MT499-D-Marketing

23 Charter | December 2009

Business > Competition

small is good There’s no need to try and be everything to everyone when you’ve found your niche in the market.

Story Melissa Wilkinson

It’s much more powerful to identify where the weaknesses are with the larger players and position yourself in that part of the market

Woolworths’ takeover of Danks Holdings to rival Bunnings signals the emergence of a true gorilla in the Australian retailing sector. While it may make some small local hardware store owners anxious about how they’re going to survive, the marketing gurus say that there is a clear solution. Apparently it’s not how big you are, but how you play the game.

A number of small-to-medium sized businesses fall into the trap of trying to compete against the larger players because they think that’s the only way to win. They try and be everything to everyone which is the surest way to waste precious resources, sap the entrepreneur’s time and leave the business overstretched.

Sally Wells, managing director of Endgame Communications, a marketing agency specialising in financial services, says that the opposite is true.

“SMEs need to avoid trying to be like the big guys and playing the big game. These larger firms are always going to be able outmarket and outsell you because they simply have more resources. It’s a waste of effort to try and position your business against them.

“It’s much more powerful to identify where the weaknesses are with the larger players and position yourself in that part of the market. While size is a definite advantage for the larger businesses,

it can also be their greatest weakness. For example, they find it difficult to give the same level of personal attention and service experience that the smaller players can provide.

“The biggest challenge facing the smaller firms is to actually make a decision on how they want to position themselves and what is their competitive advantage in the market. The key is recognising what the big guys can’t offer and what makes your business different. You need to know what you’re good at and what you stand for. The trap businesses fall into is trying to offer all types of products and services when another business is actually better suited to solve that client’s particular problem. Being clear about what you do, and what you don’t do is critical.”

KNOW THYSELF It seems that small business owners need to brush up on their Marketing 101. The core of any solid competitive strategy is delivering a service or product which solves a customer’s problem. If you’re not clear about who your customers are, what problem they need solved and how you can reach them, then no amount of money spent on marketing will ever generate decent returns.

According to Guy Kawasaki, US-based venture capitalist and author of The Art of

the Start, when positioning is done properly, it represents the heart and soul of an organisation. He says that your positioning should clearly state what you do, why clients should come to you and why good people should work for you.

If you want to build the next Microsoft, initially targeting large horizontal markets as part of your growth plans is not the way to go. Instead, Kawaski recommends that new firms should start small and establish a beachhead and then grow from there. A beachhead is a market small enough so that larger competitors are not already going after it and big enough so that if you’re successful, you can reach critical mass and profitability with it.

Tony Schiffmann, managing partner at BDO Kendalls in Brisbane, says that a lot of firms simply haven’t worked out where they want to be in the accounting profession.

“In the last 25 years I’ve seen a lot of change during that time. There’s been a lot of merger and takeover activity and a lot of firms which are left are still not clear about where they’re competing. I don’t think size itself is critical, you’ve just got to pick where you want to be. The days of the small generalised practice are over, specialisation is the key now.

“As an industry, we’ve been very slow to understand the merit of branding and differentiating ourselves and it’s something we really need to work on.”

Bernard Salt, social demographer and partner at KPMG, believes that for firms to successfully compete in the future, they won’t have to ‘get big or get out’.

“It is true that globalisation is a dominant force shaping our profession and it is

24 Charter | December 2009

shaping how and where business is being conducted. However, the firms that will survive in the future, regardless of their size, will be those who are intellectually broad, innately creative and technically excellent. There will always be a need for small firms, even in a global world. The mid-tier firms are the ones which particularly need to specialise and find an area of expertise. The key will be staying innovative and responsive to consumers’ changing preferences.”

Carolyn Stafford, small business marketing expert from Connect Marketing believes that part of the key to competing against the larger players is one of infiltration rather than domination.

“As a small player, you simply just don’t have bucks to compete that way. You have to use marketing tactics to raise awareness about your business among your target customers. This means preparing a simple marketing plan which is often a missing link for many businesses. The plan is important because it will stop you from wasting money and it gives you something to follow instead of just adopting haphazard approaches.

“Most small businesses forget about marketing, but without it, your business is dead. It is an important business function like doing your accounts, setting up the IT or managing staff. If you can’t afford an in- house function, then subcontract someone on a part-time or casual basis. Find a mum who has a marketing background and who can take on marketing, business development and sales.

“A consistent approach to marketing is key. At a minimum, you need a strong database to help you capture information about potential and existing clients. Building relationships is very important in a services business and you need to consistently generate a flow of new leads.”

Making the most of client referrals is one of the lowest hanging fruits that firms should be going after. Research has proven that word of mouth referrals are one of the most powerful forms of marketing. In a services environment, they’re highly valued because of the intangible nature associated with buying services. Clients have to consume first and then decide whether or not it’s good. If they can get a referral from someone they trust, then the chances that the client will buy are much higher. Im

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25 Charter | December 2009

Business > Competition

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PAYING ATTENTION TO BRANDING Once you think you’ve found your niche in the market, what’s next? This is the step that many business owners tend to ignore in the rush to get the doors open for business. They forget to ensure that their brand is consistent across every part of their business and importantly, the whole end-to-end customer experience.

This means making sure that your value proposition is clearly communicated across all aspects of your firm from your website, marketing collateral, offices and the way your staff dress. The marketing experts suggest identifying what values you would like to have associated with your business and then start to build them into your marketing and customer service activities. For example, if you’re trying to project a boutique, high quality brand image to the market, there’s no point having flimsy business cards and

a cheap looking website. It’s no use simply stating that you’re a customer-focused accounting firm in your marketing blurb. If all aspects of your business don’t consistently reflect this, there’s no way a customer will believe you.

That’s why taking some time to look at your branding, what you stand for and how your customers perceive your business is definitely worth it. Branding can evolve into your most valuable intangible asset because it can be one of those competitive strengths which are very difficult for other firms to copy. Firms like Apple, McDonalds and Microsoft understand the power of owning a strong brand and, as a result, invest millions in ensuring that their brands stay relevant in the market place.

BE SEEN AND HEARD Getting your message out to your target market is particularly important when

consumers are being bombarded with more and more messages every day. Getting cut-through in a crowded space can be difficult. Wells recommends taking advantage of web tools like Google analytics.

“It’s very important that you understand how to reach your specific audience because it will vary depending on the customer segment. Your website must be optimised for search engines and Google has a lot of tools which you can use for free. Google analytics is particularly good because it will give you some insights into your website traffic, what people are looking at and where they’re spending the most time. This can help you tailor your online content so you can give people more of what they want, in the way they want it. Consumers are more information hungry, cynical and IT savvy than they’ve ever been.

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