This series of articles focus on those things that will, if implemented properly, make your business grow. In this article we illustrate how the fundamentals of marketing form an integrated part of your business model.
Is my business model optimal?
It is important to note that the question is not: ”do I have the best business model”, but rather “Is my business model optimal?” That means we want to address the issue of making sure that all the elements of your business model are structured in such a manner that you arrive at the optimal result.
There is no universal best business model. There is however, a business model that will deliver the optimal results for your specific business.
Where do I start?
Start with the end in mind. In this case, the end is your customer. Remember that your customer is the only reason why you are in business. No customer, no business. Ask yourself the following questions: Does your product satisfy the needs of your customer? How does your product rate against your competition? Or is your product unique? Why should someone buy your product and not that of your competition?
Answering these questions will help you rethink your value proposition. Remember that we are equating product here with service. So the product of a garden service will be a neatly cut lawn at a time contracted with the owner of the garden.
It is very important to know exactly what your customer wants. If the customer wants his lawn cut some time this week it allows you a lot more flexibility than when a customer wants his lawn cut on Wednesday this week.
What is the optimal Price?
The price of your product is part and parcel of your value proposition. A customer will only complain (not buy) about your price if the price is higher than the perceived value. That is why your product does not necessarily have to be the cheapest.
However, it has to offer optimal value. So we are back to the customers again. Do the customers want the cheapest product possible, or are they prepared to pay more for a better quality product? If your product is unique you can in theory ask whatever price you want, but remember your customers will only pay for perceived value.
Everything to everybody?
When you start focussing on your customers you will soon realise that people are diverse. Everybody does not want the same thing. To be everything to everybody is a tough ask. And remember you have to turn a profit.
This reality will make you realise that you have to segment your market into homogeneous groups of customers and target only a few of these groups or segments (your target market). In some instances it might even be better to focus on one market segment only. The sharper you focus, the better the end result will be.
How do I get customers to buy my product?
By now you know who your customers are, what they want and how much they are prepared to pay. The next step is to find out how your customers want your product to be distributed to them. Does the customer want to come to you or do you have to go to your customer?
Here, the nature of the product plays a major role. Your customer can’t bring his/her lawn to you to be cut! But the location of your coffee shop will have a huge impact on its success.
Promoting your product
You have to tell your target market about your value proposition. You can waste a lot of money talking to the wrong people. Therefore, it is very important to make sure that you use the correct channel to talk to your target market.
If your target market is only in the Western Cape and you advertise on a national radio station you will be paying to speak to the whole ofSouth Africa, so most of your advertising budget will be wasted.
Delight your customer
By the time you actually do business with your customer you have worked very hard to get to that point. Now make the most of it. By giving excellent service to your customers, you will make sure that they come back.
Remember, if your customers do not come back you have to start all over again to get new customers. That is why it is much more cost-effective to do business with existing customers. So make sure they come back again and again!
The content in this article was provided by Sanlam – a diversified financial services group, headquartered in South Africa, operating across a number of selected global markets.
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