The company known as eBay, which started in 1995, grew significantly within a decade to become the number one e-commerce site in the world by sales revenue. In 2008, Donahoe took over as the new CEO of eBay. This was a time when the company was facing issues with growth and consumer behavior was changing. What used to be a thrilling experience for buyers was now an inconvenient waste of time and money. Consumers who were eager to bid against each other for products online were now satisfied with buying new products at fixed prices.
Therefore, ebay’s turnaround strategy was to bring the consumers the best experience to find what they want exactly how and when they want it. Although traditional eBay sellers complained about the difficulty for them to do business profitably with the new strategy, Donahoe believed buyers wanted fixed prices, quick service, and free shipping. I agree with Donahoe’s turnaround strategy because eBay had to focus on the market demands to see growth.
Something had to be done in a market where consumers wanted fixed prices and free shipping that they were receiving from companies like Amazon. om. Marketing segmentation is dividing a market into smaller segments of buyers with distinct needs, characteristics, or behaviors that might require separate marketing and develops profiles of the resulting market segments. Creating applications for smart phones and tablets was a good way to separate a specific department to its customers. For example, the eBay Fashion app allowed users to browse through products from the fashion department. Buyers were able to take time out of their day and make more purchases with mix and match features.
Using the Boston Consulting Group (BCG) method, companies like eBay classify all its SBUs according to the growth-share matrix. Market growth rate provides a measure of market attractiveness and relative market share measures a company’s strength in the market. The four types of SBUs are stars, cash cows, question marks, and dogs. Stars are high-growth, high-share businesses like eBay. When their growth slows down it turns into cash cows, which need less investment to hold their market share.
Pepsi is a cash cow in the sense that its not growing but it is making large profit in the meantime. Question marks are low-share business units in high-growth markets. A question mark could be a small garage that does car repairs because it has a small market share but a large demand for car repairs. Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves. An example of this would be a small town theatre business.
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Topic: Ebay Turnaround Strategy
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