"Based on the Taxi Magic presentation and the MusicJuice.net case for next week, what do you think are the key challenges facing Internet startups as compared to brick-and-mortar companies?"
Both Brick-and-Mortar companies and internet startups each face their own unique challenges characteristic to their type of business and industry. From the discussion in class regarding Taxi Magic and the case on Music Juice, I believe the key challenges for internet startups to be the level marketing, large numbers of competitors, and the difficulty in building trust between the company and consumers. While internet startups have several advantages, the vast atmosphere that the internet enables can also create some of these challenges.
Because of the limitless geography within the internet, companies must market themselves and advertise to a much larger market. Although internet companies face low infrastructure and overhead costs, it could be that the marketing costs needed for exposure quickly eat away at the savings generated from other areas of their business. These geographical characteristics can also increase competition. Not only in the sense that any internet company can market all over the world but also in the sense that internet companies are a lot easier to copy. Internet startups must differentiate themselves and create competitive advantages in areas that are not easily mimicked. An example of this is seen by Zappos.com. The company realized that anyone can create and internet shoe store so they made their competitive advantages, culture and customer service, in areas not everyone can easily accomplish successfully. Lastly, one of the reasons why Taxi Magic and Music Juice had a slow start was because of the trust issues involved between internet companies and consumers. I think this is going to be an increasing problem especially as more phishing and other fraudulent sites are developed.
I agree that targeting certain groups on the Internet can appear daunting. Finding a place to start and how to proceed from there is something that I would probably fret over. That's why I thought that it was so interesting that Taxi Magic begun by doing no marketing and actually grew into a successful company before they started to have a marketing segment of their company. It's amazing how word-of-mouth advertising can create a demand for a product. Because the Internet business world is always evolving and quickly shifting, a little marketing (or just the right publicity) can actually go a long way!
ReplyDeleteMarketing to the world would seem possible, but not essential for a startup in the beginning stages. Like JV said, and how the Taxi presentation described, word of mouth is important to develop a network with limited marketing costs. The important part about that is that it is low cost or free. Like you said its costly to market a company, but that word of mouth can really boost a company for cheap.
ReplyDeleteThe trust issue was also big when Taxi Magic started and saw that people did not want to give up their credit card info. I wouldn't even want cabs to know who I was because half the time they take an hour and I get upset and just grab another passing cab.