Pillar 3 Your Strategic Market Position – What’s It All About?
The remaining six Pillars of the Eight Pillars of Business Prosperity help you move from where you are to where you want to be.
Our work starts with Pillar 3 Your Market Position which is about finding the right strategic position in your market.
The aim is to find a place where you can be the top dog, the king (or queen) of the castle by finding a unique space in the market.
This means you can dominate so that you are the obvious or even the only choice.
Recession reveal the difference between a good and bad market position. The good times often allow businesses to flourish, even when they hadn’t made the hard choices and decisions because the balance between supply and demand is reasonably even..
What Is A Bad Market Position
I hope that you don’t find yourself in this situation which is an extremely bad position.
- Being stuck in a long term declining market;
- Which is particularly sensitive to trade cycles so if the economy falls by 3%, the sector falls by a multiple of 3% , for example 6%;
- And is also seasonal – like for example many retail shops which rely on Christmas gifts – and don’t have a steady cash flow;
- In a market crowded with many competitors;
- Who offer very similar or identical products and services;
- With high fixed costs which make them desperate for any extra margin;
- And prepared to cut prices at the first chance of an order;
- From customers who have no loyalty to their regular suppliers and who are happy to jump from one to another in search of the lowest prices.
Any business that find themselves in this position is going to have a very tough time and may even have their survival under threat.
How does a business end up in a poor market?
It’s a combination of:
- A badly thought out decision to enter an unattractive market caused by ignoring or not seeing the warning signs.
- Crazy, irrational competitors
- Changes in the wider environment as economies go through periods of boom and bust
- Changes in the specific market, perhaps caused by technology changes driving customers to want different things.
What Is A Good Market Position
Basically it is the opposite of the bad position.
A market that is growing and because the business has managed to make itself stand out from its competitors ( i.e. it has differentiated products and services), customers are loyal and reluctant to switch because they don’t want to give up the unique benefits so price pressure is much reduced.
The Impact Of The Recession
The recession is bringing its own pressures and businesses which see a big drop during the down-times often see a big jump during the boom.
It’s one risk factor but it does mean that the wise business owner in such a market harvests profit and cash when possible to protect the business during the difficult times.The less cautious business owner enjoys the good times and then struggles without the cash reserves to fall back on.
Making Your Business Different To Your Customers
This difference comes down to the decisions the business owner makes over a number of key areas.
You can be different because you specialise in serving a particular type of customer.
For example an accountant may specialise in the hotel and restaurant trade. He or she will reduce enquiries from other small businesses but becomes the obvious choice for a restaurant who wants financial advice and help in negotiating a better deal with the brewery.
Or you can specialise in providing a particular type of product or service.
We have seen this specialisation in retail with the development of the category killer superstores like PC World and Toys’R’Us. Vast product ranges and competitive prices magnetically attract customers.
Even these businesses aren’t in a secure position over a longer time period. They find it difficult to fight against Internet based competitors like Amazon who offer even bigger ranges and even lower prices..
Service providers can specialise in dealing with particular problems. For example, lawyers can move from being a general practice offering criminal law services, contract law, divorce law etc to a specialised firm focused on one aspect of the law, for example employment law.
Even greater specialisation can be achieved by combining a niche market with a specialist product or service.For example, employment law for entertainment businesses like theatres, casinos and strip clubs.
As your tighten your market definition, the more “right” you appear to people in the market.
You can also target particular price points – the economy sector, the middle market or the luxury market and adjust your product, service and trimmings to match.
Your Marketing Message
Your difference may be in how you communicate to your market so that it thinks that there is more of a difference than actually exists.
You may have heard that you need a USP or unique selling proposition which is often reduced to a catchy phrase which emphasises one benefit.
People struggle with the idea of unique. It sounds scary and difficult.
It just means that you need to be unique and stand-out in the small group of suppliers that your prospective customer is likely to consider. A small business based in Birmingham in the UK who is looking for a firm of accountants is unlikely to look outside of their close geographic market. These local firms of accountants aren’t competing against local firms in London or Glasgow.
One of the most famous USPs is from Dominos Pizza
“You get fresh, hot pizza delivered to your door in 30 minutes or less — or it’s free.”
This powerful statement was the foundation for their success. It tapped into what customers wanted and no one was offering a guaranteed fast delivery of pizza at the time.
It has lost its uniqueness as other pizza places have developed processes to allow them to deliver quickly. That’s progress because, if something works, competitors will imitate and reduce the advantage of the original business.
The risk that competitors will copy shouldn’t stop you developing your own clear distinction.
- First, competitors may match your marketing promise – but can they deliver on that promise? If they don’t, customers will appreciate your consistency service even more.
- Second you can move on, always one step or more ahead.
Conclusion On Your Strategic Market Position
Pillar 3 Your Market Position is my strategy training and I believe it is a fascinating area which is not well understood by many small business owners.
Strategy is a buzz word but few small businesses operate strategically. They don’t think long term and they don’t consider how their actions influence competitors and vice versa.
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