IVillage.com - the leading womens network online.

The main part of iVillage.com business model is a community model. The viability of the community model is based on user loyalty that is highly emphasized by iVillage.com. Users have a high investment in both time and emotion and the revenue can be based on the sale of ancillary products and services or voluntary contributions.

As a part of a community model, iVillage.com is a knowledge network as well. The site provides a source of information based on professional expertise and the experience of other users in forum and just articles where persons seeking information can pose questions and receive answers from someone knowledgeable about the subject ().

The company is building upon its business model in six areas: community, sponsorships, commerce and direct marketing, consistent content and broadband initiatives.

The success of the company as a whole speaks for the success of the combined business model. The company reached their goal: the traffic is increasing drastically, the concept of community as the optimum way to encircle women in their important life events is highly attractive as well. iVillage.com is accelerating its sponsorships, leveraging its commerce business, putting in place a strong foundation for direct marketing, building consistent community and actively pursuing key broadband initiatives with NBC, as well as internally, to drive its brand.

According to Candice Carpenter, Chief Executive Officer of iVillage Inc., the company is taking its very targeted demographic and creating a consistent and inviting environment, including transactions, where women can seek support and find solutions to their problems. iVillage.com is bringing women into the iVillage.com network at key points in their lives on issues that are most important to them, such as health, work and parenting, and it is building sustainable revenue streams from the loyalty derived from that relationship. Through the acquisitions of iBaby and Lamaze and the recent iMaternity joint venture, iVillage.com have made it possible for women to enter the iVillage franchise at the time of pregnancy and read magazines, join support groups, view in-hospital television channels, research baby names, as well as purchase maternity clothes and baby products. Again, the Chief Executive stated that the company’s strong results demonstrate the positive momentum in its business model that will encourage the strengthening of its brand leadership and lead to new results in reach, members and revenue, and further growth of iVillage brand. ()

2. The choice of market to expand

1. Balkan area in brief

Balkans are a group of countries that cover a Balkan peninsula that includes Albania, Greece, Bulgaria, the European part of Turkey (Eastern Thrace), and most of ex-Yugoslavia (Serbia and Montenegro, FYROM, Bosnia and Herzegovina ). It covers about 213,000 square miles (551,700 square kilometers). Romania is not a geographic part of the peninsula. But it is often considered a Balkan country because of its close ties with the region in history and politics.

About 70 million people live in the Balkan countries. Principal nationalities include Albanians, Greeks, Romanians, Slavs (Bulgarians, Serbs, Macedonians), and Turks. Most of the people belong to the Eastern Orthodox Church, but there are many Roman Catholics and some Muslims.

3.2 The decision about the target market

iVillage.com is planning to expand on the Balkans. However, due to the high diversity of the market, it’s not a good idea to expand to the whole area at once because the entrance to different parts of the market will require different strategies and business models. Conditionally, the area of Balkans can be divided into 3 sub-areas: Muslim (Albania, Turkey), European (Greece), ex-Yugoslavian (FYROM, Serbia and Montenegro, Bosnia and Herzegovina), and CEE (Romania, Bulgaria).

We have made a decision to enter a market of ex-Yugoslavian countries, namely FYROM, Serbia and Montenegro, Bosnia and Herzegovina and a Greek market as well. This decision is based on the following facts:

• the total population of the market is 27.2 million people since higher population assume higher potential for business expansion;
• all countries of the ex-Yugoslavian region share common language that will ease the running of business while Greece is the only country of the Balkan area that is the member of EU that may be beneficial in terms of legislation and trade;
• spreading the risk through expanding to both sub-areas;
• all countries of the region are closely interrelated in terms of mentality, culture, education etc.;
• since the countries of the Yugoslavia region are emerging markets, they enjoy high growth rate and have big potential although Greece is a developed country and a member of EU, its Internet industry is still underdeveloped and is about to grow up to European level;
• the lack of competition in the area since foreign companies just start to explore these markets; thus iVillage.com may benefit from being a first-mover in ex-Yugoslavia and face little competition in Greece;
• the people of the selected target market have European mentality, unlike Muslim sub-area that is drastically different and difficult  to reach as a target group;
• there are over 6 million Yugoslavians abroad that may use the iVillage.com cite within the target market for gift  and communication services;
• for economic reasons presented in Table1:

Table 1: Main social and economic indicators for Balkan region countries:

2. The decision about the target group

According to the World Factbook, 2002 () the number of Internet users in the selected market in the year 2001 was the following: Serbia and Montenegro – 400,000, FYROM – 100,000, B&H - 3,500, Greece – 1.33 million (1999). Taking into consideration the rapid growth of the Internet industry (approx 15%-20% annually), we would assume that the total number of Internet users in the selected target market nowadays is around 3.6 million people.

We decided to target women with the following characteristic:

 Our decision to change the age group from 25-54 (the current target group of iVillage.com) to 20-45 due to the reason that especially in ex-Yugoslavian countries younger women tend to be heavy Internet users while few women over 45 are using it for any purpose.

3. Implementation plan

In order to enter the selected target market, we developed the following implementation plan that consists of 11 steps:

1. Outsource consultants from the home markets: this step is necessary since iVillage.com Inc. that is an American company has little knowledge about the Balkan market. However the company know-how combined with the expertise in the Balkan region will gain the company the exact profile of the market.  
2. Conduct market analysis with the help of home market experts.
3. Establish realistic operational and performance goals & objectives concerning major elements of the business: traffic, customer loyalty, sales volume etc.  
4. To choose the partner for possible strategic alliance – examine possible acquisitions of existing portals and in case of Greece building strategic alliance with competitors for spreading the risk.
5. Conduct system and site development taking in consideration that it should be done in different languages and in correspondence with the local tastes and preferences.  
6. Test it before making the site available for the potential visitors and update the site when necessary.
7. Make up marketing plan:

1.  Product – offer wide variety of products and services that are applicable for the demand of target market.
2.  Price - the price of products available on the site should be adjusted to purchasing power of the given target group.
3.  Promotion of the iVillage.com products and services should be done through different medias such as: internet sites e.g. companies main sit (American) so that the people who are living outside the target market but are still interested in purchases could found out about it, different women magazines covering the same channels as the iVillage.com, posting the ads of the internet address at universities and other women institutions.
4.  Place (distribution) - managing of logistics and supply chain.

8. Make up financial estimations – as any new venture we are not expecting the high profits but due to the high growth rate of the target market we believe that business will become profitable in perspective. The detailed financial estimates will be presented to potential investors.
9. Performance review – the performance review of the sites should be done on regular bases in order to use as an improvement tool for future restructuring and re-development of the sites.
10. Measure the impact (both positive and negative) on the targeted group and evaluate it for future operations.
11. Constantly revise your plan to cope with demand of the target group.

4. Management issues to be discussed

In conducting the feasibility study of the venture, it is essential to use some well-established managerial techniques, such as SWOT and Five forces analysis for getting better picture of the business potential.

3. SWOT analysis

The SWOT analysis is very beneficial in analyzing iVillage.com’s external and internal environment since it documents the attractiveness of the company’s overall strategy and explains why it has been extremely successful in gaining market share in the e-Business market. It has a very attractive, hard-to-imitate set of resource strengths and competitive capabilities. We assume that these factors will help the company with new market expansion and mark the weaknesses and threats that can be minimized in the new market. Thus, the strengths, weaknesses, opportunities and threats of iVillage.com are provided below:  

Strengths:

• Widely recognized brand name.
• Differentiation of company’s products and services.
• Highly concentrated in women’s sector.
• Know how - technology, business operations etc.
• Cost advantage over its direct and indirect competitors.
• Recognition of widely known e-commerce business.
• Web site organization and convenience to use.
• Wide coverage of market segments.

Weaknesses:

• The only targeted market is the woman one (small coverage of mail issues and interests).
• Lack of the cultural knowledge for Balkan region.
• The low number of women participants on the net (in Balkan region).

Opportunities:

• New market opportunities to expand and generate revenues.
• First mover on the foreign market (ex-Yu and Greece).
• Possibility of mergers, joint ventures strategic alliances.
• Market penetration.

Threats:

• Possible entrance of competitors.

• Taxation
• Political, economical, and financial stability.  
• Country’s legal framework.
• Exchange rates, currency differences, inflation, and the interest rates differences.

4. Five forces analysis

According to the Journal of Business Strategy (1995), five forces analysis may be very useful for analyzing external competitive environment of the company. It has similarities with other tools for environmental analysis (e.g. PEST), but tends to focus on the single strategic business unit (SBU) rather than a single product or range of products. Five forces looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

Threats to entry

        Barriers to entry are those things that would deter an individual or organization from entering an industry or market. In case of Dot com companies, the barriers to entry are not high. Almost everybody may start an e-business owning a computer and having an idea; thus the model itself is easy to imitate. There are some barriers that include initial capital, patents, access to supply channels, technology requirements (Chou-Hong et al., 2001).  However, iVillage.com gained popularity because of the online community that they have built. The company has also leveraged its market position and virtual community advantages over time to drive profitability out of the industry, increase market share and disrupt competitors. (Journal of Business Strategy, 1995)

The power of buyers

        iVillage.com enjoys high power of buyers due to the fact that the logic behind iVillage.com’s strategy is satisfaction of final consumers. Moreover, because there are alternative ways of purchasing products proposed by the company, buyers have high power over it. From the other perspective, from the point of view of articles database, discussion boards and other additional services, the power of buyers is quite low because iVillage is barely the only one providing such a wide range of personalization.

        Thus, understanding the power of customers in an industry is important because it helps to identify areas that can help an organization gain an advantage over its competitors. (Journal of Business Strategy, 1995)

Power of suppliers

        Suppliers have virtually no power over iVillage and must compete on cost or other product characteristics due to the fact that the iVillage can chose from lots of different suppliers. However, taking specific suppliers, with its innovative and in a way unique product one may discuss than in this case the power of suppliers in highly significant.  (Journal of Business Strategy, 1995)

The threat of substitutes

        Substitute products include anything that may displace the product or service being offered in an industry.  When done with open-mindedness and imagination, the evaluation of potential substitute products is an excellent means of keeping an organization’s head out of the sand and focused on potential threats and opportunities.

        Speaking about the iVillage, it has no high threat of substitutes at the moment even though there are number of potential competitors focusing on the same target group.  However, theoretically any big competitor of iVillage can imitate the similar business model with given resources and access to both suppliers and customers. That’s why iVillage is trying to expand its activities as much as possible (online services, personalization, customer support and others) in order to gain customers for life. Moreover, it is important to mention that the iVillage is highly innovative and its business model is complicated, so while the potential competitor will spend time and money on imitating the iVillage present model, the iVillage.con itself will innovate it and gain customers with the new features. Thus, the threat of substitutes is not high since the imitator risks to be the forever follower, but never a leader (Magretta, 1998).

Competitive rivalry

        As discussed by the CEO of iVillage.com, Camdice Carpenter the strategy of the company is based on helping women to navigate through increasingly busy lives and maximizing their potential in their various roles as parents, friends, spouses, partners, career women, breadwinners, employees, and individuals. Due to the statement above one may argue that this is very difficult to follow. Hence, the direct rivalry among competitors does not actually exist but this is not the reason to stop with new and innovative ideas that may gain even stronger advantage for the future. (Napach, 1999)

5. Competition analysis

iVillage.com is one of the largest online destinations for women. According to  iVillage.com's traffic grew 13%, to 102 million average monthly page views during the second quarter of 1999, compared to average monthly page views of about 90 million in the first quarter. Important to revenue growth, second quarter ad views grew 40% over the prior quarter. According to Media Metrix, iVillage.com reported 4.0 million unique visitors in the month of June, reaching 6.4% of combined home and work Internet users. Including AOL visitors, reported in a custom study by Media Metrix, and overseas visitors, iVillage.com unique visitors totaled approximately 6.0 million in the month of June 1999.  In adittion another research done by Feliciano (2000), reports a number of 5.8 million visitors solely for March,2003. Because of this statistical data it can be assumed that today there are even more or the same number of traffic visiting iVIllage.com. On the other hand if the same is to be observed for Reflect.com it can be said that even though a particular number for visitors cannot be found it will be most probably by a high extent lower than the one from iVillage.com. Amongst other information, this generalization can be supported by the following explanation of a most recent Internet Research.

According to an Internet research for current top sites as of April, 2003, iVillage is positioned on the 3rd place while Reflect.com holds the 8th place from a total of 10. Considering the fact that the research has no companies on the 9th and 10th place, it can be said that Reflect.com is holding the last position on the top 10 site research. Taking things a step further it can be said that iVillage.com is a worldwide known site. According to the previously mentioned research made by Feliciano (2000), everybody (meaning mostly in the USA and UK) knows about this site, because it has been heavily marketed and different papers starting from The New Yorker ending with The Industry Standard have written about iVillage.coms founder and CEO Candice Carpenter.

Furthermore, when comparing Reflect.com and iVillage.com in relation to their target market, it can be said that iVillage.com target market is wider and it covers a broader range of categories, products and services. Viewing at the palette of product and services for both e-businesses, it can be said that Reflect.com offers more of an e-commerce product content-only website, while iVillage.com site encompasses and has evolved from product content to community-oriented and it has further developed its product to include e-commerce. Considered generally, iVillage.com is the pioneer in online community establishment.

“The virtual community of the network is the focus for a grand project of social vitalization and renewal. Under conditions of virtual existence, it seems possible to recover the values and ideals that have been lost to the real world. Through this new medium... we shall be able to construct new sorts of community, linked by commonality of interest and affinity rather than by accidents of location” (Robins, 1995).

According to O’Leary (1999) and taking into perspective this citation, the vitality of iVillage.com lies in its communications services. iVillage.com’s strength is in the virtual communities that it has nurtured. According to O’Leary, its membership has crossed the two key thresholds for creating a virtual community: iVillage.com has become large enough that almost any conversation can be sustained; and its members are sufficiently like-minded that they can make genuine, enriching connections with one another. When comparing to iVillage.com, Reflect.com does not have the advantage of having an online established community because its business is product and e-commerce oriented. Finally, having an online community iVillage.com is in a better position of not having to promote heavily new products services or sites due to its existing customer base. This advantage of iVillage.com can be capitalized and used as a competitive tool for its future e-commerce ventures.

As for a target market, Reflect.com is targeting the female market at the age of 21 and above that is considered to be Internet Female Web users with an interest in beauty and/or fashion (Ziglar, 2002, found in file Intercept Interactive). In addition, it can be said that Reflect.com customers are “beauty involved”, meaning that they are willing to invest the extra time in designing their own beauty product solutions. On the other hand according Napach (1999), iVillage.com is the most impressive site for women to date. It strives to represent “all ages and stages of woman’s life”, and all kinds of women-working and nonworking, with investment portfolios and without, married and single, etc. In one sentence iVillage.com provides solutions for women’s lives in a “well-lit, supportive community environment”. Because of all these latter mentioned reasons, it can be said that iVillage.com is a better investment alternative because it targets women in almost all of their aspects of life referring to family, career, beauty, health, everyday problems, maternity, sports, politics, everything.  On the other hand Reflect.com covers only beauty and looks aspect of a woman’s life. When considering the Balkan countries investors should have in mind the history, trends and culture of Balkan women and see that beauty is not their ultimatum interest and goal. Even though beauty is something that counts as well, Balkan women enjoy happiness and fulfillment in aspects such as family, career and harmony.

Another reason for choosing iVillage.com over Reflect.com is their most sophisticated editorial content among the women’s Web sites. It is easy, fast, convenient and fun to use. Basically it has a variety of choices that can maintain attention and devotion of users. On the other hand, even though Reflect.com is also appealing and well organized on sight it tends to test users’ patience with long questionnaires and time consuming inquiries only for an example a face cream.    

Thus, the key points concerning the advantages of iVillage.com can be summarized as the following:

• fast traffic growth;
• It is ranked as the 3rd best site;
• worldwide known name;
• target market is wider and it covers a broader range of categories, products and services;
• iVillage.com is the pioneer in online community establishment;
• communications services provided;
• most sophisticated editorial content among the women’s Web sites;
• fast, convenient and fun to use.

  Conclusions and recommendations

        The above report presented an investment proposal for the expansion of iVillage.com to the Balkan market.  Since the Balkan area includes a number of countries that are quite differentiated in terms of people’s mentality, buying preferences, culture and economic development, the area was conditionally divided into sub-areas. Further thorough examination of them from economic and strategic perspective led to the decision about the choice of final target market – countries of ex-Yugoslavia (Serbia & Montenegro, FYROM, Bosnia & Herzegovina) for the strategic issues and Greece for its highest economic development within other countries of the Balkan region.

        Obviously, there is a huge gap between the strategy perceived by iVillage.com in the US and the one that should be conducted in the Balkans. The propositions concerning different target group was made for the reason that Internet in targeted countries is used by other demographic groups and the possible implementation plan for reaching this group.

        Since the investors are considering other investment alternatives, the plan presents a competition analysis of iVillage.com and the advantages the company has over its competitors and other companies that are not direst competitors (e.g. Reflect.com). iVillage.com has particular weaknesses and threats as well. There are monitored in the above report for further consideration by the management with the purpose to minimize them and turn into weaknesses. As one of the solutions, a strategic alliance may be formed with the local business units in order to share risks and get an inside to the selected target markets.

        Finally, the recommendations for iVillage.com on Balkan include:

• build its strategy on the strategic business assets;
• provide high quality content for getting site stickiness on Balkans as well;
• to run a referral program for new users especially those with medium Internet literacy;
• provide one-to-one consulting services;

        There is a recommendation for the investors as well. First of all, there is always a dilemma faced by eBusinesses – to choose between growth and profits. Logically that profit-making is the key goal of any investor. However, one should not forget about the strategic issues of long term returns that may heavily exceed the short term ones. Since the target markets have high growth rate and potential, they are likely to generate profits in the future.

 

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References:

Feliciano, K. (2000) Ladies’ Choice, Adweek Eastern Edition, 41(23), p.70.

Magretta, J. (1998) The power of virtual integration: an interview with Dell Computer’s Michael Dell. Harvard Business Review, 76(2), p. 72-85.

Napach, G. (1999), A Site of Their Own. Cablevision, 24(8), p. 36.

O’Leary, M. (1999) iVillage Creates  Web Global Village. Information Today, 16(6), p.22.

Robins, K. (1995), Cyberspace and the World We Live In, pp.135-156 in Kolar-Panov, (2002), Internet in Macedonia: First Steps towards the Future.

Tool Usage Rates (1995). Journal of Business Strategy, 16(2), p. 12.

Ziglar, C. C. (2002), case study: Reflect.com, available online from  

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