Strategy
Strategy is simply working out what you need to do to get from where you are now (Position 1) to where you want to go (Position 2). Along the way you may wish to set ‘milestones’ or interim goals rather than ‘trying to eat the elephant at one sitting.’
You need to work out the actions and initiatives that will enable your vision to be achieved.
Not all your strategies can be pre-planned and you will develop some as circumstances change.
You need to work out how you will win market share from your competitors. Your business needs to reflect your strengths and you need to understand these in order develop your competitive strategy.
There are 3 generic strategies:
Strategy 1 – Cost Leadership
You need to have a lower cost structure than your competitors allowing you to consistently offer lower prices.
It presumes that you will have a larger volume of sales as the profit margin is low.
It is well suited to commoditised products and services.
Whilst you may have low overheads, most home and small businesses should not attempt to follow this strategy but look to develop one of the options below.
Strategy 2 – Differentiation
A premium price is charged as the product or service has perceived added value in the mind of the customer.
Differentiation can be achieved by better: product quality, customer value, customer service or exclusivity.
This strategy works best if your products and service can be delivered in a wide variety of ways and variations to customers who have a broad and diverse range of needs.
The additional price charged must cover the cost of providing the extra value.
This could be a suitable competitive strategy for your small or home based business.
Strategy 3 – Market Niche
This is where your business offers its products and services to a focused market niche.
You may actually be positioned as low cost or differentiated in your niche.
Many businesses can occupy a niche through a geographical focus.
This is the preferred strategy for home and small businesses. You can slip under the radar of bigger businesses and appeal directly and more meaningfully to a focussed market niche.
Online Market Research To Find Your Niche
The internet is an ideal tool for carrying out market research to find your market niche.
You can discover what people are asking about, find out their hidden questions and desires, get ideas for product creation, look for search volumes, cultures and discover trends.
If you want some ideas on how to do this, contact Mark for assistance.
