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. here 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. om 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 introduced globally like Boo. com has ambition to launch first online retailer selling sports clothing and goods (Viswanathan & Dickson 2007). Boo. com had the same goals and keeping those as aim following Marketing Mix was introduced. All the facts are presented are based on the case study information. Place ? Boo. om chooses to sell their products and services online and convince people to log online to their website where they can get access to all goods offered by the company. ? Boo. com bought official rights to use the registered website under the company name so that customer can find it easy to log in and do online shopping and products will be delivered through the company’s delivery department straight from the warehouse established or by other small retailers who joined Boo. com locally in different countries. Price ? Price tags were placed according to country and in the local currency to facilitate local buyers. Problem rose when there was a conflict between the big brands and their local retailers due to price difference and discounts. ? Though company used creative pricing strategy but it did not reached its target market. Various modern tactics were used like price conversion etc but big differences lead a negative impact on the target market. Product ? Boo. com introduced various famous brands like Adidas, NIKE, Fila, Ralph Lauren, Lacoste and Tommy Hilfiger etc as they targeted males and females aged 18-24 years old sports players or fans. Main tactic was to attract that certain market to buy branded products as these people generally have good purchasing power and they shop online, so basically the concept was pretty good and it jumped start pretty good too as Boo. com had extensive hit on the first day of launch of the website officially. Promotion ? Company started attracting its target market offline and online as well. Sending catalogues and provokes users to become a member so that they will receive regular promotion and advertisements from the company regarding their specials and offers. Another major tactic used by the company was the lunch of the online magazine so that readers would educated themselves regarding new fashions and trends backed up by the 44 pages catalogue where target market can find specials, products and services. ? In an article it was found Boo. com spend nearly $135 million in 6 months on promotion and 40,000 discs were circulated (Tillett 2000) Physical Layout ? Physical layout of the web page can be considered as very professional since the company spend big chunk of money in developing its website and products and services offered online. Case study clearly shows that company heavily relied on the website to attract the customers as virtual salesperson was created to help visitors. So it can be concluded that physical layout like pictures, graphics, coloring of webpage, professionalism was present. People ? Boo. com realized its strategies will work but people or human resource will play important role. In any organization human resource plays important role, Boo. com hired various people in various countries with various background, culture, skills and education to satisfy their 27 established tasks world wide. Process In order to make process orders more effectively and efficiently company spend intensively on its technology. Customers will order products and request for various services and company staff will return back accordingly with positive answers and products to their doorsteps. ? Process is very important for web retailers as it is the back bone for any online retailer and service and product provider. Question 3. In many ways, the vision of Boo’s founders were ‘ideas before their time’. Give example of e – retail techniques used to create an engaging online customers experience which Boo adopted that are now becoming commonplace.
In many ways, the vision of Boo. com founders were ideas before their time is very true and based on the facts gathered and theories it can be easily justifiable. It was understood that in 1990 in UK & US most of the indfgdfgternet connections were dial up with 40K to max 56K speed. Boo. com came up with the extensive piece of technology which is used now in 2005 and after still people complaint about the speed and the software they need to load to access the website or to use their tools online effectively. A recent example is “Flash Player” is required to watch some graphics. In 1990 ith the dial up speed customers were frustrated since it took more than 8 second to lead a page properly and on top of that they required such free software available online. This has created a negative satisfaction within the market as they have to go through 44 pages catalogue and fashion magazine to buy certain product and again on top they have to wait for 10 days for the delivery. These ideas today are highly successful as ADSL and ADSL 2+ has created a revolution as they can generate page with 20,000kbps speed and most of the computers now already comes with various small and big software.
So this shows that if Boo. com would have launched in 2007 with same strategies and tactics they would have become successful. Unfortunately the timing wasn’t so right and even though Boo. com invested so much in the technology wasn’t worth it at all. For an example Boo. com introduced the virtual salesperson in 3D graphics in 1990 with dial up speed I wouldn’t be that effective beside it would take long time to load and guide with the customer’s queries.
Now days most of the retail website using such tactics to attract customers and where target market can even put their product on the dummy virtual salesperson just to get an idea that whether it will suit or not. in order to attract customers online advertising and marketing tools were used by the company were they send potential customers emails and provoke them to visit website and which would lead to sales. Arguably not many aged 18 to 24 males and females goes online and shop in 1990 the percentage was way low comparing to now.
Author Son & Ikuta (2007) agrees and justifies that wrong selection of target market lead to high cost and low profits which happened to Boo. com as well they didn’t reach their target market well and which lead to negative results. 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.
