When Kmart Blue Light Special Is Special

The penalty that companies pay when they ignore the power and strategic brand value is usually fatal, especially against more experienced competitors.

Kmart Attention Shoppers! The discounter bankruptcy terminates its presence from 40 to Houston, closing all 17 stores in the region and eliminating hundreds of jobs that the chain of warehouses throughout the country underperforming stores. It is a classic example of a company in difficulty to understand the critical need for competitive positioning in a highly competitive economic environment.

Kmart had the pole position.

Kmart initially resonate with the market. It was unique in its own new retail category. It was a positive first step in a two-step process for locating a tag. But they ignored the crucial step: They do not identify themselves on the market with the category they created. the rudimentary management becomes distracted when they see their 100% market share drop to 90% and 80%, etc., emerge as competitors, but competitors are required to stimulate sales growth in the new category. special blue light issues for today: How can a company sell goods for less than their competitors go bankrupt for lack of sales? No flush buyers lower prices and maintain a surface now? Not if your brand runs.

Increased competition category.

It is instructive to compare Kmart with Target and Walmart. the ultimate failure of Kmart on the market was practically guaranteed to Target and Walmart to identify successfully the concept of retail low cost Kmart. Maybe Kmart hopes its lowest price to be sufficient. the retail sales success is the result of three interrelated factors: product. Price. Place.

Prices are expected to attract buyers. Products must be desirable. And store locations must be practical. Kmart successful in many cases in the three sectors.

The Houston Chronicle (January 15, 2003), as reported customer Kmart Francheville Bob bought a bath set in the Kmart store Westheimer $ 9.95. Kmart price was a fraction of a competitor's location and the store is first. But Home Depot was receiving 6 times the price for the same product.

Lower prices is not enough.

The answer is that both Target and Walmart have built stronger than Kmart brands. Or have lower prices than Kmart. Yet even with lower prices, Kmart is the preferred retailer among shoppers.

Most companies believe they can gain a competitive advantage by offering products at a lower price and Kmart is one in the history of the real life of the astonishing case of erroneously that the strategy can be.

In this eleventh hour, the prayer of Kmart management is to improve cash flow, and not by increased sales but by reducing costs. If this were a chess game, Kmart is to hear the word "Checkmate!" its competitors. When a company is competing without a favorite brand, the only movement left is to cut costs, the shopping and give customers and markets. The category is now changed forever.

Although bankruptcy Kmart, Target and Walmart will still be there, stronger than ever. Their positions in the executive category are firmly established in the minds of the buying public. The solution to the problem of Kmart tomorrow is to close more stores and to make customers and competitive turf will not be long before Kmart Blue Light is off. Kmart abdicated the throne, they built. Competitors could not have passed the leader of Kmart position if Kmart had not responded.

Kmart needs not only to reduce the size, but also to focus on creating a new category. The list of closed stores suggests that Kmart has identified "the locals" as the customer base. If research reveals that there is a valid niche in the Latin American market and no favorite brand exists in this market and Kmart have enough money and time and skills management, the strategy of building a Hispanic brand Kmart could work. Kmart, as a brand, having once created a new category in the industry, had the field in its infancy. Kmart sword is now about to be delivered to its competitors.

Kmart is more special. Last to leave the building, turn off blue light.