The Manager's View provides solutions and advice based on management and marketing principles that are used by GWR Research (www.gwrresearch.com). Many of the posts are related to or are taken from the author's books "The Manager's Guide to Building a Successful Business" and "Developing Successful Marketing Strategies". More information on the books is available at Amazon.com, BarnesandNoble.com or Businessexpertpress.com
How Can You make the Competition Irrelevant? “Hit ‘em where they ain’t.”
I was recently asked to write a blog on Blue Ocean
Strategies that was introduced by +W. Chan Kim and +Renee Mauborgne in their
book Blue Ocean Strategy.
Everyone should read the book if they are looking for ways to
grow their business by creating uncontested market spaces. The book is an
excellent read and gives many compelling examples.
If I were to give a summary of the book it would be by using
a quote by Wee Willie Keeler, a great baseball hitter in the late 1800s and
early 1900s, who said, “I hit ‘em where they ain’t”.
At 5’4” and 140 lbs., Willie was a batting champion and is
in the Baseball Hall of Fame.
For businesses, the Blue
Ocean Strategy is a study on building a strategy for any business to “hit ‘em
where the competitors ain’t”. “Blue Oceans” are areas where there is little
competition from rivals. “Red Oceans” are where rivals are congregated,
fighting for customers using similar business approaches.
A place to begin a “Blue Ocean” strategy project is with the
Strategy Canvas. This canvas depicts how players in an industry set their
strategies on multiple strategy dimensions.As you can see in the example below it shows how Southwest
Airlines strategy differs from the other airlines. This difference has led to
Southwest’s success in an industry full of failures and troubled airlines.
Blue Ocean Strategy Canvas
This is an excellent starting point for any company wishing
to determine where to move strategically within an industry to find blue ocean
Once a business has determined areas that can be exploited
to create a “blue ocean” the book provides a well-constructed approach to
developing a “blue ocean” strategy and for dealing with hurdles that will stand
in your way.
When introducing a new product or service to the market a
key, and often critical, consideration is the price for this offering. I have
seen folks simply take the cost of production and use a percent mark up as a
pricing model. This is the simplest model and it provides a good example for
the need to consider other pricing model options.
Here are 10 things to consider before setting a price for
your product or service: ·Mark up
Based on Cost Vs Retail. In the opening paragraph I gave the example of a
model being used that marked up a product by a percent over the cost. The cost
used here is generally direct cost or labor and materials. If someone wants a
30% of the asking price to be the mark up, then using 30% of cost won’t provide the
desired outcome. Simply put, it is the wrong math. If something costs $1 to
make and it is marked up by 30% for a selling price of $1.30 then the profit of
based on the asking price is 23.07%. To arrive at a 30% mark up based on the
selling price it is…
THE IMPORTANCE OF PRODUCT PRICING By
Gary Randazzo The impact of pricing
strategies can be critical for the success of new product launches, a company’s
image and ultimately a company’s short and long-term success. REACTING TO THE COMPETITION I have worked in
several industries and found that pricing is often overlooked as a key
marketing tool. In many instances pricing is driven by the sales department and
is a reaction to the competition. This reaction assumes the competition knows
the market better and has a superior marketing strategy. When reacting to
the competition it is important to understand that you are being drawn into a
game whereby you play by the competitor’s rules. You are playing their game and
changing your strategy. Your hope here is that you can play the game better or
that the competitors can’t play their own game very well. I am reminded of
a time where my company was vying for the business of a key customer. The
customer was a shrewd negotiator. We understood the valu…
TO CLARIFY YOUR MARKETING STRATEGY, START CLASSIFYING YOUR CUSTOMERS
From Texas CEO Magazine, December 2012
By Gary Randazzo
Every business, at some point, will review its marketing strategy. The cause for a strategy review can come from a difficult business environment, a windfall in profits, a change in technology or a change in customer preferences. When a marketing strategy review is in order it can be challenging to decide where to start.
Classifying customers, based on the amount of their spending, can be a good place to begin. Spending used as a metric can help the analyst understand which customers provide the biggest impact:
1) Key customers representing the largest percentage of sales and profit
2) Customers with the potential to provide greater sales (under-potential)
3) Customers that do little or no business with the organization but use products similar to those offered by the organization (nonusers)
This simple classification may…