BUSINESS Writing Your Mission Statement How does the company reach its target customers? This is all about the company’s distribution channels, which are essentially paths to reach the ultimate consumer or end user. Some companies sell directly to the consumer or end user. Known as a “flat” distribution model, this has the advantage of only having to support one layer (tier) of profit margin, but there are inherent disadvantages also. Others will use one or some combination of wholesalers, retail dealers, jobbers or other middlemen to reach their end users. Let’s consider all the products in large chain stores. Clearly, those sellers have elected to use Walmart, Target, Home De- pot, Lowe’s or similar chains to make their products available to prospective consumers. This means that the company’s customers are actually the big-box stores or similar middlemen. But companies need to make sure they can identify their consumers or end users. It’s imperative to know who ultimately buys your products and why — this is why so many companies include “warranty” cards with their products to be returned to the manufacturer. This type of business model requires supporting several tiers of profit margin. Thus, the question becomes: “Is the tradeoff worthwhile, to be able to have almost instant access to a huge network of retail outlets, especially for consumer products?” Your mission statement could also include whether XYZ is primarily B-to-B (business-to-business) or B-to-C (business to consumer or end user). If dealing with consumers, be care- ful using technical jargon. If your business includes your own “retail outlets,” then at least some of your customers likely come directly to your retail location(s). If your business has an online distribution compo- nent (some companies exclusively use an online distribution model), customers are found via the web and possibly social media. If selling to wholesale distributors, then XYZ likely identifies reseller targets and sells to them, or possibly to master distributors who, in turn, feed smaller distributors and then dealers. Some businesses are a combination (such as retail and mobile) whereas others may be mobile only or online only. As we learn in economics 101, theoretically, the flattest model is the most efficient, primarily because it only needs to support one tier of profit margin. But, alas, life is far more complicated in the real world. How do prospective customers know about XYZ’s products and/or services? Some of the answers will relate directly to the previous ques- tion/answer and depend largely upon the markets and segments the company targets. Advertising, promotion, word of mouth, 18 KEYNOTES JUNE 2021 retail and/or vehicle signage, direct-response marketing, TV, web, print media, phone books, etc., can all be used to let pro- spective customers/consumers/end users know about XYZ’s products, services and/or brand. Of course, the company may also employ a sales force to find prospects and convert them into customers. Don’t confuse distribution with branding. Manufacturers use distribution channels to reach their ultimate consumer or end user via various types of middlemen. This is known as “sell in” because you must convince these middlemen (aka channel partners) to purchase and stock your products. For instance, in the food industry, supermarkets are essentially in the real-estate business. In other words, they sell (or rent) shelf space to food- selling companies. It’s a low-margin/high-volume business model wherein the better or best shelf space is relatively more expensive. Branding is all about building an image for your product so that consumers/end users prefer and buy your product in- stead of the competition. This is known as “pull through” or “sell through.” Service Business Model There are millions of small (and large) businesses that provide one or more services. But even within the same general in- dustry, there usually are segments and niches. For simplicity, let’s consider a typical lawn service firm. Many such firms are essentially owner-operator, one-man shows, possibly with a helper or two. The typical company will provide lawn cutting to homeowners and possibly trimming and edging. Many of these companies also provide such garden services as mulch and irrigation system repairs. Of course, some such companies evolve into the “lawn treat- ment” arena, which requires licensure to handle chemicals. There are also many (typically franchise) companies that only provide lawn treatment services, such as TruGreen and Chem- lawn. These companies do not typically cut grass. Instead, this group sprays pesticides and fertilizer on lawns and plants. Then, some companies specialize in landscaping. They design a selection of plants, shrubs, flowers, etc. to deliver an “appearance” for their customers and sometimes offer irrigation system instal- lation and repair. Success in this area oſten requires some relevant education. Unlike the grass-cutting business, which is recurring (perhaps except for winter), this business is more project oriented. Even within segments of any industry, some business owners carve out niches, and many just stumble into such. An example of a niche would be if you’re in landscaping but exclusively (or primarily) provide plants, shrubs, etc. for homeowners’ swimming pool areas. Perhaps you further WWW.ALOA.ORG
