Today I’m going food shopping. I need to buy bread, milk and some groceries for a dinner party at the weekend. Where shall I go to buy my food? I have a choice of going into town to Marks & Spencer or using Aldi on the by-pass, or I could head out of town to the farm shop in my local village.
So what is going to inform my decision about which way to go? There may be issues about parking and convenience, but beyond that I am making a decision about which philosophy I choose to follow.
If my main driver is to save money I will choose Aldi. I want the cheapest of everything and will sacrifice shopping experience and sometimes the quality of the product in order to spend less on the food. It is not necessarily that I don’t have the money – I’d just prefer to spend it elsewhere.
My local farm shop exploits a different priority in my head. The food is great but beyond that I can have a chat with the staff (many of them know me by name) and they carry my box of food out to the car when I’m finished. When my daughter was little they used to play with her while I shopped. The guys at the butcher’s counter know which cuts are my favourites and can recommend something really good to cook for my dinner party.
Then there is M&S. I can buy ready-to-serve dishes from them that you’d never know weren’t home-made. It would save me hours of slaving away over a hot stove and my guests will never know the difference. In fact, they’ll think I’m a really good cook – so long as my kids don’t give the game away.
So what makes me so clear about my choices?
Each company has made decisions about their strategy. Behind their whole business model is a high-level strategic theme which colours every aspect of their business. Treacy and Wiersema’s Value Disciplines defined three strategic themes and most businesses mainly follow one of them. These themes are:
- Operational excellence – great at delivering products, leading the market on price and convenience
- Customer Intimacy – tailoring products to fit customers, refined and niche products and services, and developing long-term customer loyalty
- Product Leadership – focussing on state of the art products and quick to commercialise new ideas.
It is a mistake in developing a strategy to try to be “all things to all men”. Your customers need to understand where you are coming from, and these strategic themes help people to understand when they want to use your service. No one of them is right or wrong, but if your message is clear it will help you to attract the customers who will like your offering.
So Aldi is all about operational excellence. They make every effort to source products at low prices and to add as little cost in their retail experience as they can. Tesco used to be the best at this, but Aldi and Lidl are damaging Tesco’s market share because they have taken the low-cost message to a whole new level.
M&S goes for product leadership. If there is a new food or flavour to be had you will find it at M&S first. And the only place you can go for off-the-shelf dinner party food.
My local farm shop is all about customer intimacy. Some of the staff have become my personal friends. They couldn’t possibly compete with the low prices of Aldi or do all the product development that M&S does, but they provide good quality fresh food and a lovely atmosphere.
So what is your company’s strategic theme? Is it clear and unambiguous for all your customers to understand?
PS I chose the farm shop. Why? Because I love the fresh food and the people – and I like cooking.