Shortly after its launch in 1999 by three Swedish entrepreneurs, Boo.com become one of the biggest dot-com failures in Europe CITATION Gar01 \l 1033 (Stockport, et al., 2001). For the short duration that the company was in business, Boo.com specialized in selling branded apparel online, a concept that was still green and full of potential at the time. The late 1990s were characterized by a dot-com boom which paved the way for online businesses. Unfortunately, boo.com was placed under receivership in less than two years after its inception CITATION EMa01 \l 1033 (Malmsten, et al., 2001). At this point, the company had spent approximately $135 million in venture capital, going down as one of the biggest dot-com failures in history. Consequently, the companys failure has been attributed to an array of reasons such as the lack of an effective business plan, inability to use internet marketing tools, and high promotion costs CITATION Dav06 \l 1033 (Chaffey, et al., 2006). As a result, this paper seeks to the companys case study with the end goal of learning from the failure.
Strategic Marketing Assumptions and Decisions that led to the failure
First, the companys primary objective was to establish a niche in the apparel business and become an industry leader in Europe and America. As a result, Boo.com marketing decisions were expansionary oriented with the assumption that sales would generate adequate revenues. That was not the case. Lots of funds were invested and channeled with the assumption that sales would yield revenues, a model that would be reciprocated in all the other markets. In six months, the company had spent close to $120 million, but the sales did match the initial projections.
Second, Boo.com dismissed a technological environment analysis. Whats more, the companys platform was not user-friendly. Problems with the user experience included poor website design, wanting navigation techniques, and a complex interface. Furthermore, users were required to download additional software to view the site. Third, boo.com adopted a standardized methodology on all its clothing products. The company assumed that clothing has identical sizes.
Against this backdrop, it is evident that boo.com misjudged the essential nature of technology as it endeavored to fit in within the stock control and distribution frameworks. Whereas the companys objectives were warranted, the timing and execution led to the inevitable failure. For instance, lastminute.com, a dot-com era survivor that is still in business did not establish its operations simultaneously in all markets. The strategic decision, therefore, guaranteed the company of long-haul sustainability and success. Also, boo.com lacked a competitive advantage in the lines of pricing strategies and products authenticity compared to lastminute.com.
Boo.com Marketing tactics appraisal using the marketing mix framework
Analysis of the companys failure in an era that saw other internet companies thrive necessitates an appraisal of its marketing using a marketing mix framework.
Product: The Company introduced premium brands hence the necessity for premium costs. Be that as it may, there was a hazy blend amongst sportswear and high street apparel CITATION Amy00 \l 1033 (Teibel & Gutscher, 2000). As a result, a narrow scope restricted target audience. Boo.com sold upper end and sportswear brands as the primary products. Most of these high-end apparels need no introduction in the market because brands like Nike and Adidas had already established a niche in the market. Thus, premium pricing would not have limited sales. However, the company had limited target audience.
Price: The Company was not able to apply a decreasing pressure on price, despite the lack of adequate physical presence and operating stores. The premium priced products could not be sold because most suppliers were skeptical about the companys ability to sell the products online. Furthermore, the company faced various pricing difficulties in various markets such as price variations in Europe and US.
Place: Boo.com had global distribution platforms at its disposal. The place of procurement can be displayed by Boo.com which was a Seller-arranged site portray by a controlling outsider that represents sellers. The company was an online retailer of prestigious and sportswear brands CITATION Dav06 \l 1033 (Chaffey, et al., 2006). Through the companys advertising strategies that utilized the web, they could accomplish a worldwide reach and conveyance a view upheld by contending that the internet has the most ramifications in the marketing blend for place. However, this came with additional costs such as delivery and returns cost.
Promotion: In an endeavor to build its brand and drive target audience, boo.com was dependent on web-based promoting that translated to a high cost for every client securing that eventually prompted to the brand's failure. The utilization of public relations was more viable and is one of the accomplishments of Boo.com. The Companys promotion endeavors were overambitious and did not yield enough returns through sales generated. At the time, its internet promotion strategies such as search engine advertising and subsidiary marketing methods were restricted in its potential outcomes. Today, these are more viable for organizations.
In many ways, the vision of Boo's founders was 'ideas before their time.
Boo.com presented various e-retailing strategies that made a connecting with online client experience. The company introduced Miss Boo, an online client administration that helped customers through the site and can be clarified in contextual additionally; boo.com created a virtue 3D closet, a cutting edge tool where users could drag selected items onto a model permitting them to envision the item determination in the revolutionary 3D picture. Other remarkable visions and innovations included client email enlistment and the localization in various languages and currency. Be that as it may, these innovations were before their time. Internet speeds were still in the early stages hence the companys negative reputation regarding speed. Today, most if not all European users have access to broadband compared to the vast majority who used dial-ups in the 1990s. Most internet businesses are now utilizing the innovations primarily introduced by boo.com.
BIBLIOGRAPHY Chaffey, D., Ellis-Chadwick, F., Mayer, R. & Johnston, K., 2006. Internet Marketing. 3rd ed. Harlow: Pearson Education.
Malmsten, E., Portanger & Drazin, C., 2001. Boo hoo. A dot.com story from concept to catastrophe. London: Random House.
Stockport, G., Kunnath, G. & Sedick, R., 2001. Boo.com - The Path to Failure. Journal of Interactive Marketing, 15(4), pp. 56-70.
Teibel, A. & Gutscher, C., 2000. Boo.com Failure May Give Venture Investors Some Pause. [Online] Available at: http://www.wsj.com/articles/SB958664423147231193[Accessed 30 October 2016].
If you are the original author of this essay and no longer wish to have it published on the SuperbGrade website, please click below to request its removal:
- Business Organization Economical Terms
- Effects of Increased Communication Technology on Emirates Airline
- Evaluation Essay on Royal Dutch Shell Strategies and Management
- Critical Essay on Market Orientation: Antecedents and Consequences
- Background Information About the Total Quality Management
- Exemplification Essay on Consumer Habits in Relation to Online Reviews
- Expository Essay Sample on Ogden Publications Strategy