The 21st century has been an amazing time of growth and change around the world. As business leaders, the last 10 years has brought both opportunities and concerns about how, when and where we do business. We have been forced to reconsider old practices and ways of thinking, knowing that what was in the past is in the past; we can learn from them but we have to continue to keep eyes right and moving forward if the expectation is to continue.
This type of thinking is the thinking that separates the business leaders who seek to build extraordinary businesses from those who are just along for the ride. These are the business leaders that are thinking strategically.
External change cannot be helped or controlled. As a business leader, you want to think in terms of changing the right things – the things you have influence over – quickly. Specifically, this is referring to product and pricing strategy – essentially creating a way get your goods and services to the marketplace, while remaining profitable. Because these are internal decisions, they are areas that can be rapidly changed in response to changes in the marketplace.
- Diversify your Products: Develop products related to your primary offerings, be it improvements on those offerings (iPhone 5) or related offerings using similar expertise (from the iPod came the iPhone). Always be innovating
- Diversify your revenue model: Most business leaders prefer a recurring revenue model – where a customer will make repeat, i.e. weekly, monthly, etc. payments to the company, which allows the company better predictability of its cash flows. Some consumers prefer flexibility and other, flexibility and control. Some like to pay cash up front, others by credit card, PayPal or debit card.
- Maintain Brand Integrity: Brand integrity means that you are offering a consistent product, service, level of service to a target in the marketplace. When your company is all over the place – when the marketplace cannot pin down who you are, what you do and for whom, they are less likely to work with you until they have clear expectations of what their money is going to get them, i.e. return on investment.
- Have a Logical Pricing Strategy: pricing yourself out of the market makes no sense whatsoever. If no one is willing to pay for what you are offering, you don’t have a business. Just because you insist you have some spectacular value or offering doesn’t mean that the market believes it. Think in terms of the laws of supply and demand: as demand for your product increases, people will be willing to pay more money for it, as long as they don’t perceive they can get the same thing somewhere else for a better price.
- Price for Your Company; not your Competitors: If a discount store priced their products at the same level as a high-end department store does, which would most people choose? More than likely, the high-end store’s product. There is a perception of quality and brand esthetics that makes purchasing at the high-end store more desirable, unless the consumer is going strictly for the perception of getting a discount. By understanding how consumers feel about your pricing strategy, you can determine how your pricing strategy causes you to win or lose sales. Simply because you price “competitively” doesn’t mean that you are pricing properly.
- Have an Accountable Pricing Strategy: Be able to explain why you charge what you charge. If you have to charge more so that you can focus on a specific target market and provide them with a particular level of service, then so be it. Certainly, people will be willing to pay certain prices for certain things which seem to be in excess; however, is it sustainable? Gobble all you can and get out isn’t a long-term strategy. It is a short-term, short horizon plan.
- Retire Products and Services: Products and services have lifecycles. A product on life support may simply need to be retired to make more room for newer items. An unprofitable product needs to have plans for end of life. The more offerings you have, the more expensive it will be to run your business. Just because you can sell something doesn’t mean you should.
All of these tactics are areas that must be constantly monitored in a changing environment. Ripple effects across the economy from public opinion to public policy to technological advances, etc., change the availability of cash, people’s perceptions of things, their willingness to purchase, etc., on an ongoing basis. By re-evaluating your strategy regularly, and keeping track of your business activities, you can adapt quickly to the need to change.
Building an extraordinary business isn’t a set-it-and-forget-it-activity. Just because “the boat ain’t broke” doesn’t mean that you shouldn’t continue to work on it; once it IS broke, you are stuck – up the river without a paddle.
Aepiphanni Business Consulting: The Business Strategy People is an Atlanta, Georgia based Operations Management and Business Strategy Consulting Firm dedicated to serving the needs of small to medium sized business leaders. We help business leaders DESIGN | CREATE | BUILD extraordinary businesses. We support our clients with financial management, product and service production and delivery, outsourced services management, sales & marketing and business growth. We provide them with a number of flexible solutions to help them reach their goals.
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