Matthew Mohr 2018-01-30 11:08:31
FARGO, N.D. – Every organization creates its own marketing strategy. Most customers who stay with a business over time do so because they feel they get value from the business. In other words, the business strategy is aligned with what the customer values. What is successful at one business may be disastrous at another. It’s not unusual for people who are new to an organization to compare strategies and try to make changes, thinking alternate practices or ways of creating success are better. Evolutionary change is reasonable and good for an organization. Revolutionary change, however, is not generally the path to greater success. Similarly, following another successful business’ practices may not work. As we look at the dramatic change in our retail sector over the past century, it is evident we had two large shifts in consumption patterns. Sears changed consumer habits from buying what was available locally to national sales consumption based on a wide variety of quality products (many of which were not easily available at shoppers’ local stores). Sears employees were taught to learn about the products and provide high service to customers. Walmart followed Sears with local “Big Box” stores offering a variety of low-cost goods and low service levels. Both strategies worked for quite a while. Then as Sears attempted to maintain market dominance, it chose to follow a different path. To reduce costs, employees became less directed, and the corporation bought Kmart in what was seen as an opportunity for growth. Unfortunately, the culture and market strategy at Sears were not good matches for Kmart. Lifetime quality guarantees were no longer honored, and knowledgeable employees became scarce. It wasn’t too long before sales started falling, and loyal customers went elsewhere. As Sears continued to struggle, the company’s mixed culture and direction led to continued poor results. More recently, Amazon has put tremendous pressure on both Walmart and Sears. Amazon has a much different culture and way of marketing than either Sears or Walmart, and who will survive is yet to be determined. Amazon is in a position to change rapidly, and its market dominance is undeniable. But Amazon’s flaws became obvious when the hurricanes hit Florida and Amazon couldn’t deliver as promised, along with blaming price gouging on its third-party sales agents. When Amazon announced the acquisition of Whole Foods, my young nephew posted: “Who could have imagined getting your groceries delivered right to your front door?” I gladly reminded him that my great-grandparents owned and operated a corner grocery store, and at that time, they delivered a lot of what they sold – right to the customer’s home. I also commented, “Will current Whole Foods customers accept Walmart quality, or will Walmart shoppers pay Whole Foods prices?” Amazon has already begun to make changes at Whole Foods, but it’s too early to know if the changes will be successful. Amazon and those copying it need to pick a sustainable strategy. A local businessman and friend of mine summarized a low general pricing strategy as: “Lower prices only can come from poorer quality products or poorer service.” Trying to compete on price alone is not a path to sustained success. To survive, a business has to be profitable and add value for the customer, and its marketing strategy is the key to how a profit is created. There is truth in the old saying, “You get what you pay for.” PB
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