In February 1999, Kent Groves sat in a coffee shop thinking about
his company's new site on the World Wide Web. As president of
Maritime Trading Company, a small business he started in 1993, he
still made most of the decisions for the company.
Maritime Trading had had a Web site since 1995. Until recently,
there had been no real strategy for the site. In 1995, some friends
of Kent's, who had developed skills in Web site development, offered
to create one for MTC for little cost. Kent's attitude toward this
was "let's throw it up and see what happens." From that time until
the end of 1997, co-op students from a local university maintained
it. The only purpose of the site was to be an on-line extension of
the company's catalogue, giving people using the Internet access to
In November 1998, Kent had the site redesigned to appear more
professional and include complete, secure on-line ordering. He
wanted to entice people to visit and order on-line. Kent wondered
how to both draw traffic to the Web site and encourage customers to
come back. His goal was to provide the most interactive and secure
on-line shopping experience in Atlantic Canada.
This case was
prepared by Martha Lawrence and Dr. Shelley MacDougall of Acadia
University as a basis for classroom discussion, and isnot meant to illustrate
either effective or ineffective management. Copyright © 2000, the
Acadia Institute of Case Studies. Reproduction of this case is
allowed without permission for educational purposes, but all such
reproduction must acknowledge the copyright. This permission does
not include publication.
Maritime Trading began as a mail-order company specializing in
foods and consumables unique to Nova Scotia. Its first catalogue was
published in 1993 and products were only marketed in Canada at that
time. Between 1993 and 1999, new products were added and subsequent
versions of the catalogue were produced. See Exhibit 1 provides a
synopsis of the company's development.
MTC had been keeping track of its customers and sales in a
database for several years. Although the company had customers from
all walks of life, the typical customer had remained the same. Women
in their late 30s to 50s, with considerable disposable income, were
the greatest consumers of the company's products. When it came to
mail-order sales, this typical customer was generally restricted
from shopping in person either by geography or time constraints.
Maritime Trading had never done very much prospecting for new
business; eighty percent of its business had come from repeat
customers over the last two years.
The company broke even in 1998. Kent felt this was appropriate,
"It takes five years to build a critical mass in a
direct-to-consumer venue." Maritime Trading had moved away from just
marketing its products to the rest of Canada. Its new slogan,
"Delivering Atlantic Canada to the World," clearly expressed its new
Maritime Trading was in the gift business, selling predominantly
via mail-order. The competition was almost any gift store and
catalogue, anywhere. Three other organizations promoted regional
Canadian products by mail-order and the World Wide Web: Beautiful
BC, Canadian Geographic and Images of Canada. Kent considered these
three organizations as competition only in only the loosest sense of
Although several entrepreneurs had tried, no one had been
successful in creating direct competition for MTC in the sale of
Atlantic Canadian products. Kent believed these ventures did not
have enough capital to be successful and did not anticipate any
threats to his business in the near future.
Maritime Trading Company was a retailer and wholesale distributor
for many small Maritime manufacturers and several medium-sized
companies. It sold products from a retail location, a catalogue and
the Web site. Orders from the catalogue and Web site were received
by mail, fax or telephone. Products were also sold wholesale to
other retail outlets.
Retail Outlet The peak sales period for the retail store was
August and September, the prime tourist season in Halifax.
Approximately seventy-five percent of the store's sales came from
visitors to the area. The VP of Retail Marketing, Stephen Simpson,
was responsible for the development of retail operations. Stephen,
aged thirty-six, had joined Maritime Trading Company from a position
as a general manager in automobile sales. The level of opportunity
for retail expansion was considered quite high and a major goal was
to open a retail location in Boston within three years.
Kent preferred to spend his time with the mail-order side of the
company. Although he preferred to leave it up to Stephen, Kent
realized retail was an integral part of mail-order sales. Tourists
coming into the store would be encouraged by the staff to register
to receive a catalogue. The retail presence of Maritime Trading
directly drove mail-order sales.
In 1998, twenty percent of mail-order sales came from the U.S.,
while less than three percent came from the Atlantic Region of
Canada. Seventy-seven percent of mail-order sales were from
customers across the rest of Canada.
November was the busiest month for the mail-order business. This
was the result of past visitors and Atlantic Canadians buying
holiday gifts. The catalogue had developed greatly over the past few
years and was currently a full format design (8.5" x 11") with
twenty-four full-colour pages.
Kent was constantly searching for products to broaden the
company's offering, especially for wholesale distribution, which
made up approximately fifteen percent of the company's sales. The
challenge of this process was to find products that had sufficient
margin for wholesaling to be worthwhile.
Wholesale customers included Alder's, a company that owned gift
shops in several Maritime airports and Clearwater Fine Foods. Kent
saw the wholesale business as a definite growth area. However, the
most popular high-margin products were fish products, which were
sometimes in short supply. Kent was wary of sales growing to the
point where he would be unable to meet the demand of his existing
Kent viewed electronic commerce (the sale of products and
services on-line) as the future of Maritime Trading Company. With
the new Web site in place, Kent was intent on increasing sales with
the use of Internet technology. Kent did not see the Web site as a
replacement for the current distribution channels but an extension
of them. His focus was on an integrated marketing strategy, allowing
the customer to order products via any desired channel. He was
afraid that if Maritime Trading wasn't offering its products on the
Web, some customers might be dissuaded from buying.
Maritime Trading Company on the World Wide Web
The Web site had evolved since 1995. Initially, it had been just
an experiment. It was inexpensive and entertaining to see if a few
people would fill out the on-line order form or print it and fax it
in. It was completely insecure, with no protection for those who
entered their credit card numbers on-line. Orders came occasionally
but far from regularly.
At the time, the company did not have its own domain name. The
Uniform Resource Locator (URL) or Web site address was long and
virtually impossible for a customer to remember. In 1995, the site
was linked to the sites of a few of Maritime Trading Company's
In 1996 and 1997, information management co-op students from a
local university were hired to redesign and maintain the Web site.
In 1996, Maritime Trading acquired the domain name
maritimetrading.com. The site, shown in Exhibit 2, was largely
unchanged until December 1998. By this time, Kent was no longer
satisfied with the site. He felt it was too static; it did not make
use of the interactive aspect of the Internet medium. He contracted
Icom Alliance to redesign the site. Icom was a small, Halifax-based,
information technology services company specializing in electronic
commerce and Web-enabled business solutions. The new site is shown
in Exhibit 3.
Maritime Trading agreed to pay Icom Alliance $2,500 for the
initial design and a floating percentage of gross on-line sales
(twelve and a half percent, on average). These payment terms were
not typical but they involved a far lower up-front cost than the
standard payment terms. Under standard terms, a site like the new
maritimetrading.com would have a start-up cost of approximately
$10,000 and monthly updating fees of $150. Kent thought that he was
getting a better deal with Icom Alliance. Furthermore, he knew the
Icom managers personally and felt comfortable doing business with
The Future of maritimetrading.com
Kent felt he had some good ideas about what the new Web site
could accomplish. He believed that his own three-step marketing
strategy for the company -- acquisition, retention and extension --
was applicable to the Web site as well. Acquisition meant getting
customers to visit the site for the first time. Retention referred
to keeping the customer coming back. The third step, extension, was
motivating customers to buy across a broad range of product
offerings on the Web site.
Kent viewed this three-step process as the building of
relationships with customers. He felt that relationship building was
the only way to make the new Web site successful. His ultimate goal,
of course, was to increase sales above and beyond what the catalogue
brought in. In the meantime, Kent wanted to get customers
comfortable with the Web as a shopping medium and provide a place
where they could get useful and current information about Maritime
Trading and its products. He was not exactly sure how he would know
if the Web site was generating sales that would have come in from
the catalogue anyway.
In 1999, the URL was promoted on all business cards, letterhead,
envelopes and gift cards. It was also printed on all private labels,
inserts and hang-tags. The address was published on every second
page of the general merchandise catalogue and in the music
catalogue. On-line promotion included links from suppliers,
promotion by Icom Alliance and targeted e-mail. Kent's goal was to
incur little or no additional promotional costs for the Web site.
In the past, Kent supported the idea of registering with search
engines but felt quite differently about it by 1999. Although it was
free to register with search engines, he wanted to avoid "getting
lost in the sea" of search engine results. "What if in two years the
whole search engine thing crashes? Then what are you left with?"
Kent reasoned. He felt strongly that search engines were a thing of
Kent also felt uneasy about using on-line promotion such as links
from other sites and banner ads. He didn't want very many links or
any ads on the Maritime Trading site because he thought it would
lead people away. He knew from searching the Internet himself that
after going from link to link, it was difficult to remember what
pages had been visited. Besides having links on the pages of a few
suppliers and on Icom Alliance's site, there were not any other
sites on the Web that included links to maritimetrading.com.
It was for these reasons Kent strongly felt traditional promotion
was the way to go for the new Web site. He didn't want to pull
customers onto the site who had never heard of Maritime Trading. He
wanted customers to see the URL on products and in the catalogues
and then go to the site. This way, they would be familiar with
Maritime Trading before they arrived at the Web site.
Keeping people coming back was part of the retention step of the
marketing strategy. Kent was still wondering how to retain customers
effectively. In order to make a purchase or enter a contest on the
Web site, the customer had to fill out an on-line registration form,
which included his or her e-mail address. This gave Maritime Trading
a way to make contact at a later date and build a relationship.
The site also used "cookies" or pieces of information saved on
the visitor's computer that allowed the company to record how often
a particular computer accessed the site and what kind of pages the
visitor looked at while there.
Cookies and unsolicited e-mail were a current issue of debate.
The Canadian government was reviewing bill C-54, "an act to support
and promote electronic commerce by protecting personal information
that is collected, used or disclosed, in certain circumstances… "
This bill meant banning the use of information collected on-line for
any purpose other than what the customer intended.
e-mail would have to be careful ones. The permission of the customer
was obviously important.
In January 1999, the new site had 10,000 visits. Kent hoped to
have 50,000 visits per month by the end of 1999. Sales on the old
site had been roughly $500 per week. The new goal was to have weekly
sales of $1,000-2,000 by the end of the year.
Kent didn't have figures on the length of the average visit but
he knew that longer visits meant more interest and more time for a
relationship to be built. Catalogue requests had been fairly good in
the past since they did not require a credit card number to be given
on-line. However, Kent hoped for more activity with the new site.
Kent felt these goals were important as consumers became more
comfortable with the idea of electronic commerce. He anticipated
sales would become a significant measure of site effectiveness in
the long term.
Gathering his Thoughts
As Kent sat in the coffee shop, he began to organize his thoughts
about the Web site. Although his off-line promotion of the site was
quite extensive, he wondered if there was anything he could do to
make it more effective on the shoestring budget he had for Web site
promotion. The site had to be profitable in order to be worthwhile
-- it was already quite expensive and he needed cost-effective
ideas. Kent was pretty sure off-line promotion was the way to go but
was a bit concerned after hearing that someone wanting to visit the
site could not find it because they had not been exposed to the
promotion of the URL.
Kent felt building a relationship on-line should be the main
focus of the Web site. He was not sure how he could do this most
effectively. The new site had cookies and the database of customers
was growing. He really wanted to figure out how to build strong,
lasting relationships with on-line customers. He knew he needed to
give them something of value in order to keep them coming back.
Kent also realized that e-business could be more that just a Web
site but he wasn't exactly sure what else he could do. The office
used accounting software for invoices and inventory management and
much of the internal communication was done using e-mail. Kent was
puzzled as to how he could use e-business when dealing with
suppliers, since only around five percent even had a fax machine,
let alone Web-based ordering systems.
Kent was meeting with Icom Alliance next week. He had some
thinking to do. He flagged down a waiter, "Can I get a refill on
Exhibit 1 - Synopsis of MTC's Development
||Gift boxes, jams, maple products, fruite
syrups, fruitcake, hand-made soap, herbal oils and vinegars,
balsam Christmas Wreaths
||First catalogue published
||Clothing, dried flowers, coffee, oatcakes,
||Retail store opened in Halifax, second
||More titles of East Coast Music
More emphasis on Canadian East Coast music vendor kiosk on
Halifax waterfront, East Coast music catalogue produced,
expansion of retail store, third catalogue produced, started
to explore the Internet
||Toys, books, home decor items, King Cole tea,
Gonong chocolates, live lobster
||Retail expansion continued, forth catalogue
published, hired co-op student to do new web site design
||Full-page colour catalogue published, more
advanced web site; all products on-line, expanded into
||Jewellery, art, smoked salmon, maply syrup
||Sixth catalogue produced, relationship with
Icom Alliance began, new web site launched in December
Exhibit 2 - Former Web Site
Exhibit 3 - New Web Site