Strategic Location!? We live in cyber world era!

It just a few days ago when I wrote an article saying that business owners cannot rely solely on strategic location (See: Strategic Location & Customer Loyalty…). A few days have since passed and I have been getting a good feedback on it. It basically points out that now we can shop from home. Thank you to Mr. Internet. And no where can strategically beat shopping from you couch. Ouch!

This is a really good point and makes me thinking why should I be bothered on spending all those money for one particular spot in the CBD (Central Business District), which will cost me around three grand a week (rent)? Where, if you think about it, it is possible for me to open an online store with considerably lesser amount (per week).

I said on previous article: “if a business needs to relocate to un-strategic location, it will need to rely not only on customer loyalty and branding but also a new way to lure customers by understanding their dreams (expectation).” This is needed because customer will incur more “inconvenient” cost and in return we have to offer something more.

Now, instead of having all the troubles figuring out customer’s dreams, why don’t we go online? If I may borrow eBay terms: “List locally, sell globally.” And at the same time, our business is in everyone’s living rooms.

Right now, some of you may still wondering why businesses still queuing for a strategic physical locations, and more of you may be puzzled with the fact that those big retails companies are gripping hard on their network of stores.

Well, it all comes to people preferences. Some people like to touch, feel and try items before they buy it. Other group of people may like window shopping, but then end up buying things. And few people I know were actually saying that they rather go to the nearest shopping mall rather than paying $10 shipping and handling fees. They all have their own reasons.

Cyber market or physical market, each has its own target audiences. A statistic has found out that the main reason people shop online was because of the convenience offered. They don’t have to queue; they don’t have to find parking. In comparison with the above, we may have two different personalities here.

People will always be different one another. A few years back, when Wal-mart offer all in one shopping experience, it has not yet made street corner convenience store die. I think even with the existence of Amazon, people still sell books in-store. I believe that people have different needs, different way of doing things, or maybe different preferences. All these different will contribute on their shopping behaviors.

It is by understanding existing customers and potential target market; a business will be able to make the best decision for them. Whether, following IKEA (one centralize massive store), do it like Target (stores all over major shopping centers) or abandon the old world and join the new cyber world. Understanding customer’s expectation and offering them with the value they want will pose a significant benefit.

Author: Michael A Oei – MarketingFirst Group

Strategic Location & Customer Loyalty... Will it be enough?

Yesterday, I was driving twice the usual distance to my supplier new office. It was raining heavily. And as usual, traffic and wet road are in-separate able condition. At that moment, I start questioning myself; why do I want to go there still? And whether it would be better off for me to change supplier?

Talking about location, I remember Hoteling Model (economics) which tries to explain on how companies with substitute product usually pool at the same strategic geographical location. It could be for customer’s convenience, but mainly to maximize their market share based on location.

Apart of being close to customers, this group of sellers with similar products also attracts customers in different way. They collectively have stronger location brand (i.e. Mangga Dua – Pusat Grosir (Jakarta, Indonesia), Italian Forum – Italian Food Location (Sydney, Australia). But to what extent can a business rely on these advantages?

A business sometimes needs to relocate its location. Some of the obvious reasons are; the current rental agreement cannot be renewed, the new rental cost is too high, the current space can no longer accommodate the expanding business, and few other similar reasons. If a business has to move to un-strategic location, it will no longer have the advantages stated above.

The need for customer loyalty starts to kick in, when relocation is needed. If a business only relies on location based advantages, it will be put in disadvantage position. Here, it can be seen that branding and building customer loyalty will play significant role.

I think I can consider myself as loyal customer, because I still want to drive the distance only to visit the new store for the first time. Moreover, my satisfaction with that store customer service, pricing, product quality and range could be the force which drove me into its new location. But, these old driving forces might not be enough to push me back for the second time. I could feel the associate cost and increasing distance, moreover the convenient of having supplier nearby.

My supplier has to induce me, so that I will forgive him for moving so far away. And he does. He knows my wish list and he make my dream come true. Understanding customer dream if I may say. In this case he provides me with better products range, something which I truly want. Well he put it this way when I came in: “I have bigger space now, and I know that you are looking for this kind of products. I will have more variety in a few weeks time.” Good enough for me to check him back.

This case is also happened with IKEA. IKEA used to have many stores in different strategic locations. But one year ago, they closed all the stores except one massive store. And the new location is far from the city centre. I went there once and believe it or not, I want to come back! It is simply because they offer me a new shopping experience. That was the biggest furniture store that I have ever been to! And even that I have one big furniture store nearby, I still feel the needs to visit IKEA.

Well, I guess my loyalty won’t be enough to put me behind the wheel, driving the long miles for the second time. Unless, they lure me with something more! How about you?

Author: Michael A Oei - MarketingFirst Group