When preparing to grow your company, you need to consider which business strategy will best fit your needs, and the aims within your business plan. Some strategies are linked to cost & pricing, while others are linked to innovation and adaptation, and some emphasise quality and excellence, but all of them have the potential to grow your business if applied correctly.
Cost & Pricing Strategies
Some of the cost strategies that businesses might employ include undercutting their competitors – delivering an equivalent quality but at a reduced price – or offering a no-frills version of their competitors’ products and services. Deciding which of these strategies is right for you will involve considering what profit margin you need to make on each sale for your business to stay viable, and thinking about what image you want to present to your market. A low-cost funeral service – great! A ‘no-frills’ funeral parlour? Maybe not! A really good example of a retailer that has straddled both the low cost and no-frills strategies is Asda, whose ‘Price Guarantee’ policy helped them implement an undercutting strategy, and whose ‘Smart Price’ range offers a no-frills alternative for their customers.
Innovation & Adaptation Strategies
An innovation strategy gives your business a competitive edge by focusing on the creation new products and services. For this strategy to work your business needs to be serving long-term customer needs, so that you have time to develop innovative new solutions to existing needs. A good example of this would be Amazon’s Alexa; Amazon recognised that customers would always want to browse the web and play music, and then created an innovative solution that took all the effort out of these activities.
An adaptation strategy is suitable for businesses that have the capacity to change direction quickly to respond to changing circumstances, so that their offer is always ‘on trend.’ Many retailers within the ‘throwaway fashion’ industry are good examples of adaptive strategy, creating pieces in response to trends which are designed to be worn once or twice and then discarded when the next new trend comes along.
Quality & Excellence Strategies
Businesses with high quality, handmade or luxury products may wish to focus on strategies that emphasise the quality of their product, and steer clear of strategies which ‘devalue’ the product through price cuts, or alter the product to adapt to changing circumstances. A specialisation strategy allows your business to focus on a niche product or service, and grow your business by expanding the range of markets into which you sell that product or service. Many ‘kitchen table’ businesses (businesses started at home, rather than ones that actually sell kitchen tables!) have successfully used this model to expand, beginning by serving their local communities, and then gradually expanding their reach nationally and even internationally. A great example of this is the Jo Malone brand which started in Jo’s kitchen and has ended up as a worldwide luxury brand.
Another approach to emphasising the quality and excellence of your product is to target it at one market. With a targeted strategy, instead of taking your one niche product out to multiple markets, you adapt and refine your product or service so that it exactly matches the needs of a particular market. An example of this is the fashion brand Bravissimo, which specifically markets itself on the premise that their clothes and lingerie are cut to fit a fuller bust, precisely so those customers do not have to compromise on the ‘standard’ fit offered by other retailers.
An alternative approach would be to focus on an improvement strategy, which requires businesses to focus on continually improving their product or service so that customers know they are always going to get the best from their purchase. Luxury car brands such as Aston Martin and Jaguar are good examples of this strategy, they are known for quality and each new model improves upon the one that has gone before.
Where businesses sometimes go wrong is to try to combine two or more strategies, which can end up working against each other. For example, combining a quality and excellence strategy with a cost and pricing strategy could result in expensive production costs for a product that you then have to sell at a rock-bottom price. So it is always best to focus on one strategy at a time, but this doesn’t mean that you are stuck with the same approach forever. Whichever strategy you choose to help grow your business, you should revisit it regularly to see if it is working and/or if it is time to move on to a new approach. As Sir Brian Pitman once said ‘There is always a better strategy than the one you have, you just haven’t thought of it yet.”
