1.

Analyze the article

Remember to use the analysis tools in your writing ask yourself after reading the article

"so what?" and "why is this important?"

***

Article:

Marketing is important to every business' survival, whether it's for the local business up the street or the mega-corporation that spreads across all continents. Unfortunately, for the former, marketing is often put on the back burner, as a small-business owner has so many other things to deal with.

As a small business, you should start by looking at what your direct competitors are doing in the area. Find out how they are attracting customers and, more importantly, what is and isn't working for them. It's time to start or revisit your competitor research. "If you're opening a location-based business, like a restaurant, that competitor research might involve visiting other venues in-person to judge quality, service, aesthetics and other factors through which you want to differentiate your own business," Score says. This is also a great time to introduce yourself to other local business owners. On the other hand, if you have an ecommerce business, you will be conducting a lot of the research online.

Make sure to document your findings; you can chart to show your strengths and weaknesses alongside your competitors. For instance, you might find that you are the only restaurant in the area who isn't offering a loyalty program to attract customers, it is time to jump on that bandwagon.

An important part of marketing today is developing an online presence. You might think your local restaurant has no benefit of being online, as customers are usually local. To the contrary, you will be able to attract new customers in the area and beyond by being present online. It's important to remember that one-third of all mobile searches are related to location and 78 percent of local mobile searches result in offline purchases. You want people to find you online when they are looking for a business in the area, whether that's on Google, Facebook, LinkedIn or

From your competitor research (see point #1), you already have an idea of how other businesses in the area are presenting themselves online. Now dig a little deeper, asking questions like: Which businesses show up in Google's local pack? Which keywords are often targeted? What social media platforms are they using? What type of online content are they sharing? Take inspiration from your competitors and improve upon their efforts in order to stand out.

An important piece of your online presence is online reviews. Reviews are crucial when it comes to ranking in local searches and acquiring new customers. Research shows that 72 percent say that positive reviews make them trust a local business more. What's more, 92 percent of consumers say that they will use a local business if it has at least a 4-star rating.

Having positive reviews to your business name is an incredibly strong tool, so part of your marketing strategy should be directed toward collecting reviews from current clients. Pick one or multiple platforms that you want to direct people to (e.g. Yelp, Google My Business, Tripadvisor, Facebook). It is important to actively ask your customers to leave reviews to these platforms, as people often need a little nudge to share their opinion. You can ask this in-person, through your website or with the help of a mobile app. Prompt customers at the right time, after they have enjoyed their meal or received their order in the mail. Lastly, don't be discouraged by negative or mediocre reviews; these are valuable insights into what you can do it improve your business.

You don't have to ll the marketing yourself; in fact, one way to get the word out about your business is with local press coverage. We are not talking about getting covered byForbesorThe New York Times, but starting with the media outlets in your area who are always looking to cover local news.

Share your story with different media outlets. Many small businesses have heartfelt origin stories, so craft up a narrative that shows who you are and what your business' mission is. You want to be able to supplement this great story with amazing visuals. Professional photos will help you get featured in news stories -- you can also repurpose these photos for your social media profiles! Depending on your industry, you can also put yourself in front of reporters by sending out samples of your product. The most important thing is to make a memorable connection with a few writers and journalists to secure your time in the spotlight.

You don't need to ll the marketing yourself, turn your best customers into brand advocates who will market for you. In fact, word-of-mouth is 10 times as effective as traditional forms of marketing and advertising. So how do you generate that word-of-mouth marketing? You need to exceed your customers' expectations!

The Missouri Business Development Program states: "All successful small businesses seem to have an edge. They have found a way to distinguish themselves, to rise above the commercial fray, to put the WOW into their business." In other words, you need to delight your customers and make them say (or think) WOW. Maybe it is sending them a handwritten postcard or giving them a special gift with purchase. Maybe you have a lifelong warranty or know all your customers by name. Think of the most creative way to surprise your customer and they will not only become loyal customers, they will also spread the word for you.

According to eMarketer, 80 percent of SMB retail professionals report that email marketing is the best marketing tactic for driving customer acquisition and retention. Email marketing is a great way to a build lasting relationship with your customers. But in order to get the full benefits of email marketing, you need to build out a substantial email list first.

Start by setting up a lead magnet. "Lead magnets are essentially tempting offers that provide consumers something of value in exchange for their contact information," says Lyfe Marketing. For local businesses, this might include asking for an email address in to sign up for a VIP loyalty program, or signing up for the email list to receive special discounts.

Once you have an email list, you can cn email marketing strategy. Decide what types of emails you would like to send out, ranging from newsletters and industry-related news to promotions and recommended purchases. The types of emails will depend on the goal you want to achieve, such as improving brand recognition, increasing customer retention or boosting sales.

An app is not just a mobile application, an app is a complete mobile marketing solution. It is a powerful marketing tool if used the right way. You can use an app to draw new customers in by offering mobile ordering or a loyalty program. You can re-engage existing customers by sending out messages with promotions and news about your business. You can set up a lead capture form within the app to start building out your email list. In addition, an app can also help you collect reviews, as you are able to prompt customers to share their opinion on social media, produce online reviews or send a referral.

If you want to get even more creative, you can pull out all the stops with an app launch party. This will, in turn, trigger word-of-mouth and draw more people to your business.

All the above marketing strategies can help small businesses gain new customers and increase repeat business. Many of them also overlap and work together in order to set your business apart from the crowd: adding a "WOW factor" to your business can trigger positive reviews and, in turn, strengthen your online presence. A new app can help you build an email list, as well as get you local press coverage and so on. These are straightforward and attainable ways to boost your small business marketing

2

Complete the following information aboutfantaand products and/or services you will focus on as you develop a complete marketing plan throughout the course. You may need to do research to get answers to the questions below. The subject for this assignment should be the organization and products and/or services you identified for the Marketing Plan, Parts 1 and 2 Assignments.

When you submit this assignment, you should submit it as a complete marketing plan, including all your work from Marketing Plan Assignments, Parts 1 and 2. All elements of your marketing plan should be complete. You may incorporate improvements to earlier sections of the plan, based on prior feedback from your instructor.

Marketing Mix (Four Ps)

Product Strategy

Briefly describe your product or service. Where is it in the product life cycle? What recommendations do you have for improving the offering to fit your target market's needs? Be sure to consider:

• What level of quality and consistency does the offering have?
• How many features does it have and can they be removed or added?
• How well does your product or service deliver what the customer values? How can it improve?
• What improvements would help your offering compete more effectively?

Pricing Strategy

How is your product or service priced today? How does this compare to competitors, assuming competitors are at or near break-even point with their pricing? Analyze pricing alternatives and make recommendations about pricing going forward based on the following:

• How sensitive are your customers to changes in price?
• What revenue will you need to break even and achieve profitability?
• What does the price say about your product in terms of value, quality, prestige, etc.?

Place: Distribution Strategy

What is your current distribution strategy? What missed opportunities or disconnects are you seeing in this distribution approach? Make recommendations about your future distribution strategy based on the following:

• What are the best distribution channels and methods for you to use, and why?
• Will you have a retail outlet and if so, where will it be located?
• In what geographic area(s) will your product/service be available?

Promotion: Integrated Marketing Communications Strategy

Use the template below to lay out your design for a marketing campaign aimed at your target segment.

Approach

How will you achieve your goal? What promotional or engagement strategies will you use? Think creatively about campaigns you've seen for companies or brands that have caught your attention, and how your campaign will make an impact on your target audience. Will your campaign influence? Engage? Educate? Nurture? Build awareness? Etc.

Example: Use email marketing, social media and a sales promotion (prize drawing at a conference) to encourage veteran attendees to post online about their experiences and plans for attending the user conference using the event hashtag. Use these testimonials to amplify dialogue about the conference (via social media), build awareness (via email marketing, Web site, and targeted digital advertising) and convince peers they should attend.

Goal

In consideration of the of your previous analysis, you need to identify at least one goal for the campaign.

• Describe the target segment for your campaign.
• What is the goal you want to achieve with the campaign?
• What is your call to action?
• Make sure your goal is S.M.A.R.T. (specific, measurable, attainable, realistic, and timed.)

Example:

• Audience: HR professionals who are casual and power-users of Chumber systems
• Increase event registration by 20% by the start date of the annual user conference.
• Call to action: Register online today.

Messages

Identify the primary message for your campaign, 2-3 message pillars, and proof points for each. Be sure to include a call to action that helps to achieve your goal. Remember that messages should align reinforce your positioning statement. Be sure to include a call to action that helps to achieve your goal.

Example:

• Primary Message: The annual user conference provides phenomenal value for training, professional development, peer networking and learning how to get the most out of your investment.
• Message Pillar: This conference welcomes you into a dynamic, well-connected and highly competent professional community.
• Proof Point: Veteran attendees return year after year because it recharges their skills, knowledge and professional networks.
• Call to Action: Register online today.

Promotional Mix and IMC Tools

Identify the key marketing communication methods and specific IMC tools you will use in your marketing campaign. How will you use each of these tools? Look for ways different methods and tools can build on each other: advertising, direct marketing, public relations, digital marketing, guerrilla marketing, personal selling, sales promotion.

Example:

Digital Marketing

• Web site: Add testimonials from prior attendees, event hashtag, rolling hashtag Tweets box, social media buttons to make registration easy to share via social media

Direct Marketing

• Email marketing: Reach out to prior year's attendees who are already registered. Ask them to post about plans to attend the upcoming conference. Conduct email campaign with target audience list to generate awareness, interest, desire to attend a conference.

Sales Promotion + Digital Marketing

• Contest/giveaway: Offer giveaway where Facebook, Twitter and LinkedIn posts trigger entries in a "conference evangelist" contest/giveaway to take place at conference opening session, one entry per social media tool per day

Sales Alignment

At what point(s) in the sales process (or sales funnel) does this campaign operate? Sales process stages are: 1) generate leads; 2) build relationships/discover needs; 3) present solution/resolve concerns; 4) close the sale; 5) monitor and follow up. How does your campaign support sales activity?

Measurement (KPIsKey Performance Indicators)

How will you measure the success of the campaign? Select 3-6 KPIs (key performance indicators) that you will measure. Briefly explain why each KPI you select will be a good indicator of whether your campaign is successful.

Examples of KPIs:

• Total sales/revenue
• New/incremental sales
• Number of qualified leads generated
• Net Promoter Score
• Web site unique visitors
• Number of registrations/sign-ups
• Impressions - views of content
• CTR - click-through rate
• Engagement - comments, likes, shares, page views, video views
• Followers - social media (Facebook, Twitter, LinkedIn, YouTube)
• Awareness
• Etc.

Budget

Budget: List marketing budget and resources required to execute your marketing campaign, and estimate what it will cost. Include items such as labor, materials and other expenses such as print materials, online media tools or development, public relations services, design services, content development services, space or equipment rental, etc. Also, estimate the increased sales or revenue the campaign will generate for the company.

Item Purpose Cost Estimate Example: White paper authored by a technical writer Layout business case for why recruiting managers need an easier tool for vetting resumes and reference checking in the technology industry$500.00Item #1Item #2Item #3Item #4

Add additional rows as needed.

Estimated campaign impact: [insert]

Action Plan

Outline the specific activities you must complete in order to execute your marketing campaign. Each element of your integrated marketing communications plan should be listed as a separate activity. List actions in the order they need to take place for the plan to be successful: first things first, later steps last. Follow-up activities and evaluation of campaign effectiveness also should be captured in this action plan. For the purposes of setting due dates in this action plan, you should assume you must complete the marketing campaign within 3-12 months.

Timing Activity Type Brief Description AudienceOwnerToday's Date Example:

Web site Update

Add new key messages that fit repositioning strategy and audience focusTech company hiring managers Jim Hill

Add additional rows as needed.

Risk Factors

Contingency plans and risk management: You should consider the possible risks to your business and make contingency plans to address them. You note some possible risks under the "weakness" and "threats" sections of your SWOT analysis. Identify steps you can take to either reduce risks or work around them if they occur.

Executive Summary

section last. This short summary should provide a holistic overview of your marketing plan. All of this information is covered in more detail in the rest of the marketing plan. For the Executive Summary, provide a clear, concise overview of the following points:

Company Description

Briefly describe the organization and offerings (products and/or services) your marketing plan focuses on, and the problem(s) they solve.

Target Segment

Identify and briefly describe your target segment.

Competitive Advantage

Explain your organization's competitive advantage.

Positioning Statement

Provide the positioning statement your marketing plan will apply.

Marketing Plan Objectives

List the objectives of the marketing plan: What will it accomplish? Be as specific as possible: an anticipated increase in sales, profits, market share, etc.

4.

Assignment: Marketing Plan, Part 4

Complete the following information about the organization and products and/or services you will focus on as you develop a complete marketing plan throughout the course. You may need to do research to get answers to the questions below. The subject for this assignment should be the organization and products and/or services you identified for the Marketing Plan, Parts 1 and 2 Assignments.

When you submit this assignment, you should submit it as a complete marketing plan, including all your work from Marketing Plan Assignments, Parts 1 and 2. All elements of your marketing plan should be complete. You may incorporate improvements to earlier sections of the plan, based on prior feedback from your instructor.

Marketing Mix (Four Ps)

Product Strategy

Briefly describe your product or service. Where is it in the product life cycle? What recommendations do you have for improving the offering to fit your target market's needs? Be sure to consider:

• What level of quality and consistency does the offering have?
• How many features does it have and can they be removed or added?
• How well does your product or service deliver what the customer values? How can it improve?
• What improvements would help your offering compete more effectively?

Pricing Strategy

How is your product or service priced today? How does this compare to competitors, assuming competitors are at or near break-even point with their pricing? Analyze pricing alternatives and make recommendations about pricing going forward based on the following:

• How sensitive are your customers to changes in price?
• What revenue will you need to break even and achieve profitability?
• What does the price say about your product in terms of value, quality, prestige, etc.?

Place: Distribution Strategy

What is your current distribution strategy? What missed opportunities or disconnects are you seeing in this distribution approach? Make recommendations about your future distribution strategy based on the following:

• What are the best distribution channels and methods for you to use, and why?
• Will you have a retail outlet and if so, where will it be located?
• In what geographic area(s) will your product/service be available?

Promotion: Integrated Marketing Communications Strategy

Use the template below to layout your design for a marketing campaign aimed at your target segment.

Approach

How will you achieve your goal? What promotional or engagement strategies will you use? Think creatively about campaigns you've seen for companies or brands that have caught your attention, and how your campaign will make an impact on your target audience. Will your campaign influence? Engage? Educate? Nurture? Build awareness? Etc.

Example: Use email marketing, social media and a sales promotion (prize drawing at a conference) to encourage veteran attendees to post online about their experiences and plans for attending the user conference using the event hashtag. Use these testimonials to amplify dialogue about the conference (via social media), build awareness (via email marketing, Web site, and targeted digital advertising) and convince peers they should attend.

Goal

In consideration of your previous analysis, you need to identify at least one goal for the campaign.

• Describe the target segment for your campaign.
• What is the goal you want to achieve with the campaign?
• What is your call to action?
• Make sure your goal is S.M.A.R.T. (specific, measurable, attainable, realistic, and timed.)

Example:

• Audience: HR professionals who are casual and power-users of Chumber systems
• Increase event registration by 20% by the start date of the annual user conference.
• Call to action: Register online today.

Messages

Identify the primary message for your campaign, 2-3 message pillars, and proof points for each. Be sure to include a call to action that helps to achieve your goal. Remember that messages should align to reinforce your positioning statement. Be sure to include a call to action that helps to achieve your goal.

Example:

• Primary Message: The annual user conference provides phenomenal value for training, professional development, peer networking and learning how to get the most out of your investment.
• Message Pillar: This conference welcomes you into a dynamic, well-connected and highly competent professional community.
• Proof Point: Veteran attendees return year after year because it recharges their skills, knowledge and professional networks.
• Call to Action: Register online today.

Promotional Mix and IMC Tools

Identify the key marketing communication methods and specific IMC tools you will use in your marketing campaign. How will you use each of these tools? Look for ways different methods and tools can build on each other: advertising, direct marketing, public relations, digital marketing, guerrilla marketing, personal selling, sales promotion.

Example:

Digital Marketing

• Web site: Add testimonials from prior attendees, event hashtag, rolling hashtag Tweets box, social media buttons to make registration easy to share via social media

Direct Marketing

• Email marketing: Reach out to prior year's attendees who are already registered. Ask them to post about plans to attend the upcoming conference. Conduct an email campaign with the target audience list to generate awareness, interest, desire to attend a conference.

Sales Promotion + Digital Marketing

• Contest/giveaway: Offer giveaway where Facebook, Twitter and LinkedIn posts trigger entries in a "conference evangelist" contest/giveaway to take place at conference opening session, one entry per social media tool per day

Sales Alignment

At what point(s) in the sales process (or sales funnel) does this campaign operate? Sales process stages are: 1) generate leads; 2) build relationships/discover needs; 3) present solution/resolve concerns; 4) close the sale; 5) monitor and follow up. How does your campaign support sales activity?

Measurement (KPIsKey Performance Indicators)

How will you measure the success of the campaign? Select 3-6 KPIs (key performance indicators) that you will measure. Briefly explain why each KPI you select will be a good indicator of whether your campaign is successful.

Examples of KPIs:

• Total sales/revenue
• New/incremental sales
• Number of qualified leads generated
• Net Promoter Score
• Web site unique visitors
• Number of registrations/sign-ups
• Impressions - views of content
• CTR - click-through rate
• Engagement - comments, likes, shares, page views, video views
• Followers - social media (Facebook, Twitter, LinkedIn, YouTube)
• Awareness
• Etc.

Budget

Budget: List marketing budget and resources required to execute your marketing campaign, and estimate what it will cost. Include items such as labor, materials and other expenses such as print materials, online media tools or development, public relations services, design services, content development services, space or equipment rental, etc. Also, estimate the increased sales or revenue the campaign will generate for the company.

ItemPurposeCost Estimate Example: White paper authored by a technical writer Layout business case for why recruiting managers need an easier tool for vetting resumes and reference checking in the technology industry$500.00Item #1Item #2Item #3Item #4

Add additional rows as needed.

Estimated campaign impact: [insert]

Action Plan

Outline the specific activities you must complete in order to execute your marketing campaign. Each element of your integrated marketing communications plan should be listed as a separate activity. List actions in the order they need to take place for the plan to be successful: first things first, later steps last. Follow-up activities and evaluation of campaign effectiveness also should be captured in this action plan. For the purposes of setting due dates in this action plan, you should assume you must complete the marketing campaign within 3-12 months.

Timing Activity Type Brief Description Audience Owner Today's Date Example:

Web site Update

Add new key messages that fit repositioning strategy and audience focus Tech company hiring managers Jim Hill

Add additional rows as needed.

Risk Factors

Contingency plans and risk management: You should consider the possible risks to your business and make contingency plans to address them. You note some possible risks under the "weakness" and "threats" sections of your SWOT analysis. Identify steps you can take to either reduce risks or work around them if they occur.

Executive Summary

section last. This short summary should provide a holistic overview of your marketing plan. All of this information is covered in more detail in the rest of the marketing plan. For the Executive Summary, provide a clear, concise overview of the following points:

Company Description

Briefly describe the organization and offerings (products and/or services) your marketing plan focuses on, and the problem(s) they solve.

Target Segment

Identify and briefly describe your target segment.

Competitive Advantage

Explain your organization's competitive advantage.

Positioning Statement

Provide the positioning statement your marketing plan will apply.

Marketing Plan Objectives

List the objectives of the marketing plan: What will it accomplish? Be as specific as possible: an anticipated increase in sales, profits, market share, etc.

5.

Small Business Management

Directions: Read the case study Vizio: Disrupting Another Market in Chapter 4 on page 124 of the textbook. Answer the following questions: What challenges does Vizio face as it attempts to introduce a new line of products into a mature industry? Use the Internet to learn more about Vizio. Describe the company's strengths and weaknesses. What opportunities and threats does the company face? Which of the three strategies described in this chapter is Vizio using? Do you think that Vizio's strategy for competing in the PC and laptop market will be successful? Explain.

Case Study Visio: Disrupting Another Market Before he turned 30, William Wang was a successful entrepreneur whose company, MAG Innovation, specialized in computer display screens. In 2002, Wang used $600,000 from the sale of MAG Innovation to launch Vision Inc., which has surged past industry icons such as Sony, Sharp, and Samsung to become the fastest-growing maker of flat-panel televisions in North America. Wang's well-executed cost leadership strategy, much of which he developed from the mistakes he made at MAG Innovation, is the key to the company's success. When he started Vision ("Where vision meets value"), high-definition televisions sold for $8,000, but Wang's vision was to offer quality products and to keep costs low, enabling his company to sell televisions at half the going price. "When I started this business, I believed we could ll of the things we're doing today," he says. A lean operating strategy has been a hallmark of the Irvine, California-based company since its first day of operation. Outsourcing most functions, including tech support, warehousing, shipping, and research and development, and keeping its employee ranks lean hold operating costs well below the industry average. Vision's overhead costs are less than 1 percent of its sales, far below the 10 percent of sales that those costs represent at its competition. "Every single dime counts," says Wang. Because concept development, marketing, and customer service are keys to success, Wang intentionally keeps them in-house. Vision's distribution network is consistent with its low-cost strategy, relying on discount chains such as Sam's Club, Costco, and others to reach mass-market purchasers who tend to be price sensitive. Wang recently extended Vizio's low-cost strategy to another maturing market that is ripe for a shake-up: personal computers. "If you rewind eight to ten years, the TV market looked similar to the PC market today," says Matt McRae, Vizio's chief technology officer. "It was a mature market with lots of companies. We did pretty well. We're now the number one TV company in the United States. We've done this before." Vizio introduced a line of computers and laptops that are as stylish as Apple's successful Macintosh line but run the Microsoft Windows software that drives 90 percent of the world's computers. The computers sport clean lines, machined lightweight aluminum bodies, and powerful, high-performance components. "PCs have become a sea of black plastic," says McRae. "We're building a product people want." What Vizio's computers don't include is the "bloatware," the preloaded software that clogs most other PCs, which means that Vizio's computers boot faster and run cleaner. Maintaining consistency with its low price image, Vizio's computers are priced below Apple products and below competing PCs and laptops with prices that start at $898. The company's high-end computer, an all-in-one desktop with a crisp, 27-inch display, starts at just $1,098. "Our target audience is people who can't afford a $2,000 computer," says Wang. Vizio, which has a very small engineering staff, spent two years designing its line of computers and worked closely with key suppliers such as graphics card manufacturer Nvidia, chip maker Intel, and software designer Microsoft to optimize designs on the components and the systems that run them. "Vizio is doing a good job listening and taking advice from the experts on how to optimize hardware and software," says Steve Guggenheimer of Microsoft. Relying on experienced companies to assist in the design of its computers not only maximizes the machines' performance but also controls costs and allows Vizio to focus on providing a positive customer experience. Because the people who purchase computers are more likely to require technical support than those who purchase televisions, Vizio has decided to maintain all technical support services for computers in-house at its service center in Dakota Dunes, South Dakota. Vizio also keeps distribution costs under control by selling its computers through most of the same outlets that it uses to sell its popular line of televisions, including Walmart, Sam's Club, Amazon, Costco, and Target. The company also sells the computers through portable pop-up mini-stores made from old shipping containers that it sets up on college campuses, at music festivals, and other events. "If anyone says you can't disrupt a mature market, they're wrong," says McRae.

Three Strategic Options from Text

The number of strategies from which entrepreneurs can choose is infinite. When all of the glitter is stripped away, however, three basic strategies remain. In his classic book Competitive Strategy, Michael Porter defines these strategies: (1) cost leadership, (2) differentiation, and (3) focus. Cost Leadership A company pursuing a cost leadership strategy strives to be the lowest-cost producer relative to its competitors in the industry. Many small companies attempt to compete by offering low prices, but low costs are a prerequisite for success. "You can't compete on price if you can't compete on cost," explains small business researcher Scott Shane.47 Cost control on all fronts is paramount in companies that pursue this strategy. Economies of scale that are associated with large scale operations are a common source of a company's cost advantage (high volume = low per unit cost), which makes executing a successful cost leadership strategy difficult for small businesses. However, there are many ways to build a low-cost strategy. The most successful cost leaders know the areas in which they have cost advantages over their competitors and use them as the foundation for their strategies. Low-cost leaders have a competitive advantage in reaching buyers whose primary purchase criterion is price, and they have the power to set the industry's price floor. This strategy works well when buyers are sensitive to price changes, when competing firms sell the same commodity products, and when companies can benefit from economies of scale. Not only is a low-cost leader in the best position to defend itself in a price war, but it also can use its power to attack competitors with the lowest price in the industry. "You have to be the lowest-cost producer in your patch," says the president of a small company that sells the classic commodity productcement. Dangers exist in following a cost leadership strategy. Companies using this strategy are pursuing customers whose purchase decisions are driven almost exclusively by price and are not likely to be brand loyal. If another company dethrones a cost leader from its low-cost position, the former cost leader's customer base can evaporate quickly. Some companies attempt to compete on price even though their cost structure is not the lowest in the market. Other companies focus exclusively on lower manufacturing costs, without considering the impact of purchasing, distribution, or overhead costs. Another danger is misunderstanding a company's true cost drivers. For instance, one furniture manufacturer drastically underestimated its overhead costs and, as a result, was selling its products at a loss. Pursuing a cost leadership strategy requires a company to constantly focus on controlling and lowering costs, but if executed properly, it can be an incredibly powerful strategic weapon.

Differentiation A company following a differentiation strategy seeks to build customer loyalty by positioning its goods or services in a unique or different fashion. In other words, a company strives to be better than its competitors at something that its customers value. The primary benefit of successful differentiation is the ability to generate higher profit margins because of customers' heightened brand loyalty and reduced price sensitivity. There are many ways todifferentiation strategy, but the key is to be special at something that is important to customers and offers them unique value such as quality, convenience, flexibility, performance, or style. "You'd better be on top of what it is your customers value and continually improve your offerings to better deliver that value," advises Jill Griffin, a strategic marketing consultant.51 Any small company that can offer products or services that larger competitors do not, improve a product's or service's performance, reduce the customer's risk of purchasing it, or enhance the customer's status or self-esteem has the potential to differentiate. Even in industries in which giant companies dominate, small companies that differentiate themselves can thrive even though they cannot compete effectively on the basis of price. For instance, the $20 billion pet food industry is dominated by large companies, but several small companies are achieving success with differentiation strategies that are designed to resonate with their target customers. The key to a successful differentiation strategy is to build it on a core competency, something the small company is uniquely good at doing in comparison to its competitors. Common bases for differentiation include superior customer service, special product features, complete product lines, a custom-tailored product or service, instantaneous parts availability, absolute product reliability, supreme product quality, extensive product knowledge, and the ability to build long-term, mutually beneficial relationships with customers. To be successful, a differentiation strategy must create the perception of value to the customer. No customer will purchase a good or service that fails to produce a perceived value, no matter how real that value may be. One business consultant advises, "Make sure you tell your customers and prospects what it is about your business that makes you different. Make sure that difference is on the form of a true benefit to the customer." Pursuing a differentiation strategy includes risks. One danger is trying to differentiate a product or service on the basis of something that does not boost its performance or lower its cost to the buyer. Another pitfall is trying to differentiate on the basis of something that customers do not perceive as important. Business owners also must consider how long they can sustain a product's or service's differentiation; changing customer tastes makes the basis for differentiation temporary at best. Imitations and "knockoffs" from competitors also pose a threat to a successful differentiation strategy. For instance, designers of high-priced original clothing see much cheaper knockoff products on the market shortly after their designs hit the market. Another danger of this strategy is overdifferentiating and charging so much that a company prices its products out of its target customers' reach. The final risk is focusing only on the physical characteristics of a product or service and ignoring important psychological factors, such as status, prestige, and image, which can be powerful sources of differentiation.

Focus A focus strategy recognizes that not all markets are homogeneous. In fact, in any given market, there are many different customer segments, each having different needs, wants, and characteristics. The principal idea of this strategy is to select one (or more) segment(s); identify customers' special needs, wants, and interests; and approach them with a good or service designed to excel in meeting these needs, wants, and interests. Focus strategies build on differences among market segments. Using a focus strategy, entrepreneurs concentrate on serving a niche in the market rather than trying to reach the entire market. A successful focus strategy depends on a small company's ability to identify the changing needs of its targeted customer group and to develop the skills required to serve them. That means the owner and everyone in the organization must have a clear understanding of how to add value to the product or service for the customer. Rather than attempting to serve the total market, a small company pursuing a focus strategy specializes in serving a specific target segment or niche that larger companies do not serve or cannot serve profitably. A focus strategy is ideally suited to many small businesses, which often lack the resources to reach the overall market. Their goal is to serve their narrow target markets more effectively and efficiently than do competitors that pound away at the broad market. Common bases for building a focus strategy include zeroing in on a small geographic area, targeting a group of customers with similar needs or interests (e.g., left-handed people), or specializing in a specific product or service (e.g., petite clothing). Like Jay Lehman, the most successful focusers build a competitive edge by concentrating on specific market niches and serving them better than any other competitor can. Essentially, this strategy depends on creating value for the customer either by being the lowest-cost producer or by differentiating the product or service in a unique fashion but doing so in a narrow target segment. Speedy service, a unique product or service, specialized knowledge, superior customer service, value pricing, and convenience are just some of the ways that companies using focus strategies meet their target customers' unique needs. To be worth targeting, a niche must be large enough to be profitable, reachable through marketing media, and capable of sustaining a business over time (in other words, not a passing fad). Many small companies thrive in small yet profitable niches. The rewards of dominating a niche can be huge, but pursuing a focus strategy does carry risks. Companies sometimes must struggle to capture a large enough share of a small market to be profitable. A niche must be big enough for a company to generate a profit. A successful focus strategy also brings with it a threat: invasion by competitors. If a small company is successful in its niche, there is the danger of larger competitors entering the market and eroding or controlling it. Sometimes a company with a successful niche strategy gets distracted by its success and tries to branch out into other areas. As it drifts farther away from its core strategy, it loses its competitive edge and runs the risk of confusing or alienating its customers. Muddying its image with customers puts a company in danger of losing its identity. A successful strategic plan identifies a complete set of success factorsfinancial, operating, and marketingthat, taken together, produce a competitive advantage for a small business. The resulting action plan distinguishes the firm from its competitors by exploiting its competitive advantages. The focal point of this entire strategic plan is the customer. The customer is the nucleus of any business, and a competitive strategy will succeed only if it is aimed at serving customers better than competitors do. An effective strategy draws out the competitive advantage in a small company by building on its strengths and by making the customer its focus. It also defines methods for overcoming a company's weaknesses, and it identifies opportunities and threats that demand action.

What challenges does Vizio face as it attempts to introduce a new line of products into a mature industry?

Use the Internet to learn more about Vizio. Describe the company's strengths and weaknesses.

What opportunities and threats does the company face?

Which of the three strategies described in this chapter is Vizio using?

Do you think that Vizio's strategy for competing in the PC and laptop market will be successful? Explain