Marketing Comet - Small Business Marketing Secrets

Location Location Location - What To Think About When Choosing a Retail Location

So, you're ready to set up shop somewhere selling your wares to the public. Good for you. There are some extremely important considerations that you should make when choosing a business location. Let's look at a few things to consider.

1. How are your customers going to use you?
This is a very important first consideration that many small businesses miss. For example: if you are opening a lunch counter, you may do better in an area where people work rather than where they live. If you are selling auto parts, you want to be fairly close to the local repair shops. Think about when and how your customers will access your business.

2. Look at Logistics
It's been said that good generals study tactics, while brilliant generals study logistics. Think about your business logistically:

• Is there enough parking?
• If you need a loading dock, is there one?
• Will there be any special infrastructure needs - power, water, trash removal etc.?
• Is access to the location easy for the customers, or will they get lost?
• Is the location in a part of town with increased crime at night which may cost you dearly in insurance or shrinkage?

3. Good Traffic Bad Traffic
As a high-schooler I worked at a shoe store in the local mall. The brilliant mall promoters would bring in soap opera starts to do autograph signings in center court. The mall would be filled with literally screaming teenagers, and you couldn't park or even drive the streets near the mall. The problem with this is - none of the tens of thousands of people the mall brought in foot traffic bought anything. These were some of our worst sales days of the year.

Not all foot or drive-by traffic is created equal. However, some locations will charge huge prices for the amount of foot traffic.

It's a good idea to be near other businesses that attract customers like yours. Do you ever wonder why car dealerships and restaurants will open so close together? Because car shoppers and diners will go to an area to window-shop and everyone benefits from the spillover.

At least spend time in the area you are considering and notice the other businesses and who's shopping there.

4. Consider Cost
Retail space in malls is pricey. The foot traffic and promotions malls do can bring in a lot of business. However, there's still high turnover at many malls. The most expensive spaces are not always the most profitable.

5. Look at History
Every town has at least one retail or restaurant location that spits out business failures over and over again. It always amazes me to see a space where a new restaurant opens at least once a year. If a space seem to have a high rate of business failure, maybe there's something not working there.

Sometimes it's parking or lack of anchor businesses.

These are just a few of the  considerations for picking locations. Picking a good location is one of the most important decisions you can make for your business.

J D Moore - Marketing Comet

How to Compete with Dove (Or Other National Brands)

A nice woman named Rhea Brown wrote me and asked if I would write an article about competing with a national brand like Dove. She sells a line of 100% natural products that include things like Organic Shea Butter.

I think that her question is a good one and I will offer several pieces of advice. Even if you aren't in the beauty products business, pay attention - there are probably a couple gems in here for you too:

Realize That Your Target Market Is Different:
OK, everybody buys soap, and Dove is one of the top selling brands in the US. However, there is a separate, smaller, but profitable market that is willing to pay a premium for natural or organic products.

If you can show a valuable difference in your product you can actually charge a premium for your products. While you may not be able to capture the market share of a billion-dollar branding organization like Unilever, you can have a higher profit-margin per product.

Think About Your Brand
Some successful brands that come to mind are Burt's Bees and Tom's of Maine. These products are carried at many health food stores and even some regular grocery stores and gift stores. These brands sell to people who want to avoid unnatural chemical beauty products. They both have a "modern hippie" orientation.

Another way you can go with the brand is pure luxury. Think about selling your products through Spas, boutiques or other luxury locals. a|MEN|ity is a brand of natural men's having products sold through boutiques and at Barney's New York.

Branding is all about difference and clarity. What makes you products different and meaningful? Now everything you do from packaging to copy must reflect that.

Remember that the price you can charge for your product has a lot to do with branding. Why are a pair of Nike shoes, made in the same sweatshops in China as other brands, able to command such a high price. Nike has branded itself as an elite product synonymous with success, power, and importance.

Position Correctly
If you do your job correctly, you will not be in competition with national brands. Leave them to the masses. Unless you have a few hundred million dollars in your marketing budget - you won't be in the same league for a while.

Starbucks started as  a quirky, hippie, environmentally sound, youth-oriented brand. Their prices were higher than other coffee shops, and much higher than brewing a brand at home. They penetrated their market and offered a significantly different product (they have nearly double the caffeine content of other coffees).

Use Guerrilla Marketing Tactics:
If I had a beauty product to sell, here are a few things I might do to get the word out.

• Develop a "media kit" or info packet about the product that can go out to the media or interested buyers
• Get the product into the hands of every beauty editor for every magazine in the country
• make sure to clip and copy every positive thing written about your product to use as a sales tool
• Send free samples along with wholesale order forms to the owners of upscale boutiques and salons
• Have a web site / blog / and e-newsletter that offers free beauty tips. Make sure to capture customer information through an opt-in form.
• Find bloggers that write about health and beauty and get samples with info packets to them
• Go to conventions, hair shows, etc. as an exhibitor. This is one of the best ways to get in front of buyers.
• Focus on a word of mouth campaign. Run a promotion on your web site where if somebody buys one unit you will ship another unit free to a friend.

These are just a few of the tactics I would use to get the product known and in front of as many people as possible.

With a little ingenuity, competing with a national brand is unnecessary. Ultimately you create your own market of loyal customers.

J D Moore - Marketing Comet

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

Dynamic Pricing - Microeconomic Friend or Foe?

Did you know that when you buy stuff from a retailer, there may be other people who get a better price than you? Sure you did. You know that theaters and airlines offer discounts to seniors and children. You know that if you go to Mexico you have to haggle for the best price on that bracelet for Aunt June.

In microeconomic terms we call this phenomenon dynamic pricing. It also sometimes goes by the name discriminatory pricing. The word "discriminatory" here isn't necessarily a bad thing, it's just a technical description of the phenomenon.

Dynamic pricing is used to maximize profit by selling the most number of things to the widest group of people at the highest possible price.

Let's pretend you own a theater with 200 seats. For the sake of this example we'll assume that it costs you the same thing to run a film no matter how many seats you sell. What do you charge for admission - let's look at some ways to figure this out:

• At $10 per ticket you know you can fill half the theater. You also know that $10 is a bit steep for most students and seniors. At $10 only 10% of your audience is comprised of students and seniors. Your gross revenue is $1000.
• You institute a $5 student and senior ticket rate. Now, you fill the theater to capacity and 55% of your tickets go at the discount price. Your gross revenue is now $1450.

This is a very simplistic example of discriminatory pricing, but you get the idea. Generally you create a pricing situation that attracts the most amount of customers.

In my opinion, there are some dangerous ways to do dynamic pricing. Amazon tried this a few years back with DVD sales. They assumed (probably correctly) that frequent purchasers were less likely to shop around before making a purchase. If you bought a lot of stuff from Amazon, they actually started charging you more.

The problem is, they got caught. People comparing prices on a message board found that they had payed a dollar or two more per DVD then new shoppers to Amazon. They raised a bit of a stink and Amazon stopped the policy.

In my opinion Amazon went wrong because they penalized their best customers, and they assumed they wouldn't get caught and generate consumer resentment. In the cooperative era of the web, you have to be very careful.

If Amazon had instituted a "frequent buyer discount" and openly advertised it - I don't think anybody would have had a problem with it. In fact this is a pretty common model of dynamic pricing.

Sometimes online companies use dynamic pricing randomly to do price testing. The first visitor to their web site gets offered a DVD at $21.99 the next at $22.99. They test to find a good price point for their products. Again, this can be a problem when customers compare notes.

To use dynamic pricing well,  I believe you need a few things:

• You need an identifiable customer segment (seniors, students, frequent customers).
• You need to justify your pricing. Nobody would argue with a new customer discount, a senior discount, or even a guy named Bob discount. It just has to make sense to your customers to prevent resentment.
• You need to prevent resale. You don't want a senior buying 20 tickets and then scalping them outside your theater.

Many businesses have successfully implemented a discount buying club. Customers pay an upfront fee and enjoy a membership discount. Sam's Clubs, BJ's and Costco are exactly that.

A local Harley Davidson dealer ran a $100 membership that gave people a 25% discount on clothing and accessories. They only sold 1000 memberships (so a $100,000 upfront fee). And I'm guessing that the discount probably served to get the people who belonged to increase what they bought over the next year. I don't know for sure, but I'm guessing the dealer made out well.

Another way to make dynamic pricing work is with tie-in sales. If you are selling copiers, you might offer a discount on the hardware when people purchase a four-year service plan. If you own a movie theater, you might offer a "buy 5 full-price tickets get one free" sale. Certainly lots of businesses create packages that are less expensive than buying each item separately.

For most small businesses, pricing is an aspect of their marketing strategy that receives less planning than it should. People are price conscious, but not necessarily looking for the least expensive option.

To benefit from this, look to ways that you can use pricing to entice new customers, keep old customers, and encourage people to buy more frequently.

J D Moore - Marketing Comet

Capturing Customer Data Is Panning For Small Business Marketing Gold

Everybody's got a mailing list these days - and for good reason. When customers opt into your mailing list they become top prospects. They have already extended some trust by giving you their personal data.

[shameless plug]By the way - if you want to sign up for my mailing list and get some marketing goodness in your in-box just go to my website here and sign up.[end shameless plug]

There are other important marketing reasons for capturing customer data. Generally speaking, get as much data as you can get without being invasive or creepy. When someone is paying their bill at a restaurant, they don't want the manager running up with a clipboard asking them how old they are and how much money they make. A comment card may ask for age and income levels (in broad categories. I personally fit into the 14-67 year old age bracket with an income between $2 and $4,000,000.

One of the most important questions you can ask a customer at point of purchase is: "What made you choose us." You may be surprised to find out the answers. You may find out that the benefits you tout the most aren't appealing to your customers. You may discover benefits you didn't know you had. The answer to this question can help steer your marketing in the future.

A friend and client of mine owns an auto garage. At the bottom of his invoices he had a question that reads, "how was our service today" and just a box to tick on a 1-10 scale. I don't think this is incredibly useful. I have advised him to change the survey to two open ended questions: 1. What did you enjoy the most about your service with us? 2. What would you change to make your service with us better? The customers that take the time to answer those questions will give him ways to maximize his benefits and improve his shortcomings.

I am a web stats junkie. I love to look at my web logs to see where people are from and how they got to my web site. Recently, I noticed a lot of traffic from Russia and Estonia. Why? I couldn't tell you. Will I get a translation service to translate my web site into Russian? probably not yet - but it's worth consideration. It's neat to know that I have subscribers to my newsletter from all over the world.

So, now you have a good chunk of customers data (we might call it demographics). What the heck are you going to do with it?

We'll, my auto garage friend captures the dates, service, address, make, and model of every car service. From that, and from general observation, he knows several things. They are slower when it rains. Their customers are very local. He also knows from talking to the owner that the restaurant next door gets very busy when it rains. A HA!

Now we are working on a way to get some advertising for the garage into the restaurant - maybe on the place-mats or at the front. I also suggested to work on a special where people can get an alignment and oil change done when they dine - just leave the keys with the host and the mechanic will come get the car and have it done when they finish dining.

I have a black belt in jujutsu and I know from years of teaching martial arts that if I call a class "self defense" I will generally get only women to show up. If I call the same class "martial arts training" I will get mostly men. If I call the class "women's self defense" I will get more men calling to ask if they can participate than if I just call it "self defense". I will withhold comment on some men's poor choices of appropriate places to meet women. Depending on the result I want, I might do split advertising - that is do two ads with different copy targeted at both sexes.

Big business thrives on marketing data. They do tons of testing, split advertising runs, and heavy market segmentation. Segmentation means they break their market down into smaller identifiable chunks. They know that 15 year-old girls from Southern California respond differently to marketing messages than do 78 year-old men in Wisconsin. However, both may be important markets for Coca-Cola and other consumer products.

As a small business owner you have the advantage of being hugely profitable with a much smaller niche market. I assume that you don't have the overhead of Coke - so you can go after smaller market and still get fabulously wealthy. (Just remember to have me as a guest on your yachting trips to Fiji - thanks)

Here's a secret: You can have more than one niche market. Whoa! Yep you can and should probably have several niche markets. You need to tailor your marketing to each one separately. If I am a dry cleaner I will service my local neighborhood. I might also go after restaurants,hotels and other businesses that need uniforms cleaned. I might also look at approaching high school bands who need uniforms cleaned. How about adding an office pickup and delivery service for professionals downtown? What about clothing stores that need to clean returned items and display items?

What data do you have, how can you get more and what are you going to do with it? Think data as an essential building block of your business.

J D Moore - Marketing Comet
Technorati Tags : marketing, strategy, small+business

Your Real Competitive Threats In Small Business Marketing

Nobody is my competitor. This is not to say that I have no competition. When people use "nobody" for a small business marketing coach - that is a competitive threat. If people see having nobody to coach them through their marketing as offering a greater advantage than using me, then that is something I have to overcome with my marketing.

Ask any business owner who their competition is and they can probably rattle of a few names of businesses that do what they do. If I owned a garage I could name all the other garages in the area. If I owned a pizza place, I could name the other pizza places in town.

Your real competition consists of all the other likely choices that your customers can make. One of those choices is nothing at all. I may really need an oil change, but decide it's too much trouble or too expensive. I may be hungry and yet decide not to eat.

Another choice customers can make is D-I-Y or do-it-yourself. People can change their own oil or make their own pizza at home.

Yet another category of choices customers have includes related products or services. Instead of getting my car repaired I may just buy a new one, or get a motorcycle. Instead of pizza I may choose Thai food, a hot-dog from a cart, or a candy bar from a vending machine.

The two other competitive threats you must overcome are anonymity and momentum.

Anonymity simply means people don't know who you are yet. They may need what you have, but don't know that you're there to solve their problem. This is an easy problem to overcome with marketing.

Momentum is the idea that objects in motion tend to stay in motion and objects at rest tend to stay at rest. Objects also tend to move in a straight line unless acted upon by an outside force. In small business marketing we are talking about getting inactive people to act, and getting active people to change their actions. It's hard to get people off their comfortable couch. It's also hard to get people to change what they are used to doing.

One form of marketing momentum is brand loyalty. My wife uses Dove soap. If left up to me I would probably buy whatever was on sale and didn't smell bad. Getting her to switch from Dove soap, which she has used for years, would take an act of congress.  If some other soap came along that was twice as good as Dove for half the price - you would still have to work to convince her to try it.

Understand your customers' choices and their motivations.  You will have a more realistic picture of what your marketing must do for you.

J D Moore - Marketing Comet

Geometric Small Business Growth Through Marketing

Marketing has one goal - increase revenue. There are many routes there, but in the end it all boils down to increasing revenue. Many small businesses make the mistake of thinking that marketing is all about finding new customers. This is, and should be an important part of your marketing strategy. However, if this is the only focus of your marketing, you're missing a heaping pile of money right in front of you.

There are three ways to increase revenue:

1. Increase the number of your customers
2. Increase the frequency that your customers buy from you
3. Increase the average amount that your customers spend at each transaction

Let's run some numbers. Let's say you own a clothing boutique and you have 200 customers. An average customer shops with you once a month, and your average transaction is $100. That comes out to $240,000 in revenue per year.

Here's how to multiply your revenue:

Increase your customer base by 10% (to 220): $264,000 in revenue (10 % increase)
+Increase your average transaction amount 10% (to $110):  $290,400 (21% increase)
+Increase transaction frequency to 14 times a year (+16%): $338,800 (41% increase)

With a marketing strategy designed to make small increases in all three ways of building revenue, you can multiply your results. For most small businesses gaining a 10% increase in customers every year is a reasonable target. Look for ways that you can increase customer purchasing frequency and average transaction price.

Let's take our fictitious clothing boutique again. What are a few tactics might I use to increase purchase frequency?

• Hold special sales for regular customers (might also increase average transaction amount).
• Schedule special events: in store wine tastings, clean out your closet seminars, shop with a friend day
• Keep a mailing list and send regular flyers to customers announcing new styles. I recommend email AND snail mail for marketing.
• When customers buy from you, put a coupon in the bag that is good for a short time period starting a week from that day. They have to come back in a week or two to get the discount.

Now, what are a few tactics I might use to increase the average transaction value:

• Place easy to purchase accessories near the cash register
• Train employees to help customers put together matching pieces with accessories. Train them to ask questions like, "Do you have a purse to match that?"
• Use coupons and sales to encourage larger purchases. Coupons might be 15% off all purchases over a certain amount.
• Look at price points and consider adding slightly more expensive merchandise.

These are just a few things - that cost nothing or next to nothing. The number of ways you can use marketing is limited only by your creativity.

J D Moore - Marketing Comet
Technorati Tags : small+business, marketing, strategy

Own a Problem - Small Business Marketing Strategy

The other night I met a man who goes by the moniker "The angry customer guy." His elevator pitch was a pithy benefit statement - something like, "I help businesses profit from their angry customers." Wow - that's great!

Now imagine that he walked up to me and said, "I do customer service consulting." I might fall asleep right then and there. His position and his pitch offer to solve a problem that a lot of businesses have. It also gets me curious to inquire more about what he does.

Do other customer service consultants have strategies and tactics to help with angry customers? I'm sure they do. In marketing, the first company to claim a feature or benefit generally owns it.

Everybody knows that Folgers is "Mountain Grown." Did you know that all coffee is mountain grown? It is, but Folgers was the first coffee to claim that feature. They own the position of mountain grown coffee in the minds of consumers.

Being mountain grown is a feature. Owning a benefit is even more powerful. A benefit answers the customer's question, "what's in it for me?" My computer keyboard might be ergonomically designed (a feature), but the benefit is that it helps me prevent wrist pain. I really don't care about ergonomic design, but I do care about my sore wrist.

What problem do you solve for your customers that your competitors don't yet claim? One of my web ads for my small business coaching service reads, "Does your small business marketing stink? Let's fix it!" There are lots of coaches and consultants that help small businesses with under-performing marketing. My offer is to help small business owners who are frustrated with marketing that stinks. I know a lot of small businesses that are frustrated by their poor marketing efforts, so this web ad has been pretty good for me.

Find a problem you solve that nobody else claims, own it, and you're on your way to market dominance.

J D Moore - Marketing Comet

Under The Radar - Your Small Business Marketing Strategy

Some months I get the pleasure of speaking to literally dozens of small business owners about their marketing. Many new business owners plan to open "under the radar". That is, they open without marketing or fanfare with plans to do marketing later.

Sometimes this is OK, most of the time it's not.

Seth Godin wrote in a recent post that when he started his blog just a few people read it - now it's one of the top 100 English language blogs. This was a good investment in time for him.

In Boston, and many other cities, nightclubs stay "cool" for a few weeks or months and then most of them die off. I can't tell you how many club owners in Boston have decided that opening under the radar is a good idea. Most of them spend no time or money on marketing, or try to buy or trade for the cheapest marketing that they can get.

Here's what happens when two of their potential customers talk about them:

"Have you heard anything about the new X lounge."
"No, not really."
"OK let's just go to the Y lounge instead."

And that's if people are talking about them at all. I'm all for word of mouth marketing, but if nobody knows about you they aren't talking about you. A lot of word of mouth is generated by traditional marketing and PR efforts.

Many lounge, bar, and restaurant owners (and other small businesses) let their egos get in the way of marketing. I was in a bar recently that had been one of the hottest spots in Boston a while ago. It was a Thursday night at 9PM and there were four other people there. The manager told me that the owners didn't like to spend money on marketing and that they relied on the fact that many celebrities had been seen there.

Apparently they like spending their money on overhead while seeing no return on their investment. It's amazing that this place would spend a hundred thousand dollars or so on furniture, but not one dime to make sure that people sat on the furniture and spent their money.

You can quote me on this: Marketing is not overhead; marketing is an investment in making sure you can pay your overhead and turn a profit.

Sometimes it's OK to open a business up for a few weeks to work out the kinks before your big marketing efforts kick in. But eventually your marketing efforts need to kick in. If you're in any type of entertainment business the window is very short for building customers. You can become old news fast. Plan well.

Your marketing efforts need to continue - even if you have as much business as you can handle. Don't let your ego make you think that things will always be great. You need to work to keep your customers and make new ones.

-J D Moore - Marketing Comet