Small MediumBusinessesToolkitFor private practices, health & beauty 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

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.

YourMarket

CompetitiveAdvantage- YES! -

CompetitiveAdvantage- None! -

Single DominantBusiness

No Business Dominant Yet

You

Competitor

Use this decision tree to figure out what your strategic priorities should be.

Evaluating Competition

OperationalEffectiveness- be really efficient!- most efficient wins

Play mixed strategies

ConsiderExit

Manage Position

Profits

Revenue

Cost

Revenues/Unit

# Units Sold

Cost/Unit

# Units Sold

Fixed Costs

Variable Costs

DRILL DOWN TO ISOLATE AREAS TO MAKE IMPROVEMENTS

FINANCE

PORTER’S FIVE

CompetitiveRivalry

New Entrants

Substitutes

SupplierPower

DistributorPower

Use this classic tool taught at all MBA programs to understand all the different pressures affecting your business.

2x2 matrixFull Service

Quick Service

Affordable PremiumPricing Affordable Premium

Pricing

Specialist

Generalists

Understanding how you are differentiated from other companies can help you focus on growing the market as oppose to just competing on price.

Your Company

Competitor#1

Competitor#2

Your Company

Competitor#1

Competitor#2

BRAND PROPOSITIONS

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.

Your communication to consumers should be consistent in tone and clear. Your unique selling point or value proposition should be very easy to understand

Here’s a template and sample example to help you formulate your unique selling point and help communicate it to consumers:

tip: think of a cultural,

psychologicaltension that

makesyour customers

feel uneasy

PRICE ADVANTAGE

Examine these 3 levels to make sure you are pricing products and service correctly.

INDUSTRY LOCAL MARKET TRANSACTIONALHow does the national and loca l economy affect demand for your b u s i n e s s ? C a n suppliers put pressure on your pricing?

What are the going rates in your loca l geographical market? Is the price/benefit position well against compet i tors? Are act ively prevent ing price wars?

Is there d iscounts , loyalty programs, sales, a n c h o r p r o d u c t s , package bundles and o t h e r t a c t i c s yo u r business can use to get the best margins at the transactional level?

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

BLUE OCEAN

Employing Blue Ocean strategy methods helps avoid being in price wars with other competing companies.

Pursue activities that differentiates your business and drive down costs.

Reduce

What factor or cost can your business can reduce that your competitors has not thought of yet?

Eliminate

What factor or cost can your b u s i n e s s c a n e l i m i n a t e completely that consumers would benefit more from?

Raise

What factor or benefit be ra i s e d w e l l a b ove yo u r competitor services level.

Create

What factors or services that can be created that competing services has yet to offer?

4 E’S OF MARKETING

EXPERIENCE EVERYPLACE EVANGELISMEXCHANGE

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.

good

exp

erie

nce

bad

expe

rienc

e

HOME CAR WALK-IN WAITING ORDER RECEIVE SERVICE PAY BILLS WALK OUT DISCUSS

EXPERIENCE MAP

ANTICIPATE ENTER ENGAGE EXIT POST EVALUATION

Mapping out your customer experience at each touch point allows your business troubleshoot and improve to create the best customer experience.

SAMPLE MAP FOR FICTITIOUS NAIL SALON

Talk with girlfriendsto go

Call to setappointment

Hoping toget a good parking space

Nail PolishFume Smells

Bad Ethnic Music

Ambience Gossip Magazine

Greeting ComfortableSeating

ProductAdvice

Small Talkw/ Technician

Pampered Feeling

TippingSettingnext appointment

Talk with girlfriendsabout the experience

StampLoyaltyCard

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.

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.

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.

MEASURE BRAND SENTIMENTYou 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 96Positive + Neutral

- Negative 18 33 15 66Sentiment/

Conversations 0.75 0.65 0.71 0.69Your 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.

MODIFIED SHARE OF WALLET

USE THE RANKING FROM BRAND SENTIMENT TO CALCULATE SHARE OF WALLET.

(1-RANK

# OF COMPETITORS + 1) X (

2# OF COMPETITORS

)

(1-14

) X (23

)

= (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%).

Share of wallet helps estimate a customer’s spending within a category by store or business.

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.

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