External Market Factors: Businesses don’t operate in a vacuum and are constantly bombarded by external influences, whether they are good, bad or downright ugly depends on your mindset and how you react to them.
The top 5 external influences can be categorised as:
- Competitors
- Environment
- Legislation
- Economic
- Customers
Let’s look at each of them and explore some examples of how you can turn the ugly to bad to good
1) Competitors
If it wasn’t for competitors life would be great…or would it? Most businesses operate in markets where it’s impossible to service ALL potential customers. This means that your competitors are actually a ready source of new customers (good).
Occasionally competitors will start a price war (bad). Unfortunately many businesses respond in kind and cut their prices while adding extra features (ugly). Customers are the only ones to benefit from these tactics.
Smart marketers see this as an opportunity to educate their customers about value (good). Remember value and price are very different things. Customers purchase goods and services to solve problems. The business that presents the best solution provides the best value. The key is to determine the problems you solve so that you can articulate the true value of your offer and price instantly becomes irrelevant.
I can hear some of you scream out…”but my product is a commodity and so I can’t get passed the price issue.” There are plenty of examples of smart businesses who operate in commodity markets who have resolved the price issue. For example fruit and veg is the one such commoditised industry where some switched on marketers have focused on solving customer problems with massive success, for example:
Customer problem: “I don’t have enough time to shop for quality fruit & veg”
Supplier Solution: Shop online with home delivery
Customer Problem: “I need to improve the health of my staff”
Supplier solution: Fruit in a box delivered direct to offices
2) Environment
We all know the latest environmental issue that is top of mind. In the short term you can choose to ignore it (bad) but you will miss a great opportunity (good) and it will take a lot more effort to catch up with your switched on competitors (ugly).
Smart marketers are embracing the carbon issue and putting in plans their businesses environmental footprint. There are many companies out there who give preferential treatment to suppliers with “green credentials” and there is a rapidly growing band of like minded consumers.
Again I hear many of you screaming “I’m only a small business and I can’t afford to go down this path”. The fact is that it doesn’t have to “cost you the earth”. In Intertype’s printing business we have embraced Green Biz Check’ Corporate Social Responsibility 9CSR) program. This program has helped us to reduce our environmental footprint (we are now Carbon Neutral) while improving efficiency which funded our sustainability program. The main effort required is to galvanise your team to think differently. Now that has to be “GOOD” for everybody.
3) Legislation
Governments have the ability to pass legislation that can dramatically impact on your business. Sometimes this legislation can have unplanned consequences but if you don’t react and comply you can find yourself in a whole world of trouble (ugly).
Often new legislation can provide a wealth of opportunity for savvy business people (good). Not that long ago the introduction of GST caused every business to adjust their processes (bad) but it provided a massive boost to accountants, bookkeepers, software & hardware providers (good) and it even caused many small businesses to improve their cash flow management processes (good).
Stay tuned to what’s happening at Federal, State and Local levels and explore each new piece of legislation to look for hidden profit making gems.
4) Economic
You can’t miss it, it’s in all the papers and on TV every night… the global recession seems to fill our every waking moment and helping to destroy confidence (ugly) in its wake.
There’s nothing we can do as individuals to turn around the recession but we can find opportunities to help us through and if we are really smart, to come out the other side as winners.
I have personally been through a number of recessions and the following has been true every single time:
- Recessions are cyclical. They all end and boom times will return (good)
- Massive fortunes are made by people and businesses that take a counter cyclical approach (good). Warren Buffet practices this approach with great success,
- Most businesses will suffer if they lose confidence and stop marketing or continue as they currently operate (ugly)
- This is an ideal time to gain competitive advantage and market share as your competitors are more likely to reduce their marketing
Now is an ideal time to re-evaluate your marketing efforts and replace poor performing strategies. At Intertype we are already seeing some of our customers shift from “above the line” marketing channels which are notoriously hard to measure the return on investment and they are now placing more emphasis on direct marketing, email marketing and internet marketing which are easily measured, more accountable and fast to adjust.
You need to also look at what other customer problems you can solve. For instance Mortgage Brokers should move from targeting “low doc loans” to helping people consolidate their debts to free up cash flow.
5) Customers
We need to remember that our customers have their own set of external influences that will impact on their businesses (good, bad & ugly).
Get to know your customers and work out how you can turn ugly and bad influence into good outcomes for them.
Yes you will be helping them solve new problems but you will reap the rewards (good) and in so doing create a huge competitive advantage.
In Summary
For many businesses changed external influences may seem a pain in the butt. Thankfully many of these businesses are your competitors.
Keep an open mind, embrace changes and think up new solutions to new problems and your business will soar (awesomely good).
