Business Development - Crafting Competitive Advantage

Choose Profitable Customer Segment

Choose customer segment is the second part of business development strategy. It is a powerful concept that makes your business more efficient. This article talks about the benefit of segmentation. I answer about what is segmentation, type of segmentation, how to segmentation.

Benefit of Segmentation

To get customer segment, we first do segmentation. That enables us to choose the best segment. Segmentation and targeting is a tool for reducing money/time and competitive strategy. Without segmentation, the business cannot measure their marketing cost, because too much.

Increase Efficiency by Segmentation

Imagine you as a marketer want to sell diapers. You have limited budget and time. Do you offer the diapers to everyone? That is a bad idea, because of that exhaust unpredictable time and money. Cost almost unlimited.

Who will buy your products? Every one?

Not everyone needs diapers. It also applies to others products. Not everyone needs same pizza, clothes, and school. So, marketers identify distinct segments of buyers or segmentation. They identify demographic, psychographic, and behavioral differences between them. They also quantify the group of similar

They then decide which segment(s) present the greatest opportunities. For each of these target markets, the company develops a market offering that it positions in target buyers’ minds as delivering some key benefit(s).

Volvo develops its cars for the buyer who concerns mainly to safety. The company decides a positioning for them as the safest a customer can buy. Porsche targets buyers who seek pleasure and excitement in driving and want to make a statement about their wheels.

To sell diapers efficiently, we need to classify, and choose who most probable groups of customer that need diapers? You don’t sell it to everybody, but the only group that has baby and toddler. That is segmentation and targeting. Customer segment of diapers is family that have baby and toddler. That strategy reduces cost and time.

Competition Strategy by Customer Segment

Another benefit of the segmentation is competition. Segmentation enables targeting. How to compete with another diapers products? There are several alternatives using segmentation.

First, go to a geographic area that you can compete or it has no diapers. Second, we break down diapers customer group to a more specific characteristic, for example, economic status.

Instead of competing to generic diapers, it is better to compete with a more specific customer that you can serve better. If you can serve high class better, that is the best choice for you to create products that suit the specific segment customer that you choose.

Segmentation Inspire Market Opportunity

Usually, people think business idea is products. If we search business idea in search engine, that is about products and service. Usually, people check products idea, whether it is high competition or low competition. That is not enough.

Even you see some products is over service or high competition, it seems no opportunity. Segmentation helps us see the opportunity.

Segmentation is divide market based on need, want and demand. The concept assumes that customer differs in:

the products benefit that they want.
Product specification that they want
Communication Channel which usually they use to get information that
influences their decision
Amount of cost or price they are able to buy
Time and location that they want to buy
Quantities that they want to buy.

That mean, even very high competition, if we divide market based on more specific need, we can find opportunity.

Not all customer needs the same benefit, specification, and price. So if you found the unsatisfactory big market, that is an opportunity to offer your products.

Segmentation also evaluate profit prospects

That is a benefit of segmentation.

What is Segmentation

Segmentation is dividing the market into several levels of interest and power to buy. The result is customer segment. That is a definition if you have existing products. If you have no products, you will decide the products later. First, you make segmentation. You divide market based on your ability to provide and purchase power of the market. You scan several markets, then you decide which segment that you can serve and potential.

Main Category of Segmentation

The main category is end user (customer), trader or producer (business)? In a new term, B2C (business to customer) or B2B (business to business)?

End User Segmentation

Geographic

Customer location
Region
Urban / rural

Demographic

age
gender
occupation
social-economic group
education level

Behavioral

benefits sought
rate of usage
Loyalty status
Readiness to purchase

Psychographic

personality
lifestyles
attitudes
class

Segmentation in Business to Business

We can target segment market to business to business.

Demographic

Industry: Which industries categories that you target?
Company and business scale: What scale size companies should we serve?
Location geography: What geographical areas should we serve?

Operating Variables

Technology. The technology that customer use triggers specific need: What customer technologies should we target on as segment market? What kind of technology that has a specific need that you want to serve.
User-specific machine or something needs specific need. The frequency of using something also has a specific need. It is segmentation. The user or nonuser status: Should we serve geek users, medium users, rare users, or nonusers?
Customer capabilities also have a specific need: Should we serve special customers based on their capability needing many or few services?
Purchasing Approaches
Purchasing-function organization: Some of the business organization rely their decision on purchasing on purchasing division. Another organization relies decision on purchasing at the boss. Where is the type of company that easy to accept your offer. Should we serve companies with a highly centralized or decentralized purchasing organization?
Power structure: Company has several types of dominance perspectives. The type is technology perspective, financial perspective, worker perspective, boss perspective, customer perspective. What perspective that dominated in a company? What kind of company that easies to accept your offer.
Consider your existing relationship. Maybe they can be your customer segment that easies to access and persuade.
Purchasing policies: Should we target companies that prefer specific term of payment.
Product criteria: Should we target companies that prioritize price? quality? Service?
Situational Factors
Urgency: Should we serve companies that need fast or slow delivery or service?
Modularity: Should we target a company that tends to apply a certain application of the product. So they need specific function and price.
Retail or trader: Should we focus with or without minimum order?
Personal Characteristics
Similarity: Should we target companies whose similar values to ours?
Attitude toward risk: Should we target risk taker company or not?
Long-term relationship to Supplier: Should we target companies that tend to maintain a long-term relationship?

8 Powerful Steps Business Development Strategy that Last

Improving sustainable growth, independent and profitability is the goal of business development strategy. That is a long journey. It is a marathon, not a sprint running. So it is important to define actionable step by step business development program based on best practices. An internal team can create the strategy, but also they can ask the external consultant.

Business development is the creation of long-term value by identifying opportunity, threat, strength, and weakness. Then organization makes most suitable respond, so make the fit between customer segment, organization capability, and sustainability. It consists strategic planning, marketing planning, and standardization of organization.

This step by step procedure can apply to existing running business and also startup owner. It also helps what does a business development manager do.

Business development has several steps. I write steps in question style so the answer is progress and important steps to improve business development strategy. It is overview article about business development strategy, and I will break down later.

What are your business and its vision (business vision and mission)
Who is the customer that your business serve? (market segment)
What are your business model and competitive strategy? (business model)
How to Empower your team?
The way of thinking and procedures to deliver your value to the customer? (marketing plan)
How to make your business running without you? (systemize or business independence)
Creating business system consist organization, tool, and knowledge that support Best Offer? (organization, tool, and knowledge)
How to Measure daily business and adjust strategy? (Key Performance Indicator and Improvement)

First Business Development Strategy: Vision and Mission

Writing down vision, mission and goal are powerful, so it is first part of business development strategy. The writing combine imagination and reason. Dr. Gail Mattews found the amazing discovery that they who wrote their goal regularly achieved those achievements more.

So it is important to define the personal vision, mission, and goals of the business owners. The goal helps us and team to focus on the goal and eliminate distraction. It also empowers our motivation to reach our goals. Without a clear vision, mission, and goals, there is no hope.

To accomplish vision, mission, and goal, it is important to consider current financial and non-financial position of the business. It helps to find an easy way to reach goals and find which area that needs to fix and to improve. Identify position of business also important to identify strengths weaknesses opportunities and threats facing the business. It helps business to develops an action plan to make progress.

Continue reading 8 Powerful Steps Business Development Strategy that Last

Find Your Why Do and Feel its Power

It is nice quote about Find Your Why Do.

If you want to build a ship, do not drum up people to collect wood and do not assign them tasks and work, but rather teach them to long for the endless immensity of the sea.

Antoine de Saint-Exupery

Exupery said to find your vision ( find why to do) in a beautiful way. Usually, someone said about for something that bigger than yourself. Another word is vision and mission. But Exupery said in another word: endless immensity of the sea. That is visual. That gives us a clear distinction between task, goal, and outcome. Collect wood is a task. Create ship is a goal. And immensity of the sea is the desired outcome.

Imagine about a purpose more powerful than imagine about the task. Connect task to purpose, it drives passion.

Continue reading Find Your Why Do and Feel its Power

Fall of Madison Avenue and Rise of Digital Marketing

The article “Madison Avenue Nightmare” by Devin Leonard in 2004 signals the fall of the mass media-based advertising industry. Leonard writes, the best attitude faces the decline of Madison Avenue’s advertising industry is to let it pass.

Madison Avenue was a trading city in America in the 19th century, after the first world war. Then the city grows into a cluster or center of the advertising industry in America in the 20th century.

This advertising cluster is only temporarily depressed era during the first and second world wars. As the war ends, the industry grows larger again. After that, the area is also known as the heart of world advertising. which was once glorious in the 1920s – 1990s.

The triumph of Madison Avenue 20-40 and 1950-1990. After that, its role was replaced by advertising on the internet. Client orders decreased. Complain about more and more ad performance.

The Rise of Digital Marketing

On the other side, the adoption or use of the internet is getting more and more in the market. so that many advertisers follow the shift. Advertising was developed in social media and the internet.

At the end of 2000, there had been doubts about the power of the internet. The internet is considered a bubble. Big but no value. But along with the improvements in information technology, the Internet creates smart advertising. Advertising show only for an audience who have interest. It creates a smarter of advertising ads, that understand audience interest.

That is the convergence of marketing and information technology. Marketing work involves a lot of information technology, not just promotion aspect. Information technology is also involved in the process of marketing strategy. Marketing strategies such as segmentation, targeting, and positioning testing involve big data and algorithms. Facebook and Google provide the segmentation mapping with the technology.

Value positioning process also involves information technology. Information technology plays a role in providing data about real-time market trends. Information technology also provides an opportunity for testing market responses. Thus the process of determining the marketing strategy with the support of information technology has advantages. The advantages are suitability is more up to date with market trends and testing.

Marketing tactics that are marketing mix also involve information technology. Products are made by weighing the market tastes conveyed by information technology. product designing activities, price determination, distribution and promotion determination are decided by considering market information provided by information technology.

Measuring the success of marketing programs also involves information technology. With the support of information technology, faster market reactions are identified. The types of reactions are richer and faster than those without information technology.

The marketer needs metrics for program optimization. The initial plan was not always efficient and effective. By measuring the results of marketing programs, it can be known which programs are running well and which are not. Thus the marketer can do the optimization.

The Change of Advertising Character

But now IT offers more value in business, especially marketing. IT offers to create the effective and efficient marketing. Thus a marketing program cannot compete with an IT-based marketing program. The marketing center shifts, from Madison Avenue to disseminated to many places.

The change is not just a media shift, but a shift in marketing and advertising traits. The ads designed by Madison Avenue are intriguing, intelligent and creative ads. But now viewers have a choice to deny it. On television, viewers have a remote control. On the internet, people are free to skip the ads. This is the end of interruption advertising.

Digital marketing has specific characteristics. It is interactive, so no interruption advertising. DIgital marketer embeds their commercial goal in an educative, informative and entertaining message.

Now marketers need to know IT in order to use it to make marketing decisions. IT people also need to know marketing to be able to see IT in a business perspective, not just it’s amazing. Without knowing the business aspect, IT can get stuck on scattering IT programs without added value to the business.