No frills

I like to read the Wall Street Journal, to get a different slant in the news than what is reported daily in the local Seattle media. The WSJ always has interesting articles that you won’t find elsewhere. On Monday, one article caught my attention because it has relevance to every business, I think. This is a great example of business strategic planning in the midst of challenging times.

C.F. Martin, the maker of Martin Guitars, is using a Depression Era strategy to keep production flowing and avoid layoffs. By the way, the guitars are a $472mil industry, much larger than I thought. Their strategy? Simplify the product and sell it at a much lower price. Take out the frills and extras. Take out manufacturing costs of labor and material to provide a very decent product that meets today’s consumer’s low price needs. Their top end guitars sell for as much as $100,000 and much of their line is in the $2,000 to $3,000 range. These newer, low cost guitars are well under $1,000. Martin’s strategy is to keep their lines flowing and maintain a strong presence in the market.

We’re seeing similar strategies played out in other industries as well. The restaurant business, especially those in the higher end price range, is delivering high quality meals with lower pricing or providing incentives to customers to come in and spend. Witness the countless Happy Hour offerings under $5 on items that used to command $8 or more. Or, the three course dinners for around $30. The mentality is to drive volume and cash flow, and continue to have a strong, recognizable brand. You don’t want to risk losing customers or top-of-mind-awareness. It’s important to survive, be seen and to be in a position to grow strongly once again when the market turns.

What can this type of business strategic planning mean for your business? Where can your production or service expertise deliver real value at lower cost and still provide workable and acceptable margins in order to contribute cash to the business and retain valuable and experienced employees? It’s something to consider whether you provide a physical product or tangible service. It takes combined best thinking of your entire team to reap the benefits.

© 2009 All Rights Reserved Peter E. McDowell

PERFORMA Business Development

Different View/ Better Results

pete@performabusdev.com

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