Archives for June 2013

What we can learn from the recent JC Penney Debacle

 

What happens when plans go terribly awry as they recently did with the venerable JC Penney “strategy.”  We can learn some valuable lessons here. Especially the one about the “Retail Drug” the non-strategy “Low Price Strategy.
hbrJCP doesn’t need someone who can “execute” successfully, get back to basics, or any such thing. Just as it needed two, five or ten years ago, JCP needs a strategy. It needs to decide where it is going to play — with what set of shoppers, in what range of merchandise, through what physical and digital spaces. And it needs to decide how is it
going to provide a superior value proposition to competitive alternatives in that chosen space. This is a tough task. The department store business is a brutal one. This is not a business in which half-witted strategies can be profitable.
But if JCP doesn’t figure out an answer to these questions, it will revert entirely to the retailing drug — the “low-price strategy.” This is actually a non-strategy. There is a real strategy called “low-cost,” which can facilitate more attractive prices than competitors. But low prices unaccompanied by low costs is an approach to liquidation — which is where
JCP will be if it doesn’t start to think intelligently about strategy.

The Sunk Cost Fallacy

You have heard the phrase “don’t throw good money after bad.” Why do we do it?

When we commit to something that costs significant money and it doesn’t work out most people are unwilling to pull the plug. So, good money continues to go toward a loser. Not long ago a senior executive called me and asked if I knew anyone in the pet cremation business who was making meaningful money. I told him I didn’t know anyone who was making ANY money much less meaningful money including the guy who started it. But I do know a lot of people who have created some really innovative excuses for keeping it going. He responded that he couldn’t find anyone either and that were considering shutting down their efforts. Yet, that effort had gone on for a long time and, for all I know, still is.

 

Screen shot 2012-07-02 at 8.03.03 PMThis sunk costs situation happens much too often in business.  We insist on getting value out of the money we’ve already spent.  We become determined NOT to lose money.  We can’t — we won’t — let go.

However, by not letting go when something isn’t working, we can end up losing a lot more.  We keep pouring money, time and effort into something that has no chance of working or would lead to a poor result at best.  The project or initiative  keeps costing more and more.  Instead of cutting our losses, we compound them by hanging on.  We make our losses worse….More at What Are Sunk Costs? – Small Business Trends

My opinion? I admire people who can admit mistakes and move on. Don’t you? It’s far more embarrassing to keep betting on a loser.

Leadership Lessons From The Boy Scouts

Here 12 leadership concepts that stand the test of time.

 

Screen shot 2012-07-02 at 8.03.03 PMSurveys show that over 70 percent of consumers in America and Europe distrust businesses as a whole. But for the brands that they do trust, consumer loyalty is fierce. I’ve personally found that one of the easiest ways to instill trust is to mirror the 12 values found in the Scout Law:

A Scout is trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean and reverent.

Whether you incorporate these values into the way you personally conduct business or into the way your brand operates as a whole, I think you’ll find that consumers will be excited to work with you time and time again. So let’s get down to business and analyze the Scout’s Law….More at 12 Business Leadership Lessons From Scout Law

Marketing Segmentation: not what you were hoping for

Like you, I have sat through too many powerpoint presentations about market segmentation. Somehow it didn’t ring true to me. Or, at least, if it is true, I find it almost insurmountable logic to believe that you can be quite as granular as you think you can.

There was a time when the air force thought it could win all future wars and infantry was obsolete. It took a while for them to realize that they needed the “boots-on-the-ground.” So it is with hard and fast “solve it all” “magic bullet” answers.  Life is hard work.

This blog post has a new slant on segmentation you might find interesting.

 

hbrHer confession was blurted out in the midst of our first conversation about the new digital marketing strategy which we would eventually advise them on: “You know, I don’t think I believe in segmentation anymore.” She said it fast and softly, almost in hope that the sounds around us would make it inaudible. But we did hear it, and responded, “Well, we don’t either….”

…Once the taboo was lifted in our minds and in our conversation, our client, a senior marketing executive in the telco sector, with decades of operational experience, explained that in some of the countries she managed, her marketing teams were simply shelving the results of the segmentations they felt obligated to perform out of routine, or because they felt it was expected of them as serious marketers. They just ignored them. In others, marketers were still adamant that segmentation was the only way to go, but couldn’t explain its benefits. Voodoo indeed.

We agreed to work on a new kind of segmentation based the combinations of jobs that customers need to get done. Here’s how the “jobs done” segmentation works:More Reading

My thoughts:

I can remember almost 30 years ago being shown the results of what may have been the first market segmentation in funeral service. All I can remember were “station-wagon moms” I guess they have been succeeded by soccer moms. Anyway I have noticed something about the results and the reality. Virtually every study indicated the majority of people don’t want to talk to a funeral director BEFORE there was an actual body. On the other hand experience has shown me that when there is an actual body they don’t want to talk to anybody BUT a funeral director. I like the thought process in this article. It makes more sense than putting people in slots.