CROSSFIRE
Want To Take Your
Business To The Next
Level? Consider This
Approach For Most
Appropriate Strategies
By Herman Githinji
W
hen we have so many tools in
the bag, we might not know
which one is most appropriate
for a particular task. What we use on
most occasions is what we know, rather
than what is most appropriate. Abraham
Maslow said in 1966, “I suppose it is
tempting, if the only tool you have is a
hammer, to treat everything as if it were
a nail”. Management schools will teach
us a variety of strategies that can be used
generally. But how do we know when to
use each?
Before knowing which tools to use,
you must understand your problem.
And to understand your problem, you
must understand your environment. In
designing your overall strategy, you must
understand firstly your industry and at
what stage, it is, in the life cycle.
The industry life cycle starts with infant
age, then growth, then maturity, and finally
the decline. Each stage requires a different
strategy because business topography and
competitive dynamics vary.
When you intend to take a business to
the next level, there are several strategic
options at your disposal. First, growth
strategies are most important. We want
to grow in volumes, revenues, and market
share. This is because if the market is
growing we have to grow as well in order
to retain our market share.
And sometimes we want to increase
our share of market too. These growth
strategies are most applicable at the
growth phase in the industry life cycle.
Growth comes from recruiting new
customers rather than from fighting and
winning them from competitors.
Key growth questions that your strategy
should answer in this phase are: How
can we sell our products or services to
new markets or customers? How have we
positioned ourselves in order to attract
new customers? Are our communication
and awareness strategies robust enough
to reach the desired new customers? How
are we differentiated in order to appeal
to new customers? How are our trading
Key questions to inform your retention strat-
egy are: What do customers mostly value?
Are we offering the most competitive value?
How can we create and raise the switching
cost? How often do we receive and act on
customer feedback? How have we segment-
ed our customers? How do we reward loyal-
ty? How do we ensure that we are growing
business from our retained customers?
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terms and pricing positioned to attract
new customers? Are our distribution
strategies adequate to conveniently reach
all new markets? How efficient are we in
recruiting and converting new customers?
These strategies are most apt in the
growth phase of the industry where
customers are plenty and players are few.
These opportunities present themselves in
new and emerging markets. All marketing
energies in this phase are geared towards
recruiting new customers. This is where
Safaricom, and Celtel (Now Airtel), were
20 years ago when mobile phones were
introduced to Kenyans. At that time, it
was mostly about how quick each was in
reaching out to customers and winning
them.
When these market expansion and
customer recruitment is gone, companies
are ushered into the maturity phase. In
this phase, companies must decide if they
want to continue growing in volume and
market share, or want to consolidate their
growth. The industry, in this phase, is
saturated. Companies must therefore fight
for market share from the competition for
growth.
Appropriate strategies here should be
about fighting for, and winning customers.
Companies must learn how to fight to
win or how to defend their markets. If
you don’t have the muscle to fight, then
strategically merge in order to create that
capability.
In this phase key questions, you must
answer are: What is the size of the total