Changing Strategy Without Losing Your Customers - Three Vital Steps to Refining Your Strategy
American Eagle Outfitters and Wet Seal Stores have issued statements about company turnarounds needed to cut sales loses. This kind of story occurs far too often: a business disconnects from their customers because the company either wants to sell to a larger customer base or they want to upgrade to a more prestigious look.
The strategy may seem initially correct. Here are some examples:
==> Three years ago American Eagle decided to shift from its targeted customer, the high school teen, to the college student body by offering more sophisticated styles. Their intent was to grow up with their customers.
==> Wet Seal felt they had to react when competitor Forever 21 started to offer more trendy items. Wet Seal decided to distinguish itself by upgrading the quality of the products.
==> In an attempt to end a downturn in market share, McDonald's decided to upgrade their menu selections. They introduced higher priced specialties, super sizes, and upped prices on their traditional favorites.
==> Remember when Farmer Jack closed their stores for several days to go to everyday low pricing? It was their attempt to recapture the value-minded customers they had lost to Wal-Mart and Meijer. At the same time, Kroger, which was always positioned on quality and variety, was upscaling to compete with Whole Foods Market and other specialty chains.
==> Unlike Wal-Mart where Sam Walton and his company leaders understood the low-price business, Kmart executives moved into the posh suburbs of Detroit. While Sam continued to relate to his customers, even driving his own ancient pick-up truck, Kmart's CEO had a driver behind the wheel of his luxury car. It is no wonder he became uncomfortable running a discount store chain and wanted to impress his upper-class friends by upscaling the stores.
Each of the these five organizations made a fundamental mistake in changing their strategy.
==> American Eagle overlooked the fact that as youth grow into adulthood, they want to leave behind the things of youth. Although a favorite among adolescents, the college customer wants to move from high school and show they have grown up. American Eagle is one of those things they want to leave behind. American Eagle needed to concentrate on building their high school business.
==> Wet Seal was disconnected from their customer. When they differentiated from Forever 21 with higher quality and prices, they forgot that their customer base was more disposable. They wanted new swimsuits through the season, not one suit that will last a couple of years, especially because the trend cycle is shorter.
==> McDonald's decision to upscale ignored their marketposition as a low-cost fast food retailer. They struggled until they developed the dollar menu, which has brought back their base customer. Keeping the upscale menu items, the chain is able to address the desires of a changing national diet while retaining the customers that made them strong.
==> Although Farmer Jack's move was probably the right thing to do, the corporate executives at parent A&P did not understand the margin structure for everyday low pricing, raising prices to the previous high-low strategy. By abandoning ELP, Farmer Jack returned to poor results, sealing the death of the chain. However the Kroger strategy worked because it did not change the customer base.
==> Kmart's move was a disaster at the check-out. To further kill the company, the executive was replaced by a new CEO. This CEO was from an exclusive suburb of New York City and owned upscale "The Museum Company". Although financially astute, there was no chance he would relate to the Kmart base customer that craved Big Red chewing gum instead of Altoids. The company entered a downward spiral that would end in bankruptcy.
Let's shift for a moment to corporate culture. The number one problem with changing a corporate culture is that the current corporate leaders see the culture as a comfort zone. The existing culture is what made them successful, therefore it works (at least in their minds). The idea of changing a corporate culture, even for improved productivity or bottom-line results, takes the executives out of their comfort zone - therefore they do not embrace a changed culture. In fact, most will undermine or be outright hostile to a change in corporate culture.
To prove the point, how many executives do you know that have taken their company to casual attire yet still wear a tie? If you know of even one you know too many. Although they may make great sounding excuses as to why they need to wear the tie, the reality is that they have not bought into the changed culture.
The Core Problem
Back to the idea of knowing your company roots, these same "culture-change-fearing" executives will quickly embrace an upscale strategy that ignores the existing customer base. Why? The new strategy is in some way close to their comfort zone. The customer perspective becomes unimportant as the comfort-zone factor kicks in.
This is what the unsuccessful companies above did. In one form or another, they tried to change their customer base. Executives will make this product or service change because these high-paid executives are attempting to take their customers to a place more in line with their own shopping desires or where their acquaintances will give them the most admiration.
Three Vital Steps to Refining Your Strategy
There are three vital steps to take if you want to successfully change your stategy to add more value to your customer. To receive these steps, request the FREE PDF file at getmaximpact.com/RequestArticle-Strategy.html.
Rick Weaver is President of Max Impact, a national leadership and organization development company based in Rochester Hills, Michigan. Rick is an accomplished business executive with experience in retail, market analysis, supply chain and project management, team building, and process improvement. He has worked with hundreds of companies to improve sales, processes, and bottom-line results. MaxImpact offers leadership and organizational development services along with employee assessments and background checks. Contact Rick at 248-802-6138 or via email, firstname.lastname@example.org. MaxImpact is on the web at getmaximpact.com
Be Like Bill - Think!
Twice a year, Bill Gates goes to a remote island hide-a-way for a week at a time. No, he's not going for a fishing vacation; instead of rods, reels, and lures he takes market analyses, position reports, engineering reports, and opportunity papers.
Insurance Requirements in Franchised Companies
Franchised companies often require what some believe to be excessive insurance requirements. This is because so often if a franchise is sued for any reason that the Lawyers go after the big money of the franchisors and name them in the lawsuit.
GOT MEME? How to Attract Your Clients and Customers Attention
No "meme" isn't a typo and Got Milk, the more commonly know phrase, is actually a marketing meme. If you've opened up a magazine or watched TV in the last ten years you've seen the fun and memorable Got Milk ad campaign using celebrities with a milk mustache.
Rules to Setting Business Goals and Objectives: Why and How to be SMART
We all know that nothing runs without a plan, and a plan cannot run without having its objectives set.That applies to any kind of plan, whether we're talking business or personal finances, university degrees or NGO programs, website promotion or weight loss.
If You Dont Focus, Innovate and Evolve, You Die
After 128 years of business, a household word, Montgomery Wards, Inc., closed their doors forever and filed bankruptcy.
Don't Allow Yourself to Get Burned
I am not a big fisherman, but I do enjoy it whenever the opportunity comes my way. I have some friends who are fanatics and occasionally I will go out with one of them.
Cost-cutting Essential to Maintaining Profits
Why cut costs now? Efforts are multiplying to cut costs wherever possible in order to achieve or preserve high profits. The resulting benefits for all of a company's employees should be obvious.
2 Simple Steps Before Starting Your Business
There is so much small business information available today that it's easy to be bogged down by the sheer volume of it all. Where does one start? Well, it's safe to say not all the information you'll receive will be of equal value.
Art of Succession Planning
Succession planning, like any business acumen, is both an art and a science. That is to say, there are many proven strategies that can and must be followed so that successful transition can occur.
Own Your Niche by Building a Niche Community
In 1997, David Steele was making the transition from a professional therapist to relationship coach. Part of his strategy was to become a center of influence and THE Relationship Coach for his community.
Succession Planning: Problems Getting Started
A survey released by the American Institute of Certified Public Accountants in the spring of 2005 illustrates a widespread problem on the lack of succession planning [deciding who will take over running the firm when the current managers die or retire]. The survey found that 60% of responding certified public accountant (CPA) firms have owners who are in the 55-to-62-year-old age bracket, and more than half (56%) have at least one partner who will retire in the next five years.
10 Critical Facts to Put On the Cover of Your Business Plan...
In most business plans, no matter how striking the idea, the covers are critically important. The majority of investors may flip to the executive summary, if they get past the cover, when deciding whether or not they are interested.
A Rough Cut on Feasibility
A piano tuner recently moved to Buffalo, NY, and would like to assess the business possibilities for him in his new home. He plans to estimate how many piano tuners the greater Buffalo area can support, and compare that to the number listed in the phone book.
Who is Responsible?
While writing an article recently on effective ways to bridge the IT/Management communication gap, I realized that few of us are eager to take responsibility in our business lives to make something different happen and be part of the solution.Indeed, we have a culture based on blaming: sellers would obviously close more sales if it weren't for the buyer; decisions could easily get made in meetings if people could make up their minds; systems would get designed correctly if the users could get it right the first time; teammates would get along if it weren't for those in the team that were difficult, etc.
College Students and Graduates to Run Company Outlets or Franchises
Does your overall business strategy include the recruitment of college students to run your locations? Are you a franching company and looking for young, talented, hardworking and dedicated franchisees? There are some things to think about before you deploy such a strategy. There are both positives and negatives to focusing your recruitment efforts on college students, for instance best reason's to use college students include some of the following:They May Have Rich Parents Who Can Pay Outright For A Franchise;They May Have Parents Who Are Willing To Co-Sign For A Franchise;They are Young With Plenty Of Energy;They Have Little Business Experience And Will Not Try To Rewrite Our System;They Are Used To A Very Structured Environment;They Want To Succeed;They Might Have A Business Degree;They Are Sociable Animals And Good With People;They Will Study Our Operations Manual Cover To Cover;They Will Make Two To Three Times As Much With A Franchise Than Their First Corporate Job;They Love To Have Fun And This Is A Fun Job.
Consolidation in the Software Industry is Hardly New: Obsess About It or Risk Losing it All
Some analysts credit [Larry] Ellison with anticipating the consolidation in the enterprise software industry and leading the charge. Ellison 'called a major shift in an entire market, which was impressive.
Water Conservation and Water Issues for Mobile Car Washers and Auto Detailers
Obviously, there will never be an actual water shortage since two-thirds of our earth's surface is water. The problem is distribution.
Innovators Role at Hard Times
One Research Scientist at the Hewlett-Packard (HP) Imaging Systems laboratory said Carly Fiorina was a marketing person put in change of engineers who cared nothing about the art and beauty of technology. She just wanted saleable stock to bring to market.
More Uses for Your Business Plan
You have invested a lot of time and energy on writing a business plan just to get a loan or to attract an investor. What do you do when you get the money or, worse, should you be turned down?Do you just file it away? That's like investing in a boat that remains parked in your driveway after its inaugural voyage.
Business Plan Financial Projections: Stop Worrying About Being Right...
Business plan financial projections seem daunting because they are so uncertain. This very uncertainty, however, is what makes preparing them easy because you can't possibly be right.
|home | site map|