Question 1. Which strategic marketing assumptions and decisions arguably made Boo.com’s failure inevitable? Contrast these with other dot-com era survivors that are still in business, for example lastminute.com, Egg.com and Firebox. com.
Boo.com was started by 3 Swedish entrepreneurs as they wanted to launch a world wide online retail website selling major sports brands clothing like Adidas, Nike, Fila, Lacoste, Polo and Ralph Lauren etc. there were major decisions and assumptions were made, taking for an example the currency conversion rate offered in US and Europe was far lower than the normal currency conversion rate in the market this lead to negative impact on the Boo.com and its sales. Initially it was though that world wide launching and making it a successful online store within month by injecting huge amount of money would lead to brand recognition in the market. Company invested $135 Million in the first 6 months in order to make it popular website all over the world (Tillett 2000). Author Verma & Verma (2003) explains that website retailing is least expensive as maintaining website and uploading pictures and graphics and using creative 7 Ps of the marketing mix leads to positive result. Boo.com spend $6milion in 1999-2000 on web developing and adding pictures of the products which coasted them $200 per picture was a huge expense created by the company management, due to those reasons they couldn’t generate $20 million in 2000 and on 18th May 2000 company got bankrupt. The assumption of being a global brand within months by injecting unnecessary money in the technology and it operation was a wrong decision made by the Boo.com management which actually led to disaster and company needed urgent finances in 2000 which eventually lead them to bankruptcy. Another major assumption went wrong was the selection of the target market. Company started targeting males and females aged 18 years to 24 years old as it was believed they are more fashion conscious people. But critics and according to media pointed out the fact that these people are fashion conscious but how many 18 to 24 male and females go online and do shopping using their credit cards. This is what we are talking about in 1990 where online frauds and dial internet were common comparing to now. In contrast there were other online retailers like egg.com and Firebox.com and they survived and still running business. As money or profits generated and wise and realistic strategies and tactics were used by these companies. According to a travel Trade Gazette (2007) clearly stated in their article that Boo.com blew their money and wasted on so many unnecessary technologies. Article also presented that boo.com is linked with one of the biggest failures of the first dot.com era. It materialised at around the same time as lastminute.com and was Swedish-owned UK-based site selling "lifestyle" apparel. Extravagant marketing and development costs meant it burned through money which impacted in 2000 when investors gave up and $20 million was not raised by the company on 18th May 2000 and was declared bankrupt. Where as other online companies used less financial sources and tried best to attract customers and satisfy their needs and wants. So basically above arguments and facts clearly shows various wrong decisions were made by the Boo.com management and by the company itself which led them to failure.
Question 2. Using the framework of the marketing mix, appraise the marketing tactics of Boo.com in the areas of Product, Pricing, Place, Promotion, Process, People and Physical Evidence.
For online retailers it is vital to create their marketing mix very effective as it is not mere limited to the Place, Price, Product and promotion (Rix & Stanton 1998). Various authors clearly supports that another 3 major Ps like People, Process and Physical Layout brings business for the service Industries and other retail shops, especially when the brand is to be...
• Rix P. & Stanton W.J. 1998 “Marketing: A practical Approach” 3rd edition. McGraw Hill. Sydney
• Son J.D. & Ikuta S (2007) “Customer selection problem with search cost, due date, sideline profit, and no waiting room” Pacific Journal of operational research. Volume 24. Number 5.
• Tillett L.S. 2000 “It’s back from the dead” Internet week article. Issue 834. Page 11.
• Travel Trade Gazette (TGG) May25th 2007 “There is life after death Boo.com” Tonbridge. Page13.
• Viswanathan N.K. & Dickson P.R (2007) “The fundamentals of Standardizing the global marketing strategy”. International Marketing Review. Volume 24. Issue 1. Page 46.
• Verma D.P.S. & Verma G (2003) “Online pricing: Concepts, Methods and current practices” Journal of service Research. Volume 3. Issue 1. Page 135.
Please join StudyMode to read the full document