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Business Strategy

Before discussing the process of developing sound business strategies, it is fair to ask what a business strategy is in the first place. A business strategy, sometimes termed competitive strategy or simply strategy, is here defined by six elements or dimensions. The first four apply to any business, even if it exists by itself. The remaining two are introduced when the business exists in an organization with other business units. A business strategy specification includes a determination of

1.     The product market in which the business is to compete. The scope of a business is defined by the products it offers and chooses not to offer, by the markets it seeks to serve and not serve, by the competitors it chooses to compete with and to avoid, and by its level of vertical integration. Sometimes the most important business scope decision is what products or segments to avoid because such a decision, if followed by discipline, can conserve resources needed to compete successfully elsewhere.

2. The level of investment. Although there are obvious variations and refinements, it is useful to conceptualize the alternatives as

* Invest to grow (or enter the product market).

* Invest only to maintain the existing position.

* Milk the business by minimizing investment.

* Recover as much of the assets as possible by liquidating or divesting the business.

3. The functional area strategies needed to compete in the selected product market. The specific way to compete will usually be characterized by one or more functional area strategies, such as a

           * Product line strategy.

* Positioning strategy.

* Pricing strategy.

* Distribution strategy.

* Manufacturing strategy.

* Information technology strategy.

* Segmentation strategy.

* Global strategy.

4. The strategic assets or competencies that underlie the strategy and provide the sustainable competitive advantage (SCA). A strategic competency is something a business unit does exceptionally well, such as manufacturing or promotion, that has strategic importance to that business. A strategic asset is a resource, such as a brand name or installed customer base, that is strong relative to that of competitors. Strategy formulation must consider the cost arid feasibility of generating or maintaining assets or competencies that will provide the basis for a sustainable competitive advantage.

The concept of a business strategy for a group of business units is introduced, and two additional components of strategy are needed:

5. The allocation of resources over the business units. Financial resources, generated either internally or externally, plus non-financial resources such as plant, equipment, and people, all need to be allocated. Even for a small organization, the allocation decision is key to strategy.

6. The development of synergistic effects across the businesses—the creation of value by having business units that support and complement each other. It is only logical that multiple business organizations that can achieve synergistic effects will have an advantage over those that ignore or fail to achieve synergy.

All six elements of the strategy concept can be capsuled into three core elements as shown in

Key Strategies for Successful Marketing Thinking

1. Solve problems. Think in terms of benefits rather than features. Successful marketing propositions don't start with a product, but with the answer to a customer's problem. Know what customers want to buy and WHY they're buying it. If you don't know the driving forces, learn them. That way there are no misdirection or expensive false starts.

2. Learn to manage chaos and manage in chaos. Things don't happen in order, even though management types often crave linear time and work flows. The successful marketer manages chaos-in the corporate world, and in buying patterns. He finds sales patterns where none seem to exist on the surface and builds on them.

3. Build relationships  as well as sales. Most people can sell a good product once. But it's the relationship that spurs future sales. Especially in a service environment, the company is buying you, not just your product.

4. Stay in tune with your customers. Know that consumers buy on emotion first and physical benefits next. How one sells to the consumer is just as important as how it is sold. There will be much more on this in the coming chapters.

5. Borrow ideas from the competition. Do this freely and without remorse. Know how the competition will react to your marketing strategy and the plusses and minuses about competitive products. Become your competitor's best friend and customer until you know almost as much about competitive products as they do.

6. Listen. Listening is an underrated art form. Customers will give you as much information as you need if you probe correctly. Successful marketers ask-and then listen! The second part is where most people go wrong. It's physically impossible to talk and listen at the same time and the weak marketer spends more time babbling than listening. Customers will tell you everything you need to know about how to make them buy your product when you ask the right way. Successful marketers ask questions and know when to shut up.

7. Continuously think of ways to make your product better. Constantly evolve your products and your strategic thinking. Avoid tunnel vision by always looking for peripheral strategies and markets. The ideal product and target market has never been invented. Improve your product and look for new target markets even before the product or strategy hits the market.

8. Never see yourself as a victim. It's an easy mind-set to get into: you feel your product is not ideal, the competition too strong. These are all temporary conditions. Moses had hundreds of thousands of followers hanging on to his every word. But many people don't know that Moses had a speech defect (Exodus). There always will be negatives but you will overcome almost any negative with solid marketing that puts a spin on the product and turns a negative into a selling point.

9. Think proactively 100 percent of the time. Locate problems before they occur, along with potential solutions. There are always going to be problems that you didn't think of when you started a strategy. Find remedies for potential dysfunctional situations before they occur.

10. Fill your bead with minutia about anything and everything. It doesn't have to be related to the task at hand. Mind chatter feeds on those little scraps of information you keep in your head. The answers to questions rest in your subconscious waiting to be set free at the proper moment.

11. Live and breathe marketing. Keep a twenty-four hour vigil for new opportunities. Opportunities don't come and kick you in the butt; they always have to be probed and ferreted out. And opportunities don't work the 9-5 shift. In our business society we have put marketers on a daily nine-hour schedule. But our body and brain rhythms don't fit that schedule. New ideas usually opt to surface at weird times when you're actually thinking of something else-i.e., driving a car, taking a shower, and even making love (unfortunately).

12. Take a break now and then. Having time away from work isn't just a good idea. It's mandatory. Continuous work brings circular thinking. When batteries are recharged during a vacation, you get a fresh look at your ideas and your marketing proposition.

Marketing and Selling