The Many Faces of Price

I see businesses in this area (especially restaurants) using monetary price as a marketing tool. Do your customers and prospects care or even notice?

In other words, is monetary price sensitivity an attribute of your target market or are you just hoping for an easy gain in market share? If you do gain market share, will you gain enough to offset losses caused by the lower price? Are monetary price oriented consumers even the type of customers you want?

Most small businesses realize (some too late) that customers who are seeking a low monetary price are really not the best customers to have. Better to attract customers who value the unique service only you can provide.


More sophisticated marketers compete using non-monetary price, or what it costs a customer - other than money - to buy a product or service. These “prices” include the time spent on shopping, ideological factors and the risk that the product will deliver expected or promised benefit.

Here are some recent examples:Business Week on Supermarkets
Supermarket Strategies: What's New at the Grocer
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A Biznik article for service providers
Why Low Prices Don’t Attract Clients
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2006 Harvard business writing on the folly of lowering monetary price
Low Prices = More Customers? Not Always
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Cautionary item written after the dot com crash
Advice to services firms: Don't lower prices
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A nice piece from Jack Trout, written during the 1991 recession
Marketing savvy can triumph over tough times
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The 20 Keys to Online Marketing

Following are 20 keys to successfully marketing your product, service, and business online.

1. Have a professional, easy-to-navigate, quick-loading design. Hire a professional design firm or at least use a good site template.

2. Have lots of quality related content.

3. Build lots of links to your Web site.

4. Build credibility and rapport.

5. Start an e-mail newsletter with quality content and send it out at least once per month.

6. If you are selling a product, have an affiliate program.

7. Once you have an affiliate program, don't forget to promote it.

8. Do whatever you can do profitably to attract large affiliates and form key strategic alliances.

9. Position yourself advantageously in the search engines.

10. Use cost-per-click (CPC) engines, but make sure you know the lifetime value (LTV) of your customers and that you do return-on-investment (ROI) checks often.

11. Supplement your affiliate advertising with both online and traditional advertising, but track results and always do ROI checks.

12. Advertise using CPM channels to build brand recognition, but put profitability before brand recognition.

13. Offer yourself as a resource to the media as an expert in your niche.

14. Hire a great publicity firm or bring an experienced publicist in-house.

15. Use autoresponders to maintain constant contact with prospective customers.

16. Remember that business is all about relationships and communication. Always work to build more relationships, and once they are built, make sure you are in continuous contact with your prospects, customers, strategic alliances, suppliers, investors, and the media.

17. Encourage word of mouth among your customers.

18. Have superior customer service and have staff to answer all incoming e-mails within 24 hours.

19. Send out periodic e-mail follow-ups making sure your customers are happy and asking them for feedback on your product and the service your company has provided.

20. Blog frequently with quality content.

from the book Zero to One Million by Ryan P. Allisfrom

Obama and the Flim Flam Man

No, this isn't a political post - as a business person I focus on commerce rather than the body politic. Today's political headlines are providing ample fodder for my least favorite form of commerce - scams. There is nothing like a downturn to bring out the scum-buckets and scam artists.

Regular announcements by the President and press releases from various government offices are providing Americans with hope for a better economy but these same announcements provide a new language for scammers to use to dupe the unwary.

"Get your $12,000 stimulus check," "Stimulus grants for your business," and "Stimulus loans for start-ups" are just a few of the baited phrases the scammers are dangling while angling for YOUR hard earned cash.

Whenever assessing the validity of any offer, just perform this simple test - does money flow from them to you, or is there some form of payment or private information required?Throughout the SBA application process, the applicant is NEVER required to pay any up-front fees.

Here are some more in-depth articles about the scams making the rounds these days:

Beware of Scams Promising Help in Winning Stimulus Money***

Stimulus Prompts Small Business Loan Scams***

BBB Warns Grant Companies Exploit Confusion over Stimulus Bill to Rip Off Consumers***

FTC Consumer Alert - Seeing Through Stimulus Scams

Thinking Outside the Box - Store, That Is

Retail is a fascinating business but getting into retail is considered somewhat difficult. Finding a location, fixturing and the huge investment needed for inventory serve as significant barriers to entry.

For quite some time now, a somewhat different approach to retail has been flying under the radar. The current economy (especially the difficulty in borrowing) suggests a serious look at what are called "Pop-up stores."

A pop-up store is a small operation set up temporarily to capture a specific audience or target market segment. Limited or consigned inventory that's priced to sell fast, a temporary or mobile facility and lots of loud marketing all make the pop-up store a bit different from the typical retailer.

We generally don't think of these as pop-up stores, but the neighborhood fireworks stand is a perfect example. Other good examples include Halloween and Christmas shops. As the articles listed below indicate, these are only the beginning of what might become a significant retail trend:
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Pop-Up Stores: All the Rage
The latest trend in retailing: shops that open for a few days in a major city or a mall—and then are goneBusiness Weekby Pallavi Gogoi Four days. That's how much time New Yorkers had to get a piece of the upscale design line Proenza Schouler at discount prices. On Feb. 2, the über-chic discount retail store Target (TGT) popped open a store in lower Manhattan, to display this latest high-fashion-at-low-prices design line. The store then closed on Feb. 5.***

The Pop-Up Store: A Smart Idea for Frugal Times
Christina Scotti, FOXBusiness, Wednesday, December 03, 2008 Jonah Staw, 33 years old, founded Little MissMatched on the oddball notion that socks don't have to match. Since then, he has built this three-year old company, with projected sales of $30 million in 2008, into "a lifestyle brand" that targets tween girls. The sell: being different and imaginative is cool -- and colors definitely do not have to coordinate.***

POP-UP STORES
trendwatching.com, first published in January 2004 If new products can come and go, why can't the stores that display them do the same? Well, you guessed it, retail outlets increasingly do. From gallery-like shopping spaces with one-off exhibitions to mobile units bringing inner city-chic to rural areas, TRENDWATCHING.COM has noticed an increase in temporary retail manifestations around the world.***

Pop-Up Stores Pop Up as Inexpensive Way to Build Buzz
Advertising Age By Natalie Zmuda, August 31, 2009 NEW YORK (AdAge.com) -- A few years ago, when cheap real estate was scarce, pop-up stores were a major investment for marketers. Now temporary stores have emerged as a perfect solution for cash-strapped brands, commission-hungry brokers and landlords faced with a glut of commercial real-estate space.***

Is there a pop up store in your plans? Be sure to do your homework and get information about local ordinances and code compliance, then start planning!

How Can you Raise Prices in this Economy?

One of the more frustrating aspects of my practice is helping clients understand the importance of price in business success. In tough times, the knee-jerk reaction to regaining customers and market share is often to lower prices. Please don't do that!

First, the last thing any business needs to do during a slow down is to reduce profits when sales are going down. Second, study after study indicates the customer - the very person you are trying to impress with your self-sacrificing "low price" - couldn't care less.

What?? But everyone says they are watching their pennies during this recession - how could customers not care about price? The answer is that sellers and buyers are seldom talking about the same thing when they say the word "price.

"When a Seller Says "Price" they are referring to the shelf price - what customers pay.

When a Customer Says "Price" the customer is talking about the money they spend, the risk they bear and the time it takes (among other things) to complete a purchase. Understanding what a customer means when they say "I want low prices" can mean the difference between success and bankruptcy.

A recent Wall Street Journal article reported on a fascinating consumer test that illustrates this point well:

Why Tie Marketing to Time, Not Money By Kelly Spors, March 24, 2009, 9:07 AM ET"In today’s recession, many small businesses may think it’s wise to tie their marketing to money and value to appeal to cash-strapped consumers. But perhaps they should tie it to something else of considerable value: time."

"A new study by researchers at Stanford Business School, published in the Journal of Consumer Research, found that it’s generally far more lucrative for businesses to reference time and personal experiences in their marketing than focusing on monetary value.""The experiment showed that the sign that stressed time brought in twice as many passersby who ultimately paid twice as much than when the signing stressing money was posted. Those customers who bought with the sign mentioning time also reported liking the lemonade more than the others."***

If any of my readers would like to discuss this is more detail for their business, please call or email and we'll set up an appointment.

Year End Updates from the IRS

IRS Features Recovery Tax Credit Information now on YouTube and iTunes

To help taxpayers take full advantage of the 2009 tax provisions in the American Recovery and Reinvestment Act, the IRS has launched a YouTube video site. People without an iTunes account can hear those same podcasts, in English and Spanish, on IRS.gov’s Multimedia Center.

http://www.irs.gov/irs/article/0,,id=212289,00.html

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New IRS Materials Available to Promote Awareness of Recovery Act Tax Benefits

As part of a larger effort to increase the awareness and use of tax benefits available through the American Recovery and Reinvestment Act (Recovery Act), the Internal Revenue Service has announced the availability of a vast array of products that help explain several tax benefits currently available to American families.

http://www.irs.gov/newsroom/article/0,,id=213326,00.html

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Deadlines Near for Business to Choose Expanded NOL Election

Eligible taxpayers must act soon if they want to take advantage of the expanded business loss carryback option included in this year’s Recovery law. This carryback provision offers small businesses that lost money in 2008 an excellent way to quickly get some much needed cash if they were profitable in previous years.

http://www.irs.gov/newsroom/article/0,,id=213149,00.html

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While digesting IRS info is not the most exciting way to spend an afternoon, learning more about these programs can really impact the bottom line!

Are You Sorry You Opened?

Being a business owner has its ups and downs and lately the downs have been extra tough. Through it all, most owners are still happy to be in business. But what if you’re sorry you’re open?

What if the ups don’t seem to be fixing the downs and what if it’s just about impossible to remember when it was fun to come into the shop in the morning?

If you’re sorry you’re open, you just might want to pick up the phone and call your Northwest Georgia SBDC. Many of our clients tell us it’s just nice to have someone to talk to during these difficult times and all of your SBDC services are free and confidential.

If we can find a way to bring the fun back into your business then you will find our time well spent. If we can't see a way to get things back on track then we can talk about the changes, big and small, that can help you get your life back on an even keel. The contact information is listed right below the University of Georgia's SBDC logo on the upper right side of the blog so pick up the phone or send an email - your Northwest Gerogia SBDC is here for you!

Call: (706) 272-2700

Write: rriedrich@georgiasbdc.org