Target Market - PNN
INNOVATIONS FOR
EBUS 311
Katie Wagner
Debbie Zebron
Leah Balerno
EXECUTIVE SUMMARY 3
ADVANCES IN PEAPOD 4
Introduction 4
Peapod 4
Industry 6
Target Market 9
Advantages 11
Disadvantages 12
New Innovations 13
- Visual Distortions 13
- Lack of Promotion for Products 14
- Self-Repeating Orders 15
- Pharmacy 16
- Text Ordering 18
Conclusion 20
WORKS CITED 21
APPENDIX I – Website Print Screens 22
APPENDIX II – Website Navigation 29
EXECUTIVE SUMMARY
The Internet has provided consumers with the luxury of getting products when and where they want them. Due to this increasing demand, Internet businesses have been developing at a rapid pace. Peapod, an online grocery retailer, has taken advantage of this growing trend and is therefore one of the main providers of grocery services via the Internet.
Although Peapod provides fast and convenient services, we discovered multiple limitations. We decided to address these problems and improve the retailer through various methods. Larger pictures on the website correct visual distortions of products, “Quick Meals” provides better promotion of goods, and self-repeating orders allow easy use and more convenience. In addition, incorporating a pharmacy and widening delivery areas expand Peapod’s target market and developing “text ordering” solves the problem of not having access to a computer when there is a need for grocery products. Our innovations will not only increase revenue for Peapod, but will offer consumers superior service.
Keywords: M-commerce, Innovations, Online Retailer, Convenience, Customer Service
ADVANCES IN PEAPOD
Introduction
Online grocery shopping is a new and expanding market. With the popularity and incorporation of the Internet in our lives, online shopping has become a popular and convenient method of obtaining goods. Retailers are attempting to take advantage of consumers’ growing dependency on technology by incorporating grocery products with the mix of goods available for sale on the Internet. Many consumers associate negative concepts such as the desperate search for a parking space, the endless pursuit of products that are not in stock, and checkout lines that seem never-ending with the task of grocery shopping. A consumer need for change was created and marketers responded with the development of the electronic grocery industry.
Peapod
Peapod was founded in 1989 by brothers Andrew and Thomas Parkinson (Peapod, 2005). The goal of the company was to offer an innovative and easy way for consumers to accomplish their grocery shopping. In the beginning, Andrew and Thomas would complete all of the packaging and deliveries themselves- with other friends helping out as needed. As demand for the service grew, Peapod expanded operations to include much of the greater Chicago area, which is currently its largest market. Peapod then extended into additional markets, and began taking orders over its own web site () in 1998. To date, Peapod provides service in Greater Chicago area, Greater Boston area, Connecticut, Long Island, New Jersey, New York, Baltimore and Washington D.C (Peapod, 2005).
Peapod is the current leader in the online grocery industry (Gross, 2004). It is aligned with Giant Food. We decided to use their Website as an example of what a consumer would typically encounter in their online grocery shopping experience. Buyers on Peapod have three options to begin their shopping adventure. First, if they had completed a visit before, they could use their Giant Bonus Card to shop from a list of items they had purchased in the past. The Bonus Card provides storage for this data. Their next option is to “Browse Aisles.” Items are typically grouped into categories that parallel store aisles. Their final option is a “Search” box. This is available for specific items or those items a consumer has trouble finding. The consumer can browse the website selecting items to place into their personal shopping basket. This process can be as long or as short as the consumer would like. Obviously knowing the brand name of your product choices speeds up this process greatly. For example, there are about 200 cold cereals in existence. Not knowing the brand name of the cereals you desire could create a lengthy search. For those who do not know the brand name of their products, the websites also offer pictures of each product to help narrow the search down. The first trip can be somewhat time consuming depending on the size of it, as well as the consumer’s knowledge of the products he or she wants. Every order is handled by a team of trained “shoppers” who select each item on the shopping list from the goods on the shelves in the store. They chose the products according to the specified brand and size that was provided by the consumer. Once your grocery list is complete, you must choose a delivery time. There are typically options ranging from same-day up to twenty-one days. Once you have chosen your delivery time, simply head to the cash register.
The numerous existing online grocers hold one thing in common – they all designed their websites to emphasize simplicity. Their goal is to encourage consumers not to be intimidated by the Internet by creating their web pages in the most basic manner possible. Computer users of all levels will likely find the online sites easy to use. Before a consumer who feels capable of Internet shopping begins, they need to be sure that their computer is also capable. A basic configuration is a PC with Windows 95/98, Windows NT 4.0, or Windows 2000, or a Mac with MacOS8.x (Andersen, 2004). If your computer does not have any of these configurations, it is likely that you will need to upgrade before you begin. In regards to Internet connection, the stronger the Internet connection the more efficient the shopping experience will be (Andersen, 2004). This is because a user will be able to move through the pages more quickly and the computer will be capable of loading graphics at a higher speed. If a consumer does not have a high-speed modem, the time it takes for graphics to load onto the screen may be quite lengthy. A 28.8 modem can handle the job, but anything faster will make the process more efficient (Andersen 2004).
Industry
The online service industry has been growing more and more successful in the past few years with the increasing use of the Internet. In fact, most consumers expect companies to at least have some sort of online presence. Business websites provide customers with speed and convenience that they can not otherwise get with a regular store.
In addition, the Internet tends to level the playing field when it comes to companies. Websites provide small retailers with more power to compete with established firms. No matter how well a store does with its physical location, an Internet presence can make or break a company. Therefore, inexperienced or new firms without a physical location or a large following can have a chance at succeeding with an Internet site. They simply need to remember a few rules of thumb. For instance, a website must be designed in a way that is easy for consumers to navigate and find what they are looking for. It also needs to provide adequate information and excellent product accessibility. The appearance of the website can also be detrimental to a firm if it is not aesthetically pleasing. It needs to incorporate images that reflect the company, their beliefs, and their products and services. Performance of the site is another issue. If it takes too long for a page to load or for consumers to find a product, they will likely look elsewhere. Lastly, security is essential. A company needs to be able to provide its customers with a protected site. They need to instill the fact that it is safe to purchase products via the website without negative consequences such as having their credit card number stolen. With these factors in mind, and the growing number of computer specialists available, it is easy to see why the online services industry is growing. It is easier for knowledgeable professionals to build successful firms through the Internet rather than creating brick and mortar stores throughout the country and world.
Much like the online services industry, the specific online grocery store industry is one that is growing as well. In the beginning, many people were hesitant to have food delivered, especially food that could be perishable, delicate, expensive, or must stay cold or fresh. It appeared that the Internet grocery industry had flopped in 2001 when Webvan Group declared bankruptcy. The company had lost nearly $830 million dollars after making enormous predictions of success (Pastore, 2001). Online grocery retailers though did not give up. In fact, they have made Internet grocery shopping available to tens of millions of consumers nationwide (Associated Press, 2004). They also improved delivery options, such as “Just in Time” delivery, hand packaged products, temperature controlled containers, partnerships with local grocery stores, and specially equipped delivery trucks. With all of these innovations, consumer’s fears are being subsided. People are discovering how easy it is to browse every day grocery items on a website, order them, and have them delivered straight to their homes. The typical internet order of $130 is larger than the average in-store sale (Gross, 2004). Research firm International Data Corp. predicts that consumers will spend some $2.4 billion shopping for groceries on the Web in 2004, up from about $200 million in 1999 (Andersen, 2004). Although these numbers may seem large, they still consist of only 0.4% of total grocery sales in the United States (Pastore, 2001). The key points online grocers need to focus on to continue expansion are to enhance the convenience of their services while still keeping costs low. Peapod is one company that saw the potential of an online business and has surpassed its competitors in the online grocery field.
The future of such online services seems very bright. Our society is continuously becoming more and more dependent on technology and if Internet grocery retailers can keep customer satisfaction at a high level it is estimated that online grocery sales should exceed $6.5 billion by 2008 (Associated Press, 2004). Although that is just 1% of the total estimated grocery market of $641 billion, it amounts to an astounding annual growth rate of 42% (Gross, 2004). Internet grocers are very likely to grow with the Internet and according to a study by an Andersen Consulting report, it is estimated that by the year 2007, 15 – 20 million households will order their groceries online for home delivery (Andersen, 2004).
As previously discussed, it seems as if every company is leaning towards having some type of website to reach their consumers. In all honesty, the future of retailers may be a sole presence on the internet without the existence of actual, physical stores. Although this idea may not come to realization for quite some time, it is possible. People are becoming more and more concerned with getting what they want, when they want it. Right now, the Internet is the only way to solve those demands. It provides fast responses to the everyday and the out of the ordinary requests.
Target Market
Peapod currently has a very narrow target market. They tend to focus on dual career families, single parents, and new families with young children. This focus is towards those who don’t have time to go the grocery store, browse the aisles, and wait in long lines. The online retailer is also limiting their market by only focusing on certain geographical regions. For instance, at this point, Peapod is only developed along the East Coast. Not only that, but they restrict themselves to specific areas that are near their partner store, Giant. These limitations are ignoring a very large possible market for Peapod.
To address this issue, we decided to expand Peapod’s target market. We will first do this by incorporating customers who can’t necessarily go to the grocery store, not because of time issues, but because of physical restraints. The largest group of people that fit into this category is the elderly. Most of the time, they don’t have the ability or luxury to jump into a vehicle, drive however many miles it is to the store, roam the long and crowded aisles, and lug all of their heavy groceries home. Peapod is not currently targeting this very needy market. That needs to change. Peapod could obviously use marketing and advertising to attract this market, but we developed another idea that would increase their use of the online grocery store.
Our idea to include this market is to create a pharmacy within the Peapod website. This will entice the elderly, and disabled as well, to use their computer within the comfort of their homes to order groceries and their prescriptions. A few clicks of the mouse are much more convenient that dealing with the hassle of going to the grocery store for food and pharmaceuticals. Therefore, the target market will be expanded. I should also mention, however, that having a pharmacy within the website doesn’t only attract the elderly and disabled. It will attract all of those who are short on time or those who refuse to use online grocery stores because they can’t get the full range of grocery services. With the inclusion of a pharmacy, they now can.
Geographical locations that eliminate a broad possible target market can also be addressed. We want to include the rest of the United States within Peapod’s focus by expanding their delivery areas. Peapod has already established a successful online entity. This of course, is always the hardest part when deciding to go global, or in this case, national. Peapod simply needs to expand their focus and possibly create an additional partnership with local brick and mortar grocery stores across the country in order to increase their number of customers. For instance, if Giant is not a large company on the West Coast or throughout the rest of the U.S., Peapod needs to partner with other profitable business throughout the country. This will also give consumers a sense of comfort knowing that their online groceries are in some way connected to the groceries they have grown accustomed to getting at their local stores.
As you can see, these innovations will not only positively affect their current market by offering more services and more locations, but it will also expand their current target market by including more customers from a demographical and geographical perspective.
Advantages
There are numerous benefits associated with purchasing groceries through an Internet retailer. First and foremost is availability. Consumers have access to Web grocery stores 24 hours a day and seven days a week. This is extremely beneficial to those with very busy schedules or awkward schedules because the service is available at their convenience. Another advantage of Internet grocery shopping is the time savings associated with it. According to a study by Khan and McAllister, excluding driving time, the average American spends 45 minutes in a single trip to the grocery store. In this same study it was revealed that the average Peapod buyer completes their shopping process in a mere 37 minutes (Andersen, 2004). By using Peapod a person does not risk a more time consuming trip due to crowds, lines, or lack of parking as they do in a traditional grocery store. The next benefit of purchasing groceries online is the organization it provides. All items are separated into specific categories making them easy to find. Also, Internet grocery sites are easy to use. Numerous Web stores provide an overview as well as detailed information about their services. In addition, many provide a step-by-step guide to using their Web Site to ensure that the user does not become confused. Finally, one of the most emphasized benefits to online grocery shopping – the avoidance of crowds and long lines. Almost every consumer has faced a shopping trip that was originally supposed to take ten minutes and turned into an hour due to crowds, lack of parking, or long lines. Online grocery shopping eliminates the occurrence of this problem.
Disadvantages
There are also many disadvantages associated with online grocery shopping, specifically Peapod. First, the products displayed on Peapod’s website are small and distorted. This makes it hard to distinguish one product from another. The next disadvantage is the lack of promotion for the products. Peapod’s website does not contain any endorsements for products on their website, making it hard for consumers to choose which product to buy. Also, this is a missed chance on a huge profit opportunity for Peapod. Product endorsements are a good way for companies to make money and to establish relationships with other businesses. Another disadvantage is delivery problems. Even for small orders a consumer must take part in a detailed shopping experience. This may be too time consuming for some shoppers. The next disadvantage we found is that consumers do not have access to all grocery services such as the pharmacy. Finally, the biggest disadvantage we found with Peapod’s website is that they do not address the fact that consumers do not always have access to a computer. Consumers may find themselves in need of groceries while stuck in traffic, on a plane, or anywhere. Peapod must take into consideration that to expand their market of customers they must think about the needs of all consumers and not just those with an Internet connection.
New Innovations
- Visual Distortions
There are numerous different types and brands of products in existence. This makes it very easy to confuse one type of a product from another. On Peapod’s current website, the available pictures are very small and the brand names are barely distinguishable. This is a serious limitation because many shoppers are brand-specific – they only buy a certain brand of a product. In regards to visual distortions because of small pictures, Peapod has a few options. One possibility is to keep the pictures the way they are, but provide a link for customers to click on that would list all available information about the particular product. This information would include everything from the brand, to the size to nutrition information. The problem with this idea is that certain physical characteristics of a product cannot be depicted in any other way than a more detailed picture. For example, a consumer may know that the milk she buys has a picture of a pink cow on it and if she cannot distinguish which carton it is, then she is not likely to buy the product. Consumers are most likely to distinguish products by physical characteristics therefore the solution we chose to implement is to create larger and more detailed pictures of the products. Consumers are not likely to use a service if they are not confident that they will receive the correct order. By enlarging the pictures, our website gives consumers more of a feel of the actual shopping experience. We enhanced the photo sizes to the point that brand name and details of the product (size, type, nutrition information, etc) are easily visible. Therefore when using our website consumers can evaluate and compare projects just as they could in an actual grocery store. We think that this will attract more consumers because they will be capable of telling one product or brand from another and they will be able to ensure that they are ordering the product they desire.
- Lack of Promotion for Products
In an actual grocery store, product promotions are everywhere. Promoting the products of certain brands is one of the key ways that grocers make a profit. For example, shelf space is a highly valued asset in the grocery industry. Grocers negotiate with brands regarding which brand gets which space and how much space each brand gets as well. The best spaces are sold to the highest bidders. Internet grocers lack this opportunity because obviously they do not have shelf space to sell. A possible option is for Peapod to create an online coupon book. They could advertise deals on specific products that would be available only to online shoppers. The online coupon book would not only promote products, it would also distinguish Peapod from other grocers through deals and promotions. The problem with the coupon book is raising awareness of it. If consumers do not know it exists then they cannot possibly utilize it, and businesses who advertise in it will not gain any advantage. In the end, Peapod would have to fund not only the creation of the coupon book, but the advertisement of it as well. Another option is for Peapod to sell pop-up ads or screen space to brands. This would create an opportunity for products to enhance advertisement and for Peapod to profit from the selling of these advertisements. The problem with pop-ups and banners is that many consumers see these as more of an annoyance than an opportunity. We decided that incorporating a recipe/meal link on the website would be the best way for Peapod to promote specific products. We titled this link, “Quick Meals.” The idea behind this feature is to list simple recipes, but to name specific products as the ingredients. This would provide the opportunity to increase revenue by partnering with specific brand names. For example, on our website you can see that all of the products listed are Kraft products. Therefore in the end Kraft benefits from the increased marketing and we benefit from the increased revenue. This feature also has the potential to expand the target market. Consumers are constantly looking for ways to accomplish things faster. All of the meals listed in this link can be made in about thirty minutes. This feature would be attractive to any type of busy individual– from working mothers to party planners, to on-the-go families, there are very few people who will not find this added service beneficial.
- Self-Repeating Orders
Efficiency is essential to consumers in today’s fast-paced world. Consumers do not always need a large order when grocery shopping, so they should not always have to go through the same detailed process for every trip. One way to enhance the efficiency of this process would be to create a section titled “Quick Items”. This section would list products that customers typically need on a regular basis such as bread and milk. The problem with this idea is that it is impossible to predict what each consumer could need on a small trip. In the end this link could actually decrease the efficiency of a shopping trip because a consumer could end up spending too much time clicking back and forth. The idea we decided to implement is an intelligent agent that would allow customers to create self-repeating orders. Grocery shopping trips are unique to specific individuals. Some shoppers take long trips once a month and others prefer shorter trips on a weekly basis. To cater to the needs of all types of shoppers we added the tool of self-repeating orders. For example, if a person knows that he or she typically needs a loaf of bread and a gallon of milk on a weekly basis, then this person could type in the products desired, as well as on what time basis (daily, weekly, monthly, etc.), and the day they would prefer delivery. This service is extremely innovative because not only does it provide a service it completely eliminates the unneeded shopping process for the consumer. Self-repeating orders is an example of convenience at its best.
- Pharmacy
One innovation that we have decided to incorporate into Peapod is a pharmacy. This idea was briefly touched upon earlier, but will now be explained in more detail. We felt that one major limitation that Peapod had was a lack of access to all grocery store services. The online retailer could solve this dilemma through various options. For instance, they could incorporate an online bank into the website. Much like some regular grocery stores, consumers would be able to do at least some of their banking activities, such as transferring cash to different accounts, before they purchased their goods. Another possibility to add more services to the website is by including a coffee shop, such as Starbucks for example. It is a growing trend to add little shops like this to grocery stores. Peapod could keep up with the times by incorporating this into their website and allowing consumers to purchase such items along with their products. However, if either of these options were chosen, there would be great difficulties involved. The website would have to be extremely secure and another partnership would have to be obtained in order to create a bank. Also, most people would want their coffee drinks immediately, which wouldn’t be possible through an online retailer. Therefore, we believe that by introducing a pharmacy onto the website is the best choice to allow consumers to get a wider range of services that they would normally get at a regular grocery store. As stated earlier, the main benefit of adding a pharmacy is the fact that it will obviously expand Peapod’s target market by incorporating the elderly, the disabled, and those who are short on time.
The Peapod pharmacy is very simple to use. To order a new prescription, the consumer simply needs to contact their doctor and tell them to call the prescription into the online pharmacy via a toll free number. For repeating prescriptions, a doctor is not even needed. The customer just needs to go to the website and enter the prescription number themselves. The prescription will then be shipped alone or with their food purchases from the website.
In addition to providing access to prescriptions, the pharmacy also offers consumers a toll free number that is available 24 hours a day, 7 days a week. This number will connect them to a pharmacist that is available to answer any general or specific questions the consumer may have.
This innovation’s main attractive quality is the convenience it offers to consumers. They can get their food products and pharmaceuticals at the same place without having to go to the physical store. This will also increase the company’s revenue by attracting consumers who would have never used an online grocery service before they could get their prescriptions filled through it as well.
- Text Ordering
Our last innovation that will improve Peapod’s current status is incorporating “Text Ordering” to their services. This is simply being able to order products through a text message via a cellular phone. Currently, this type of ordering is not used with any grocery retailers and will be only be available by Peapod. We believe that this solves the issue of consumers not always having access to a computer to order their goods. Due to the great increase of cell phone use by everyday people, we feel that this is a direction that Peapod cannot afford to ignore. There are other options, of course, to solving this issue. For instance, Peapod could offer a toll free number that would allow consumers to call in their orders. This idea, however, creates many difficulties. For one thing, it would be extremely time consuming, especially if the system were automated. People use Peapod for its convenience and speed and therefore, would not enjoy spending long periods of time on the phone making their grocery purchases by pressing an unending number of buttons. This idea would also cost the online retailer by making them pay for those who work the call center. Therefore, to increase revenue, save costs, and continue to provide customers with fast and flexible service, text ordering is the best option for dealing with a lack of computer access.
According to our textbook, Electronic Commerce, M-commerce is defined as “business transactions and payments conducted in a non-pc-based environment.” This is a growing trend among the entire world population. M-commerce offers many benefits that Peapod needs to take advantage of through text ordering. For instance, if a person gets a craving for a certain product, or drives by a grocery store and remembers a product they need but doesn’t have time to go purchase it, they can simply send a text message from their phone to purchase the good. The speed and convenience of this new feature is exceptional. Companies need to understand the growing lack of time consumers have to do ordinary and often mundane tasks. Text ordering is quick and simple for those who are on the go. Location is also no longer a boundary that needs to be hurdled. Most people have access to cell phones all the time. Cell phones are flexible enough that they can be used most anywhere. This eliminates the restriction of needing a computer to make a purchase.
The actual process of text ordering is not difficult. The very first step a person must do is to go to Peapod’s website and register their cell phone number. The consumer can then send text orders at any time from there on out. The customer simply needs to know three pieces of information to do so. First of all, they need to know what products they would like to purchase. Secondly, they need to have a preferred delivery date in mind. Lastly, their desired delivery time should be known. Once everything has been decided on, the consumer merely sends this information through a given text message format to Peapod. Their order will then be placed, shipped, and delivered when wanted. The text ordering will provide the company with more revenue due to the ease of use and the accessibility it provides consumers.
Conclusion
Technology is ever-changing and face-paced. Peapod has the potential to offer a much needed service to customers but they must keep up with their customer’s needs. By incorporating larger pictures, promotion links, self-repeating orders, an online pharmacy and text ordering into their website, Peapod will put themselves a step a head of the competition and attract a much larger market.
WORKS CITED
Andersen, Sherry. (2004, 26 November). Is online grocery shopping for you?
Computer Bits, 13, 7 – 9.
Associated Press. (2004, May). After flashy failures, internet grocery quietly grows. Retrieved on November 16, 2005 from ABC 7 News Website: ness_internet_grocery.html
Awad, E. M. (2004). Electronic Commerce From Vision To Fulfillment (2nd ed.). New
Jersey: Anderson
Gross, Mandy. (2004, July) Online Grocery Shopping is Still Alive and
Apparently Growing. Retrieved on November 16, 2005 from USDA Website:
11.html
Pastore, Michael. (2001). Online Grocery Store Needs a Little Marketing.
Retrieved on November 16, 2005 from Clickz Website:
Peapod-Online Grocery Shopping (2005). Retrieved on October 20, 2005, from
Peapod Website:
APPENDIX I – Website Print Screens
The Following are print screens of a majority of the new and improved Peapod website. For a more detailed look at the site go to:
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APPENDIX II – Website Navigation
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This is the navigation structure for the new Peapod website
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