Tag Archives: Strategic Planning

Suppy & Demand’s role in Strategic Planning

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A question was submitted to address-

“…how to assess and compensate for Supply & Demand in a small business?”

Supply and Demand is one of the necessary factors a business needs to aggressively monitor due to its direct correlation to the businesses ability to generate revenue.  Supply & Demand is one of the 5 key components we look at when assessing the “Products Pillar” of any business.   While  the Laws of Supply & Demand would be considered economics and financial planning(most of which I place under the Operations Pillar), most of the control an organization has over it aligns with its products designs and features.

For example creating that “uniqueness” in your product line is one tactic you can Strategically Plan to increase the Demand for your product.

First some background – This question originated from a M.O.R.E Assessement ©  Our firm refers to the “4 Pillars of M.O.R.E.©” (Products, People, Operations, & Marketing) that all businesses need to generate revenue.  Depending on the scale or scope of your business and industry the method to assess each of these can range widely, but the importance of each of these Pillars is a constant.  When they work together, you generate more revenue.   So, assessing and developing each of the “Pillars” is vital  to develop your businesses ability to create revenue, so these 4 areas are always our starting point for assessments.LearnMore-Blue-Primary-16

 

Assessing Supply & Demand for your Product

Many businesses utilize purchased Business Plan tools (templates, software) or SWOT/PEST analysis methods when determining existing competition and direction, which is an important part of assessing Supply & Demand.  While these are good tools, they can become easily biased by whomever is completing them.  I have read many SWOT analysis that simply don’t represent Threats or Opportunities with in a company well.  Thus if a SWOT is the only format used, it can lead to poor or unwise strategy and false outcomes.  I always recommend more than one set of eyes create/debate outcomes when using this type of assessment.  I DO think they are valuable tools and our firm uses them, but in conjunction with other tools.

The process we tend to use frequently is referred to as a “Market Study”.  A Market Study is an in-depth, qualitative analysis process which employs many tactics.  Each “Study” is a relatively custom designed because every organization or brand is unique.  Brand development differs in every organization based on resources, skills and leadership. When performing a Market Study, the process is gathering information from key representatives of every key constituency possible that may create, utilize or experience that business product.  Perceptions are confirmed about the product/companies current and former character and user, and enough data is gathered to support future direction. Using an organizations vision and mission needs to be a focal point.  A Market Study provides holistic data (internal & external) to help answer: What niche(s) could the organization occupy and what is distinctive about its positioning?  Where as a SWOT is merely a component of a Market Study that is generally produced internally.  While there may be overlap, it is not as thorough.

Surveys are used in most Market Study’s and are an excellent way to collect data on a variety of topics and also works well for supply and demand studies.  A properly designed survey has the demographic data, customer preferences, and motivators data needed to help position your products correctly.  C.S.Simons Consulting performed a Survey in 2015 to determine why people hire a consultant, which significantly improved how and who we speak to.  Click on the Survey link to take our brief Survey!

Benchmarking is also a recommended step in a Market Study and involves competitive data and interviews to discover strategies or missed opportunities of similar businesses. Properly designed conversations will provide significant information you can use for Supply & Demand assessment.   Generally both companies gain from the experience and can also lead to improvements in Cost Containment & Labor Optimization.

Territory is another key consideration when determining Supply & Demand.  What is the radius for your product appeal ? (assuming a physical address).  This changes radically by product or service and by industry, but the key is to understand buyers preferences and motivators as it relates to what you sell.  How far will they go to find us?  While it sounds obvious or easy, it may not be.  The second part of that consideration is how many like “you” are there within this radius?  Competition is good to an extent, but how do you determine over-saturation?

Quick example;

Many people want Bankers, Lawyers, or Accountants close to where they are located but won’t think twice about traveling for a specialty doctor or upscale retailer.  Determining if you are a basic service or destination service in the mind of your customer is key to knowing the radius they will travel to give you their money.  Of course, the farther they travel the higher the expectations and the more you risk if they are unsatisfied.  But, most will easily justify spending more if you are a destination than if you are basic.  (Law of Supply)

How to compensate /correct for Supply & Demand deficiencies?

If you don’t have….

Location, Location, Location,

you need

Marketing, Execution, and Follow up

Marketing – Customers need to know  either 1) your name or where you are  AND 2) why they want/need you.  Tactics and Campaigns will come and go, but to maintain customer Supply & Demand, Marketing professionals may be your best bet.

Execution –  What ever the Marketers are saying you “do” or “sell”, you better make sure the people your customers encounter in your business or products they buy from you,… do it.  If you say you have great customer service, you need to make sure they encounter Excellent service, if your marketing says your product will help them loose weight or look sexier, it better or else it will effect your Demand.

Follow up – No matter what you sell, if you have customers, you should ask how they liked the product.  The number one thing you need to do once they have purchased something, is to get them (or their referrals) to come back and buy more!  I recognize this can be more difficult depending on what you sell, but the fact remains that you need feedback to help determine if you are executing what your Marketing says you are.  No feedback or not even asking for feedback can be very dangerous.

  • Ever go to a local restaurant where the food was so-so(or worse) and no one ever came back to ask “how is everything?”.  You leave less than impressed. Has your likely hood of recommending or returning gone down?  Maybe. But what if you traveled an hour to go to this restaurant you “heard about” and had the same experience.

What is your likely hood of going out of your way next time to return? 

There goes your Demand

 

Key times to RE-ASSESS your Supply & Demand

It’s important to note that Supply & Demand is just one of the 5 key factors our company looks at to assess the Product Pillar for revenue generation and therefore not the only consideration when assessing your products design and strategy.  Reviewing the Supply and Demand for your organization/product can be done at any point of the business life-cycle.

Key times to do this are:

  • At Start Up
  • Any time your business encounters a major change like new leadership
  • When planning Expansion/Relocation projects
  • Opening new locations – know WHY they find you, don’t assume they will
  • Considering new technology implementation
  • Creating a Strategic Growth Plan
  •  If it has been more than a few since you looked at this you may want to because of the rate of speed technology changes.

Internet Marketing is radically different than it was 3 years ago, thus HOW people are finding you IS different.  The internet has shifted buyers motivations in many industries, how has it effected yours? I always have a plan in my back pocket for a sudden change in sales (+/-) and I have many systems in place to tell me where or why people are finding me.  This data is reviewed periodically and is the basis for changes in Business Strategy.  I highly recommend this be given some thought by owners and operators.  I don’t have to tell you how quickly things change and your customers needs and loyalties are changing just as quickly.

This is only the tip of the iceberg on this subject and how to use the information for product development  and building your business.  Feel free to contact me if you would like to discuss this further or if I can help guide you to some Marketing professionals I work with to help.
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Carpe diem!

Choosing the right Strategy Consultant

Ask an Expert, Operations,

From our “Ask an Expert” series-

John asks;

“In your speech you spoke of the importance of Strategic Planning for businesses of all sizes, what should I look for in a Consultant to help with our Strategic Planning?”

Thanks for the question John,

Businesses of all scale need business strategy that focuses on growth or improvements.  Many businesses realize that periodically bringing in a Consultant to help solve a nagging problem or achieve their next milestone is a cost effective way for improvement.  One problem is that a “Strategy Consultant” comes in many forms and choosing the one that “fits” best for your organization can be daunting. 

Some take complete leadership roles and others facilitate your team through the process.  Depending on your business structure some may want a lot of time to become ingrained before determining a path, others may run most of the project by conference calls or group facilitation.  There really is no “Right way” and there are many variables.  To complicate this further, no two businesses are the same so it is hard to look at a Consultants client list as a means to determine their qualifications.  I always recommend looking at their Successes. How far have they taken their clients? Ask references if they added value and clarity to the process?  Did they achieve what they were hired to do for each client?  Did they exceed expectations?   If so, Where & How?

Its about the results!

Before you begin your search keep in mind that Strategic Planning is a process and not a project.  It is not a one and done task.  To begin there is a process that most consultants will follow to insure the appropriate information is gathered and considered (see below).  Then after the initial plan is written and launched the process continues.  This is where many teams fail.  I have seen senior management complete a plan and hand it off to a manager (to implement) to then not look at it again for a year.  How to manage the “Change” is often left out in the planning stage.

Using metrics to make adjustments is often JUST as important as the original plan is.

 

So to answer the question – “..the most important thing to look for..” is a combination of….
  1. someone who understands this process from start to finish
  2. has the capability to get you to stick to it (more on that below)

 

As mentioned, here is a quick look at the general process followed in a Strategic Planning process.

  1. Listens
  2. Investigates
  3. Researches – Benchmarks, Industry, Interviews
  4. Considers your resources
  5. Gap Analysis
  6. Provides support for your chosen direction
  7. Develops an agreeable implementation plan
  8. Follows up – Continued Relationship

The first 4 are to understand your problem, your industry, your people and your obstacles.  The 5th step is both analytical and Strategic, and steps 6 -8 focus on defining and insuring success for your organization.                                                                                    LearnMore-Green-Primary-16

Musts for a Strategy Consultant

What to listen for in their pitch and confirm in reference checks.

  • Acts as Partner  – Goes to lengths to learn the entirety of the problem and solves it the way you would, or in an easily adoptable way for your team.
  • Goal oriented – keeps project and team on track.
  • Project planner – demonstrates the ability to plan, organize & communicate to all involved insuring key timelines & milestones are met.
  • Past successes – history of creating solutions to permanently solve clients problems.  Determines root cause of problem for organization.
  • Multi level understanding – has the ability to see problem from all levels of your organization leading to comprehensive solutions and reduces implementation struggles.

 

Bonuses –

A person with a complimenting style for your team.  A leader who perpetually develops, enables, supports, guides, informs, mentors, comprehensive, and displays patience with your team.  (Ask references)

 

Some common mistakes made
  1. More often than not, Strategy “fails” during the implementation phase, not during the planning stage.  Use a decision funnel to insure each tactic created can be implemented properly or you risk failure.  Execution is key!  Make sure whoever is calling the shots has an understanding of all phases of implementation.
  2. Goals set during Strategy session do not follow the “SMART” methodology, thus, even if implemented correctly, they are either not attainable or pertinent.  In each case, time, energy, and money have been wasted with little to no reward.
  3. Change is not associated with efficiency or market study.  Due diligence is needed.  Perform a SWOT, PEST or industry specific analysis.  Insure Change is tied to improvements and not just profit.
  4. Ad-hoc strategy seldom works.  Vet everything!
  5. Insuring resources are available at all levels or risk frustrating your workforce or customer base.

 

Final thoughts

The ability for this Consultant to influence decision makers through the entire process should be evident.

  • You should feel some respect for the consultant
  • You should feel it someone you need at “your table”
  • You should want to listen to them

 

Hope this helps,

Carpe diem!

 

Business PhotoC.S.Simons Consulting specializes in Management & Business Strategy, offering 25 years of successes for you to benefit from.  Offering a Shared Risk Platform – Results Guaranteed or you won’t be billed!