Become a Market Leader with PIMS (Profit Impact of Market Strategy)

• Become profitable
• Generate a boost in sales
• Develop a strong brand identity
• Gain significant market share

A huge share of the responsibility to attain these objectives rests on the shoulders of marketing specialists.

Marketers devise strategic approaches, businesses implement the recommended marketing strategies based on market research, and as a result, the company’s position in the marketplace may or may not change.

Strategic approaches are devised with the use of strategic elements and promotional tools. I have already walked you through quite a few of these marketing tools, but this particular one is pretty unique.

A strategy that grows every day

The Profit Impact of Market Strategy (PIMS) stands out for being a continuous study, with inter-industry penetration.

The easiest way to understand PIMS is to think of it as a collection of thousands of business strategies.

Incidentally, they aren’t just any old strategies.

What could be better than a marketing strategy that keeps on improving and providing a host of valuable information and research to fuel your ever-growing and ever-changing efforts for market domination?

PIMS – the beginning that never ended

In the 1960s, General Electric came up with PIMS as an objective approach to analyzing and learning from the great corporate performance.

PIMS makes use of a unique library or database which keeps expanding to this day and will continue to do so. The database comprises cross-sectional and time-series data on approximately 4000 businesses collected from more than 500 firms, big and small.

The information is built over a collection of 200 data items in a standardized format, covering:

• The environment in which the business operates
• The size of the target audience and the number of customers
• Market growth rates
• Channels of distribution
• Competitive position in the market
• Product/service price, quality, and costs involved
• Overall annual financial and operating performance

When to use PIMS

For small to medium business operators, PIMS can be used to validate your specific investment and expenditure strategies.

By analyzing the hordes of evidenced data contained in the PIMS database, you can derive bulletproof strategies to optimize the profitability of your business and encourage steady growth.

Marketing managers can use PIMS to understand their business environment and react to it accordingly. PIMS is used to develop and test strategies for taking reliable financial measures.

Using its database, you can identify critical strategic factors that will enable your business to achieve a better, as well as a sustainable position in the market.

You can also:

• Determine the company’s future direction
• Recognize competitors and evaluate potential acquisitions
• Measure benchmark performance levels.

Remember, strategic positioning is the chief determining factor of business success.

How to use PIMS

To use PIMS, you have to participate in it.

If you want to take advantage of PIMS’ services, you are required to provide detailed company information to the service at first.
This information includes:

• Your competitors
• The nature of the market you are competing in
• Your balance sheets
• Your current sales and assumptions regarding future sales.

In return, PIMS will enable you to derive four unique and valuable reports:

1. The ‘Par’ Report

This report demonstrates that cash flows and ROI which are expected, and deemed normal for businesses like yours, given your cost structure, market, technological advancement, and competition.

2. The ‘Strategy Analysis’ Report

This report delivers you a list of predicted outcomes of numerous strategic options available to you. These consequences are estimated on the basis of similar companies making similar moves, from a similar position, in a relevant business environment.

3. The ‘Report on Look-Alikes

This report is developed to help you derive the ideal mix of strategies for your company, by thoroughly analyzing businesses similar to yours.

4. The ‘Optimum Strategy’ Report

Based on the experiences of companies like yours, this report will provide you with optimum business strategies for improving profitability and growth rates.

Questions to ask during PIMS

When participating in PIMS, your business should explore the following factors:

• market environment
• current competitive position
• The lifecycle stage your products are in
• current market share
• current sales figures
• customer concentration
• customer purchase amount
• relative product price and quality
• capital and operating structure
• existing investments
• operating effectiveness

In terms of the factors evaluated, you should ask questions like these during PIMS:

• What level of profitability can I expect for my business?
• What amount of gain or loss of market share that my business can expect?
• How much marketing expense is currently required by my business?
• Does my business currently hold any opportunities for generating profitable growth?
• Will vertical integration be profitable for my business?
• Will my business profitability be reduced or increased or unchanged by the investment I am planning?
• What are the cash implications of my business’s growth rate and relative market share?

PIMS in action: follow the 3 rules

While participating in PIMS, ensure that you abide by its 3 principles. These will make the application of the strategic tool easier and deliver the most accurate results and reports for your business:

Most importantly, note that you do not have to subscribe to PIMS to apply its principles to your business.

Depending on the business, it is important to understand that it is frequently impossible to quantify market shares for small businesses in micro-markets.

Simply implement the self-evident principles of this strategy in your market. You will take a greater hold over the market share by becoming customer-focused, and by improving the quality of your products and services.

Final Thoughts

PIMS is an unbeatable marketing instrument for providing useful business metrics in the form of a diversified portfolio. Using the governing principles of PIMS, you can be well on your way to achieving the 3 main business objectives outlined at the beginning of the article.