Digital

Strategic
Report

CRM Proposal COLLECTIVE GALLERY

Management Strategy for Content Industry


Executive Summary

What if Collective Gallery could learn from a customer through a recommender
system and produce better web content from the data derived? What if their e-
commerce system could automate personalization on the Web, allowing
personalized experience for each customer? What if we could track purchasing
patterns and enable individual personalization for each client/consumer? These are
some of the examples what a Recommender System can offer. With an automated
content from consumer data, change management is also bound to happen and this
will also be highlighted under management strategy. From the evaluation made
based on CGs SWOT analysis, below are the key recommendations that were aimed
to leverage these four elements of the business:

Key Recommendations:
Technology
o Application of Recommender System using attribute
algorithm, item-to-item correlation and user input data
(purchase, user review, and editors choice or supplied
content) to increase personalization and collection of
systematic consumer data for audience development.
o Deployment of Oracle CRM On-Demand Mobile Sales for a
quicker performance in common and repetitive tasks by sales
staff
Finance
o Leverage B2B market and opportunities to transform content
collections or digital content rights for commercial use
through partnerships with companies of different sectors
(retail, events, brands).
Management
o Change management through business process automation
and process improvement: optimizing existing processes and
automating number of manual operations (in regards to
purchase transactions) using information technology. Staff
allocation will be according to variety of skills offered and
type of tasks they are able to identify with the most.


In order to be on par with the advancement of digital industry and proliferation of
digital consumers, CG must pay attention at how digital age is changing and
disrupting the digital content industry. The strategic plans above are aimed for a
smoother, streamlined business process with an aim to leverage more commercial
and international business opportunities.





1. THE MARKET FOR DIGITAL CONTENT

1.1. Growth Overview

According to Tsai, Lee, Yu (2008), the exponential growth of the average global
annual growth rate of digital content is influenced by technological advancement,
cost reduction, and proliferation of enabling technologies. These types of
technologies can be broken down to digital processing, storage and
telecommunications. Tsai et al (2008) added that requirements such as strong
cultural background, creative ideas, and mindfulness of IP rights and
telecommunications infrastructure bounded by government policies are foundations
of the development of the digital content industry. This essay gives a quick overview
on the current discussion, licensing and IP, pricing in the digital economy and a short
documentation on stock agencies and how it revolves in the digital world.

Tsai et al (2008) added that enterprises therefore would have to realign their
strategies parallel to the changes in the knowledge-based economy. There are a few
suggestions in regards to said discussion, firstly pertaining to being more advanced in
innovations versus other competitors to survive in the market. Consistency is
necessary as well to keep the pace going. According to Cheng and Shyu (2004),
Innovational Intensive Service (IIS) is the catch of the ICT industry in this economy
where companies leverage market domination through advanced technology and
occupy new service models to create diversified products, services, and market
expandability. Thirdly, as the innovation process in the content-based economy is
considered empowered and moving, it reverberates low heterogeneity. Therefore, in
order to strive, enterprises need to thrive in continuous innovation and offer a range
of diversified products (Tsai et al).

1.2. Pricing in the Digital Economy

Extracting the pricing factor, Bockstedt, Kauffman and Riggins (2005) did a research
on the pricing in the digital economy. Its price dispersion is still in the research stage
and has received a considerable attention. Following section will cover discussion on
prices for online books and music files and the breakdown of pricing aspects in the
digital world. They argue that the Internet is a playground for low-friction channel
for commerce, but the heterogeneity factor is still important in other dimensions of
Internet competition among online retailers. Three main factors that affect price
dispersion are branding, trust and awareness. Bockstedt et al (2005) suggested that
Amazon.com is an case example of premium price dispersion because they position
themselves based on service capability and brand recognition. It can be added that
product differentiation via online travel agents services fuels the price dispersion.
Pre-price dispersion state is handed to the music market but it changes as
consumers begin to show varied demand for songs in digital format and preferences
over service providers. This could be seen from the variation of prices based on the
date of music release itself. Older music is offered at a lower price, whereas new
music has a higher reserved price as demand is more inelastic and copyright
protection is more rigid.

Bockstedt et al (2005) suggest five grounds for price rigidity on the Internet as
structured below:

1. Menu costs of price adjustment
2. Underlying market structure
3. Asymmetric information in industry business processes
4. Demand based drivers
5. Contract based drivers (subscriptions)

Putting the above points into context, we find that digital music services control
their databases of MP3 and it usually priced at a low cost. The infant market is not
able to start any long term contracts between digital music sellers and buyers and
industry price are wavered by competitors. Rigid prices are maintained to avoid
flagging of quality problems to competitors or consumers. Even so, online firms are
able to compete on monetary value, followed by non-price elements tactics for
example promotions, customer service and advertising.

In the current digital content economy, bundling and subscriptions or freemium
are the most adapted models by many online music streaming service (Bockstedt et
al, 2005). There are three strategies to make up the pricing information goods, which
are versioning, bundling, and fixed-fee pricing. It is suggested that offering
freemium, which is the free trial of a full version before getting consumers to pay
in full amount allows online streaming site to keep on reaching new market
segments. However this creates a partisan view if the consumers only take
advantage of the free trial and recreate accounts to keep getting free trials for
another additional months. This makes it possible for unscrupulous users to violate
copyrights by engaging in piracy activities (Bockstedt et al, 2005). Even so, Wu, et al
(nd) argued that piracy of information goods could be fought with versioning and it is
an effective tool in digital music pricing and marketing because it perpetuates self-
selection.

1.3. Crowdsourcing in Digital Content Industry

Opportunities for constant content creation, production, and consumption have
allowed individuals to reach and understand audiences easily across the globe
(World Economic Forum, 2015). The constantly evolving technologies and fast pace
of innovation has sparked the contemplation of more fluid modes of distribution and
content creation. Based on a report by The Business of Creativity by World Economic
Forum (2015), questions regarding the implications for IP outside the content
industries rose as the power of Internet continuously show a significant impact on
the content industry. There is a rise of amateur creators producing Do-It-Yourself
(DIY) tutorials, covering songs, providing video cheats and tips and participating in
online journalism through their own recording lens. This creates a marketplace of
interest as it fosters the hobby of creativity of the digital consumers and promotes
the growth of new disruptive model such as user generated content or profoundly
known as crowdsourcing (World Economic Forum, 2015). Copyright systems are
bombarded with plethora of tasks to adapt and create policies developed for this
type of market in todays hyper connected world. It has been argued by many that
these things need to be speed up in the legal systems to keep up with technologies
that have enabled this wave of creative energy (World Economic Forum, 2015). This
discussion acts as a foundation for the evolution of stock image or content websites
that will be covered in the next section.

1.4. Stock Photography Today

Stock photography websites boomed in 2000s to cater independent and freelance
photographers who shoot stock photos and earn royalties from their images.
Looking at it via the context of collective effort, stock photography websites could be
one of the first crowdsourcing efforts in that the websites pool any and all creators
and photographers to upload their work to these stock websites (Turner, 2015). To
emphasize the crowdsourcing point, these websites are the pioneer to have laid
foundation as a marketplace for other content such as videos, audios, fonts, design
elements, code and such. It follows the same methodology, argues Turner (2015) in
that they pull a collective effort to put assets on websites and be paid based on
royalty sales. In the latest news of stock image websites, there has been an on-
demand photograph marketplace with a smartphone app to go with (Hear, 2013).
Acting as an upgraded version of old stock image website with the actual
crowdsourcing definition, Scoopshot was originally pitched as a platform for users
to upload and sell content of eye-witnessed reports and other prominent content,
pitting it against conservative picture agencies and citizen journalism style news
avenues. According to Hear (2013), the current funding that supported the startups
has totaled up to approximately $11 million, appearing to head rivals of the same
industry such as Foap, EyeEm and Rawporter. However, Scoopshot has changed its
course slightly as it repositions itself as a reverse marketplace for stock and plenty
other timely content providing an on-demand element to the content it sells (Hear,
2013). This allows buyers to produce local, national, and global news pieces, which
is responded by users by capturing and uploading their catch that meets the brief.
The user then will receive a cut of any consequent revenue generated if a purchase
has been made.
















2. BUSINESS STRATEGY

2.1 Introduction

As noted in the summary, this strategic plan is the driver tool to meet the projected
business goals of Collective Gallery. As a picture and media library that operates on
B2B model based on rights sales, CG aims for more B2C opportunities with an
improved customer service, enhanced online experience and smoother payment
transactions. In its finance and management context, CG plans to have its revenues
increased through a more effective exploitation of assets and a higher turn up in
market share. In operations level CG hopes to reduce costs and promote greater
efficiency through a more streamlined business process.

This strategic plan covers two stages of discussion concluded by a list of future
recommendations as its conclusion. First it presents the compilation of strategy
based on three components, which are Technology, Finance and General
Management. Each area is presented with a short case study and use case exemplars
to form a concrete argument on each strategy.

As mentioned in the current overview of digital content market, the proliferation of
content has created a saturated competition for all content companies alike.
Therefore, it is imperative for CG to come up with forward moving strategies to
maintain and find its composure on technological advancements and other
international opportunities.

CG is based in the south east of London, operating with 23 staff and apart from
selling online and on-request content it also engages in consumer product sales,
marketing and branding opportunities from its content. The nature of content is
highly targeted to heritage and culture based audience.


2.2 Customer Experience and Streamlining Operations

Below are the strategic plans aimed to support CGs current mission as such:

Smoother purchase transactions
More efficient and quicker operational process
More personalized and insightful approach in dealing with customers

a) Recommendation System

Based on the market overview of the current digital content industry,
behavioral research show that judgments are often influenced by elements
of the environment and can be built upon request. Through e-commerce,
businesses have the chance to provide customers with broader options.
However, due to impersonalized nature of online business, they need to
increase the amount of information or choices provided to provide more
freedom in choosing their item of purchase. Ultimately, the point of contact
for businesses to understand online customers is through the way customers
react to the information they provide. In addition to that, companies are also
able to leverage on the information retrieved from customers. Using a
system to manage the information known as information filtering system
(Kihn, 2015), this model helps to manage information overload and increase
of useful information ratio to false or irrelevant data. In martech1 terms, an
information filtering system is known as recommender system. Deploying
recommender system into CGs information architecture helps to provide
automated suggestions based on algorithms that fit existing technology.
Recommender systems automated personalization on the Web, allowing
choices to be specifically catered for each customer. Businesses on the hand
would be able to obtain rich insights on their customers buying patterns,
influences and prediction of future buying behaviour. Explanations aside,
below are three ways recommender systems can enhance customer
experience (Schafer, Konstan, Riedl, 1999):

i. Browsers into buyers: Visitors to CG website often have a gist of what
type of images to look for but probably will take a long time to
contemplate over various choices. The time consumed can sometimes
cause browsers to get stuck in confusion as they navigate through
different lists. Recommender systems is set to help them find

1
Marketing Technology is any technology that enables marketers be more efficient or effective in reaching their
audiences (with a great user experience to boot) (Kerr, 2015).

 products they wish to purchase by matching their browsing patterns
or filter options.
ii. Cross-sell: Through recommender system, cross-selling could also
take place by providing a personalized array of suggested choices. An
example scenario: a customer lands on the page, uses the filtered
search and chose to purchase a picture of an Oriental vase. The
algorithm in recommender systems picks up and suggested an old
video recording on vase-making in the Imperial time as one of other
suggestions, creating a list of similar products on top of the page
before customer checks out to pay.
iii. Loyalty: A good business strategy begins with customer loyalty.
Through the suggestions and data collection, recommender systems
improve loyalty from the personalization transaction between
customers. Customers tend to return to website that operationalize
their interests, buying behaviour and pattern as the immediate
choices match their best needs.


It is a matter of fact that recommender systems have transformed the way
people look for products, information and even on the decisions of other
people. Based on scholarly research (Scafer et al., 1999), there are six e-
commerce companies as exemplary points to show how they benefit from
the utilization of one or more variations of the recommender system. Table 1
shows the brief description of the features of the system grouped in three,
which are interface, technology and recommendations.


Table 1 - Recommender System Examples (Schafer et al., 1999)

The recommendation interface is where the data comes from and it exists in
the form of browsing history, emails, personal rating, text comments, interest
or favorites (Top N List), ordered search results and browsing. Through these
segments data is extracted and the systems technology will then compute
based on choices such as: item-to-item and people-to-people suggestion,
attribute-based recommendation (based on searches) and user inputs. User
inputs are utilized in four versions, which are purchase data, likert scale or
rating, reviews (text) and most importantly editors choice. As CG are lacking
in revenue-driven content on the web, having an editors choice technology
for recommendation purposes would be a way to increase business revenue.

b) Oracle CM On-Demand Mobile Sales

The aim is to improve efficiency on operational level, particularly on optimization
of job roles in ad-hoc work that involves specific skills. This includes work in
digitization, collection development and metadata. Installing a specific
technology to assist member of staff is important to improve efficiency in closing
deals. Features in this solution include:

administrative configuration of record types, fields and related items as well
as automatic inheritance of labels, pick list, and other configuration data
from Oracle CRM On Demand.
Oracle Data Sheet

Sales staff could access custom objects, service request and other databases to
fully connect with their customer. It is important for sales and licensing rights
staff to quickly manage their tasks especially when it comes to appointments
with potential client/customers, collaboration with external sales team members
also keeping customers contacts in check. By deploying this solution users could
immediately access to key information that is already configured to match CGs
CRM environment. With the integrated access to leads and opportunities that
provides specific staff with the information they require at the point of customer
engagement or business deal, it allows them to close deals on the fly.

c) Reducing Friction Points at Payment Checkout

The occurrences of friction during payment at checkout due generally happen
under these circumstances:

1. Shoppers high sense of security
2. Level of business credibility and trustworthiness
3. Amount of customer assistance and information
4. Ease of flow and smoothness of user experience (UX) delivery

At this point, CG has covered the basic tenets of security measures at the
checkout page by including the addition of green bar assurance which is the
Extended Validation SSL Certificates 2 instead of the basic SSL. Extended
Validation Certificate (CV) is not only rigid on identity verification but also flashes
the green assurance bar on organizations name next to the website tab.
However, CG has yet to add a more personal touch on customer service, as there
is no quick reach to customer service or any contact details to prove their
trustworthiness and credibility. Therefore, it is suggested for CG to add our
details and customer service information right at the payment page to provide a
sense of communication and showing a desire to clear out confusion or queries
as fast as we can. Figure 2 below shows an example of assistance provided right
at their checkout page (via ASOS).

2
A certificate used for HTTPS websites and software that proves the legal entity controlling the web site or
software package (Wikipedia)


Figure 2 - Immediate Approach to Customer Service

2.3 Leveraging B2B Market Base for B2C Opportunities

a) Branding Opportunities

It is known that CG has identified its primary customer base to be a heritage and
culture based audience and we ensure that our message speaks to their needs.
However, in our aim to increase revenues by exploiting assets affectively, we
want to start looking at secondary audience through product packaging and
events management. We are looking at galas, celebrity dinners, and themed-
events with association to culture and heritage. Our collections could be used as
their digital backdrop, sound effects gifts (images printed on notebooks and
such), etc. Attendees or secondary audience might not be consumers simply
because they are unaware of the service or collections that we have. If they
come to us, it might not be for the same reason, but they might come back as a
new customer intending to be engaged in our collections. It is a significant step
to isolate the unique dimensions of different major business market sector and
find out how much market potential does different sector represent and how to
find our shares in it. Below is a short case study on Cisco Systems, Inc. and how
they engage with an F&B company, Heineken to delve in secondary markets.

b) Case Study
Cisco Systems Inc. is a networking solutions company that is the foundation of
the Internet and supports most corporate, education and government networks
on a global scale. Cisco is also a leader in business-to-business firm that positions
its products and services to various organizations: commercial enterprises (eg:
corporate and telecommunications firms), governmental units and institutions
(university and health care organizations). Even so, they tap into secondary
markets to transform complex technology products and services into a method
that meets customer requirements regardless of the area of business. One of the
most recognized brewers in the world, Heineken planned to expand into
adjacent markets and give way to a new customer interaction and welcome Cisco
on board. Cisco then provided support and guidance in regards to building up
Heinekens marketing efforts (Hutt and Speh, 2006).


2.4 International Market Share

 a) Global Market Entry Options

To develop an effective global marketing strategy, we must evaluate alternative
ways digital content business can participate in international markets. Considering
the CGs entry-level stage of evolution in international involvement, this will be its
first association to participate in global markets.

- Strategic Global Alliances (SGA)
Strategic alliance is termed as a relationship between two or more companies to
cooperate to achieve certain strategic objectives and to share common risks. It
works well for market entry and they maintain status as independent and
separate entities and follow the terms to make contributions to the partnership
until it is terminated. It is usually formed in the global marketplace where
organizations or companies are based in different regions of the world. It
typically results in empowering co-marketing by both organizations to drive
traffic and awareness of other companys business.

Advantages from SGA that should be expected by CG are broken into four
aspects:

1. Organizational advantage: forming a strategic alliance to gain necessary skills
and obtain particular competencies from strategic partners. Particularly
looking at museums or galleries in the USA as this will help in enhancing
productive capacity, provide a distribution system and most importantly
extend supply chain. Becomes an added value if partner is a well-known as it
helps to add legitimacy and credibility to our organization (for future
investment plans).
2. Economic advantage: Chances to reduce costs and risks by segregating them
across the partner(s) of alliance. It also reduces both individual enterprises
financial risk as the greatest potential of an equal share on a project only
stand to lose half of the total project cost in case an alliance fails.
3. Strategic advantage: It is useful to create a competitive advantage by
garnering various resources and skills. It helps us in tapping into the
international business markets as it can promise future business
opportunities, widening use of collections and acquirement of more rights.
4. Political advantage: Forming a strategic alliance with international institution
to gain entry into a foreign market in a calculative and strategic way. It is
also a way to improve position as a cultural and heritage based commercial
content library.


Table 2 - Spectrum of Involvement in Global Marketing (Hutt & Speh, 2013)

Table 2 shows the level of commitment in the spectrum of involvement in global
marketing and strategic alliance falls in the middle with a more low commitment
inclination. Below is a sample of case study through a museums viewpoint that
resonates to the idea of involvement in strategic alliancing for CG.


b) Case Study

Museums such as National Gallery of London, the Philadelphia Museum of Art and
the State Russian Museum have signed up alliances with digital content companies.
Through such arrangement, museums intellectual property (IP) would be licensed
and processed in a productive and business-like manner. It is a potentially profitable
and exclusive financial chance for licensing of both museum and digital contents
depth of IP. Many stock agencies have formed alliances that are cultivated with a
wide range of cultural institutions and prominent individuals. Taking the stats of
Canadas Royal Ontario Museum where they generated approximately (Canadian)
$50,000 from the alliances and Smithsonian Institute is able to garner an annual
figure in the US for about $150,000 (Carmichael, 2006).

3. FUTURE RECOMMENDATIONS

From the strategic plan devised for Collective Gallery, these are the future
recommendations regarding the strategies and this documentation itself:

1. In depth comparative analysis of organizations in the same sector to garner
proper statistical data for further insights. It is also to gauge the credibility
level of the strategic decisions made; whether it has been done by other
agencies or not
2. More emphasis on budgeting and the presentation of it on each decision
level, especially in adapting technological systems or databases. Therefore,
deeper insights should be attained in finding out how much new systems
deployment would cost
3. Progression towards social computing or mobile application: moving towards
Web 2.0 after progressing through smart systems on website. Finding ways
 to connect users as content creators and allow them to access collection on
the go.
4. Proposing a concise change management for the human resources
department for any suggestion on new technology and revamping each
staffs task according to their specified job scope.











































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