When I was with the International Centre for Agriculture Technology and Science, we coined a phrase with the help of Dr. Roger Moore called Market-Focused Planning. This term applied to a thought process we developed to guide strategic planning away from self-centered navel-gazing to focusing on how our most significant strengths would be perceived by the public and which strengths would give the organization the greatest leverage.
I adapted that technique and used it successfully in my consulting practice to help companies focus their resources to create products and markets that created long-run competitive customer value and choice while creating long-run profit. This understanding would then disconnect the company and its resources from everything else. The narrower the focus, the better the chances for success.
I did apply this technique with HealthSpace. When I evaluated the company in 2002, I saw several problems. Apart from having a good concept (the market leader at the time, Digital Health Department essentially had the same vision), it was undercapitalized, had poor financial management, and had no coherent marketing plan. The company was tech-driven and not customer-centric, and had complicated technology. HealthSpace lucked into a couple of contracts. I was able to bring in some capital and improved management, but I had to find a competitive edge. Using Market Focused Planning, I determined and implemented the competitive strategy of superior service, responsiveness, and timely delivery. This strategy has been our guiding light ever since, with the addition of best-in-class technology that has propelled HealthSpace to market leadership.
Market Focus has four steps:
- Determining the potential competitive markets and products (services) to focus strategic priorities and core competencies
- Choosing where to compete
- Creating customer choice
- Assess cash flow and profitability
First, we need to understand how potential customers make decisions. Most Buyers have an existing need satisfier, and most products or services require the buyer to switch from a current choice. Switching involves rejection of the status quo; therefore, choice requires rejection. So, three questions become apparent:
- What would motivate a buyer to switch?
- To choose our product, who will have to be rejected? And
- Why should a buyer do this?
To understand how customers make choices and rejections between competing products, we first must determine what criteria customers use to conceptualize “value.” To do this is is critical to understand which potential customers we can most create competitive long-run value while at the same time generating long-run profitability. Profiling and engaging with the “ideal” customer will allow us to create a positive choice and avoid rejection. Also, we will understand how to support the rejection of NBC (the next-best choice).
Critical Management Questions We Must Ask Regarding Buyer Behavior
To develop a winning strategy, we must determine how to create competitive value in key influencers’ minds in our customer organizations. Specifically, value our competitors can’t match. Our focus must be to determine where we can create unique and significant value in our target customers’ eyes. We must understand how our customers compare choices for value creation and how they reject. On which customers should we focus? Maximum value creation for them or maximum profit for us? Who in our organization manages key customer relationships
Creating leverage in a competitive strategy
Developing a competitive strategy is about leveraging strength against weakness. Once we determine where our most significant competitive opportunities lay and to whom it matters, we can apply leverage in the lead generation and lead conversion process. We must make it as easy as possible for customers to do business with us. Therefore what changes need to be made that can affect choice/rejection and profitability? We must examine our product and process; our customer communication regarding relationships, logistics, and price. This examination will guide our advertising, promotion, and selling strategies.
Using Market Focused strategic planning will ensure that you identify the best customers for your products or services or uncover market opportunities you don’t currently have. Understanding buyer behavior and making decisions provide tremendous insight into developing effective lead generation and successful customer conversion strategies.