Indigo Books & Music Inc.: Optimizing Its Loyalty Program SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Indigo Books & Music Inc.: Optimizing Its Loyalty Program
This case allows for a discussion on loyalty programs. How should irewards, a consumer loyalty program, take advantage of the new capabilities promised by Indigo's new customer relationship management (CRM) system. Would adjustments to the pricing structure or the membership discounts be appropriate? Ultimately, how could Indigo ensure that its irewards program was both meaningful to customers and contributed to sales growth? The basis of the irewards program was an annual membership that afforded the member discounts on books. Members were assigned a membership card with a specific number that referred to their account; an annual membership fee was the cost of the program to the customer.
Swot Analysis of "Indigo Books & Music Inc.: Optimizing Its Loyalty Program" written by Kyle Murray, Ken Mark includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Irewards Membership facing as an external strategic factors. Some of the topics covered in Indigo Books & Music Inc.: Optimizing Its Loyalty Program case study are - Strategic Management Strategies, Market research, Sales and Sales & Marketing.
Some of the macro environment factors that can be used to understand the Indigo Books & Music Inc.: Optimizing Its Loyalty Program casestudy better are - – challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, wage bills are increasing, there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, banking and financial system is disrupted by Bitcoin and other crypto currencies, central banks are concerned over increasing inflation,
digital marketing is dominated by two big players Facebook and Google, there is backlash against globalization, etc
Introduction to SWOT Analysis of Indigo Books & Music Inc.: Optimizing Its Loyalty Program
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Indigo Books & Music Inc.: Optimizing Its Loyalty Program case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Irewards Membership, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Irewards Membership operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Indigo Books & Music Inc.: Optimizing Its Loyalty Program can be done for the following purposes –
1. Strategic planning using facts provided in Indigo Books & Music Inc.: Optimizing Its Loyalty Program case study
2. Improving business portfolio management of Irewards Membership
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Irewards Membership
Strengths Indigo Books & Music Inc.: Optimizing Its Loyalty Program | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Irewards Membership in Indigo Books & Music Inc.: Optimizing Its Loyalty Program Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Irewards Membership are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Successful track record of launching new products
– Irewards Membership has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Irewards Membership has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Highly skilled collaborators
– Irewards Membership has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Indigo Books & Music Inc.: Optimizing Its Loyalty Program HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Ability to recruit top talent
– Irewards Membership is one of the leading recruiters in the industry. Managers in the Indigo Books & Music Inc.: Optimizing Its Loyalty Program are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Superior customer experience
– The customer experience strategy of Irewards Membership in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Operational resilience
– The operational resilience strategy in the Indigo Books & Music Inc.: Optimizing Its Loyalty Program Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Irewards Membership has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Learning organization
- Irewards Membership is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Irewards Membership is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Indigo Books & Music Inc.: Optimizing Its Loyalty Program Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Analytics focus
– Irewards Membership is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Kyle Murray, Ken Mark can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Ability to lead change in Sales & Marketing field
– Irewards Membership is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Irewards Membership in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Sales & Marketing industry
– Indigo Books & Music Inc.: Optimizing Its Loyalty Program firm has clearly differentiated products in the market place. This has enabled Irewards Membership to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Irewards Membership to invest into research and development (R&D) and innovation.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Irewards Membership digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Irewards Membership has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Weaknesses Indigo Books & Music Inc.: Optimizing Its Loyalty Program | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Indigo Books & Music Inc.: Optimizing Its Loyalty Program are -
Low market penetration in new markets
– Outside its home market of Irewards Membership, firm in the HBR case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Skills based hiring
– The stress on hiring functional specialists at Irewards Membership has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program, is just above the industry average. Irewards Membership needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Irewards Membership has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow decision making process
– As mentioned earlier in the report, Irewards Membership has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Irewards Membership even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High bargaining power of channel partners
– Because of the regulatory requirements, Kyle Murray, Ken Mark suggests that, Irewards Membership is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program, in the dynamic environment Irewards Membership has struggled to respond to the nimble upstart competition. Irewards Membership has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Irewards Membership is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Increasing silos among functional specialists
– The organizational structure of Irewards Membership is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Irewards Membership needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Irewards Membership to focus more on services rather than just following the product oriented approach.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Indigo Books & Music Inc.: Optimizing Its Loyalty Program HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Irewards Membership has relatively successful track record of launching new products.
High operating costs
– Compare to the competitors, firm in the HBR case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Irewards Membership 's lucrative customers.
Opportunities Indigo Books & Music Inc.: Optimizing Its Loyalty Program | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program are -
Learning at scale
– Online learning technologies has now opened space for Irewards Membership to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Better consumer reach
– The expansion of the 5G network will help Irewards Membership to increase its market reach. Irewards Membership will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Irewards Membership can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Irewards Membership can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Loyalty marketing
– Irewards Membership has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Irewards Membership can use these opportunities to build new business models that can help the communities that Irewards Membership operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Irewards Membership can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Irewards Membership can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Irewards Membership is facing challenges because of the dominance of functional experts in the organization. Indigo Books & Music Inc.: Optimizing Its Loyalty Program case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Irewards Membership can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Building a culture of innovation
– managers at Irewards Membership can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Sales & Marketing segment.
Manufacturing automation
– Irewards Membership can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Developing new processes and practices
– Irewards Membership can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Irewards Membership can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Threats Indigo Books & Music Inc.: Optimizing Its Loyalty Program External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program are -
Environmental challenges
– Irewards Membership needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Irewards Membership can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Irewards Membership can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program .
Increasing wage structure of Irewards Membership
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Irewards Membership.
High dependence on third party suppliers
– Irewards Membership high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Irewards Membership in the Sales & Marketing sector and impact the bottomline of the organization.
Consumer confidence and its impact on Irewards Membership demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Irewards Membership needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Stagnating economy with rate increase
– Irewards Membership can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Irewards Membership needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Irewards Membership will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Irewards Membership in the Sales & Marketing industry. The Sales & Marketing industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Indigo Books & Music Inc.: Optimizing Its Loyalty Program Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Indigo Books & Music Inc.: Optimizing Its Loyalty Program is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Indigo Books & Music Inc.: Optimizing Its Loyalty Program is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Irewards Membership needs to make to build a sustainable competitive advantage.