Tag Archives: competitive strategies

Business Failure: Business Success Can Breed Business Failure

“Corporate failure is never the results of a random set of events. It is normally a reflection of deep-seated corporate shortcomings.”

 (Chartered Institute of Management Accountants, 2012)

Business Success Can Breed Failure

We have all heard about the stories of companies that once dominated industry but later fell into business decline. There are many reasons for this. The usual suspects for business decline include becoming to dependent on existing customers, the inability to adapt business models to deal with destructive technologies, the lack of leadership, and focusing on short-term financial performance all have led to business demise. One reason not often mentioned for business decline is the hindrance of learning at both the individual and organizational levels about the true causes of business success. Success can breed failure (Edmondson, 2011). Learning enhances your capacity to face and respond to situations. However, from the business success perspective:

  • We draw wrong conclusions about the business success. We believe our success is because of the strategy, the talent, or the business model used is the cause of the success creating a false premise. Tombstone-of-Successful-Company
  • We fool ourselves developing an overconfidence bias. Although faith in ourselves strengthens our self-assurance to make a decision and execute a strategy, it can also breed closed mindedness and foster a “well if it worked before, it will work again” rational, which is not considering environmental changes and just plain luck.
  • We do not fully analyze the causes of the business success.  We will ferret the causes of a failure because we have to know why something bombed. However, we will not devote the time and resources to find out why the company was successful—again maybe because of false assumptions.

When companies catch the upward draft of success, the arrogance of the enthusiasm kicks in. Not surprisingly, the virus of success can become fatal in five or ten years (Kolind, 2006).  Think of Research In Motion (RIM) and AVON, companies in decline. The downdraft winds of business decline are a factor of the business life cycle.  The death cycle of business decline encompasses three factors: company size, company age, and company success.  One of these three factors can result in increase in:

  • The number of layers in management
  • The number of departments
  • The amount of formal procedures
  • The length in time the long-term planning process
  • The number of budget items
  • The amount of meetings
  • The quantity of reports

A problem is when the company loses its mojo. Success blinds management and causes lose touch with its customers.  Bureaucracy grows, information gets filtered and delayed, and arrogance breeds. Unfortunately, management will begin blaming others for performance slippage when the company begins to slide due to the downdraft of business failure.

Recommended actions include:

  • Question the causes of business success and failure.  Do not get stuck looking at the symptoms.
  • Do not get enamored at a cult personality be it CEO, advisor, leader or expert.  Question decisions and recommendations.  Remember, there is no such thing as a stupid question.  What is stupid is when you fail to ask the question.
  • Have strong, independent advisors and directors.
  • Complexity is the “fog of noise designed to hide reality.” Find and streamline to clarity.
  • Align pay and remunerations with risk.

References:

Chartered Institute of Management Accounting. (2012, February 15). Understanding the causes of corporate failure. Retrieved December 15, 2012, from Financial Management: http://www.fm-magazine.com/feature/depth/understanding-causes-corporate-failure

Edmondson, A. C. (2011). Strategies for learning from failure. Harvard Business Review , 89 (4), 48-55.

Kolind, L. (209). The second cycle: winning the war against bureaucracy. New York, NY: Pearson Prentice Hall.

 

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Know Your Niche

Getting to Know Your Niche

“Niches typically describe smaller sets of customers who have more narrowly needs or unique combination of needs.”

Philip Kotler

Sometimes, deciding what niche to focus on for your niche marketing business can be quite difficult. How do you choose when there are so many possibilities? Other times, the answer quickly becomes as clear as day.

Whether you have a concrete idea and are ready to roll, or need to spend a little time deciding just what niche is right for you, you will need to do some research before truly beginning your niche marketing business.

Your niche should be something you enjoy (like hiking, biking, painting or cooking) but that also allows for you to fill a void in that niche. For example, if you enjoy cooking with organic ingredients, maybe you can provide a product like an organic cookbook, offer recipes of the month and exclusive coupons for organic foods.

Just be sure you know what you are talking about and enjoy it, because it will quickly become your bread and butter, both literally and figuratively!

Once you have chosen your niche, you will then want to ask yourself the following questions: (All may not apply.)

* What is the formal definition of this niche/topic?

* Who is typically interested in this niche?

* Who is/are my target market(s)?

* Is there a broad target market? Or a narrow target market?

* Are there many other marketers already catering to this niche?

* How can I stand out from other marketers in this niche?

* How will my business/offering be different/better/valuable?

All of these questions and more are critical to answer before getting to work. Why? Because it is absolutely critical to understand what you are doing before you begin doing it!

You will also most likely need to differentiate yourself because unless you have hit the jackpot with an off the wall, yet realistic idea, you will most likely be joining a niche that already has marketers catering to it.

How do you stand out? Well, you begin by offering quality products and services. Don’t just say you know what you are talking about. Actually do the research, put together valuable information, and provide your customers with something your competition isn’t; Expertise!

Your target market/customers will soon realize that your products are better than the rest and that your commitment to customer service is what truly sets you apart. Respond to requests in a timely manner. Act on calls to action, like increased functionality or product improvements. And pay attention to feedback. What your customers are saying to others is often just as important (if not arguably more) than what they are saying directly to you. While not everything they say is worth listening to, 99% of it certainly is. Just as the old adage goes in the restaurant and retails businesses, the customer is always right!

Remember, niche marketing isn’t about you. It’s about them. Your customers are the very essence of your business. They are who you are selling to and providing for. If you put them at the top of your list, you will soon be at the top of theirs!

 

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Niche Marketing, Don’t Be Fooled By the Myths

3 Common Myths About Niche Marketing

Effective businesses analyze their competitors as closely as they do their customers. Studying and evaluating competition help owners decides where to compete and how to position against the competition in each market margin. Global competition requires constant analysis of competing forces. Competitive strategies need to take advantage of opportunities and to avoid threats. Market leaders and competitors cannot fulfill market-fulfilling role unless customer needs and desires are understood and satisfied.

By attempting to expand market size, dominant companies continuously defend their current business against rival attacks. Businesses that are second, third and lower ranks are often called runner-up, or trailing, firms. To avoid being a follower in a large market, many attempt to be a leader in a niche, a smaller market

However, there are many myths surrounding niche marketing and the opportunity it provides for making money. Although many have questioned the possibility of great success by marketing to a niche, or small market group, it can and will be profitable if you do it right.

So how do you separate fact from fiction when it comes to niche marketing and how you can benefit from it?

Here are 3 of the most common myths that surround niche marketing and the truth behind them.

Myth #1:         Small Market, Small Profit

A small market does not dictate a small profit. Sure this can be true, but it is a blanket statement to say the least. Take for example the market of multimillion dollar residential real estate. This is arguably a small market as most of us are not in the market for such expensive homes. But there are some who are and the realtors who sell to them make anything but a small profit. In fact, they probably make more off of one sale than most of us do in an entire year! Therefore, just because you are focusing on a particular segment of a larger market does not make your earning potential small. It makes your target more focused. Think about Starbucks. Who would pay over a buck for coffee? Hmmm. Howard Schulz proved that niche markets can change from a small market, small profit to large market, large profit.

Myth #2:         You need to expand your offerings

Are you familiar with the old adage, less is more? Well, it’s a phrase that carries on in its infinite wisdom for a reason. It’s true! And it is especially true for niche marketing.

You will never hear of a carpenter who manufacturers handcrafted rocking chairs begin to offer leather sofas. Why? Because he has a specialty and knows there is a very specific group of people who enjoy and appreciate his work. Just the same, you may never hear of a fast food restaurant offering five course meals. Again, they know their market, they understand what their market wants, and they stick to it.

You should do the same! Remember, you can’t sell everything to everyone. You should focus your efforts and continually work on perfecting them. That is how you will set yourself apart and gain the trust and respect of your customers.

Myth #3:         If people don’t need it, they won’t buy it.

If you’ve ever stepped foot in a store that is right ANY store, you know that this is far from the truth. How many times have you walked into a grocery story for a gallon of milk and walked out with a carton of eggs, a candy bar, magazine and bottle of water?

Or, how many times have you walked into a shoe store and bought a second pair because they were buy one, get one half off?

Or, how many times have you stocked up on your favorite perfume or cologne because it was being discontinued?

We’ve all done it. We are consumers and we live in a consumer-drive world. Therefore, people don’t just buy what they need. They buy what they want. Hopefully, you are providing them with both!

Footwear company KLAS Shoes LLC of Bedford offers a full children’s line, under the name Roc-A-Bouts, along with three lines in the adult health and wellness category — Rotasole, KLASFit and Strolleez. Its shoes are sold in at approximately 300 individual store locations nationally, including many independent retailers in the mid-South, as well as some online retail venues. The company was founded in 2008. Not a very good time to establish a company. Gross sales are now over $6 million.

So define your niche market. This allows you to become an expert to that market. The more specific you are about who you serve, the better it is for people to send business your way. Keep focused and streamline your marketing efforts and dollars.

 

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Critical to Niche Marketing…Goals!

Setting your niche marketing goals

Every successful business venture starts with a plan. Without one, how will you know where you are going and how you will get there? This is part of your strategy (competitive strategy). Take the time to not only become familiar with your niche and target market, but set goals for yourself. For entrepreneurs, this is especially critical.

 Time Goals

Set a date for when you would like to launch your niche marketing website and business and do everything in your power to meet that deadline. As you move forward, continue to set goals and timelines to follow as a way of keeping yourself on task and on schedule.

Budgetary Goals

Be sure to set a budget and stick to it. If your plan is to invest $100 or even $1000, set up a budget that allows for expenses that stay within your means. Sticking to your budget will be a large deciding factor as to whether or not your business becomes a success.

Profit Goals

Of course, the purpose is to make money, but you must set realistic financial goals in order to meet them. In other words, say your ultimate goal is to make $5,000 a month. Well, that is a great goal. But is it realistic for your particular niche?

Your potential for revenue will directly depend on what you are selling and whom you are selling it to. Some niche markets lend themselves to higher profit because of the value of the product being sold (like limited edition watches), while others require more volume in order to meet high revenue goals. Neither one is better than the other, it just depends on your individual business scenario.

No matter what your goals or how extensive they are, the most important thing to remember is to be realistic with yourself first. If you are, and you know and understand your boundaries and limitations, then the rest will follow and your goals will be that much easier to achieve.

Also read: SEO and The Significance in Niche Marketing at http://garyrushin.com/2012/07/seo-and-the-significance-in-niche-marketing/

 

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SEO and The Significance in Niche Marketing

Entrepreneurs have realized the importance of Internet Marketing (IM) in putting a “stake in the ground” in creating their market footprint. IM must be a part of good competitive strategies to capture business. So too is the impact of using SEO. Search Engine Optimization (SEO) is a critical piece to the niche-marketing puzzle. If you do not tackle SEO head on, you will get lost in the crowd.

SEO is basically the process of helping search engines (i.e. Google, Bing, or Yahoo) not only recognize and find your site, but also list and rank your site content. The purpose of this process is to ensure Internet searchers see your website in the (hopefully) first, if not first couple of pages of results when performing a search related to your niche.

When you set up your niche marketing website, you will want to first create a list of keywords that are relevant to your target market. For example, if your niche is vegan dinner dishes, your keywords might include vegan, vegan dinner, vegan dinner recipes, vegan dinner dishes, and vegan recipes.

However, you will want to be careful not to make your list too long because you can only realistically top so many keywords. With SEO, it is critical to focus.

Once you have a set list of keywords (preferably anywhere from 5 to 10 should suffice_ you then must include these words within your site content, your site headings, footers, site page titles, meta tags and anywhere you deem appropriate. You want to weave these keywords into your messaging as much as possible in a casual way that allows for maximum optimization but still makes sense to your readers.

SEO is all about strategy, so take your time when deciding how to approach your niche market. This is not something to take a shot in the dark with. You will want to put careful planning into your SEO efforts, as they will drive traffic to your site, and ultimately, drive your business.

Read more on entrepreneur strategies and lifestyles at http://GaryRushin.com.

 

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Competitive Strategies: 4 Questions to benefit the New Business Reality

Gary S. Rushin, CPA/CIRA

The end of 2011 showed economic renewal and the signs of consumer confidence. But wait! Conducting business like the good old days has vanished like a butterfly that flew away. The effects of the 2008 economic downturn and the subsequent “great recession have changed market forces and how companies must manage business models. And with Europe still considered on the brink of currency collapse that can engulf the world, experience has taught us that new performance agendas must emerge for companies to adapt to the new market reality. In taking into account this new reality, key performance methods and measurements are required and actions must be made to include:

  • Enhance operational flexibility

  • Optimize market reach

  • Re-evaluate the business model

  • Accelerate decision-making and execution

  • Strengthen management talent

  • Heighten capital availability and deployment

  • Revive risk management

  • Strengthened stakeholder confidence

Normally in times of crisis, the customary practice is retrenchment, reduction in force, focus on today, and taking care of the immediate to avoid tumbling. With the reality of these challenges, management must determine whether the company is heading towards the right direction. Four key questions must be asked to improve competitive strategies:

  1. Are the changes in the domestic and global markets temporary or permanent?

  2. Over the next three years, what trends must a company anticipate?

  3. Of the company’s business functions, what changes will be necessary over the coming three years to be competitive?

  4. How should the company’s key performance indicators evolve to provide better management measurements?

In planning for growth, companies must develop an overview of the next three years to compete. After surviving the years of economic crisis, the aftermath lull, the possible European monetary collapse, and the continued U.S. political deadlock, for companies—the only certainty is uncertainty, which makes competitive strategies critical.

 

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