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82 THE SEVEN PRINCIPLES OF DIGITAL BUSINESS STRATEGY

shipped further from the distribution center than local suppliers. Stay- ing in advocacy is going to be a long hard slog if they are to gain market share in what are already well-serviced new territories. In fact, striving for growth in this way is likely to bring a risk to Majestic as the only obvious lever available to the business on which to base its beachhead in new territories is to reduce its prices and effectively start a price war.

2. Move from advocacy to attention: A second option open to Majestic is to deploy an attention-based marketing program to try to pick up disgruntled customers or new start businesses that pop up in the newly expanded territory they plan to service. They consider sponsoring a golf tournament in the new territory but discover that this tactic has been established by their competitors and is in its 20th year. They look to spend money on trade advertising but find it difficult to justify the money spent as their competitors are already established and doing the same. They look to find sales opportuni- ties using SEO optimization, but when they look at the activities of their competitors, they realize that this is already a heavily contested space and shifting a competitor from a natural search engine posi- tion could be almost impossible. The same challenge applies to paid search; the cost of acquiring a new customer is prohibitively high.

3. Move from advocacy to authority: While this may seem like the only option available to Majestic, it is the hardest to execute because it presumes that the business can transform itself through innovation and present a new alternative proposition to the marketplace. As we know, being an authority is measured by the outcome that our business is referenced frequently for the innovations we provide by industry publications and experts. To achieve this outcome, Majestic will have to divert much of its profits into creating a sequence of new industry changing innovations in order to gain such recognition. As a third-generation family-owned wholesale business, they prefer to modernize over time than to radically innovate in order to go grow. Innovation simply isn’t within their DNA.

How Majestic Got to Where it is Today

Majestic is a 35-year-old business. If we lens lock our view on their home city, we can see how the business has grown over this time. In the early days, it was unknown and the founders had to establish their credentials

McKeown, Niall, and Mark Durkin. The Seven Principles of Digital Business Strategy, Business Expert Press, 2016. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=5089199. Created from apus on 2021-06-09 03:35:59.

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THE SIXTH PRINCIPLE OF DIGITAL BUSINESS STRATEGY 83

with a few trusting clients. It grew slowly, built a good reputation, ser- viced their clients well, and acquired one customer at a time principally by the founder knocking doors day after day and asking for business. Once the business started to accumulate profits, it started to advertise to build brand recognition with unfamiliar customers. The sales force grew and account managers were charged with delivering a quality service to their existing customers as well as seeking new customers.

Majestic’s 35-year journey in its home city

The business continued to grow by repeating its marketing formula over and over: buying ads, sponsoring events, and servicing customers to the best of their ability. They maintained their advocacy activity as they moved to attention. They discovered that “bought media” helped account managers win new customers and it gave comfort to existing customers that they had chosen the right supplier.

Over the last 20 years, the business has acquired several smaller com- petitors and expanded its range into more exotic fruit and vegetables as well as prepared foods. Its logistics center has grown, it now has a tele- sales team and an e-commerce website, and of course it still maintains

McKeown, Niall, and Mark Durkin. The Seven Principles of Digital Business Strategy, Business Expert Press, 2016. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=5089199. Created from apus on 2021-06-09 03:35:59.

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84 THE SEVEN PRINCIPLES OF DIGITAL BUSINESS STRATEGY

its account executives’ weekly customer visits. Within its own city and logistic limits, Majestic has slowly grinded out a position of primacy.

As the second generation of family owners matures, however, they want to reset the lens lock and grow the business further throughout the state. The market is different now than it was 35 years ago when the origi- nal founders started. There weren’t any national competitors back then. Logistics were simpler, customers were less demanding, and there was a more willing acceptance to try the “new local guy” based on reputation.

If Majestic was to expand into several cities, it didn’t want to take another 35 years to do so. They didn’t have enough cash to acquire and assimilate competitors and getting in the door of what are already well- serviced customers was going to be a challenge for even the most experi- enced account executives.

Faced with these three potential strategic business moves, the senior management team within Majestic considers the consequences of each move along with the actions and challenges they’ll face.

Trying to Grow Via Advocacy

We know that Majestic started off with a strong sales ethic and built a brand by spending wisely on advertising and brand promotion. It grew into a position of strength within its native city by servicing owner- managed restaurants, hotels, and small hotel groups. It now has a desire to grow into surrounding cities and would like to have a marketing-led strategy that would enable this growth.

An abbreviated version of its strategy could be written as follows:

Know Yourself

Diagnosis: The company has desires to grow into other geographic markets but hasn’t yet established a point of differentiation. It hopes to leverage its long track record of good customer support, but it doesn’t yet know if that’s enough to gain market share.

Strategic ambition: To grow organically to become a prime statewide supplier of fruit and vegetables to its target audience within the next 5 years.

McKeown, Niall, and Mark Durkin. The Seven Principles of Digital Business Strategy, Business Expert Press, 2016. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=5089199. Created from apus on 2021-06-09 03:35:59.

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THE SIXTH PRINCIPLE OF DIGITAL BUSINESS STRATEGY 85

Unique value proposition: We are the state’s longest established pro- viders of fruit and vegetables to small and medium restaurants and hotels.

Each of the above makes for a poor strategy. The diagnosis is based on a leap of faith assumption that customers

can be gained by simply replicating practices that have worked in Majes- tic’s home city for 35 years, elsewhere.

The strategic ambition assumes that competitors can be outperformed and customers persuaded to change supplier especially to an “unknown” supplier like Majestic who have no track record beyond their own home city.

The unique value proposition assumes customers want to seek a new supplier that has been established for several years in another city. It’s hard to see how this proposition actually offers any value to the customer.

Know Your Customer

Volume: Using a Google Adwords tool entitled “Keyword Planner,” Majestic has found that there are over 100 searches per month in their state for people seeking “wholesale fruit” or “wholesale veg- etables.” They believe that this shows there is demand beyond their own city for a new supplier.

Task: Unknown Intent: Unknown

While they know the volume of search engine activity in their target state, they don’t know the task of the searcher when they type these key- words into their search engine. Are they looking for a supplier of whole- sale fruit and vegetables or could it be that they are home users wanting to find out if they can get low-cost food online? Moreover, search vol- ume doesn’t tell us the intent of the searcher. Assuming 20 percent of the searchers are from independent restaurant owners and hoteliers, are they seeking to purchase fruit and vegetables? Is their intent to switch supplier or are they simply looking to price check?

Until these major assumptions are validated, these data are all but useless. The marketing leaders within Majestic must run experiments to

McKeown, Niall, and Mark Durkin. The Seven Principles of Digital Business Strategy, Business Expert Press, 2016. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=5089199. Created from apus on 2021-06-09 03:35:59.

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86 THE SEVEN PRINCIPLES OF DIGITAL BUSINESS STRATEGY

understand if there really is statewide demand for another wholesaler in this market. Rather than rush to create test websites, the leadership suggests that this is a major mile marker that must be understood and so they place it into the strategy execution section of the strategy board (Principle 7, strategy execution).

The business knows the volume of people searching online for whole- sale goods, but it doesn’t know if it’s their target market, and if it is their target market, what will make them switch to a new supplier. Answer- ing these kind of unknowns is a primary task of any marketer and as we will see, something that can be completed rapidly. How they find the relevant data is not for debate during strategy meetings, only that it must be found.

Next the business leaders need to look at the competition they must either displace or outflank.

Competition

Competitors: They are numerous and better established and some have access to greater resources than Majestic.

Proposition: Each of the competitors has their own website and each claims to have the biggest, fastest, freshest, and widest selection of goods. They all claim to offer the best service and they all want to become “your supplier of choice.”

Force: Force is a calculable number. It’s a combination of the size of the company in any particular market and how actively they are marketing. The mass of an organization is simply a measurement of their turnover as a percentage measured against other competi- tors. If the turnover of the largest competitor is $10,000,000 and the second business has a turnover of $5,000,000, the first business has a mass of 100 and the second has a mass of 50.

Acceleration is a measurement of how digitally active a business is. This can be obtained from Ionology.com/dmd/. The number is gener- ated by checking out the frequency content is produced, the number of inbound links, and how many people are citing the business for its innovations.

McKeown, Niall, and Mark Durkin. The Seven Principles of Digital Business Strategy, Business Expert Press, 2016. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=5089199. Created from apus on 2021-06-09 03:35:59.

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THE SIXTH PRINCIPLE OF DIGITAL BUSINESS STRATEGY 87

A business with a large turnover but with low activity can theoreti- cally be displaced by a smaller business that’s much more active. A large business that retains a prime position in Majestic’s target market will be hard to displace even if their marketing activity is much less than that of Majestic. A large mass with low momentum is very difficult to shift using attention-based techniques.

The only real way to shift a larger prime player in a new market when you have lower resources is to out-innovate them.

Resources

Time: The time required to operate an advocacy model is high. It typically requires a marketer to prepare print marketing materials to support sales representatives and create e-mail marketing campaigns to target existing customers and new sales opportunities gained by the sales team. Time is often spent on social media although engagement is low due to the lack of having something innovative or unique to say.

Talent: The term “talent” refers to leadership talent. This is often not present in an advocacy approach. The organizational leadership usually let the marketing team get on with their job and there’s little in the way of interference.

Cash: There is a low cash requirement as most of the marketing col- lateral is distributed to existing customers by the sales force as well as via e-mail and social media.

Advocacy Summary

In conclusion, this strategy is perceived to be the lowest risk model as it simply extends the operational functions of the current business and attempts to step-and-repeat the actions they have perfected over years of being in business within their own city limits.

The reality is that this is not a marketing-led strategy; it’s a sales-led plan. They defend their current position in their home city where they are well known and respected. To grow statewide and deploy these same actions assume that this model will work. It’s not certain whether it will, but if it does work growth will be extremely slow.

McKeown, Niall, and Mark Durkin. The Seven Principles of Digital Business Strategy, Business Expert Press, 2016. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/apus/detail.action?docID=5089199. Created from apus on 2021-06-09 03:35:59.

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