Tag Archives: Strategic management

September 23, 2014 · 12:19 pm

Why Should They Bother?

If you’ve spent more than a few minutes here on the screed you’re aware of my unbridled passion for golf. As any golfer will tell you, when all else fails and your game hits rock bottom, it’s time for new equipment.  As sure as the sun will rise it’s always the tool and not the carpenter. From where does one buy that new driver that is going to solve all of one’s issues? The answer to that is actually instructive for most businesses.

A golf ball.

(Photo credit: Wikipedia)

In general, one either goes to the pro shop at your local club or to a golf store. Of late most of those golf stores are located in cyberspace. This has hurt the big brick and mortar golf chains badly. In fact, not long ago Dick’s laid off 500 PGA Pros and is scaling back its golf business.  After all, the irons are the same not matter if you’re buying them from the manufacturer (who will sell direct), a big box retailer, the golf store, eBay, or your pro shop.  Suddenly, while every brand of club is different, once you’ve decided on the make and model the club itself is the same no matter which source you choose.  This has placed pressure on margins.  In this case, as is the case in many other businesses, the internet wins every time.

The real question is why should a consumer bother going to the golf store?  In the case of Dick’s, they did exactly the wrong thing.  eBay can’t do proper club fittings – making sure the length, lie, and swing weight are right for you.  Sure, you can get golf lessons from YouTube but that’s not nearly as good as having one on one instruction.  The shop at my club will put new grips on my existing clubs, extending their life.  I’m certainly not going to mail them someplace to have that done.

In other words, every business needs to figure out why consumers should care about them – why they should bother.  Price works for businesses without a human touch.  In fact, the move toward more personalization for web-based businesses points directly to the advantage any real-world business will have: the human touch.  We’d rather speak with humans.  Don’t automated customer service lines frustrate you?  I don’t want to press 3 if my issue involves an odor of gas – I want to talk to a person NOW!

We need to think about how our brands and businesses can get consumers to care.  Otherwise we’re completely vulnerable to someone who will do what we do and sell what we do for a dollar less – free shipping included.

Make sense?

 

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September 19, 2014 · 8:12 am

Why Saving The Pots Is Bad Business

I’m not a fan of The Olive Garden which is our topic this Foodie Friday. I grew up eating (and cooking) Italian food and Olive Garden is pretty far from the cuisine I love. That said, I appreciate that it’s a lot easier for one to find authentic Italian food in New York and other big cities than it might be elsewhere in this great land of ours. The Olive Garden might have to do for those poor souls.

logo

(Photo credit: Wikipedia)

A hedge fund recently produced a very lengthy report on Olive Garden’s parent company.  You can read the entire report here – it’s a fascinating look at how a company can lose its way.  I want to focus on one very specific aspect of the report: the food at Olive Garden.  The lessons we can take from it are very instructive for any business.

One main criticism the deck makes is this:

Olive Garden has seemingly lost its Italian heritage and  authenticity.  (It) lost ties to suppliers that offered authentic Italian ingredients and Italian wines at compelling price points. Now Olive Garden serves dishes that are astonishingly far from authentic Italian culture, such as burgers & fries, Spanish tapas, heavy cream sauces, more fried foods, stuffed cheeses, soggy pasta, and bland tomato sauce. Olive Garden has moved away from its authentic Italian roots and now offers what appears to be a low-end Italian-American experience.

The deck has photos of dishes as advertised and as they actually show up on the table.  The difference is amazing.  But it was one last complaint – along with the reasoning behind why the situation is the way it is that really got my attention:

According to Darden management, Darden decided to stop salting the water to get an extended warranty on their pots. Pasta is Olive Garden’s core dish and must be prepared properly.

Uh..duh!  Which is the lesson for any brand.  Diluting your brand causes consumer confusion.  Olive Garden for tapas or a burger?  I think not.  Saving the pots to reduce costs at the expense of the customer experience is lunacy.  Damaging the product – especially the signature product – is a big step down the road to brand destruction.

Many companies lose their core identity in the chase for revenues.  That’s bad.  Hurting the products that got you to this point is worse.  It’s not, as the report points out, just one instance. Breadsticks are another signature dish.  “The lower quality refined flour breadsticks served today are filled with more air and have less flavor (similar to hot dog buns).”  Can your brand survive while committing this sort of product suicide?

Without a brand identity, you’re done.  When any home cook knows more about making your product than you do, it’s time to pack it in.  That’s true if it’s pasta or clothing or web sites or anything else.  Agreed?

 

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September 16, 2014 · 10:54 am

Can You Trust Your Customers?

It’s not news to any of you who are paying attention to media but we’re at a tipping point.

1898 advertising poster

(Photo credit: Wikipedia)

The cracks in the traditional patterns of media consumption have widened to a point where the foundations of those patterns are falling down. Need proof? How about this morning’s piece is the Wall Street Journal:

Hopes that TV advertising will rebound this fall are beginning to dim. TV networks have been banking on a surge in ad spending in coming weeks, ever since an anemic second quarter reported by media companies and a weaker-than-expected “upfront” advance ad-sales market for the new season. The new season doesn’t kick off until next week but already sentiment is starting to change. On Monday, Jeffries analyst John Janedis lowered his estimates for advertising revenue growth in the second half of the year for most of the biggest media companies

Or this from Kantar Media:

“Four of the nation’s five biggest advertisers,” including Procter & Gamble and AT&T, “cut ad spending on traditional media and online display in the first half of the year.”

So now what?

Millennials spend 30 percent of their time with content created by their peers. This means they’re spending more time with peer-created content than traditional media combined (print, TV, and radio).  Nielsen’s most recent study indicates that Americans aged 18-24 watched a weekly average of 19 hours of traditional TV during Q2 2014. That was a substantial 2-and-a-half-hour drop-off from Q2 2013, which in turn had been down by an hour from the year before.  Spending more heavily in those channels isn’t going to happen.  The impact of most digital display is negligible.  Where is the light at the end of the tunnel?

The answer might just be in the audience itself.  Putting consumers and their messages about the brand front and center – probably through social channels – might just be the way forward.  That’s where is the audience is spending time and the messages are from trusted sources.  As Nielsen found:

Word-of-mouth recommendations from friends and family, often referred to as earned advertising, are still the most influential, as 84 percent of global respondents across 58 countries to the Nielsen online survey said this source was the most trustworthy

The real question is do you trust your consumers enough to hand over your brand?  Can you get on board with them creating content that you’ll push for them?  Are you willing to provide tools – images, logos, whatever – or to promote the products that consumers choose, not those slated for promotion in the marketing plan?

Interesting times.  What’s your take?

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