30 August 2009

Life Cycle of E-commerce Websites

The life cycle for any e commerce website normally observe in five years span. An online marketer should know about the effect of 2 I’s on life of e commerce website which is , Interactivity and Individuality.

Introductory Stage:
Motive: Creating awareness

In this stage: Branding begins and quality levels are established. The search optimization process normally showing slow effect on search positioning. Webmaster should use viral marketing and search marketing tactics to pull the instant traffic. In this state we normally observe the conversion rate is under 1 %, and CPA is also little higher. Promotion is based on creating awareness and establishing a place in the niche market. Integration process is very crucial in E-commerce business model; webmaster should rectify all possible bugs and problems to make sure smooth future operations.

Growth Stage:
Motive: Penetration, Positioning and loyalty.

In this stage: Prices are steady to declining, as every participant in the industry is focused on market share and becoming the low-cost producer. Costs are declining with increasing volumes, and profits are improving. Distribution is increasing as well. Competitors are attracted to enter the market. The customer retention is main task to achieve projected ROI, Interactivity and Individuality is key to success. Product reviews and customers testimonials increase brand loyalty in the market.

During this stage, as competitors enter the market: Marketing strategy starts to shift from education and awareness to differentiation. The sales presentation moves to strong proposals and demands higher presentation skills. There is a need to develop trust. The sales cycle is longer, and there are more complex process yet not integrated to main stream, the strong technical back ends improvise your positing in the competition.

Maturity Stage:
Motive: Visibility (Reinforcement)

The market maturity stage occurs when the market has become saturated. During this stage: Sales growth rate tends to decrease. Efforts are focused on differentiation of the product. Pricing may be lower because of increased competition. More internal pressure is placed on reducing costs. Margins begin to shrink as marginal competitors are forced out of the market. Distribution is maxed, and promotions come into play as a way to encourage preference over competing products. Webmaster should think about new business model development in this stage only, using the brand loyalty of your consumer’s online marketer should innovate new product line or services for niche demography.

Decline stage:

The market decline is recognized by the downturn in the demand for the product. It may be caused by the introduction of an innovative new product or changing consumer tastes. As volume declines, competitors focus on maintaining market share while maximizing profits. Efforts focus on reviving the product by adding features and finding new uses.

In this stage, one of these can be done: Repositioning Withdrawal Run-Out Phase out. In this stage, the costs will remain steady or decline. Advertising should be reduced unless there is some hope of repositioning the product in an effort to prolong its life and the potential for profits.

E commerce website normally goes through above four stages. The Technical and Online Marketing ability decides e commerce business success.

E commerce Success story : eBay