Why Yahoo is Going Under.
by Redstone Promotional Communications Marketing Staff.
Yahoo, the internet portal giant, has been struggling in the face of stiff competition for several years. It is now in the final stages of a lengthy bidding process for its core services of search, email, advertising and media operations.
So goes the merciless world of commerce. It’s always a struggle, even among the biggest companies. So you small business people out there, this is just a reality check, to heed what we are always telling our customers which is that it’s a tough market out there for ANYBODY. And in order to stay alive, you need every advantage you can get. Mostly this all boils down to marketing. If Yahoo had had better marketing forecasters, they would have never purchased Tumblr when it was already on it’s downslide, which is now worth only 1/3 of the price Yahoo paid for it; and a few other really bad marketing decisions that led to Yahoo’s demise.
People want to know how Yahoo, who was really the very first search engine, managed to end up going out of business just a few short years later. Well, don’t every envy the first business to do something. And we’ll tell you why. It’s because if you are the first business to be a success at a particular service or product, that means that all of your competitors will now be focusing all of their efforts on outdoing you, and unless you have a top-notch marketing and advertising team, it won’t be long before you are knocked off your throne. So the pioneers of business, such as Steve Jobs of Apple, Mark Zuckerberg of Facebook, etc., are constantly looking over their shoulder to see who is creeping up in the business world to take away their glory.
Yahoo was powerless to do anything against the giants Google and Facebook. Even if they had managed to put together a top notch marketing team, they still could not compete with these two internet monopolizers; and that is where Yahoo make their biggest mistake, and they did realize it, but just too late. Yahoo’s biggest mistake was in continuing to try and compete against Google, who was poised to take over the internet and own it. Yahoo tried over the last 2-3 years to adjust it’s business plan and strategy by acquiring other things, such as Tumbler and Alibaba, but these desperate measures came a little too late.
What Should Yahoo Have Done?
Some business owners, such as Steve Jobs, have learned along the way that when life throws you lemons, you can’t just make lemonade; you have to come up with a flavor nobody has tasted before. When Apple ran into problems with competition from IBM, they knew enough to not try to compete with IBM on the same marketing strategy IBM was using; which was basically that they could make a cheaper computer than Apple for the home user. Steve Jobs had the savvy to realize just making a cheaper computer to equal IBM was not going to cut it with consumers, plus, he would forever be playing that price war with IBM. Jobs had to come up with something that would blow consumers minds and make them want to pay more for his computer, and he was extremely successful at doing just that. Now, Apple has blown IBM away, and pretty much owns the digital gadgets market sector, with iphones, ipads, Macbooks, iwatches etc. etc. Luckily, Steve Jobs had the money to reinvent himself, the wheel (the computer) and the market. Steve Jobs was a visionary; he knew what he wanted for his product, would not accept anything less, and knew how to get others to appreciate the same values and visions he had for his company. We all know how this story went, and that it did not go without a huge cost to Jobs and a few bumps and bruises along the way. That was because Jobs was also a huge overachiever, and as such, became a computer genius rather than just a computer designer. This put a huge bull’s eye on his back from that day forward. He designed a product, timed it perfectly with what the consumer was wanting at that time, and had the money to do whatever it took to make it so. Not many people have those skills.
So…As a Small Business Owner, What Can You Learn From the Big Guys’ Mistakes?
Most Mom and Pops and small businesses are just happy to be making a profit; they do not ever concern themselves with what their competition is doing, who is moving up the commerce ladder right behind them, or what they can do to be considered “great.” They are just happy to be able to make payroll, pay their enormous retail rent, and maybe take a day off here and there so they don’t drive themselves into an early grave.
In other words, most small business owners never aspire to be anything more than successful at paying the bills and putting a little luxury time aside to keep doing it. This mindset, of settling for just getting by, is what stops small businesses from becoming great small businesses. Nobody is saying you should be the next Steve Jobs, but take a lesson from Yahoo, who also did not set out to monopolize the internet like Google, if you don’t do it, somebody else will. You may be skating by with you current business just fine for a few years, but the market will change, consumer demand will change, and some other business will start tapping into your profit margin. What this whole Yahoo lesson boils down to is always being prepared to change is the name of the game. Most savvy business owners know that in order to stay in business, you have to be willing and able to change with the times; the market trends, the consumer demands. This takes continual market analysis and observation, something small business owners just don’t have the money or resources to do. How do you know when your industry is about to make a huge shift into something else, some other product that you aren’t selling, or some other service that you never even thought of. Knowing this information is what separates the big fish from the little fish in the world of business.
If you are have been feeling shopping malls and chain stores constantly breathing down your neck because they can sell their product cheaper than what you can buy it for, you cannot decide to try and compete with them, you will lose. You have to find out their weakness, and yes, you may have to settle for losing a certain percentage of your business to them, or a certain type of customer, but if you want to stay in business, you have to figure out how to not compete on their level but compete on an entirely different level.
Ever since the concept of hiring cheaper and cheaper labor, paying them dirt cheap wages, and throwing customer service out the window became the trend, businesses got caught in their own downsizing web. They kept getting cheaper and cheaper labor, hiring kids to do the work skilled professionals used to do, and now, they are finally realizing that they are losing business, not gaining profits, because they forced the only sector who could afford their products out of jobs so they couldn’t afford to spend money anymore. Thus leading to the Great Recession and loss of sales and income to these business who thought they were being so clever as to hire the cheapest labor they could find because they were always chasing that almighty bottom line. Bad business strategy when everybody starts doing it, and which is what causes economies to collapse.
Yahoo should have realized a bit sooner that trying to compete with Google and Facebook was a losing battle. If they had, they would have used their resources to come up with a completely different business plan in order to stay in business. This would have involved Yahoo finding a way to offer something Google and Facebook did not, and that would be tough, but not impossible. It would have involved Yahoo recognizing their weakness – their lack of ability to compete against such internet giants – and reinventing themselves in quick response to it. Yahoo did eventually realize this, but by the time they did, it didn’t matter how much money they threw at it in t.v ads and catching slogans, it was just too late. They should have pooled their monetary resources into something that would actually have an effect on keeping them afloat, but see, they didn’t know what that was, because their marketing team was not adequate enough to figure it out. They just thought more advertising would do the trick. They were wrong; because they didn’t do their research properly.
As a Small Business Owner, What Can You Do?
#1. If you have the opportunity, set aside some money in an account just for having to reinvent yourself – get knew equipment, pump up advertising, hire market researchers etc. Steve Jobs and Google could never have accomplished what they did without some cash flow readily available. Even if you only put aside a couple hundred or a thousand dollars a month, start with something.
#2. Set aside some time every month to analyze your industry, competition and market to see what they are up to. If you can’t find the time to do this, it is worth it to hire somebody who can. We are always shocked here at Redstone that so many business owners hesitate to spend any money on market research. You should think of market research as the equipment that will allow you to be in business just like any other piece of equipment necessary to run your business, and that without it, you can’t have a business. It is your most valuable business tool, yet so many business owners refuse to use it simply because they are too cheap. If Steve Jobs had thought that way, Apple would have never existed.
#3. Don’t Ever Drop the Ball. Once you get the two plans above implemented, don’t get so wrapped up in business you forget about them. Market research is a life-long necessity for any successful business because the market does not ever stay the same. It is continuously changing and you need to know when it is so you can stick with it.