It's Time to Review Your 2008 Business Strategy

Jim Karrh Commentary


The year 2008 still has that new-car smell to it, yet my impression is that everyone managing a business in our state is already stomping the gas pedal pretty hard. So how confident are you in your company's marketing strategy?

Will all that horsepower, effort and desire ultimately pay off? 

This column is about marketing strategy - the process of pointing your company's limited resources toward the fights with the greatest opportunities and least competitive resistance.

This is an Opinion

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Hundreds of consultants, professors and executives have written thousands of tomes on the subject of strategy.

But I'm not convinced that anyone needs to fill pounds of paper with long words to craft a sound and winning strategy.

My training and experience have led me to believe that an informed, honest set of answers to only six (admittedly tough) questions should do the trick.

Here is my set of Super Six questions:

1. "Which market segment(s) should we serve?"

In essence, this question requires you to decide which fights to fight. Many companies use a SWOT-type analysis (strengths, weaknesses, opportunities, threats) to jump-start this particular discussion.

However you begin, the answer to this question requires a decision about three market components: the end customer segment(s) you will serve; the functions or services you will provide to support those segments; and the technologies and/or channels that will support the functions.

For example, the Magnotta winery in Ontario, Canada, has become the third-largest winery in the province by selling mass-appeal wines at the lowest prices possible.

The Magnottas bypass selling through the monopoly-owned liquor stores in Ontario and instead sell directly to the consumer from the winery, via a dealer network and online. The Magnottas established a cost advantage by combining winery operations with their fresh grape-juice business.

2. "What differentiates us in the marketplace in serving the needs of those segments?"

 Many companies struggle because they essentially offer "me-too" products and services - those that fail to be unique in any important and relevant way.

Without any differentiating benefits, a business can never succeed in positioning against competitive offerings.

Long-term winners carve out a position in the marketplace, make sure it's relevant to their segments and fiercely defend it; among auto brands, for example, Volvo has for decades successfully carved out a profitable niche in safety. 

3. "Where are we in the product life cycle?"

Products, like people, follow a natural sequence of birth, rapid growth, maturity and decline.

Each stage carries important implications for strategy.

Recently introduced products require investment to counter consumer doubt, for example, while mature product categories are marked by tough price competition and fights for share over relatively narrow product differences.

4. "Under which circumstances should we enter or exit markets?"

Marketing battles require clarity of mission as well as a well-considered exit strategy. Have you and your colleagues considered when you might leave today's battles in order to fight different ones?

In general, the criteria for deciding to stay in (or, alternatively, to skedaddle from) a market are the attractiveness of the market, your company's relative advantage(s) in that market and the inherent riskiness of the market.

5. "What is our combination of marketing vision and corporate values?"

Here I mean the ideas that capture the imaginations of employees, distributors, suppliers and other members of your corporate tribe.

Strategies based only on financial goals won't do the trick across the organization; human beings need to connect to larger ideals.

6. "Have we anticipated the strategies and responses of our competitors?"

Good strategies incorporate a full competitive response analysis.

For each competitive option in your plan, you should address the range of competitors' possible reactions - plus your informed forecast of the likely impact of each on your company.

So here's hoping you and your colleagues have chosen the right fights - and strategies to win them - for 2008 and beyond.

Most of my columns for the balance of the year will address tactics for making your strategies hum.

(Jim Karrh, Ph.D., is senior vice president of Advantage Communications Inc. in Little Rock. E-mail him at jkarrh@advantageci.com.)