Harvard Business School Case ...
Situation Analysis
Guru.com is an online marketplace for freelance talent, which was launched in December 1999. It started off by catering to about 25 million independent professionals in the US.
By the end of the twentieth century, the staffing industry had changed dramatically there was a mass movement towards outsourcing and the rise of an independent workforce. In fact experts prophesied the establishment of a ‘free agent nation’. The revenues of talent facilitators, like Guru.com, which focuses on IPs were expected to exceed $2 billion by 2005
Guru’s competitors were Freeagent.com, Monster.com’s TalentMarket and host of others who launched around the same time and more were expected
Guru.com directly connected businesses with professionals who specialized in various professional categories. Employers seeking professional expertise would post their projects or contract work on Guru.com and professionals seeking work would be matched. The company also offered back-office support and career advice to IPs, along with tax guidance, discounts on health insurance and other products, and tips on all aspects of running a solo business, from collecting bad debts to maintaining a home office.
The independent professionals were between the age group of 25 – 55 and well educated. Guru .com had a goal of achieving 400,000 gurus registered by end of 2000 from the present level of 105,000
Case Background & Competition
- Guru.com was launched in Dec 1999, after a 5 month preview, with 400 employees, 35000 registered gurus and 2500 registered hiring companies. This was after a trail run where in 3000 people were hired in a matter of a week.
- Guru.com’s service was free for the IP’s but the companies paid for each project posted
- Guru’s competitors were Freeagent.com, Monster.com’s TalentMarket and host of others who launched around the same time and more were expected
- These catered to about 25 million independent professionals in the US.
- The business of outsourcing was growing with companies expected to spend up to 81 billion in 2003 from a figure of 51 billion five years back.
- Revenues of talent facilitators such as Guru.com were expected to rise from 1 billion now to 2 billion by 2005
- By 2000 Free agent.com expected to have 150000 registered users, the market had 10000 employers vying for the project seekers which was almost to the tune of 143000 in total.
- Number of outsourced projects expected to increase from 20mn to 50mn
- Ranks of contractors were set to increase from 21% of US workforce to 41% in 2010
- Number of Guru’s signing per week – 6000, and it was very important to attract good projects to keep them engaged.
1. What are the central issues?
One of the major issues concerning Guru.com is whether the proposed budget of 12 million for a marketing campaign is justified and is the benefit accruing out of it more than the cost? Did Guru.com want only to acquire customers as a short run objective or did it want to go for branding in an integrated holistic fashion.
Since its official launch, the Guru.com site had generated significant market activity with more than 250,000 searches per month, 3,760 posted projects with an average project value of $12,000. The growth in page views, new hirers, and new projects was close to 17% per week. Based on the study by Guru.com, it was observed that about 73% of hirers had rated their experience with the site as excellent or good. This proved that Guru.com provided quality service to customers, as majority of the customers were satisfied, and in turn became referrals by spreading positive word-of-mouth. So keeping this fact in mind was it justified going for an extensive offline campaign?
Events and Public Relations had been the bulk of Guru.com’s offline marketing. As part of their offline event strategy, the company had launched the First Guru Awards, which give it exposure and proved to be a low-cost way to get customers. Their other PR exercises which included coverage in various magazines and significant media attention had been very successful as well.
The other issue is regarding the target market. Should they aim their communications at the gurus or hirers or both? And even within the gurus segment should they target the IPs or did they go for people already working elsewhere, in order to entice them to the guru lifestyle.
The answer to this question would answer other related issues, where to advertise what vehicle to use and what tone to adopt for the communications.
2. What are the IMC options?
After Guru.com decides on its target only then can an effective campaign be created. The choice of targets will determine the medium and also the message.
And of course whether they want to keep customer acquisition cost low by making efforts to get customers to sign up only, without going into a proper branding exercise.
Till date customer acquisition costs have been low at approximately 15 for a Guru and 70 for a hirer. Guru.com has spent on an average 500000 / month on e-mail, online ads and print direct mail. The company conducted many offline events that were cost effective in getting the target audience to register with the site.
If they go for branding then the objective will be to make sure that the people experience the brand several times and in several mediums.
The IMC options that Guru.com practiced earlier comprised of sales promotions, event marketing and Public Relation campaigns. Some of the efforts that it had employed earlier included a promotion whereby they had offered free t-shirts to the first 3,000 people who signed up, and this had resulted in positive feedback that helped the company publicize their early product development. This event was a success, evident by the fact that about 35,000 IPs or gurus and about 2,500 hiring companies got registered respectively, off that initial site in the first five months. But this was in the early stages of the company and communications needs change as the company grows.
They can go for television and primetime shows are something that would match the profile of almost all of their target market. They could go for magazines that would appeal to both the gurus and the hirers like Wired, Industry Standard etc
The Internet would be a great medium as majority of the gurus used the Internet for their jobs. And being IPs most of their time would be spent on a computer, as that is the medium that connects their work to the world.
• TV [primetime]
• Print [industry and lifestyle
• Interstitials
• Event Sponsorship
• Seminars
• Direct mail
Pros and cons [television vs. print]
TV
Pros
• Appealing and visually exciting.
Cons
- Expensive
- No guarantee of right exposure
- Will target watch
- Easy to switch
- Dependant upon acheiving the effective reach and frequency
Pros
• Captive
• Repeated exposure.
• Maximum Information Dispersion
• More Economical
Cons
• Not as appealing as TV
Q3. Evaluate the 6M Model.
1) Market
For Guru.com the market is segmented into two markets, the Gurus and the hirers
Characteristics of Gurus
- Self-assured, optimistic, energetic and active in their spare time professionals
- Independent professionals in the market who are Gurus in their respective fields who value independence, freedom, and passion
- They are passionate and committed, believe in independence and freedom, and seek variety and flexibility in return.
The objective of the campaign is to create awareness of the guru lifestyle and of the convenience and ease it provides. And its reliability in not only getting the gurus work but handling the other aspects as well. Making sure they are paid and taking on the other hassles for the gurus.
They want to ensure that they would do not promise work for every guru so that there are no false hopes.
3) Message
Guru.com wants to make sure that the message that its communications deliver is pertinent, easy-to-understand, simple yet powerful and evocative. It does not want to poke fun at anyone and wants to come across as someone that means business and hires the best people possible.
The message it wants is one that tempts people towards the independence and freedom that the guru lifestyle has to offer.
The message has to be smart and clever rather honest but aspirational as well.
4) Media
Guru.com should have a mixture of TV and print with emphasis on print media and
Television, Radio, Print - magazines/newspapers, television/radio).
Popular primetime shows. Expensive but have higher reach. Magazines such as Fast Company, Business Week, Wired, Industry Standard, Communications Arts and lifestyle magazines such as Men’s Journals etc. Internet - 51% use the Internet regularly and Radio as people oft have the radio on whilst at home.
5) Money
The budget proposed by the Vice-president of marketing is $12 million. - Guru.com had spent about 500000 monthly on e-mail, on-line ads, etc. The Annual Guru’s Award event was a great experience and was successful as many new customers signed up. And it had cost only about 300000
6) Measurement
Surveys can be conducted to find out the efficacy of the campaign and trackable media can be used.
4. A small media plan
Medium Expenditure
TV 4,500,000
Magazines 3,000,000
Direct Marketing 1,500,000
Events 1,000,000
Radio 500,000
Outdoor 1,000,000
Internet 500,000
Total 12,000,000
