Over the past few years, many businesses in different sectors have begun allocating significant amounts of time and resources to incorporate technology into their business. This strategy to transform businesses in the digital age has been going on for a while now, but the pandemic simply accelerated (some would even say “forced”) this evolution. For example, several companies are only now learning the various communication challenges involved when face-to-face interactions are limited.
In this post, we’ll cover some of the best practices involved in updating your organization to modern-day technological standards.
Roadmaps to Digital Transformation
To remain competitive in this new age of consumer behavior, businesses must update their business model with a clear digital strategy. Each business has its own quirks and will require different degrees of digital transformation in order to remain successful. Creating a roadmap provides a structured approach to digital transformation. It’s best to start by simply looking at your business in its current state. Here are a few things to keep in mind:
Perhaps the most important aspect of any business is the people running it. As you transform your business, it is imperative to identify key persons that directly impact success. It might also be a wise decision to bring in new talent to help transform your business and gain a competitive edge in the digital space. It’s not uncommon for large enterprises to recruit digital transformation agents from other successful companies.
This aspect of the business is all about maintaining or improving efficiency. A company’s process should include a future-proof plan for scaling the business and updating the business model to compete in the digital age. How will you maintain growth and earnings? What bottlenecks can be improved? Which innovations can take place? Take a deep dive into your internal processes to understand how to better serve both your own team and your customers.
Tools and infrastructure are needed to empower people and enhance processes. Prior to the pandemic, businesses have already been utilizing different platforms to facilitate communication between team members. A few examples of these platforms include Slack, Microsoft Teams, and Zoom. These company group chats help integrate members of the business together, and helps facilitate communication and collaboration over the internet, without the need for face to face meetings. But technology can also influence sales, marketing, customer support, finance, and various other functions of the business.
Reassessing Road Maps Due to Covid-19
Now, and for the foreseeable future, the majority of consumers are limiting their time spent outside of the home. This has brought about a surge of online traffic, with companies ramping up infrastructure to accommodate the load.
With this change in consumer behavior, companies must reassess their strategies in order to maintain growth. For example, as people now stay online longer on average due to being stuck at home, social media, and entertainment platforms (Facebook, YouTube, Instagram, etc.) are now viable investments to incorporate into your marketing campaigns. Understand where your target market is spending their time online. Analyzing new consumer groups is important in answering this question.
As a general rule, newer platforms tend to attract the younger generation. The rise of TikTok is no doubt thanks to Gen Z or “Zoomers”. It’s been a powerful tool to introduce products to Gen Z consumers due to the easily digestible content. Youtube, Twitter, and Facebook tend to be frequented by Millenials (Gen X) as well as Baby Boomers as these are the platforms they grew up with. Facebook and Twitter in particular boast the highest user count among all platforms.
Keep in mind this is only one aspect of digital transformation: online marketing. Digital transformation can also have a profound impact on one’s business by automating repetitive processes, offering more robust technical or customer support, or creating a more vivid and insightful report for your efforts. All of these changes will become even more essential in this post-pandemic world.
Advantages of Digital Transformation
As the need for digital transformation grows for each sector of the market, the benefits are also becoming clearer. The first, most obvious advantage is the opportunity to improve processes and innovate within the business. Using online tools and technology, each process or task can be made easier to improve efficiency across the board. Consider how tools like Asana or Basecamp have simplified project management to the point that people from different countries can continue to work and track their progress with increased agility.
Adopting certain technology will also serve to enhance customer experiences. Platforms such as Salesforce or HubSpot have become highly effective at analyzing customer journeys, which in turn can lead marketers to create more valuable experiences from the moment they are hooked, to the moment they return for a purchase. For example, receiving an email notification about an abandoned cart, or an upcoming booking can help increase engagement while providing customers with the information they may have ordinarily forgotten about.
Other tools can also help yield new consumer insights. Collecting information on how users navigate a website, interact with social media, or engage with email campaigns can open a treasure trove of information that you can then use to deliver better products or services. Location data is one such example. On many platforms, you can now learn where the bulk of your audiences come from, which in turn can help inform your advertising strategy both online and offline. More advanced enterprises even use machine learning and artificial intelligence to seek out patterns that the human eye cannot detect.
Jobs to be Done
So what are the jobs to be done in theory? What are some unmet customer needs that can be addressed? When creating your roadmap for digital transformation, you’ll notice that new tasks and processes will develop. This could mean expanding your team or training an existing team member. Use the data gathered from consumer behavior to determine what jobs are needed.
One example is finding out how your customers engage with your brand. Do customers head directly to your social media account? Then you need a Social Media Manager to handle your brand’s social media presence. Do they go directly to your website instead? Perhaps expanding your web development team to optimize your website would be better instead. Does creating a phone application make more sense for your business? Then you’d want to hire an Android or iOS software developer. Figuring what works best will greatly improve the customer experience.
Keeping up with the competition allows for some accurate competitive analysis. As brands become more public, one can determine the more popular brand based on user engagement online or follower count. Figuring out what works and what to improve is made easier with information on competitors being publicly available.
Examples of Digital Transformation
Back in 2017, Home Depot decided to update its brand strategy by creating a more seamless online experience, across all channels. Over three years, the company invested $11 billion into hiring over 1,000 professionals, updating their back-end and distribution channels, and completely revamping their IT department. The result: more actionable customer insights, better local trend tracking, and more accurate inventory levels. Their revenue has since grown over $17 billion.
With governments urging social distancing, countless companies with physical stores that usually rely on foot traffic need to come up with a way to get their goods to consumers without heading into a large group of people. Grocery stores have begun promoting curbside pickups to get goods to customers to help avoid large gatherings. Companies such as DSW and Michael’s are also adopting curbside pickups for customers. This new practice relies on an effective online scheduling and notification system, as well as a robust back-end that can handle all these requests.
Fitness companies such as 24 Hour Fitness have begun offering online workout classes in response to gyms closing due to the pandemic. Other fitness brands such as Orange Theory and Planet Fitness are now also promoting At-Home workouts by creating both free and premium content for their customers to use at home. These apps must be carefully developed and designed, as they are effectively acting as the online equivalents for their facilities.
The year of the pandemic has been a wake-up call for companies to accelerate their digital transformation efforts. Companies need not reinvent the wheel: while these examples have involved larger companies with significant budgets, smaller-scale organizations can begin (or continue) their digital transformation with modest yet impactful initiatives, such as updating a CRM platform or migrating to the cloud. As we look forward to future advancements in tech, these organizations that have already begun their transformation will have a unique advantage over competitors that fall behind.
Entrepreneurs understand the various challenges associated with their line of work: long work hours, uncertain business models, volatile market conditions, the list goes on. But when you add an international market or clientele on top of that list, entrepreneurship becomes a lot more complex.
International entrepreneurship introduces a few new factors, including travel, remote teams, localization, international regulations, and foreign competitors. Balancing each responsibility while addressing the unique markets and challenges for each country can take its toll on anyone.
In this tips guide, we’ll cover the various considerations to make, the obstacles to navigate, and a few strategies for ensuring success, no matter which country the business may operate in.
Types of Entrepreneurship
Entrepreneurship generally refers to ownership of a business that involves a grand idea with significant risk. But it’s more than just owning a small business, entrepreneurship can be further broken down into more specific types, focusing on certain industries or approaches to business. For example:
Social entrepreneurship – Social entrepreneurs pursue ideas, products, and services that have the potential to address social or community-based issues. For example, Catchafire is a for-profit organization that matches skilled volunteers with non-profit organizations, similar to a matchmaking website but for philanthropy and volunteerism.
Scalable startup entrepreneurship – a business model where an entrepreneur takes an idea or concept and experiments with a repeatable business model that will return high growth and profit. A great example of this would be Instagram or Snapchat, which thrives on the growth of its user base. That’s why there are features that encourage and even reward users for referring their friends to the platform.
Innovative entrepreneurship – a type of entrepreneurship that introduces a completely new product, service, or process with the intention of disrupting an existing market or creating a completely new market. When Uber was first introduced, there was no such thing as ridesharing. Overnight, Uber had developed a new way for people to get from point A to B using a single app.
Keep in mind that there are many other types of entrepreneurship, such as researcher entrepreneurship, opportunistic entrepreneurship, and even intrapreneurship, which is an entrepreneur within an established organization.
Learn Cultural Differences
If you leave with only one takeaway, let it be this: each country has its own unique culture that must be acknowledged and respected if a business hopes to succeed there. Many businesses have opened shop in another country, only to fail miserably after failing to properly understand the local market and culture.
One way to better understand or measure the various cultural differences between each country is through Hofstede’s cultural dimensions theory. Developed by Geert Hofstede, founder of the personnel research department of IBM Europe, the framework analyzes cultures based on six different values:
– Power Distance (PDI) – Measures a country’s acceptance of power inequality. A high power distance indicates a culture that embraces hierarchy, while a low power distance indicates a more egalitarian society.
– Collectivism vs. Individualism (IDV) – Measures whether a culture tends to celebrate the accomplishments of a single person or the entire team.
– Uncertainty Avoidance Index (UAI) – Measures how comfortable a country is with uncertainty. Higher UAI suggests the country is more uncomfortable with uncertainty.
– Femininity vs. Masculinity (MAS) – Measures whether a country embraces power, achievement and success or whether it prefers growth, cooperation, and quality of life.
– Long-term orientation vs. Short-term orientation (LTO) – Measures a country’s connection to the past and how it addresses present or future challenges. Low index (short-term orientation) suggests that a country values its traditions, while a high index (long-term orientation) suggests that a country values adaptation and innovation more.
– Indulgence vs. Restraint (IND) – Measures the degree of freedom afforded to citizens with regards to their wants and needs. Indulgence refers to a society that is generally free as it relates to human desire, while restraint refers to a society that controls its citizens choices and desires.
While it remains an imperfect and incomplete way to view a culture, it can help illustrate the vast differences in values between countries. For example, the United States tends to favor individualism (with an estimated rating of 91), whereas Japan prioritizes collectivism (estimated rating of 46). This single insight can have profound implications on a business’s marketing, production, sales, and more.
International business etiquette
No matter which country one may conduct business in, there are a few common expectations to uphold out of respect. These may include:
– Proper introductions – First impressions make all the difference, so it’s crucial for entrepreneurs to speak clearly and directly to whomever they meet.
– Being on time – Although some countries are less strict about punctuality, lateness is generally seen as disrespectful of another person’s time.
– Gifting – Businesses tend to show appreciation for another person with a modest gift, such as a local treat or souvenir.
– Participating in traditions – One ideal way to show respect for another culture is to show curiosity and appreciation for traditions, such as trying new food, learning about their history, or speaking the local language.
– Research – Nothing can prepare a person more for experiencing a new culture than to read or learn about the culture beforehand.
International businesses, particularly those from the United States, tend to wield considerable power and influence over the countries they operate in. They are able to take advantage of relaxed regulations, uneducated citizens, bountiful resources, and even cheap labor in different countries. This creates an imbalance in the power dynamics between the citizens and the corporations that set up shop nearby. Because of this phenomenon, international companies have a civic responsibility to give back to the country whenever they can.
Companies like Coca-Cola have donated more than $820 million since 1984 in developing more sustainable communities. This includes a $500,000 donation to Africa Against Ebola Solidarity Trust, $700,000 to Alternative Indigenous Development Foundation, Inc., and $800,000 to the China Women Development Foundation. Coca-Cola isn’t alone. Whole Foods, Starbucks, Disney, and other major corporations have begun similar initiatives to invest in local causes and communities.
As a company’s understanding of an international culture begins to take shape, the next question becomes: “what do we focus on?” For an entrepreneur, this question is something that comes up daily. Choosing which tasks require the most attention can make the difference between a focused company and one that may falter within a few years.
Former President Dwight D. Eisenhower once said, “I have two kinds of problems: the urgent and the important. The urgent are not important, and the important are never urgent.” This has slowly evolved to become the “Eisenhower Principle” or the “Eisenhower Matrix.” It breaks down workloads and projects into four categories”
– Important and Urgent
– Important but not Urgent
– Not Important but Urgent
– Not Important and not Urgent
Entrepreneurs can take advantage of this framework by starting with tasks at the top, everything that is essential to the business but is also time-sensitive. From there, importance takes precedence over time-sensitivity. Anything in the fourth category can be considered a distraction, and not worth doing.
The Eisenhower Matrix can be a useful tool for prioritizing day-to-day tasks, but it can also reveal personal, as well as business strengths and weaknesses. Over time, patterns will emerge that show the type of tasks and projects a person or business may excel at, such as marketing and sales, while highlighting the inefficiencies or distractions, such as research and development. Successful entrepreneurs would do well to pay careful attention to both.
International business plan
Similar to startups that pitch their idea to an investor, international entrepreneurs must have an international business plan that details their model for producing profit and growing the business.
There is no one standard template for forming an international business plan, but there are a few items that one should consider adding:
USPs or Unique Selling Points
Entrepreneurs must develop selling points that distinguish their brands from other competitors. This may be a unique feature, compelling price point, exceptional service, or competitive advantage. McDonald’s, for example, has the USP of convenience, as they are easily found around the world.
Companies that fail to conduct market research, particularly into an international market, are doomed to fail. Market research can inform everything from the design of a product to the intended audience and can determine the ideal time, place, quantity, and price point to sell something. Above all, market research clarifies who the product is for, and why the target customer would want to buy it.
Barriers to entry
Regulations, competitors, political climate, environmental dangers are all considered barriers to entry, something that makes it harder for a company to do business somewhere. Without a formal understanding of these barriers, a company may make a costly business decision, such as being sued for breaking a law or being cannibalized by much more established brands.
How will a product or service be moved and delivered to the customer? Consider a single phone, which must be designed, assembled, shipped, and delivered to the customer. That process alone may involve several companies spread out throughout the world. A clear understanding of logistics will ensure a smooth operation and distribution system.
A unique consideration for international entrepreneurs, localization is how a foreign product or service can become accepted as a local brand. Such an act requires market research, cultural education, experimentation, and tough conversations with various audiences. Ultimately, the more personalized a product is to a certain country, the more likely they will adopt the brand.
Finally, a business must consider the presence it intends to have in a foreign market. This largely depends on the nature of the work, the size of the team, the level of involvement, and other factors.
Companies may choose to have a limited presence, opting for something close to a virtual office, or they may opt for a new branch/satellite office and take advantage of a shared office space or private office. Virtual offices will undoubtedly save the company money, but a physical office can offer greater visibility and a more direct channel for local customers.
Navigating around the waters of international entrepreneurship can be overwhelming, to say the least. Not only do you have the same considerations of a traditional company, but you must also think about how to adapt the business to the local culture, no easy feat. The most successful entrepreneurs will understand that research and preparation is everything. If a business hopes to succeed in a foreign market, they must completely immerse themselves in the culture. Only then can they hope that customers will buy into their brand.
A serviced office is similar to a traditional office or office building but is fully-furnished, fully-equipped, and managed by a company with the ability to rent individual rooms or floors to other companies. They may also be known as a business center, executive suite, or managed office.
How do serviced offices work?
Serviced offices are owned by a facility management company or office provider, sometimes working with a serviced office broker to find tenants to rent office space. Companies that manage these spaces have greater ownership and control over the spaces, so they usually are more flexible with long-term leases and requests for additional spaces compared to a traditional office. These offices also allow businesses to save money through shared spaces and resources, from meeting rooms to printers.
Services and amenities tend to vary depending on the property manager, but they typically include:
– Furniture (desks, chairs, whiteboards, coat racks or lights)
– Receptionist or front desk
– Conference room/meeting room
– Telecom services (dedicated phones, televisions, or webcams)
– Administrative support (such as help with printing/faxing/mail delivery)
– Internet connectivity (Novel Coworking uses direct fiber and Wi-Fi)
– Kitchens/kitchenette with fridge, coffee makers, and dinnerware
– Heating and air conditioning
– Cleaning services
Watch this video on Novel Coworking’s SmartSuites for an example of what to expect:
What are the benefits of a serviced office?
1. Cleaning and maintenance included
In traditional offices, businesses have to hire separate companies to clean each office every night and to maintain computers and other equipment in the event of an error. Serviced offices already have an on-site team for both cleaning and maintaining the facilities, which can free up time for businesses to purely focus on their operations and development.
2. Reputable business address
These offices are usually located in downtown commercial or financial districts – and for a reason! There are numerous benefits to having a downtown business office, including access to restaurants, services, and financial institutions. Beyond convenience, having a business address downtown also creates competitive advantages for business development. For example, customers are more likely to purchase from a business with a prestigious downtown address than from an apartment or rural residence.
3. Flexible lease contracts
When businesses sign up for a serviced office, they’re not tied down by a conventional lease agreement. For businesses who are looking for the ability to opt-with short notice, these offices provide a great alternative to traditional office spaces. Some may even be willing to negotiate lower monthly rates in exchange for a long-term contract with businesses.
4. Pay-as-you-use equipment and facilities
If your business seldom uses expensive conference equipment or printing supplies, then the money that would be used to purchase that equipment may be better invested in other areas. Fortunately, in a serviced office, businesses need only pay for each use or each hour. Small business owners understand there are many monthly costs associated with running a successful company, and minimizing facilities overhead and equipment investments by leasing with a serviced office provider can result in major cost savings in the short and long term.
5. Access to a national serviced office network
Some serviced offices, like most coworking spaces, offer a national network of offices open to members. As long as you have a pass, you can enter any of their other locations throughout the country, introducing greater flexibility and mobility into your business schedule.
6. Move-in ready offices
Businesses don’t always have the liberty of spending weeks on moving equipment and personnel into offices. Sometimes they need to get up and running as soon as possible so they can start making money. But these office spaces reduce the risk of downtime by allowing clients to move in immediately.
7. Trained administrative staff
Expecting a visitor to your office? Want to mail something out? Need some new office supplies? These serviced spaces aren’t complete without a group of fully-trained staff, such as a dedicated receptionist that can assist with daily business. You can feel at ease knowing there’s an additional member of your team you can count on.
Why use a serviced office?
Startups/Entrepreneurial Venture– New entrepreneurial ventures and startup companies want the bare necessities of an office without breaking the bank. By working with a serviced office, they can enjoy the benefits of a meeting space, private office, and admin support without any of the costs.
Silos/New markets – Businesses like marketing agencies tend to expand to new cities to reach new customers. Setting up offices across the country accomplishes the task without all the hassle of setting up a new building or team.
Specific projects – Serviced offices are great for quick, one-off projects, like film production or event hosting.
Transition space – For brands that are moving between locations, a serviced office can provide immediate access to office space. This quick set up can help to ease the transition period.
Are coworking spaces the same as serviced offices?
Coworking spaces certainly share a number of qualities with serviced offices, including the support teams, shared facilities, and flexible lease options. The main difference is in the name: coworking spaces offer businesses the ability to work in a large, wall-free space that cultivates creativity, collaboration, and productivity. Serviced offices typically only have office rooms or suites.
Location-based marketing is one of the newer marketing strategies, but it’s also one of the most effective for small businesses. With the use of online platforms and minimal investment, a simple startup can more accurately target their ideal customer. But since it is a relatively new concept, there’s still confusion around how it works.
What is location-based marketing?
Location-based marketing, also known as geo-targeting, is centered around creating personalized marketing strategies based on the target customer’s location. For example, a clothing store may want to show Atlanta-inspired clothing to its customers based in Atlanta. Because the content is more relevant to the customer’s unique experience, they are more likely to make that purchase.
The strategy itself has been around for quite some time (think of billboards that advertise local businesses) but has recently found new life thanks to the major advances in technology. Our mobile phones have become such a crucial source of information that an industry has grown specializing in this kind of marketing.
In order to use this type of strategy, a marketer must use a form of location-based service or LBS. This is a form of software service that uses geographic data and information to provide relevant services or information to users and consumers. An LBS is not necessarily a marketing tool as it is used in a variety of applications such as navigation software or social messaging applications.
One popular example is Pokemon Go, an augmented reality mobile game that became a viral trend in 2016. One of the core mechanics of the game is having the player be in the physical location in the real world to interact with creatures and objects in the game. Malls across the world capitalized on this as it welcomed “trainers” to come and catch virtual creatures in the establishments. Fortunate businesses that became hotspots for players saw a rise in traffic as the game reached its peak.
Location-based services can also be found in social networking sites such as Facebook, Twitter, or Reddit as it allows for targeted advertisements towards users based on their location. It essentially offers relevant information to users by using GPS-based or IP-based location information in order to suggest useful nearby services. This form of advertisement is called geolocation advertising.
How does location-based marketing work?
Location-based marketing uses the location data of a customer to provide more relevant product or service offerings.
First, the customer’s location is collected through the GPS system in their phone or mobile device, or in the unique IP address of their computer. In some cases, a service may analyze your browsing habits or Wi-Fi details to track your location, as is the case with Facebook.
The information collected is then parsed and analyzed by a combination of marketers, analysts, and artificial intelligence. Using your location and subjective elements such as your interests or purchase behavior, marketers can then suggest more relevant products, like restaurants near you or limited-time events in your area.
There are two types of approaches to location-based marketing. There is the national approach versus the local approach. The difference between a national marketing strategy versus a local marketing strategy is the intended amount of exposure. A national strategy aims to have a broader reach but will result in a reduced number of interactions. A local marketing strategy is essentially better for smaller businesses targeting customers in the immediate area or city. This obviously has a shorter reach but would result in more customer interactions as customers feel the messaging is more relevant to their lives.
Is an app needed to engage with location-based marketing?
Not necessarily. Small businesses with a tight budget can still find inexpensive ways to collect location data for marketing. The simplest and most straightforward way is to just ask, through a sign-up sheet or a survey. The upside is that you are doing it with customer consent, and it doesn’t require much effort.
Another and perhaps more effective way is using geofencing or beacons. Geofencing involves cellular towers and Wi-Fi to determine a person’s location, while beacons use a small Bluetooth device placed by a physical store to detect any smartphones that pass by. To learn more about these methods, visit Clutch’s page here.
Once you have data to work with, it’s time to pick an avenue or channel to reach out to customers. One of the best channels for location-based marketing is Google Ads. It’s arguably the most popular channel for advertisers with 5.6 billion searches on average per day. As customers search for products or topics they are interested in, your brand would pop up in the form of an ad.
Another contender is Waze Local. As a new competitor in the marketing space, this feature of Waze offers users a way to advertise to people based on their current location and destination. The app has enjoyed a growing user base due to its usefulness in navigating traffic which translates to an effective channel for businesses to be discovered by customers, both local and foreign.
Of course, you can’t ignore one of the largest social networking platforms out there. As of 2020, Facebook boasts a user base of over 1.69 billion users. Facebook has numerous ways to reach customers through either suggested ads or by creating pages for your business to interact with customers. Facebook’s advantage over other websites is that it is first and foremost a social networking site. This means that customers can leave comments or reviews and easily share brands through links which drive other users to check you out.
So depending on your audience and your approach, you won’t need an app, but it may make targeting that much easier.
The Benefits of Location-Based Marketing
Investing in a location-based marketing strategy brings numerous benefits for you as a business. Since this type of strategy is focused on channels visited daily by almost everyone in the world, marketers will experience increased engagement with their campaigns. Even if you’re not on a social network, you can build an email list and send relevant offers to a filtered list of customers residing in your area.
The first thing you will notice is improved turnaround times. Gone are the days of the need to stand out in the sun handing out flyers or going door-to-door pitching your business. With the power of the internet, you can spend 30 minutes creating a newsletter or generating a coupon code to send them out to a hundred thousand customers with a click of a button. You’ll get a response within minutes.
Brand-awareness is also heavily boosted as the rise of sharing sites like Twitter essentially gives you free advertising. This, in turn, lowers your CAC (Customer Acquisition Cost) as you simply need one satisfied customer in order for them to tweet or post about your brand to share with their friends. Soon, their friends will also share thus creating a sort of sharing cycle where the original customer will occasionally come across your brand again. A promotional post or ad is easily shared with hundreds of people by one person.
As location-based marketing is all about targeting a specific group of people, you will also experience far less competition. You will only be competing with brands within your area, as opposed to national or international brands. By controlling one dimension of the marketing mix (place/location), you can deliver a more coherent and resonant message to your intended audience.
By providing a service that’s easily accessible and relevant to customers, businesses will also experience higher conversion rates for their campaigns. A promotional offer sent out in the morning could bring an influx of customers to your store in the afternoon as your store location could be part of their daily routes. It also circles back to the instant gratification that consumers are used to, wherein they would naturally choose a product that is easier for them to receive, even if its price is a couple of dollars higher. They are essentially paying for the convenience.
The Challenges of Location-Based Marketing
An obvious challenge mentioned earlier is the decreased reach this type of strategy faces. As you are targeting a specific group of people, you are only able to reach those within a certain area. You may still attract users or customers from outside your targeted locations, but the message may not have as much of an impact.
Another issue in relevancy is your content. Making your message or content relevant is a must to attract paying customers. That might mean hiring more specialized writers or designers that have a more nuanced understanding of the local culture. Localization can be an additional expense that not all companies have the luxury of spending.
More recently, users have expressed concerns over their location privacy on the Internet. According to HERE technologies, around 80% of consumers do not fully trust services collecting their location data and a further 90% dislike the current privacy practices. If you aren’t upfront about your collection practices and a customer finds out, there’s a chance you could lose their respect forever.
Tips for location-based campaigns
Location-based marketing should be used as a starting point, not the ultimate tool. Finding out a user’s location is a major accomplishment, but then what? You must find ways to tailor products and services to people within those locations. That may mean opening new stores, rewording certain copy, or creating special/limited-edition product offerings.
Learn to track local trends and reviews. This complements the need to stay relevant within your space or industry. You’ll be able to create dynamic campaigns that stay relevant depending on what is happening around your city. Tracking reviews left by customers is already a free feedback tool provided by having a page on Google or Facebook. Use this free information given by customers to improve your business. Being able to communicate and interact with your community is key.
Most importantly, always be upfront with your clients and customers about location tracking. You may see a few drop-offs in terms of numbers, but that’s a minor pain compared to the stress of a public backlash or even legal action. Be honest and your customers may be more willing to give you the information you seek.
Examples of Location-Based Marketing
The biggest video sharing platform on the Internet offers geo-targeted ads. If you noticed, Youtube tends to play ads every 10 minutes or so of watch time. These ads are different for each Youtube account, and they take into consideration the location of the user to play more relevant ads.
Another service by Google is Google My Business campaigns. These campaigns are useful when users are searching with Google Maps. By having a campaign with Google My Business, you are legitimizing your business in the eyes of Google as well as having your business information pop up on one of the most popular map apps in the world.
Networking and local conferences are also a great way to conduct a location-based campaign without relying too much on the Internet. Being able to connect the old fashioned way not only gets your brand across to customers but also to potential business partners as well. You’ll be able to form local partnerships from other businesses where you can share customer information and revenue.
Location-based marketing is still in its infancy, but it will only grow more important as the Internet becomes increasingly expansive and noisy. Geo-targeting is just one of the ways marketers are staying relevant in the minds of their customers. But remember, it’s only a method. It’s what you do with the information you find that matters.
In our latest blog series, we’ve covered the basic concepts of startup growth, the importance of pivoting and persevering, and the real-life consequences of failing to adapt to the market. In this guide, we want to focus on realistic strategies used by companies around the world that can help take your business to the next level.
Analyzing risk using the Ansoff Matrix
Definition: “[A] strategic marketing planning tool that links a firm’s marketing strategy with its general strategic direction and presents four alternative growth strategies as a table (matrix)” (Business Dictionary).
Developed and named after H. Igor Ansoff, the father of strategic management, the matrix presents the level of risk involved with various strategies. The four strategies are:
1. Market development – Building on the success of an existing product but introducing it to a new market or market segment.
2. Market penetration – Building on the success of an existing product and further engaging an existing market.
3. Product development – Introducing a new product to an existing market.
4. Diversification – Creating a new product and introducing it to a new market or market segment.
The Ansoff Matrix is useful in strategic planning because it simplifies the concept of risk as it relates to a company’s target markets, product lines, and industry experience. Market penetration is generally accepted as the safest strategy since it builds on a company’s existing knowledge of their target market and products.
As a company transitions to product or market development, there are significantly more risks involved. For product development, this includes the risk of faulty parts, distribution concerns, or lack of production experience. In terms of market development, it may involve risks of cultural misunderstanding/appropriation, translation issues, or a lack of general interest.
Entrepreneurs would do well to use the matrix any time they introduce a new strategy, from bringing a product to a new country, to adding an update to an existing product line. Doing so can help mitigate overall risk.
Market penetration strategy
Market penetration strategy is one of the most common and reliable ways for a company to grow. Since the product and market have already been “proven,” there is far less risk involved.
Instead of reaching out to a new market or introducing a new product, the risk comes from capturing a larger share of the market. Usually, this means taking away customers from other companies.
A common tactic to gain a larger market share is through market penetration pricing. Companies will offer their product at a far lower price than their competitors, sometimes at a loss, so that they can capture the market in the long term. Walmart, for example, is notorious for using penetration pricing to attract customers away from K-mart and Sears. Today, 90% of Americans live within 15 miles of a Walmart.
Market penetration calculation
With a simple equation, any business can calculate its market penetration rate. First, you need to know your total addressable market (TAM). This is the maximum amount of money you can make from selling your product or service. In other words, it’s the total amount of demand that exists in the market for your particular offering.
Once you have your total addressable market, you can use the following formula:
Market penetration rate = (number of customers ÷ target market size) x 100
This equation may seem daunting, but by segmenting the market into smaller, more manageable niches, you can more accurately and effectively predict the success of your efforts.
It’s important also to understand that the market penetration rate by industry varies significantly. Pricing strategy author Marlene Jensen suggests that the normal penetration for a consumer product is between 2 and 6%, while a business product can have a rate between 10 and 40%. In terms of the smartphone industry, Apple has a 19.2% market share, Samsung has 18.4%, Huawei has 10.2%, while smaller brand names make up the remainder.
Market penetration examples
Under Armour is known for creating some of the highest quality performance gear for athletes. In recent years, Under Armour has even captured second place for biggest athletic wear provider in the U.S., overtaking Adidas.
In 2014, Under Armour was able to increase its market share through increased promotion and distribution. Their ads focused on self-improvement and discipline, as seen in “Rule Yourself” featuring Golden State Warriors player Stephen Curry, and “I Will What I Want” featuring American Ballet Theatre Dancer, Misty Copeland.
Market development strategy
When companies are ready to bring their products to a new market or a new segment of the market, they employ a market development strategy.
The risk in a market development strategy is with the company’s lack of experience with the new audience. Companies may fail to understand each market’s particular needs, desires, pain points, and cultural or socioeconomic traits without first conducting the necessary research.
Two questions must be answered before a company enters a new market: first, will the new customers want the product in the first place? Second, does the company have the production and distribution capabilities to expand to a new market?
It’s not uncommon for businesses to expand to new markets to also double down on talent acquisition. An app development company wanting to introduce its app to the Latin American market may want to consider hiring a Spanish-speaking developer or translator. Or if they are targeting the millennial market, they may consider hiring younger team members to gain their feedback.
Market development examples
Americans may be surprised to learn that Red Bull is not an American company at all— it’s Austrian. But across the world, people develop such a strong connection with the Red Bull brand.
One big reason is through its event marketing. Red Bull features a number of extreme sports events in various countries; these include the Indianapolis Grand Prix, Soapbox Race in Jordan, and the Air Race in the U.K. The brand has become synonymous with high-energy and extreme sports. Instead of merely having the same event around the world, it tailors events to the audience.
Another example comes from Pixar, the famous animation studio behind Toy Story, Finding Nemo, Up, and many more. These films already have a personal and handcrafted touch, but Pixar goes above and beyond by localizing even the smallest props or movie details. For example, the U.S. trailer of Inside Out shows a character watching a hockey game, while in the U.K., they are watching a soccer game. These small touches add up to make Pixar feel more local to international markets, despite it being an American production.
Product development strategy
If a company is comfortable with its existing market but instead wants to introduce a new product, then it must go with a product development strategy.
With a product development strategy, the challenge stems from building a solid product or service that is in line or surpasses your brand’s existing reputation. This applies to both a product introduction and product evolution.
To avoid the potential losses from a failed or faulty product launch, companies invest heavily in research and development, or R&D. Customer needs, competitor landscapes, emerging technology, and macroeconomic factors—these are just a few of the elements that the people in R&D must investigate to inform the product development strategy. In 2018 alone, US-based companies spent a total of 329 billion in R&D, according to PricewaterhouseCoopers LLP. Amazon accounted for $22.6 billion of the investment, while Google parent Alphabet spent $16.2 billion. In the end, a product development roadmap will help align the R&D and strategic divisions of a company with the production and distribution divisions.
In recent years, automobile manufacturers have begun to introduce more eco-friendly updates to their product lines. A decade ago, the market was a lot less uncertain, but brands such as Tesla and Nissan have demonstrated a strong desire for a fully-electric vehicle. From luxury models such as Ford Mach-E, the BMW i3, and the Porche Taycan, to family options such as the Hyundai Kona EV and the Kia Nero EV, it seems almost every car brand is designing their own electric auto.
After years of highlighting images and short videos on their platform, Instagram introduced IGTV, a place for content creators to publish long-form content. Instagram took the novel approach of introducing IGTV as both a standalone app and a feature within the existing Instagram app, so as not to alienate their audience. Finally, the company partnered with various influencers and creators to promote the launch of IGTV as a live event, including Fortnite streamer Ninja, Susie Shu, Katie Austin, Bryce Xavier, Lauren Riihimaki, and Lele Pons.
The last and riskiest strategy for business growth is diversification, sometimes known as corporate diversification, which involves introducing a new product for a new market. With so many unknowns and a company’s lack of prior experience in the space, there is bound a greater probability of failure. Not only must the product be developed and distributed according to the brand’s standards, but it must also be embraced and adopted by the target market.
Diversification strategy examples
Depending on how you approach diversification, you can also mitigate the amount of risk through strategic planning. There are 5 different types worth understanding:
1. Concentric diversification – Perhaps the safest and also the closest to market development, concentric diversification refers to creating similar products or services using existing assets and infrastructure. For example, a sandwich shop adding burgers and salads to the menu.
2. Conglomerate diversification – As the name suggests, this is when a company enters an entirely new market after being bought out in a merger or acquisition. Marvel, the superhero media franchise, has entered more movie and TV show deals in recent years due to its acquisition by Disney.
3. Horizontal diversification – When a company introduces commercially or technologically unrelated products to customers with similar needs. For example, a GPS company that creates commercial GPS systems may offer a new kind of system to use in vehicles.
4. Vertical diversification – When a company introduces new products to a new market by acquiring either its suppliers or distributors. For example, a furniture company buying its supplier of fabrics (backward vertical integration) or the stores where it distributes its products (forward vertical integration).
5. Internal diversification – Technically referring to product or market strategy, not diversification. “Internal” refers to products or markets that are already within the company’s existing plans and operations.
From its very inception, every company should strive to grow. Of course, this is much easier said than done. With such fierce competition and ever-changing consumer behavior, it seems that any new product or market strategy can be a shot in the dark. Yet entrepreneurs know best that the higher the risk, the higher the reward. As long as company strategies are rooted in research, and as long as the research is based on real customer interactions, the most daring business initiatives may prove to be the ones that have the most significant impact.
Last week, we presented one of our most comprehensive guides yet on how to expand your business sustainably. This week, we are taking it back to the basics: research, resources, and creating value.
In an analysis of the top 20 reasons why startups fail, the number one cause was “no market need.” In other words, despite the lofty visions, mythical investments, and a reliable product, startups continually fail to understand their intended markets.
Why is this? How is it that major companies continue to create promising ideas but fail to attract a long-term customer? According to entrepreneur and consultant, Nick Freiling, it’s all because of market research or lack thereof.
“I’ve worked in market research for years. If there’s one thing I’ve learned,” Freiling wrote in a Medium post, “it’s that market research often makes or breaks a product launch.”
Freiling advocates starting with defining your company’s niche. Before selling anything, you need to understand who is not your target audience. Then you can concentrate on the people who are interested in paying for your product and avoid chasing after the wrong customers.
The competitive analysis may help you narrow down your ideal customer. Analyze existing companies and the audience they serve. What are they doing right and how could they improve? More importantly, how will you stand apart from your competitors?
Entrepreneurs must learn the answer themselves. This involves conducting primary research through the following methods:
– Interviews – Ask people on the street if they would buy your product. Ask users in Facebook groups or Slack channels. The more you ask people you don’t know, the more honest the feedback you receive.
– Surveys – If you need a larger sample size, then you may want to put out an online survey. Not only do places like Google Forms and SurveyMonkey make this a simple step, but you can analyze data in ways you couldn’t before.
– Online analytics – These days, you don’t even need to pay anybody to yield actionable data. With a Google Analytics or Facebook account, you can develop personas of entire audiences just by observing users’ online interactions.
There are many other ways you can collect relevant data on your customers, but these three represent the most simple yet effective way to get inside their heads: listening to them directly.
In the past, businesses determined their success based on sales projections— how much money they will make based on past performance. Today, sales projections alone cannot guarantee the growth of a startup. Entrepreneurs must learn to understand their customers first and the intentions behind their purchasing decisions.
Utilizing business resources
Fortunately, entrepreneurs have a multitude of tools at their disposal to streamline production and deliver a quality experience. These are known as business or organizational resources, and there are four main types:
– Human resources – the employees within a company
– Capital resources – the machinery and equipment used to produce products
– Financial resources – the money used to purchase raw materials or compensate workers
– Raw materials – the most basic elements needed to create a product or service
Human resources describe the employees who work for a company, as well as the department that manages resources related to the employees. Originally, the term caught on as a way to describe humans as living, social beings—deserving of respect and dignity within the workplace. But today, some believe HR, by design, propagates beliefs that humans are merely resources to be managed. The field’s language and literature continue to evolve as executives and laborers seek to understand the other party’s perspective.
Capital resources refer to the physical assets of a company—land, buildings, tools, equipment, and machinery. They are goods that help produce other products and services. Capital resources are different from factors of production, in that capital resources are man-made only, while factors of production can refer to both man-made and natural resources.
Financial resources refer to the money that can be used by a business in the form of cash, liquid securities, and credit lines. Companies need to maintain a steady stream of money, whether by cutting costs, increasing market share, or consulting investors.
Every product is merely a collection of inputs. Trace these inputs back far enough, and you’ll understand the most basic elements that form a product. This includes the wood used for reams of paper, and the silicon for computer chips— anything that is an ingredient in the primary production of goods.
Entrepreneurs and other stakeholders in business must carefully balance these four elements to create a long-term, successful business.
After carefully researching and identifying your target market, the next question becomes, “how can your business provide customers with true value?”
Keep in mind that this is not the same as offering products or services for low prices (like major retailers that brag about “great value”). Instead, value is a quality, feature, or experience that your brand can provide that no one else can.
More importantly, value is also a matter of perspective—the best way to think about it is through the lenses of real value and perceived value. Real value refers to the actual cost of production or service—total labor hours, capital, financial investments, and other assets. Perceived value is the worth of a product or service assigned by a customer.
Perceived value is an abstraction. Depending on the product, brand, and even country, one value may be higher than another. One of the keys to a successful business is to create a higher perceived value than real value.
For example, fast fashion companies like H&M, Zara, and Fashion Nova produce clothing using cheap labor and materials. These brands rely on the brand name and the design of these clothes to appeal to customers. This is a case of perceived value being much higher than real value.
Perceived value can increase through added features and benefits, including:
– Convenience – Restaurants and stores that offer online delivery have an added layer of convenience (and therefore, additional value) to their dine-in competitors.
– Customer service – According to Salesforce, a customer is four times more likely to buy from a competitor if a problem is service-related rather than price or product-related.
– Craftsmanship – Brands like Mercedes-Benz and Rolex have become synonymous with quality and attention to detail, which is why customers will pay exponentially higher for their products than their competitors’.
– Exclusive features – While voice assistant speakers are made by Google, Apple, and Amazon these days, customers will flock to certain speakers because of their unique features, like HomePod’s integration with iOS, or Alexa’s ability to order from Amazon.
Creating and providing value to customers is one of those tenets extolled by entrepreneurs everywhere, but only a handful put it in practice. Brainstorm the ways your product or service can add greater value to your customers, starting with minimal resources if your company is a startup. You may find that these elements end up being the main selling points of your brand.
Business concepts to understand
As your business continues to expand, you’ll become more familiar with certain concepts in entrepreneurship, even if you don’t refer to them daily.
We’ve discussed the importance of value creation when building a startup. Still, some entrepreneurs believe that it’s more accurate or useful to refer to value as a USP or unique selling proposition. While value indicates something of worth to a customer, a USP suggests a feature or quality about your brand that they cannot get anywhere else. This exclusivity is what keeps new customers flowing in, and past customers coming back for more.
For a business to pinpoint its USP, first, it must analyze its competitive landscape. Perhaps the most commonly taught model is the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
This tool allows business owners and entrepreneurs to identify which aspects of a business to focus on internally and externally. For example, an app development company may fill out the SWOT analysis as follows:
– Strengths: Experienced team members, prestigious clients using product, talented leadership.
– Weaknesses: Lack of long-term engagement (high-drop off rates), poor app learnability, small team size.
– Opportunities: Early access to the newest iOS and Android updates, growing audiences in the European market.
– Threats: Similar startups copying previously successful apps.
Simply listing out the pros and cons of business in this manner will allow one to better prioritize current tasks and avoid the pitfalls of wasted work.
Perhaps the most critical concept to understand is ROI or Return on Investment. How much did your business gain or lose from a financial investment? This is usually calculated as a ratio, as seen below.
Business owners and entrepreneurs tend to place the most emphasis on ROI. After all, businesses must turn a profit to survive.
But it’s easy to get too fixated on the amount gained, and not enough on the actual costs. That is why businesses must divide their costs into fixed and variable costs. Fixed costs are a set amount each time, such as monthly rent, software subscription fees, and salaries. Variable costs change over time, depending on factors like labor or customer traffic; these include supply costs, taxes, and contracted work.
Understanding which costs can be cut without sacrificing the overall quality of the business can lead to a higher ROI and a leaner production or service. Continue to explore these concepts in further detail—how do they apply to your own business?
Tapping into business partnerships
The true beauty of a company is in working with others to accomplish a common goal. Even businesses listed as sole proprietors have found value in partnering with vendors and suppliers.
Among the benefits of partnerships include:
– Cheaper supplies, raw materials, and cost of production
– Increased efficiency (such as delegating design work to a partner agency)
– More business leads and referrals
– Increased brand awareness and prestige
– Greater reach
– Faster distribution
There are three main types of partnerships: general partnerships, limited partnerships, limited liability partnerships. Let’s break down what each one entails.
General partnership, also known as a joint venture, typically involves two or more owners united by a single business goal. The partners share equal rights and responsibilities when it comes to management. Each partner then assumes full responsibility for all business debt. Fortunately, general partnership businesses are not taxed to the company but pass through the partners themselves as gains on their tax return.
Limited partnerships restrict liability to the amount of their business investment. This also necessitates one participant to accept general partnership status, which in turn means they take on more responsibility. Both partners benefit from company profits, but only the general partner has managing control, while the limited partner has no say in top-level business matters.
Limited Liability Partnership
Limited liability partnerships (LLP) benefit from the tax advantages of a general partnership, but the participants also gain personal liability protection. This means that if a partner or a business were to act wrongfully, the other partners are not personally responsible. Some states also offer non-partnership tax legislation.
The nature of your partnership depends on the relationship of your business with the partnering company. Sometimes strategic partnerships may involve an international campaign to align all teams under one system, while product-specific partnerships can focus on joint ventures in a more specific capacity. Visit the Small Business Administration to learn more about what each type of partnership entails.
Growing a business can be a monumental undertaking—even all the content in this post may only act as an intro to a greater adventure. Use these ideas as starting points, not principles set in stone. Business leaders must be flexible and adapt to the changing needs of the market and the marketplace. As your business makes small steps and learns from customer feedback, you can begin to make micro-adjustments towards a faster-growing business model.