Read the following case study and answer the questions.

Case Study: What Went Wrong at Trendy.com?

Trendy.com was a social networking site designed for people over the age of 25 living in the U.K. Users who were questioned about their preference for the site replied that they liked the look and feel of the site design, the absence of targeted advertisements, the ability to use video messaging, the creation of customized user channels and connections to professional and career development sites.

Once established in the U.K, Trendy.com expanded across Europe. It obtained free translation of the site content by appealing to European users, and was an instant success. News stories described how Trendy.coms networking services were enabling professionals to forge new business links across Europe, find career opportunities across the EU and enable interactive communication between family and friends in a world in which many people were moving freely in search of work and life experience.

Shortly after its European expansion, Trendy.com had a quoted value of GBP 12 million, an amazing achievement considering that its two founders, Gary Keegan and William Brent, established it on a secondhand computer using a spare bedroom as office space.

A Desire for Expansion

With its European success, Trendy.coms founders began to consider opportunities outside Europe. The U.S. was already saturated and breaking the dominance of the main players seemed impossible. According to Gary Keegan, Japan appeared to hold more potential. He had visited and noticed only one major networking site. To his surprise, this site had had no means of adding new contacts and seemed to rely mostly on people posting anonymous blogs to which readers could respond. When Gary returned to the U.K., he told William Brent that Trendy.com had to expand into Japan. Their success there was guaranteed.

A Rapid Move

Gary was convinced that if Trendy.com did not move rapidly to establish a presence in Japan, it would lose a potential market advantage to other major social networking sites. Despite Williams protests that the company was not ready for an expansion into Japan, the site was established within a month of Garys return to the U.K. Trendy.com did not have Japanese employees and did not feel there was a need to employ translators. Instead, they relied on users contacted online to translate the website content. This had been a very successful strategy for Europe and had contributed to Trendy.coms profit margins.

A Costly Mistake

Six months after setting up the Japanese site, user numbers were still disastrously low. William insisted that Trendy.com set up an office in Tokyo to establish a corporate presence there. They employed a small team of Japanese consultants and marketing specialists to promote the site. However, the new employees were very critical of the way in which Trendy.com had set up operations.

When Brent visited the new office, he held a meeting to discuss all their concerns. He was told that Japanese Internet users had different views about security and communication than Europeans. The Japanese believe online security is very important and are reluctant to use their real names and photos online. They prefer anonymous blogging to blatant self-promotion. In addition, most Japanese tend to use mobile sources to access the Internet and Trendy.com was not optimized for mobile use. Another major problem was that Trendy.com had not established a presence in Japan before launching. The Japanese viewed this as insulting, as they did the often- amateurish translation that had been provided by the users.

It appeared that Trendy.coms investment in Japan had been wasted. It had made no significant inroads into the market, and the operation in Tokyo was running at a loss. William decided to reposition the site to try to recoup some of the sunk costs.

QUESTIONS

1. What mistakes did Trendy.com make with this market entry strategy?

2. How could Trendy.com have avoided this expansion failure by running through a strategic planning process?

3. Based on the information in this case study, what would be the best market entry strategy for a social networking site wishing to enter Japan?

4. How might Trendy.com recoup some of its losses?