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Growth through Market Strategies
Focus on your small business market strategies for growth. What is strategic planning? How do you build an effective strategic management process? Understanding industry-specific strategies is useful for building your own strategic business plan. For example, you can use an airline industry analysis as a model (because these are relatively easily accessible online) for different types of strategies (both successful and unsuccessful).
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What is strategic planning?
It's about ensuring that you plan for your small business growth and success: and then act on that plan!
Part of your strategic plan and your strategic management process is to build a market strategy (or strategies).
Three primary strategies to use in building your market and/or your product are market penetration, market development, new product development and diversification (of either product or market or both).
Adding new markets can add significant costs, stimulate product innovation, and grow sales (you need to take the bad with the good).
Three Growth Strategies:
Market Penetration
- increase penetration into the market by strengthening your marketing and promotional programs (in particular, consider your marketing mix promotion plan)
- increase penetration into the market by strengthening your small business sales efforts (for example, through personal selling, telemarketing, postcard marketing, cold calling, direct mail and direct marketing campaigns, and more)
- increase penetration by employing competitive strategies to gain market share from your competition
Market Development
- target marketing of customers who are not buying: why are they not buying, how can you appeal to those buyers
- focus on market segmentation: look at new market segments and potential customers in those new segments
- success with a market development strategy is dependent upon thorough market research and planning.
Market Diversification
- add new markets and increase sales and profitability
- add by expanding into new market segments within your industry
- add by expanding into new market segments outside your industry
- Diversification may require new equipment, new facilities, new operating skills and new staff.
- Merger and/or acquisition of other businesses might be an attractive method of diversification; you can buy the equipment, the facilities and acquire the staff and skills with the new firm.
- Partnerships and/or alliances with other businesses can be an alternative method of market diversification.
- A diversification strategy can be used as either an offensive or defensive strategy. As an offensive strategy, a business could use it to grow market reach and market share. As a defensive strategy, a business could use it to protect a shrinking or stagnant market and extend the market's life-cycle.
- There are significant advantages to diversification. For example, diversification can minimize the risk of seasonality for a specific product line in a specific market. Furthermore, a concentric diversification strategy (which is one where the market, or product, or service is related) can leverage existing fixed costs and minimize the overall cost of goods sold.
- add new markets and increase sales and profitability
Market Strategies and the
Strategic Management Process
Use an Airline Industry Analysis as an Example:
The airline industry has both successes, and failures. It has used market penetration, development and diversification strategies to grow markets. The industry has focused strategy on growth, but has failed in recent years to adapt its strategies for economic factors and other market drivers and key success factors.
If using an airline industry analysis to build your own strategies (or any other industry analyses), make sure that you clearly understand the failures, along with the success. Don't model yourself after the wrong decisions or activities.
There are risks associated with each market strategy.
As a small business owner, you must assess each risk, understand how to mitigate the risk and whether or not it is still worth while moving forward (there are times when the reward is worth the risk and times when it's not worth it to move in that direction; you need to strategically manage the process).
Focus on successful business growth, and ensure that you develop your market strategies to lead you in the right direction.
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The Importance of Strategy
Why is strategizing important to your business?
Because it enables you to more clearly understand what you need to do to more your operation in the direction you need, and want, to go.
Doing a thorough analysis and review will enable you to implement more effective strategies, tactics and techniques.
Results and Strategy
Definition of Business Model: It's Different
The type of tactical planning you complete as you strategize is important because it forces you to make difficult choices and difficult decisions.
(Make sure you understand the definition business model - the practices, and focus, of the business on delivering the value proposition - to engage in a strong and successful strategic planning process).
Also write down your choices and decisions to plan the actions necessary to move forward (use samples to provide you with a model for your own action plan).
The action plan is your road map. You must ensure that you are managing the direction you take.
Once you begin this planning process you will need to ensure that the plan you develop is do-able; make sure you include effectiveness measures in your plan.
And remember that your plan for strategy in business needs to be reviewed on a regular basis and be adapted as market and economic conditions change.
The end goal is not the plan but rather the results therefore make sure you have measurements in place to track results.
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Tools for Strategy Planning
Start with your SWOT (strengths, weaknesses, opportunities and threats) analysis.
Add aspirations and results to the SWOT (some do SOAR (strengths, opportunities, aspirations, and results) as a separate activity) to ensure that your vision for your business is incorporated in your goals and objectives.
Conduct a market opportunity analysis and look for unmet needs that align with your objectives.
Doing a thorough analysis and review will enable you to implement more effective strategies, tactics and techniques.
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