.COM Bust

The . COM bust, the . COM “bubble”, the failure of companies that “dot-bombed”, happened more than a decade ago, but the lessons learned are important for the present tech sector. Many investors argue that we are in a bubble now, with companies like Mainstream selling for $1 billion and hundreds of others getting million dollar valuations. Looking back, it’s clear from a marketing perspective current aspects of the products and websites themselves could have been changed to increase chances of success.

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Many will claim though, that many of the issues with the . COM bust and failures were of the market and overpriced Ipso that drove greed in Silicon Valley and around the world. Barring these situations, marketing data from the bust and the way that the companies failed are helpful in preventing another massive amount of failures. Marketing is the face of an organization. It’s one of the easiest things to change that will impact the perception of a product or organization the most. That’s why marketing should be one of the first things considered when coking at the past and future of web businesses.

Why Did It ALL Fail? When the . Com boom happened, thousands of investors flooded the market with money seeking that “golden opportunity’ for riches and success. It is well known that the success rate for new businesses is remarkably low. The industry is cut-throat and with a flood of money with the newly growing . COM businesses, there were sure to be failures. This time though, the amount of failures was astronomical. Many of the businesses focused on greed and didn’t breed a strong corporate culture for success.

It becomes apparent that bad business was on the mind when looking at companies like Flood; many investors were seeking far-out ideas that might gain traction. One of the key aspects in many of the failures was mismanagement of resources. With millions of dollars, it’s still wise to have a sustainable business plan that allows for profit. Offering free deliveries only works when you’re not selling a product that has razor-thin margins in the first place. Many of the failures indicated a failure of the individuals to realize the benefits of an Internet business. Many people utilize the

Internet to attain cheap products, cheaper than retail at least. When a website provides a premium product or something at a cost similar to retail the usability and customer relations should be very, very good to make up for this loss. Sites like boo. Com failed because they were selling premium products at normal costs. Boo. Com also had issues with the website itself: it was clunky and amazingly difficult to navigate. In Internet marketing, a business should project an image of simple, easy-to-use and navigate controls or face backlash or alienated customers.

One moon element among all the businesses was the fact that they spent millions of their investment capital on commercials, endorsements, products, etc. Using traditional marketing, many of the businesses assumed that they could blast the site/ product to everyone and it would be embraced with open arms. Instead many people found the ads annoying, pointless, and unnecessary. Pets. Com and MAP. Com had process that could be maintained for a long duration with the little investment capital they had.

Looking at all these issues it becomes apparent that one issue led to cost of the problems for the companies. Almost none of the businesses that failed during the . COM failure had a well-rounded business plan. Some of them had innovative ideas. Zoom with I-her delivery was a nice idea but the profitability simply wasn’t there and it failed. Pets. Com showed that an online business model for some products simply wouldn’t work. People would rather Just pick up their animal products while out shopping. Pederast now owns the domain and is remaining quite profitable.

If these businesses had simply stepped back and took a deep breath and retreated a decent marketing plan that built upon a solid business plan (like Amazon), they may have succeeded in the long run. Potential Strategies to Prevent a Bust Now that some of the causes of the failure have been discussed, possible solutions should be evaluated. As stated before, a strong business plan is important to stay afloat, but with many businesses it is impossible to know if an idea is crazy or genius until it enters the market, so it’s not fair to say “Fix the ideas”.

Since this is done from the perspective of a marketing manager, one could argue to focus on user experience ND ad campaigns. If anything Boo. Com showed failure on nearly every aspect and level that it’s possible to fail on. The product they were selling had a definite market: high-end clothing. The problem was they didn’t identify that the majority of shoppers online are seeking deals. There is a perception that without the overhead of retail that costs should be much cheaper. By charging nearly identical prices they were failing to target the Internet market as a whole effectively. If Boo. Mom had negotiated lower prices on the high-margin clothing they may have been a large success. They needed to provide value and did not. Secondly, ads are a necessary part of business exposure. But spending 25% of an entire investment on ads to rush towards an PIP is a recipe for disaster. If those companies with sustainable business ideas would have grown their base in a methodical manner it’s likely they would have been in existence longer and adapted to changes. In the case of MAP. Com: Instead of spending millions of dollars on endorsements, a single endorser in limited markets would have allowed for them to improve their service.

The idea that flooding the market with ads will create success is a false dichotomy. Instead they should have asked themselves how to produce ads that effectively introduced their web service while remaining financially stable. User experience is the last key aspect that may have doomed many of the companies. When flash ads, banners, toolkits, etc. Pop into display it creates barriers that alienate the visitor. Instead, these companies should have focused on allowing people to use their services in the most convenient way possible�one of the strengths of Internet based communication.

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