MARKETING BLOG Issue 12
Learn why being a "little bit different" is a disastrous marketing strategy
The view from the shopping cart was pretty much the same at Longos (the established grocer) and Michael-Angelo's (the challenger), which helps explain why Longo customers had little interest in switching to Michael-Angelo's.
When people ask me about big marketing mistakes, I tell them the biggest – and most common mistake – is to adopt the “little bit different marketing strategy.” This all-to-common approach is based on the false assumption that a customer will happily pay a little extra to buy something that is a little different than what they have purchased for years. That’s wrong, wrong, wrong – and I can prove it by telling you about a real-life marketing battle that I watched played out over the last few years.
The participants were two successful grocery store chains, situated on opposite corners of Woodbine and Highway 7 in Unionville, Ontario. The first into the marketplace was Longos (where I have shopped since the late 90s), a slightly upscale grocer that for the better part of a decade competed successfully against many similar grocers. However, everything changed in the early 2000s, when an all-out attack by no-frill/no-selection/no-service competitors wiped out every upscale grocer in the area – except Longos (and a much smaller specialty shop, The Village Grocer.
At that point, Longos had two choices:
- Stay the course and view the retail carnage as a good thing because it wiped out all the direct competitors
- Try competing directly with the no-frill/no-service/no-selection competitors
The people behind Longos, who have always impressed me as savvy marketers, stayed the course and continued to focus on their strengths:
- A wide selection of prepared foods
- An equally impressive selection of fresh fruits and vegetables
- A strong and effective customer service focus, driven by managers who were always present to help a customer or address something that needed to be fixed in terms of the offerings on the shelves
Are they nuts?
Then something very strange happened. A direct competitor of Longos, Michael-Angelo’s, opened up across the street. My first thought was: are they nuts? Even the smallest marketing study would have revealed that there was only room for one upscale grocer in that general area, never mind that corner.
But to be fair, I needed to see the Michael-Angelo’s store before making a final decision. So I decided to make a head-to-head comparison by visiting both stores at about the same time on the same day. Here is what I found:
- Fresh fruit and vegetables: no discernable difference
- Meat department – no discernable difference
- Grocery – slightly wider selection at Michael-Angelo’s with a few more gourmet items
- Prepared foods – a little more upscale
- Prices – generally a little higher
- Service – about the same as you find in the Bay or Sears, which is the same as saying there was no service
I finished my evaluation by going to the check out area, where I was astonished to discover that Michael-Angelo’s had twice as many cashier terminals as Longos. Twice! These folks were clearly expecting to do some big business.
But during my visit only half of the checkouts were open and every one was unoccupied. Let me repeat that. Every checkout was unoccupied when Longos, at the very same time, was busy.
I visited the Michael Angelo’s a few weeks later to see if my first experience was the exception or the rule. Once again, I found a near empty store – proof that Michael-Angelo’s “little bit different” strategy had failed. Here’s why:
- The market for an upscale grocer in that area had shrunk to the point where it could only support one outlet. This was obvious because all of Longo’s direct competitors had been wiped out.
- Michael-Angelo’s only option was to steal Longo’s customers and given the proximity of both stores it was reasonable to assume that some Longo customers would cross the street (just like me) and see what Michael-Angelo’s was all about. But given the size of the Michael-Angelo’s operation (double the cashiers), it could not aim for a slow and steady absorption of Longo customers. It had to get them all and it had to get them fast, a near impossible goal.
- With higher prices and gourmet foods, Michael-Angelo’s was aiming at more upscale shoppers, who represented a tiny fraction of the customers already being served by Longos or the specialty grocers. Even if they got them all (and they didn’t), there weren’t enough to sustain the Michael-Angelo’s operation.
- The shopping experience at Michael-Angelo’s was clearly inferior to the experience at Longo’s. That drawback and the other big negative – higher prices – guaranteed that most Longo customers would stay with the grocer that had earned their loyalty and offered better pricing and superior service.
Bottom line: Trying to build a business by being a little different than a well established competitor never works. It certainly did not work for the Michael-Angelo’s outlet at Woodbine and Highway 7, which suddenly, but not surprisingly, closed earlier this year.
I continue to shop at Longos and can’t help but be impressed by a store that has held on to its market share when everyone else in that category has failed.
|Wolfgang Franke is President & Creative Director of Words at Work Advertising & Marketing, a full service communications company established in 1988. Our growing list of valued clients are found throughout our local market, Markham and the Greater Toronto area, across Canada in cities such as London, Ontario, and Edmonton, Alberta, and an expanding list of international locations ranging from The Big Apple in New York to Kanturk, Ireland.|