The current economic crisis is causing havoc not only for Vallarta businesses but for consumers as well. Some long established brands that were once considered unshakeable pillars of capitalism are now hardly recognizable. Large or small, there is a scramble afoot to innovate at any cost.
While innovation is desirable, any substantial change to a company's strategy or roster of products and services must be shrewdly scrutinized to facilitate success.
It's tempting to digress from a long-term strategy and enter into new markets, offer new services and create new products in an attempt to grab market share from a seemingly dwindling customer pool.
Consider the fate of local eatery that recently dropped prices, launched an ill-researched campaign in mass-market media, and adopted an aggressive hostess campaign at it's door. Its sales, already suffering, were greatly reduced. Why? Existing customers and its new target segment had pre-existing notions of the restaurant's exclusivity, high cost and excellent service.
Its existing customers presumably became confused by the restaurant's discordant new messaging: it was at odds with its long established exclusive image. Customers opted for the security of other restaurant brands, with many reportedly canceling reservations. Its new target customers could not seemingly believe or comprehend the restaurant's promotion, therefore shunning its efforts to enter the fiercely competitive mass-market arena, leaving its table's – and its presumably bank accounts – virtually empty.
While the restaurant's tactic may have generated short-term gains by attracting bargain hunters, the end result proved damaging to its long-term prospects by harming the restaurant's existing brand equity and goodwill. Customers are fickle, we like stability and despite claims to the contrary, many of us abhor change.
If changing course or launching new services seems the only way to ensure survival during the low season, it pays to do your homework, not by looking out, but looking in.
Review your brand, the attributes that secured your success, the goodwill your business enjoys in the market and consider how your customers feel about you, your brand, your offer and why.
If launching a new offer holds a high degree of risk to your brand, if it appeals to a completely different segment than your existing customer base or if it promotes attributes that are in conflict with your existing positioning 2×1 margaritas at the car wash, anyone? – then careful scrutiny is required. A wrong move may prove to be the tipping point that drives customers away rather than lure them in.
New service or product launches need a minimum level of resource investment to gain recognition and acceptance in the market place. If a new offer requires diverting resources away from an established if battered one, think twice. It costs twice as much to attract a new customer than to service an existing one, it also costs infinitely more to launch and maintain a new service brand than support one already established, however weak it may seem.
Trusted brands, however difficult the times, are valued by customers, and while we may buy less of them today, we tend to be loyal. If budget are tights, refocus your efforts rather than damage your existing assets by launching a new service or product you cannot fully support. Opportunities abound for those that know their product and understand their customers well. So do your homework, reward customer loyalty and add value wherever you can – there are many cafes along Olas Altas that now offer free wireless-internet service.
Talk to your customers, your internal and external partners. Efficiencies can always be found and savings funneled into adding value, rather than cutting costs. Collaborate with suppliers and see how together you can enhance your offer existing offer to keep your customers and your brand alive.
