In our last article we discussed how to develop a true customer focus. This month we focus on how best to respond to your market place by identifying new trends and ‘benchmarking’ best practices, learning from the competition, clarifying your unique business strengths and weaknesses, and planning marketing and promotional activities.
By becoming a member of your local Chamber of Commerce and by subscribing to relevant trade journals, you increase your exposure to business networks and the latest information and trends. Most chambers are mandated to support small companies in their quest for new opportunities.
This is achieved through a number of services (including enterprise development, business intelligence and training) and opportunities to swap ideas with similar minded individuals. Over half of chamber members are small, medium and micro enterprises with turnovers below R5 million per annum, so they’re definitely the right company to keep. The tough trading climate means chambers have adopted a more pragmatic view and spend more time helping companies drive efficiencies, reach export potential and run their operations within national compliance regulations.
The CapeChamber of Commerce, for example, aware that ‘deal flow’ is critical to small business growth, has developed an aggressive pan-African policy which sees it connecting with other African chambers, governments and agencies. A quick glance at online magazine news stands like www.magazines.co.za, which showcases several categories of South African magazines, including free digital ones, reveals there are many options to choose from. You should search trade publications related to your industry sector and preview latest issues (if you can) before subscribing to the actual publication of your choice.
Learning from competitors
In order to learn from competition one needs to set aside all prejudices and be prepared to learn from other companies. Having correctly identified your competition you can begin to plan comparative shops. Be sure to think as broadly as possible. Competition in food retailing, for example, is diverse and numerous. Everyone from the large supermarket across the highway, to speciality food retailers/food standalones at the end of your driveway, convenience shops at garages and numerous ‘mom & pop’ style small businesses are competition.
It’s important to conduct thorough desktop research before you leave home. Search websites for clues on strategy and product positioning; check advertising and promotional activities in the mass media (local and / or national press, radio and on TV). Is your competition focused on selling ‘quality’ goods or price leadership? Once you view them close-up, what messages are prominent in their window displays? What happens once you’re inside their premises? Take note of everything from shop layout through product range or catalogue, to price-points and approach to customer service. Write down all key information and take photographs if you can.
Benchmarking for success
Benchmarking is the process of comparing your company and your processes/performance to the best in the trade. Aspects typically measured are the quality of goods and services, time to manufacture product and or delivery schedules and costs. The process of benchmarking involves identifying the best companies in your sector, or in another sector where similar processes exist, and comparing them with your own.
In this way you learn how well you are performing and, more importantly, the reasons certain companies are successful or not. Benchmarking is especially effective when used to measure performance against a specific indicator (cost of a product, productivity improvements, cycle time or defects per product) resulting in a measure that is comparable with your own performance. Benchmarking then allows you to develop new objectives to improve or adapt specific processes with the aim of increasing your performance. Benchmarking may be a once-off event, but is usually an ongoing, continuous improvement process.
There is no single benchmarking process, but you should first understand your own processes in detail and then identify potential benchmark companies. Having completed the benchmarking exercise one can then determine the gap and / or process differences. Finally you should set targets for future performance and communicate to everyone involved. Having implemented the changes you should review improvements on an ongoing basis.
To understand your own business strengths and weaknesses you will need to start with a simple analysis. Ensure you have the right people in the room in the first place. Quality input ensures quality output. Then be brutally honest about your company and its potential. Jim Collins in his best-selling book ‘Good to Great: Why some companies make the leap…and others don’t’ calls this confronting the “brutal facts”. Follow this up with a simple SWOT Analysis. Ask your team what your company’s strengths are i.e. what you are particularly good at? Conversely. What are you weak at i.e. what does your company struggle with? What opportunities exist for you to take advantage of (given your unique strengths) and what are the threats from competition i.e. how can they beat you at what you do? Once you’ve established your strengths and weaknesses you’ll be able to identify your unique offering (see last month’s article).
Defining your market
Another trick is to define your market in really simple dimensions. Let’s illustrate with an example. Take a cosmetic product i.e. body cream or lotion. Does the product fall into the category ‘therapeutic’ or ‘beauty’, high or low price? Vaseline Intensive Care Lotion for example would be a therapeutic product (with variants including Aloe & Cucumber for skin repair etc.) and also low to medium-priced. Your task is to plot all your competitors on a scale with just two axes.
Now answer this question for yourself. Where does Ingram’s Camphor Cream fit into the picture versus say a Coty or Lancôme product? Having identified your customers (we also completed this exercise last time) you can now begin to plan your marketing or promotional effort.
This is a subject on its own, but it starts with identifying an annual calendar of events. Start with the bigger ones e.g. seasonal changes & weather patterns (rain or shine), then public holidays & major sporting and / or special events in your geographical location. Finally record competitor activities (the more history you have the easier it will be to predict their behaviour). Now plan your promotions. If you’re a small food retailer do you want to expose an existing product or launch a new one?
When is the ideal time to do this – at the beginning of a week, on a Monday say, or a Friday in the case of boerewors – when it sells well as most customers braai on weekends? When would you advertise croissants? On a Monday – right? Because that’s when most customers buy them. Plan special events to coincide with the reduction activities of competition, your own reductions and clearances on weekends when most customers shop you – and so on.