By Amanda Creter and Alex Mont-Ros
As a business owner, you are no stranger to Business Planning. No matter the size of your company, you most likely have a business plan in place to follow. But is the plan you have laid out for your company to follow in alignment with your end result for your company? If not, how do you get it there? This is where strategy comes into play.
There is no right way to think about strategy. In fact, there are so many variations when it comes to strategy that finding the best fit for you and your company can sometimes be overwhelming. Here are a few of the different types of strategies and examples of when they are utilized best.
Conventional Strategy-Planning: This type of planning is often the one companies go to first. This involves creating a vision and mission statement for your company and employees, along with company values, then using those mission and vision statements to create a business plan that impacts the operational aspects of the business. This strategy is effective for both small and large companies.
Cost Strategy: Often referred to as Low Cost Strategy, this strategy is used when a company is offering a product or service, and they want to obtain the competitive edge by offering the lowest prices. This has both pros and cons. You attract the business of those who solely want the lowest price. Where you find yourself at risk is when someone else comes out with a lower priced product or service. This will most likely redirect your customers/clients to them, since they are not loyal to you, just looking for the cheapest product. Also being associated with the lowest product or service can give you a reputation of being subpar and could be difficult to rebrand and change that image down the road. In the real estate world, consider discount brokerages and agents who leverage this strategy and how you will compete.
Differentiation Strategy: This is the opposite of Cost Strategy and attracts different customers, not those looking always for just the best price. With Differentiation Strategy you want the market you are in to perceive you as the higher quality product. You want to do this at the same or similar price point (if possible), while offering a higher quality product that better meets your customer’s needs. To successfully do this you must always be innovating and changing to match the needs of your client base. Real estate agents will want to consider how they differentiate themselves in the marketplace and have a strong value proposition.
Corporate Strategy: Corporate Strategy focuses on how the company can offer value across multiple departments/business, while also defining what business the company is in within the market. It takes into consideration the scope of the corporation and how the various departments and businesses work together to achieve common goals. Think of a real estate team where there are operational, marketing, sales, IT, and finance for example, would want to make sure they have a clear corporate strategy that aligns with each individual business unit objectives, also known as the Functional Strategies.
Functional Strategy: When you develop individual goals for each person/division in the company, it helps to best utilize your resources while providing direction. This is critical as you develop your corporate strategy and business strategies so that alignment is developed setting a clear path for your organization.
Focus Strategy: Focus Strategy is often used by big companies in addition to multiple other strategies listed above. However, this strategy is even more beneficial for smaller businesses who may not be looking to compete with big ones, or are trying to break into a narrow market/niche. A company will use Focus Strategy by focusing on a few target or niche markets. This way they don’t need to compete with larger companies who have more money and resources, but can tailor their product to meet the needs of these smaller markets and still come out successful. If a real estate team
Diversification Strategy: This type of strategy is when a company transitions into a new market with either new products or services they have never offered before. This is often with a product or services that is completely unrelated to what the company has previously been offering. Think of a real estate team who decides to focus on FSBOs in which they tailor a program that takes into account special pricing and marketing efforts that are not allotted to a traditional seller, or the customers they usually serve. You can also see diversification strategies playing out when a real estate team decides to develop a mobile app or CRM for agents outside of their team to help generate revenues outside of their core business.
Not every strategy will be right for every business or real estate team/agent out there, but finding the right approach or blends of strategies will be essential to gaining clarity for growth and sustainability. Do some research, try out a few, and see which is the best fit for you. With strategy will come a clear plan, and with a clear plan will come growth as you execute against the strategy. Building a successful business is hard enough. Give yourself a competitive edge by aligning your values with the right strategy.