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Discount TagPrice cutting is a lousy strategy. Period. Just don’t do it if you don’t have to. One reason is that price cutting is a game your competitors can play too, and we both know they’re nowhere near your league.

The thing is, somebody can always come in cheaper. Your competitor can decide to basically “give it away” for a while with the goal of “building market share.” If they’re dumb enough to employ this so-called “strategy”, let ’em! Let them give it away if that’s the only way they can get business. Revenue they lose by cutting prices becomes lost profits that can’t be invested in research and development, so they will ultimately short-change their customers by denying them innovative new solutions in the future. And what happens if material costs go up? Or other expenses like insurance rise? Or if an unexpected expense or crisis occurs? Then what?

Let the other guys sell on price. You sell on VALUE!

Your value might mean better quality, a better experience, or any number of things that will become much more important to your customer once you tell your value story the right way.

So rather than fretting over how you can compete on price, focus instead on giving your customers VALUE. Go get ’em!

Every one of your competitors has access to a pencil. And with it, each of them can mark down prices any time it wants to. And there goes your advantage.” – Jack Trout, Repositioning

 

 

 

One of my favorite quotes is from statistician George E.P. Box: “All models are wrong; Some models are useful.” Indeed, no model is perfect or inclusive on any subject, and  I think you should look at as many as you can on any important topic, then determine your own uses for what you find and discard the rest.

Consider Dr. W. Edwards Deming’s philosophy that helped form the management process of Total Quality Management (TQM). It unfortunately is labeled by many as one of those management “flavors of the month” that just didn’t work. Actually,  it worked well for those companies who put the effort into making it work, then a bunch of other companies thought they could just take it and make it work for them, only to end up disappointed because they tried to pound a square peg in a round hole. I think categorizing TQM as a “failure” or even just dismissing it as a “flavor of the month” is unfair.

As big a fan as I am of Deming and the TQM philosophy, I’m the first to say I don’t agree with every aspect of it. That doesn’t mean it’s not valuable. If a we take the whole philosophy of TQM and mine through it for the nuggets we can use and then discard what we can’t, I think we’ll  be very happy with the outcome. And we’ll have more ownership of the end result because we had deeper involvement in its development.

Here’s a link to a discussion of Deming’s 14 Points. I’d urge you to take a look at these 14 Points not with the goal of applying all of them in your current situation, but with the simple, useful goal of seeing which one(s) might be worthy  of consideration. At the very least I’ll bet a glance at these 14 Points will spark some ideas.

One of the greatest pieces of advice I received several years ago was to never try to blindly adopt any one idea, philosophy, or system, but to instead look warily at EVERY idea, philosophy and system with the goal of finding at least one thing that could be taken and adapted to my own situation. I’d encourage you to do the same thing. Taking that approach gives you a wealth of ideas to pull from and avoids the pressure of trying to find a single solution from a single source. If you look for a single source for all the answers, you’re bound to be disappointed eventually. If you look for one idea from every source, you may be downright amazed at how many good ideas jump out at you.

Good artists copy. Great artists steal.” – Picasso

 

 

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Here’s one of the best scenes from a terrific movie! If you haven’t seen this one, gather as many people together as you can and view it as soon as you can!

Go get ’em!

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What would Joan do?

By Dr. Burt Smith August 12th, 2013

question mark sharpieProcter & Gamble is considered a “best of breed” company. Their stock is considered a must-own by the vast majority of stock analysts, and their legacy has spanned two centuries.

One reason for their ongoing success is the power of their brands. One reason they have such powerful brands is because they stay so close to their customers. One way they do that is to literally put the customer at the center of EVERY decision they make.

As former CEO Arthur Lafley described in his book, The Game Changer, they actually have a ritual they go through. They have a life-sized, cardboard cutout of a female character they call “Joan” who occupies a spot in their offices. “Joan” is an amalgam representing their typical consumer. Every time they find themselves stymied wondering how to make a particular brand or strategy decision, or just wondering where to go from here, they ask the simple question, “What would Joan do?” They ask what would be the best course of action for their target market, their ideal customer, and that helps move them forward.

Develop profiles of your ideal customers. You can even give them clever names so that as you develop every aspect of your brand, you can envision exactly who benefits from the value you’re delivering. You may find that being able to identify with those fictional characters can help you make  decisions worth real profits.

The customer isn’t a moron. She’s your wife.” – David Ogilvy

 

 

 

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“In the business world, everyone is paid in two coins: cash and experience. Take the experience first; the cash will come later.” — Harold Geneen

 

 

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Every object continues in its state of rest, or of uniform motion in a straight line, unless compelled to change that state by external forces acted upon it.” (Holzner, “Physics for Dummies”)

 

That’s pretty much the long and short of what the science of Physics is all about, I guess.

It also helps explain how environmental forces impact our strategic decisions. What might be considered the first rule of strategic planning is that the organization does not exist in a vacuum. It is part of a very dynamic environment, and what makes that environment dynamic in the first place is the constant interaction of a set of environmental forces (or “factors” if you prefer that term). These are sometimes called macro-environmental forces, and they’ll affect your strategic decisions anywhere on the globe you operate. It’s also worth noting that these forces are ultimately beyond our control.

Different authors label these different ways, but my favorite acronym for the forces of the environment is PEST. PEST stands for:

Political/Legal Forces

These deal with any laws that currently affect our strategy or those that might be passed that could affect it. It also refers to how litigious (sue-happy) our particular environment is, too. Good luck finding an environment these days that isn’t litigious, by the way.

Economic Forces

These forces relate to what’s going on in the economy. Is unemployment up or down? Are interest rates up or down? How eager is the banker to lend or not lend? Is a particular commodity or raw material rising or falling in price?

Socio-cultural Forces

Socio-cultural forces simply deal with the human side of strategy. Specifically, they deal with demographics and psychographics, which are sometimes described as who buys (demographics) and why they buy (psychographics). These forces also deal with culture, values, etc. For example, tattoos didn’t used to be that common, appealing only to certain demographics for certain reasons. Now the culture widely accepts such body art. Similarly, once 2/3 of the population smoked, and now smoking is largely frowned upon.

Technological Forces

Something “digital” may come to mind when thinking about technology, but the truth is that technology is any innovation that makes doing a task easier or more efficient. The Internet was certainly the marvel of our generation, just as nanotechnology will be for the next generation, but fire, the wheel, the steam engine, the printing press, the repeating rifle, penicillin, you name it, anything that offered an improvement is a technological innovation and would be categorized as a technological force.

So…?

So while we don’t have to like it, we do have to deal with these environmental forces as we’re doing our planning. You may have a grand strategy in mind, but a change in any of these forces could prove otherwise. Think about how your organization has been affected by a change in one or more of these forces in the past few years. On the positive side, though, just knowing what changes may come as a result of these forces at work can give you an advantage, so a good idea is to become a constant student of what’s going on with regard to them in your world. You may find you can spot an opportunity or a threat well ahead of your competition by just knowing where to look.

 Inside of every problem lies an opportunity.” – Robert Kiyosaki, Rich Dad, Poor Dad

 

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