Fiat Changes Chrysler's Direction.

Chrysler New Yorker photographed in College Park, Maryland, USA. Category:Chrysler New Yorker Fifth Avenue (Y-Body) Category:White Chrysler sedans (Photo credit: Wikipedia)

Dodge Intrepid photographed in College Park, Maryland, USA. Category:Dodge Intrepid (first generation) Category:White Dodge sedans (Photo credit: Wikipedia)

1993-1997 Chrysler Concorde photographed in USA. (Photo credit: Wikipedia)

In previous postings I talked about your marketing niche and your place in the marketplace and how difficult it can be to change that niche or marketing group. Today I am going to look at one of the major players in the auto industry Chrysler whose parent company announced a couple of months ago what their product direction is going to be and see if they are making the right or wrong decision in the long run.

Chrysler has been down a very rocky road over the last 35 years. After almost going bankrupt in the 1980's it came back with vengeance only to fall back into mediocrity again.

It was then acquired by Daimler the owner of Mercedes which produced mixed results with some award winning products but misdirection elsewhere. Then came the disastrous sale to Cerberus which Mercedes sold ownership but had control over the products offered by Chrysler and finally the government bailout and sale to Fiat.

Recently Fiat has announced how it intends to move forward with its Chrysler Division and re-image the nameplate that has suffered for several years. Fiat plans to change the marketing direction of the division to increase sales.

For those not familiar with the brands, Chrysler was supposed to be the luxury brand, Plymouth the volume and lower end brand, and finally Dodge was originally the middle brand between Plymouth and Chrysler (there was a fourth brand Desoto that was slotted between Plymouth and Dodge before that brand was discontinued in 1960). Shortly after Chrysler was acquired by Daimler, the Plymouth brand was dropped then in 2009 Dodge trucks became the Ram brand. The Dodge Viper which was the performance superstar of the Chrysler lineup was to be the star of a new brand called SRT which were the sport trim levels on several Dodge cars but they have since been put back under the Dodge umbrella.

The first major change will be that Chrysler brand will become the volume nameplate of the division. Car buffs are howling over the decision that turns what was once the luxury brand of Chrysler Division in the volume leader. However, any thoughts of Chrysler being a true luxury brand went out the window years ago and especially after the 90's when cars such as the Chrysler New Yorker was built on the same LH platform as the Dodge Intrepid with little to tell them apart other than the front grill of the car. It appeared that Chrysler was following the bad example of General Motors of the 80's and 90's instead of other companies who were more successful at creating unique luxury cars that stood apart from their more common brethren.

At this point in time there is few car buyers out there that think of Chrysler as a luxury brand beyond some that do like the one shining star in the Chrysler lineup and that is the 300. Now Fiat does not intend to completely abandoned the luxury market, instead it is bring back Alfa Romeo to the United States to sell the upscale cars. Analyst are questing whether the Alfa Romeo brand will be able to take a bite out of the luxury car market from other better known brands.

Next Fiat intends to make Dodge the performance brand which has been off and on for years. The new Challenger Hellcat is an example of the future of the division. The Dodge Caravan will be eliminated in favor of the Chrysler Town and Country. Once again there is little difference these days between the two vehicles as both are the work horses of the rental car fleets. As mentioned above the Dodge Viper is back and the Dodge lineup will see more performance oriented cars.

Some of the most aggressive plans Fiat has involves the Jeep nameplate that Chrysler acquired more than 20 years ago and has been one of the bright spots for Chrysler. While the Patriot and Compass vehicles have not won over car enthusiasts or buyers, the new Jeep Cherokee seems to be a winner giving the every day drive what they are looking for in a vehicle but still offering its core enthusiast a model that makes them happy in the Trailhawk edition. Fiat also intends to take Jeeps unique niche globally by expanding its reach in Europe and Asia. They also intend to build a new large sport utility vehicle and reintroducing the Grand Wagoner name to go head to head in the larger SUV market.

There is also smaller plans for the RAM division. The new ProMaster which is a full size front wheel drive cargo van has already arrived and plans are for a smaller cargo van called the ProMaster City to compete with the likes of the Ford Transit Connect. Beyond that their bread and butter pick up trucks that have taken a big bite out of General Motor's market share over the last few years will get updates and then new models over the next few years.

It will be interesting to see how Fiat's plans will work out. As I have mentioned numerous times it can be extremely dangerous to radically change your core market too quickly as both Nordstrom and Wal-Mart found out a few years ago. However, in this case the Chrysler brands with the exception of Jeep the brands have been so marginalized over the last 35 years the change in direction will most likely not hurt Fiat in the long run. With that being said, what Fiat needs to do now is produce cars that excite the marketplace and bring buyers into the showrooms and that is going to be a tough sell.

Just a note of disclosure: I worked for a division of Chrysler for 5 years and have previously been a shareholder of Ford.

Related articles

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• Chrysler to ax the Grand Caravan
• "Fiat Chrysler Automobiles" Lays Out Ambitious Plans
• Muscle cars? Jeeps? Chrysler readies big plans
• FCA plan: Chrysler to double its line-up by 2018
• Chrysler Group LLC Posting Sales Increases Despite Recalls
• 2015 Dodge Challenger SRT Hellcat: Top 10 Amazing Facts about America's Most Powerful Car
• Is Dodge's New Hellcat a Screaming Deal?
• SRT back to Dodge, Dart SRT, new Challenger, Charger and Caravan's death outlined in 5-yr plan

LinkedIN and your business

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Over at the smallbiztechnology blog they have great starter information for someone looking to build their business by getting involved in social networking and specifically LinkedIn.

LinkedIn is a social networking site that focuses on business relations and is good way for small business owners to get their name out and make contacts that could increase your business.

One thing to keep in mind when it comes to social networking is that there is paradox when it comes to them. If you are looking to help your business you need to study the network and find out the best places to sign up for and get involved.

However, too many people end up spending too much time on the social networking sights and it comes at a cost to both personal and business. Therefore you need to walk a fine line between using the networking sight enough to bring attention to your business but not too much time that you are actually wasting time.

One of the suggestions that the blog makes is to get involved in groups after thoroughly researching them. Groups are a good way to gain information but you must thoroughly research the groups so you are not wasting time on a group that is not going to benefit you. One possibility would be to join some groups and see what you get out of them.

There is a lot to be gained by getting involved in social networking. However, you must make sure the time being spent is paying off for you in the long run and not just wasting time.

Who Needs Venture Capital?

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The New York Times Small Business Edition has a great article about Elizabeth Charnock who is running a start up company in the Silicon Valley area but is doing it without venture capital.

Bootstrapping a Start-Up in Silicon Valley

There is some great lessons to be learned from this article.

Don't Battle over Price

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Thanks to the influx of discount store, it seems like everyone has reduced themselves to trying win customers over price. How many times do you see that someone has the lowest prices, guarantees the lowest price or will match any price.

The Small Business Branding Blog points out that if you try to fight on price, then you reduce yourself to a commodity and as a small business you will loose against the big boys.

Lowest Price Guaranteed – All The Way To The Bottom

As the blog points out, instead of battling on price find ways to create value with your customers. Now there is always going to people who only look at price (but these are the same people who complain about a lack of service and the poor quality of products they buy). As a small business owner you want to concentrate on the customers that can see value in doing business with you.

As a small business owner the biggest advantage you have is to provide better service and better services than someone could receive in a big box store. What kind of services you can provide your customers will depend on what type of business you are in.

One way to find out what your customers would like to see is to ask them. They will be glad to tell you what additional services would make you stand apart. Also look at the business news and find out what the big retailers are dropping such as Layaway programs.

Once again it comes down to finding your niche and making sure you are setting yourself apart from the competitors, not on price but on service and services.

Looking for a web designer?

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Are you looking for a web designer? Then the Small Business Branding blog has some questions that you will ask any web designer that you are looking to design your site.

10 Critical Questions To Ask A Web Designer

While the task of designing a website may be daunting for those that have not experience in it, you need to remember the KISS principle when it comes to web design: Keep It Simple Silly. Some web designers what to put all the coolest stuff onto your website but all it does is drive away traffic.

While your website is under design, make sure to get feedback from your customers on what they think of the proposed design. If a sampling of your customers is negative, you need to go back to your web designer and find out ways to make it better for your customers.

You do not have to become an expert in web design, but become familiar with what constitutes a good website so that you can ask good questions and insure that your designers do not go overboard with what they design.

Changing Public Perception

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If you are going to be successful in the long run in your business you are going to need to change public perception.

Now what public perception am I talking about?

The perception that the small business is inferior to large businesses. People have the misperception that small businesses have high priced, are run down and are an indication that the place you are located is going down hill.

Now in some cases this perception has been earned. There is plenty of examples of small businesses that have let their place run down and not took care of things. But then again I know of a major grocery store chain that sold several of their stores recently most of which are less than 5 years old and the new owners that are local are spending thousands of dollars in repairs for non-existent maintenance.

It is ironic that many people complain every day about the lack of service and poor quality at some of the major chains but continue to purchase the same products for those stores because they are "cheaper".

So how do you change this perception?

First of all this is not a perception that is going to change overnight. It has taken years for the perception to become ingrained in peoples minds so don't expect it to change tomorrow.

Second you need the power of word of mouth. If people experience that your business is clean, has friendly employees, and is taken care your customers will tell their friends about you.

Third, if your area has a locally owned business organization such as Local First Utah that is a group of small businesses working together to promote locally owned business you need to join. If your area does not have this type of organization think about creating one.

Not only will the organization is a way to market your business, but it is also an excellent opportunity to network with other small business owners to learn from their successes and mistakes.

You need to change the perception about small businesses.

Can you Change your Niche?

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You have your niche in the marketplace, but you decide that you want to head a different direction in order to capture a different part of the market. However, if a major corporation such as Wal-Mart and Nordstrom’s failed at changing their niche, is it possible for the small business owner to change their niche? Yes, it is possible but you have to do it very carefully.

First of all let’s take a look at what happened to Wal-Mart and Nordstrom’s.

As anyone who has been alive for the last 20 years knows, Wal-Mart’s niche has been the lowest common denominator, the lowest price shopper. Not the smartest shopper who wants value for the dollar but the customer who only looks at the price and not what is in the package.

The problem with having this niche is that there is not a lot of margin in this market. Realizing that they are quickly hitting market saturation in the United States, they knew that they would have to make more money off of their products in order to continue improving income.

Seeing the success that Target was having, they decided to move that direction. However, in the stores that they tried to upscale, they lost their core market and sales begin to flounder and the experiment was stopped. Wal-Mart is now moving more upscale but doing it much more slowly and not trying to alienate its existing market.

Nordstrom’s has always been known as the customer service retailer. You did not go into Nordstrom’s for low prices or the hippest fashions; you went in there if you wanted good service. Seeing that their core market was aging that they were not brining the younger market Nordstrom’s decided to change their focus by bring in the hip and trendy. Once again it failed as Nordstrom’s core market was alienated and sales went down not up.

The lesson to be learned is that you can change your niche but you cannot alienate your existing market. You can slowly bring in or start building new items, but you also want to keep your existing customers happy with the products they have been buying all along.

Take time if you want to move your niche and don’t alienate the people who have kept you in business.

How clean are your facilities?

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How well are your are your facilities maintained?

One of the several things that I hear mentioned when it comes to small business is the perception that their facilities and stores are dirtier, older, and not as well maintained as other stores. While you can question the validity of the argument, it is still important that you maintain your facilities to the highest level possible.

It goes without saying that you want to clean your store every day. In addition you want to have a regular schedule of more extensive cleaning of shelves, counters, and anything else that a customer comes in contact with.

Another way to keep your facilities looking fresh and clean is to do regular painting. I know that you are busy people but it will pay off with your store or other facility looking more presentable to the public. The cost of the paint is small compared to how well your store will look with some regular coats of paint.

Also when it comes to paint, stay away from colors that look old or dirty very easily. White is a prefect example of a color that just does not hold up. You will want to insure the colors wit with your clientele. If they tend to be more conservative, stick to colors that are more conservative. If your niche is a younger crowd, then more radical colors would work.

A little effort goes a long way to making your store more presentable. Remember first impressions are everything so make sure your store is providing the right one to your customers.

Wages...

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Right now it is not a good time to be an employee for many companies. Many companies out there are cutting wages and other benefits right now using the economic times as a way to cut costs on the backs of their employees.

Many companies have freezed wages, lower starting salaries, and cutting any benefits they can. One of the major retail chain went through and fired all their store employees then required them to reapply for them at lower wages and fewer to no benefits.

Compare that to what a grocery store I shop at has done. They went through and gave EVERY single employee in their store a $2.00 an hour wage to help them out during these tough economic times. Many people seeing that will probably think that this was some PR thing that they did. However, the company has not publicized it because they did it to help out their employees.

If you were an employee, which company would you want to be working for?

Your employees are the biggest assets your company has, yet so many companies just look at employees as a wage cost and don't see the value they bring to the business. Is it any wonder that there is so little employee loyalty?

I am not saying that all employees are perfect and you will have some bad employees, but if you treat your employees with respect and treat them like the assets they are, you will have a better group of employees.

If you want the best employees, you need to treat them like they are.

Social Newtorking can be your friend...

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While many think of social networking sights as a place for friends and meeting people, there is also many opportunities to build your business and take care of problems before they arise. I will go over ideas that you should be looking at to build your business and reflect back on the situation in my previous post on how it could have been taken car of as a win-win situation.

1. You need to have a blog. I know, you are a busy person and don't have time for worthless prattle in a blog. Instead you need to look at a blog as a way to personalize your business. In your blog you can discuss new items in your store, let people know about special offers, explain how to use some items, let people know about recalls, and other information that lets them know more about your business.

2. You can also Twitter. Many people still think of Twitter as something for useless talk, but it is another opportunity to network with others and let people know what is happening with your business. You can include links to postings on your blog or to the websites of companies you do business. One thing to avoid is too many posts directing people to your website and nothing else. If that's all you post and you do it too frequently (there is people out there doing 20/30 posts and hour with this kind of stuff), then you will loose followers and your message will not get out.

3. Get yourself on Facebook and MySpace. I deal with Facebook more than I do with MySpace but make sure you have a presence on them. You can also set up your facebook account so that your twitter messages will show up on your facebook page. Not only should you have a personal page on Facebook, you should also have one for your business so which will allow people to become fans of your business and to get more information about it.

Now lets go back to the situation mentioned in my last posting. The customer who was upset with the business told all his friends on Twitter and Facebook excactly what happened. Even though the business was also on Twitter and a follower of that person, they did not respond in any way shape or form. The customer is a member of a close nit group who is the main niche of this store. While some people may continue doing business with this store do you think that some of the people that followed the customer will stop doing business with said store? Of course they will and the silence made the situation worse.

So what should the store have done? They could have made a blog post and posted links to their other social networking sights telling their side of the story and what they tried to do for the customer. Once you make your statement you do not want to say anything else. The other person will most likely want to get in a shouting match with you but no one will win in that situation. It is easy to get emotional in these situations since the person is putting down in your business but the best thing to do is sit back, let others see your side and make their decision from there.

Use social networking sights to your advantage. It is an opportunity for your customers to know you better, find new customers, give your customers more information about your business to your customers, and deal with your customer service issues.

Returns, Returns, Returns...

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On several occasions I have mentioned how important it is to have a good return policy. Too many small retailers fear the thought of returns and institute somewhat draconian measures to deal with that fear. While this may result in fewer returns it also results in fewer sales because the competitors have better return policies.

Many times a small retailer will only offer in store credit on returns and some even add a restocking fee on some transactions. This type of policy will only send customers to competitors because the big box stores and many on line retailers will give refunds on purchases.

Now lets take a look at an extreme example. Say a customer purchases $150,000 in product, and the needs to return $20,000 of that product. While this kind of return would seem to be devastating in its amount, it is close to the 10% mark that I suggest you keep out of your sales to compensate for possible returns.

While the return amount may be hard on you to deal with, your customer invested a great deal of money with you and it is important that you take care of them. If you are hard nosed about the return, how do you think that person will react and tell their friends? On the other had if you take care of the customer how will the customer react and what will be the information conveyed to the friends?

Remember, word of mouth advertising is one of your most important marketing tools at your disposal. Word of mouth can make or break a small business so it is important to keep it positive. While it is impossible to please everyone, making your return policies reasonable will go a long way to keep your customers coming back to you instead of going somewhere else.

Is your niche too small?

In the past I have discussed the importance of having a niche. A niche is the segment of the market that your business focuses on and sets your business apart from the competition. While it is important to have a niche market that separates you from competitors, you also need to avoid the problem of having too small of a niche.

Recently I saw a note from someone I knew that is having problems with cash flow now because their niche in the market is too small to pay the bills. Now they are expanding into other areas in order to put food on the table.

It is very important when you are doing your marketing plan that you conservatively estimate the size of your market. If you estimate too low and your market is much bigger, so much the better. However, if you estimate too high and there isn't enough market to support your niche, you will not be in business for very long.

In other words, do not look through rose colored glasses when you are doing your marketing plan. Be realistic about the potential of your marketing and be conservative. This also points out how important it is to have that business plan and to keep it updated on a regular basis.

Remember you have plenty of resources to figure out what the market is for your niche so be sure to make the most of them.

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Adding On...

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Are you adding on to the services you are providing?

If you are a fan of Jeff Foxworthy you probably think of his number about McDonalds and their attempt to add the Hot Apple pies to people coming through the drive thru. Adding on to products and services can also have a negative cogitation because of the way some companies push extended warranties.

So why would companies push an add on even though it might be considered pushy by the customer?

Let’s take an electronics store for example. It may surprise some people that there is little to no mark up in electronics. A store selling a business laser printer may make anywhere from 2 to 10% of the sale of that machine. It is a big sale but it is not making a lot of money. Now if an extended warranty is added to the transaction that could be anywhere from 50% mark up or more, you can see why some companies can get really pushy about getting those warranties.

However, you as a small business owner is trying to build customer loyalty, so pushing products that the customer may not think is necessary will only alienate them and cause them to shop elsewhere.

So how do you get additional items added to the sale without upsetting the customer?

First of all, you need to use proper salesmanship. I have gone over sales presentations in the past and will refresh that information in the near future. You need to ask your customers questions and listen to their answers and they will tell you what they need.

Let’s use the example of selling a printer. Most printers do not come with USB cables because the manufacturer doesn’t make any more money building the printer than the electronics store makes selling it (the manufacturers make their money selling the ink).

One of the questions you can ask your customer is if they already have a USB cable and is it long enough. Another example is that they may tell you during the conversation that they will be printing brochures so a natural add on would be to ask them if they will need any brochure paper.

So how does this build customer loyalty? You are finding out exactly what the customer needs to insure that they do not have to turn around and come back to your store or more likely go to another store to get needed supplies. I cannot tell you how many times people came into my store and said they bought a printer and the salesperson never mentioned that they would need a USB cable so the had to come to our store to purchase one. Do you think they were happy with the salesperson at the other store?

There is other ways to get additional sales.

Service businesses can also benefit from this and since I have several friends who are professional photographers, I will use them as an example.

During my wedding, our wedding photographer mentioned to several families that he also takes family portraits. He ended up doing some shots of families at the wedding in addition to the pictures of us. Since he was already at the wedding, this extra business only cost him a couple of rolls of film.

If the photographer did one wedding per week, think about how much additional revenue he could make by just getting one family per wedding to do a portrait session.

Getting an add on to a sale not only can help your revenue but it can also help you build customer loyalty by ensuring your customer leaves your store with everything they are going to need in order for the product to solve the customers problems.

Also, be on the look out for additional ways to increase your revenue stream to make your business more profitable and successful.

Building Customer Loyalty

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How loyal are your customers to you?

The answer to the question could be what stands between success and failure of your small business. Today you see many major retailers trying to build customer loyalty through their so called rewards cards. It is the latest attempt to keep customers coming to their stores as opposed to their competitors.

But what can you do to create customer loyalty?

The Freelance Folder blog has several ideas to build your customer loyalty.

The first idea they mention is to add a human touch to your service. When is the last time your tried to call a company on a 800-number and have been totally frustrated with the results? Make sure that your customers are able to reach someone that can answer their questions.

While I have said it is OK to outsource some projects, you should never outsource anything that will affect the service that your customer receives. These days too many companies are outsourcing their customer service functions which in the long run will only harm the experience the customer has when they call.

An outsourcer can provide the same level of customer service that you can because it is your business and to them it is just another account.

Another important way to build customer loyalty is to take care of the customer no matter what. To often small businesses have return policies that are too restrictive and cause them to loose customers in the long run. While a return always hurt, a customer that is able to return a product without problems is more likely to come back and buy more than a customer that cannot return a product.

The best way to deal with returns is to set aside a certain percentage of your sales to compensate for returns. This way you are not being caught by surprise with a really big return that you are not expecting.

Building customer loyalty should be one of your biggest priorities. It will mean the difference in the long term future of your company.

Finding the right Web Hosting Service...

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The Start Up Spark has some great tips for small businesses on finding the right webhosting service for a website.

As the blog mentions, be sure you do plenty of homework before you decide who is going to do your hosting. For any small business price is going to be an important factor but you need to look beyond that.

Check to see what other small businesses are being hosted by the site and see what their experiences have been.

Also do an internet search of the companies name and you will most like find posting boards that talk about the service. While people on these boards tend toward the negative side, it will also alert you to issues that the company may have and that need to be avoided.

Also do not make your decision on what “free” items you get with your webhosting. I have seen webhosting services have all kinds of offer including free software but the free software is worth about what you pay for it. Do not use any of these free items to decide from one service over another.

Remember, your website is the first thing many of your potential customers are going to see. Make sure that you find the right web hosting partner for you and your business.

Overcoming Cheap Imports

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The Babe of Business has a good article on how you overcome cheap imports by showing value and quality.

This is another area were your network can come in handy. While your big time competitors have big money to advertise their cheap products, you can use your network to get the word out about your products and the value and quality they have.

For example if someone in your group hears that a customer is planning to head to store “A” to buy a product, they can inform them that your store has a better quality product on sale that will last longer and you can do the same for them.

What you must remember is that you are not selling to the majority who think they are saving some money by buying something for a couple of dollars less but are getting far worse quality. You are marketing toward those who can see the value for the dollar, that they will be getting a better product for there money.

This is why it is so important to stake out your niche and take advantage of it.

Networking and Marketing Partners

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In my last entry I mentioned how important it is to get the word out about your business and the importance it plays in the economy.

However, you also need to build a network that will not only help you and your business but also be beneficial to other small business owners. Look for small business owners that own complimentary businesses of yours so that you can work together to promote each other’s business.

As a small business owner you do not have the money to go out and plaster the television with ads like your big time competitors. Therefore you need to look at less expensive ways to promote your business and creating a network is the best, least expensive way to do it.

One of the ways to build your network is to check with your locally owned business association for complimentary businesses. If you do not have that type of organization in your area check with the chamber of commerce, SCORE plus friends and family that may have suggestions for you.

You should be able to find many businesses that compliment yours. For example if you run an appliance store, you could work with repair people, stores that sell furniture but not appliances, home decorators and so on. You can refer clients to them with them referring clients to you.

Make sure that you feel comfortable with the people you network with. If you do not feel they will provide excellent customer service, consider finding someone else because you are putting your reputation on the line with a referral and joint marketing. Also make sure that the referring and the marketing are a two way street. If you find that you refer many clients over to your network but you never see any referrals from them then look into it. Sometimes it could be that you just have more people to refer than they do but you also don’t want someone to take advantage of you either.

Networking is an important marketing strategy for small businesses. Be sure to network with complimentary businesses that will fit your niche and your comfort level.

Small Businesses will be the leaders

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Small Businesses Will Lead Us to a Better Future

It is amazing that 63% of people feel that Entrepreneurs and Small Businesses will lead us to a better future.

If you look at most of the troubles that we are currently facing you will find that either government or big business or more likely both created the problems that we are facing.

Considering that small business owners have been largely ignored not only by the government but also by the general population, it is nice to see they are starting to see the importance that small businesses play in the success of the economy.

Now you need to get the message out on how important small businesses are to the economy. While sometimes a chamber of commerce is helpful in getting this information out, many of them have very large corporations as their members so are not willing to alienate those large companies by putting the focus on smaller businesses.

What some areas are now doing is creating locally owned business associations that are designed solely to promote locally owned business and to get information the public about their importance. In Utah their are two organizations designed for this purpose. First is the Vest Pocket and the second is Buy Local First.

Buy Local First comes out with a directory of locally owned businesses plus also promotes their importance to the local community.

Small businesses are very important to the economy and now is the time to let people know. If you do not have an organization designed to promote your small business get together with other small business owners to get the message out.

Learn lessons from the failures...

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Previously I have discussed how important it is for you to know thy enemy and to keep appraised what they are doing right and wrong in order for you to be more competitive. However, it is also important for you to learn from those that fail since as the old saying goes "Those who do not learn from history are condemned to repeat it".

In the retail sector there has been many failures over the last year including such names as Steve & Berry's, Circuit City, Mervyn's and others.

Today I am going to give a couple of examples of things you can learn of what went wrong at Circuit City and how to use those as lessons in your own business. By studying your own competition including those who don't make it, you will learn valuable lessons to improve your business and insure the same thing doesn't happen to you.

Among the issues that Circuit City faces was the lack of a niche, customer service, and the layout of their newer format stores.

While I may start sounding like a broken record, it is critically important that you have your own niche away from the major competitors. In the case of Circuit City, it could not separate itself from its major competitor Best Buy. The only major difference between the two stores was that Circuit City eliminated appliances several years ago which seem to contribute to their problems, not help them. Otherwise, they seem to try to emulate Best Buy not set themselves apart from Best Buy.

Following up on their attempt to emulate Best Buy, Circuit City eliminated their commissioned sales staff a few years ago and put them all on hourly. At the time Circuit City said it got rid of the top of sales ladder because they would have wanted too much money and in my experience it was clear that they kept the mediocre people and that led to poor customer service.

Let me give you one of my personal examples. I wanted to buy and item and the only store to have it in my state was Circuit City (otherwise I would have gone to a local competitor). I walked into the store and immediately found it in a looked up case. There was two employees standing just a few feet away but neither one of them would come over to help me. Finally I went over to the customer service counter to ask for a manager in order to get some help.

Instead of coming up to the counter and helping the customer personally which should have been done, the manager calls on the phone, tells the customer service person to find someone to help me because he had better things to do. Finally someone did respond to the calls by the customer service counter and I got the item I needed.

Clearly Circuit City failed from management down to take care of the customer. While in many cases this could have been an isolated incident, I heard many similar stories from other people which showed that Circuit City was failing in this area.

Finally, Circuit City also had problems when it came to their new format stores. The last new Circuit City store to open near me was in their newest format and I took a drive over to check it out one day. While the store was nice and new, the whole layout of the store was confusing. There was one department that was spread over three different areas of the store. How confusing would this be to the average customer? Stores need to be logically set up so that people can come in to them and find what they need easily.

That is just three examples of what where major problems at Circuit City. These are valuable lessons to learn so that you do not suffer the same problems as they did.

Learn from your successful competitors and learn from the failures so that you do not make the same mistakes they did.

Know Thy Enemy...

Image via Wikipedia

How well do you know your competition?

If your like many small business owners, the answer to that question is probably not well. Many times small business owners are so caught up doing their thing every day, that they forget to keep an eye out on what their competitors are doing.

In previous entries I mentioned how important it is to keep ahead of the competition, especially the big boys, but how can you do that if you are not keeping an eye out for what they are up to. Now I am not talking anything secret agent style here but hey if that is your style, have fun. The main thing you want to do is to find out what their stores look like, how well their employees are trained, how they price, and figure out how you can out smart them.

I would recommend you go out and visit each of your major competitors at least once a month. However, you should also not forget about the smaller competitors and visit them every few months to keep up on what is happening out in the world.

Often times the big players will send out people to shop the competition but they often will not visit locally owned stores because they don't consider them to be important. This can be a major advantage to you since you will know more about them than they know about you.

The more you know about your competition, the better prepared you are to be competitive and ahead of the them.