The Disappearing Mid-Market
Have you noticed the challenges that many large retailers are facing in the marketplace? Yet other retailers are performing ahead of the market. Why are some failing miserably, even leaving the market, while others are excelling? Because the best retailers have determined what their value is and have effectively communicated their value proposition to the market.
For example, right now top end retailers such as Nordstrom and bottom end mass merchants like Target are doing well. Those in the middle, such as Sears, are getting lost in the shuffle. Grocery shopping looks the same: high end Treasure Island and Whole Foods are growing, with low-end Super KMart and Aldi holding their own. Both ends are stealing from the mid market.
The examples come up in catalog shopping, financial services and probably your own business-to-business market as well. Customers are either willing to pay for added value, ease of service and convenience; or they want the services stripped away to reveal the very lowest price. And the same buyer may buy food from the Peapod delivery service and do some shopping at Sam’s Club.
The Great Depression influenced an entire generation’s buying habits; and today’s buyers are also cautious with their spending. Although we had experienced an unprecedented economic boom, the current economy is reeling with uncertainty. The buyer vacillates from feeling unsure about tomorrow to recognizing the true value in value-added.
The buyer today is more fickle, less loyal than ever before. With a continuous influx of products into the marketplace and increasing options of where to actually buy the products, consumers are letting go of die-hard shopping habit patterns.
What do customers want? As always, customers want value. But each customer defines value differently. Two types of customers are emerging: the intrinsic value customer and the extrinsic value customer. The intrinsic value customer sees value only in the product itself. They want to obtain the product in the cheapest and easiest way.
The extrinsic value customer sees real value beyond the product and defines value in terms of what the product does. The extrinsic customer values advice, problem solving, customizing and the ability to meet special or unique needs.
The key is to determine your value proposition. Then rearrange your market strategy to communicate this value proposition through your delivery process. Offer alternate distribution channels that will capture these different value needs of your various customers. Or settle for the mid-market, be everything to everyone; and disappear with Wieboldts and Polk Brothers.
