When your business strategy fails, what do you do?

All business, be it small, medium or big needs a laid down plan on how to achieve its objective, the strategy might not be documented, but trust me they do have a strategy in place. The reason most business fail in their strategy execution is because it is out of sync with the market and their internal structures. Several functional strategies together make up a business strategy for a company to adopt in their business operations.
All business, need to put in place structures in order to properly serve the market needs. In this global era, markets are changing fast, consumers are developing new taste and preferences as a result, new strategies have to be developed fast to match up with the trends. In this post, we will share with you what you need to know about strategy and how to turn your failing strategy into a winning strategy.
Understanding strategy
Why business strategy fails
What is market research
Competing to win
Growth strategies
Price determination

Understanding strategy

A strategy is simply an action plan chosen on how to undertake a task. In business, business strategy refers to an action plan by management on how to run the business and conduct operation to achieve set objectives. The strategy answers questions on how to grow the business, how to build and attract loyal customers, how to compete and outperform rivals, which market to target, how to dominate the market and how each functional piece of a business will function and work together to reach objectives.
It is thus a decision to pursue a particular set of actions among many business approaches to move a company to its intended destination. Strategies are employed in almost every facet of our lives, knowingly and unknowingly, from military tactics to personal life decisions.

Why business strategy fails

Most business strategies fail because strategy is a chain of activities that need to be put in motion in light with market demands. It is therefore unlikely that strategy as originally conceived and crafted, will prove suitable over time. Business strategies need to be modified in response to changing market demands, new technologies, emerging market opportunities, competitor moves.

Reasons why business strategies fail:

Unresponsive strategy to change in market demand
Competitor market dominance
Imitative strategies
Poor leadership
Lack of financial resources
Cost disadvantage
No or insufficient communication
Delay in taking advantage of opportunities
Lack of performance measurement

Market Research

Market research, a technique used to gather information and better understand the target market a company is in. Businesses be it small, medium and large use this information to design better products suitable to the niche, improve niche user's experience, and craft a effective marketing campaigns strategy to attract quality leads and improve conversion rates.

All markets can be divided into submarkets and niche markets.
A sub-market is a distinct segment within a broader market and a niche market is a narrow segment within a sub-market defined by its own unique needs, preferences, or identity.

Companies focus on niche markets to better cater to a specific consumer than competitors who target a broad audience. Catering to the unique demands that mainstream providers aren't addressing, businesses pursue niche markets to build loyalty and revenue with a largely-overlooked audience.
For example, rather than offering a general cleaning service, an entrepreneur might pursue a niche by offering floor polishing services exclusively. Another business in the same city might occupy a separate niche, specializing solely in bio-degradable cleaning products.

Benefits of niche market targeting
There are several benefits to targeting a niche market:

Reduced competition
Focused business efforts
Providing expertise
Establishing brand loyalty

Without research, it’s difficult to understand the market needs and tailor products to meet their preference. Sure, generic ideas might work, but why go in blind and waste resources when you can go in prepared and be profitable. Markets and user preferences within the market changes over time. Closely connected to succeeding in a market is the idea of Red Ocean and Blue Ocean, Professors W. Chan Kim and Renee Mauborgne authors of the Blue Ocean Strategy and Published by Harvard Business Review Press.

In their book, "Blue Ocean" is an untapped market, where there is weak or no competition, enabling anyone to target and claim a chunk of the market share. On the other hand, "Red Ocean" refers to the market where competition is high. Here, the market crowded with most participants offering the same type of good or service.
The mistake most people make today is that they do not properly research the market, as a result, they target markets or niches that they perceive to be easy targets thereby stepping into someone's else red ocean that may be experiencing keen competition.

Competing to win

To effectively compete to win, a business should secure a competitive advantage. To secure this advantage, management should initiate defensive and offensive moves based on prevailing market circumstance to please customers. A competitive intelligence tool to understand the company situation and market is known as SWOT analysis. Using SWOT analysis, a business can appraise its resource strengths, weaknesses, external opportunities and threats.
Strengths: A company's strength is something a company is proficient at doing better than rivals or an attribute that enhances its competitiveness in its target market. It can be a specialized skill/capability, physical asset, human asset or intellectual capital, intangible asset or valuable alliances.
To truly prove valuable, a resource strength should be hard to copy, durable and should fit the company's market situation.

Weaknesses: A weakness is a skill, shortcomings or something a company does poorly as compared to others in the market. Nearly all companies may be deficient in an area or another. A company's vulnerability depends on how much they matter in the marketplace.

Opportunities: To properly tailor strategy to fit a company situation, an identification of market opportunities is needed to appraise the growth and profit potential that each one holds. Unlike the strengths, and weaknesses, opportunities exist in the external environment. Market opportunities that are unpredictable and frequently changing limits a company's ability to spot and exploit.
Not all market opportunities may present itself as a fit to the company situation, managers must resist the temptation of seeing every market opportunity as the right company opportunity.

Threats: Factors external to the company that pose hinder a company's profitability and competitiveness are referred to as threats. Threats can emanate from better advanced technologies, introduction of new products by rivals, entrance of lower-cost foreign competitors, new market regulations, demographic shifts and other circumstances not within the control of the company. Management therefore has the task to identify circumstances that pose a threat to the company's future prospect and evaluate the options available to lessen, eliminate or avoid the threat.

7 Things to consider when competing to win

#1. Focus on long term strategic moves
Meeting a year's performance target may fade away quickly, focusing on sustaining a competitive position pays off years after. Managers who focus on short term performance, do not serve the interest of shareholders.

#2. Be prompt in adapting to market changes
When market dynamics change, responding late or too little, puts a company in a position where they have to play catch-up, first movers would have already capitalized on the market opportunity.

#3. Invest in creating achieving sustainable competitive edge
A competitive edge over rivals, is a key factor to achieving profitability. When competing, a company must be aggressive on offense and aggressive on defense.

#4. Avoid strategies that succeed only in favourable conditions
Any move by a market player, will lead to responses by other market participants. Competitors will employ measures to counter strategic moves. A good strategy works well even in worst circumstances.

#5. When undertaking offensive strategies, attacking a competitive weakness is more profitable as well as less risky than attacking a competitive strength. Offensive strategies most often than not, require financial resources.

#6. When competing on price, be wary of cutting price without a cost advantage. Price cutting may lead to retaliations from rivals in the market place. The best chance a company has to remain profitable in a price war is when you have lower costs than rivals.

#7. When pursuing a differentiation strategy, a company must ensure that wide visible gaps in quality, service or performance are maintained. Minor gaps or differences between rivals' product offerings may not be visible or important to prospective buyers in the market.

Growth strategies

H. Igor Ansoff, a mathematician and business manager, developed a model that businesses can apply when pursuing a growth strategy. This model was published in the Harvard Business Review in 1957. THE FOUR GROWTH STRATEGIES Four types of growth strategies are proposed on this basis. The four main growth strategies are as follows:

MARKET PENETRATION
Market penetration seeks to increase sales of existing products or services in existing markets, to increase market share. In doing this, customers move away from competitors or buy your existing products or services more often. This is done through price decrease, an increase in promotions as well as distribution support; sometimes, a rival firm can be acquired.

MARKET DEVELOPMENT
Increasing sales demand of existing products or services on previously unexplored markets is what market development is about. Market development introduces new ways in which a company's existing offers can be sold in new markets, and also grow existing markets. Here, different customer segment is targeted; from industrial buyers, to households, new areas or regions and foreign markets.

PRODUCT DEVELOPMENT
Launch new products or services on existing markets is the objective of product development. Product development may be used to extend offers proposed to current customers with the aim of increasing their turnover. These products may be obtained by: Investment in research and development, acquisition of rights and patents to produce products; Franchising agreements allowing re-branding are some of the ways in which product development occurs.

DIVERSIFICATION
Diversification is a means of launching new products or services on previously unexplored markets. Diversification is a risky strategy. It involves exploring completely new products and services on a completely unknown market. with diversification, unrelated products or services can be sold to existing customer groups, new product lines can also be developed with or without similarities to existing range of products, also, a company may enter its suppliers or customer market and target same or other related products.

Price determination

Pricing is one of the most important factors to be considered as part of your strategy. The price of your product or service determines your profitability and sustainability in the market place. When setting a price for a product, aside from the pricing strategy to use, the sensitivity of your target customers to pricing is also worth considering.
In a market, where customers are sensitive to high prices, offering high end products will eventually lead to a fall in sales demand. To survive in such markets, managers have to pursue cost efficiencies throughout the value chain and also deliver the bare essentials to the target market in order to stay profitable.
Some pricing approaches are listed below:

Cost-based pricing: With this approach, the total cost associated with offering an item to the target market, including production, transportation, distribution and marketing expense is used as a benchmark, aggregated and an amount is added to cover profit.

Break-even pricing: This approach examines the relationship among costs, revenue and profits. Break-even pricing uses break-even pricing to determine the sales quantity at which total costs equals total revenue for a given price. Any sales units beyond the breakeven point generates profit and sales units below the breakeven point generates losses.

Discriminatory pricing: This pricing approach is seen in action where two or more distinct prices are set for a product or service with the aim of appealing to different consumer segments by incorporating essential features to high end features, brands and sizes.

Pricing lining: This involves selling products or services at a range of prices with each product or service representing a distinct level of quality.

Final words

Strategies are necessary to effectively communicate, rally support and focus the team energy towards the attainment of business goals. Sometimes, a strategy may fail in its bid to give a business a home run or competitive edge. When strategy fails, it is of the essence to quickly evaluate the market and its participants to understand the demographics and the market trend using the SWOT analysis earlier mentioned. The ultimate goal of all value creation process is to delight the customers with products that satisfy their profile. Customers reside in the markets, as well as competitors, that is why analyzing the market is crucial to know how customers responds to a business' offerings.