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Toolkit for Small Businesses
1. Small
Medium
Businesses
Toolkit
Fo r p r i va te p ra c t i ce s , h e a l t h & b e a u t y
companies, home contractors, restaurant,
entertainment venues retail shops and other
small medium sized businesses.
Who are looking to improve their business
strategy, do better marketing and prevent
getting in to price wars.
Alan Nguyen
2. Whether your small business is growing well or needs a band aid,
walking through and applying the different tools will help me
help your business.
3. Evaluating Competition You Manage Position
Single Dominant
Business
Competitive
Consider
Advantage Competitor
Exit
- YES! -
No Business
Play mixed strategies
Dominant Yet
Your
Market
Operational
Competitive Effectiveness
Advantage - be really efficient!
- None! - - most efficient wins
Use this decision tree to figure out what your strategic priorities should be.
4. FINANCE
Revenues/Unit
Revenue
# Units Sold
Profits Fixed Costs
Cost/Unit
Cost Variable Costs
# Units Sold
DRILL DOWN TO ISOLATE AREAS TO MAKE IMPROVEMENTS
5. PORTER’S FIVE
New Entrants
Use this classic tool taught at all
MBA programs to understand all the Supplier Distributor
Competitive
different pressures affecting your Power Power
Rivalry
business.
Substitutes
6. 2x2 matrix Full Service Specialist
Your
Company Competitor
#1
Competitor
#2
Premium Premium
Affordable Affordable
Pricing Pricing
Competitor
Competitor
#1 Your
#2 Company
Quick Service Generalists
Understanding how you are differentiated from other companies can help you
focus on growing the market as oppose to just competing on price.
7. BRAND PROPOSITIONS
Your communication to consumers should be consistent in tone
and clear. Your unique selling point or value proposition
should be very easy to understand
tip:
think of a
cultural, Here’s a template and sample example to help you formulate
ical
psycholog at
tension th your unique selling point and help communicate it to
makes consumers:
mers
your custoasy
feel une
What is your category? The only asian restaurant
How are you different? that is authentic in quality for food & decor
Who are your customers? for discerning foodies
Where are they located? in the Tustin/Irvine area
When do they need you? when they want a quality dining experience
Why are you important? in a time when chains sell bad, overpriced and fake asian dishes.
8. PRICE ADVANTAGE
Examine these 3 levels to make sure you are pricing
products and service correctly.
INDUSTRY LOCAL MARKET TRANSACTIONAL
How does the national What are the going Is there discounts,
and local economy rates in your local loyalty programs, sales,
affect demand for your geographical market? anchor products,
business? Can Is the price/benefit package bundles and
suppliers put pressure position well against other tactics your
on your pricing? c o m p e t i t o r s? Are business can use to get
actively preventing the best margins at the
price wars? transactional level?
9. PRICE WAR RISKS
One of the biggest dangers to SMB companies is when one competitor in the
market triggering a price war. Below are characteristics of businesses likely to
be hit. ID your business likelihood of a price war and then plan a strategy to
prevent one.
CHARACTERISTICS: LOW RISK HIGH RISKS
Service type Differentiated Undifferentiated
Market capacity High Low
Market trend Growing Stable/Declining
Customer concentration Widely dispersed Highly concentrated
Number of competitors Few Many
Price visible to competitors Low High
Barriers to switching suppliers High Low
Overall customer price sensitivity Low High
Cost trends Stable Volatile/declining
10. BLUE OCEAN
Reduce Raise Pursue activities that differentiates your
business and drive down costs.
What factor or cost can your What factor or benefit be
business can reduce that your raised well above your
competitors has not thought competitor services level.
of yet?
Eliminate Create Employing Blue Ocean strategy methods
helps avoid being in price wars with
What factor or cost can your What factors or services that
other competing companies.
business can eliminate can be created that competing
completely that consumers services has yet to offer?
would benefit more from?
11. 4 E’S OF MARKETING
EXPERIENCE
EVERYPLACE
EVANGELISM
EXCHANGE
The next step is ramp up your business’s marketing and service. Give customer the best
experiences at every stage of interaction. Give them a reason to advocate on behalf of your
business and be every where they are at.
12. EXPERIENCE MAP
good experience
SAMPLE MAP FOR FICTITIOUS NAIL SALON
Stamp
Comfortable Pampered
Greeting Loyalty
Seating Feeling
Card
Talk with Setting
Gossip Product Small Talk Talk with girlfriends
girlfriends Ambience Tipping next
Magazine Advice w/ Technician about the experience
to go appointment
ANTICIPATE ENTER ENGAGE EXIT POST EVALUATION
HOME CAR WALK-IN WAITING ORDER RECEIVE SERVICE PAY BILLS WALK OUT DISCUSS
bad experience
Hoping to
Call to set Nail Polish
get a good
appointment Fume Smells
parking space
Bad Ethnic
Music
Mapping out your customer experience at each touch point allows your business troubleshoot and
improve to create the best customer experience.
13. EVERYPLACE: PAID MEDIA
All the paid advertisement promoting your business.
Newspaper, TV, Magazine, etc. can be considered “Paid
Media”
If your business has the budget, consider the traditional
media to build your business’s brand or get a direct
response from consumers.
14. EVERYPLACE: OWN MEDIA
Website, Business Cards, Letterhead, Blogs, Videos and
other marketing collateral that helps consumer aware of
your business is considered your “own media.”
Making sure these basics look good and communicate
clearly that reflects quality level of your products and
services is very important.
15. EVANGELISM: EARNED MEDIA
“Earned media” is the reviews, mentions, comments
people make about your business on sites like Yelp,
Twitter, Facebook, Foursquare, Instagram etc.
This is free advertising done by your good customers.
This can drive a lot of referral sales. On the other side of
the coin, if you don’t handle complaints and address
their concerns-- social media can also hurt your business.
It pays to really engage them.
16. MEASURE BRAND SENTIMENT
You Competitor 1 Competitor 2 Market Total
positive
conversations 14 20 10 44
neutral
conversations 7 22 8 37
negative
conversations 3 9 3 15
total
conversations 24 51 21 96
Positive + Neutral
- Negative 18 33 15 66
Sentiment/
Conversations 0.75 0.65 0.71 0.69
Your Sentiment/
Market Sentiment 1.09 0.94 1.04
rank 1st 3rd 2nd
Using this method, you can rank your business against others in
terms of what internet reviewers think of your business.
17. MODIFIED SHARE OF WALLET
Share of wallet helps estimate a customer’s
spending within a category by store or business.
USE THE RANKING FROM BRAND SENTIMENT TO
CALCULATE SHARE OF WALLET.
RANK 2
(1- )X( )
# OF COMPETITORS + 1 # OF COMPETITORS
1 2
(1- )X( )
4 3
= (1-0.25) X 0.67
= 0.75 X 0.67
= 0.75 X 0.67
= 0.50 or 50% share of wallet score.
Repeat for competitors to compare (17%, 33%).
18. EXCHANGE: WHAT ARE YOUR CUSTOMERS REALLY WORTH?
Rather than just looking at the average transaction/
ticket sales... consider the Life Time Value of each
customer.
What they will spend in a year, how many years you
expect them to stay with you, and the referral business
they can bring to you. Referrals can be in the form of
word of mouth or through tweeting/liking on social
networks. Customer loyalty programs can be set up to
take leveraged to keep customers and incentivize
referrals.
Don’t just think of prices... think value.
19. Additional Sources:
Here are some links to help your business further:
http://www.caseinterview.com/
http://fluent.razorfish.com/publication/?m=6540&l=1
http://hbr.org/2011/10/customer-loyalty-isnt-enough-grow-your-share-of-wallet/ar/1
http://www.slideshare.net/theopenroom/the-4-es-of-marketing-ogilvy-pr
http://www.blueoceanstrategy.com
http://en.wikipedia.org/wiki/Porter_five_forces_analysis
http://www.amazon.com/Zag-Number-Strategy-High-Performance-Brands/dp/
0321426770
http://www.amazon.com/Price-Advantage-Wiley-Finance/dp/0471466697