Augustín strongly believed in his strategy shift in pricing model, but failed to observe his customers, and instead imposed a rigid idea of his expectations onto his customers. Critically, he isn’t understanding the point of view of his customers, who are wondering what his brand can offer. His original customer base is strongly attracted by low prices, especially what they perceive as “good deals.” This is important, because they can’t afford to lose their core market while reaching out to markets, and some idea validation would have shown that finding a strategy that appeals to both this core market and others would have helped him prevent the 211 million euro loss in revenue.
If I was consulted to advise Augustín at this moment, I’d recommend scaling back his “Hablar Claro” strategy. Some aspects of his strategy are quite commendable, such as putting in large scale changes to appeal to a younger generation, and he has good reason for doing so. However, while implementing so many vast changes, he’s alienating his core market, and creating a fun space but ultimately failing to drive up revenue. This is because the new market of younger people he’s targeting prefer to do their shopping online, and instead aren’t focused on Emilia in terms of retail. This becomes a net loss. Instead, I would advise Augustín to shift his approach away from Hablar Claro, back to promoting sales, but however implementing some smaller scale changes such as newer styles of clothing to gradually attract a younger audience. Some of the original tactics used such as printing circulars and coupons could be easily digitalized at a low cost and remarketed towards a younger audience, the main focus of the new marketing strategy, while refraining from making a large scale change that affects the core market base of more fiscally restrained shoppers. This would allow for the retainment of the customer base while gradually reaching out to others.
