I
N
LESSONS LEARNED
Questions?
- Be willing to change with the market!
- Discerning True Innovation from fads! [Market Research]
"experience is simply the name we give our mistakes"
-Oscar Wilde
What can be learned through
the mistakes
made?
Brand Equity Audit
- Brand Identity:
- Large selection within a physical book store
- Brand Integrity:
- Met expectations
- Brand Resonance:
- Tried to build with the addition of cafes'
T
Music, Movies & Cafe
Tried to build a brand but instead lost track of their brand identity.
- Barnes & Nobles invested in beefing up online sales and developed its own e-reader and was Successful.
- Borders expanded its physical plant, refurbished its stores and tried to build a brand by setting up Cafe's in Book Stores - Unsuccessful
E
Music, Movies & Cafe
- Ignored declining music and DVD sales
- Invested heavily in Music CD's when people were moving to ipods.
International Expansion
- Borders has huge international presence
- Opened huge superstores in Singapore, United Kingdom, Australia, Peurto Rico etc
- International operations started becoming a losing venture as some of its stores cost the company approximately $2 million for maintaining
- By end of 2009, all overseas directly owned stores are sold/closed, leaving only the franchise stores in Dubai, Oman, Malaysia
R
Too Many Stores
- 70% of their stores competed with Barnes & Noble
N
- Continued opening stores even without real continuous growth in profits
- Declining growth and Last profit observed on 2006
E
Inability to Realize...
- Changes in Customers Needs (Outside-in Thinking)
- Rise of Additional competitors into the Market
Neglect of...
Reasons for Failure
T
Fork In The Road
Borders response to the internet was shortsighted, myopic, and ultimately led to the demise of the brand
a. The name of Borders signature coffee drink
b. Borders brand of e-reader
c. Sony's format for e-books
d. The nickname of Michael Jackson's Hair style
Brand Analysis Project
Competitors / Strategic Advantage
What Mass retailer acquired Borders?
Sophisticated inventory management system
Superstores, unlike any other bookstores
- Media sales
- Grow brand loyalty/identity
- International growth
Andrew Benner
Prathyusha Vaddepalli
Praneeth Koka
Kiran Kumar
Sarah Dush
- Economic recession
- Barnes & Noble
Border's Overview
- Established in 1971 at Ann Arbor by Thomas & Louis Borders
- Unleashed first superstore model in 1985
- Aggressive expansion
- By 1994, opened 44 superstores across 22 states
- Early success - Second largest in 1995
- Established its first international store in 1997
- Applied for Chapter 11 bankruptcy protection in 2011
- Large selection of new books
- Pricing/bargaining power
- Real estate & store Size
- Inventory management system
- Aggressive expansion
- e-Commerce
- e-Readers & e-Books
- Economic recession
- Changing customer behavior
- Digitalization of music/movies
- Growing competition
- Large selection of new books
- Pricing/bargaining power
- Inventory management system
- Aggressive expansion
- High debt burden
- High churn at executive level
- Prior success led to thinking that their business model would work in the future
- Inside out thinking
- Later created a brand identity dilemma
kmart purchased Waldenbooks in 1984 and Borders in 1992
What was their alternative strategy
What Did they do instead?
What Lead to the Crossroads?
e-Readers Market
- Amazon kindle unveiled in 2007
- Barnes & Noble answered with the Nook in 2009
- Apple introduced the iPad in April, 2010
What Borders Did Instead
- Borders passed on the growing e-reader market
- Borders was late to the party and introduced the Kobo in July, 2010
e-Commerce Market
- Barnes & Noble was moving out of the physical CD and DVD business
- Borders failed to see the potential for digital music
- The company invested heavily in CD’s and DVD’s just as the industry was moving toward digital
- Borders continued to expand physical stores as late as 2006, in the middle of the internet boom
- The company foolishly purchased a stationary company in 2004 (Paperchase), even as written letters were becoming less common
- Amazon launched in 1995
- Barnes & Noble launched website in 1997
What Borders did Instead
- Borders began an online presence in 1998
- Huge failure for the company
- Loss of tens millions of dollars
- Borders outsourced all of its online business to Amazon in a partnership in 2001
- Borders dissolved the Amazon partnership and launched its own website in 2008