Marketing Comet - Small Business Marketing Secrets

Penetrate or Expand - Which Customer Targeting Strategy Is For You

Just about every business would just love to have more customers. Just how you go about getting them is the million dollar problem. Here's some insight into the two basic ways to build up your customer base.

Expansion:
An expansion strategy seeks to add new markets to a product, service, or company. This could be geographic or demographically based.

When a company decides to launch it's products into a new country - that's an expansion strategy. If you have been selling locally and all of a sudden put your products on the Internet for a global audience, that's also expansion.

Penetration:
Penetration focuses on gaining more share of an already served market. It may involve getting customers to switch from competitors to your product. It may also involve getting non-customers in your target market to become customers.

If you ran a grocery store, getting more people in your town to shop there would require a penetration strategy. If you wanted to sap customers away from a competitor - that would also require a penetration strategy.

Which one is right for me?
Both types of strategies have their strengths and their weaknesses for adding new customers. Ultimately choosing a strategy will require some creative thought and research.

Expansion Strategy Pros:

• You can be the first to offer your product or service in a certain market.
• You may serve a totally unmet need.
• You may bypass a lot of competition by being the only player in a new market.

Cons:

• You may have to work to mature a market if the product is so new that there's little perceived need.
• You may have to repackage what you do to serve the new market.
• Unpredictability creates risk in entering a new market.

Pros of a penetration strategy:

• Since you're already serving the market you know that market and may use tactics that you're already using.
• Word of mouth works well in penetration strategies because peer groups tend to talk amongst themselves.
• Depending on the competition you may be able to dominate a particular market without the need to expand into other markets

Cons:

• If there's heavy competition brand loyalty will work against you in converting customers.
• You must make sure that your market is large enough, and has enough money, and a need for what you sell to support a penetration strategy.
• If you penetrate a limited target market you are at risk if buying behavior changes, new competitors enter, or economic conditions change.

Large companies will use a mix of strategies and tactics to maximize their effect. Expand, then penetrate or vice versa. It pays to think about your strategy for adding new customers and then use tactics that support that strategy.

J D Moore - Marketing Comet

Packaging, A Merchandizing Strategy To Maximize Small Business Profits

If you're in any type of retail business, either B2C or B2B, and you sell multiple items it makes sense to pay attention to merchandising. This may also apply if you're in a service business with multiple services.

It probably stands to reason that you sell some items that have a higher markup than others. If you go to a shoe store, you'll notice they sell all kinds of accessories. The markup on accessories can be as much as 10 times that of the shoes. If you buy a $50 pair of shoes, the markup  may be $12.50. Then you buy $25 worth of socks at the same store - the markup may be $20.

One way to increase overall profit in a business is to increase the average amount of each transaction. A great way to do that is to create packages of items. Let's say we're at our fictitious shoe store. We might create a package where you get a discount off a pair of socks and some shoe polish when you buy a pair of shoes.

It stands to reason that customers would be more likely to purchase the socks and polish because of the perceived discount, and the ability to justify the purchase.

Here are some keys to creating successful packages:

• Package higher markup items with lower markup items to decrease the overall profit loss from the discount.
• Create logical packages. Pairing a golf bag with a tennis racquet probably won't make sense to the customer.
• Promote the packages as unique selling points. Put together something that your competitor don't offer.

Look at creative ways to increase your customer's perceived value.

J D Moore - Marketing Comet

What Does Maslow Know About Marketing?

We all have needs. You have needs, I have needs, your dog has needs. A lot of what makes marketing is matching or creating products to meet customer needs.

In 1943 a guy named Abraham Maslow wrote a paper and outlined a hierarchy of needs. His idea was that certain needs take precedence over others. For example, if physiological needs like food and water are unmet, you might care less about self-esteem.

Maslow put the needs into a nice pyramidal form, with the needs that take precedence toward the bottom:

You can click on this image to get a full-sized version.

You can see at the bottom are physiological needs, moving to safety, then to love (social needs), esteem, and self-actualization.

In the United States, most people have their physiological and safety needs met. Sure, sometimes we are hungry, and sometimes we may feel unsafe. In general when we are hungry - we can get food. In western countries like the US, people spend a higher proportion of their income on needs other than physiology or safety.

Yes, I know you need shelter, but you do not need a half-million dollar condo. You need food, but you do not need to eat at fine restaurants. These choices are usually about love and esteem. They give us social power.

Self-actualization needs are about the human drive to experience our own uniqueness. It's the drive for musicians to create music, and painter to paint.

If you own a restaurant - marketing that plays on hunger can be very powerful. The problem is that you only get people to pay attention when they are actually hungry. It's important to realize that people go to restaurants for a lot of reasons including socialization.

Look at the advertising for the Olive Garden chain of restaurants. It's all about family experience - this falls into the love / belonging set of needs on Maslow's scale. The desire to connect with our family is a strong human motivator.

Esteem needs are the primary motivators for luxury items. For good or bad, people pump up their self esteem with brand names, labels, luxury cars, and things that are expensive. If you are marketing a luxury restaurant - expressing physiological needs is not going to work for you. People who are feeling physiological needs aren't paying attention to esteem.

Safety is a strong motivator in marketing and the basis of many large campaigns. Think ADT alarms, Volvo, and a lot of health campaigns.

How do you fit this into small business marketing?

First, start with your target market. Always start with your target market. Then figure out what needs are going to be most motivating for them. A lot of this is going to depend on their social and economic position.

Let's say that your target market are people who read the women's fitness magazine Shape. We know that these tend to be educated women in their 30's who have a higher than average median income.  Delving further we might discover that these women's interest in fitness is geared towards body image. We might conclude that these readers are at a life phase that is primarily motivated by love, belonging, and esteem.

OK - our marketing tactics might include direct mail to Shape subscribers and a print ad in the magazine. Our various pieces should promise, directly or indirectly, to fulfill those needs. the ways to do that are basically infinite.

Here's the beginning of a the process to develop a marketing brief:

1. Who is my target audience?
2. What needs do they have?
3. In which ways do my product or service meet those needs, or how can my product or service be made to meet those needs?
4. Which needs will we focus on in a particular campaign?

By the way, if you can't answer question #3, then find a new target market.

J D Moore - Marketing Comet

Tickle Your Customer's Imagination For Powerful Advertising

The text read, "A half hour ago a pool of bloody chicken juice sat on this counter." The picture was of a boy (appearing to be about 4) grabbing a cookie from a pile sitting on a counter.

Gasp! It's enough to make any parent squirm.

The ad was for disinfectant wipes. In fact, it was probably the best ad I saw while flipping through Better Homes and Gardens in my doctor's office.

Would the ad have been more effective if it simply showed a picture of the product and said something like, "kills the germs on your countertop to keep your family safe"? I doubt it.

Many of the greatest ads in history act to stir the emotions of the buyer by stimulating the imagination. Remember that people make decisions emotionally first and then justify with logic.

A classic direct mail headline (from a piece that made millions of dollars) read: They all laughed when I sat down at the piano, and then I began to play. The ad sold a home-study piano course.

Both the bloody chicken-juice ad and the piano piece use emotional implication. The bloody chicken-juice ad implies that your children are in danger. The piano piece implies social acceptance.

The ads don't say something like: "play the piano and everybody will like you." It's too blunt and doesn't successfully get past the conscious filtering that says, "I don't need to play the piano to have people like me." Our conscious filters might also say, "for centuries people have cleaned counterops with soap and water and yet the human race has somehow survived."

These ads also cause us to create pictures in our heads. You can see the shy guy at the party sitting at the piano. You can imagine a pool of bloody chicken-juice. Holding these pictures in mind stimulates deep emotional desires that we might not even be conscious of.  The desires for social acceptance, and to protect one's children are basic human nature.

If you create your own advertising, it's always a good idea to begin with the customer in mind. That about which emotions and desires you can stimulate through your images and words.

Telling stories is a great way to work the human imagination.

Make that emotional connection and your advertising will become a customer magnet.

J D Moore - Marketing Comet

Social Proof And Small Business Marketing

Remember in high school when all the nonconformists hung out, wore the same clothes, and listened to the same music? Maybe you were one of them. High school is a fantastic laboratory to examine the socio-psychological effect known as social proof.

Social proof basically means that we look to others, usually in some social group with which we identify, to validate our choices. It's why a lot of women shop together, why trends happen, and why people tend to always vote for their party's candidate.

It may make you uncomfortable to think that your choices are influenced by mob mentality, but it's a an empirically sound phenomenon. There have been many studies that have shown social proof to be an extremely powerful force in decision making. Experiments have been conducted where the subjects sometimes even ignores what their senses are telling them to go along with the crowd.

Social proof tends to happen on an unconscious emotional level. We don't tend to think, "all these other people are wearing purple sneakers ... I'd better get some too!" We see dozens of people with purple sneakers and one day we have to have them.

You can see the negative effects of social proof in Nazi Germany, riots, and gangs. People sometimes succumb to social proof and go along with the pack even if the pack is doing something stupid, destructive, or dangerous.

Why do we do this? Think about human beings in the stone age. Compared to the animals that we hunted or hunted us we were slow, had weak claws and teeth, and weren't very strong. Our ancestors survived by being social.

They lived and hunted in groups for increased safety. They shared the technology to make tools, hunt and gather, and make fire with each other. To keep from killing each other off they needed to act together and cooperate. If you saw three cave-people drinking from a stream, you could assume the water was safe. If all the people in your tribe made arrowheads the same way, you could assume it was a good way to make arrowheads.

Advertisers have long understood the effect of social proof. The next time you're watching TV, notice how many commercials talk about how many customers a company has, or show testimonial after testimonial. After opening weekend, many movie ads will talk about how well they did. The idea is that if they sold $45,000,000 in tickets, it must be a good movie.

Some ways you can use social proof in your marketing

• Collect and use testimonials.
• If you are the most popular brand, talk about that in your marketing.
• Get your product, t-shirt, or bumper sticker into the hands of as many people as possible.
• Focus on building buzz with beta-testing, or focus groups.
• Have special "bring in your friends" events.

Social proof can be a powerful convincer strategy. When you use it intentionally and well, your business will grow.

J D Moore - Marketing Comet

Superbowl Ads And Small Business Marketing

It wouldn't be the Monday after the Superbowl without the analysis of the $2 + million per spot commercials. I have to admit, I'm a sucker for Superbowl ads - especially the more cinematic or humorous advertisements.

A relevant question that none of the analysts seems to ask is - do Superbowl ads work? The answer is: that depends on what you mean by "work".

Do Superbowl Ads Generate Positive Cash Flow?

This question is tough to answer. If I spend $10 million on Superbowl advertising alone do I get a return of at least $10 million + $1? Probably not.

A few years back when venture capitalists were wheeling truckloads of money up to dot-coms, every new dot-com blew their money on pricey ads. Not one of them is still in business today. Pets.com is a prime example - they spent a tons of money on ads including at the Superbowl. They just couldn't sell enough dog food to stay in business.

Do Superbowl Ads Generate Buzz?

This is where expensive advertising such as this pays off. If an ad is good, people will talk about it, post it to web sites, parody it, and give it awards. A good ad will generate buzz and talk for a while.

Another nice thing about the Superbowl is that larger groups of families and friends gather to watch. This can help with word of mouth when people talk about the ads with friends and families.

One of the biggest advertisers on the Superbowl is Bud Light. They had some great ads last night too. Undoubtedly people will be talking about some of their advertising over the next couple of weeks.

If they hadn't advertised on the Superbowl, would it have a negatively impacted their business? It's hard to know for sure. Their Superbowl ads are part of their larger overall marketing which includes comprehensive year-round multi-channel marketing.

One of the secrets of Superbowl advertising is that it's not just about selling beer to individual consumers. Having an ad on the Superbowl also makes Bud Light look like a big deal to its distributors, restaurateurs, liquor store owners, and their own employees. It's as much public relations as it is simple advertising.

What Can Small Businesses Like Yours Learn?

Here are a few of the lessons we can derive from Superbowl advertising:

• Smart businesses market across multiple channels all year round.
• Advertising that's simply cute or funny without developing word of mouth, or customer demand is a waste of your money.
• PR and branding are extremely important aspects of marketing.
• One of marketing's main jobs is to build consumer confidence.
• Don't blow your entire marketing budget on one risky ad or series of ads.

J D Moore - Marketing Comet