31 Jan The IKEA Dresser May Last Longer than your Operational Efficiency
by Taylor Gombar
Enough already! Let’s understand strategy before five more colleagues endorse your LinkedIn skillset. As marketers we can agree to the vital need of strategic positioning in a business plan. Marketers cannot confuse long-term marketing strategies with operational efficiencies. Operational efficiencies merely increase productivity levels. It is easily replicated by any competitor’s larger workforce or lower price. If you continue to strategize based on operational flow, the IKEA’s MALM dresser may last longer than your competitive edge.
Marketing Strategy Versus Operational Strategy
We are aware of the fundamental elements of marketing: objectives, strategies, tactics, and outputs. But, can we discern the difference between inputs and outputs? Coca-Cola produces Fanta in high quantities to keep overhead costs low.
Coca-Cola’s economy of scale is only an operational efficiency. The company’s economy of scale is an operational efficiency that keeps costs low — not a marketing strategy. If that was Coca-Cola’s strategy, Coca-Cola would fizzle to Pepsi’s strategy before hitting shelves.
A marketing strategy can and should align resources for operational efficiencies to occur. So, a supply chain structure is not a long-term marketing strategy, rather an operational strategy.
The IKEA Example
IKEA exemplifies a business strategy that is not easily mimicked by competitors. IKEA leverages a marketing mix that ensures low cost, self-service product creation, and simple distribution. Customers have a self-made product, which they made a lower cost. IKEA’s strategy success originates from a mix of product, place, price, and promotion. IKEA’s strategy is not a reliance on operational efficiency. The company considered the design of its store concept in addition to its distribution channels.
Still unsure of the difference? Let’s consider how Walmart rose to popularity with its reduced inventory carrying cost and competitive pricing. Yet, consumers saw how Walmart’s operational efficiency did not hold weight to Amazon’s strategy of Prime Membership pricing and home-delivery distribution. Operational efficiency became instantly ineffective upon market entry of a lower cost provider.
We cannot overlook all elements of the marketing mix in our business strategies. Price can offer operational efficiency but it does not establish long-term market positioning. Just ensure you are creating a strategy with product, price, place, promotion elements before you are endorsed on LinkedIn.