MARKETING STRATEGIES II

Know Your Market
Few small businesses can sell to everyone. Most are limited by geography or capital to some portion of the total market. In order to develop and implement a marketing strategy, you must be able to identify that segment of the total market toward which you should direct your marketing effort. For example, a small corner grocery would not ordinarily try to attract business from the other side of town. Nor would a shop specializing in small children's apparel attempt to attract college students.

In some cases, the identity of the segment is fairly obvious. To the local retail or service establishment such as the drugstore, grocery store, dry cleaner, or service station, the market is almost every household in the local area, since almost everyone needs these products and services.

Market segments can be classified in a number of ways, such as age groups, income levels, or specific interests. A retailer of fine jewelry would be interested in the market segment comprised of the upper and upper-middle economic classes. A costume jeweler would direct its efforts toward the middle-income market segment. An audio equipment dealer might be interested primarily in the youth market, and a home furnishings store would be more interested in adults. A sporting goods shop would direct its efforts toward the athletically inclined, while the bookstore would seek the scholar.

Factors such as age, income, and special interests affect the demand for the products or services that you sell and the way you must try to sell them. People's buying needs and wants are influenced by a number of other factors as well, such as current fads, fashion trends, media publicity, advertising, and the opinions of friends and neighbors. Plan your product or service line so that it is geared to your market and keep abreast of
those factors that cause your customers' tastes to change. You should keep abreast of all indicators of change such as:

• Changes in manufacturers' offerings.
• Views of opinion-makers in your industry.
• Opinions of influential media such as magazines, newspapers, radio, or television.
• The experience of businesses selling to a comparable market segment in other areas.
• The experience of your competitors.

The list could go on forever. The important factor to remember is that you must be able to identify the influences that shape thinking in your market segment and then keep informed about these influences so that you can adjust your line of products or services accordingly.

Your Marketing Strategy
In order to develop a marketing strategy, you must be able to clearly define the particular market to which you wish to appeal. You must know the customers to whom you want to sell and you must know how your product or service appeals to their particular wants. Will it sell because it is more economical? Or more attractive? Perhaps it is more reliable than the product or service your competition offers. Perhaps its quality is superior or it enhances the buyer's status or self-image.

1. List three factors which can define your market.

2. Which is usually the more successful approach to the selection of products or services to offer your market?

• Offer those products or services that you prefer to sell.
• Offer those products or services that your customers prefer to buy.

Competition
No aspect of marketing can ignore competition. Just as competition affects the price you charge for your product or service and the methods you choose to market it, competition also influences the line you will offer.

To protect yourself from competitors, you must stay a step ahead in every aspect of your marketing operation, including the selection of your product or service line. Frequently, this requires a further definition or review of what you are selling.

The record shop mentioned earlier must realize that it is in the recorded music business, not just the record business. The recorded music business includes cassettes, tapes, and cartridges. The "record" shop that failed to offer these items would soon lose business to competition.

Furthermore, the record shop must assess its competition in other areas. Perhaps some are offering stereo equipment or car stereo equipment which the shop might also consider offering its customers. Or perhaps competitors offer customers the opportunity to preview records before buying them. Some competitors may offer more personal service. And, of course, some competitors may simply offer lower prices.

Granted, competition cannot always be met in every way in which it is possible to compete, but the small business person must continually be aware of the competition and what it is doing so that competition cannot get the upper hand. Your product or service lines can usually be tailored to provide a uniqueness which will appeal to the market you are trying to reach, whether or not that uniqueness is in product selection, service, price, location, or some other quality.

New Products or Services
There are times when, based upon your analysis of previous performance, industry trends, or market conditions, you will want to consider adding to or modifying the products or services you offer.

Market Tests
Since the ultimate test of the value of any new product or service is your market's reaction to it, you are usually well-advised to make some sort of market test before committing yourself to any major change in your line. For example, a women's dress shop may be interested in adding a higher priced designer group, a sporting goods store might be considering the addition of camping equipment, or a restaurant might be considering supplementing its basic "meat-and-potatoes" menu with quiche or crepes. In each case, a tryout for a predetermined period of time can give you an idea
of the likely success of a major commitment.

Object of Market Test
One factor must be borne in mind, however, when conducting a market test of a new product or service. This is whether or not you expect the added line to create additional sales with your present customers or to attract new customers.

For example, if a fast food shop added salads to its basic hamburger menu, there may be little gain if this simply makes salad customers out of hamburger customers. In fact, it might even reduce the average check, resulting in a loss. However, if it causes hamburger customers to buy a salad also, or attracts new customers to the shop, it will probably prove to be a profitable addition.

Promotional Support
If the change in your product line is expected to increase sales among present customers, they must be aware that you are offering the additional product. In other words, your sales force must make the effort to suggest the new items to present customers as they purchase your current offerings. Also, announcements must be made, perhaps in the form of in-store signs, window displays, or even advertisements.

If a product innovation is expected to attract new customers, some form of promotional effort must accompany the introduction. Otherwise, the "new customers" will have no way of knowing that you are offering them the product and your effort will be wasted. While the cost of the promotional effort may exceed the profit potential of the market test, the knowledge gained can be rewarding in the long run. It will alert you to potentially profitable products while deterring you from investing in those that offer
little hope of marketing success.

As discussed previously, a market test is generally conducted for a predetermined length of time. For instance, a sandwich shop may offer homemade soups for two months to see how well they are received. At the end of the two-month period, the sales checks can be analyzed to see if soup is being purchased in addition to a sandwich or instead of a sandwich. After this analysis, a decision can be made as to whether the addition of soup to the menu has increased profits sufficiently to warrant becoming a permanent offering. Similar examinations of test results can be made for almost any product or service being considered.

1. New products or services should be offered:

• only after careful research
• because the competition has introduced them
• because the business owner desires them

2. When conducting a market test, it is best to:

• simply offer the product for sale
• make some promotional effort in connection with the test

In marketing, trial and error is often the most practical decision making technique. The men's clothing store that stocks only blue shirts will never know the profit potential from other colors. In fact, the owner might think that blue is the only color men buy because blue is the only color the store ever sells! The easiest product to sell is the one that the public wants to buy. You will never know what they want to buy unless you give them a chance to buy it!