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Alternatives for Growth
SendOutCards has a number of different options for growth. The company utilizes what it terms a "network marketing" model, wherein its distributors are responsible for selling the cards, and bringing in new potential distributors as well, for which they receive a payment. This is the company's growth model and therefore an integral part of its strategy. For each individual distributor, however, there are different alternatives for growth. The first of these is via social media and the second is via more traditional marketing efforts.
There are several advantages to social media marketing. These include increased brand recognition, repeated exposure, leveraging word-of-mouth, creating influence and driving traffic (Chandler, 2013). The direct benefits of social media are that it allows you to reach the people within your circle, but they expand outwards. An example of how this works is to send out cards to people that you know, and when they enjoy the cards to get them to send cards themselves. Eventually, this can lead to fostering a relationship that results in that person coming on as a distributor. As is usually the case, most of the customers are not people that you know today, but are people that you meet through the power of social networking. There is nothing like social media to harness this power. While it is true that social media takes time to develop, the costs associated with a social media program are generally quite low. The big drawback to social media is that it can be time-consuming, and there is greater risk in opening two-way communication channels vs. The one-way communication of traditional media.
Traditional marketing media is the other main option here. Whereas social media represents two-way communication, traditional marketing is more of a one-way conversation. The distributor will simply seek out traditional media channels in order to gain brand exposure for Send Out Cards, and to generate sales. This type of media exposure can be costly, but can be targeted well, for example, via Google ads. Traditional media is not usually effective for small businesses, however, because it relies on saturation and repetition for its success. For products/services that are niche in nature, traditional media marketing is generally less effective than social media marketing.
A third option is face-to-face marketing efforts. This would involve the distributor working directly with friends, families and acquaintances in order to push the product or service. This marketing has the lowest amount of reach, but in-person marketing can be very effective when the distributor is compelling and charismatic. It should be noted that these three options are not mutually exclusive. One or more of them, or all of them, can be used at once.
Best Value Discipline
Treacy and Wiersma (1993) noted that there are different value disciplines that can be used. The major ones are customer intimacy, operational excellence, and product leadership. The key here is that the product is fixed, defined by Send Out Cards, and there is nothing special about it. They are cards. So the only real options are operational excellence (in marketing) and customer intimacy. Thus, the optimal strategy is dependent on how the business should proceed. Customer intimacy is important to some extent -- personal relationships are key to selling SendOutCards distributorships -- but at the end of the day having a highly-effective selling apparatus is key to sustained success. So the appropriate value discipline is definitely to become expert at marketing, utilizing a variety of techniques to expand both the marketing reach and the marketing effectiveness.
An alternate way to conceptualize...
Porter identified the following generic strategies: cost leadership, differentiation, focus low cost and focus differentiation (Quick MBA, 2010). The business model relies on having a fairly efficient operation, selling cards and bringing on distributors with a relatively low acquisition cost. This points to cost leadership as a strategy, but in reality the best strategy for a SendOutCards distributor is to utilize the differentiation strategy. Essentially, the cards themselves are nothing special, but you have to sell them as though they are something special. You have to sell the benefits of the cards. And bringing people on to become distributors, for which you earn a fee, is definitely going to require a differentiation strategy. This is because there are many investment opportunities in the world, and convincing people close to you to invest in this one requires convincing them that SendOutCards represents a special and unique opportunity for achieving a vehicle to financial success and acting on life's biggest promptings.
There are a number of different grand strategies that can be used -- this is another way to look at strategy in addition to the value disciplines and the Porter generic strategies. The grand strategies are market growth, product development, turnaround, and liquidation (Clark, 2014). Liquidation and turnaround strategies imply that the business is not successful, but that is not the case. The product development strategy is inappropriate. The distributor is someone who is focused on building the business around the SendOutCards product. Thus, the product itself is fixed, by the company, and cannot be changed. The only grand strategy that really fits therefore is the market growth strategy. In the market growth strategy, the distributor seeks to build business by both selling lots of cards and by convincing others to set up their own distributorships, for which the distributor will be paid some referral fee.
One of the most important things to note is that the different types of strategies out there as described above are not necessarily mutually exclusive. Thus, multiple strategies can be recommended. The above analysis makes it clear that as a starting point, the grand strategy has to be market growth. Thus, everything that is recommended needs to be based on the idea that the distributor for SendOutCards is going to focus on market growth as the basis of their strategic actions.
The next step is to think about the recommendations for the generic strategy and the value discipline. The key with the generic strategy is that you have to have one -- you cannot be in the middle because other people will either win customers by being cheaper or by being better. The middle ground often leads to failure, unless the company executes a middle grounds strategy perfectly (Quick MBA, 2010). Thus, it is recommended on the basis of the above analysis that the distributor or SendOutCards should follow two strategies. For selling cards, this is where cost leadership is important. The cards are inexpensive, and this is really a commodity business. The key here is that the cards need to be sold in high volume -- get people to use these cards routinely. The distributorships, on the other hand, are much more in line with a differentiated strategy. Bringing people on board means demonstrating to them that you have a unique investment opportunity that promises the path to financial freedom, just by working hard and with a minimum of real risk. The greeting card industry has a high growth rate of 2.3% over five years expected, so there is a lot of opportunity (IBIS World, 2014). So the approach to investors is going to be different in that you simply have to convince them of the value of the investment, whereas with the cards the key is to be a low cost provider of greeting cards and focus on churning a high volume of cards to generate profit, since the margins on any individual card are actually going to be quite low.
To achieve the low cost strategy, the distributor for SendOutCards must achieve a streamlined operation that has low costs but a high rate of efficiency. Only with this will the distributor be able to increase both…
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