Business Development

Since the early of civilization,  human beings have known that business has an important role to reach wealth.  Business gives what individuals and society need.  Today, people learn business to get sustainable money. There is a lot of article and book about business, include my article about business development steps. So,  it’s not easy to recognize what matters from the business.

Studying business from business history gives insight into what’s important in business. History shows something that always exists in the development of a business.

The important thing in the business is efficiency and sharing benefits competitively. Efficiency allows entrepreneurs to get profit from the business transaction. It also helps entrepreneur offer a good price.

how to do business efficiently?

The way to run it is by specialization, the scale of production, and create more fit between customer problem and company solution. So continuous market research is important to create the best-fit offer. Business tells the offer in copywriting format or advertising in several media channel.

Specializing for efficiency

Since barter trading, people know that business needs efficiency. At that time efficiency is achieved by specializing in production. Specialization and focus in creating a product encourage people to produce products quickly, cheap and good. Because he has put his time and energy into a field, he will find a better, faster and cheaper way to compete in a market.

Because specialization is efficient, the state tends to specialize in its core business areas. The city also has its own specialization.  specializes, villages specialize. That specialization does not have to be a whole country or city only make one product, but there is a dominant product.

Adam  Smith developed the idea of specialization for this efficiency by offering a division of labor. When within the company, there is a division of labor, with a smooth production flow, then productivity will good and growth occurs.

For efficiency too, Ford advised workers to be obedient without thinking, so that the conflict between the management team and the workers is minimized.

With the division of labor, the employees will handle the tasks easily and quickly mastered the production process.

Today, specialization is not only in production house but also they produce for specific market. Therefore, they do segmentation and choose specific market segment.  By target for the specific market, the business can make attraction offer, because they program their products for the specific segment.  To match

Large production scale for efficiency

Creating large quantities of products will reduce production costs per product. In addition, producers can also press profit margins, in the hope if the goods sold a lot, total profits are also many.

The production cost of a product has fix cost and variable cost. Whatever quantity of product that we made, fixed cost does not change, not multiply. And the variable cost increases when quantity also increases.

Machinery for Mass Production

Consequently, after a business has an orientation to mass production, they need technology, machine, teamwork, and market that they buy.

Humans are constantly looking for ways to enlarge the scale of production, using animal power, heavy machinery, and computers, aiming to increase mass production.

Teamwork for Mass Production

To manage large machine and large market, they then need a team and manage them. Therefore, business needs leadership and management discipline.  Vision make the team more cohesive tea

 

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

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

Operating Variables

1. 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.
2. 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?
3. Customer capabilities also have a specific need: Should we serve special customers based on their capability needing many or few services? Purchasing Approaches
4. 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?
5. 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.
6. Consider your existing relationship. Maybe they can be your customer segment that easies to access and persuade.
7. Purchasing policies: Should we target companies that prefer specific term of payment.
8. Product criteria: Should we target companies that prioritize price? quality? Service? Situational Factors
9. Urgency: Should we serve companies that need fast or slow delivery or service?
10. Modularity: Should we target a company that tends to apply a certain application of the product. So they need specific function and price.
11. Retail or trader: Should we focus with or without minimum order? Personal Characteristics
12. Similarity: Should we target companies whose similar values to ours?
13. Attitude toward risk: Should we target risk taker company or not?
14. Long-term relationship to Supplier: Should we target companies that tend to maintain a long-term relationship?