Wednesday, September 16, 2020

Distinctive Strategic Positioning: Don't Panic and Just Abandon It Amidst the Pandemic

Source: Wikimedia

Suppose your firm has a distinctive strategic positioning and a powerful competitive advantage.  Then along comes COVID.   Some managers may panic and abandon key facets of the unique strategy in an effort to cope with difficult economic and social conditions.   Some firms, though, have prospered despite the pandemic, in part because they have capitalized on the fact that so many people are spending a great deal of time at home.   Stihl is an interesting example of a firm with an unorthodox strategy that has resisted the temptation to abandon distinctive elements of its business model over the years, including during the past six months.  They have demonstrated that personal relationships and interactions still matter to consumers, even in an age of increasing online transactions, curbside pick-up, and home delivery.  

Stihl is one of the world's leading chainsaw manufacturers, headquarted in Germany. A recent Bloomberg story is titled, "Stihl Still Sells Chainsaws the Old-Fashioned Way." The firm is still owned by the descendants of founder Andreas Stihl.  Here's how the article opens:

If a limb falls on your car or you suddenly need to carve a wildfire break around your house, will zip you a Husqvarna 120 Mark II chainsaw in a few days for $180.  It's not so easy with America's top-selling brand, though. On the Stihl website, no prices are shown, and once you select a product, you’ll have to click through to find a nearby dealer – typically a small hardware store – that may or may not offer delivery. It’s an anachronistic, clunky sales machine, seemingly ill-suited to shopping during a pandemic. It’s also working just fine thanks.  Stihl (pronounced 'steel') sales so far this year are up 20 percent over 2019 and in the U.S. it is on pace for the best year in its near century of business, both in terms of revenue and units sold.

The company doesn't sell through big box stores.  In fact, in the past, Stihl has boasted about not selling in these establishments.  They once runs ads saying that you wouldn't find their chainsaws in a box, not even a big box.   The ad referenced the fact that the dealer staff often assembled and taught you how to use the product before you left the small neighborhood store.  The article ends noting the loyalty of its customers:

The strategy might not make for as many transactions, but it makes for a stickier, more lucrative customer. The personal touch, apparently, still works in a digital, distanced world.

No comments: