Strategic Planning in the Small Business

Unit 3

HO 3-1 (continued)

service

attribute could result

in the ignoring

of others which

would reduce

performance

level.

It does little good

to produce a

standardiz-.d

hamburger with

little taste,

Second,

the evaluation

process could be-

come too narrow

by responding

only to in-

formation about

the distinctive competence.

If the only performance

criterion

is iiumber

of sales generated

during the month,

then

Low

the sale is made

may become unimpor-

tant. This

could result in

few repcat

customers

and no referrals.

Four Steps Toward

Differentiation

A

small firm can follow

four basic steps

in

order to identify

and develop

a distinctive

competence.

The first

step involves

con-

ducting

three "nalyses.

The first analysis

focuses on the

firm-its financial

condition,

physical assets,

technological expertise,

and

human

assets. The human

assets may be

the

most important,

especially

if there is a high

degree

of one-to-one

service, as in real

estate.

The

second analysis

looks at conditions

in

the firm's desired

market area.

Service

demand

is determined by

three elements:

level, or the number

of potential

customers;

trend, indicated

by a declining,

stable,

fluctuating,

or growing

market; and

loca­

tion, i.e.,

identification

of customer

concentration.

The

third analysis involves

a careful study

of the competition,

those at the front

of the

pack. t does little

good to analyze

other

"middle-of-the-packers."

The focus

must

be

on how the

leaders got to be

leaders, keep-

ing

three elements in

mind: how the leaders

respond

to demand, how

they create demand

for their services,

and how consumers

per­

ceive

the leaders.

a distinctive

competence that

the firm could

develop. The distinctive

competence

could

be one of

the following: introducing

a new

service that appeals

to a specific

consumer

group; redesigning

an existing

service that

had been allowed

to deteriorate;

Lnd or

eliminating

services

that no longer

satisfy

needs. It ih important

to make the

distinc­

five

service as ta'gible

as possible to

aid in

recognition.

The third

step involves designing

and imple­

menting

an action

plan for positioning

the

firm's

distinctive coinpetence.

Beyond

spec­

ifying who should

do what and when,

three

other

elements must be

considered. First,

the communication

strategies to

be used to

convey

the distinctive

trait must be idern­

tified. What

message does

the firm want to

transmit? What

media channels are

the most

efficient and effective?

Determining

cost

and price

is extremely difficult

for service

businesses.

Careful attention

must be paid

to identifying

all of the costs

of the service,

especially

time, including

both transaction

of

the service

and waiting for

consumer inquir­

ies.

The price should

reflect an understand­

ing of what the consumer

believes to

be fair.

Since it is

often difficult for

the consumer to

comparison shop for

a service, the more

tan­

gible the service,

the easier the comparison.

The fourth and

final step is to develop

distn­

bution

strategies which

are efficient for

dif­

ferent

customers. In

real estate, customers

are either

sellers or buyers.

For sellers, the

service

is typically

delivered at their

pro­

perty.

For buyers,

se-vice delivcry

can

occur at

three sites:

in the

firm's office,

in

a licensee's car,

and at the seller's

property.

Each

of these distribution

points can influ­

ence service

delivery.

CONCLUSION

These three analyses
provide the information
Although
the demise
of the small service

required

to take the second

step: to identify

firm ha,;

been predicted

in many sources,

278