Business column: Building a marketing strategy for today’s small business
How are you going to stay in business if you do not make significant adjustments?
Today’s small businesses need to retool their business strategies. Marketing plays a critical role. Yet, poor planning can hurt a business’ attempt to make a profit. Dr. Frank Rothaermel, author of Strategy Management, writes: “A business strategy, therefore, is more likely to lead to a competitive advantage if it allows a firm to either perform similar activities or offer similar products or services at lower costs.” This article examines how small businesses should formulate a marketing strategy that tailored to their intended customers.
The pandemic continues to wreak havoc on the U.S. economy. Small businesses are no exception. According to a 2020 survey of more than 5,800 small businesses, the pandemic has caused massive dislocation among this business sector. The survey found that 43% of businesses had temporarily closed, and nearly all of these closures were due to COVID-19. Thus, businesses that have not made sufficient adjustments in their planning and strategy are at a disadvantage. Sadly, some individuals start a business with lots of passion and knowledge, but without a plan. With good planning, many businesses can avoid the pitfalls that drive some businesses to failure.
Successful businesses implement a marketing strategy. Dr. Michael Porter outlined three types of generic strategies: low cost, differentiation, and niche-focused. The low-cost strategy allows a business to use low pricing to stimulate demand and gain market share. This strategy requires companies to maintain especially tight control of their costs. An example of the low-cost strategy in the fast-food industry is McDonald’s.
The differentiation strategy is an approach in which companies attempt to set their products or services apart from their competition. Businesses must find ways to distinguish their products from other similar products by developing uniqueness through product design, features, quality, or other noticeable factors that attract customers. For example, Burger King attempts to distinguish itself from McDonald’s and other competitors by offering flame-broiled burgers.
Finally, businesses can employ a niche strategy that targets a specific sub-group of customers or focus on serving a particular area. Most small businesses want to protect themselves from too much competition by targeting a specific group of buyers. Although large organizations may have more financial resources, their size makes it difficult for them to adjust to market forces. Therefore, being small and nimbler has its advantages.
To formulate the appropriate marketing strategy, small business owners must address the following questions:
What are the specific customer segments?
What markets do you currently own and what is the future outlook for those markets?
What are the customer needs, wishes, and desires that you can serve?
Why do you want to satisfy these customers?
What is the value of your product/service to customers?
How do you distinguish your products from those of your competition?
How do you plan to satisfy these customers?
In closing, the pandemic and the financial crisis have ruined many small businesses. Unfortunately, some business owners have not adjusted. Yet, changing customer expectations and stiff competition have put more pressure on small businesses. Successful small businesses want to stay ahead of their competitors. Nike Emeritus Chairman Phil Knight explains, “I may be over the top on this, but I just don’t want to be like my competitors. I want my people to believe that whenever our competitors succeed, we will be less able to do all the things we want to do.”
This article discussed how and why today’s small businesses must go about crafting a marketing strategy that is tailored to their intended customers. An effective marketing strategy can be a game changer for small business owners.
Let’s pray that it is not too late.
About Dr. Daryl Green:
Dr. Daryl Green provides consulting, guidance and management training for today’s small businesses. Additionally, Dr. Green is a nationally renowned lecturer. He and his students at OBU have assisted more than 20 businesses in the region with marketing and management expertise. If you would like more information about this article or business assistance, please contact Dr. Green at firstname.lastname@example.org or visit www.drdarylgreen.com.