Outperform competitors: Focus on market

"There is only one boss the customer

and he or she can fire everybody in the

company by spending his or her money somewhere

else." - Sam Walton, founder of Wal-

Mart

Sam Walton definitely understands the

power of customers and one of the

mantras in today's marketplace is "customer-

focus." Why is that? Because in

today's economy, more than ever, customers

are becoming more powerful as

they become increasingly discriminating

about their purchases. This is leading to

intense competition for businesses.

Whether you are a business-to-business or

a mass-market company, selling a product

or a service, the competition for your customer's

pocketbook is intense.

If you want to out perform your competition

and keep your customers coming

back, implement one basic business strategy

- focus on your market. This means

taking customer focus to a higher level

and having a company-wide strategy that

is not only customer focused, but is also

market focused.

What does it mean to be market

focused? Specifically, you need to understand

your customers' needs and wants

better than your competitors do and provide

your customers with superior products

or services. To do this you need to: 1.

Gather information about your customers

and your marketplace; 2. Communicate

the information collected to your managers

and employees; and 3. Act on what

you learned by responding to the markets'

needs. These are three basic business activities

that most companies do, but not formally

or systematically.

Generate and use relevant information

about your customer and marketplace.

Information or market intelligence that

your company needs to make strategic

decisions includes knowing more than just

data on customer needs and wants. You

also need to look at environmental factors

such as government regulation and policies,

technological changes, competitors

and their activities, and more importantly,

future industry trends.

Your company probably informally

gathers a significant amount of customer

information in meetings and discussion

with customers and distributors, in sales

reports, and in databases, to name a few.

Sources for environmental information

include trade publications, industry events,

and your local network. Intelligence gathering

can be broad or specific depending

on your company and budget. The key is

to gather information that is comprehensive

enough, but is also relevant and usable

to your company. After you have the

information, what do you do with it?

Most companies don't formally do anything!

If you are going to all the effort to

learn about your market, communicate the

relevant market intelligence to the people

in your company. The information you

gathered needs to be regularly compiled in

a usable form and then effectively shared

with your managers and employees.

Spreading the information throughout

your company can be as basic as informal

hallway meetings or as thorough as building

a customer and market database.

Other ideas include periodic newsletters,

management lunches, forums, internal

message postings, and formal reports. In

the end, what is crucial is not the method

of distribution, but the end result.

Intelligence needs to be communicated

clearly, continuously, and appropriately so

your staff can strategically respond to the

market.

Responding to your market is the critical

last step to being market focused. You

can generate information and communicate

it internally, but unless you respond to

market needs, nothing has been accomplished.

This is the hardest step for companies

to implement, but it is the most

important. If you're still in business, your

company must be growing and developing.

Just like the other two steps, using

market intelligence to respond to your

market is not taking on a new activity.

Rather it is using what you've learned to

drive your strategies. Your company should

be driven by understanding what your customers

want, figuring out if and how to

meet their needs, and producing and

offering the wanted product or service

they want.

How does this help my company's performance?

If you link these activities

together, you will provide superior value to

your customers, which results in improved

firm performance. Here is a motivating

fact: Numerous academic studies have

proven that companies that link these

activities together and therefore are more

focused on their market, achieve greater

levels of financial, non-financial, and overall

business performance when compared

to their competitors. A company that

increases its market focus by 10 percent

will see an increase of between 17 and 20

percent in overall firm performance.

How market focused is your company?

University of Nevada-Reno is currently

executing a benchmark study assessing the

market focus of businesses in this region

in conjunction with Economic

Development Authority of Western

Nevada, the Reno-Sparks Chamber of

Commerce, the Sparks Chamber of

Commerce, and the Hispanic Chamber of

Commerce. If you would like to know

how you compare to other Reno-area

companies, you can take the survey at

http://www.coba.unr.edu/faculty/olsen/stu

dy/.

"A company that increases its market focus

by 10 percent will see an increase of

between 17 and 20 percent in overall firm

performance." - Erica Olsen