Introduction
Omondi (2009) asserts that there is a direct relationship between strategic and financial planning for any firm. Business strategies affect the finances of a business by increasing costs and reducing or increasing sales volumes for the firm. Livingstone Consultants is a real estate agency firm that offers consulting services related to all aspects of buying a home (Podolski, 2007). As a real estate agency, Livingstone Consultants understands that there is a lot of competition in the market. As a result, Livingstone Consultants has decided to engage in a new market strategy that will attract more customers (Podolski, 2007). The new strategy will involve the aspects discussed below.
Discussion
- All potential customers will not be charged any consultation fees when they come to Livingstone Consultants for any kind of consultation. This will mean that Livingstone Consultants will have to depend on commissions that mortgage and other parties such as real estate developers will give them for every customer they bring (Podolski, 2007).
- To be able to create the Livingstone Consultants brand as a household brand that every potential consumer would think of when they want to procure any form of real estate, Livingstone Consultants will engage in continuous marketing of the firm on all media outlets such as TV, magazines and the internet (Podolski, 2007).
Effects on costs
The strategy will increase the costs of the firm because consultations will be offered to many customers. Increased advertising will also increase the costs because each advertisement has to be paid for. Since the consultation will be free, this may attract a lot of people including those who have no intentions to buy a home, because people like free things and will take them even if they do not need them.
Effects on sales
Although this strategy will increase the costs of Livingstone Consultants, it will work well for them since it will increase sales. As explained above, offering free consultation will attract as many customers as possible. This will give the marketing team an opportunity to get as many deals as possible. Even though most of these customers may not be interested in buying a home, they could be persuaded to buy because of the good offer they are granted. For every sale made, Livingstone Consultants will get more commissions from mortgage providers and real estate developers, and thus recover the marketing expenses and still make some reasonable profit margins (Podolski, 2007).
Risks
According to Podolski (2007), any business strategy will bear some sort of risk. The strategy for Livingstone Consultants assumes that offering free mortgage consultations to consumers will give them a chance to increase their sales, by attracting as many curious people as possible. This decision was reached after Livingstone Consultants realized that charging for this consultation was actually limiting the number of potential customers (Podolski, 2007).
The main risk with this strategy is that there is no guarantee that there will be a direct correlation between offering free services and increasing sales. This is because even the mortgage providers and real estate developers offer free real estate advice to customers. If offering free consultation and advertising more aggressively will not increase the sales volume, Livingstone Consultants will end up making heavy losses and fail to recover (Podolski, 2007).
References
Omondi, W. (2009). Understanding Business Strategy. Journal of Business Management, 4 (5), 49-52.
Podolski, J. (2007). Business Strategy and Risk Mitigation. New York: Pearson Education.