market? Who is playing in there? In which
market can we fight and win? Whom
among current competitors can we fight
and win? How do we fight to win? Is it
easier to fight for the desired market or to
buy them out?
In the decline stage, and also a bit in the
maturity stage, companies must start to
increase their productivity. They must save
cost to be more competitive. They must
start to think about profitability. They
need a war chest and competitive prices.
Some of the key profitability questions
to ponder are: how can we sell more of
the higher-margin products? Which
competitors high margin products don’t
we have? How can we grow the most
profitable sectors? How can we grow in the
profitable distribution channels? How can
we align our incentives, sales structures,
trading terms, and discounts to support
profitable lines? Is marketing spend
aligned to support the profitable lines?
How can we improve the profitability of
lower-margin products?
The other set of strategies to consider in
all these phases are customer retention
strategies. These are strategies to ensure
that what we have bagged-in is retained,
and improved. In the growing phase, if
you’re not careful, you may fail to notice
when you lose a few customers because
you keep getting many more new ones.
In the maturity phase, retention strategy
becomes alive. In this phase, when we lose
a customer, getting them back becomes a
costly affair, and volumes decline.
Key questions to inform your retention
strategy 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 segmented our customers?
How do we reward loyalty? How do we
ensure that we are growing business from
our retained customers?
Companies can do a lot around the
retention strategies. Safaricom and
other big companies create complicated
and intertwined offerings to ensure
customers are locked in, and switching
costs are inconceivable. When you think
of migrating from Safaricom to Airtel,
for example, you stop and think about
the Mpesa, the Mshwari loans, the
convenience of reloading airtime, and the
Bonga points you have accumulated. All
these are Safaricom strategies to ensure
that even when we complain, as we usually
do, we are not quick to quit.
So, next time you sit in those strategy
meetings, first understand which phase
of the life cycle your industry is in, then
go ahead to identify which strategies
best suit your company in the short and
medium terms. When we understand the
phase in the life cycle of our industry,
we give ourselves new lenses to see new
opportunities to use the hammer and the
other tools as well.
Herman Githinji is a management
and seasoned marketing consultant and
law graduate from the University Of
Nairobi. You can commune with him
on this and related issues via email on:
[email protected].
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Owachi Africa Ltd
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www.owachi.com
Contact:
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[email protected],
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