Tag Archives: Strategic management

Death By 1,000 Cuts

When I was in the TV business, the most sought-after demographic was always young adults. While they often weren’t the key to the heaviest volume of product sales, it’s when we’re young that we build consumption habits and establish brand loyalty. Let’s keep that in mind as we look at some recent trends in media.

You’re probably not surprised to hear that cord-cutting – consumers ditching their cable or satellite TV subscription in favor of streaming and.or over the air services – has continued to accelerate. As the Techdirt blog reported:

MoffettNathanson analyst Craig Moffett has noted that 2016’s 1.7% decline in traditional cable TV viewers was the biggest cord cutting acceleration on record. SNL Kagan agrees, noting that traditional pay-TV providers lost around 1.9 million traditional cable subscribers. That was notably worse than the 1.1 million net subscriber loss seen last year.

They also noted that those numbers don’t tell the entire – and much worse – story. Those numbers report those who canceled an existing subscription. When you take into account the youngsters moving out of their parents’ houses or graduating from college and forming their own household for the first time, there are around another million “cord nevers” who are missed sales by the traditional cable and satellite providers. It really doesn’t matter what business you’re in. When you stop attracting younger consumers, you have a problem.

Why is this happening and how can we learn from it in any business? Techcrunch, reporting on a TiVo study, said that:

The majority of consumers in the U.S. and Canada are no longer interested in hefty pay TV packages filled with channels they don’t watch. According to a new study from TiVo out this morning, 77.3 percent now want “a la carte” TV service – meaning, they want to only pay for the channels they actually watch. And they’re not willing to pay too much for this so-called “skinny bundle,” TiVo found. The average price a U.S. consumer will pay for access to the top 20 channels is $28.31 – a figure that’s dropped by 14 percent over the past two quarters.

There is also the matter of convenience and personalization. Netflix, Amazon, and other streaming services do a great job in making recommendations and offering you programming based on your viewing habits. Has your cable operator done that for you lately?

We can learn from this. Cable operators who focus on broadband and “throw in” the TV offerings aren’t doing much better than those who don’t, since the overall out of pocket is sullied by broadband caps and other, often hidden, price increases that help the bottom line but only prolong the inevitable. It also just makes it easier for a lower-priced competitor to enter the market. I know enough about how the TV business works to recognize the issues with skinny bundles (it’s hard to offer channels on an ala carte basis due to contractual restrictions). We’re seeing more and more offerings that bundle channels outside of the traditional providers and that’s going to exacerbate the aforementioned trends as well.

What’s needed is a rethinking of the business model. Getting local governments to preclude more broadband competition isn’t a long-term solution (look at the wireless business!) nor it is the “free and open market” to which most businesspeople pay homage. Listen to your consumers and give them what they want, especially the young ones. Cord cutting isn’t some far off fantasy that naysayers have dreamt up. It’s here, and it’s killing you by 1,000 cuts. The rest of us can learn from this and, hopefully, not make some of the same mistakes. You agree?

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Filed under Reality checks, digital media

Learning From The Apocalypse

While you’re probably aware of the loss of jobs in the coal mining sector, you might not have been paying attention to what’s going on in retail. Department stores alone have lost 18 times the number of jobs when compared with coal miners since 2001. That doesn’t include all the smaller players that have gone out of business nor the number of jobs lost among those who are support people at shopping malls – cleaners, etc. The term you see most often as you begin to research this topic is “apocalypse.” If you’re in the media business, the music business, or many others, you might think of it as just another incidence of disruption.

Inside an abandoned mall in Allen, Texas. The ...

(Photo credit: Wikipedia)

One of the most disturbing things I’ve read recently was as study by GetApp, which reported that

Two out of three business owners who currently run both an online and physical store believe that they will close their physical store’s doors within ten years and operate their business solely online, according to new research conducted by GetApp.

In fact, there were over 3,500 store closings from Macy’s, JCPenney, K-Mart, and others this year. It’s happening because of technology and globalization. Ask yourself when the last time you went to the mall to go shopping. The only times I’ve been have been when I needed something in my hands immediately, and even that reason is being addressed by Amazon and others. It’s not going to get better, either.

So what do you do if you’ve invested millions of dollars building malls or other large retail spaces? That’s really the situation many businesses find themselves in. Not with respect to owning physical space but in having to expand their thinking. Landlords who thought of themselves as containers for retail are now having to think about servicing a different clientele. Churches, movie theaters, medical offices, gyms, and other tenants can move in while others move out. I drove through what used to be an outlet mall this weekend, and while it was pretty deserted (and kind of depressing), there appeared to be a couple of small start-up companies who had leased space. I’m wondering if the space was less expensive than comparable space in one of the many start-up hotels that have popped up seemingly everywhere. Of course, servicing these other tenants will require a different set of services and skills but that’s what disruption breeds, isn’t it?

The retail apocalypse is just one manifestation of what’s been happening for the last 25 years. Every business is ripe for disruption and it’s really a case of how far along it is in the process. The real question is how prepared are you as it’s happening?

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Filed under Thinking Aloud, What's Going On

It’s Time For Brunch!

It’s Foodie Friday and the topic this week is brunch. You might not have noticed, but having breakfast late is a thing. In fact, many restaurants are adding a specific brunch menu while all-day breakfast has contributed mightily to McDonald’s improved financial results. Consumer research shows the growth of brunch service in restaurants around the country as customers enjoy breakfast foods all day and night long.

Mid-City New Orleans: Brunch at the Ruby Slipp...

(Photo credit: Wikipedia)

According to its 2017 MenuTrends report, Datassential reveals brunch was available at 4.9 percent of all chain and independent restaurants in the United States in 2016, compared to 2.0 percent of restaurants ten years prior. Over the past four years (2012-2016), brunch service in U.S. restaurants increased by 43.5 percent.

In other words, restaurants are catering (pun intended) to the desires of their customers for breakfast foods around the clock. I’m willing to bet your local diner has always served breakfast all day so this isn’t exactly a surprise or huge innovation. What is an interesting development is how many places have responded and added a brunch or all day breakfast menu.

Contrast this with a place I know that opened as a casual lunch business, got great reviews, but not enough business. The owner didn’t want to change his business hours to include early supper to take advantage of the increased foot traffic in the neighborhood after 5. He wasn’t able to make a go of it. The flaw wasn’t the food or the service or even the location. It was in not responding to the realities of the market and the opportunities those realities presented.

Your business might be making similar mistakes. What are your customers telling you? What are market trends showing? It may be overly simplistic, but if customers are enjoying breakfast foods all day long, your job, if you’re in the breakfast business at least part of the day, is to serve them all day as well. You can fight your competitors but you can’t fight your customers’ tastes! Make sense?

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Filed under food, Helpful Hints

A Little Bit Better

We closed on the sale of Rancho Deluxe yesterday. I lived in that house for 32 years (almost to the day) and it holds a lot of happy memories. The pictures you see are the view from the yard when we moved in and the day we moved out. As you can see, quite a bit changed. While the core of the house is pretty much how we found it, we added on a few times and changed the old kitchen into office space when we built the new kitchen/family room.

The core of the house itself is over 100 years old and, as with most older homes, wasn’t without issues. Over the years we replaced the furnace (twice!), the roof, fixed sills, removed asbestos, and landscaped. There were also hundreds of little fixes and improvements. We did all that without tearing down the original structure as so many in our town have done. We like to think we left it better than we found it.

That’s really the business point. We often get pulled into situations or projects where there is a lot of history that predates you. One approach that many people take is to just blow everything up and to start over. That ignores the good in what’s been done already. It can also cause a backlash from the people who invested their efforts to get things to where they are when you walk in. The challenge, both with old houses and old business situations, is to leave things at least a little bit better than you found them.

That’s not to say that some things are beyond saving. Sometimes a situation is in such disrepair that gutting it and starting over is the prudent and less expensive course of action. I think, however, that we often get more focused on a solution that may be more expedient and different as opposed to better.

Think about the things on which you’re working. Are you making them better or just patching things up so you can cross them off the list? Is the team happy with what’s being built or are you painting things a color that everyone hates but which was on sale at the store?

I’ll miss the old place while at the same time not missing the almost non-stop series of items on the “to-do” list. It protected us from hurricanes, blizzards, countless minor storms, withering heat, and freezing cold. I always felt that we had to protect it a little. I’m walking away knowing it’s better than I found it and hopefully in good hands for the next 32 years. Can you say the same about what you’re doing?

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Filed under What's Going On, Thinking Aloud

Disasters

Foodie Friday, and the topic is disasters. Like anyone who does a fair amount of cooking, I’ve had my share of disasters in the kitchen over the years. No, I’m not talking about the time I dropped a full pot of soup on the way to the fridge. I mean those times when the best-laid plans of the cook, as Robert Burns said, gang aft agley – often go awry.

In my case, there is a seafood sausage that has become the stuff of legend amongst those who were (un)fortunate enough to have seen it made and attempted to eat it. There was also the time that egg rolls refused to stay rolled and sent the cook (that would have been me) into a utensil throwing rage since I was cooking for my new bride and my parents and was pretty embarrassed.

There is a business point within my true confessions today. First, each of these things was a learning experience. Second, each has become a story that’s been retold over the years. While our main goal in business shouldn’t be to avoid being a bore at cocktail parties, having a few self-effacing tales in your repertoire isn’t a bad thing. The bigger takeaway is the first point.

Disasters are often the result of pushing the envelope. Hopefully, they don’t originate in sloppiness or willful ignorance or haste but rather is boldly going where you’ve never gone before, whether in the office or in the kitchen. When we fail in the latter venue, there is always some take out food we can get to serve. When we fail in the office, we can use the experience to rethink how we plan, how we prepare, and how we execute so that it becomes a teachable moment and not a complete waste. Besides – you just got another great story to tell at the party where you’re celebrating your company’s latest success!

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Filed under food, Helpful Hints

Adding Value

I think most of us can distinguish between cost and value. Buying something at a lower price improves the cost, but if the item breaks and needs to be replaced in a month, the value of what we bought at that lower price is quite low. Smart shoppers do that cost/value equation in their heads as they shop, which places the onus on us as businesspeople to provide superior value no matter what business we’re in.

How can we do that? It’s not just by lowering the price, although if what you’re selling is a commodity, the price differential becomes pretty important. To a certain extent, that’s something I deal with as a consultant. You might have noticed, there are a lot of us out here. What I need to do, when talking to potential clients, is to help them to understand why I’m worth the premium I charge when compared to many others out here. I do that by adding value in some of these ways:

  • Understanding their perspective. I see my business through their eyes which means I must research them, ask a lot of questions, and then present myself in a way that is meaningful and valuable to them.
  • Giving them something for nothing. Sometimes it’s just a series of articles I’ve found that are relevant to them but those articles demonstrate how part of my service to them is to help them stay informed and ahead of the competition.
  • For existing clients, I’ll often do many of the “little” tasks that end us distracting my client from their main purpose. That can mean writing up brainstorming sessions, breaking our their web analytics, or updating their website. That helps them by reducing anxiety, by keeping them focused, and because I’m generally not as rushed and more experienced than they are, improves the quality of those lesser tasks.

Adding value needs to be as basic as breathing for any of us in business. The real challenge is in making the type of value you add correlate to the needs of each customer. How will you do that today?

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Filed under Consulting

What Do You Know

It’s Foodie Friday and this week I want to reflect on an experience I think many of us have had. I’m not quite sure what to call it – an awakening? An education? It’s what happens when you have your preconceptions of what a food is blown away by a much better version. It’s what happens, for example, when you take someone whose idea of Mexican food comes from years of eating at Taco Bell or whose conception of pizza has been shaped by Papa John’s to an authentic taqueria or to a pizza place that uses great ingredients and a coal-fired oven. I’ve had that experience with a friend, who now refers to two kinds of pizza: pizza and real pizza.

English: Picture of an authentic Neapolitan Pi...

(Photo credit: Wikipedia)

The point of this isn’t that they had low standards or unsophisticated tastes before they experienced the real deal. They just didn’t know, and that’s something that’s applicable across many businesses. It becomes especially more relevant as your product gets closer to a commodity. Consumers probably have an existing opinion that’s based on something that’s usually fairly mainstream. Our job as marketers is to help them to know that there is a difference and why our product does a better job than what they might believe is possible.

How do we do this? Sampling is the most obvious answer. That’s not just giving out food samples on the street. It’s free trial periods of services. I thought that most online accounting software was the same, for example, until I needed to get some customer service help during my free trial period. One company was head and shoulders above the others I tried and they now collect $15 from me every month. They helped me to know.

My favorite taco place is just down the street from a Taco Bell. The menu is in Spanish, they offer goat, tripe, and lengua tacos along with some of the best fish tacos and tortas I’ve ever had. Would you know that as you drove past on your way to Taco Bell? Not unless I took you there. Our job as marketers is to help people know. Are you doing that?

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Filed under Consulting, food