brick-and-mortar business

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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