I’m not going to argue with the genius of Juan Trippe, the late head of Pan Am (as discussed in last night’s homework assignment). But the problem with genius is that it can overstretch itself, which is what happened to Trippe, and that had dire consequences for Pan Am.
But first, it’s time for yet another one of Kim’s Supermarket Stories (and I promise it has relevance).
I once worked for a chain which prided itself on the quality of its product — not only the merchandise, but the service of its customers. The Produce Department (Fruit & Veg to non-Murkin Readers) was as good as any “street market” or “farmer’s market”, for the simple reason that the store merchandisers tossed out a tremendous amount of any produce items which they judged sub-standard or even close to going “off” before they ever set it out on the shelves, in the bins, fridges or displays. The result was that you could pick any item off the display stand, and had no need to check it because you just knew that it had passed a stringent quality test. And the same was true of every department: (on-site) bakery, meat department, deli and so on. As a result, our average basket cost a little more than our competitors’, but then again, our typical shopper belonged to a higher income bracket: the kind who value quality over price and expect the best. Our average household, therefore, usually consisted of a high-earning husband/wife with teenage kids, who lived in the upper-middle class suburbs where (surprise surprise) 95% of our stores were located.
I was at the time the senior marketing manager for the chain — ran the loyalty program, worked with the Advertising department, worked with Purchasing on product selection and so on.
Then we had a huge management change: new CEO, new COO and new CFO. When I went to the first “welcome” meeting, the new CEO announced, without any fanfare, that our chain would henceforth be aiming for the lower segment of customers: younger moms with small kids, more “efnic” shoppers, and so on. After the meeting, I managed to get a one-on-one with the new CEO, and blew up at him.
- Had he discussed this with Purchasing? (because we’d have to start buying larger pack sizes, cheaper — perhaps lower-quality — products, which meant new shelf set design, and so on)
- Were all new stores going to be located in more down-market areas? (because our existing stores were not convenient to those areas)
- How were we going to compete with the multitude of competitive chains who had already staked out the “Every Day Low Price” (EDLP) position in the marketplace? (and we didn’t have the numbers to compete with the large existing chains, anyway)
- Had anyone looked at how this new strategy was going to affect our gross profits? (in our end of the market we had hardly any competition, ergo we could afford our higher prices for the quality)
- And why the fuck had I not been consulted on any of this? (because I had all the answers to the above questions).
To his credit, the new CEO didn’t fire me on the spot. But his lofty answer was that the board of directors had decided that we needed to “grow the business”, and as we had the upper end of the market more or less to ourselves, we needed to expand our customer base.
Which brings us back to Juan Trippe and Pan Am.
It’s clear that Pan Am had a quality product, and their clientele were not people who, let’s say, were at the bottom of the market. Their service was unparalleled, not only in the airline industry but anywhere, and it showed in all aspects of their business: hiring, training, equipment and cuisine.
Then Juan Trippe decided to “grow the business”, and open Pan Am up to the lower end of the market via mass-market people carriers like the Boeing 747.
I had always wondered why Pan Am ever, or could ever, have gone out of business. The YouTube video gave me all the answers. To be blunt, Pan Am went from “You can’t beat the experience… Pan Am!” to “We’re just another airline; check out our low prices.”
Their demise was as predictable as that of the above supermarket chain: both went out of business only a few years after making that calamitous decision to chase a new market.
Side note: I resigned a month after my meeting with the CEO.
Now, had I been Juan Trippe and wanted to “expand the market”, I would have done a couple things differently.
- Had the 747 jumbos built, but not flown them under the Pan Am logo, to include ground staff, cabin staff and maybe even pilots.
- Named the new budget airline “Dream Trippe” or something similar, and not have the 747s have first- or business class — basically, the economy-class seating (and service) would run from nose to tail.
- Kept the 707s going until the new sub-200-seat generation of airliners became available (e.g. the long-haul Airbus 220-300 or the “short” Boeing 757-100). Then turned them into first-/business class-only aircraft, using the traditional Pan Am staff and pilots, and maintaining the both the higher prices and the clientele who preferred the luxury service levels.
- Shared the existing Pan Am slots at airports between the two airlines.
That’s the basic idea of the thing, but you get my drift. It might not have worked and Pan Am might still not have made it. But they failed anyway, so how much worse could the outcome have been?
But at least they wouldn’t have screwed up their Pan Am brand, which was priceless. And the actual blowing up of the Pan Am brand was the entire responsibility of its founder.
This class of blunder doesn’t seem uncommon; I saw a variation on this theme play out with my own eyes, with the same outcome.
Now here’s a variation on the same theme from the other side. Consider the pre-bankruptcy GM and ask yourself, why the hell are Chevy, Pontiac, Oldsmobile and Buick selling four versions of the same car?
Look at all the money they saved until the
customersrubes caught on.Albert,
you’re right about the car manufacturers. I think they streamlined their brands and models a little bit.
JQ
I had a Mercury Sable, exact same as the Ford Taurus with a couple more luxury things on it.
The electric extending antenna launched on a highway once. Heard a thump when I turned on the radio and then static. Just wires trailing from the antenna hole when I arrived. Stupid Fords.
Markets change too, though. When I was a kid, the “jet set” were still around and working class people like my parents couldn’t afford the lavish vacations in exotic climes. Even the cheap seats back then were for the upper middle class. I used to wonder what it would be like to step off the plane and set foot on the ground half way round the world.
Nowadays, the travelling toffs are in a pickle. To get on a plane and fly first class isn’t a status symbol anymore. And all that separates them from the house poloi back in steerage is a curtain or a doorway. So when Tyronius and Sasqueetchia start fighting back in economy, or Covid Kate starts screeching and swinging at other travellers – he’s still going to have his experience ruined by it. He doesn’t want to listen to that crap or rub shoulders with people like that. There is no glamour in flying anymore.
Today’s jet setter flies charter or even has his own bird. The world is a much smaller place now.
I know it’s not, but that chain sounds a lot like Wegmans is today. They are the only thing I miss about living in New York state.
Wegmans is a brilliant organization. If I was cursed with having to live in upstate NY, that store would be the only consolation to the abject misery.
Today’s First Class is yesterday’s Regular Class. No more table cloths for meals, no more ( lightweight ) metal “silverware”. Even the Glassware has been replaced. All that’s left is better legroom and seat spacing and separate waiting areas ( larger Hub cities only).
Fortunately, now that we are both retired the amount of long haul transcontinental Flights are fewer and limited to vacation Travel, and the list of places we still want to see has already been mostly done.
Yep. Classic stories and it play out over and over and over again for some reason. They never learn. When I lived in Chicago, Jewel was the everyman store and Dominick’s was the higher end grocer. Then Safeway bought Dominick’s and they were gone a few years later. Now they have Mariano’s started by a former Dominick’s exec on the high end.
In PA, same thing. Our higher end chain was Genuardi’s. Same thing. Safeway bought them, gone in a couple years. Now we have Wegman’s on the higher end.
They’re like Dummocraps, keep doing the same thing expecting a different result. Very odd.
Dominick’s was also a client. I knew everyone there, and I warned them that selling out would kill the chain, but the younger generation of DiMatteos had no real interest in running a supermarket chain , and they wanted to cash out (Dominick himself had retired many years earlier).
C’est souvent la vie, when it comes to family businesses.
Family run businesses rarely survive. The odds of the various “right stuff” being present in each successive generation is a crap shoot that will eventually come up snake eyes, and then it’s all over.
When I was a young banker I somehow made a specialty of financing leveraged buyouts of supermarkets for a few years. I saw all the things you describe here. I knew only one chain that actually was brilliant at serving both ends of the market, high and low: The Boys Market in Los Angeles. If I remember right, Ralphs tried to change its target market as you describe, and it was a disaster.
The local chain market in my area growing up was a family run company called Roche Brothers. They had started as a small grocery store way back when. As they were expanding into goods and services that people wanted, a fresh bakery, prepared foots etc, they opened another chain with the “upscale” name of Sudbury Farms. The model worked. they kept their neighborhood name chain as well as their “upscale” chain with a wider variety of products and services. I don’t recall if the prices were very different between the same stores.
JQ
Roche Brothers is still around, but Sudbury Farms not so much. Did some IT Consulting for them a number of years back. That may have been the distinction between the brands that they intended but the perception was the other way around. Possibly because the naming of Sudbury Farms was percieved as more of an expanded overpriced local Farm Stand than the Large Chain store they were.
One game changing Tech that I’ve seen is the availability of real time shipment tracking of sensitive produce. Small inexpensive boxes that travel with large trays of produce and report back temperature, humidity and pressure every 10 minutes from the fields of South America, Mexico and the California Valley to the Distribution hubs. Now the buyers know which trays sat on the tarmac for 20 hours at 90 in Santigago and which sat in the refrigerated containers. They may look the same at the distribution hub but one is going to be bad when it gets to the shelf.
Well, it wasn’t entirely the fault of the 747 and the decision to bring air travel to “the masses”. Had the 70s not been so fecal in so many ways, Pan Am may have weathered the storm. A notch down on the “glamour” scale perhaps, but still a going concern. Stagflation, the oil embargo, and the increased enthusiasm of the Mohammedan barbarians to fuck things up for the civilized world were just too many nails in their coffin.
“I am going to grow the business” must be inscribed on the tombstone of many a failed enterprise.
Making changes for changes sake, re- branding, amd increase profit margins were phrases that still make me flinch.
When I went back to working for someone else, in my interview I was asked what I planned to do to increase the sales volume. I said I was going to go out with the sales force on calls and talk to customers. After that I would figure out a plan. The CEO was not impressed but the COB asked why. I told him I tell then I would be just bullshitting and making promises based on what they wanted to hear.
Turns out the sales force could sell and the customers liked the gizmo, but there was no marketing effort to let people know the gizmo really existed. The owners were engineers and they had thought marketing was not needed because everyone knows the gizmo was the greatest thing since sliced white bread. Easy fix .
Ugh. As an engineer, I EXACTLY HATE THIS. We tend to believe that everyone else is “just like us”, sees what we see, and values what we value.
It’s not the case at all. Engineers are a deeply weird variant of the human species, and those precious few engineers who can also comprehend the imperatives of biz are few and far between.
On the other hand, and equally destructive, are the MBAs trained to “widget” abstractions that imply that subject matter expertise is fungible, and therefore need not be taken into consideration. Bizguys who do not consult or ignore their engineers (or worse, think they ARE the engineers) are in over their heads and on the slow train to the La Brea tarpits.
Every time I see the word “widget”, I think of “Back To School”, and “Thornton Melon”.
You ever see anyone heckle a diver?
Your alright kid!
TODAY the question would be
You ever see anyone heckle a dementia patient that stole an election?
Your alright Brandon!
Degrees from College acronym (Full disclosure I have an MBA, however I have worked hard my whole life and still do).
AS – Alota Shit
BS – Bull Shit
MS – More Shit
MBA – Masterful Bull Shit Artist
PHD – POST HOLE DIGGER or PILED HIGH and DEEP
GED is the GOOD ENOUGH DEGREE. Get a GED (or High School Diploma) and a trade, and you’ll be way better off than the college educated.
Most of the idiots I went to college with are barely qualified to ask if you want fries with that.
Don’t get me started on the scam that is higher education.
Please don’t tell me, “Oh! You should never say thing like that!”
Do you honestly believe that you’d get the same care (dental) at a Medicaid mill in Harlem as you would at a 5th Avenue office in the 50s?
Obama (sorry! I can’t find it within me to designate him by title) wanted to force the Harlem experience on all the “Murkins” via “The Affordable Care Act”
There are times I’m grateful for the anonimity of a nom de plume.
Kim:
You might be interested in the Saga of the Market Basket / Demoulas Bros. Super Market Chains and Family feud . One Cousin and Big Money against a Brother, the employees and most of the Customers
if you don’t already know the story. Market Basket is still going strong. Demoulas not so much.
see https://www.forbes.com/sites/hollieslade/2014/09/10/inside-the-billionaire-family-feud-that-nearly-killed-market-basket/?sh=5e64ecda42d4
I’ve seen worse. https://www.startribune.com/state-high-court-declines-to-review-45m-award-in-lunds-family-dispute/507738392/
And Lunds was a client of mine; Tres was not only a client, but a good friend. His sister was an asshole.
The company I am working for is singing some of the same verses. Different market but looking to have Diversity. Defined as less qualified buyers for the product. Since the product is always sold over time it mean more defaults. And all the attendant misery that brings.
It is not ending well.
I sent this to a cousin, a retired pilot. Here is his response.
” Interesting take. Part of the problem was that back in the early days, Trippe made some powerful enemies in government. Consequently, the CAB never approved any domestic routes for Pan Am. When de-regulation came along they were at a huge disadvantage.”
It’s the old fable about the dog with a bone who sees another dog with a bone. Too many organizations are absolutely convinced that there’s a gold mine over on the other side. I ran into it at HP when they bought Compaq, Extended Systems, and go down the line. No one had a clear idea what they were going to do with them to make money. Kind of like the US invasion of Iraq. Now that you have it what do you do with it?
They sold a whole bunch of Compaq desktops to the Firearms Bureau of the CA DoJ for distribution to CA’s firearms dealers because they couldn’t figure out a way to mandate us to computerize the DROS process without giving us the computers and HP printers.
But the real blunder is that HP was the world’s leading manufacturer of electronic test equipment, and management threw that away to become just another PC manufacturer.
I feel the “chasing markets” with regard to Sig Sauer firearms.
I totally enjoy the classic series Sig Pistols (P229, P226, P220, P225, P239).
Then along came the P238 (380) and P938 (9MM). These two models were metal (Aluminum frame and steel slide) firearms, pocket sized. I bought one of each a few years back. Wow did I have issues with these two. Both ended up back at Sig for repairs.
– The P238 came back after one trip working. It was a jam o matic. Again, Sig did fix it, after one repair trip back. However, I sold the P238 after it came back fixed. Just never trusted it.
– The P938 went back to Sig three times for repairs, until I had to argue with them and say look, this thing is junk. Jammed up, had hammer follow (shoot one round, mag still has ammo and the hammer is down on a SINGLE ACTION, and also would not always lock back after last round). Sig eventually made it right and sent me a new P229 as replacement. P229 is an awesome firearm.
Do not even get me started on the new Glock knock off plastic crap from Sig. Sorry, that stuff is complete garbage as far as I am concerned. There are ENOUGH plastic guns out there that are of much better quality. Springfield and Glock come to mind. The P320, and P365 are Fugly in my opinion. I would not ever pay for one of these. If someone gave me one for free, I would trade it towards a real Sig, a classic P226 or P229 or some other firearm that looks stylish and is not a plastic knock off.
Go with the classic series from Sig.
It seems so many firearms companies are just going for this plastic firearms knock off route. While polymer firearms are reliable and cheap and great overall for a carry beater gun, one or two is enough. If people have a safe full of plastic stuff, my opinion is you wasted your money. You don’t need 10 to 12 or more of the plastic fantastic.
Another company chasing markets in my opinion is Honda. Pre 2005 their vehicles were awesome. 2005 to 2010, ok not awful not great. I would not touch a modern day Honda. From CVT transmission issues, to oil dilution issues on turbo engines, along with the quality NOT being what it used to be, I say this TOYOTA IS KING. 15 to 20 years ago Honda and Toyota were equal. Today, I would not buy any new Honda.
So far, you can trust Toyota.
Sad that companies lose quality and loyal customers to try and chase different customers with unproven services and products.
I participated in some CVT testing10-12 years ago. What’s inside the casing is deceptively simple – a flexible steel belt running between two steel variable diameter V pulleys. The catch/sticky point is that the trans fluid has to be slick enough to lubricate and cool the belt, pulleys and the trans’ bearings, while at the same time not be too slick, or else the belt will slip on the pulleys.
The scary part is the the range of allowable coefficient of is only ~1%.
IOW, say if the trans fluid CoF is ideally 10% /-.5%, let it go up to 10.6% as the oil additives break down, bye-bye metals in contact.
Well, he said, let’s make Cof 9.4% to give us some margin. Then the belt slips on the pulleys, the vehicle won’t accelerate and the trans rapidly overheats and bye-bye trans.
Maybe somebody has figured it all out since then, but I’m not crazy about the prospects. A family car is not a race car or jet aircraft where high maintenance per operating hour is the norm.
Same goes for electric cars. The Government is trying their damndest to force electric cars on the people.
Cuz, electric cars are just so environmentally friendly according to the libtards.
Some serious issues are:
– Sourcing the materials to make batteries is HORRIBLE for the environment
– Battery manufacturing is HORRIBLE for the environment
– Rechargeable batteries have a limited lifespan. Every 10 to 15 years when the batteries in the electric cars are end of usefulness and they need to be dumped somewhere OR the whole electric car scrapped, that will be HORRIBLE for the environment
– Electricity doesn’t come out of thin air. What is being done to CREATE all this environmentally friendly electricity?
Side notes
– States like California do not even have enough electricity to power all of their houses all of the time. How will they power electric cars? Maybe this is a form of control – example – you have already driven to and from work today. You do NOT need to drive any longer, no more electricity for your car today, this week, this month etc.
– How serious can you take all this “good for the environment” bullshit when cunts like Nancy Piss Flaps Pelosi and Al Gore fly around on private jets, and of course the pResident and VP Call Girl, JOE AND THE HOE, arrives everywhere they go in an armored limo that is gas powered and gets under 10 miles per gallon. WTF?
The worst part? If someone wants to spend their own money on an electric car, fine do it. I don’t care. But when the Government is forcing them down our throats? Using our tax money to force these dumbass cars on us all? That is market control (Socialism style) and of course these corporate cock suckers (Government Motors anyone?) will chase that market of FREE GOVERNMENT CHEESE courtesy of you and I the tax payer.
Oh, I have also heard that in addition to being good for the environment, that these electric cars are cheaper to run than gas powered cars. FOR NOW… Wait until the Democrats and RINO’s start regulating electricity more.
This shit is all fucked.
I bought a Honda Pilot for my wife in 2016 and it has been the worst car I’ve ever owned….and I drove Chrysler products for the first half of my life.
I used to be a Honda fanboy. Not anymore. In my opinion, modern Honda’s are overpriced throw away cars.
Think about the Honda products of yester-year… The late 1980s to 2005 or so Accord’s and Civic’s. The first and second generation CRV (1997 to 2006). ACURA (Honda’s premium brand) – Acura NSX from the 90s, the early 2000’s TSX, and of course the Legend. All of these cars were high quality, required minimal maintenance and repairs, and were enjoyable to drive. They also had a style to them, where they did not look like anything else on the road.
Today, good luck if you purchase a Honda. Likely you will need the warranty.
A year ago I bought a used Toyota Rav4, luckily right before all this Biden inflation. 1 year of driving, ZERO issues. ZERO repairs. ZERO stories. It’s a 2018. It runs without issues on regular gas.
I used to enjoy Honda. Now I am a Toyota fan. But of course, if I hit the lottery every, I am totally going to find a 1990’s Acura NSX. I am NOT even interested in the 2017 and new Acura NSX. HAS to be an older one.
Somewhere around the turn of the millennium, Honda inexplicably decided to change direction and make dogshit. Took a few years for the quality to hit rock bottom, but we’re there.