Why is Cafe24’s platform free?
Understanding the changing business environment brought on by the IT Revolution has shed light on the sustainable marketing solution.
Why most marketing doesn’t result in good branding
Marketing refers to the activities a company undertakes to win over consumers and grow their market share to the desired level. There are usually three steps to this process. First, a company needs to capture the consumer’s attention by various means including ads, pricing, and promotions. Next, the company should gain trust by consistently emphasizing its values. The last step is when the company completes its brand by transforming trust into customer loyalty.
Unfortunately, most companies fail to make it to the third step. Let’s take a look at the marketing journey of those that fall short. Most try to stand out by slinging coupon codes and discounts – but this only drives up costs to an astronomical level. Though such efforts may result in more brand recognition, they are not adequate for the long term. Many companies that are pressed into neck and neck situations with their competitors tend to make hasty and miscalculated decisions that end up in a series of blunders. Sooner or later this leads to a crunch in resources that causes policy changes in order to cut costs. Companies in this state turn to deceptive marketing for a low-budgeted quick fix. Eventually, existing customers will lose sight of the brand value, be disappointed, and turn away to find a market player that offers more intriguing benefits.
Yet Cafe24 has taken a different path. In 2003, the company launched its online store-building service free of charge. And to this day the free policy still stands. Cafe24 gained trust by providing the industry’s most stable One-Stop Service and became the market leader with its consistent brand value. Such success was only possible through a complete understanding of the IT Revolution.
Understanding the IT Revolution will clear the path to sustainable marketing
In the digital world that emerged with the IT Revolution, products can be copied infinitely. It may take a considerable amount of time and funds to develop a new product but it costs almost nothing for a new customer to use an existing product. In the past, acquiring new customers always came with a cost. But the IT Revolution has ushered in a new paradigm that has changed everything.
In the modern age, the costs of maintaining the infrastructure for an IT service continue to drop. Take a look at the hard disk drive that used to set the standards of data storage. When IBM introduced its first hard drive in 1956, the price of the Model 350 with a 3.75MB storage capacity cost a whopping 34,500 dollars. In comparison, the price of a 1TB hard drive today is just about 60 dollars.
Such characteristics of the IT Revolution surprisingly opened up new ways for companies to achieve all three steps of marketing. The key is to offer high-quality products for free or extremely low prices at the nascent phases of an emerging market. Making good products widely available despite initial losses make it possible to appeal to more consumers from the get-go. Companies that endure this period can discover the means of generating profit down the road. Product price and service quality are maintained so that customers continue to receive consistent value.
When Google first introduced Gmail with 1GB of free email storage, many investors and industry peers thought that the service was unsustainable. Nevertheless, Gmail became the core driving force behind Google’s growth. A decade later, nobody doubts its profitability and sustainability.
Cafe24’s marketing focuses on providing sustainable values to its merchants
Cafe24 promoted the launching of its free online store-building service with marketing campaigns targeting e-commerce merchants. But the company was met with much confusion both internally and externally when it first revealed its free policy. People found it difficult to understand why a company would make a service available for free when they could gain profits. Even some merchants seemed to be somewhat doubtful of the service they were receiving.
Nonetheless, Cafe24 was certain that the e-commerce market would grow exponentially. So the company powered through with a conviction to become the first to dominate the online shopping sector. It certainty led rise to its bold free policy. Over the years, the company has kept its service free. It has maintained its values that made merchants choose Cafe24. This was possible through the prudent use of the marginal cost of production and taking advantage of the dropping costs for infrastructure maintenance. And this quickly led to market trust.
As expected, the e-commerce platform started bringing in profits after seven years of being in the red. Furthermore, it became the company’s core business that would drive its future. Cafe24 is more than just a service. It has evolved into a global e-commerce platform encompassing its merchants and companies that provide various services.
Going forward, Cafe24 will not just settle for the common use of marketing seen in the market. It will follow its path so that anyone with creativity can become successful through Cafe24. Further, the company will share insightful perspectives to provide consistent values to merchants. Providing value is at the root of Cafe24’s business growth. This is the type of marketing that Cafe24 has in mind.