SmallMediumBusinessesToolkitFo r p r i va te p ra c t i ce s , h e a l t h & b e a u t ycompanies, home contractors, restaurant,entertainment venues retail shops and othersmall medium sized businesses.Who are looking to improve their businessstrategy, do better marketing and preventgetting in to price wars. Alan Nguyen
Whether your small business is growing well or needs a band aid,walking through and applying the diﬀerent tools will help mehelp your business.
Evaluating Competition You Manage Position Single Dominant Business Competitive Consider Advantage Competitor Exit - YES! - No Business Play mixed strategies Dominant Yet Your Market Operational Competitive Eﬀectiveness Advantage - be really eﬃcient! - None! - - most eﬃcient winsUse this decision tree to ﬁgure out what your strategic priorities should be.
FINANCE Revenues/Unit Revenue # Units Sold Proﬁts Fixed Costs Cost/Unit Cost Variable Costs # Units SoldDRILL DOWN TO ISOLATE AREAS TO MAKE IMPROVEMENTS
PORTER’S FIVE New EntrantsUse this classic tool taught at allMBA programs to understand all the Supplier Distributor Competitivediﬀerent pressures aﬀecting your Power Power Rivalrybusiness. Substitutes
2x2 matrix Full Service Specialist Your Company Competitor #1 Competitor #2 Premium PremiumAﬀordable Aﬀordable Pricing Pricing Competitor Competitor #1 Your #2 Company Quick Service Generalists Understanding how you are diﬀerentiated from other companies can help you focus on growing the market as oppose to just competing on price.
BRAND PROPOSITIONS Your communication to consumers should be consistent in tone and clear. Your unique selling point or value proposition should be very easy to understand tip: think of a cultural, Here’s a template and sample example to help you formulate icalpsycholog at tension th your unique selling point and help communicate it to makes consumers: mersyour custoasy feel une What is your category? The only asian restaurant How are you diﬀerent? that is authentic in quality for food & decor Who are your customers? for discerning foodies Where are they located? in the Tustin/Irvine area When do they need you? when they want a quality dining experience Why are you important? in a time when chains sell bad, overpriced and fake asian dishes.
PRICE ADVANTAGE Examine these 3 levels to make sure you are pricing products and service correctly. INDUSTRY LOCAL MARKET TRANSACTIONAL How does the national What are the going Is there discounts, and local economy rates in your local loyalty programs, sales, aﬀect demand for your geographical market? anchor products, business? Can Is the price/beneﬁt package bundles and suppliers put pressure position well against other tactics your on your pricing? c o m p e t i t o r s? Are business can use to get actively preventing the best margins at the price wars? transactional level?
PRICE WAR RISKS One of the biggest dangers to SMB companies is when one competitor in the market triggering a price war. Below are characteristics of businesses likely to be hit. ID your business likelihood of a price war and then plan a strategy to prevent one.CHARACTERISTICS: LOW RISK HIGH RISKSService type Diﬀerentiated UndiﬀerentiatedMarket capacity High LowMarket trend Growing Stable/DecliningCustomer concentration Widely dispersed Highly concentratedNumber of competitors Few ManyPrice visible to competitors Low HighBarriers to switching suppliers High LowOverall customer price sensitivity Low HighCost trends Stable Volatile/declining
BLUE OCEAN Reduce Raise Pursue activities that diﬀerentiates your business and drive down costs. What factor or cost can your What factor or beneﬁt be business can reduce that your raised well above your competitors has not thought competitor services level. of yet? Eliminate Create Employing Blue Ocean strategy methods helps avoid being in price wars with What factor or cost can your What factors or services that other competing companies. business can eliminate can be created that competing completely that consumers services has yet to oﬀer? would beneﬁt more from?
4 E’S OF MARKETING EXPERIENCE EVERYPLACE EVANGELISM EXCHANGE The next step is ramp up your business’s marketing and service. Give customer the best experiences at every stage of interaction. Give them a reason to advocate on behalf of your business and be every where they are at.
EXPERIENCE MAP good experience SAMPLE MAP FOR FICTITIOUS NAIL SALON Stamp Comfortable Pampered Greeting Loyalty Seating Feeling Card Talk with Setting Gossip Product Small Talk Talk with girlfriends girlfriends Ambience Tipping next Magazine Advice w/ Technician about the experience to go appointment ANTICIPATE ENTER ENGAGE EXIT POST EVALUATION HOME CAR WALK-IN WAITING ORDER RECEIVE SERVICE PAY BILLS WALK OUT DISCUSS bad experience Hoping to Call to set Nail Polish get a good appointment Fume Smells parking space Bad Ethnic MusicMapping out your customer experience at each touch point allows your business troubleshoot andimprove to create the best customer experience.
EVERYPLACE: PAID MEDIA All the paid advertisement promoting your business. Newspaper, TV, Magazine, etc. can be considered “Paid Media” If your business has the budget, consider the traditional media to build your business’s brand or get a direct response from consumers.
EVERYPLACE: OWN MEDIA Website, Business Cards, Letterhead, Blogs, Videos and other marketing collateral that helps consumer aware of your business is considered your “own media.” Making sure these basics look good and communicate clearly that reﬂects quality level of your products and services is very important.
EVANGELISM: EARNED MEDIA “Earned media” is the reviews, mentions, comments people make about your business on sites like Yelp, Twitter, Facebook, Foursquare, Instagram etc. This is free advertising done by your good customers. This can drive a lot of referral sales. On the other side of the coin, if you don’t handle complaints and address their concerns-- social media can also hurt your business. It pays to really engage them.
MEASURE BRAND SENTIMENT You Competitor 1 Competitor 2 Market Total positive conversations 14 20 10 44 neutral conversations 7 22 8 37 negative conversations 3 9 3 15 total conversations 24 51 21 96 Positive + Neutral - Negative 18 33 15 66 Sentiment/ Conversations 0.75 0.65 0.71 0.69 Your Sentiment/ Market Sentiment 1.09 0.94 1.04 rank 1st 3rd 2ndUsing this method, you can rank your business against others interms of what internet reviewers think of your business.
MODIFIED SHARE OF WALLET Share of wallet helps estimate a customer’s spending within a category by store or business. USE THE RANKING FROM BRAND SENTIMENT TO CALCULATE SHARE OF WALLET. RANK 2 (1- )X( ) # OF COMPETITORS + 1 # OF COMPETITORS 1 2 (1- )X( ) 4 3 = (1-0.25) X 0.67 = 0.75 X 0.67 = 0.75 X 0.67 = 0.50 or 50% share of wallet score. Repeat for competitors to compare (17%, 33%).
EXCHANGE: WHAT ARE YOUR CUSTOMERS REALLY WORTH? Rather than just looking at the average transaction/ ticket sales... consider the Life Time Value of each customer. What they will spend in a year, how many years you expect them to stay with you, and the referral business they can bring to you. Referrals can be in the form of word of mouth or through tweeting/liking on social networks. Customer loyalty programs can be set up to take leveraged to keep customers and incentivize referrals. Don’t just think of prices... think value.
Additional Sources: Here are some links to help your business further: http://www.caseinterview.com/ http://ﬂuent.razorﬁsh.com/publication/?m=6540&l=1 http://hbr.org/2011/10/customer-loyalty-isnt-enough-grow-your-share-of-wallet/ar/1 http://www.slideshare.net/theopenroom/the-4-es-of-marketing-ogilvy-pr http://www.blueoceanstrategy.com http://en.wikipedia.org/wiki/Porter_ﬁve_forces_analysis http://www.amazon.com/Zag-Number-Strategy-High-Performance-Brands/dp/ 0321426770 http://www.amazon.com/Price-Advantage-Wiley-Finance/dp/0471466697