Business Advice Daily

Know and Serve Your True Niche

By Jack Hoffmann

Awhile back I asked business owners at a conference to name the single biggest challenge facing them in their businesses. The responses included the following:

* The poor state of the economy

* The shortage of qualified personnel

* The impact of technology on their business

* The impact of increased competition on pricing and profits.

* The impact of foreign manufactures on their business, in particular, China.

But all of these concerns seemed secondary when the owner of a mid-sized company said, “My biggest challenge is determining exactly what business I’m in”.

This comment underscores the strategic importance of companies being able to define their businesses in more relevant and high-value terms than just the products and services they provide. For example, it’s commonly understood that the demise of many of the railroad companies in this country was due mainly to the fact that those companies could never see themselves in the “transportation” business but instead clung myopically to the notion that they were in the “railroad” business. If Southern Pacific Railroad knew they were actually in the transportation business and not the railroad business, there could have been Southern Pacific Airlines or Southern Pacific Cruise Lines or Southern Pacific Trucking, etc. Instead today Southern Pacific no longer exists.

Walt Disney Productions knows that they are not just in the movie business, the video business, the amusement park business or the resort business, but in the family entertainment business. All of their marketing plans and daily activities reflect that reality.

A few years ago the developers of a new hot drink concept approached two of the largest coffee producers and marketers with their plan to market flavored coffee drinks at coffee houses for $2.00 a cup. Both companies told them there was no way people would spend $2.00 for a cup of coffee.

But the marketing concept of the developers of Starbuck’s was not just to sell coffee, but to sell a unique experience built around a cup of coffee in an atmosphere where people would gather to read or socialize and drink unique types of coffee. Starbucks understands that they are in the “experience” business and they train their employees intensively to insure that every customer enjoys that experience with unique coffee drinks as the focal point. Today Starbucks offers thousands of outlets and venues for customers to eat, drink, socialize and even use their wireless lap top computers. But they are not selling the coffee drinks for $2.00 a cup, try $3.50 and $4.00 a cup. They are marketing and delivering a familiar and comfortable social experience which happens to result in record or previously unheard of sales of coffee drinks at all hours of the day.

In much the same way, you must define your company, your services and your products in a manner that can be communicated easily, and be fully understood by other people. Exactly what is this business you are involved in? If you are like most business owners, you are probably going to find that you have difficulty in answering that question, or you have a glib, bare-bones answer to that question. But in light of this discussion, does it really say enough? It may not be that your vision is myopic, but most likely you’ve just never verbalized your company’s true value proposition to another living soul or maybe even to yourself, for that matter. Whether your business currently produces $500,000 or $20 million in sales, or employs two people or five hundred, you need to establish and clearly verbalize your value points and mission in order to launch your company into a growth oriented, profit-building marketing mode.

Identify your mission and the unique values of your business. It sets the stage for your marketing and strategic plan. It also provides a means of evaluating the direction and performance of your people, your processes, your systems, your alliance strategies and your business plan.

Another thing that gets in the way of companies realizing their true identity is the challenge of defining what they are not. It’s very hard for many companies to admit their limitations. As a result companies often reach too far and extend themselves into product and service areas, markets and/or geographies that do not represent their true strengths, capabilities and capacities. Resources get stretched thin, value messages get diffused and customers get confused.

How can you determine what business you are really in?

· One way is to ask your customers, clients, suppliers and/or partners to describe and articulate what values they feel your company brings to the marketplace.

· What values or benefits do your products and services add to what the above constituents are trying to accomplish in their own businesses?

· What are the most efficient and results-oriented ways of delivering your products and services?

· In which areas have you grown on purpose (because of a strategic plan) and in which areas have you grown through opportunity that may have dragged you off in directions you didn’t intend to go (and perhaps need to retreat from)?

· Ask your employees what business they feel you are in? They may give you a completely different perspective.

· What things do people think you do best and which ones do you not perform well? This may be a clue into areas that you should back away from or offload to suppliers or alliance partners.

· What is the real value of your products and services to the customers and potential customers you will service and, therefore, where should you focus your precious and limited resources?

Once you establish what business you are really in, market the values you provide to the wants and needs of your various target markets and your individual key customers. Brand your company so that everyone, including your customers, your employees, suppliers and partners as well as you have no doubt about what business you are really in.

33rd Edition - Personal Growth Carnival has chosen this article as one of its “best of the week” (March 20) picks. You can see it and many other wonderful, inspiring and informational articles at Bryan Fleming: Home of the Million Dollar Savings Club.

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