Читать книгу Simply Management: Effective Methods to Plan, Manage, and Improve Businesses - Warwick J Thompson - Страница 8

Now you should have an understanding of what to consider when trying to develop a business strategy, and how Strategy differs from Success Factors.

After ensuring all the relevant Success Factors successfully achieved (or will be), now turn your mind and attention to building a comprehensive Strategy - whether your business is a start-up, an existing business, or a new acquisition.

Work your way successively through the Source Group lists. As the strategy develops, constantly ask yourself:

•“Will this give me a competitive advantage?” and if so, how and why.

•“Will that advantage be sustainable?” for how long, or how can it be made so.

•“Will my product/service be clearly differentiated?” and if so, what will achieve that.

•“What consumer need am I satisfying?” And does it matter to them.

•“How will competitors react to my strategy?” – because they surely will.

•“How will I/we respond?” and will the strategy still deliver competitive advantage.

Following are some recent successful and unsuccessful business strategies that illustrate attention, or lack of it, to the process above.

Case A.

American fast-food chain Subway entered a mature, crowded and cluttered market in which some existing participants were struggling to remain viable. Subway was virtually an unknown.

After attending to all the relevant success factors, their primary strategy was – and is – heavily built on health, nutrition and freshness, riding on a diet-conscious social mood, with a secondary strategy of variety, customer choice and value for money. Their differentiation from competitors and their positioning as the healthy alternative choice was -and is – quite clear.

Their competitive advantage is sustainable because their product-offering and strategy is quite specific to their retail outlet: competitors are already firmly positioned in the consumer mind so that even offering some me-too products does not change the public perception. Try as they might, competitors cannot match the health/nutrition strategy of Subway, supported by a stream of product innovations.

Case B.

Two agricultural scientists planned to niche market a highly specialised consumable product to the arable/horticultural sectors. By both its formulation and ingredients, the product had some unique characteristics that would clearly differentiate it from the nearest competitor products.

To secure their market advantage, they had almost exhausted their scarce funds in an attempt to patent their product in the local jurisdiction. The patent had not yet been applied for and both founders had taken alternative employment to earn more money for further funding the patenting effort.

I advised them to discontinue the patenting track and pursue a three-part strategy instead. Firstly, get some technology security by negotiating with ingredient suppliers for a period of exclusivity based on volume-purchases. Secondly, get a number of field trials underway across a variety of end-users to prove the superiority and efficacy of their product. Communicate the positive results of those trials strongly to their potential market (using that market-promotion effort to draw in distribution from appropriate retail chains) and price the product on the basis of offering superior results for a competitive cost.

Done quickly and done well, their brand would dominate the market niche and secure market advantage.

Case C.

A new mobile phone company planned to enter the market against two very strong well-established existing competitors. Their product offer had a very narrow and specific focus versus the competitors’ broad range of products and services.

The new entrant had attended to their obvious success factors including at enormous capital cost, setting up towers to provide comprehensive communication coverage of all the main centres.

Their strategy was heavily based upon very competitive pricing for text, voice and data. They would provide outstanding customer service, including portability and immediate registration of existing phone numbers for new customers switching from the existing competitors. They would communicate their price and service strategy aggressively to their target market – existing mobile phone users aged 15-35.

In a casual conversation prior to launch with several of their executives, I offered the observation that their strategy lacked competitive advantage, was not sustainable and was highly vulnerable, suggesting that the existing broad-service competitors could easily match the new entrant’s pricing plan for their narrowly-focussed product, cross subsidising the cost from other profitable sectors of their business.

Existing number portability and prompt registration depended strongly on co-operation from the existing competitors who would not be inclined to be so co-operative. The new entrant had no retail presence to provide direct customer service and assistance, yet would rely on consumers to phone in or email, then obtain their new SIM-cards by mail; the consumer would have to remove their existing SIM-card and install the new one. I also added that it is often difficult to provide outstanding customer service immediately from an initial start.

The launch initially failed its objectives. Adverse public reaction and comment was so strong that the existing competitors had not needed to respond to the pricing offering. The assertions and commitments given by call-centre customer service representatives (based as they were on policy-set targets) proved hollow and were not delivered. Huge delays with number portability and registration meant newly purchased SIM-cards did not work. The target market demographic, not known for its patience, understanding or tolerance, inundated the website and the call centre with queries and complaints, causing crashes and further delays. Even a blog was started by furious customers and attracted hundreds of angry comments and frustrating experiences.

The competitors’ pricing response is still to come and hit the struggling new entrant. Having spent several hundred million dollars on their set-up, it could cost the new entrant at least that again just to secure a toe-hold in the market after such a disastrous start. Yet it was mostly predictable.

Case D

The talented food-technologist owner of a small food manufacturing business had developed a cluster of new sauce products. These were fresh products attractively and innovatively packaged in a clear soft-plastic pyramid-shaped container displaying the company brand prominently, followed by a description of the product and use-instructions. Because they were fresh, the sauces had a limited shelf-life and had to be stored, displayed and sold from a chiller. Retail distribution was thru the major supermarket chains.

The supermarket chains agreed to stock the products, given that they were innovative and potentially a new niche category of fresh sauces, and launched them in all stores throughout the country. However, within a few months, the products were delisted and withdrawn from retail display.

There were a number of weaknesses here, both strategic and operational - that resulted in failure.

There was as assumed competitive advantage that a fresh and ready-to-use sauce was better than one that had to be made up from packeted dry ingredients, or alternatives. There was an assumption that the products satisfied a consumer need. Neither of these assumptions had been market-tested. The innovative packaging, though novel and attractive, could quickly and easily be copied by competitors and therefore delivered only a momentary competitive advantage.

Given the small size of the business and the small volume of product, the production costs were quite high. The resulting price of the product, although not very high per unit, represented an expensive addition just as a complement to a meal. Not only did this price-point not appeal to consumers, it was highly vulnerable to being undercut by larger competitors if the new category proved successful. So the cost/price strategy was not sustainable.

Chilled shelf space in supermarkets is limited, expensive and aggressively competed for. Any new product or brand needing such specialised retail distribution must attend to its fundamental success factors, irrespective of the strengths of its strategy, in order to be granted the space and even more importantly, to retain it. In this case, there was virtually no advertising or promotion to create consumer awareness of the new product. There were no in-store tastings or promotions to generate a demand for the products. There were no ‘taste-tests’ conducted prior to launching the products to ensure consumer acceptance of the flavours offered and there was no alignment of the products with commonly-prepared meals to ensure a volume-end-use for each.

The lack of consumer awareness, the tenuous alignment with a volume end-use and the high price of an elective addition to a meal, all resulted in the products lack of movement off the shelf. Not only did the low consumer off-take not meet the retailers’ objectives for chilled shelf space, but the products low turnover meant they reached their ‘use-by’ date and had to be removed.

The innovative packaging has now been utilised by large food companies for other high-volume lines such as soups.