “From there on you need to guide your customers to the particular places they are allowed to go and to carry out the transactions they require.” (Amor, 2000) Web site is the basic marketing message on the Internet. It is an important feature of the Internet business because the brand can grow customer loyalty on web.
Name value iVillage.com has an implication of women society. Today’s women have much pressure than before. They play more roles such as mother, wife, daughter and employee. Moreover, women’s sensitive and dependent character enable them willing to share experience each other. iVillage comes from my village. When women see this sweet name she would imagine that place is leisured and comfortable. This name would attract women’s attention. As iVillage describe “a global neighborhood engages women a safe, supportive environment.” In fact, iVillage evolved into an online community where members exchange advice and develop relationships. In this respect, iVillage has learned most women’s psychology and established the good reputation among women Internet users.
While Oxygen.com is a little strange name compared with iVillage. Oxygen has an implication of life. “The brand brings to mind certain attributes and says something about the product’s values.”(Kotler, 2000) Oxygen.com represents the revolution of the media company on the Internet because the name is so unique. Oxygen media has infiltrated its innovative spirits into the name. It stimulates people’s curiosity and tempts them to surf on its web. However, traditional women may not interest in this name or accepted it after a long time. According to the intuition of women iVillage is quiet, safe and peaceful, while oxygen if full of adventure and exciting. Therefore, most women would prefer iVillage to Oxygen in terms of name value.
The design of web site is very important; as it is the first thing the customers are going to see. Both companies’ main business purpose is to attract and maintain women customers. “Web page is from a marketing point of view like the business card of your company.”(Amor, 2000) Attractive design of web page would definitely interest customer. The differences in web sign between iVillage and Oxygen will be explored from two aspects: one is the color schema, and the other is content.
Color has certain effect on the users. Color should support the message of the web page. Opening the web of iVillage, its color schema is light green, yellow or orchid that is the color of tranquil, intuitive and trustworthy. However, the colors chosen by Oxygen web page are red and black. Red is a very aggressive color, full of energy, determination and passion. Black is mysterious. Generally, the color schema to some extent indicates the style of the Internet business. IVillage is a comfort community where you can entertain, release and communicate. While Oxygen is an exciting place where you may experience interesting and modern life. However, the color schema of Oxygen may offend some customers who want to enjoy easeful life on the Internet. After all the red and black have the imagination of heavy topic. In this case, iVillage provides more value to the customer than Oxygen.
The most important thing on the web page is content. It is impossible to attract customer to return to look for new information if you let users leave the web page without giving them information. Entering the web sites of iVillage and Oxygen, you may find that iVillage compromises a large amount of information than Oxygen. Firstly, iVillage uses changeable picture that gives the customer a vivid impression. Secondly, iVillage has more items channel than Oxygen. This provides the customer more choice. Thirdly, the pop-up of Oxygen is too many compare with iVillage. Pop-up provides information to the customer, but sometimes the customer, who is not interested in this kind of advertising, may feed up this service. Finally, iVillage has established good feedback systems than Oxygen. For example, I registered on both iVillage and Oxygen. I received a confirm e-mail from iVillage, which contain a lot of information about the company. While until today, I did not receive any feedback from Oxygen.
Differentiation strategy “A firm differentiates itself from its competitors if it can be unique at something that is valuable to buyers.”(Porter, 1985) A successful differentiator finds ways of creating value for buyer. For the Internet media company, it creates value by raising customer performance, which “involves raising their level of satisfaction or meeting their needs” (Porter, 1985) In order to cope with fierce competition, both iVillage and Oxygen develop the differentiation strategy.
iVillage.com is the world’s largest online business for women. Candice Carpenter, CEO of iVillage, summed up the goal of iVillage’s offerings: “We strive to help women navigate through increasingly busy lives and maximize their potential in their various roles as parents, friends, spouses, partners, career women, breadwinners, employees, and individual.” Its differentiate strategy can be evaluated on three points.
Firstly, iVillage provides women with comprehensive information on the Internet. IVillage’s current channels and sites include Better Health, Career, Relationships, Food, ParentsPlace, Shopping, Fitness & Beauty, Work From Home, Travel, Pets, Astrology.net, Book Club, and Money Life. Each channel also includes many specific topics. iVillage tries to give women all kinds of information around their life. Owing to different roles of women acting in the society, their purposes on line are various.
Different customers buy different kinds of value. “Customer value is the sum of benefits received minus the costs incurred by the customer in acquiring a product or service.”(Treacy and Wiersema, 1995) Women can get all kinds of information they wanted on iVillage.com without buying newspaper or magazine. On this point iVillage offers their customer the lower cost products.
However, a large amount of information may cause some problems. Customers may be lost among the mass of news, topics and message. Sometimes they read the articles forgetting their initial intention. Next, it is not easy for customer to find the particular information among thousands of items. Although iVillage has a search service, it is still need time to find what you really want because there may be many articles attach to the key words. Finally, there is no guarantee about all the content is high quality and original.
Secondly, iVillage has developed its site into a community-oriented site. Offering support groups, bulletin boards, and buddies. IVillage has set up a community for every interest. “At any one time, there are some 1,400 ongoing discussion boards which bring together groups of like-minded women who share experiences or help each other solve problems.” (http:// www.ivillage.com) In this case, the consumer drove the site’s innovation. The company has to respond by further developing the offering to fit the needs and wants of its users.
Interactivity enhances the relationship between customers and the company. As a result, customer can be benefited from two aspects: First, the information is updated because the communication is ongoing every day. Whenever you enter into iVillage there are a lot of message on different bulletin boards. You can talk to many people as if attending the party. Instant and current communication gives customer the updated information about the topics they are concerned. Second, the information is much valuable and the customer can use it to solve the problem in real life. For example, the Work from Home section offers a software library filled with bookkeeping, billing, legal, payroll, and sales-lead software. From the Health Page, you can access the huge store of medical information. This feature of iVillage adds more value of the service to the customer. On the other hand, iVillage would have loyal customer as it provides more value to customer. Therefore, interactivity is an important differentiate strategy for iVillage.
Finally, iVillage is venturing into e-commerce. IVillage develops this strategy according to the changeable environment. Today, “more and more web sites are competing for the same revenue dollars from advertisers. Along these lines, advertisers have become less willing to post ads on pages that are increasingly congested with other sponsors’ banners and links. As such, pages are limited in the number of ads they can post, which in turn caps their ability to generate revenues.”(Afuah and Tucci, 2000) iVillage has an advantage to e-commerce due to its existing customer base and on-line community.
IVillage develops its e-commerce in a very clear way, especially for information service. For example, when I try to acquire the information about my constellation in the horoscope channel, it provides me some brief information. While for the details, I need to pay money. This may have two effects on the customer. One is to arouse the customer’s interesting and enable them to pay for the service; the other one is to frustrate or even annoy the customer because they cannot receive the instant information.
Oxygen.com Oxygen.com, backed by strong media personalities and heavy investors, has generated an interest because of its innovative approach to satisfying women’s needs. It combines the entertainment power of television with the power of Internet to create interactive television. This differentiate strategy is hard to imitate. Therefore, Oxygen erects barriers around its product market space.
As we know, with the Internet, it is considerably easier to learn about competitors’ products and technologies that underpin them. “With the databases on patents available on the Internet, an imitator can quickly search through its own patents and those of its target competitors and be in a better position to challenge the patents or to determine what it needs to leapfrog the competitor.”(Afuah and Tucci, 2000) Oxygen’s unique method to develop the Internet business has great competitive advantages.
Drucker (1985) asserts, Innovation is a specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or a different service. It is capable of being presented as discipline, capable of being learned and capable of being practiced. Entrepreneurs need to search purposely for the sources of innovation, the changes and their symptoms that indicate opportunities for successful innovation. And they need to know and apply the principles of successful innovation.
“Uniqueness does not lead to differentiation unless it is valuable to the buyer. Oxygen’s products deliver the following values to customer. Firstly, it is satisfying the various needs of the customer. Most women enjoy the program on the television. However, when they are on the Internet, they may lose opportunities to watch TV. Oxygen solves this problem in an innovative way. Its 24 hours cable connect enables you can watch TV program at any time when you are on the Internet. Next, the information about the TV program is easy to get. On the web page, customer will find TV schedule easily, and you can receive program information everywhere on Oxygen. Finally, Oxygen not only provides television service but also the favorite topics to women such as health, career, family, relationship and self-discovery.
Nevertheless, everything has two sides. Although Oxygen’s new style represents the trend of future media. Some disadvantages still exit, particularly when Oxygen tries to explore the international market.
First, Oxygen narrows the market segment. It is can only maintain the loyal customer who is both interested in television and the Internet. According to some people’s view, the combination of television and Internet may weaken their strength to some extent. The company’s energy and investment have been scattered. Therefore, the customer may think it cannot provide the high quality service. In addition, some women who do not like television would feel been bothered by the television information showed everywhere. Meanwhile women who prefer television to Internet would not like to get information of TV program though the Internet. Therefore, the Oxygen will lose some market share compare with iVillage.
Second, Oxygen.com has region restriction. The customer cannot see TV program if there is no cable accession. However, “Internet access and use around the world is large and growing every day.”(Currie, 2000) Approximately 100 countries now enjoy Internet access. There are around 20 million Internet hosts worldwide. If Oxygen only restricts its service within the US, it would lose the huge global market.
Who is the winner? In the Internet business, customers control the company’s success or failure. “We have entered an era vibrating with the din of small voices. Every citizen can be a reporter, can take on the power that be. The difference between the Internet, television and radio, magazines, newspapers is the two-way communication. The Net gives as much voice to a 13-year-old computer geek – as to a CEO or Speaker of the House. We all become equal.”(Siegel, 1999) Therefore, which company owns a larger customer and offers more value to the customer would beat the competitor. Based on this principle and according to the evaluation mentioned above, iVillage has superior competitive advantages.
First, the statistic below shows iVillage attracts and maintains more customer than Oxygen. (Source: Jupiter/ Media Matrix, January 2000, Women over 18) Next, iVillage can build a customer for life because of its updated and a large amount of knowledge and information. While Oxygen’s combination feature reduced its communicating function. Customers prefer iVillage not only for the entertainment but also for learning. Learning is along with life. From the history of iVillage, we can see it always stick to the customer-focus strategy.
It was the first company to offer the service for women. Then iVillage developed its site into a community-oriented site from its original content-only product. In recent years its attempts to e-commerce. All the evidence show iVillage can respond immediately to the customer’s needs, and develop effective strategies according to the changing environment. Consequently, it dominants the women market on the Internet and becomes the market leader.
Finally, iVillage Understands women better than Oxygen. From web design to content, iVillage tries to present a delicate and comfort home to women because most women do think a home is a wonderful place. While Oxygen likes an exciting and dynamic bar, where you can go there once a week but cannot stay for life.
In short, iVillage offers more value to the customer so it would be the winner according to my point of view. It is really a worthy website for women.
The Internet has changed the world’s economy. It is a trend for companies to do business on the Internet. iVillage.com and Oxygen.com are the media company on the Internet whose target market are women.
The combination of volume-based and e-commerce business model offers iVillage greater competitive advantage as well as provides more value to the customer. While Oxygen’s innovative business model, which integrate the television and the Internet, is hard to imitate.
The name of iVillage is quiet, safe and peaceful, while oxygen if full of adventure and exciting. Most women would prefer iVillage to Oxygen in concern of name value. In terms of web design, iVillage also provides more value to the customer than Oxygen.
iVillage provides women with comprehensive information on the Internet and develops its site into a community-oriented site. While Oxygen’s innovative method, which is restricted by region, narrows the market segment so that it cannot have large share as iVillage. iVillage understands the customer’s needs and responds quickly to the market change. It develops the service for women and by women. village’s customer-focus strategy gives its more competitive advantages as well as adding much value to the customer. Therefore, iVillage stands out of the fierce competition.
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