First appeared in ‘Better Business (U.K.)
I am making an assumption based on some experience and a good deal of hearsay about busy managers. My assumption is that a large proportion of you think strategic management is something that happens in books or with IBM or some other large Organisation.
“Not for me, thank you very much.”
Now, don’t worry I’m not going to bore you senseless with a long article on cost benefit analysis, TQM or force field analysis. I want to try to give you some practical (fun, even) ideas to help you have more control of the business and move your business forward.
Firstly a question; “What business are you in?”
Sounds a fairly innocuous question doesn’t it? But maybe it’s not so simple.
Look at the example of Parker pens. Parker pens have had a great name and reputation since their beginning in 1888. Yet somehow by the mid 1980s they were in crisis. Over the past nine decades Parker pens had survived wars, cheap imports, ballpoint pens, roller ball pens, etc. .
Now, in a period of relative calm they were in disarray. They were losing money despite a large range of initiatives. The approach that had evolved was one of competing in foreign markets and neglecting their traditional markets. So, a strategic meeting was arranged and there was one item on the agenda; “What market are we in?”. Answering this question transformed their business.
Someone asked the question; “When did you last receive a Parker pen?”. Ask yourself that question. I guess, like most of us you’ll have a similar response to the people at the meeting; birthday present, Christmas present, presentation – a reward of some sort. Parker Pens finally worked out that they were in the gift business. They were not in the market of competing with cheap pens, etc. This insight transformed their business. Instead of continually cutting cost and quality they spent more on quality and marketing. They redesigned and repackaged their products. They increased their advertising budget by 60%. They raised their prices and began to target the “style-conscious and affluent sector.” Despite a world recession Parker pens increased its turnover by almost 50% in the last half of the decade.
So now – which business are you in? The gift business? The everyday business?
What are your markets? The luxury end of the business? The exclusive market?
If you really think you know who your customers are and what they want that’s really good. This next part of the exercise is the fun part. You’re allowed to day-dream, be a little creative, let your imagination run away with you. This works really well if there are a couple of you to bounce ideas off each other. Now think about who your customers could be? Who are your potential customers? List as many ‘types’ of people you can think of that are interested in your products. Don’t worry that they haven’t any money, or live in Australiaor anything. Just list your potential customers.
This list could include individuals – Mr Jones, groups – students, farmers, “businessmen with no time”, or even Organisations – “Marks and Spencer”, “Harrods”, The Clergy..
You should have quite a nice list. Now write alongside each entry why they don’t buy from you at present – “no money” perhaps, “no time to talk to them “, “never heard of me”
Now have a look at those reasons and for each reason see if there’s something you can control or influence that would make them customers. Influence could mean anything you could possibly do to influence them – from sending them an email to arranging a thirty minute selling meeting with them. If there is (and remember we’re still in non-practical thinking mode here) then just put a tick alongside the customer.
Now look at the list. One of the reasons for doing this is to show how much control you actually do have when trying to win more customers. This shows that you have some control or influence over many, many aspects of your business.
Now it’s finally time to get real and practical. Look at the list and identify one or two potential customers or groups of potential customers who would have a significant impact on your business if they became customers. Highlight those. Think carefully about what you can do to win those people over. Don’t worry too much about the timescale. You’ve already identified that you can have some influence – just flesh
that out. If possible talk to people about ideas. Identify something you can do that will kick start the process. Trust me even if nothing happens you’ll feel better about it.
Go back to the list and identify some very simple, easy (hopefully cheap, or even free) things you can do that will give you a ‘quick win’. Something you can do tomorrow that will have an effect. It may be that you just change your pricing strategy. Whatever you decide to do, do it immediately. This action will give you more energy to move onto the next target customers. Once you get some impetus it’s hard to stop – just like a snowball.
A quick word on pricing. Sellers are often ‘afraid’ of price. They’re afraid that if something’s too expensive no-one will buy. Well that may be true but there’s a similar problem if the price is too low. There is a great story about a business woman who was selling jewellery and it wasn’t going to well. The story goes that she was with her bank manager and realised she’d have to do something so she phones her assistant to reduce the prices. The following day she goes to the shop
and sees her assistant beaming.
“Great strategy we’ve sold lots more jewellery”
“Yes but what’s it cost us?”
“What do you mean?”
“Well, I told you to half the amount”
“I thought you said “Add a nought. “so I did and we’ve sold lots more.”
It’s probably an apocryphal tale, but it does make a point. People don’t always want the cheapest they can get. If something is well made, unique, people want to pay for it. I’ve worked with people who have said “Oh I couldn’t ask that for it – I know how much it cost to make.”I would doubt if anyone really does – once you’ve taken in the cost of everything, your time, the articles that don’t sell, the hours of
paperwork it’s impossible to know the price. One tip someone told me was to look at the finished article and ask yourself how much you’d pay for it if you knew little about the cost of producing it. That’s would be a good starting point for your pricing.
So you’ve done a stakeholder analysis and looking at pricing strategy -maybe this strategy business isn’t as frightening as it sounds.