Page 215 - Electronic Commerce

Chapter 4

from Failures feature). It is only a good idea if it provides customers with recognizable
value and augments the rest of the company’s marketing strategy.

LEARNING FROM FAILURES
190
Kozmo
Throughout New York City, people in their homes late at night crave entertainment and
snack foods. Kozmo was launched in 1998 to meet the needs of those New Yorkers. With
its orange-jacketed delivery people riding bicycles or motor scooters, Kozmo promised
delivery of most items within an hour of ordering. Kozmo did not offer as wide a range of
items as most convenience stores, so its main competitive advantage was its delivery
service. Kozmo attempted to become profitable by adding high-margin items, such as
DVD players and Sony PlayStations, and expanding its delivery areas to include higher-
income neighborhoods. In addition to Manhattan, Kozmo operated for a short time in
Houston and San Diego. In these cities, the higher average distances between deliveries
made it even more difficult to cover costs.
Despite its best efforts, Kozmo was unable to create an image that was much differ-
ent from that of a convenience store on wheels. Kozmo found it difficult to convince
customers that delivered snack food items and videos were significantly more valuable
than snack food items and videos on the shelves of nearby convenience stores. Most of
Kozmo’s product line consisted of items for which most people were accustomed to pay-
ing low prices.
In March 2001, just one month before closing operations, Kozmo announced a mar-
keting plan that included spending $2.5 million to print and circulate 400,000 catalogs.
The plan was a last-ditch attempt to increase brand awareness, gain new customers, and
convince people who did not have an Internet connection to use Kozmo’s phone order
service. Unlike other companies who have integrated print catalogs with online opera-
tions, however, the Kozmo catalog was not a part of an integrated business plan and did
not provide much added value—a bag of potato chips does not gain much appeal by
appearing in a full-color catalog photo.
The lesson from Kozmo’s experience is that using one element from a marketing strat-
egy that has worked for other companies is no guarantee that it will work for every com-
pany. Marketing techniques are effective only when implemented as part of an integrated
strategy that fits the company’s products and gives customers a compelling reason to buy.

ADVERTISING O N T HE WEB

Advertising is all about communication. The communication might be between a company
and its current customers, potential customers, or even former customers that the
company would like to regain. To be effective, firms should send different messages to
each of these audiences, however, each message should tie into or be an element of a
common theme, or story.
The five-stage customer loyalty model shown in Figure 4-5 (in the previous section)
can be helpful in creating the messages to convey to each of these audiences. In the
awareness stage, the advertising message should inform. The message could describe a

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