Pets.com Inc.: Rise and Decline of a Pet Supply Retailer SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer
The case follows the rise and decline of Pets.com from its inception in 1994 until 2000. It starts with a look at the birth of Pets.com, followed by a discussion of the market, consumer behaviour and key competitors. It then focuses on Pets.com's business strategy and marketing mix. The case study provides the basis for class discussion of a number of key issues, including but not limited to a) the decision whether to enter a strategic partnership, b) the pursuit of an aggressive growth strategy, c) the design and management of the marketing mix, d) the use of aggressive communication and pricing strategies, and e) brand-building decisions. Pets.com is often cited alongside the Edsel, New Coke, Betamax and others as one of the biggest marketing blunders of all times. As such, students find it a fascinating story. The case study also asks students to reflect on some common challenges faced by organizations, such as entry and survival in a highly competitive market, how to deal with a dominant player, venture capital and entrepreneurial issues, business model design, brand management, marketing mix decisions, and the benefits and perils of a growth strategy. The case has been used successfully in the following courses: a) an MBA elective course dealing with popular marketing mistakes and failures, b) a postgraduate strategic marketing course dealing with growth strategies, c) a marketing management course at the undergraduate level focused on the design and management of the marketing mix, and d) a services marketing module at the undergraduate level on the topic of online marketing.
Swot Analysis of "Pets.com Inc.: Rise and Decline of a Pet Supply Retailer" written by Omar Merlo includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pets.com Marketing facing as an external strategic factors. Some of the topics covered in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study are - Strategic Management Strategies, Growth strategy, Marketing and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer casestudy better are - – increasing energy prices, increasing transportation and logistics costs, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, there is backlash against globalization, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion,
banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing government debt because of Covid-19 spendings, etc
Introduction to SWOT Analysis of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pets.com Marketing, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pets.com Marketing operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer can be done for the following purposes –
1. Strategic planning using facts provided in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study
2. Improving business portfolio management of Pets.com Marketing
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pets.com Marketing
Strengths Pets.com Inc.: Rise and Decline of a Pet Supply Retailer | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pets.com Marketing in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer Harvard Business Review case study are -
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– Pets.com Inc.: Rise and Decline of a Pet Supply Retailer firm has clearly differentiated products in the market place. This has enabled Pets.com Marketing to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Pets.com Marketing to invest into research and development (R&D) and innovation.
Ability to lead change in Innovation & Entrepreneurship field
– Pets.com Marketing is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Pets.com Marketing in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Training and development
– Pets.com Marketing has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Strong track record of project management
– Pets.com Marketing is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Ability to recruit top talent
– Pets.com Marketing is one of the leading recruiters in the industry. Managers in the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Pets.com Marketing digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pets.com Marketing has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Pets.com Marketing is present in almost all the verticals within the industry. This has provided firm in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
High brand equity
– Pets.com Marketing has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pets.com Marketing to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Organizational Resilience of Pets.com Marketing
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Pets.com Marketing does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Pets.com Marketing has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Pets.com Inc.: Rise and Decline of a Pet Supply Retailer HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Cross disciplinary teams
– Horizontal connected teams at the Pets.com Marketing are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Low bargaining power of suppliers
– Suppliers of Pets.com Marketing in the sector have low bargaining power. Pets.com Inc.: Rise and Decline of a Pet Supply Retailer has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Pets.com Marketing to manage not only supply disruptions but also source products at highly competitive prices.
Weaknesses Pets.com Inc.: Rise and Decline of a Pet Supply Retailer | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, it seems that the employees of Pets.com Marketing don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, in the dynamic environment Pets.com Marketing has struggled to respond to the nimble upstart competition. Pets.com Marketing has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Pets.com Marketing needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Need for greater diversity
– Pets.com Marketing has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Skills based hiring
– The stress on hiring functional specialists at Pets.com Marketing has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, it seems that company is thinking about the frontier risks that can impact Innovation & Entrepreneurship strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow to strategic competitive environment developments
– As Pets.com Inc.: Rise and Decline of a Pet Supply Retailer HBR case study mentions - Pets.com Marketing takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Capital Spending Reduction
– Even during the low interest decade, Pets.com Marketing has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Products dominated business model
– Even though Pets.com Marketing has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Pets.com Inc.: Rise and Decline of a Pet Supply Retailer should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Pets.com Marketing, firm in the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Interest costs
– Compare to the competition, Pets.com Marketing has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Opportunities Pets.com Inc.: Rise and Decline of a Pet Supply Retailer | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Pets.com Marketing can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Learning at scale
– Online learning technologies has now opened space for Pets.com Marketing to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Leveraging digital technologies
– Pets.com Marketing can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pets.com Marketing can use these opportunities to build new business models that can help the communities that Pets.com Marketing operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Loyalty marketing
– Pets.com Marketing has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Pets.com Marketing in the consumer business. Now Pets.com Marketing can target international markets with far fewer capital restrictions requirements than the existing system.
Better consumer reach
– The expansion of the 5G network will help Pets.com Marketing to increase its market reach. Pets.com Marketing will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Pets.com Marketing can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Using analytics as competitive advantage
– Pets.com Marketing has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pets.com Marketing to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Pets.com Marketing can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Creating value in data economy
– The success of analytics program of Pets.com Marketing has opened avenues for new revenue streams for the organization in the industry. This can help Pets.com Marketing to build a more holistic ecosystem as suggested in the Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study. Pets.com Marketing can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pets.com Marketing can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pets.com Marketing is facing challenges because of the dominance of functional experts in the organization. Pets.com Inc.: Rise and Decline of a Pet Supply Retailer case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Threats Pets.com Inc.: Rise and Decline of a Pet Supply Retailer External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pets.com Marketing can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer .
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Pets.com Marketing will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Pets.com Marketing business can come under increasing regulations regarding data privacy, data security, etc.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Pets.com Marketing needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Innovation & Entrepreneurship industry regulations.
Stagnating economy with rate increase
– Pets.com Marketing can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Consumer confidence and its impact on Pets.com Marketing demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer, Pets.com Marketing may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Environmental challenges
– Pets.com Marketing needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Pets.com Marketing can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
High dependence on third party suppliers
– Pets.com Marketing high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Pets.com Marketing in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Pets.com Marketing is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Pets.com Marketing
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pets.com Marketing.
Weighted SWOT Analysis of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Pets.com Inc.: Rise and Decline of a Pet Supply Retailer is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Pets.com Inc.: Rise and Decline of a Pet Supply Retailer is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Pets.com Marketing needs to make to build a sustainable competitive advantage.