Recently, Applebee’s announced they would close 135 locations in 2017. When I first heard the news I wondered what had happened to the once-popular chain. Known for their affordable somewhat bland menu, with low calorie options, they were a mainstay of middle America for 30 years.
While many people might think it was the quality of their food, I am going to argue it was a major miscalculation by their marketing team. You see, they forgot who their customers were, as they tried to chase a new, young hip, millennial market. Instead of expanding their brand, they alienated their core.
It all began in 2010 when Applebee’s unveiled their “revitalization” concept, which included remodeled interiors and exteriors, contemporary designs and new more upscale food and drink selections all designed to appeal to the elusive and temperamental millennial audience. The collapse of the Applebee’s dynasty wasn’t as much an indication of American’s changing tastes as it was a huge target marketing failure.
Target Marketing Fail #1 – Didn’t attract a new audience.
What was the first problem with their plan to attract the millennials? It was kind of like a 50-year-old divorcee at a singles bar, the changes felt forced. Young consumers weren’t buying it. Applebee’s wasn’t a hip cool place to bring a date or meet friends after work. It was where you took your grandmother to lunch after church on Sunday.
Their investment in the upgrades and a new menu to appeal to the “foodie” crowd didn’t pay off. That was unfortunate, but sometimes marketing campaigns flop. That isn’t usually enough to completely tank a brand, but Applebee’s had a bigger problem.
Target Marketing Fail #2 – Lost long time fans.
As they desperately ran after this new customer they didn’t notice what was happening with their long time fans. Suddenly, the cost conscious, slightly older customer no longer felt comfortable at Applebee’s. The prices were higher, many of their favorite items were no longer on the menu and the restaurant felt different. They stopped coming.
If you will forgive one more dating metaphor, this is like the boy who drops his loyal girlfriend to chase the pretty new girl in town. When she dumps him he discovers his loyal former girlfriend has moved on and he has no date for the prom.
Target Marketing Lesson – Proceed with Caution
Marketing history is filled with stories about brands who lost their way as they chased new customer groups. JC Penny tried to go upscale and Irish Spring tried to reach women. In both cases, the efforts fell flat shrinking their core customer base without penetrating the new target market. Don’t assume that the lesson here is that you shouldn’t try to expand your brand, but you must proceed with caution.
- Make sure you know what your most loyal customers love best before you make too many changes.
- Do your homework, make sure you know what your new target thinks of you. If Applebee’s had done that they would have realized this was too big a leap.
- Look for ways to connect to new audiences in different places. That’s what we did with Randall Beans as we helped them reach a younger audience without losing their Wal-mart shopping grandmothers.