Marketing Basics: How Blind Can you Be?

What do you do when others can sell everything you have in your store for less?

Radio Shack can trace its origin back to 1921 when two brothers opened the first store in Boston selling ship radio equipment and ham radios. The company name came from the small compartment aboard ships in those days called the “radio shack”.

Over the years the company expanded offering a variety of early computers, calculators, and emerging electronic gadgetry. In 1977 Radio Shack introduced the first mass-marketed fully assembled personal computer – the TRS-80, with a level 2 Basic operating system was created by Bill Gates.

Throughout the 80”s and even into the early 2,000’s Radio Shack expanded and became the quasi iStore of the times, the place where consumers went for the latest “hot” electronics. However, during the 2,000’s the dynamics of the market for electronics changed dramatically along with the evolution of the internet. The result was that by the end of 2013 there were 4,300 company owned stores with more than 23,000 associates on the slippery slope to irrelevance, and no one in management seemed to realize it?

Apparently oblivious to management, the Radio Shack model had become obsolete. Even the name was outdated. The icing on the cake was the Radio Shack commercial during the 2014 Super Bowl that was reminiscent of the ‘80’s pop culture. This ad acknowledged how out of touch Radio Shack was with today’s young tech savvy consumers armed with smart phones that can find the best deals on anything.

Whose idea was it to spend all that money pitching a brand to consumers whose parents and grandparents even stopped going to the remaining Radio Shacks? Their children could not even perceive what a radio shack was. If you’ve been to a mall recently where there still is a lone Radio Shack store, consumers are passing it by with a quizzical look on their faces wondering “what’s that”?

This lack of traffic to their retail locations is the final stage of the brands decline to obsolescence. All the obvious signs are evident: sales declined another 14% in their current quarter, the stock has dropped 47% this year, its cash position and borrowing limits will run out in less than a year, 1,100 stores have been closed already, and overall the company has posted a $737 million loss. Share value has now fallen below $1.00 down from a high of $79.50 in December 1999 – the hay day of the brand.

Lessons

• Don’t bring in a “silver bullet” CEO from another industry to try to rebrand an already dead brand. The current CEO, Joseph Magnacca, was brought in from Walgreen’s?

• What is your competitive advantage? Who is going to spend $25 for an electronic component that can be bought for $14 online?

• Study market history. Retailers do not die quickly e.g. Sears/Kmart, Best Buy, Rite Aid. They suffer from amnesia and experience years of losses, declining share prices, alienation of customers, and a series of silver bullet CEOs collecting generous compensation packages while they preside over the demise of the brand helpless to do anything about it.

• Why work for a company with a declining brand? The employees suffer the most by losing their jobs e.g. 19,000 employees were terminated during the disastrous 15 month reign of Ron Johnson, the silver bullet CEO brought in from Apple to rebrand JC Penney.

• Where is the Board of Directors in all of this? They are supposed to protect the rights of the owners of the company, the shareholders, and oversee the management of the company. In the case of the decline of any company the Board is typically asleep at the wheel.

Author:.

Robert M. Donnelly is the author of: Guidebook to Planning - A Common Sense Approach, an educator: Professor of Entrepreneurship & Innovation at Saint Peter's University, and a brand builder and marketing expert. His new book: Personal Brand Planning for life is a guide for anyone w...

Go Deeper | Website

Have a question for Robert?

* Required information
Name:
Email Address:
(never displayed)

Your question or comment:
Human? What is the next number: 10, 12, 14, ..?
 
Enter answer:
 
Tell me when Robert responds to me.
 
Remember my form inputs on this computer.
 
 
New Graphic
Subscriber Counter