Are your competitors offering newer and wider ranging services than you, have things gone a bit stale and your business needs freshening up? Or you are sitting comfortably in your own niche and can’t grow any further without expanding your business model? If so then the next step is a tricky one…
In a world where every company is striving to be the best there are always going to be notable casualties, companies that lost their way or couldn’t keep up with a more progressive rival. HMV are a good example of a company that were very strong and got complacent in the face of progressive online rivals. Play.com, Amazon and the like have blown HMV out of the water by eating a huge chunk out of HMV’s business. What was HMV’s response? Take a long time to ponder the situation and then make a less than perfect attempt to broaden their online appeal against their more established digital peers. A case of too little, too late.
Unfortunately, HMV now face closing down 60 of their retail outlets to cope with the collapse in profits, please no blaming the snow on that one. A whole host of slow acting companies face the same pain in the new year. A new years resolution to get their act together simply won’t cut it, businesses have to read the market place and be proactive…and early.
The flip side of the equation are those companies that practically own their sector already. Time to put their feet up, hey? No. Of course, that’s not how business works. We all want to keep striving to make more and more profit and expand our businesses as much as possible. But there is a problem. How many businesses have been in a strong position, only to try that bit too hard. How many companies out there have been so clouded by potential profit margins that they forgot the product or service that made them a success in the first place.
Let’s take a cautionary look at Starbucks. Yesterday the coffee giants announced that they were changing their 18 year old logo. Nothing too shocking about that. The theme though for this make over was to mark Starbucks attempt at being ‘more than coffee’. Now it gets interesting. This is the company that has set up its own record label and is now planning to sell alcohol and ice cream to go alongside its mocha and Colombian ready brew. Are the go to brand for high street coffee spreading themselves too thinly here? I think they may be.
The end result for a company that loses their niche and direction by going after a more progressive rival can be severe. Look at the fates that have befitted Bebo and MySpace. They tried to go after Facebook in a big way and both ended up with egg on their virtual faces. They both had a sustainable audience and they both lost that audience by trying to go after the wider crowd. Essentially they played into their rivals hands and gave them free business by pushing their loyal users away. This is what can happen when a business spreads themselves too thinly.
If you’re looking to take the next step with your business be careful, the stakes could be higher than you think…
7/01/11
