In June 1996, an innovative shop which was called “adMart” was established by the inaugurator of Next Media Ltd. , Mr. Jimmy Lai. adMart was an antenna shop which received order from customers through Internet or phone calling. Also it provided the door-to-door delivery service for free. adMart mainly sold foods, drinks, commodities and some electronic devices. A delivery firm, ezVan, was simultaneously established.
In fact the competitive advantages of adMart were the relatively low selling price and the free delivery service. Unfortunately, adMart closed down in December 2000, due to a continuous loss. As the case stands, adMart’sdegree of acceptance was not high because of its negative news. However, adMart’slow acceptance was not the only reason for its closing down. The two main supermarkets, Wellcome and PARKnSHOP, have strategically made use of their brand popularity and prestige, also their small fortune, to snipe adMart.
Although the Internet and phone call ordering and free door-to-door delivery service were the innovative ideas, adMart was a new shop. Obviously it had not much capital and a popular brand. By comparison, Wellcome and PARKnSHOP had much more capital for trial and good prestige for cost minimization. Before the establishment of adMart the Internet selling was not popular. It was known that adMart brought the trend of Internet selling. The two main supermarket became aware the fresh shop and the innovative selling method.
They knew that adMart would be one of their enemies, therefore they started their new marketing strategies to snipe this fresh shop. Wellcome and PARKnSHOP made use of their capital, they set up their own delivery line and aimed at sharing the market of Internet selling. Besides, they offered their customers some premium, like offering free delivery service for customers who bought above $60. Nevertheless, these marketing strategies have not violated the marketing ethics. Actually setting up a new line was not a problem, it was only a marketing competition strategy.
However they maliciously requested the suppliers and distributor to provide some extra discount on stock import. Since they had striven for the low import cost, logically they could reduce the price of their stock. They can have the same profit amount, eventually they could boost their quantity on sales. The customers chose natch the cheaper shop, the source of sales of admart flowed to Wellcome and PARKnSHOP. Besides, Wellcome and PARKnSHOP could engage in predatory pricing. The main marketing ethics Wellcome and PARKnSHOP violated is Fairness.
According to American Marketing Association (AMA) Code of Ethics, fairness is one of the core values marketers should obey. Fairness restricts the competition of material between companies. Wellcome and PARKnSHOP made use of their brand to menace the suppliers and contributors for their own benefits. It was one of the false Wellcome and PARKnSHOP had done which violated the AMA Code. Furthermore, Wellcome and PARKnSHOP requested for not only discount, but the rejection of supply to adMart. Affirmably this action violated fairness.
It was because this action directly reduced the stock and crippled the operation of adMart. Under the fairness, no one can manipulate the market, whatever supply market or sales market. Undoubtedly speaking Wellcome and PARKnSHOP had violated fairness because they attempted to manipulate the market with their own heads. In my opinion, these peremptory actions were absolutely unacceptable. These actions would reduce the competitiveness of the small company, which encountered the fairness of the market.
