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 item, 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 different 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 paying low prices.
In march 2001, just one month before closing operation, Kozmo announced a marketing 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 RedEnvelope, However, the kozmo catalog was not a part of an integrated business plan and did not provide the same kind of added value that RedEnvelope’s catalog provides-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 strategy that worked for one company is no guarantee that it will work for every company. Marketing techniques are effective only when implemented as part of an integrated strategy that fits the company’s product and gives customers a compelling reason to buy.