business builder marketing
Answering two key questions will help owners navigate
by Carl Larsen
WHAT’S THE DIFFERENCE between strategic marketing and tactical marketing?
Metaphorically speaking, strategic marketing is your compass heading and destination. Tactical marketing is all the controls you have at your disposal to steer and propel your ship along the way.
But you say you are a business owner, not a ship’s captain.
Well, the destination is what you would like your company to look like at some future point and the compass heading is the most pragmatic route your company should follow to arrive there.
So now you say that the pragmatic route is the hard part to figure out.
It’s really not when you take a look at three basic elements: the current position of your company, the markets ahead of you, and where you want to be. When you have a good understanding of these elements, navigation will become surprisingly like clear sailing.
So how do you get started? Since your goal is to safely navigate to your desired destination, the first two things you need to know are: Where are you now? Where do you want to be?
Where are you now?
Your current position is a summary of everywhere you have been, your value proposition, and how you go to market.
When assessing where you have been, look at the foundation of your business, which is comprised of your core competencies and technologies. These strengths support your value proposition and also provide barriers to entry for your competitors. What is it that your company does really well?
Your value proposition is the ultimate reason why your customers are willing to pay you money for your products or services. Many times the company’s value proposition is not obvious.
One technique that can be used to identify your value proposition is to look at which of your products or services generates the most profits. You may be surprised to learn that only 60 percent of your offering is providing a reasonable return. The other 40 percent may bring you value by bringing in more customers, but many times, it is just unintentional business.
Identifying and quantifying your strongest value proposition will give you the best starting point from which to start navigating.
It is also important to know how and where you take your products or services to your identified markets. How do you reach your customers? Where exactly are your customers? What sales channels do you use? How do you advertise? What materials do you use to support the sales process?
The answers to these questions not only tell you how to get your current customers, but also how you might be able to access new customers to either grow market share in your current markets or to address new markets if need be.
Where are you going?
Now that you have a good fix on your current position, imagine your desired destination. Where do you want your business to be and in what time frame? This sometimes can be a very difficult question to answer.
Other times the answer can be as simple as a rough business valuation at a specified future date — possibly to fund your retirement. It can take many forms, but it is your decision and can be ascertained considering the needs of you, your family and employees.
When choosing a final destination risk is another factor that must be considered. Fifty and even 100 percent growth rates can be feasible, but they may also have very high rates of risk. What is your tolerance for risking the whole business? Are there any reasonable contingency plans?
As you look at your strategic marketing map, at this point, you have your current position and your desired destination. The sea in between those two points is really the marketplace ahead of you.
Not surprisingly, the more you know about this future marketplace the easier it will be to safely navigate it. Are the markets that you serve expected to grow, remain stable, or shrink? Will any of these markets be severely disrupted by a new product or service? Will consolidation within your industry force out the smaller players?
With this work now completed you are ready to navigate. The first and most basic question is, “Will your current offering in your expected future markets lead you to your destination?” For some the answer to this question is yes. With updates to your offering and serving your traditional markets you may well be able to arrive safely at your destination.
Others will need to be creative and cunning. This most likely will involve taking market share within your traditional markets or possibly entering new markets.
If at all possible, stay within your traditional markets. This is what you know. The foundation of your company was built to provide value within these markets and the culture of your company performs within these markets.
If you are left with no other choice than to penetrate new markets, target new markets that require the least amount of change within your company. You do not want to enter a new market that requires your company to have new core competency, new sales channels, new products or services, new customers or a need to cover new geographies.
This is just too much change and carries a high degree of risk. Balance the attractiveness of a potential new market with your company’s ability to execute within it.
[contact] Carl Larsen is founder of Advance Business Advisors LLC in Eden Prairie, providing management advisory services to small businesses: 952.960.3649; carllarsen@iib.ws
