A common misconception in regards to marketing is merely it to advertising. In discussing the idea of applying a marketing strategy, many businesses I’ve encountered steer directly to types of advertising. It is true that advertising is a facet of marketing, but a marketing strategy may involve little to no advertising to meet goals. It is also true that a marketing plan may not be designed to attract more customers. In the simplest of definitions, marketing is designed to reach the most profitable customers in the most profitable manner in the most profitable period of time to deliver the most profitable product and/or service.
The emphasis is placed on the word “profitable” because the end result of any business strategy is to effect the bottom line in a positive way. Entrepreneurs tend to laud the points of their mission, vision, and values as the markers for success, but the driving factor behind each of those bullet points for any for-profit business is increasing the profit margin. I have developed a school of thought that being a profitable business, meeting goals, and satisfying the market requires the mastery of mixing opportunity and skill.
Capacity causes concern for many small businesses. Ideas have no bounds, but your business will. It can only be housed in a building that meets the budget; it can only reach an audience that is within a specified range. These constraints may limit your ability to realized increased returns. Say a bakery is opened in a small shop and serves a small but loyal market. Due to limitations, the owner decides to only operate from 6 am until noon from Monday to Friday using a three-person staff daily.
Executing business practices that meet the demands of the market presents an ideal disaster in the event that the demand spikes. Pastry lovers discover that the mentioned bakery has better service than its competition and the selection is very comparable. Customers began to switch even though the hours of operation are shorter and the staff is smaller. The owner is faced with a decision because inaction will cause a shakeout and sacrifice profit growth. This is a real possibility for entrepreneurs who perfect their marketing mix with restrictions in capital.
What can a supplier do when it has maximized its potential to meet the market? The aggressive but risky answer is to push through and capitalize to make the most of the profits while the demand is high otherwise known s striking while the iron is hot. This option provides an immediate return, but unless the gains are used to address the lack of ability to supply the high demand, owners run the risk of being overwhelmed. The basic principles of economics require a price increase in this scenario in order for forces to balance. This price increase will allow for the supplier to increase the capacity and continue to compete in the high demand market. The bakery is now offering pastries at a higher cost to the consumer, but it allowed it to staff more bakers and more cashiers along with a drive through lane to speed up the process.
Obstacles present themselves that prevent the internal growth needed adjust to the rise in demand. In this case, entrepreneurs can widen their supply by adding additional points of sale, leasing products, or other methods that increase exposure without raising the price to the consumer or the cost to the supplier. Instead of increasing the staff, the bakery negotiates a series of resell deals with grocers and gas stations in the area. Pastries are then resold at an insignificant markup allowing the re-seller to benefit from sales. The bakery owner polled a sample of existing customers to determine which communities to be most profitable.
These two solutions are but a few of the many possibilities to solve a constant dilemma for small businesses that find themselves in the midst of a spike in demand. Analyzing the market and relating it to the specifics of each company affords the chance to overcome this hurdle. Contact Double A Market Consultants at firstname.lastname@example.org for more information about a consultation to overcoming your business’s obstacles.