Augustín made several assumptions about what would appeal to both new and old customers of Emila. He believed that customers wouldn’t mind the increase in prices, young people would prefer brick-and-mortar over online shopping, and customers would share their love for Emilia with their social media following. He failed to design any prototypes or conduct experiments that could have helped him validate these ideas. It’s important to test your ideas on a sample of your target market before you make such risky business decisions. By testing your assumptions beforehand, you can save a lot of stress, time, and money later down the line. Before losing 211 million euros in revenue, Augustín could have observed and conversed with a small group of constomers regarding his initial ideas. That way, he wouldn’t have been so out of touch with their needs and motivations. He would have discovered earlier that people value Emilia because of its discounts, and such affordable prices have allowed Emilia to garner several loyal customers. He also would have found that customers find the “hablar claro” strategy really condescending. The sooner he knew this information, the faster he could have found a strategy that maintains loyal customers, draws in younger markets, and helps Emilia gain more revenue.
If I were asked to advise Augustín, I would tell him not to abandon the discounts that make Emilia unique. Sure, some items should become more expensive so that Emilia can gain revenue. However, if the general public already associates Emilia with discounts, eliminating almost all the sales wouldn’t make people want to spend more. If Walmart suddenly became as expensive as Whole Foods without changing the quality of its products, for example, I’m sure people would stop shopping at Walmart. Just because a brand isn’t luxurious or attractive to big spenders doesn’t mean it lacks value. I would advocate for the changes recommended by Augustín’s coworkers, especially the promotion of cultural changes such as making Emilia a social hub for young people. I think these changes are a way to revolutionize Emilia without sacrificing the aspects that make Emilia attractive to consumers.
