My startup, Kronicity, is building a free site with paid upgrades, of course, designed to scale quickly. This scale will be monetized through a humber of means. The latest, I read a How to think out of the box book that came in an Amazon box, argued that my user was the product and my customer was the marketer and that I should build for them. He pointed to Twitter users as product and marketers as the actual customer.
Here's my take. There is no such thing as a user who is only a product. The user is both customer and product. Kronicity is designing for two customer segments, the user and the marketer. I FIRST have to develop a product the user will love and use. Only then will I be able to market to the marketer for all that lovely advertising money.
There's a pretty important distinction here. Defining who your customer is is critical. Every feature and design decision must focus on customer experience and customer perceived value. If you're monetizing your users, you have at least two customer segments. This requires viewing your product through two lenses and building two marketing strategies. And, if done properly, seamlessly integrating both segments into all planning phases.
Wednesday, August 26, 2015
Wednesday, August 12, 2015
What Does a Business Strategist Do?
The simplest explanation, is we consider and align every possible aspect of a business. Think of your business as a natural extension of the natural world, which it is. Alexander Pope’s reference to a “Vast Chain of Being” applies to the interconnected parts of a business just as much as to the success or failure of a species in the wild. Cockroaches, for example, are really well-aligned animals. Mammoths - not so much.
How We Do It
We do this utilizing a large number of tools and usually involves enlisting the advice and assistance of numerous other experts. I could talk all day about this, but let’s try to break it down into a few simple components.
Competitive Forces Analysis
Most startups think of competitors as the firm down the street competing for the same customers. And this is partly true. But trust me buddy, there a whole lot of other things trying to kill you. Is the technology ready for your product? Is the customer ready? Can they find a cheaper alternative? Are economies of scale working against you or in someone else’s favor? Has your competitor locked up all existing manufacturing and distribution?
By example, did betamax fail because it was too soon for a new media format? Or was it that VHS aligned themselves with Blockbuster to create a customer pull strategy? If so, VHS succeeded because they identified the superior product competitor and outcompeted with a superior distribution channel.
One of my favorite examples is a lawsuit, “Silk” versus the Milk Industry. It was settled with a collaboration where Milk wholesalers distributed the “Silk” product. In this case, the milk industry recognized a potential threat and decided to join rather than fight. Distributing gave them insights and profits. Silk recognized a powerful competitor and ore importantly a potential collaborator that provided them with a a well-established efficient low-cost distribution and marketing channel. The consumer won as well. Quoting Charles Darwin: “In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed.”
These are just a few of many competitive forces to consider. A business strategists considers all of them and recommends solutions and strategies to accommodate.
Channel Design
Understanding the competitive landscape is critical in identifying channels that need to be developed. The “Silk” example above was a very efficient and low cost solution to a problem most businesses face. Recognizing the actual competitive forces allowed them to collaborate and not only eliminate competition, but to develop low cost distribution and marketing channels. Most startups instinctively and reflexively seek the lowest-priced raw materials and manufactured goods. Big mistake! Your product is priced based on overall cost to create and deliver to the end user. A high priced manufacturer may also have well-established channels/access to your customer. They may open doors to new customers, share marketing costs, even distribute for you. Understanding channels is critical.
Financing
Let’s assume you’ve developed a better mouse trap that requires only biodegradable paper components. And you only need a $40,000 to get to market. As a business strategist, my first thought is to negotiate a partnership with a paper manufacturer to produce the product at cost, reducing your cash needs to about half or $20,000 and then borrowing that cash from the same paper manufacturer. Of course it would have to be a damned good mouse trap. But even if deemed a risk by the manufacturer, with a good marketing plan, such as using their distribution network, there is still some room for negotiation.
Marketing
Align all the parts! Can your customer be reached through an established network? Are any partners in your channels connected to them? Lord knows your manufacturers are vested in your success. Perhaps there’s a collaborator with a complimentary product? You could share costs and tap into each others customer base. The competitive analysis above can fine tune who your customers are and better target your campaigns. Your partners can share insights on what worked or didn’t work for them. Have you identified substitutes that you have to position yourself against? I witnessed a customer at a high end tea shop complain she could find an oolong at a quarter of the price the shop was asking just down the street. The manager responded that they too could sell cheap oolong but decided to maintain high quality tea did not compete on price. he shop had done their homework, priced and packaged and marketed accordingly. The customer paid the price.
Communication Channels
How many times have you gone to a retailer or restaurant and was so disappointed in the service that you never went back. Or maybe you had a suggestion that would have really helped out a new small business. I pity the poor business owner who doesn’t know of your experience nor learned of your suggestion. But in reality, it is their fault for not having established communication channels that make it easy for customers to interact with your business AND for employees to act on this data. And this communication extends from customer to business owner and straight on back to manufacturer and raw goods provider. And a well designed communications channel allows a business to respond quickly to change. Again, I quote Darwin: “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”
As you can see, just as in the “vast chain of being” in the natural world, there’s a lot of overlap in all categories. Aligning them is critical to survival. Your goal as a business owner or manager is to try NOT to be a mammoth. We can help.
 |
| https://upload.wikimedia.org/wikipedia/commons/0/0a/MammothVsMastodon.jpg |
How We Do It
We do this utilizing a large number of tools and usually involves enlisting the advice and assistance of numerous other experts. I could talk all day about this, but let’s try to break it down into a few simple components.
Competitive Forces Analysis
Most startups think of competitors as the firm down the street competing for the same customers. And this is partly true. But trust me buddy, there a whole lot of other things trying to kill you. Is the technology ready for your product? Is the customer ready? Can they find a cheaper alternative? Are economies of scale working against you or in someone else’s favor? Has your competitor locked up all existing manufacturing and distribution?
By example, did betamax fail because it was too soon for a new media format? Or was it that VHS aligned themselves with Blockbuster to create a customer pull strategy? If so, VHS succeeded because they identified the superior product competitor and outcompeted with a superior distribution channel.
One of my favorite examples is a lawsuit, “Silk” versus the Milk Industry. It was settled with a collaboration where Milk wholesalers distributed the “Silk” product. In this case, the milk industry recognized a potential threat and decided to join rather than fight. Distributing gave them insights and profits. Silk recognized a powerful competitor and ore importantly a potential collaborator that provided them with a a well-established efficient low-cost distribution and marketing channel. The consumer won as well. Quoting Charles Darwin: “In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed.”
These are just a few of many competitive forces to consider. A business strategists considers all of them and recommends solutions and strategies to accommodate.
Channel Design
Understanding the competitive landscape is critical in identifying channels that need to be developed. The “Silk” example above was a very efficient and low cost solution to a problem most businesses face. Recognizing the actual competitive forces allowed them to collaborate and not only eliminate competition, but to develop low cost distribution and marketing channels. Most startups instinctively and reflexively seek the lowest-priced raw materials and manufactured goods. Big mistake! Your product is priced based on overall cost to create and deliver to the end user. A high priced manufacturer may also have well-established channels/access to your customer. They may open doors to new customers, share marketing costs, even distribute for you. Understanding channels is critical.
Financing
Let’s assume you’ve developed a better mouse trap that requires only biodegradable paper components. And you only need a $40,000 to get to market. As a business strategist, my first thought is to negotiate a partnership with a paper manufacturer to produce the product at cost, reducing your cash needs to about half or $20,000 and then borrowing that cash from the same paper manufacturer. Of course it would have to be a damned good mouse trap. But even if deemed a risk by the manufacturer, with a good marketing plan, such as using their distribution network, there is still some room for negotiation.
Marketing
Align all the parts! Can your customer be reached through an established network? Are any partners in your channels connected to them? Lord knows your manufacturers are vested in your success. Perhaps there’s a collaborator with a complimentary product? You could share costs and tap into each others customer base. The competitive analysis above can fine tune who your customers are and better target your campaigns. Your partners can share insights on what worked or didn’t work for them. Have you identified substitutes that you have to position yourself against? I witnessed a customer at a high end tea shop complain she could find an oolong at a quarter of the price the shop was asking just down the street. The manager responded that they too could sell cheap oolong but decided to maintain high quality tea did not compete on price. he shop had done their homework, priced and packaged and marketed accordingly. The customer paid the price.
Communication Channels
How many times have you gone to a retailer or restaurant and was so disappointed in the service that you never went back. Or maybe you had a suggestion that would have really helped out a new small business. I pity the poor business owner who doesn’t know of your experience nor learned of your suggestion. But in reality, it is their fault for not having established communication channels that make it easy for customers to interact with your business AND for employees to act on this data. And this communication extends from customer to business owner and straight on back to manufacturer and raw goods provider. And a well designed communications channel allows a business to respond quickly to change. Again, I quote Darwin: “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.”
As you can see, just as in the “vast chain of being” in the natural world, there’s a lot of overlap in all categories. Aligning them is critical to survival. Your goal as a business owner or manager is to try NOT to be a mammoth. We can help.
Subscribe to:
Posts (Atom)