Four Central Concepts in Strategic Planning
There are four strategic planning principles in business that are timeless. Success or failure in any one of these four areas can lead to dramatic changes in business results, for better or for worse. We discuss these principles in great detail in my seventh book in this series, Marketing.
Know Where to Specialize
The first is specialization. Today, we live in a world where we have to specialize and do a few things exceptionally well. Your chosen area of specialization largely determines the future of your business.
You can specialize in a product or service, a customer segment, or a market area. When you specialize in a product or service area, your specialization is easy to describe. When asked, “What kind of business are you in?” your immediate answer will be “life insurance,” or “orthopedic surgery,” or “seafood restaurants,” or “enterprise software,” and so on.
Choose Your Market
Another possible area of specialization has to do with your market. You can specialize in a particular type of customer. For example, in my business as a professional business speaker, I engage with the managers and executives of corporations, on the one hand, and the owners of small and medium-size enterprises (SMEs), on the other hand, no matter where they are located. I work worldwide and have spoken in sixty-seven countries. I’ve written seventy books and produced several hundred audio and video learning programs. But these materials are all aimed at managers and executives on the one hand and entrepreneurs and business owners on the other. This is where I specialize.
You can specialize in a geographic area. A convenience store will specialize in a single neighborhood. A manufacturer can specialize in satisfying the demand for its product worldwide. But in every case, you must specialize and be clear about your area of specialization.
Be Different from Your Competitors
The second concept in strategic planning is differentiation. All marketing is differentiation. All selling is differentiation. All business requires that you differentiate your product or service so that it appears superior to that of your competitors and is viewed as a better choice.
Peter Drucker once said, “The purpose of marketing is to make selling unnecessary.” Apple is a perfect example. When Apple announces a new product or service, people line up around the block and sleep on the street to be the first purchasers. They do not need to be sold. Because Apple’s quality reputation is so excellent, people are “sold” by the very announcement of a new product.
Competitive Advantage
Another term for differentiation is “competitive advantage.” Sometimes we refer to your area of differentiation as your “area of excellence.” Michael Porter of Harvard Business School refers to the need to develop a source of “unique added value” that offers your customers something that they value and are willing to pay for, and that no other competitor can offer.
What is your competitive advantage? What makes your products or services superior to those of your competitors? What is the unique added value that your customers receive when they buy from you that no one else can offer? Your ability to ask and answer these questions is perhaps the most important part of business strategy.
Select Your Ideal Customer
The third principle of marketing strategy is segmentation. Many marketing experts believe that all marketing today is segmentation. This is the development of absolute clarity about those specific customers who most appreciate the qualities of your product or service in your area of specialization.
We referred to segmentation in Chapter Eight when we asked the question, “Who exactly is your perfect customer?” The answer to this question is the person who most appreciates your area of specialization and most desires the unique added value that you offer. Your ideal customer is the one who will buy the fastest and has the least price resistance.
One strategy is to identify your target market, your perfect customer, then to focus single-mindedly on being the superior choice of the people in that market segment in the product or service category that you represent.
Another strategy, if you are not selling as much as you want to your current customers, is to change your customer. Find or develop a new customer who will better appreciate the special qualities of your product or service offerings.
The greater clarity you have in describing the ideal customer for your business, the easier it is for you to organize all of your advertising and promotion so that it is aimed at precisely the customer you want to attract and who will most appreciate what you offer.
Focus and Concentrate
The fourth strategic principle of marketing is concentration. Once you specialize, differentiate, and segment, you can then dedicate 100 percent of your resources to focusing and concentrating on the best and most profitable potential customers for your business.
Once you have developed an excellent product or service and clearly identified the very best customers who can and will buy your product/service at prices that are profitable for you, you then concentrate single-mindedly on dominating that market segment.
Or, as Alexander said to his troops at the Battle of Gaugamela, “Kill Darius. Kill Darius. Kill Darius.”