Every endeavor has a strategy for winning. Want to win at Scrabble? Texas Hold'em? Stock-car racing? Politics? Business? You need a strategy, a plan toward a goal. The word comes from the Greek term for “generalship,” the guy who develops and carries out military plans. It suggests that the endeavor is a battle that must be well planned and executed for success.
Your business is a battle. You will be fighting for fiscal territory with the help of economic weapons and soldiers in service. You will win a few and lose a few battles, but your goal will be to win the business war and live to fight another day.
Actually, you will develop numerous marketing strategies for various components and tasks within your business. For example, you will choose the best methods of introducing your business, offering your products or services, and positioning your business in the marketplace. You'll also develop a strategy for repositioning your competitors (“the enemy”) so that your business wins more battles.
You'll continue using strategic thinking in other aspects of your business in addition to marketing. For example, if you have an investor or lender to satisfy, you'll develop a plan or strategy for sharing profits or paying back debt as needed. If you someday choose to move your business to a larger facility, you'll need a strategy to ensure success.
Initially, you need a comprehensive strategy that plans many aspects of your business opportunities and challenges. You must step back from your business for a moment and make sure that its overall concept is viable. That exercise is one of the major functions of writing a business plan—to define and strategize. To develop an accurate comprehensive plan, you must ask and answer some fundamental questions about your business.
What Business Are You In?
The question seems so simple that many entrepreneurs don't bother with answering it—then have problems as they lose their business focus. Your business plan uses the executive summary (Chapter 3) to help you answer this vital question. As your plan is developed and you get new data, your business focus may change slightly or significantly. In any case, you must update and verify your business definition.
Large corporations call this defining the core business. AT&T sells communication. That's their core business. You should not expect them to begin selling cars or mutual funds. They clearly understand and focus on the core business. So should you.
Established businesses often have difficulty growing to the next level—or even maintaining the current level—of profits. In many cases, the cause is that the owners/managers have lost their understanding of the core business. They have reached out to markets in which they aren't able to be competitive. By refocusing on their proven core enterprise, many unprofitable businesses can regain and even grow market share.
Make sure that you understand and clearly define your core business as succinctly as possible. What is it your business does uniquely to earn a profit?
What Market Segment Do You Want to Reach?
No business can sell to everyone. The marketplace is limited by geography, economics, product selection, service availability, competitive, or other restricting factors. So each business must define the market segment that it can best reach. It may be a local market or a niche online market or one that is defined by the income of customers. In each case, these segmentations must be clearly defined so a comprehensive plan can be strategized.
What Distribution Channels Will You Use?
Another seemingly obvious question to be asked in developing a comprehensive plan is: How will you get your product or service to the intended customer? Your answer is critical. Will you sell through a retail store, wholesalers, jobbers, brokers, door to door, online, mail order, party plan, or another proven distribution channel? Yes, you can eventually use more than one channel, but one must be primary. Which one?
A related question must be asked and answered: Is this the best distribution channel for your product or service? As you develop a comprehensive business and marketing plan, are you certain that the selected channel offers your venture the greatest chance of success? If it's retail, should it be wholesale? If you're planning to sell online, are you convinced that it is more profitable than selling through the mail or using party plans? There is no right answer for all businesses. Your job is to ensure that the selected distribution channel is the right one for your business concept.
What Share of the Marketplace Do You Expect to Capture?
As you analyzed the marketplace for what you're selling (Chapter 7), you determined not only the economic size of the market but also who your primary competitors are. If your business is entering a marketplace with $10 million in annual sales, how much of that can you realistically expect to earn? Can you get a 20 percent share of this market? How quickly? Will your share then grow? Will the growth be from market expansion or by earning it away from your competitors?
Your marketing strategy depends on how you define your business’ position within the marketplace both now and in the future. This definition requires some defensible data. You can use industry studies, market research, and expert advice to help you calculate your business’ market share. Most businesses will plan growth in part by increasing their share of the available market. If they expect to have 10 percent of the market on their first anniversary, they may aim for 15 percent or more on their second anniversary. Your marketing strategy must reflect these goals with a specific plan.
Want to know more about your competitors’ market share? If the company is publicly traded, purchase token stock and get on every available mailing list. Search their website, if available. They will often tell you how much of the market they believe they own. Of course, many businesses embellish this figure, but it can give you an idea of the market size and their position in it.