|Strategic Planning Information|
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 www.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, email@example.com. MaxImpact is on the web at http://www.getmaximpact.com
Ten Steps To A Great Strategic Plan
Ask a small business owner about their strategic plan and they'll either laugh or get that stricken look in their eyes. Yet it's well documented that businesses with a strategic plan are more successful. No matter what size business, from solo practitioner to hundreds of employees, a thoughtful strategic plan will help you achieve your dreams.
The Chasm of Change---- Restructuring ----- The Goliath
Richard L. Daft one of the country's recognized academic leadership experts raises the question, "What kind of people can lead an organization through major change?" A Turn-A-Round restructuring qualifies as major change and requires transformational leadership. Daft points out that this type of leader is characterized by the ability to bring about change through innovation and creativity. This type of leader motivates people to not only follow their lead but to believe in the vision of corporate transformation, the need for revitalization, to sign on for the new vision and to help institutionalize a new organizational process." Daft points to four principles in discussions about leading an organization through major change. These four principles are the foundation of the restructuring Turn-A-Round process.
Getting Started with Succession Planning: Part I
GETTING STARTED WITH SUCCESSION PLANNING: PART I
The Top Five Reasons Strategic Plans Fail
"Most great plans aren't. They are just nice, high-level ideas."
Clearing the Path: 4 Ways Fear Wreaks Havoc on Your Dream and What to Do About It
Please take a moment before you read any further and answer these three simple questions:
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?
The Impact of Price Popularity on Profits
The goal of almost every business owner is to generate a profit either for themselves or their shareholders. This can be challenging at best. So much thought and effort go into running a business, accounts payable, accounts receivable, dealing with vendors, customers, etc. Because of this people sometimes do not focus on one of the most important factors- pricing. Knowing how much you can charge for your product or service is invaluable information. Businesses typically want to increase volume and prices at the same time. In a perfect world that would be easy to accomplish, yet we do not live in a perfect world. So just how do businesses go about deciding how much to charge for a product or service?
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 for Business - 10 Key Points You Must Know
By cranking up others development to meet your business needs, big or small, not just for right now, but for the future, you will find payoffs, big-time. Here are a few ideas to get you started.
Could You Be Setting Your Business Plan Up For Failure?
David E. Gumpert, author of Burn Your Business Plan, often tells the story about how he and his partner failed to raise money after sending their business plan around to venture capitalists and meeting with several others to make presentations. Disappointed by the fruits of their labor, they considered giving up on their venture in 1995. Fortunately, on the advice of their board of advisors, they chose to divert their time from massaging the business plan to making sales. The financing, they were told, would come later.
During the election we heard about Ohio?s Economy
Much of what we heard in the mass media about Ohio and the down and out economy was the fiction of spin-doctors of politics who wanted to oust the current sitting President. On further review and first hand observation and experience Cincinnati has people moving in and economic expansion. It is in a good spot with decent quality of life, plenty of jobs and an expanding set of suburbs. Just cross the river into KY and you get a glimpse of the reality.
Three Easy Ways To Know Thy Competitor
"Did you hear what your competitor is doing?" This question has caused many business people to freeze in their tracks. How about you? Does your sales team know what your competitors are doing? And if a prospect was to ask them, "give me 10 unique reasons why I should buy from you and your company," could they answer this question without a pause? "Knowing thy competitor" is critical, and this article will outline three easy ways to know more about them, than they know about you! Let's get started!
10 Ways To Make Your Business Unique
1. Largest Selection -
Seasonality: Whats the Big Deal?
Do you work in or own a business that's affected by seasonal cycles? Do you live in a community whose population changes significantly during the year (e.g., tourist influx, students returning to college)? Do you ever feel stressed out or frustrated by the seemingly constant changes or the extreme highs and lows of your life or your business?
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. So it's important to be discerning when you're thinking about applying any suggestions to your new business. In many cases, you'll find some suggestions don't match your business type, management style, budget, or industry. This could lead to wasted dollars spent and time lost. So learning how to research and compile information will be key in developing a plan that is tailored to fit your business needs.
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. In solitude he reads and thinks and reads some more, writing notes in the margins then composing questions, thoughts, and his own positions that will impact the future of Microsoft and the entire technology industry for years to come.
How to Grow Your Business by Clearing the Way to Growth
Is your business growing as fast and effectively as it could, or is it stuck at the same level it has been at for years? Research (Larry Greiner, 1972) has discovered 5 specific stages of business growth. Most business never grow beyond the second level. At this level, the business is characterised by a small group of owners (if not a sole owner), supported by a small team of people at an operational level. This describes the 90 plus percent of businesses, which have 10 or fewer staff.
5 Strategies That Will Boost Your Business Productivity Today! - Part 1
Building a dynamic small business is a constantly evolving, increasingly demanding role.
Documenting the Exit Strategy in Your Business Plan
All investors greatly desire and are motivated by a clear picture of a company's exit strategy, or the timing and method through which they can "cash in" on their investment. This picture best comes into focus when the key valuation and liquidity drivers of the company are clearly delineated. An excellent method to accomplish this is through descriptions of comparable firms that have had successful liquidity events, either through acquisition, merger, of initial public offerings (IPOs).
Don?t Just Talk About the Weather, Use It to Advantage
A well known, national chain of restaurants discovered that certain weather patterns substantially impacts their business. They have studied it and found that more people go out to eat dinner when there is a series of beautiful days. So they measure the weather quality at their stores across the country. Managers report the weather quality daily. A weather predicting system is then employed to determine the quality of subsequent days. When the model predicts a higher customer count they reduce or eliminate sale items and include higher priced or higher margin specials on the changing daily menu. While they can't control the weather, they know that their customers respond to it. Knowing that, they work to take advantage of factors that can predict changes in business activity.
|home | site map|