Case Study - Boo Hoo.
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
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
References: - • 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.