What Business Are You In?
Most businesses regard the product or service category to be their business identity i.e. a producer of potato chips is in the edible consumables category; a bank is in financial services category; an auto manufacturer is in the automotive category etc. This has worked well in the past. But the global financial crisis and the resultant recession from it has brought about a seismic shift in how consumers are now engaging with brands and businesses. This shift in consumer psyche has resulted in businesses learning (and learning fast) that the ‘old way of doing business’ is simply not sustainable anymore!
Putting out a product, highlighting a ‘edge’ or a “unique selling proposition” and communicating that using all the consumer touch points (a la integrated advertising) and throw in a good measure of ‘sales promotion’ to get the sales numbers in—simply doesn’t jive anymore today. Today, the consumer is asking to experience certain value benefits, in the brand and in the relationship with the brand, prior to getting to the usage state and contributing to the business’s revenue growth.
Simply put, the consumers (courtesy social media and online communities) are forcing businesses, (small, medium, large) to re-define “what business am I in”?
For larger businesses (read multi-nationals with global brands) they’ve taken the lead early (within the recessionary period) by moving into the realm of providing value (in many ways) to the consumer to keep the engagement, get positive brand referral and gain usage. But for the entrepreneurial, small and medium-sized businesses, having to move onto creating, providing and delivering clear value benefits is a paradigm shift! From being in the business of providing a physical product benefit, they now have to deliver a perceived value benefit prior to their consumers using them. Couple this with the increasing cash flow and financial tightness that small and medium businesses often face and you’re looking at a real dismal business future.
So is it all doom and gloom? No!
On the contrary, this is an opportunity for such businesses to move on to the next level of growth. Not overnight, but over a fixed period of time, with painstaking hard work involving meticulous business and brand planning, starting with answering truthfully and factually the all-important question of “what business am I in” in order to increase the “value benefit” to their core target consumers.
If this has interested and intrigued you, then allow me to add value to you!
Here are three strategic concepts that will help you identify the value benefit your businesses can give to your target consumers.
1. Potential Opportunity is infinite.
Opportunity exists provided we look for it. In order to find the opportunities, re-look at the business from providing only finite benefits to infinite benefits. In order to find infinite benefits, emotional satisfaction (among the targeted consumers) has to be understood. Evaluate this emotional satisfaction to see how to increase it. This process would:
(a) Provide a new answer to “what business am I in” and
(b) Provide a new creative (and innovative) approach that would deliver more perceived value.
2. Think BIG in order to make big changes.
Many entrepreneurial and small businesses often get stuck in the “survival” rut. It’s a hard job to keep the business afloat, manage the costs, and earn enough to keep going. This can often dim the creative thinking ability as a result leading to a vicious cycle where the input is based on the need of ‘surviving” and thus the outputs are low. A change in thinking and thus, in approach can do wonders. Thinking big helps in identifying where to make changes, how to make those changes.
Start with a realistic assessment of where the business is at. Draw up a S.W.O.T (Strength, Weakness, Opportunity, Threat). Evaluate options, the resources required, costs etc. Cut the list down one by one, by looking through what can be done based on existing resources. Anything on the SWOT not adding value to the process in moving the business forward, get rid of it. In order to do this, as the business head, you would have to take a hard look at yourself and even change your thinking, beliefs and habits. Approach the business from the perspective of providing value than translates to financial growth.
Identify the value you can provide and identify the activities that aid in delivering it and tie it back to developing financial growth. Then set annual targets. Each year move that financial target upwards realistically. This doesn’t mean the business has to have more customers but it can increase the contribution from the existing customers by increasing their usage.
3. Be really good and really different.
Every category has an abundance of everything. As a result of this your core consumers would have choices plentiful. This reduces the perceived value from one product to another (unless and until it indeed is a true innovation) . The net result is a low price setting
So how do you create the value perception which would be unique to you and your business? Identify what really matters to your core consumers, check if your product or service is delivering that and delivering it well. Then engage your consumers. Generate engagement to grow the “perceived quality” of your product or service and then deliver well. Net result is a great reputation and a perception of ‘quality’ that your consumers would espouse for you to their communities and become your brand ambassadors.
These three concepts would enable you to develop a more sustainable business model simply by involving your consumers and engaging with them. This engagement would increase the “trust” factor as the consumers would share their emotional need since there is “transparency” i.e. consumers knowing that you want to develop/deliver a product/service that is beneficial to them. Knowing this emotional need and adapting your business process accordingly, you re-define the business you are in by becoming a value provider instead of a manufacturer or a service provider.