Formulating a Market Strategy
In the previous article, we talked primarily about tools to determine your market niche and ways to utilize these tools in gathering information to determine your store's market position. With this information gathered, what do we do with it? On the board level, it should be utilized to formulate a strategic plan or to review an already existing plan. More importantly, on the staff level, the information gathered is the basis for an operational marketing strategy.
A marketing strategy should be used as a working paper that guides the store's operations for the next 1-2 years. The format of a marketing strategy has three sections:
- basic assumptions -- based on survey results and past planning processes;
- strategic goals -- goals for growth and fiscal health of the co-op;
- achieving goals -- operational ideas for changes that will alter the perception of the storefront by the public to conform to the strategic goals.
(An advertising strategy, to be discussed in our next column, is a result of the marketing strategy and needs to be treated as a separate document. A market strategy creates the product to be advertised; the advertising strategy defines the markets to be advertised in and the media vehicles to be used.)
As mentioned earlier, it is important that corporate goals are established through a strategic planning process before an operational marketing strategy can be written. These corporate goals, along with gathered data, will form the basis of the strategy formulation. The first step is to analyze the corporate goals, asking three primary questions: 1) How do overall corporate goals relate to marketing? 2) Are the goals achievable through store operation? 3) Are the resources available -- both capital and personnel -- to achieve these goals?
If these questions are sufficiently answered, you are ready to formulate your strategy. From surveys and competition research (discussed in the previous article), you have the basis for the analysis.
Analysis of market:
-->Is the market growing?
-->How large is present market (dollars and people)?
-->What determines the size of the market?
-->What services that relate to our business are currently being offered in the market?
-->What services do customers desire?
-->How is market segmented; what is our appropriate and perceived niche?
-->Is demand for product growing? consistent? declining? fluctuating?
-->Market shares of competitors: what are they and why do they have them?
These answered questions, and additional questions specific to your market, will give you a broad overview of the current market conditions.
Analysis of customer:
-->What is your customer base?
-->What are the perceived needs and wants of the customer?
-->What are the reasons they buy from your store or a competitor?
-->What % of their food dollar is spent at your store?
-->What is the demographic and psychographic profile of your average customer?
-->What customers/trade area can be sufficiently serviced?
-->What services do they desire that you can sufficiently supply?
-->Are they price competitive?
-->Do they provide the desired product lines of your customer base?
-->How do your suppliers compare with competitors (price, product, wholesale services)?
-->Are they promotion and marketing oriented?
-->Who are your primary and secondary competitors?
-->What are their strengths and weaknesses?
-->What are their strategies?
-->What is their share of the market?
-->What is their ability to service the market?
-->How do their resources compare to yours (size, management, buying power, supplier services, etc.)?
-->What is the demographic/psychographic profile of their average customer?
-->Advantages and disadvantages competition has over your store.
-->Cost of strategy (promotion, equipment, increased inventory, advertising, etc.).
-->Effect on corporate profit -- does return on investment warrant strategy implementation?
-->What are fixed and variable costs associated with implementation?
In completing this analysis, you have identified the key outside forces and formed the basic assumptions that make your business what it is today. Your next step is to use the analysis to set your strategic goals to change or strengthen your market perception and niche.
The third step in completing the market strategy is achieving goals. This is the nuts and bolts of the strategy -- operational ideas that will alter the perception of the storefront by the public to conform to strategic goals.
The development of the operational strategy starts from the ground up, utilizing the people who have the most familiarity with the areas they work in; this is where some of the best, most productive ideas come from. A form needs to be developed to solicit comments from appropriate staff members, with a determined timeline. This form should spell out exactly what the task at hand is and the areas where ideas are needed. This accomplishes two things: it allows all staff to participate in the strategy development, and it allows a myriad of ideas and suggestions to flow to the strategy coordinator for consideration.
The operational portion of the strategy starts with the stated purpose and goals. Then, each area of operations is looked at, with stated goals and objectives for each one. The areas commonly looked at in a retail co-op are:
- product line development
- sales (increasing sales per customer)
- equipment, layout
- promotion (in-house)
- miscellaneous (policy effects, budgeting, operational plans, etc.).
Under these categories, the goals and objectives for operational change are laid out.
This completes the formulation of the market strategy. The detailed data-gathering analysis and goal-setting will allow you to create an operational section of the strategy that addresses your store's long-term needs and goals. It will give everyone in the organization a sense of vision and working for a common goal. And it will give the manager the ability to focus on long-term projects that integrate with other departmental goals and objectives.