How Small Businesses Can Deal With Competition

handshakes-business

Jay Cain was a promising engineering student at Georgia Tech. Coming into his sophomore year, Jay was ranked in the top of his engineering class. Having two high successful parents who were engineers themselves didn’t hurt his image among his peers. However, Jay was not happy with his projection in life. His passion was deejaying in front of an audience.  He had garnered a reputation in his high school and his local community for being a good talent in music. He even found himself deejaying parties in college while he was preparing for engineering exams and assignments. 

He told his parents several times he was thinking about leaving school in order to start his business full-time deejay. His parents dismissed the thought because they felt it was not realistic or practical given his abilities in engineering.  When the semester started at Georgia Tech, the school was missing one bright talented student…Jay Cain.  Leaving Georgia, Jay went to New York to make it big. Using money he saved, Jay found himself roomed with three unfamiliar roommates where the rent was cheap.  Jay found that working as a deejay was difficult because of the large competition among established deejays in the area.  Yet, Jay wasn’t about to give up with his dream. He just couldn’t go back to his parents or college.  Jay sat by himself trying to figure out how to meet the competition.

 As many millenniums start flooding the employment landscape, young adults are considering starting their own businesses.  Corporate downsizing and layoffs have thrust many individuals into a tough employment market while other employed workers who are unsatisfied with their jobs plot to fix a plausible exit strategy which will land them into their ideal job.

Sadly, many people run with these well intended ideas about starting a business with little insight into how to implement their plan so that the idea can be successful.  Most folks don’t realize that there is nothing new under the sun and found someone else who is doing what they set out to do. In fact, some people find themselves in a highly competitive environment with little or no plan for navigating this climate. In this issue, we will  examine the concepts of competition for small businesses fighting in global environments. Individuals will learn more about starting a business with competitive environment. Continue reading

Value Perceptions Among Customers

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Organizations should think strategically when creating value perceptions of their products or services.  In fact, they should seek to establish a formal tiered system where possible. Strategic leaders have a long view on value creation.

Strategic thinking is defined as ‘the generation and application of business insights on a continual basis to achieve competitive advantage.’ In fact, strategic thinking focuses on value creation by enabling a provocative and creative dialogue among people who can affect a company’s direction.

Marketing expert Ken Favaro maintains that putting value creation first gives businesses two advantages over their competition in driving for profitable and sustainable growth: the first is capital and the second is talent. In fact, he argued that successful value creators never suffer from capital shortage. 

Yet, this process shouldn’t be done in a vacuum. Customers and all members of the supply chain should provide input so that the expectations are clear. Businesses that pay more would get more benefits (i.e. certain perks, discounts, etc.). Therefore, the value proposition would be enhanced.

However, being strategically conscious about these business relationships isn’t simple.  Value must be understood and sought out.  Value is viewed as the perceived experience and worth gained from a product or service.  Organizations should make their product clear to customers; some businesses need to introduce a tiered system, based on value-added services.

For example, if I want cheap fast food, I go to McDonalds. Therefore, my expectations are lower than going to a five star restaurant.  Customers are very understanding when the seller’s value proposition is clear. Favaro further suggests that putting value creation consistently first requires leadership skills, discipline, and perseverance. He further challenged organizations to demand higher standards from managers who would jeopardize these business relationships.

Mark Johnston and Greg Marshall, authors of Relationship Selling, discuss that perceived value is in the eyes of the customer and varies.  They further argued that customers expect and deserve consistency in the way an organization’s value-added message is put forth.  Therefore, sales professionals’ biggest challenge is selling value.

Please discuss value perception of customers from your professional experience.

© 2014 by Daryl D. Green

 

Value Creation for Customers

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Customers determine the value of a product or service.  In today’s competitive environment, value creation is a corporate advantage.  However, building this value is often difficult.  People have different ways to assess value.  Some folks use traditional ways based on some established reference point, such as a company’s price guide. 

Yet, some ways are informal.  In many countries, haggling is an acceptable practice of transactional selling.  Philip Kotler and Kevin Keller, authors of Marketing Management, explain how businesses must understand customer decision making processes for purchases. They note, “They [customers] tend to be value maximizers, within the bounds of search costs and limited knowledge, mobility, and income.” 

Here’s a personal example. My family visited Mexico and began the great American tradition of haggling sellers to get the price of merchandise down. Radio host Dave Ramsey believes everything is negotiable. Anything that is worth the effort of negotiation must have passed the value threshold to the consumer. Paul Peter and James Donnelly, authors of Marketing Management, note that culture, social class, and reference group influences play an important role in consumer behavior. 

Some risks are involved with purchasing.  This reality has a bearing on value for customers. If decisions involve low risk, they are often done quickly with little thought.  Yet, major purchases normally require more risks, like buying a house. Therefore, having a good relationship with the seller is important.

The buying decision stages are (1) recognition of need or problem, (2) determination and description of the traits and quality of the needed items, (3) research for qualified buyers, (4) acquisition and analysis of proposals or bids, (5) evaluation of proposals and selection of suppliers, (6) selection of an order routine, and (7) performance evaluation and feedback.

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that many organizational purchases are motivated by the requirements of the firm’s production processes, merchandise inventory, or day-to-day operations. Therefore, customers are very value conscious on high priced items, such as cars. 

Customers use varying methods to reduce their buying risks. Negotiation expert Carleen Hawn recommends five common sense approaches for effective negotiations, which are: (a) don’t bargain over positions, (b) separate the people from the problem, (c) focus on interests, (d) invent options for mutual gain, and (e) insist on using objective criteria. In most cases, haggling at a specific retailer involves a one-time transaction. Johnston and Marshall further suggest that value creation is what ultimately gets customers to come back.  Therefore, businesses that allow haggling must build relationship selling components for repeat value to customers. 

Discuss your professional experience with value creation in your industry or organization.

© 2014 by Daryl D. Green

Visibility for Professionals

Questons

In our society, which makes many determinations about a person’s character from his or her actions, high visibility is important to position oneself to success.

Philip Kotler and Kevin Keller, authors of Marketing Management, argue the importance of branding for individuals as well as for products to help them stand out among the crowd: “For branding strategies to be successful and brand value to be created, consumers must be convinced there are meaningful differences among branding in the product or service category.”[1]  Therefore, professionals need to distinguish themselves from their competitors.

Sadly, most workers are invisible to their management.  Some employees believe that if they work hard and are loyal to their organizations, they will be promoted and rewarded accordingly.  However, these individuals often see less qualified and less talented people get promoted ahead of them.

Renowned Pastor Richard S. Brown Jr. underlines this misunderstanding of this current culture:  “Everyone wants to be outstanding but no one wants to stand out.”  Today’s organizations promote individuals who know how to shine.  From a marketing perspective, these individuals understand how to use visibility to promote their personal brand.

 https://www.youtube.com/watch?v=o3fMQ1SWDU4

In the book, High Visibility: The Making and Marketing of Professionals into Celebrities,  Irvin Rein, Philip Kotler, and Martin Stoller examined the  role that celebrities play in society and the fact the everyone is involved in either producing or consuming celebrities.[2]  Yet, when you discuss this reality openly to others, most managers and executives would argue that it is the individual technical performance or merit of their work that gets them ahead.

However, most folks will not take advice from a ‘no named’ or unfamiliar expert, given the choices between an unrecognized and a celebrity expert.  Therefore, high visibility can open doors to opportunity.

Rein, Kotler, and Stoller note:  “Today for the visibility-conscious professional, fame is the ultimate accomplishment.  Well-knownness has evolved into celebrity, and in today’s society, that means power and money – not just to its possessor, but also to businesses, institutions, political parties, causes, entrepreneurs, and charities.” [3]

For the savvy professional, gaining visibility goes to understanding what’s important to his or her organization or targeted institution.  This task requires doing the necessary research to determine the organization’s priorities and goals.  Furthermore, this matter requires understanding the personal characteristics of the key decision makers and looking for opportunities for high visibility.  The rewards of high visibility can be great.

Rein, Kotler, and Stoller further explain: “Our society is generally quite willing to pay this ‘celebrity premium,’ to reward those who take the risks to become the highly visible people we so love to revere or revile.” Of course, high visibility normally requires a great amount of sacrifice on an individual’s part.  Often, it can mean taking a job that no one wants because odds of success are slim.

As in many stories highlighted in the magazine tabloids about celebrities, relationships can also be a casualty of high visibility.  As society searches for more heroes and fulfilled fantasies, celebrities and fame will forever be a part of our society.  Consequently, high visibility will afford opportunists with more fortune than the Average Joe.  Therefore, working professionals need to understand how high visibility can be used in order to provide them with advantages that are more competitive.   

Please discuss the visibility for professionals based on your own work experience.

© 2013 by Daryl D. Green

 


[1] Marketing Management by Philip Kotler and Kevin Keller

[2] High Visibility: The Making and Marketing of Professionals into Celebrities by Irvin Rein, Philip Kotler, and Martin Stoller

[3] High Visibility: The Making and Marketing of Professionals into Celebrities by Irvin Rein, Philip Kotler, and Martin Stoller

Closing the Sale

group problem-solvers

Closing the sale is a vital attribute for a good salesperson. However, most people have had to convince someone about something, which is similar to closing a sale. When you persuade someone to accept your position, you are applying a good pitch and sale. You have built trust.

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that rapport, trust, and mutual respect inherent in a long-term relationship take off some of the pressures with closing a sale. Therefore, we all have a little bit of salesperson in us!

We do not know the customer’s price threshold where he is willing to purchase. Johnston and Marshall further argue that the customer will seldom buy a product based only on a presentation, despite how well it is done. Knowing this missing information, I would ask the customer if he or she has a price range in mind. This would better assist the salesperson in tailoring a solution to the specific need.

The authors also explain that customers will develop objections to various aspects of your proposed solutions, even if there is a long-term relationship. In fact, an objection is simply a customer’s concern with some aspect of your solution to his or her need.  This can include price, delivery time, terms of agreement, or a myriad of other components.

According to Johnston and Marshall, there are nine basic strategies for dealing with customer concerns: (1) question, (2) direct denial, (3) indirect denial, (4) compensating for deficiencies, (5) third-party endorsements, (6) bounce-back, (7) defer, (8) feel-felt-found, and (8) trial offer. The most confrontational strategy is direct denial.

Although there is no magical pill for closing a sale, there are some fundamental components to a successful sale close. A great sales pitch should explain the value proposition; showcase the advantages and benefits of the product/service; enhance the customer’s knowledge about the company, products and/or services; and create an unforgettable experience.

Johnston and Marshall further maintain that a salesperson must clearly articulate the value proposition to the customer. Why do I need the product or service?  In fact, a salesperson must have the skill to alter the sales pitch based on the customer feedback during the call to action.  Therefore, the process starts and stops with the customer as the focus of this process.

Please discuss closing the sale with customers from your own professional experience.

© 2013 by Daryl D. Green

The World of Elance.com

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Elance.com is a freelance website that allows customers to solicit work from a variety of outsourcing services, which include programmers, designers, office support, translators, marketers, researchers, and many other disciplines. In marketing, the marketing mix consists of product/services, placement, price, and promotions.

Elance.com allows a business to post a job opening and invites freelance workers who believe they have the requisite skills for the job to make a bid. The company charges a $10 fee to each business to post a job, and also takes a small portion of what gets paid to contractors. Below is an analysis of Elance.com’s marketing mix:

Service – Elance.com allows businesses to post a job opening to freelancers at potential savings.

Placement – All transactions occur on the website.

Price – The company charges a $10 fee to each business to post a job and also take a small portion of what gets paid to contractors. It is considered low-to-medium cost.

Promotions – Much of the effort appears to be publicity and ‘Word of Mouth’ promotions.

The following questions would be asked as a marketing professional (suggested answers are also provided) when analyzing Elance.com:

Elance.com aims at two clients, employer and freelancer.  Clearly, you must know your customers. Paul Peter and James Donnelly, authors of Marketing Management, argue that successful businesses understand customer needs.

With that said, potential employers see a website that attracts over 500,000 talented freelancers.  For the freelancer, there is an opportunity to bid on 48,000 jobs, worth $480K.  It is recommended that the website be more tailored for employers and freelancers, since they have different needs. This could be done with distinct website buttons.

For potential employers, Elance.com provides ratings and tested freelancers whose profiles and ratings can be evaluated.  For freelancers, it is real-time feedback.  When Elance.com gets repeat business or new business, this is also a good indication of superior services.

 

Through the rating process and feedback, Elance.com can obtain feedback.  Likewise, freelancers get paid and get feedback.  Michael Solomon, author of Consumer Behavior, suggests that consumer response is the ultimate test of whether a marketing strategy will succeed. Therefore, Elance.com is the top freelance website that has to support a variety of consumers.

Please discuss Elance’s marketing strategy from your own professional experience.

© 2013 by Daryl D. Green

Customer Motivation

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Customers are motivated to purchase, but not for the same reasons.  To date, most explanations of customer motivation are based on cognitive factors rather than biological factors.  At the very basic level, it is easier to apply Maslow’s theory.

Some experts believe that application of Maslow’s theory has been somewhat simplistically explained in a commercial application, especially as the same product or activity can gratify different needs. Yet, individual purchasing considerations and motivation aren’t easy to understand.  Motivation can be a combination of learning experiences, buying history, and cultural environment.

In crafting products and services for the marketplace, managers should conduct research where targeted consumers are involved in order to formulate a well-balanced marketing-mix relative to the competition. Each customer has a need.

As you know, consumers are very complex. In fact, no two people are alike. Paul Peter and James Donnelly, authors of Marketing Management, maintain that marketing research can limit the risks associated with management marketing strategies.

Let’s explore this matter. Doing focus groups on the targeted market to gather market information would be critical. For example, a new retirement development would want to follow this strategy.  Who would want to live there?

If the primary demographic was women and widows, then amenities would need to be in line with these demographics.  Michael Solomon, author of Consumer Behavior, further suggests that the specific way we choose to satisfy a need depends on our unique history, learning experiences, and cultural environment. Therefore, gathering information about prospective consumers is critical to the marketing mix. 

Please discuss customer motivation from your own professional experience.

© 2013 by Daryl D. Green

Buyers’ Trust

ethics-cross the finger

Too many businesses lose their focus. They are often consumed with their own quest for profitability at any cost.  Consequently, buyers become less trusting of these companies. 

In fact, countless businesses are making careless mistakes. Former Johnson & Johnson Chairman and CEO Jim Burke explains, “You can’t have success without trust…You tell me any human relationship that works without trust, whether it’s a marriage or a friendship or a social interaction, in the long run, the same thing is the trust about business, especially businesses that deal with the public.” 

Most businesses underestimate the critical attribute of trust in profitability. Any value proposition will fail without TRUST.  Some organizations seek to clearly deceive customers in the short run to gain profitability. It’s a fatal mistake. 

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that building trust is essential in fostering good relationships with customers.  In fact, one of the primary tasks of organizational leaders is to foster trust within and outside of the organization.  

Many businesses suffer because they don’t understand their customers and how to meet their needs. Therefore, the message is mixed!  In fact, the manner in which customers are treated have a bearing on their customer satisfaction.

Paul Peter and James Donnelly, authors of Marketing Management, note that building a good relationship with channel members is a critical part of marketing communications. Understanding customers is critical. Therefore, businesses need to provide them the right message is vital.

Furthermore, numerous managers believe they can offer this concept without regard to their employees. Some treat employees poorly and expect them to showcase service with a smile. In this situation, trust is lost. Managers need to model the way in value creation. 

John Hamm, author of Unusually Excellent: The Necessary Nine Skills Required for the Practice of Great Leadership argues that some managers have misunderstood leadership. They feel they can work fewer hours, give their work to others, and not respect employees due to their position or title. 

Yet, managers’ bad behaviors are not without consequences. Employees soon lose their trust in these managers to do the right things. Hamm explains, “When leaders compromise their own integrity, it takes that extra urge out of our bodies that says we’re willing to go the mile.  Therefore, trust as a competitive advantage cannot be underestimated by today’s businesses. 

Please discuss your professional experience with customers and their trust in buying.

 © 2013 by Daryl D. Green

Customer Value Differences

young-business-professionals-discussing-seriously

Companies must focus on value for customers. However, all customers are not the same. Globalization has created all types of problems for businesses.  One of the issues is how to stay ahead of the competition by exploring new markets while keeping the same customer base.  This action is not easy.

Mark Johnston and Greg Marshall, authors of Relationship Selling, maintain that customers expect and deserve consistency in the way an organization’s value-added message is put forth. [1]

Being strategic conscious about these business relationships is not simple.  Marketing expert Ken Favaro further suggests that putting value creation consistently first requires leadership skills, discipline, and perseverance. He further challenged organizations to demand higher standards from managers who would jeopardize these business relationships.

These marketing problems are worthy of the most decorated scientists. In fact, the right value proposition is critical because all customers are not created the same. When organizations place value creation as a high priority, organizations will beat their competition because they will deploy capital better and develop internal talent better.[2]

Customer expectations and customer needs are often different. Management expert Ray Miller further suggests a “strategic trap” for businesses seeking to meet customer expectations. Delivering below expectations is obviously bad.  However, simply satisfying customers will not guarantee customer loyalty either because they are getting nothing more or less than they expect.

 https://www.youtube.com/watch?v=d7vwhHLmdWI

Furthermore, some businesses get caught up being efficient in developing cookie cutter solutions for the masses. Yet, they overlook that value seeking customers are looking for products and services that solve their specific needs.

Consequently, employees should be motivated to provide value for customers if the businesses want to be successful.  In fact, this reality involves being compensated fairly, being treated with respect, and being given meaningful work. Finally, companies must understand that customer value expectations are often different. Therefore, businesses that  manage customer expectations effectively will possess a distinctive advantage in the market.

Please discuss your professional experience with customer value differences.

© 2013 by Daryl D. Green

 


[1] Relationship Selling by Mark Johnston and Greg Marshall

[2] Put Value First by Kevin Favaro

Locking on the Value Proposition for Customers

bazaar-selling

In my office, I hung a newspaper article prominently on my wall.  This 2010 article showcases the top 100 government officials in my area.  Surprisingly, the university basketball coach was the top official, at over $2 million.  Following suit was a short list of athletic coaches followed by highly noted professors and administrators.

This amazing list furthered stimulated my interest in determining the value of individual skill sets.  In some other areas of the country, region, or state, someone would probably determine that these same jobs did not warrant the same financial worth.  In fact, individuals within the same organization with the same title and similar professional backgrounds can be found making significant differences in salary.   Given these realities, it is easy to see that customer value propositions differ.

Today’s companies must become adapted at determining customer value. However, all customers are not the same.   In fact, globalization has created all types of problems for businesses.  One of the issues is how to stay ahead of the competition by exploring new markets while keeping the same customer base.  This action is not easy.

Many businesses build their profitability on this simple equation. Companies seek to reduce their inputs (outsourcing labor, better technologies) to obtain greater profitability. Yet, the process is often pretty self-serving with little regard to the customer and lesser value on employees.

Therefore, many people might insist that some business simply stumble on what customer value actually is and how it affects their business.  For this discussion, value is defined as the net bundle of benefits the customer derives from a product of service.

Mark Johnston and Greg Marshall, authors of Relationship Selling, state that the starting point for learning about relationship selling is to understand the customer. A value lesson is learning that the customer is the center point for creating value.

Paul Peter and James Donnelly, authors of Marketing Management, suggest that the starting point in the buying process is the consumer’s recognition of an unsatisfied need. Therefore, the focus must go back to the customer for any sustainable business success.  They must be deliberate with their connections with customers and value.

Being strategic conscious about these business relationships is not simple.  Ken Favaro, author of Put Value Creation First, further maintains that putting value creation consistently first requires leadership skills, discipline, and perseverance.

He further challenges organizations to demand higher standards from managers who would jeopardize these business relationships. When organizations place value creation as a high priority, organizations will beat their competition.

Given the complexity of customer value, how do businesses stay connected with customers and their ever changing wants and needs?

© 2013 by Daryl D. Green