As marketers, Radio Shack should serve as an important cautionary tale of how quickly our businesses can erode if we lose sight of our core value proposition. The first two parts of this three-part blog series (read part one here and part two here) documented Radio Shack’s meteoric rise to retail prominence throughout the 1960s and 70s, accomplished by identifying the ideal customer (the hobbyist) and offering to the market a unique, authentic value proposition built upon a foundation of four key factors:
Credibility — Can I trust your claims?
Clarity — What are you actually offering?
Exclusivity — Can I only get this from you?
Appeal — How much do I desire this offer?
By honoring this core value prop — Radio Shack stores provide specialized, innovative parts and merchandise not available anywhere else, sold by the most tech-knowledgeable staff in retail — Radio Shack grew from a handful of bankrupt Boston electronics stores to a retail juggernaut with more storefronts than McDonalds.
The mid-1980s would mark the beginning of the end for Radio Shack, as the company continuously diluted, rather than refined, the comparative strengths of the exclusivity, appeal, credibility and clarity that served as the bedrock for its core value proposition.
The Mid-1980s — Marginalizing the core customer
Who is your customer? How did that customer find you, and why did he buy from you? What does that customer tell others about you? Even more important, what does the customer wish your company would do for him? That knowledge is your only true source of power.
— Kristin Zhivago, Revenue Coach, Author of Roadmap to Revenue: How to Sell the Way Your Customers Want to Buy
By 1984, even though Radio Shack’s stores continued to stock parts and components popular with hobbyists, the company’s specific focus on the DIY market was clearly beginning to shift.
The success of the TRS-80 had given Radio Shack a sense of arrogance, and the company began claiming that small businesses and schools were Radio Shack’s new target market, rather than hobbyists, who were “not the mainstream of the business.” This pinched-nose approach to hobbyists would pervade Radio Shack’s messaging for the next 30 years, whether explicit or implicit.
In fact, hundreds of neighborhood Radio Shack stores saw products aimed at the hobbyist and tinkerer disappear entirely when the stores were converted into Radio Shack Computer Centers.
Ironically, these hobbyists that Radio Shack alienated were among the earliest adopters for new technology, including the TRS-80, and many were quickly growing frustrated with some of Radio Shack’s practices.
Although Tandy’s computers boasted superior hardware performance to competitors — often running up to three times faster than its IBM counterparts — the software library for Radio Shack’s line of personal computers was not nearly as robust as IBM or Apple’s.
Because of the company’s insistence on offering mostly private-label products, the TRS-80 computer was designed to work primarily with inferior Radio Shack-brand software. In the absence of MS-DOS, largely superior IBM-compatible software was not compatible with the TRS-80.
Further, expensive peripherals that customers bought for the TRS-80 were purposely designed to be incompatible with other personal computers.