Table of contents

Chapter 1: E-business Concept Description! 4

Chapter 2: Environment and Marketplace! 52.1 SWOT Analysis! 5!! 2.1.1 Internal Strengths and Weaknesses! 5! 2.1.2 External Opportunities and Threats! 5! 2.1.3 Extended SWOT Diagram! 62.2 SLEPT Analysis! 72.3 Impacts of the Internet! 102.4 Competitors! ! 10! 2.4.1 Competing Values! 10! ! · iFrogz.com! 12! ! · Bobsmade.com! 13! ! · Sennheisernordic.com! 15! 2.4.2 Differentiation from Competitors! 16! 2.4.3 Co-branding! 16

Chapter 3: Strategy! 173.1 Vision and Mission Statement! 173.2 Value Proposition! 173.3 Supply Chain Management! 18! 3.3.1 Upstream Activities! 18! ! · Upstream Suppliers! 19! ! · Upstream Intermediaries! 21 ! 3.3.2 The Organisation! 22! ! · Storing! 22! ! · Printing! 22! ! · Packing! 22! ! · No Physical Store! 23! 3.3.3 Downstream Activities! 23! ! · Downstream Intermediaries! 233.4 Risk Management! 253.5 Infrastructure! 26! 3.5.1 Intranet! 26! 3.5.2 Business-to-business Extranet! 27! 3.5.3 Consumer Extranet! 27! 3.5.4 Website Interface and Options! 28! ! · Website Front Page! 28! ! · How to Design the Headphones! 28! 3.5.5 Buying Process! 29

Chapter 4: Marketing and CRM! 314.1 Competitor Analysis! 31! 4.1.1 Internal Capabilities! 32! 4.1.2 The Core Proposition! 32! 4.1.3 Value on Social Channels! 324.2 Target Group and Customer Segment! 334.3 Demand Analysis! 344.4 Channels! ! 35! 4.4.1 Search Engine Optimisation (SEO)! 35

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! 4.4.2 Google Adwords! 35! 4.4.3 Affiliate Marketing! 35! 4.4.4 Online Advertising – Social Networking Sites! 36! 4.4.5 Viral Marketing! 36! 4.4.6 Community ! 37! 4.4.7 Discount Services! 37! 4.4.8 Celebrities! 384.5 Customer Relationship Management (CRM)! 384.6 Revenue and Cost! 40! 4.6.1 Revenue Streams! 40! 4.6.2 Cost Structure! 40

Chapter 5: Future Possibilities! 425.1 Expansion to Other Countries! 425.2 Software for Copyright Issues! 425.3 NGO Collaboration! 435.4 Product Expansion! 43

Chapter 6: Reflections! 44

Chapter 7: References! 45

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Chapter 1: E-business Concept Description

Unique Headphones is an online shop providing people with the opportunity to customise great sound quality headphones so it fits their personal expression. Not only will they have the opportunity to customise, they will also be sure that no one else has the same design, as our company will guarantee that it is impossible to create two identical pairs of headphones.There are five different models, with ten different base colours, on which the customer can design. They are all over-ear headphones, as in-ear headphones are too small to give people the ability to customise properly due to a lack of space. People can create their own design in the company's web based drawing program, scan in a drawing, insert a picture, or choose from one of the pre made designs made by one of the company’s artists. This gives the customers free reins in creating their special pair of headphones.

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Chapter 2: Environment and Marketplace

When starting a new business it is important to make an analysis of the internal and external environment the business is going to operate within. This is done to make an evaluation of the business’ chance of being successful.

2.1 SWOT Analysis

We have chosen to use the SWOT analysis method to gain an overview of our internal strengths and weaknesses and our external opportunities and threats.

2.1.1 Internal Strengths and Weaknesses StrengthsUnique Headphones’ biggest strength is the personal and unique design that our customers are guaranteed. Beside this strength we are also very concerned with the sound quality of the product. This means that we can compete with other high quality sound brands in the headphone market. Another internal strength is our possibility for expanding our business in the future - this will be elaborated in section X. Future Possibilities.

WeaknessesSome of our weaknesses are much related to the things that also strengthens the business. Since the products are based on unique designs, one of our main strengths, we have a problem with return rights, since we cannot sell one customer’s unique headphones to others. Therefore, our customers have to agree to buy a product without the opportunity to return it. Of course, this does not apply if there are issues concerning the right to invoke lack of conformity. It is especially a weakness because the business only exists online, which means that the customer cannot interact with the product beforehand. Further, we must consider that we are dealing with personal and unique designs, which means we cannot mass produce items. Therefore, the customer must expect a certain production time. Last but not least, we have a brand establishment barrier. This is always a start-up company’s problem, and it is a weakness our business hopefully will get rid of fast.

2.1.2 OpportunitiesWe believe there are good opportunities to compete in the headphone market, because we introduce something new and innovative. We want to combine quality products, cool designs and customisation, making this combination a key differentiation on the market, as we also

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assure completely unique products. Since no other headphone company provide such a product, we consider Unique Headphones as a first mover within this market. Another opportunity is that we have the possibility of co-branding. When we have established our brand, we have great opportunities to collaborate with other companies.

ThreatsOur biggest threat is that the concept with uniqueness can easily be copied by other companies, who have an already established brand. Therefore, it is very important that we brand our business in the best way possible, which will be clarified in the marketing section. As our customers are given free reins on their designs, another threat to our business is the copyright issues, which will be elaborated in our SLEPT analysis below.

2.1.3 Extended SWOT diagram Below is a visualisation of our SWOT diagram including an extension with strategies to emphasise on the strengths and opportunities and try to minimise the influence of the threats and weaknesses (Chaffey, 2011, p. 254). Reasons for the different strategies chosen will be explained throughout the report.

Figure 2.1: Extended SWOT diagram

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2.2 SLEPTThe macro-environment concerns the international, technological, country specific and society depending factors that can affect your business.

Figure 2.2: The Environment in Which E-business Services are Provided (Chaffey, 2011, p. 50)

A good way to look at this is with the SLEPT analysis (Chaffey, 2011, p. 180). The factors in the macro-environment affecting a business are:

SocialLegal and ethicalEconomicPoliticalTechnological

The social factors are about consumer behaviour, lifestyles, and the general trends in society. As our product is a consumer good and not a thing that is necessary for people to survive, we will have to follow the general trends to make the product a necessity for the consumers. A lot of companies today give their consumers the opportunity to customise their products, like Nike (NIKEiD, 2012) and Dell (Dell, 2012). They do this as: “Consumers may experience joy during the co-design task as a result of the fulfilment of an intrinsically

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rewarding, artistic, and creative act” (Mourlas and Germanako, 2010, p. 12). Making the consumers happy and providing them with a great experience is always the aim of a company. We try to achieve this goal by giving the customer the ability to customise, as we see a trend developing within this area.  

The legal factors involve being up to date with laws concerning your area of business. In our business area we should be aware of copyright issues as people might want to print a copyright protected image or logo on their headphones.Another important thing to consider is, if we should expand the business to other countries, as these might have some different legal restrictions for us to consider. Therefore, we will have to acquaint ourselves with these before expanding the business internationally.Lastly, it is important to consider privacy issues. People are interested in knowing how the information they provide to the company will be used. This is an important factor to consider in relation to our website, as we will have to give people a feeling of security when making transactions on our website.  

A big ethical issue is the fact that we are giving people free reins on their design. This means they are able to design extreme illustrations, e.g. nazi or sexist motives, that might offend other people. We have decided that since we in Denmark have freedom of speech, we will not limit people in what they can do on their headphones. However, we will on the website make it clear that we as a company are not under liability for any of the personal designs.

The economic factors are much intertwined with the social factors, since the economic factors influence people’s spending power. As Denmark is currently in a recession it can be risky to start up new businesses as ours, this as people may not be willing to pay for things that are not a necessity. Still, it seems that people generally do not cut down on electronics but merely on travels, restaurant visits and buying new cars (DST, 2011-09-28). Therefore, we believe there still is a market for designer headphones. Another economic factor to consider is how people’s online buyer behaviour is. This is not a problem we see as a challenge, as a lot of people buy online in Denmark (DST, 2011-04-29).

Political factors relates to the government and the rules they set. The issues for this area are for our business very much related to the issues mentioned in the legal factors.

Lastly, there are the technological factors, which is about being aware of the technological changes. The technological changes in the headphone and sound industry are constantly

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evolving. There is for example a trend of making headphones wireless. Some of these changes might affect our business in the future, but for now we do not see any way the general look of an over-ear headphone (with the two big round shapes on your ear) will change dramatically. However, it is important that we constantly do an environmental scan (Chaffey, 2011, p. 49) and import the newest designs and technologies. Otherwise, we will not be as interesting for the customer and might even lose them if we do not stay up to date.

The above-mentioned factors are shown in The Waves of Change (see Figure 2.3) (Chaffey, 2011, p. 181). It illustrates how fast changes happens in the different areas. In regards to our business we are very much concerned with the social and pop-culture areas. As these are fast evolving we will have to explore the trends often to stay competitive in the market. The technological development does not change as fast, however we will also have to stay updated in this field.

Figure 2.3: Waves of Change (Chaffey, 2011, p. 181)

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2.3 Impacts of the InternetWhen starting up an e-business concept the Internet has a crucial role. Before the Internet it was not that easy to start up a business in new markets as one needed a physical location to place the store, new employees, and physical advertisements to get people’s attention. This has become a lot easier and cheaper with the Internet, as many of the previous physical activities can be done online. For example, one can just choose to expand to other nations without having departments in these countries. This will not require a lot of costs, as only a few changes on the website regarding language and shipment information is necessary. Based on Porter’s Five Forces theory, Chaffey (2011) states that the barriers of entry, with the Internet, has become very low and this creates a threat for the already existing businesses (p. 259). Still, to have success when starting up one needs to be market leaders in marketing and customer service as these are the barriers of success (Chaffey, 2011, p. 259). The barriers of success are today more important to consider than the barriers of entry, as these are relatively low. Another important thing to consider when starting up a new business is that the Internet has made it a lot easier to introduce new business models and products. This makes it even more important to do an environmental scan often, as to determine where the competitors are heading and how one can differentiate (Chaffey, 2011, p. 259).

The roles within the marketplace have also been switched as the consumers have become more powerful (Chaffey, 2011, p. 259). They are now able to evaluate and compare prices on the different products forcing the companies to compete on their prices. Today, a company will have to focus a lot on the reviews given by the customers. If they are bad this may have great consequences in regards to selling to customers.

The possibilities and threats that the Internet provides are of huge influence to our business. We exploit the options the Internet provides in terms of entering the market at relatively low cost, but we also have to be aware of the additional challenges it creates in relation to the customer.

2.4 Competitors

2.4.1 Competing valuesIn order to differentiate from other similar e-businesses, it is important to do a competitor analysis of the current businesses on the same market (Chaffey, 2011, pp. 396-398). We have identified three main competitors to our business, and have put each competitor into

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the Competing Values Framework by Quinn and Rohrbaugh (Quinn, et al., 1991) (see Figure 2.4). The Competing Values Framework are divided into four corners that each have two subdivisions which gives a total of eight values to consider, when we are analysing our competitors.

High ranking in quality refers to the quality of the product being sold, in this case especially the sound quality of the headphones. Efficiency and speed are the factors that explain partly how productive the business is and partly how fast for example a product is shipped to the customer. The value of profit will in all of the following business analyses be ranked semi-high to high, since these companies’ primary goals must be to earn money. If we on the other hand were dealing with a business based on volunteering, profit as a value would rank low. Community as a value refers to what degree of activity the business has in relation to social media online. The values of knowledge and growth are about the potential of the business proliferating. A high rank in knowledge is an expression of the future growth potential of the business, whereas a high rank in growth is an indicator of the current growth of the business (Cameron, 2006, p. 96). Finally the value of innovation is about how innovative and new-thinking the business is in terms of developing headphones in relation to the market. In the following section we will elaborate on how our business differentiates from our competitors, i.e. Bobsmade.com, iFrogz.com and Sennheiser.

Figure 2.4: The Competing Values Framework (Quinn and Rohrbaugh, 1983)

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iFrogz.comiFrogz.com (a subsidiary of ZAGG, Inc.) is concentrating on the buyer being able to choose between a wide range of headphones, with the opportunity of picking between a limited selection of colours and patterns. Their customer segment lies within the ages from teenagers to young adults – we know this partly because the visual branding on the website contains pictures of this age group using iFrogz.com’s headphones. The price rate of iFrogz.com’s headphones is very affordable compared to other high quality headphones, which can have something to do with the fact that iFrogz.com have a logistics and development centre in Hong Kong, while having located their main office in the UK. The prices of the headphones range from around 115 DKK to around 400 DKK (iFrogz.com audio, 2012 and iFrogz.com earpollution, 2012).

iFrogz.com’s mission is “to create innovative products that are stylish, practical and unique.” (iFrogz.com about us, 2012). However, we do not find them to be especially innovative, as they do not contribute with anything new to the headphone market. iFrogz.com also claim to deliver “killer sound” (iFrogz.com, 2012). This is an assertion that numerous reviews from the company’s own website verify, which is why they have a high value concerning quality (iFrogz.com reviews, 2012). Also, their value in community is high, since they are very active in online communities such as Facebook, Twitter, and Youtube (Figure 2.5), where customers for example can be a part of an online community and get discounts, win prizes, and more (iFrogz Facebook page, 2012).

Figure 2.5: Use of Social Media on iFrogz.com

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The possibility for growth is limited because of the mother company ZAGG Inc., as the assembled business of both companies is already of a certain size. It could also be argued that iFrogz.com should be viewed as a separate business, and that they therefore have the possibility to expand in regards to their share on the market.

The values efficiency and speed are ranked high as iFrogz.com have fast shippings and a lot of resources and support from their mother company. Regarding the value of profit, it is iFrogz.com’s aim to gain profit and this value is therefore ranked high.

Bobsmade.comBobsmade.com are rather similar to our concept as it is possible to customise headphones. They have artists who draw and paint directly onto the headphones by hand, and therefore every set of headphones are automatically made unique. Although, in this concept it is not the buyer who makes the design, but instead the buyer who e-mails the company an idea for a motive and then the designer makes a drawing with her own style. Bobsmade.com’s customer segment is decreased because the style of the designs is cartoonish and is therefore mostly directed towards a younger target group, approximately within the teenage span.

Figure 2.6: Customised headphones (by Bobsmade.com)

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The price level of Bobsmade.com’s uniquely customised headphones is approximately 660 DKK (Bobsmade.com headphones, 2012), which is relatively cheap considering the work that is put into the product by the artists. It is safe to say that Bobsmade.com do more of an all-round business of customisation, because they also produces customised sunglasses, shoes, bags, hoodies, skateboards, etc. (Bobsmade.com, 2012).

Figure 2.7: Customised shoes by Bobsmade (Bobsmade.com)

Bobsmade.com operate with only one model of headphones (the Philips SHP 1900), and are not branding themselves directly on high sound quality. Although, a quick look into some reviews of this particular headphone model has shown that the customers get a lot of sound quality for their money. In regards to the value of community, they are very active on the online social communities such as Facebook, Twitter, Youtube, as well as on Deviant Art (an online community for artists such as drawers, painters, etc.) (Deviant Art, 2012). Furthermore, Bobsmade.com are also running a blog on its own website. They have a high rank of value in innovation, partly because drawing on products and customisation is

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relatively new, and partly because her style of drawing is unique. Bobsmade.com’s potential for growth is high, since the company only consists of one designer and four artists. Therefore, the business has great possibility for expanding – given that there is a market for it.

The values of efficiency and speed are low, partly because the actual production of the headphones are made by hand, and partly because it can take up to three weeks for a set of Bobsmade.com headphones to be delivered to the customer (Bobsmade.com headphones, 2012). Finally, it can be argued that Bobsmade.com’s value of profit is a bit lower than our other competitors’. Since the concept of this business is very personal to the founder of Bobsmade.com, the importance of profit might not be as high for the company. The whole website of Bobsmade.com gives the impression that passion is the main driving force of this company (Bobsmade.com, 2012).

Sennheisernordic.comSeenheisernordic.com (Sennheiser’s Danish, Norwegian, Swedish and Finish departments) are competitors in the sense that they have one of the biggest brands within the headphone industry when it comes to quality. On the contrary, the only way to customise a pair of over-ear headphones is to choose between black and white, and this is only on a very limited number of their headphones assortment (Sennheisernordic.com product, 2012). Instead of focusing on customisation, they have made half a dozen different categories for the customer to choose between in order to get the exact right sound, whether it is for studio purposes, portable music players, traveling, sports or gaming (Sennheisernordic.com shop, 2012). The price on a pair of their headphones vary a great deal; from 175 DKK (Sennheisernordic.com low price, 2012) to 3.590 DKK (Sennheisernordic.com high price, 2012).

Sennheisernordic.com rank high in the values quality, efficiency, and profit, as they are a well established company with focus on making money. They are well established on the market of headphones, and therefore they rank low in the values of growth and knowledge, as we believe they already have a huge part of the headphone market. When it comes to the values of community, Sennheisernordic.com are only beginning to expand on the possibilities that lie in the use of social media, which is why they are ranked semi-low in this value. In regards to speed they are ranked low, as it can take up to three months to get your product from Sennheisernordic.com, because they often have backorders on new and popular products. Regarding innovation, Sennheisernordic.com rank semi-high since they have a lot of new ideas, such as optimising technologies and the design of sound equipment to improve the

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experience, e.g. more comfortable headphones for sports athletes (Sennheisernordic.com sports, 2012).

2.4.2 Differentiation from competitorsSince our competitors are very conscious of the values of quality and community, which is also the case with our company, our biggest possibility to differentiate from these competitors is to rank high in innovation. We believe that even though customised headphones have already been thought of, the way we can stand out from our competitors lies within our interpretation of what innovation is. We are bringing the same sense of uniqueness as Bobsmade.com are, but at the same time we are also giving our customers the possibility of creating their own unique design.

In short, we believe we are innovative as we give the customer the ability to design their own headphones, while guaranteeing that there can not be made a copy of this design. Regarding the competition with Bobsmade.com, there are great opportunities for us to differentiate from them in the values of efficiency and speed, since it is our goal to make faster deliveries. In proportion to the competition against Sennheisernordic.com and iFrogz.com, we can especially differentiate from them in the value of growth, since both companies are already established brands on the market, and therefore have a smaller chance at expanding their businesses than we do.

2.4.3 Co-brandingSince Sennheisernordic.com is known for their high quality in sound and are one of the biggest companies on the headphone market, they could be a partner for us to potentially work with. By collaborating with Sennheisernordic.com our business will automatically gain value from their brand, without us having to put as many resources into a branding strategy. Furthermore, we will also be ensured that we get the sound quality we are looking for. Other opportunities in partner collaborations are to work with similar companies like Sony, Logitech, and Bose. The suggested  collaboration with different partners is however a possibility we see in the future. Before the larger companies could agree on a collaboration with us, we would need to establish whether or not people are actually interested in customising headphones.

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Chapter 3: Strategy

3.1 Vision and Mission Statement For Unique Headphones it is important to have visionary goals within the business. Therefore, we have formulated a vision and mission that will constantly make the company thrive for being better. Our vision is phrased so that we can return to it and remember what our core business value is. Our mission is what we do for our customers to live up to our overall vision.

Vision: We want to give everyone the opportunity to feel unique.Mission: Unique Headphones give the customer a pair of unique, personal, and high quality headphones enabling them to differentiate in a crowd.

3.2 Value Proposition

With unique customisation of headphones we offer a newness (Osterwalder and Pigneur, 2010, p. 23) to the headphone market, since we make sure our product fulfil our customers’ needs, as the individual customer gets their specific design wishes.

We offer the opportunity for our customers to have a unique pair of headphones that no one else will ever have. The customer can either choose a unique design from our website, or they can customise their own personally designed headphone.We offer the opportunity for our customers to have a unique pair of headphones that no one else will ever have. The customer can either choose a unique design from our website, or they can customise their own personally designed headphone.

Key values:

• We focus on design, but not our designs, namely the customers’ designs. This gives them an opportunity to become Produsers (Bruns, 2008), which means that they are both producing and using the products.

• By wearing our headphones, the customer gets to display their own design with the Unique Headphone status (Osterwalder and Pigneur, 2010, p. 24).

• The online shop is an easy way to create your own customised headphones (for more details on the usability of our website go to the infrastructure section).

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• We deliver a quality product at a high performance level (Osterwalder and Pigneur, 2010, p. 23).

• We deliver within a week.

Figure 3.1: Example of product from Unique Headphones

3.3 Supply chain management

"Supply chain management (SCM) involves the coordination of all supply activities of an organisation from its suppliers and delivery of products to its customers" (Chaffey, 2011, p. 312). In our business the essential part is how we get our products from our suppliers, how it is delivered to us and how we get it to the customers.

In order to get a perspective of our business’s supply chain activities we have distinguished between our upstream activities and downstream activities as Chaffey (2011, p. 312) suggests. The logistics concerning the processing of the upstream and downstream activities and the materials within these activities, are described as the inbound and outbound logistics (Chaffey, 2011, p. 322). These will be integrated in the upstream and downstream analyses.

3.3.1 Upstream activitiesThe upstream activities can be described as the flow between our business’ organisation, our suppliers and the intermediaries (Chaffey, 2011, pp. 49-50). The upstream activities are where our business receives its products from and how they are delivered to us.

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Upstream SuppliersTo determine how and where we would get our five different models of headphones in ten different base colours produced we investigated the different opportunities. Below is a description of the possible ways to handle the production including their advantages and disadvantages. Based on these we made the final decision in regards to the production of the headphones.   

1. Our business could have their own factory in Asia, producing the headphones in different colours and in different models.

Advantages:• The business would have an easy job regarding the communication between producing

factory and the main office in Denmark.• Production may be faster than through outsourcing, since we then could cut out possible

middlemen, which might else be in the production flow.• Cheap labourDisadvantages:• It would be costly to establish a new factory with employees. For instance in China they

often do not allow other countries to start up factories in their country.• As Asia would be an unknown territory to us, we would need to get help finding a suitable

location for the factory, employees and third party suppliers to provide us with the necessary machines to create the headphones.

2. The business could have a factory in Denmark that produced the headphones.

Advantages:

• Transportation would not be necessary to the same extent as with a factory in Asia, which could save the business money.

• As we would be physically closer to the factory, it would be easier for us to check how the production came along in comparison to having the factory located in Asia.

• The supply chain would be much quicker because products would get delivered faster.Disadvantages:

• Salaries would be more expensive than in Asia.• Renting of facilities, or rent for the actual location would also be more expensive than in

Asia.

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3. The factory could be an established factory in Asia that already produce headphones.

Advantages:• We would not have expenses regarding facilitating a whole new factory (rent, machines

etc.).• The Asian company would already have experience in producing headphones and be

aware of the quality.• Cheap labor.Disadvantages:• We cannot choose how we want every little detail to be on the different models, since this

is another company’s production line.• The shipping of our products from Asia to Denmark would take a long time.

We have chosen option three primarily as this is the financially most beneficial. Since other companies offering similar products often outsource their production to locations such as Asia to save expenses, we have also chosen to have an Asian supplier that already produces headphones. An example of a potential partner could be the Asian acoustics company called YUiN (YUiN, 2008), who produces different models of headphones and earplugs of fine quality according to user reviews (HeadRoom, 2012). Given that we want to collaborate with an already established factory that produces headphones, means that we can also, to some extent, get a great quality and still at an affordable and very competitive price.

In addition to getting the headphones produced we also need to have boxes to place the headphones in, when they are sent to the customers. As production is cheaper in Asia, and we already need to transport the headphones, these boxes would be produced in Asia as well. It would be preferable if the headphone production company also would be able to produce the boxes, otherwise we would need to collaborate with another box producing company.

An effective way to save money when products need to be shipped is to be aware of how the items are packed. In a company like IKEA, who is very concerned with cheap price, they save money by packing their products in boxes as small as possible, as this gives them the opportunity to transport more each time they ship their products (IKEA, 2012). In terms of our company it would save us money to ship the headphones in boxes where they would be organised so each headphone would take up the least amount of space as possible. The

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headphones would under transportation be packed in bubble wrap to ensure that they would not get damaged. Furthermore, the boxes in which the headphones would be sent to the end customer should be transported from Asia to Denmark unassembled, as this would demand less space and thereby reduce expenses in terms of shipping.    

Upstream IntermediariesBy having a partner in Asia producing our products, we would need an intermediary that could transport our products from Asia to Denmark, where the actual printing of the unique design would take place. We have chosen that the printing should be done in Denmark, since we thrive to deliver our products within a week from the order placement. It would therefore not be possible to do the printing in Asia, as shipping from there would take a long time. Furthermore, it would be expensive to have a shipment with only a few headphones. To determine how we would handle the shipment we investigated the different possibilities.

1. Invest in a subsidiary shipping company within our own company.

Advantages:• Establishing an intranet and taking care of communications would be easier within our own

company.• We could potentially earn money by offering our shipping (even though it might be a small

operation) to other Danish companies.Disadvantages:

• Lots of expenses and might not be likely with a newly created business. 2. Make an agreement with a shipping company who already deliver products to Denmark from Asia.

Advantages:

• In comparison to the one above this is the cheapest solution.• We would have a partner who already has lots of experience with the shipping industry

giving us the most reliable transportation. Disadvantages:

• If we were to become a part of a bigger agreement with different Danish companies and a shipping company, we might not have as much influence on the details of the shipping e.g. when they ship or where it will be delivered.

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Given the fact that we are a new business the cheapest solution would be to get in on an agreement between different Danish companies and shipping companies in a larger operation. It would be a shipping company that already ships materials and products from Asia to Denmark, so we would not have to establish a brand new shipping route to Denmark. This shipping company could for example be Maersk (Maersk, 2012). When the headphones arrive to Denmark we would furthermore need to have an intermediary to transport them from the ship to our storage. This would be done by making an agreement with a company like Mini Trans (Mini Trans, 2012).

3.3.2 The OrganisationStoringWhen the headphones arrive to Denmark they will be organised in our own storage space. As a start up company we find it most efficient to rent a combined storage, printing and office space. We believe this is the best economic solution as everything will be located at the same place, thereby minimising the transportation of the headphones from an external storage. It also helps to keep the inbound logistics more simple, without external storage space. The organising of the headphones will be done through a digital system, so we constantly can control how many headphones we have left of different colours and models in our stock. Having a digital system to manage our stock is one of the key inbound logistics (Chaffey, 2011, p. 322) in our company, as it also supports the CRM in terms of delivering the correct product in time. It is also important that we maintain a surplus in our product stocks according to the demands of our customers. However, we do not want to have a too large surplus that we cannot sell due to low demands. Depending on the size of the storage space, and how well we sell at the beginning, we will order many headphones fewer times, in order to save shipping expenses. PrintingIn order to print the different designs on the headphones we need to have a collaboration with an external company who can provide a printing machine (or more). As all the headphones we will have to print will differentiate from one another in terms of design, the printing machine will have to work in correspondence with this demand. Depending on the technological possibilities the machine will either be human or computer operated. Its purpose will be to make a quality print on the headphones resembling the demand from the customer.

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PackingWhen the print is done it is time to send the headphones to the customer. Before this can be done they need to be packed into boxes and attached with the customer's address. These are outbound logistics and in the start up phase we would be able to do this task ourselves, but on a long-term base we would have to employ someone to do the packing. In order to save expenses this work could be performed by teenagers between 15-18 years, as they are cheap in labor compared to adults. No physical storeAnother way we have chosen to minimise expenses is to make the company an online shop without having a physical store. As people buy more and more online, especially within our main customer segment (DST, 2011-04-29, p. 38), we do not see a need to have a physical store. This will be expensive in terms of paying rent and employee salary, and therefore our concept is based on being an online shop only.     

3.3.3 Downstream activitiesOur downstream activities concern how we get our products to the customers and involve the transactions between our company, our customers and the intermediaries in between (Chaffey, 2011, p. 312). The following section will list our intermediaries in terms of our downstream activities.

Downstream IntermediariesTransportation: Getting the products transported to our customers would be through FedEx, UPS, GLS or Post Danmark. Our choice would be based on tests of the delivering time and the prices they can offer us.

Pick up: Our business would also offer another way for our customers to retrieve the headphones. Instead of sending the product directly to the customers’ address, we would have the opportunity for customers to pick up their headphones in a physical store. This could be Blockbuster as they already collaborate with other companies i.e. GLS (GLS, 2012). It would give our customers more influence in when and where they could obtain their purchased product, which could add an extra value to the customer.

On the next page is a visual illustration of our supply chain (Figure 3.2).

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Figure 3.2: Supply Chain

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3.4 Risk management

When selecting and deselecting between the possible intermediaries and suppliers there are always risks to consider, as something unforeseen can happen. Below we have made a list with possible risks, estimated their probabilities of occurring, their impacts on our business, and furthermore proposed possible solutions. The risks are ranked from 1 to 10, where 1 is low probability and low impact and 10 is the opposite with big probability and influence.

Figure 3.3: Risk Diagram

Some of these risks derive from us choosing to outsource different tasks. Our business can either have a very vertical integration, virtual integration or be in between (Chaffey, 2011, p. 332). With a very vertical integration our business would have all tasks done within the organisation and not outsource any tasks. If our business were to do that, the price would be very high since it would require a lot more expenses to establish our own production. As a

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start-up business it is very unlikely, since we would not have that kind of capital at our disposal. However a vertical integration might also eliminate some of the risks, since there would be fewer steps in the supply chain.

When outsourcing the production our organisation take some necessary risks in order to reduce our expenses and increase the quality. By having a partnership with an established factory in Asia, instead of producing them in Denmark, we can deliver cheap headphones but still have good quality.

If we were a virtual organisation we would have all tasks outsourced. This would result in more elements in the supply chain as transportation would play a more significant role if more of the production was outsourced. This would increase the number of risks. Still, tasks as technical maintenance can be outsourced without having extra transportation imbedded in the supply chain. The most optimal situation is to have the technical support department situated in the organisation, but as this is expensive we choose to outsource a part of it. We will have an internal employee with a broad knowledge on IT and web, and use a technical support department in another company when help is needed. Communication with the technical department can be done through a business to business (B2B) extranet (which will be elaborated in the next section) and could therefore be handled easily.

3.5 Infrastructure

A way to benefit from e-business is also to use the tools the Internet provide in terms of optimising the internal and external workflow and providing an extra value to the customer. The following sections will revolve around infrastructure to explain how Unique Headphones will make use of intranet and extranet.

3.5.1 IntranetIn order to create a common platform for the employees to communicate, the company will have an intranet (Chaffey, 2011, p. 105) based on a content management system (CMS) (Chaffey, 2011, p. 107). A crucial part for a company is to enable and make sure that the communication between different departments is working. This is a huge part in ensuring that the customer gets the right product at the right time. The intranet should therefore be used to optimise the processes that takes place within the company from the product is ordered to its delivery.

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As explained earlier the company needs to deal with copyright issues, as people are able to design their own headphones. In the beginning we have chosen to solve this problem by letting people within the company check the different designs. The intranet would in this case ease the job of checking the different designs, as it can forward the designs directly to the people in charge of this department. In short, the intranet would be able to facilitate the communication to create an effective and paperless work environment. The intranet would also consist of a database containing all customer designs. In collaboration with the database we would have a software program making sure no equal design can be done.

3.5.2 Business-to-business Extranet“Technology is vital to supply chain management since managing relationships with customers, suppliers and intermediaries is based on the flow of information and the transactions between these parties” (Chaffey, 2011, p. 312). In relation to our supply chain management it would be beneficial to exploit the possibilities that the Internet provides in terms of communicating with our suppliers and intermediaries. This could be done through a B2B extranet, which Chaffey (2011) describes as: “any network connected with another network for the purpose of sharing information and data. An extranet is created when two businesses connect their respective intranets for business communication purposes” (p. 108). This would optimise the workflow as all communication between our partners and us would be electronic. This is both a fast and almost free of charge approach. It would enable us to order online and as we could share information with each other we could see when production was done and when we were able to get the headphones shipped.

3.5.3 Consumer ExtranetAs an extra service to the customers our company will enable them to create a profile on the web page through a consumer extranet (Chaffey, 2011, p. 108). This could create an extra value for the consumer, as it could give them the opportunity to create their headphones in different stages. By creating an account they could revisit their own profile and continue to create their pair of headphones until they were completely satisfied with the design. It could also have the feature of letting the customer save different designs created by the artist collaborating with the company before they decide on the design they want. Overall it gives the customer an opportunity to engage more personally with the website, as they will have their personal site to interact with. It could also give them the opportunity to store their receipts and follow their order. An additional advantage of the consumer extranet for the

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company is that it will enable them to get extra knowledge about which customers are buying the headphones. This could later be exploited in a marketing perspective.It is however important that the customer is able to purchase the headphones without creating a profile. This will give the customer the opportunity to make a quick purchase without forcing them to create an account.

3.5.4 Website Interface and OptionsWhen developing a website, usability is a crucial factor to take into consideration. It can have unwanted consequences if a website is not user friendly with a well-structured interface, as the potential user might not be able to use the website correctly. Thereby, they will not get the full potential out of the service the website provides. For this reason it is important to put great effort into ongoing development and testing of the company's website. The following will describe how the user will be met at the website’s front page and how they are able to design the headphones. Website Front PageAs we are a startup company no one will know the concept and possibilities it provides beforehand. When a potential customer visits the website for the first time it is therefore important to give them the possibility to learn this in a clear and simple way. The front page will provide a simple video explaining the different options and steps the customer will go through when creating their headphones (inspiration from dropbox.com). This is a simple and clear way to explain the customer how everything works, without them having to read a lot of text. How to Design the HeadphonesWhen the customer has decided to make use of our service and buy our product, it is important to provide the necessary tools for them to design as they wish. No matter which of the five different headphone models the customer chooses they are able to design on the outsides of the headphones and on the top of the headband. The three different areas available for designing are showed on the computer screen giving the customer the possibility to design them separately. To make sure the design will look the way the customer wish the website also provides a 3D replica of the design like NIKEiD does (NIKEiD, 2012). It makes it possible to see how the final headphones will look like. Thereby, it also gives the customer the opportunity to correct the design until it looks completely right. The design part can be done in different ways:

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Upload Picture or DrawingIt is possible to upload a picture or an already existing drawing from the customer's computer to the website. This will enable the customer to have personal pictures or drawings on their headphones. After uploading they are able to correct the size and position of the picture/drawing until it fits the chosen headphone model.

Draw the DesignIf a customer wants to design the headphones from scratch this is also possible. The website provides a design program that enables the customer to play around with different features. This program would resemble the opportunities the customink.com (CustomInk, 2012) website uses, but with some extra features that would enable the customer to make a more detailed design. It is however important that the design program does not get too complicated as everyone with a minimum understanding of IT-skills should be able to use the program.!

Choose a Design From an ArtistIf a customer wants to have a pair of Unique Headphones but does not have a specific design in mind, or the skills to design themselves, they are able to choose a predefined design done by artists that we collaborate with. This way the customer should only choose a design from the website catalogue. Important for this option is still that when a design is chosen it can no longer be chosen by anyone else. This way we still provide the uniqueness of only one customer with this specific design. This means we would work with graphical artists who would make several headphone designs, which people could then choose from. The idea is to outsource this activity in order to collaborate with a variety of different artists over time.    

Combined OptionsThe customer is able to combine the different design methods. If they want e.g. a picture on the right headphone and make their own design on the left headphone this is possible.

3.6 Buying Process

Below is a flowchart describing the different steps that happens from a customer decides to design their headphones until they receive them.

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Figure 3.4: Flowchart

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Chapter 4: Marketing and CRM

This chapter is concerned with making people buy our product and get to know our brand. This includes creating a marketing strategy and implementing a Customer Relationship Management (CRM) system (Chaffey, 2011, p. 451). These two things are very much intertwined as the CRM system is supposed to support the marketing strategy in creating a valuable relationship with the customers and making this relationship as easy for us to handle as possible.

Figure 4.1: The Four Classic Marketing Activities of Customer Relationship Management (Chaffey, 2011, p. 451)

When looking at Figure 4.1 we will have to first select our customers, acquire them, retain them and at last extend their relationship with our company. Regarding the selection of our customers we will have to define who we want to target (our customer segment), what these customers want (our demand analysis) and where we reach them (our channels). This is a part of our strategy along with a competitor analysis. The competitor analysis should help us find out what our competitors do and how we would be able to do better and differ from them.

4.1 Competitor Analysis

As the e-marketplace has a very dynamic nature and is fast evolving it is important to monitor how the competitors do when they try to acquire and retain their customers (Chaffey, 2011, p. 396). When benchmarking the competitors there are several different aspects to look into. With inspiration from Chaffey (2011, p. 397) we have defined our competitors in order to find out where we differ and make this difference clear in our marketing communication. This section can be seen as an extension of the Competitors section with more focus on the marketing aspects:

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4.1.1 Internal CapabilitiesAs mentioned in the Competitors section, there is a big difference in our competitors. Therefore, we will have to respond to two different kinds of competitors. The small and very niche oriented and the big international businesses that have a lot of internal resources. What we will try to do is to keep the uniqueness you get in Bobsmade.com but also establish our name. As mentioned in the Competitors section none of our competitors brand themselves both on the unique customisation and the sound quality, so here is our opportunity space.

4.1.2 The Core PropositionWhen looking at Bobsmade.com they sell a lot of products with main focus on customisation. There are not much text describing each product and for example they have no technical details on the pair of headphones they sell (Bobsmade.com headphones, 2012). Sennheisernordic.com are only selling sound gear and are very much concerned of the quality of their products. They also, as opposed to Bobsmade.com, have a lot of information on their products both describing the inside and outside quality (Sennheisernordic.com technical details, 2012). This makes the customer able to base their buying decision on product detail descriptions as well.

Our strength and the place where we will differ is that we combine the concept of customisation from Bobsmade.com and the concern on quality from Sennheisernordic.com. We give people the opportunity to design their headphones in a unique way but still provide them with a good quality product. We should brand ourselves as a very creative and design concerned company and this shall be prominent in our advertisements and website. Also we shall have the professional look and for example show product details on our website, so people are able to decide whether they want one or another of our five headphone models.

4.1.3 Value On Social ChannelsBoth Bobsmade.com and iFrogz.com are very much using Facebook in their communication. Bobsmade.com are for example posting offers and asking people what should be painted on the products (Bobsmade.com Facebook page, 2012). iFrogz.com has a button on their website which guides people to the different social networking sites they use (see Figure 2.5). Bobsmade.com have the page with most likes and people are regularly posting comments about their products etc. Sennheisernordic.com is also on Facebook but does not have as many likes and the people using the page are not as active as on the other two

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companies’ pages. When looking at especially Bobsmade.com’s Facebook page a lot of people comment on what to paint on the products and in general like the postings. This shows that people are actually conscious about the brand and like to participate in the communication with it. This makes us aware of the fact that we should also be very active on for example Facebook. Not only by creating offers but also in listening to the customers and engaging them in different decisions. In short, our marketing strategy is to combine the strengths of our competitors and create a unique combination of the very creative universe and the professional product concerned company.

4.2 Target Group & Customer Segment

Figure 4.2: Porter’s Generic Strategies (Marketing Teacher, 2012)

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Unique Headphones are placed in the Differentiation Focus box of Porter’s generic strategies, since it is a product with more focus on differentiation than cost. This means we target a niche market (Osterwalder and Pigneur, 2010, p. 21). As a start we want to target Danish people whom could have interests such as music, sound, gadgets, design, and art. We want to mainly target teenagers and young adults, since this is a group of people who likes to stand out and have customised belongings (e.g. NIKEiID (2012), adidas shoes (mi adidas, 2012), Polo Principle (2012). This does not mean that children and elderly people should be excluded as possible customers - they are just not a part of our initial main target group.

We expect two different customer segments in this target group: 1) We have the more regular customers, who would be interested in the pre designed Unique Headphones 2) Then we have the more creative customers, who will spend a lot of time and effort into designing their own headphone. We need to meet the needs of both groups when developing our business. We will do this with the different ways you can purchase a product in our online shop. The customer has the possibility of quickly choosing a unique design and purchase it (segment 1), or she can spend a lot of time on developing her own design, create a profile, and interact with the website (segment 2).

4.3 Demand AnalysisThe next step in our marketing strategy is to define the above mentioned segments demands. As a start we had to consider whether we only wanted to have an online shop or this should be supplemented by a physical shop for example in Denmark. We decided not to have a physical shop as this is costly, because of rentals and employees, and we do not think it is a problem only having an online shop as 89 % (Internet World Stats, 2012) of the Danish population are using the internet. The Danish population is also one of the nations where most people purchase online (DST, 2011-04-29, p. 35) and a big part of those who purchase online are people within our target group (DST, 2011-04-29, p. 38). Our initial main target group is the Danish population, but as the shop is online we could also expand the shipping to other countries further on. Therefore, by having an online shop, we believe we are meeting the needs of our customers. Next we will explain how we plan to target this group of people.

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4.4 ChannelsWhen the segment and their demands are defined, planning on how to reach them is the next step in the process. We are now concerned with acquisition of the customers, which revolve around how we reach our customer segment. When targeting younger people we will have to separate us from the other commercials this segment is exposed to. Also we will have to be present on the channels where they are and hopefully create attention around our brand.Reaching this segment can be done on several different channels. These should mainly be online as this segment is very much represented here and as our shop is only accessible online. Another reason for doing most of the marketing online is that offline advertisements are very expensive and we, as a startup company, would not afford to buy the expensive positions.

4.4.1 Search Engine Optimisation (SEO) Most people use search engines (Google, Bing or Yahoo) when wanting to find things on the internet. Therefore, it will be of big importance for us to do some SEO as this will help us appear as one of the first hits they get. SEO is in short described as: “A structured approach used to improve the position of a company or its products in search engine natural or organic results listings for selected key phrases” (Chaffey, 2011, p. 475). SEO can be done in many ways for example it is important to use key words many times as this will increase the ranking of our site. In our case suggested keywords could be: unique, headphones, customise, portable music, music, design as these are the things people will most likely search on if wanting to find us and the sort of product we make.

4.4.2 Google AdwordsWe would also have to consider using for example Google Adwords (Google Adwords, 2012) as this would make us able to appear on Google when people make a search on headphones or customisation. This is not the same as SEO, as we do not focus on the hits here but namely the advertisements in the sidebars. These advertisements would be pay-per-click (CPC) (Chaffey, 2011, p. 477), which means we would only have to pay Google for showing the advertisement if people actually click on it and visit the site.

4.4.3 Affiliate MarketingIn line with using Google Adwords it would also be relevant for us to engage in affiliate marketing. Affiliate marketing is in short described as a commission-based arrangement where an e-retailer pays sites that link to it (Chaffey, 2011, p. 489). In our case we could have

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a banner or other advertisement on a site where people are already thinking about music such as Gaffa (a music magazine) or Spotify (an online music library). If a user on Gaffa then clicks on our advertisement, gets to our site and buys a pair of headphones, they would get a certain percentage of the final revenue we gain from that sale. This example is based on the CPA-model (cost per acquisition) (Chaffey, 2011, p. 74), since we only earn money by selling our headphones and not by generating visits. If we were to earn money by generating visits we would have the CPC-model (Chaffey, 2011, p. 74), and our online shop should have advertisements from other third party sites. This would mean that other companies could benefit from the large amount of user visits on our online shop, and then pay us for showing them. However, we do not want to have an online shop with advertisements everywhere, since this might give a bad user experience.

4.4.4 Online Advertising - Social Networking SitesRegarding the online advertisements, these could be put on for example Facebook, Twitter, Spotify, YouTube and online music magazines like Gaffa. Spotify and Gaffa is in particular interesting as this is specifically about music and therefore of great relevance for our product. Facebook, Twitter and YouTube are all social networking sites, where people can construct a personal profile and share connections with friends (Boyd and Ellison, 2007). These social networking sites are in particular relevant to use as they have a lot of users, for example 92% between 16-19 years and 79% of the 20-39 year olds in Denmark use them (DST, 2011-04-29, p. 38). As they have a lot of users, they are a good channel when wanting to create viral marketing. Since it is easy to share things online among friends, it can spread very fast.

4.4.5 Viral MarketingViral marketing is one of our tactics for making our target segment aware of our brand. This we would try to do by creating some cool videos showing the design process of a pair of headphones. This would both show the end product and the big influence people have on the looks of their headphones. The video should be short, easy to share and have a clear message (Scott, 2008, p. 23). It does not need to cost much to produce such a video as: “We’re bombarded with overproduced TV commercials all the time—so often that we usually just turn off our minds when they come on” (Scott, 2008, p. 23). Therefore, we do not need to put a lot of money in making the movie as our message will still come through. Also one of the major things in such a campaign is that the video (or any other thing that is shared) should create something that has not been seen before. It should either be fun, extreme or in another way catch people’s attention.

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The viral marketing is very effective and inexpensive as you reach a lot of people without using a lot of money. Still, it is not easy to create a viral marketing campaign, as people need to find your message interesting and it has to be served in an interesting way. Therefore viral marketing is also a lot about timing and luck (Scott, 2008, p. 16) and these two things are hard to prepare for, as you do not know when people are ready to distribute your message.

4.4.6 CommunityWe will also be using the social networking sites in other ways. This will be to create a community for the customers, where they can be more engaged in the brand and in this way create more value for them. This is also an important part of creating a good customer relationship.As the interactive marketing communication has moved from push to pull (Chaffey, 2011, p. 468) it is important for a brand to engage in a dialogue with the customers so they know what the customers want. This could be another important aspect in using the different social networking sites, as they provide the opportunity to communicate with the customers. As the internet in general provides the opportunity for two-way communication (Chaffey, 2011, p. 468) it is important to use this potential. If people feel that the company listens to them and integrates them in the decisions it will again create value for them. This we could do by letting people suggest artists they would like as a guest designer. This way they would also have an influence on the decisions.When using social networking sites it is important the company uses the potential in them. If people use them for example for writing a question or proposal for an artist the company needs to respond to this. Otherwise the usage of those sites will not create the extra value and the customers will stop using it. It will therefore require some man-hours from us to keep the site updated and interesting for the customers.

4.4.7 Discount ServicesAnother effective way to reach customers and make them aware of our business is through companies such as downtown.dk (Downtown.dk, 2012). These kind of sites offer customers great discounts (often 50%) on all sorts of products. The idea is for us to give for example 100 people the possibility to get a pair of Unique Headphones at a cheaper price. Using this sort of marketing would probably make us lose money on the sold headphones through this offer, but it would be an investment in the future, as people would get to know our brand when looking at the offers on the site. It would furthermore have a positive effect, as it would increase the amount of people owning a pair of our headphones.

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4.4.8 CelebritiesAs mentioned above, we will not use offline advertising as this is too expensive. Still, we will in some way be using the offline world to create attention around our brand by using celebrities in our branding. This could be like the way Skullcandy uses Kate Upton (SkullCandy Kate Upton, 2012) and BeatsbyDre uses Lady Gaga and P. Diddy (BeatsbyDre artist series, 2012). We could  use the persons to design for example 20 different pairs of headphones that then would be auctioned on our web site. Also, we could use them for wearing our headphones and thereby creating attention around our brand. This could for example be a football team where they have all got a pair of our headphones. These should then both include something generic; the team’s logo and also something personally designed by each of the players. This would also state the uniqueness in our brand. Using well-known persons in branding is very useful and can boost sales if the brand and the celebrity is a good match (Gleberg and Larsen, 2009). This will naturally also be expensive and we will therefore in the start-up phase not be able to use the biggest celebrities and sport teams as the ones mentioned above. Instead we could use up and coming artists in Denmark.

4.5 Customer Relationship Management                       As a part of the acquisition we will integrate a CRM system. A CRM system or Customer Relationship Management system is used for: “[…] building and sustaining long-term business with customers” (Chaffey, 2011, p. 451). As we collect data about the customers through our CRM system, we know details about them, which we can use when we communicate with them. Thereby, they will hopefully get a great customer experience, buy more of our products, and recommend Unique Headphones to their friends.

Giving people a good experience with the brand from the start is very important, as they will then be more likely to stay as a customer. Therefore, it is important to have a website which is easy to use, looks professional and is safe for the customers to use. As the website is the first thing that meets the customer we will have to make a website that supports our brand and support the general atmosphere we are creating around our brand. The website is even more important as we do not have an offline shop and real sales people to meet our customers.

Besides using the website to create a good experience with the brand we also need to consider our customer service. If people have any questions or encounter a problem it is important to provide them with help as fast and competent as possible. First of all we will

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need a FAQ (frequently asked questions) on the web site so people can try to find their answer themselves saving the waiting time for an employer's answer. Then we should strive to answer inquiries as fast as possible. Also it should be a personalised answer where people feel that they have contact with a real person. This creates the best relationship between the company and the customer.

The website is an important part as it is the first thing the customers see, but it is equally important to provide the customers with a good and personal experience.The CRM system will make it easier for us to keep track of our customers and save their information for later use. When a pair of headphones is bought the order will automatically be registered in the CRM system which makes it easier for us to practice good customer service. The CRM system will also help us to keep the information from our customers compiled and thereby making it possible to make campaign management on a later stage. In the retaining of the customers the CRM system will play a vital part. We will now have to keep the already existing customers but at a low cost. This can be done through sending e-mails that is customised to the individual customer. An example of this could be to track which design categories the customer had been looking at and sending special offers about this category. The email could also just contain information about the new designs that had arrived. This is done just to make them remember us and hopefully capture their interest in some new design. We will of course need to get the customers’ permission to send these offers and it should be possible to opt-out again (Chaffey, 2011, p. 458). It is also important to store information about our customers as this can also help to make the communication more specific, and hopefully by doing more specific targeting we will be able to convert some of our new customers into returning customers. !When looking at the last part of the circle we need to extend the customers’ life cycle. This means: “[...] increasing the depth or range of products that a customer purchases from a company” (Chaffey, 2011, p. 452). This is a bit hard in relation to our business as the only product we sell are headphones. Still we can try to make them buy more headphones by for example giving them a discount when buying pair number two. Also our advertisements could show how there is a pair of headphones for every mood or activity. So when doing sports you need one expression on your headphones and when walking in the city you need another.

In the future we might extend the articles we sell to contain other things than headphones, but this will be elaborated later in the report.

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4.6 Revenue and CostOne of the most important aspects when having a business, is the balance between ones revenue streams and ones cost structure (Osterwalder and Pigneur, 2010, pp. 31-41). Within this balance lies the possibility to acquire as much revenue as possible, and minimise the costs. It goes without saying that the ability to lower the costs and expenses will make more profit in terms of new and more comprehensive revenue.

4.6.1 Revenue StreamsIn our business the most important revenue comes from the asset sales of our products to our customers. We gain this revenue due to the transaction from their one-time payment in our online shop (Osterwalder and Pigneur, 2010, p. 31).

The standard headphones the customers can create with their own design has a fixed price, around 900 DKK (porto included). The price for our headphones is more expensive than iFrogz.com’s and Bobsmade.com’s, since we offer a service of customising and good sound quality. It is cheaper than most of  Sennheisernordic.com’s over-ear models as our quality is slightly lower opposed to their more expensive high quality components. However, during campaigns with potential artists or celebrities the exclusive design headphones will be sold through an auction, in order to gain as much profit as possible. We expect that our customers are willing to pay an even higher price for our headphones, if it has been designed by a celebrity they like.

4.6.2 Cost StructureThe biggest costs and expenses derives from our outsourcing and materials. With the production and transportation travelling from Asia to Denmark, it results in great expenses for our company. However, by outsourcing we are also minimising the expenses, since production is cheap in Asia compared to Denmark. One of our great expenses originates from our printing of the design in Denmark. If we were to mass produce identical products, our costs would be vastly smaller. The opportunity to customise the headphones is what separates this business from the rest, but it is also one of the most expensive elements in our supply chain.

Even though we do not have a physical store, the business still need to spend money on human resources within the company. Such as employees that make our online-shop running and make marketing strategies and sales.

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Although we outsource production, we are not only concerned with minimising expenses and be cost-driven (Osterwalder and Pigneur, 2010, p. 41). Our business seeks to be both cost-driven, in terms of producing headphones at a much cheaper price in Asia, and to be value-driven, as we offer an individual extraordinary opportunity through customisation.

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Chapter 5: Future Possibilities

As the concept behind Unique Headphones is a new business, the strategy presented in this report is made in relation to this fact. It has been important to consider all aspects of the business and it has caused some restrictions in terms of possibilities to implement the expensive initiatives from the start. As we in the future see potential for growth in the business we are also concerned with change management (Chaffey, 2011, p. 531). This means we have considered various ways to expand the business and what consequences this might have to the way the company works. The following sections will describe how we will approach the future when Unique Headphones becomes a success.     

5.1 Expand to Other CountriesAs mentioned earlier we see a great opportunity to expand the company to other countries. If the concept with customisation of headphones is viable in Denmark there should be an opportunity to enter the market in other countries. To make advantages of being a first mover we should not hesitate to expand when there is a foundation for it. As sending the product to other countries would prolong the transportation time, we would not be able to deliver the headphones within a week. Depending on which country we would send the headphones to, we would have to inform the customer of the exact extended delivery time. Expanding to other countries would furthermore result in new marketing strategies in each country and we should as mentioned in the SLEPT analysis also consider that these countries might have other laws.   

5.2 Software to Copyright IssueOne of our big concerns in relation to letting people create their own designs is in terms of copyright issues. An important part of the business is to make sure we will not get into trouble regarding copyrights of other brands. At first we would solve this problem by having several people within the business to check all the different designs. If the business were to experience huge growth, both national and international, we would look into using software that could detect if the copyright law was broken. This would most likely be costly to implement, and would therefore only be beneficial to invest in if the production line was big. It would eliminate the need for people within the business to check all the different designs.!  

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5.3 NGO CollaborationA great challenge when starting a new company is to make people aware of the product you are selling. Our plan to achieve this goal is described in the above mentioned section about marketing. However, we also see alternative ways of doing this in the future. If we were to be a known and recognised name we would try and make partners with non-governmental organisations (NGO), to achieve publicity in a way that could also strengthen our image. This could for example be UNICEF (Unicef, 2012) or Røde Kors (Røde Kors, 2012). The idea behind is to create a line of Unique Headphones designed by famous people willing to do it for free. These could then be auctioned to the highest bidders. The additional income would then be donated to the chosen organisation. It could hopefully create attention around our business and we would be associated with helping the less fortunate. This is a way of doing marketing in an untraditional way, as opposed to traditional commercials that people are exposed to all the time.             

5.4 Product ExpansionAnother possibility could be to expand the business within the field of customisation. Instead of only producing headphones we could give people the possibility to design other items as well. The idea is for people to customise other electronic products.

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Chapter 6: Reflections

As explained earlier the customers are becoming more powerful, and they also have more influence on the products they buy. With the Internet and the possibility for people to express themselves and stand out there is a bigger emphasis on customisation. This is a general trend in society, which is by Bruns (2008) named produsage. People are today both producing and using their products. The produser model is to a great extent present in our concept as we leave it to the consumers to decide how they want their headphones to look. As mentioned in the SLEPT analysis, regarding the environmental scan, it is important that we constantly are aware of what is happening in society and how the trends change. Although customisation today is considered as a positive thing, this opinion might change in the next couple of years. The customers may get tired of taking an active part in designing how they want their products to look instead of having the possibility to choose among a certain amount of pre-made products. When exploring the trends it is important to listen to the customers’ needs and thereby determine where the market is going.

We believe that this concept has the possibility to be a success as we are actually listening to the trends, and thereby giving people the opportunity to decide how they want their products to look. Besides providing them with this feature, we also create headphones in a completely different way than our competitors. For this reason we are innovative as we fulfill a whole new market area which adds extra value to the customer experience. As the customers’ influence on the product will be even bigger, we are in some way entering a blue ocean (Kim and Mauborgne as cited in Osterwalder and Pigneur, 2010, p. 226).

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Chapter 7: References

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