Volume 3; Issue 3
I Don’t Know if I Still Have a Strategy – Part 2 of
Formulating a New or Improved Competitive Strategy
In Part 1 of this newsletter series, we suggested having a
meeting amongst key company personnel to brainstorm answers to the
six questions below. In this issue, we will discuss questions 1, 2
This exercise is designed to make you think differently
about what is happening in your business. These six questions are
similar to those many consultants might ask early in the process of
correcting or re-implementing a new growth strategy. Oftentimes,
these questions illicit a response from business owners commonly
referred to as a “deer in the headlights response.”
- How many different reasons are there to explain why customers
buy from me?
- How many of my customers also buy from my competitors? How
much do they buy and why?
- What makes my company different than my competitors? (Include
the good things and the bad.)
- Is my goal to keep up with, stay ahead of, or be different
from my competitors?
- Do I have the right mix of products and services or am I
trying to be too many things to too many people?
- Are my customers in growing, mature or declining industries?
Consider your staff’s answers to the questions 1, 2 and 3. All
three questions relate to why customers buy from you and why others
buy from your competition. Customers typically buy for one or more
reasons, but those reasons normally fall into five categories.
Since most customers have mixed reasons
for choosing one provider over another, we are looking for the
reason that appears more than any other. For example, suppose the
range of answers presented during the meeting included price,
service and convenience. However, service was mentioned more often
than the other two. List these answers in a column on a white board
and use different colors for each – Black (least mentioned), Blue
(mentioned often) and Green (mentioned most). Put your company name
The next step involves a comparison of the reasons why people buy
from your competitors. This might include your own customers if they
sometimes use competitive sources. How do these reasons compare to
those listed for your own company? There must be differences, no
matter how subtle. List these reasons in a second column using the
same colors as before. Make a column for each competitor.
key to this exercise is to understand what motivates people to buy
from you versus your competitors and what separates your competitors
from each other. You are now better prepared to adjust your
marketing to reflect your value differentiators – those attributes
that separate you from the competition.
Suppose your price
is a little higher than the competition but your customers remain
loyal because they prefer your service. You might run a short-term
sale to attract customers from the competition and then “wow” them
with your service.
You may find you need to be more like the competition in some
ways and remain different in others. What if your service department
was open until 7 PM versus closing at 5 PM? You may find many of the
competitors’ customers would switch to buying from you because they
require later service hours. Do your competitors carry complimentary
products that make it easier for customers to get what they need in
one stop? Perhaps you need to reconsider your inventory
Remember, price is the last thing you want to change to
drive new traffic. Pricing represents a tactic that every competitor
can easily match. Within six months, everybody will be exactly where
they are today but making less per sale. Playing with price corrupts
the market for all participants.
between you and the competition are so subtle they don’t provide any
basis of competitive comparison. This isn’t necessarily a bad thing.
It may mean that an opportunity exists to create a “value
differentiator” and catch the competition flatfooted.
example, a local, in-town gardening center was competing for the
same customer as larger competitors in the country having acres of
product at lower, volume-based prices. After performing a similar
competitor analysis with a trained consultant, they decided to no
longer compete head-to-head with these larger competitors. They
began reducing inventory in low margin areas and expanding inventory
in higher margin, specialty items including unique gifts and
seasonal home decorations. They also leased 1,200 feet of space to
Starbucks and repositioned themselves as a gift and gardening
“boutique” and improved profit margins and created an enhanced
shopping experience for their customer.
|BizMACH Affiliates are Experts in Small Business
Call us for a Free and Confidential Consultation. After
all, you have spent a lifetime building a company and sooner
or later it will be time to cash out. Wouldn’t you like to
know where you stand today so you can determine where you need
to head tomorrow?
BizMACH is an association of highly skilled
consultants, evaluation experts and merger and acquisition
We take ordinary companies and create extraordinary value.
Best of all, we only work with lower mid-market companies
and our fees reflect our confidence.
Ninety percent or more of our fees are contingent upon the
successful transition of your company - even if that sale is
Competitve advantage is the key to revitalizing your
company's growth and profitability.
Call us if you'd like a free consultation and to learn
how BizMACH can grow your company and increase its value.
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