Even the biggest of brands can experience problems with their strategies. Leading your business successfully is obviously a good thing but can you handle that success so it doesn't affect you negatively?
Both internal and external factors influence the business world on a daily basis. The reason for that is because our world is changing, alongside the consumers' needs and interests. There are many examples where companies have failed because all of their good strategies seemed to have lost relevance.
When it happens, it means that either a company has outgrown its audience or the audience has outgrown the company. In the first instance, we can look at the very well known brand, Walmart. Over the last five decades, it has managed to grow so big that there are only a few places in the US that don't have a store. When large companies experience these kind of growth challenges, they must conquer new markets, otherwise there will be growth stagnation. Realizing this, in early 2016, Walmart announced its plans to build smaller 'express' stores, in order to squeeze into the urban market.
An important lesson to learn here is that when you feel that due to predicted or unpredicted circumstances, your strategy is irrelevant, it's time to have a think about the revitalization of your brand or even launching a new one. There is no point in replacing your strategy with another one because the existing one has already proved to be successful. Sometimes, it simply doesn't have enough space to provide the growth you want.
In that case, it is worth looking at every element of your existing strategy to become relevant again. You need to think about your target market, value proposition and capabilities in the same way as if you were at the beginning of your business journey.
Let's have a look at the Gap Inc. clothing brand and its decision to create the Old Navy brand in 1994. When Gap was about to reach a saturation point with its target market for its classic-style, rather pricey clothing, it launched a brand with on-trend clothing at a lower price. That can be seen as a perfect example where instead of rebuilding the whole strategy, the company stretched its value proposition by attracting a different target audience, while leveraging the same design and supply chain capabilities that distinguished the original business.
If we compare both moves from Gap and Walmart, we can see that the latter, needed new ways of developing the business it already has, rather than investing in new high-cost projects. In terms of supply chain management, the move involved smaller but more frequent direct-to-store deliveries which meant that the financial model is low volume, high margin, which is the opposite of large stores. Regarding value proposition, it is a locational convenience, which is not at all associated with Walmart as a brand. As a result, the project failed because Walmart should have worked with their existing strategy rather than creating a new one.
On the other hand, there are also situations, where businesses struggle to engage their audience because it starts losing interest in the product or service. That is a tough one because it's hard to make an old song popular again amongst new trends, fashion, and changes in society and demographics.
There has been a massive shift in the teenage mindset since 1981, a year, when the MTV cable channel was born. It gained popularity by streaming music video content and delivering it successfully to youngsters, which created a cult around the channel. The only problem was that the teenagers were growing into adults and those who replaced them were interested in different services. Towards the very end of the 20th century, the appearance of CD's, MP3 players and Internet streaming meant that the young population no longer needed TV to listen to their favorite music.
Once that happened, MTV's popularity dropped significantly, and it was the time to revitalize the content. From streaming videos, the channel moved towards reality show content designed for teenagers, and it worked out well, with the channel now showing hardly any music content and concentrating on reality programming. It brought hit shows like The Osbournes, The Hills and Jersey Shore, which although critically slated have brought in millions for the company.
It is clear that good strategies lead to companies outgrowing their target customers, whilst we also have external influences which ensure the opposite. In both cases, it can create an issue. The only way to solve this problem is to rethink existing strategies, which will open new horizons in the business world or breathe new life into current markets when they start turning their back on you.