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.

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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.

The Vendor Balancing Act

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While most people think that one of their more difficult relations is with customers, in the long run they may find that their most difficult relationships will their vendors. In a perfect world the vendors would treat you like you are truly THEIR customers but in reality many vendors act as though it is the other way around.

Of course some vendors are much better than others and it will take some experience to find out who the better vendors are.

Then there comes the balancing that you will have to perform. If you find that a vendor is taking advantage of you, what do you do? In most cases you would assume that you drop the vendor and find someone that will treat you better. The problem arises when that vendor is the only source of an important product.

Let’s use electronics as an example. Let’s say that you currently stock brand “A” electronics which is one of the more popular brands in the industry. However, “A” products does not allow you to return defective products to them causing you to eat the product. Now you will have to analyze if the amount of sales created by having product “A” in your stores is enough to justify you losing some money on returns.

If the amount of sales justifies you keeping that product then you will want to plan for a certain amount of returns that you will have to mark off. Of course you can probably find a technical school that would love the donations of the defective product in order to let students experiment with them and thus giving you some goodwill.

On the other hand if the amount of sales and the hassles created by them do not justify you taking the losses on their product then dump them and find another vendor. However, I would let the company know why you are going to drop them and see if they will do anything for you.

In addition, vendors used to have reps that would come and visit local stores, building displays and building relationships with the companies that sold their products. However, these days’ vendors have been cut so severely that they may only visit major stores once a month or have cut out some altogether so the chances of them coming to your independent store may be slim and none.

You will defiantly want to cultivate a relationship with any vendor that does take the time to come visit you. They are an excellent source of information and if they take the time to visit you then they are probably a vendor you will want to focus on.

Also, depending on the products you sell; look for smaller vendors that may not have the name but will have the ability to service you better.

Remember, you are the vendor’s customers so find vendors that treat you that way.

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.

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.

Six Lessons from Stephen King?

The Freelance Folder Blog has six lessons learned from Salem’s Lot and Stephen King about Freelancing. While it was written toward freelancers, it has information that applies to most any small business.

Lesson one is to trust the prickling on your neck. In other words if something doesn’t feel right, don’t do just for the business. Many times people just starting out or smaller operators want the business so bad that they are willing to deal in situations that may not be for the best. Remember it is better to turn down work that is going to end up being a bigger nightmare than it is worth than accepting the sale or project and having a living nightmare on your hands.

Lesson Two is if the locals say the house is haunted, don’t go ghost hunting. In other words listen to the warning of others. If someone says they have had problems with this person or this company or they have other warnings about dealings, make sure you take their warnings to heart. Once again if you don’t you could end up with a nightmare on your hands.

Lesson Three says do not hang around with people that suck the life out of you. In other words avoid people who are emotional and spiritual vampires. I have a sister in law like this; she will suck every emotion out of you. We feel drained after having to deal with her for just a short time. Find people that stimulate you and make you feel good, whether it be an employee, partner, spouse, or friends.

Lesson Four is if the problem is bigger than you get help. In other words find a mentor who can help you with your business. Find people that you can collaborate with and build your business.

Lesson Five is that there is three ways out of a situation gone bad: 1. Stay and Fight and Die a miserable death, 2. Stay Fight and Barely Survive, or 3. you can run and hope it doesn’t catch up with you. Well you probably won’t die from a business project gone bad (ok, I guess that depends on who the project was with), but you may wish you were dead. There are times you just need to cut loose, lick your wounds, and deal with the losses.

Finally Lesson Six is Keep the Faith. Have faith that in the long run you will be build your business and become the success that you see fit.