Whether you are part of the ceramic tile or stone industry, which is my speciality, or even part of the floor covering industry, the same business and marketing principals apply and you need to go through the same exercise to answer the following questions and prepare your business strategy:
• You need to know who your competition is
• And, what your competitive advantages are over that competition
• You need to know your own strengths and weaknesses as well as those of your competition
• You need to have a good product mix in order to supply the commodities, drive volume and to promote the higher margin products that give you a competitive advantage
• And of course, you need a written marketing plan to orchestrate the complexity of your business, and the plan has to continually adjust to accommodate the changing market and influence of the economy.
Positioning your company service and brand identity is important, but often not done well by many companies. “Customers for life” is a good goal but keeping customers requires a dynamic strategy that will give them a reason to come back and refer you to others.
Positioning products for performance and value is important too, which support higher price points and avoid the costs of customer false expectations.
Taking market Share is a fundamental way to grow your business in a down economy. There will be some opportunities through attrition of competitors who can’t survive, but there are better opportunities through outperforming your competition with service. When it comes down to it, people buy from people who they like and trust. Being a reliable supplier is very important. Not responding timely, or giving out bad information, or not making deliveries on time often cost customers a lot more than inconvenience. It can cost customers money in penalties or in lost opportunities, if not in reputation. All of which could be a reason to cause them to do business with your competition.
Dropping prices seldom works in the long run and too often companies resort to this as the easy way to try to gain more business. This is at best a short term strategy. When you actually do the math, raising prices and increasing service levels is more effective. For example, if you drop your prices by 10%, assuming your costs remain the same, you would have to increase your sales by 43% just to break even. Plus you would have 43% more business to serve that would either require increasing your staff and costs, or it would diminish the level of service you can provide. On the other hand, if you increase your prices by 10%, assuming your costs remain the same, you could lose 30% of your business and you would still make more profit. Plus, you would be in a better position to maintain or improve the level of service you can provide to your customers.
Now is the time to maximize your market share, retain and grow your customer base, and prepare your company and your product mix with competitive advantages for the inevitable return of a favorable economy. Have you taken the steps you need to do this?
Donato Pompo is founder of two well-known flooring industry companies focused on improving everything about ceramic tile and stone flooring and the businesses that produce and sell them. They are Ceramic Tile and Stone Consultants (CTaSC) and the University of Ceramic Tile and Stone (UofCTS).