Problem Faced by Blue Nile Company

1095 WordsMar 14, 20125 Pages
Problems There are several problems that Blue Nile needs to deal with if they wish to remain on top such as: ❖ One of the major problem with web based marketing is maintaining and driving consumer toward the website which will pose blue Nile’s major challenge going into the 21st century so how to attract new consumers. ❖ How should Blue Nile Inc increase consumer awareness and confidence purchasing high value luxury jewelry online? ❖ Blue Nile has very little presence outside of the United States and only offers a limited number of products in United Kingdom and Canada. ❖ The cost to buy keywords on Internet search engines rose significantly in 2005, which result in cutting back on advertising expenditure,…show more content…
Gold, platinum ❖ Pressure from traditional high street chain retailers on diamond suppliers to stop selling to Blue Nile Inc. ❖ Depressed stock price resulting in further capital investment or stock buy back ❖ Uninvited hostile takeover by competitor/ investment speculator ❖ Loss of market share, revenue and profit from potential copycats and traditional jewelry retailers. II. Porter’s Five-Forces Model of Competition Overall, the market is moderately unattractive. The competitive forces create an environment in which companies can make a good profit, but doing so can be difficult. Companies in the online jewelry industry must pursue very smart strategies to be competitive. Substitute Products: The threat of substitute products is moderate. Substitutes for diamonds include other types of gems. However, since other types of gems do not carry the same prestige as diamonds, many customers will not seek out these substitutes. Buyer Bargaining Power: The competitive pressure associated with buyer bargaining power is moderate for the following reasons: ❖ Buyer switching costs are low. ❖ Blue Nile sells high priced items. ❖ The jewelry industry is growing. ❖ Buyers have access to a lot of information. ❖ Buyers generally purchase items infrequently and in small quantities. Supplier Bargaining Power: The competitive pressure associated with

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