Augustín was very adamant that his new strategy, “hablo claro,” would revolutionize the current landscape of Emilia. He was convinced that, due to Emilia’s current state as a run-down retailer, all of its strategies needed a complete revamp. He felt that Emilia was too skewed towards mothers and older women, and had “a distinctly matronly air over the decades; it was where frugal middle-aged women shopped for sensible clothing for themselves, their husbands, and their school-age children.” Furthermore, Emilia’s customers “had become conditioned to buying only when prices had been slashed.” Augustín wanted to change both of these aspects: instead of targeting middle-aged women, Augustín wanted to target the youth, who weren’t yet tainted by “the money games that have been plaguing retail for too long.” Along the lines of avoiding money games, he wanted to use “hablo claro,” or “straight talk,” and give customers the prices upfront without having to play games of cutting prices or advertising deals.
While his strategy makes sense, Augustín missed a crucial part before implementing his pricing model shift–he forgot to do needfinding. Specifically, did customers really want hablo claro? Did the youth really want to shop at Emilia’s? Was there a risk of losing their current customer base of middle-aged women? By taking the time to think about what the customer really wants, Augustín could have avoided losing 211 million Euros in revenue from the straight talk campaign, instead of finding out from the results that the campaign wasn’t working.
If I were recently consulted to advise Augustín, I would recommend for him to abandon the hablo claro model ASAP–it’s clearly not working, and trying to stick to it without doing any research beforehand is reckless. Augustín should first take Nico’s advice on going first to the policy of “best price weekends”–by doing so, at least we can retain our current customers. As we are reverting back to original policies, Augustín should then take the time (without needing to put out any fires) to do proper needfinding in order to determine customer’s pain points and discover what they really want. Only then can he suggest the right strategy shift for Emilia.
