Keith Herrmann, Council for Industry and Higher Education
The severe nature of the current economic downturn will require many small firms, from “one-man” bands to those with a few hundred staff, to make concerted efforts to adapt and re-think their business strategy.
Re-group to survive The first requirement is cutting costs across all parts of the business. Also review your suppliers to further improve efficiencies. A survey of small firms in the UK shows that SMEs are likely to take action on costs in a recession - 14% have changed utility supplier, 11 changed their IT or telcom suppliers.
However, monitoring the cost base must be complemented with a sustained commitment to investing in the assets of the business to ensure that you are ready for the up-turn.
Re-group to survive Thinking critically about the “US” of the business is needed—develop a premium brand to achieve a strategic shift in positioning and market penetration. Use social and business networks, including Linked-In, Facebook and Twitter to extend your access to business networks and new customers. Figure 1 below provides some ideas for repositioning your business—you have to differentiate yourself from your competitors.
Here are four ideas :
1. Understand your customer’s needs - use qualitative insights about customer behaviour to build product brand value which ‘customerise’ the entire experience of the firm. Only by ‘connecting’ with your customers will firms be able to ensure higher levels of customer satisfaction and subsequent repeat purchases.
2. Building brand personality - product differentiation based on locational factors alone is not enough. Develop new and meaningful ways of differentiating your products through marketing the benefits of quality, location, personality or the environmental benefits of your products. Creating the brand halo effect is all good and well but if there is no actual delivery behind this, a product’s reputation will have been irreparably harmed.
3. Building supply chain integrity - this is particularly important when supplying to larger customers. It is critical that full supply chain integration assists in the delivery of what is ‘promised’. Hence the reference in this article about ensuring that your suppliers understand your USP and the distinctive brand identifiers of your business.
4. Local market presence - the most effective way for firms developing new brands to establish market presence is via local markets. Local markets can be reliable routes into national markets, but the only danger is that they can become easily saturated and thus precipitate entry into national markets. It is crucial therefore to ensure that the brand building process is flexible enough to accommodate expansion and has an identity which is not too parochial.
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