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Strategy Formulation in a Changing Market

By Stephen Bedford, Managing Director of the Strategy Consultancy and Marketing Outsourcing business Conical
The legal sector has seen considerable change in recent years and without going into detail on all the influences impacting upon the market place, there is no doubt that organisations operating within the legal market will have to adapt to change or face an uncertain future.

 

Change in any market place is of course natural. Technological advance dictates that consumer goods manufacturers have to drive forward product change as a matter of course, but in the legal sector the basic provision of services has been relatively static. The internet has provided some on-line models and the arrival of intermediaries have resulted in something of a challenge to the conventional law firm model. The Legal Services Act and Alternative Business Structures is ushering in change, the full extent of which is hard to judge, but what is clear is that those operating within the legal market will have to ensure that their organisation is well structured to meet the needs of a faster moving market place. This could result in something as subtle as a slight change in emphasis in the way services are offered or may dictate a complete organisational refocus or restructure. As ever some may be slow to change and as a result may have a limited life span.

 

All businesses should have a clear strategy that defines what products or services they market, who those products/services will be marketed to and to articulate why clients or customers should buy a particular product/service. There may well be longer term strategic objectives to consider. These could range from market share in a particular sector, through to personal objectives of Directors, such as divestment of a business at a particular value at a particular time. The need to plan is somewhat taken for granted yet, many organisations both within the legal sector and outside of it, do not make use of structured strategic planning tools.
Given the changes in the legal market place it is important for Barristers to develop a clear strategic vision and thereafter to deliver that vision.

 

Strategic Planning Tools and Techniques
There are several easily understood strategic planning tools and techniques that can be employed by Chambers.
Segmentation Analysis and Niche Marketing

 

Segmenting the market is a very important concept in all forms of marketing. The approach suggests that different parts of the market place have different needs and that if an organisation can align itself, or align individual services, to individual market segments then it will appear more focused and relevant. Clearly, this requires some tailoring of services to specific parts of the chosen market segment.

 

We are all subjected to examples of segmentation on a daily basis. Financial institutions have different brand names aimed at various types of customer. Whilst in the airline industry several ‘classes’ of travel often exist on the same aircraft.

 

A tighter approach to segmentation is that of ‘niche marketing’. This is a tactic that is employed widely in the services sector and in particular in the business to business sector. The approach is one that identifies a highly specific group of target buyers and results in services being specifically designed for that group. It is quite possible that we may see the emergence of truly national legal brands serving the private client market but may well see some teams break off to create highly focused single service law firms. We could also see more highly specialised commercial law teams such as media/construction/aviation etc. whilst larger international firms consolidate their international position. Clearly the way Chambers serve these organisations needs to reflect their particular needs.

 

Niches can be attractive when the customers within that niche are likely to pay a premium for a service that directly addresses their needs. Niches can also be attractive even when a premium price is not obtainable, if additional profitable market share can be obtained.
These principles can be seen within the Bar as a direct result of specialisation and as such it would be easy to conclude that the profession understands segmentation and has done so for many years. However, specialisation is only a component of segmentation. For example, there is little evidence of changes in operating procedures, service levels or indeed branding for different types of Barrister client. The main portal for most organisations – the web site – rarely articulates a segmented service and the emphasis is often on one size fits all. For a business to be able to respond to changing market needs it needs to offer service packages that appeal to the different segments of the market place and then to promote these in a coherent way. This will help separate the business from its less focused competitors.

 

Service segmentation opportunities can be identified by listing the target organisations or client types the organisation is looking to attract and then looking at creating particular service packages to meet the needs of that client type. This could impact upon the duties of the clerking team, the way a client is billed, pricing, the web site and so on.
Choosing the target market segments may not be a straightforward process. What may be profitable now maybe a segment that is about to see the arrival of new competition or perhaps see a reduction in demand or price. An example of this from the law sector could arguably come from wills and probate work. Those high street firms that have a strong wills and probate team may well have ridden out the current recession better than those that are exposed to commercial property and transactional commercial work. However, this sector is one that will probably see the hottest competition in the coming years from alternative suppliers, on-line models and so on. As such market segments should be looked at in terms of their growth potential, the relative competitive strength of the organisation and also the margins and profitability that are available within the segment.

 

SWOT Analysis – Strengths Weaknesses Opportunities and Threats
This is perhaps the most widely used strategic planning tool. It provides useful information about the current strategic position of the business or organisation and it can be used in all sectors. It is remarkably simple to use and provides valuable information for business planning.

 

A SWOT analysis involves the creation of a list of organisational Strengths, Weaknesses, Opportunities and Threats. If the exercise is opened up to a relatively large number of people the analysis can identify consensus within the organisation. Most organisations use SWOT analysis as an internal tool. It can be used to good effect if a select group of clients, peers, referral bodies and possibly even suppliers are asked to complete the exercise.

 

Experience suggests that the views of clients do not always correspond with the views of those within the organisation. Where there is a gap this is potentially worrying and is something that needs to be addressed and is suggestive of an organisation that is perhaps losing contact with the market place.
Listing an organisation’s strengths, weaknesses, opportunities and threats achieves nothing in itself. What is of course required is some form of action plan to make the most of the strengths, evaluate and pursue opportunities, protect against threats and address weaknesses.

 

Implementing Strategic Change
Strategic analysis of an organisation can, perhaps with some external support, be achieved relatively easily. Making the required change is the most challenging issue. A strong clearly defined management structure will greatly assist in implementing changes in strategic direction. Chambers or indeed law firm Partnerships, often rely upon consensus building management processes which can result in something of a blurred strategic outcome.

 

Where a strategic planning process identifies a likely need to discontinue a particular service then this is often linked to individuals with strong personalities who will resist the change. As such, perhaps the biggest strategic planning challenge of all is that of decisive leadership and creating working environments that respond to and welcome change.
Even when a business has strong leadership there will always be some resistance to change. Some people respond to change slower than others and these people need to be supported through the change management process and may well need some encouragement to adopt changes as well as some positive reinforcement.

 

Closing Comments
Given the changes happening in the legal market place with new structures and services evolving, Chambers need to plan clearly, change direction quickly and above all, have market place appeal.
There are plenty of useful strategic planning tools available for Chambers to consider and these can be used to good effect. For these tools to be used to good effect organisations will need strong leadership and an ability to implement change. Analysis alone will not deliver this.
The Author

 

Stephen Bedford is Managing Director of the Strategy Consultancy and Marketing Outsourcing business Conical. He is a Fellow and Course Director of the Chartered Institute of Marketing. He is author of reports on Barrister, Law firm and Accountancy Marketing. T 01727 844000 e-mail: sjb@conical.co.uk
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