How to use strategies to your advantage.
Story Highlights
Introduction All companies need strategies in order to grow, this includes an action plan for the
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Introduction
All companies need strategies in order to grow, this includes an action plan for the next 12-24 months to monitor weekly and monthly activities of the company. You are about to read various strategies that will help your company to grow and develop in the market place.
Instructions
Difficulty: Moderately Challenging
Things You'll Need
- Note pad and pen
- Good cognitive skills
- Ability to implement plans
- A good business vision
Steps
1
Step One
Low cost, High
Differentiation
Strategies.
· Dominant leader strategies for defending
competitive position through low cost, high differentiation.
Research experience and intuition all indicate that the dominant market leaders, the company that stands out above the rest, has significant advantages in the market place, which it dominates. Basically meaning, it has the ability to manage the market and the competition and to return the highest profitability in both the short-term and long term.
This means that market share and profitability are strongly related. This means that businesses with market share above 40% earn an average return on investment 3 times that of those with shares under 10%. The importance of shares varies however, between industries and market situation. There are two important differences
Differentiation
Strategies.
· Dominant leader strategies for defending
competitive position through low cost, high differentiation.
Research experience and intuition all indicate that the dominant market leaders, the company that stands out above the rest, has significant advantages in the market place, which it dominates. Basically meaning, it has the ability to manage the market and the competition and to return the highest profitability in both the short-term and long term.
This means that market share and profitability are strongly related. This means that businesses with market share above 40% earn an average return on investment 3 times that of those with shares under 10%. The importance of shares varies however, between industries and market situation. There are two important differences
2
Step Two
1. Marketing share is more important for infrequently purchased products than for frequently purchased ones.
2. Market share is more important to business when buyers are fragmented rather than concentrated.
Factors such as economies of scale, risk aversion by customers and market power are some of the intuitive explanations of the dominance/high profitability relationships.
2. Market share is more important to business when buyers are fragmented rather than concentrated.
Factors such as economies of scale, risk aversion by customers and market power are some of the intuitive explanations of the dominance/high profitability relationships.
3
Step Three
The dominant market leader will at different times, consider both offensive and defensive strategies. Offensive moves are those strategic changes the market leader initiates. They may be threatening to competitors where the objective is to take market share and undermine their positions through frontal attack on selected competitors market. They may be non-threatening offensives designed to improve volume and profitability in the industry as a whole.
4
Step Four
Offensive strategies include
· Product packing and service innovation
· Development of new market segments
· Redefinition of the market to broaden its scope and position products more closely against broad substitutes, and
· Market development through product variety and distribution strategies to increase usage and widen availability
Only the market leaders should consider playing defence. Under certain market conditions the most profitable strategies are those that protect and defend the market share and profit base of the market leader. Under other conditions, it may be more rewarding to adopt market-building strategies.
· Product packing and service innovation
· Development of new market segments
· Redefinition of the market to broaden its scope and position products more closely against broad substitutes, and
· Market development through product variety and distribution strategies to increase usage and widen availability
Only the market leaders should consider playing defence. Under certain market conditions the most profitable strategies are those that protect and defend the market share and profit base of the market leader. Under other conditions, it may be more rewarding to adopt market-building strategies.
5
Step Five
Defensive strategies include
· Blocking competitors by brand for brand matching, distribution coverage and price strategies to reduce their market share and profit potential
· Pre-emption of a competitora??s action by being first with a new product/services and distribution system
· Use of government regulations tariffs, import quotas or court action to increase a competitors cost or deny a market base, and
· Rumours about a competitors viability, service back-up or reliability of products/services
In practice, all these strategies are used frequently by leaders to defend their market position. Two main types of strategies for gaining maximum coverage and closing competitors out of opportunities are product/service proliferation and competitor acquisition.
Market saturation, by offering proliferation of product to distributors and end users limits the opportunities for the competitors. British airways have been very successful with this strategy in the airline market, retaining overall leadership of the European market.
· Blocking competitors by brand for brand matching, distribution coverage and price strategies to reduce their market share and profit potential
· Pre-emption of a competitora??s action by being first with a new product/services and distribution system
· Use of government regulations tariffs, import quotas or court action to increase a competitors cost or deny a market base, and
· Rumours about a competitors viability, service back-up or reliability of products/services
In practice, all these strategies are used frequently by leaders to defend their market position. Two main types of strategies for gaining maximum coverage and closing competitors out of opportunities are product/service proliferation and competitor acquisition.
Market saturation, by offering proliferation of product to distributors and end users limits the opportunities for the competitors. British airways have been very successful with this strategy in the airline market, retaining overall leadership of the European market.
6
Step Six
Low cost,
Low differentiation
Strategies.
The banking industry is a good example of undifferentiated markets in which a number of large competitors exist, none of whom have a dominant share, but all of whom are seeking a leadership position. The principles of offensive and defensive strategies and options for high share business, apply to companies holding a jointly dominant position. If the aim is to achieve out right leadership, however, the orientation is usually offensive. Offensive marketing has seven areas of importance
Low differentiation
Strategies.
The banking industry is a good example of undifferentiated markets in which a number of large competitors exist, none of whom have a dominant share, but all of whom are seeking a leadership position. The principles of offensive and defensive strategies and options for high share business, apply to companies holding a jointly dominant position. If the aim is to achieve out right leadership, however, the orientation is usually offensive. Offensive marketing has seven areas of importance
7
Step Seven
1. Vision. How the business will change and improve in the future ahead of its competitors
2. Commitment. In every area of the business to achieve improvements in customer value or cost of operations
3. Innovation. In every area of the business to achieve improvements in customer value or cost of operations.
4. Long-term outlook. Allows commitment to longer term growth and profit goals
5. Continuing. Investment to renew and improve all assets, especially new products, existing brands and customer franchises
6. Persistent attack. Providing the overall focus of a companya??s activity on fighting and winning, any defensive efforts is part of a long term plan that will culminate in a fresh attack, and
7. Speed of response. To changes in the customer needs or in the business environment, and quick counter-attack to competitive thrusts.
Lets put all of this together now with one more piece of information, which is of vital importance
2. Commitment. In every area of the business to achieve improvements in customer value or cost of operations
3. Innovation. In every area of the business to achieve improvements in customer value or cost of operations.
4. Long-term outlook. Allows commitment to longer term growth and profit goals
5. Continuing. Investment to renew and improve all assets, especially new products, existing brands and customer franchises
6. Persistent attack. Providing the overall focus of a companya??s activity on fighting and winning, any defensive efforts is part of a long term plan that will culminate in a fresh attack, and
7. Speed of response. To changes in the customer needs or in the business environment, and quick counter-attack to competitive thrusts.
Lets put all of this together now with one more piece of information, which is of vital importance
8
Step Eight
Deciding on the breadth of market coverage
Below are written five elements of market coverage that can be used for your company.
1. Single segment concentration. In which the organisation focuses on just one segment. Although a potentially high-risk strategy in that your company is vulnerable to sudden changes in taste or the entry of a larger competitor, concentrated marketing along these lines has often proved to be attractive to small companies with limited funds. Left to itself if you concentrated upon a single market segment can develop a strong market position, a specialist reputation, and above average returns on a whole.
Below are written five elements of market coverage that can be used for your company.
1. Single segment concentration. In which the organisation focuses on just one segment. Although a potentially high-risk strategy in that your company is vulnerable to sudden changes in taste or the entry of a larger competitor, concentrated marketing along these lines has often proved to be attractive to small companies with limited funds. Left to itself if you concentrated upon a single market segment can develop a strong market position, a specialist reputation, and above average returns on a whole.
9
Step Nine
2. Selective specialisation. As an alternative to concentrating upon just one segment, you may decide to spread the risk by covering several. These segments need not be related, although each should be compatible with the organisationa??s objectives and resources.
10
Step Ten
3. Product/service specialisation. In which you and the company concentrates on marketing a particular type of service to a variety of clients and target groups, i.e. Top-man and Burton group has concentrate upon selling clothing to a pre dominantly young market.
4. Market Specialisation. Here you look at concentrating on satisfying the range of needs of a particular target group.
4. Market Specialisation. Here you look at concentrating on satisfying the range of needs of a particular target group.
11
Step Eleven
5. Full market coverage. This is the most costly of the five for market coverage; a strategy of full market coverage involves serving all customer groups with the full range of services needed.
12
Step Twelve
The 4 Pa??s takes a sellers view of the market, not a buyers view. A buyer considering an offering may not see it in the sellera??s way. Each of the four Pa??s might be better described as the four C's from the buyera??s point of view.
13
Step Thirteen
Product
Price
Place
Promotion
should and can be replaced with.
Customer value
Cost to customer
Convenience
Communication
While you as a marketer see yourself as selling a product, the customer see themselves as buying value or a solution to a problem. Customers are interested in more than price; they are interested in their total cost of obtaining, using, and disposing of a product. Customers want the product and service to be as conveniently available as possible. Look at the 4 Ca??s then build from this the 4 Pa??s, use this as a platform for the start of gaining interest and share.
Price
Place
Promotion
should and can be replaced with.
Customer value
Cost to customer
Convenience
Communication
While you as a marketer see yourself as selling a product, the customer see themselves as buying value or a solution to a problem. Customers are interested in more than price; they are interested in their total cost of obtaining, using, and disposing of a product. Customers want the product and service to be as conveniently available as possible. Look at the 4 Ca??s then build from this the 4 Pa??s, use this as a platform for the start of gaining interest and share.
14
Step Fourteen
Defining the target market
Once you have chosen the target market, it is relatively easy to identify the names of potential buyers. As the company deepens its knowledge of the target market, what it wants, what it buys, where and when it buys, how it buys and so on you improve the ability to find good leads.
Once you have chosen the target market, it is relatively easy to identify the names of potential buyers. As the company deepens its knowledge of the target market, what it wants, what it buys, where and when it buys, how it buys and so on you improve the ability to find good leads.
15
Step Fifteen
Soliciting Leads Through Communication Tools
There are several ways to gather prospect names. You can use advertising, direct mail, telemarketing, and trade show exhibits. Or you can buy names from list brokers, of the companies you want. For example if you wanted to obtain names of cat owners in the UK. One way is to place an add in the national leading newspaper, offering a free booklet titled a??How to take care of your cata?? any cat owner needs only to fill in a coupon and supply the familya??s name, the cats name, the cats age and birthday, and any other information that you can find useful. Most cat owners who saw the ad would probably request a free booklet. Plus there are other ways of obtaining names and addresses.
There are several ways to gather prospect names. You can use advertising, direct mail, telemarketing, and trade show exhibits. Or you can buy names from list brokers, of the companies you want. For example if you wanted to obtain names of cat owners in the UK. One way is to place an add in the national leading newspaper, offering a free booklet titled a??How to take care of your cata?? any cat owner needs only to fill in a coupon and supply the familya??s name, the cats name, the cats age and birthday, and any other information that you can find useful. Most cat owners who saw the ad would probably request a free booklet. Plus there are other ways of obtaining names and addresses.
Overall Tips & Warnings
- Action Planning
- An action plan is something that is done on an everyday basis for a business that wants to succeed. Each action plan does not have to be written on many pages. A two-page action plan for a 6-12 month period is adequate. The action plan should at least contain the following:
- You must now put the goals and strategy into concrete action to take place in the calendar time. All plans must generate into work. That means setting the dates for the companya??s advertising campaign, sales promotion, product and service launches. It also means assigning individuals to tasks and to monitor performance. It means communicating the action plans to all of your partners who are working with you and for you, so they know what to expect and when to expect it.
- Always make sure that you implement good strategies when the company is doing well. If you delay strategies, and wait for the time the company is facing bad times, the strategies will be of no effect.
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