Wouldn’t it be great to just take a pill and make your competition go away? Of course it will never be that simple. I believe we can agree that all the easy problems have been solved and if we are ever to be able to make our competition irrelevant it will require a difficult course of action that challenges our assumptions and historical ways of relating to customers.
The natural result of market forces over time is to drive profit out. That’s why the good old days are always seen in the rear view mirror. Profit is for humans as a flame is to a match. As soon as you find it other people figure out what you are doing, and they copy you or come up with alternative solutions that dilute the profit pool for everyone.
But when you realize you are competing for profits, not sales, not market share and certainly not to be the best, opportunities show up that may otherwise be overlooked.
Profit follows value creation which, in an oversupplied world, is not to be another “me-too” company. Do we need another restaurant or another big box store or anything, for that matter? Probably not, but we still have wants and goals. I don’t need another vendor, I have dozens standing by to replace the ones I have . . . but what do I want? I want convenience. I want more customers. I want what I want, the way I want it, when and where I want it!
The terminology of strategy and strategic positioning comes from the military, and the desire to gain a strategic advantage over the enemy, which often takes the form of positioning your troops in a specific way. Flanking maneuvers, taking the high ground, come to mind.
Applying this concept to each element of your business model can reveal opportunities to capture profit that leaves the competition out-flanked.
Take your distribution model as one example. How do you currently interact with your customers? Where, when and how do you serve them? Are your channels and practices essentially the same as those of your competitors? If so, your customers sees you as a me-too commodity and pressures you on price as your only differentiator.
A friend of mind secured tons of profit by delivering his product (liquor) to restaurants in the middle of the night simply because it was more convenient for the customer and no one had ever thought to offer it.
While we’re on the topic of restaurants, I read this week that the number of food trucks in Minneapolis has grown from a handful to about 70 in three years. If they applied the idea of strategic positioning to a different meal time they might find a lot more customers at dinner time at the Park and Ride transit stations who now would buy dinner for a family instead of just lunch for themselves.
But the channels you use to reach your customers is only 1 of 9 elements you need to examine:
- Your value proposition: is it truly unique and does it position you as an irreplaceable strategic partner who helps your customers experience what they really want?
- Customer relationships: do you show up in the manner your customers really want?
- Customer segmentation: have you sliced the onion thin enough to identify the micro-niche markets who value most what you do best?
- Channels: have you considered that the way you reach your customer could and does change over time?
- Revenue streams: have you bundled services or created enough offerings to achieve the “just right” service level while expanding your revenues?
- Key relationships: have you maximized the potential of your key relationships?
- Key resources: have you put enough thought into the utilization of key resources?
- Key activities: have you identified the activities and processes that create unique vale for your customers?
- Cost structure: can every expense by justified for how it supports your value proposition?
Once you have thoughtfully integrated these nine elements you will have built a winning strategy!
Written by Bill Mills, the CEO of Executive Group
The purpose of Executive Group is to help business owners dominate their niche market by becoming indispensable to their customers.