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Audio Advice was a brick-and-mortar audio specialty retailer with two stores in North Carolina. Traditionally, audiophile components were only sold through specialty stores. However, this practice was shifting, with a growing portion of sales occurring online. Audio Advice wanted to capture a portion of this growing channel, so started online as an Amazon Marketplace seller. Though this channel resulted in quick revenue growth without a great deal of initial investment, it was not suitable long term. Audio Advice’s management had a bigger vision. In planning their transition to their own e-commerce site, Audio Advice needed to consider branding: should they extend their existing brand, use a sub-brand, or develop a new one? How would each option affect in-store sales, Audio Advice’s reputation, and the willingness of audiophile brands to allow online sales of their products?
The case is suitable for advanced undergraduate marketing students and MBA students. The case is ideal for a core MBA marketing course, and will also fit well in courses on digital marketing, brand management, marketing communications, and channel management. The case will help students to ·understand branding and sub-branding decisions in an online environment; ·appreciate the organizational challenges of shifting to online retail (e.g., managing potential conflict and capitalizing on synergies between the marketing channels); ·introduce Amazon Marketplace (a substantial channel that many students are not familiar with); ·evaluate the distinctions between selling through Amazon Marketplace, direct e-commerce, and brick-and-mortar retail; and ·understand and analyze customer lifetime value.