Pets.com Case Study

Question 1

SWOT Analysis

Strengths

Pets.com had several strengths that would have worked to help the company move forward. Among them is that the company was the pioneer of pet online stores. It had come into business at a time when no other pet business had a similar operational model. As a result, the company had the ability to position itself as an industry leader and acquiring a substantial market share before the others embarked on adopting a similar model. Another strength emanated on the aspect that at some point Pets.com was partnering with Amazon.com. Amazon had started to build a name for itself, and featuring Pets.com on their website would have helped in substantial traffic redirect.

Weaknesses

The marketing strategy of Pets.com worked as a weakness for the company. The case study indicates that the management was accustomed to spending whatever was necessary to keep the company growing. There was the tendency to spend millions on advertising while selling products at a loss to help attain the targeted market share. This was a risky move since the approach meant that the company did not have sufficient if any cash reserves that would help in overcoming an unprecedented market shock. The losses do not auger well with the investors too.

Opportunities

The opportunities that Pets.com had included that of obtaining an increased market share. This opportunity had been presented by the fact that E-commerce was still young, and its growth prospects were promising. Easy access to the internet and other related products was pushing more people to indulge in online activities including shopping. If the company had positioned itself appropriately, it would have had the opportunity of capturing the new internet users.

Threats

The major threat that the company was facing was that of competition. Pets.com was facing competition from both brick and mortar pet businesses, and other online pet stores. Failing in one area would have been detrimental since the competitors would have taken advantage of the situation. In case the competitors offer products at a lower price, this becomes a major threat since most of the products are close substitutes. Given that E-commerce was still young at that time, the threat of new entrants was real too. This is because as more businesses venture, the more a company’s market share is likely to be affected negatively.

 

Question 2

Given the SWOT analysis, the company’s target markets include existing pet owners and aspiring or new pet owners that have access o the internet. Having access to the internet is paramount since the business is operating under E-commerce.

Existing Pet Owners

Positioning Statement: For existing pet owners with access to the internet, Pets.com is the pioneer of online pets’ stores that delivers all your preferred pet products at a lower cost because only Pets.com has sufficient knowledge in understanding what you really want.

Targeting existing pet owners that use the internet makes sense since this audience is already familiar with the pets industry. It is an audience that is already spending money for the sake of ensuring that their pets are well taken care of. This means that it would not take a lot to convince them to purchase products from the company so long as the products on offer have the ability to fulfil their needs. The position statement that has been used has tried to show that this target market already knows what it wants. Assuring them that they will always get what they want at a lower cost compared to other stores is likely to intrigue them into considering working with the company.

Aspiring Pet Owners

Positioning Statement: For aspiring pet owners with access to the internet, Pets.com is a pioneer of online pet stores that provides you with all the information that you need to know and guides you with the products that you ought to purchase because the company has sufficient knowledge in this industry.

There are people out there who aspire to become pet owners, but due to lack of some vital information, they are not yet ready to take the step forward. Some are indifferent since they are not sure on whether it is a daunting task or not. Seeing a company that can help them in making the decision and supports them along the way would help them in making up their mind. The positioning statement shows that the company is knowledgeable when it comes to matters related to pets and this would make this target audience to trust the company with the information that it will be providing.

 

Question 3

The objectives of the new marketing mix strategy will include building brand awareness, growing the market share and increasing the profits.

Brand awareness will make it possible for the company to position itself in the market. It will go a long way in ensuring that Pets.com ramps up customer loyalty. Acquiring new customers is usually a costly process, therefore, retaining customers and ensuring that they usually come back is vital for long-term business sustainability. The loyalty that comes with brand awareness comes with some level of security for the business due to repeat customer activities. Brand awareness can also be a relevant executive metric. Executives are usually looking for metrics that they can report to the board, shareholders and other relevant stakeholders as evidence that the company is operating successfully. This helps develop positive relations with these stakeholders.

Growing the market share will help the company to suppress the competition in the industry. When the market share is growing, it means that the company is not at the threat of being thrown out of business by the competitors since their presence does not bring much of an impact. The growth of market share will also help the company in taking advantage of the economies of scale. Larger businesses usually have the ability to get discounts by buying bulk hence getting favorable credit terms from suppliers. Another benefit comes with the perception that customers have regarding large businesses. There is always the perception that large businesses are more secure compared to small businesses hence implying that they can be relied upon for future businesses. As a result, the business will be able to sell more products to this market segment.

Increasing the profits, on the other hand, will help the company to attract more investors. A company that is earning continual profits is viewed as a potentially viable investment option since investors believe the probability of earning a favorable return on their investment is high. Increased profits also make it possible for business expansion. Pets.com will be able to open more warehouses in other demographic locations and add to its product mix so as to meet the needs of all the consumers. The expansion can also come regarding acquiring other businesses something that helps take care of existing competition.

 

Question 4

Pricing

Given the above objectives, the company should employ the tactic of using value-based pricing. Pricing is the key profit driver. Going with value-based pricing means that the company will not base its prices on the competitor or cost benchmarks. Here, the price is based on the customer value that the company creates. Customer value is the willingness of a customer to pay, and it is the total of the combined benefits that accrue to customers as a result of purchasing products from the company. This helps in creating a competitive advantage since consumers are likely to remain loyal and hence increase the market share hence boosting profits in the long-un.

Promotion

The promotional tactic that will be on use is that of advertising the company on varied platforms. Among the platforms to use are display ads, TV advertising and referral programs among others. Using varied programs ensures that the company reaches as many people as possible. This helps in creating awareness of the existence of the company’s products hence increasing the potential of making sales. Instigating effective public relations under the promotional prospects also helps in enhancing customer loyalty. This works in acquiring a substantial market share in the long-run.

Place

The company’s point of sale will be through the website. The business is targeting internet users, and the promotional strategies in use will help in pushing this forward.  Given the case study, E-commerce is not yet saturated hence commanding a significant market share will be feasible. It is all about being strategic and getting ahead of the competition.

Product

The tactic here will be indulging in a variety of products. Different pet owners prefer different products for various reasons. As a result, making these products available will accord them a favorable customer experience. To identify the products that are going to be offered, the company will undertake a survey among the existing pet owners. Stocking products for the sake of it without assessing the market will result in them being obsolete. Being able to cater for the needs of most if not all pet owners will help the company in attaining desirable market share hence substantial profits.

 

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