What You Can Learn From...
March 1, 2006
When the growth of the Internet in the late 1990s enabled investors to gather information and manage buy and sell transactions on their own, brokerages lost their place at the center of the stock transaction.
How they coped: To survive, some brokerages consolidated their day-to-day trading business into customer service centers, freeing up stock brokers to cultivate high-net worth clients seeking “high-touch” attention for all of their financial planning needs.
Lesson for you: As a real estate practitioner, you don’t need to limit yourself to helping households buy and sell their primary residence. Plant the idea that real estate should be integrated into the household financial planning process and not separated from stock and bond investments. Then position yourself as a trusted adviser on the real estate portion of a household’s portfolio.
When the airline industry was deregulated in the late 1970s, many established airlines used their newfound freedom not to reset their strategies to compete with discount upstarts like Southwest but to accomplish goals that made sense only during the regulated era, says Jonathan Byrnes, a senior lecturer at the Massachusetts Institute of Technology, who also writes for Harvard Business School publications. The result was the loss of Braniff and Pan Am, among others.
How they coped: Surviving airlines abandoned old strategies even at the expense of their short-term financial picture. Some dropped profitable long-distance routes — easy targets for low-cost carriers — in favor of the now ubiquitous hub-and-spoke system, something new carriers couldn’t replicate quickly.
Lesson for you: If your market shifts, throw out your strategy book. Example: If you’ve traditionally recruited new licensees and a new competitor entering your market starts attracting them first by offering salary plus commission, change your focus. Go for veteran associates, something that a company with no track record in the market would have trouble doing.
Ford, GM, and Subaru wrestled with weak sales after poorly matching some models to buyers. Ford launched Edsel to fill a middle-market niche for which, it discovered too late, little demand existed. GM couldn’t convince younger buyers that Oldsmobile was once again the cool car it was in its early days. And Subaru, trying to capture older drivers with a Honda Accord look-alike, damaged its hold on young drivers who liked its rugged four-wheel drives.
How they coped: Ford dropped Edsel, GM dropped Oldsmobile, and Subaru returned to its rugged four-wheel drives.
Lesson for you: Don’t overextend yourself into a market you may not be ready for. If you specialize in high-end homes, don’t suddenly enter the FHA REO market. If you do, consider creating an affiliate with its own branding so that you don’t confuse consumers. You can’t “turn around an entrenched image rooted in consumer experience,” says Mark Kassof, a marketing strategist in Ann Arbor, Mich.
When the federal do-not-call registry took effect in 2003, tens of millions of households signed on to put their phone number off limits to salespeople. Woe to telemarketers who slip up: Each mistaken call can lead to an $11,000 fine. State do-not-call laws come with their own fines, too.
How they coped: Telemarketers created their own do-not-call lists to add a protective layer between themselves and new federal no-call registrants. When telemarketers call households that have signed on too recently to be included in the last registry update, callers apologize and then explain that there can be a lag of several weeks between registration and when the updated registry is released. Then telemarketers add the household’s number to their internal list.
Lesson for you: Internal lists can help protect you from calling households not yet on the registry but who’ve asked, in previous calls from you, not to be called again. The federal government imposes a fine for calling these households a second time.
The popular high-sugar, high-caffeine soda’s brand image had offered a rural antithesis to whatever characterized the urban elite at the time — corporate conformism in the early 1960s and the hippie movement in the early 1970s. But by the 1990s with the emergence of the high-tech entrepreneur culture, marketers feared the rural imagery was dated, says Douglas Holt, a professor with Oxford University’s Said Business School.
How the company coped: Enter the slackers. Marketers maintained the drink’s outsider status by pegging it to urban slacker culture. The drink has become what Holt calls a “brandtopia,” an iconic product whose outsider authenticity gives it cultural authority.
Lesson for you: To stay in tune with changes in your market, update the essence of your brand, not the brand itself. Example: You launched your brokerage years ago as a brash upstart doing things differently. Now you find a host of new competitors touting their fresh approach. Don’t try to set yourself apart by breaking with your identity and saying you’re the established choice. Reinvent yourself as the company to whom innovation is old hat.