Why do market positioning strategies fail
Business growth! But where?
But what have you actually achieved for the company?
It is only too seldom asked what growth entails or how sustainable and value-adding it actually is. Many companies, regardless of industry, large or small, that achieve quantitative growth, do not succeed in creating meaningful and sustainable values for themselves and for the market with their growth.
Long-term, value-driven growth seems to be an obvious problem. Of course, it is easier to increase sales in the short term through marketing and sales efforts.
Is that the long-term principle of corporate governance?
Is that how you avoid the price war of the competition?
What is preventing sustainable growth?
2 obvious reasons:
1. Companies orient themselves towards the wrong goals
Is it really the primary goal of a company to increase the previous year's profit every year and primarily to turn the sales and / or cost screws? International research results show that companies that pursue the interests of customers more than profit achieve a higher level of motivation among their employees and at the same time achieve better financial results. I see the yield, in an exaggerated way, as a "waste product". It is not the goal, but the result of a business model.
2. Companies have customers, but many do not have a customer-oriented business model.
A business model describes the way in which a company generates value and converts it into profit. Peter Drucker (American economist) put it this way: “Value creation expresses the special benefit that a company creates for its customers. Value capture describes how this added value can be converted into profit by the company. Therefore, value creation and value capture should be the two central drivers of a business model in order to be competitive in the long term.
Impulses for profitable growth
Sales and earnings growth as the ONLY benchmark are an obsolete model. The future will be shaped by more sustainable thinking and acting. It is about setting growth activities that aim to create valuable or unique benefits for customers and generate stable income.
3 concrete approaches
1. Expect a growth Your Brand essence
Knowing core competencies is crucial for corporate success. Just believing you know them is not enough. They mean shedding ballast and focusing on the things you do best. For example, as a bank, to say: "We are a bank and that is our competence" would, with all due respect, be very unprofessional.
As Steve Jobs put it, "I was passionate about building an enduring company where people were motivated to make great products."
His motivation was the product and not the profit.
Develop success patterns around your core competence and set guard rails in which you move. This allows you to concentrate on the essentials. Inefficient swerving, gut decisions or hip-shot actions are a thing of the past.
2. Put them on own growth-enhancing innovations
Much of our economic growth and prosperity comes from innovation. In this context, the question always arises: "How do you define innovation"? To put it simply: "A successful innovation = when the market screams HURRAY".
An example of this: The success of Cirque de Soleil was imperative because the audience gains did not come at the expense of the already shrinking circus industry, whose main customers have always been children. Cirque de Soleil did not compete with the circus businesses. Rather, they created a new market where there was no competition. A completely new group of customers was addressed. Adults and corporate customers were prepared to pay several times the traditional circus admission price. At the same time, animals and their training were completely avoided, thus saving high costs.
Which innovation could (r) evolve your industry?
3. Develop your customer-oriented business model
As already mentioned, the development of the business model must be able to provide answers to the two central questions. How do we create added value for the customer (value creation) and how can this added value be converted into profit (value capture)? Clearly define your future market positioning that is relevant and pergent. Develop the offer and price logic (which products and services, with what added value, at what price?), The marketing logic (who is the market and how do you address the service?), The communication logic, the value creation logic (marketing logic and operational Excellence) and the profit logic (how is profit made?).
Long-term value and Income-driven growth is one of the most difficult challenges in strategic management. You have to deal intensively with your own industry, people and their values and consumption preferences as well as the influencing macro factors at regular intervals. Nothing lasts forever.
Do not rely primarily on the achievement of your next sales or earnings targets in the future. A far better recipe is to identify what is important to your customers and focus on them always to satisfy.
It will be worth it.
With best recommendations
Christoph D. Albrecht
Do you have any questions or comments on the subject?
Write to me:[email protected]
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