You have probably noticed the deluge of advertising that is targeted to the new reality of being at home. This is obviously a response to the global pandemic we are all being affected by. The following is a breakdown of what is happening and what your business can do about it:
Marketing Strategy Marketing Strategy
Aired prior to the COVID-19 crisis but replayed recently Campbell’s realized that people are stockpiling canned food. Set to a wholesome and nostalgic soundtrack without pandering to panic buying, they capitalized on an opportunity to remind customers of a classic pairing. On a side note, the music choice was oddly relevant — Thank You For Being a Friend was the theme song to the ’80s sitcom The Golden Girls and the elderly are among the most vulnerable to COVID-19.
Also, more people are telecommuting and are realizing their home computers might not be suitable for work so Dell aired a commercial for one of their newest laptops. Peloton, home office chairs, etc. are all advertising the benefits of being healthy and productive at home. Also, mental health app Talkspace, Delta Airlines offering free flights for medical volunteers, online education, bidets, and more are using this opportunity to advertise their products and services.
Seize the Opportunity
When disruptions happen, it is important to consider alternatives in order to adapt to the new environment. I have advised a new restaurant client to pivot their business model from a brick and mortar location to a commercial kitchen or food truck and adjusted their ad hoc financial projection model to reflect the pivot. Of course, depending on the stage of a business pivoting to a commercial kitchen or truck is not an option; which is why I always provide tailored consultations to each client.
Many people have a lot of downtime now with not having to go into work. It is a good time to take a break from watching the news and start mapping out the idea that you’ve been mulling. Who is your target market? Where will you be located? What are your startup costs? These are all questions you should know the answers to or be actively seeking if you are serious about taking the next step. If you do not know the answers or want a second opinion on, I always provide free consultation so send me an email. Afterwards, those pushup challenges on social media are also a good healthy distraction too from all the dire news.
These are better practices than gouging prices like that hand sanitizer guy.
NPR’s How I Built This is a fantastic podcast that brings the stories behind some of the world’s best-known companies. How I Built This interviews innovators, entrepreneurs and idealists about the movements they built.
Peloton co-founder: John Foley
In this episode, they interview John Foley, one of the co-founders of Peloton; the fitness and media company that you’ve probably seen commercials for.
In the interview, they greatly undervalued John Foley’s network and experience but nonetheless, this episode touched on several relevant topics my clients often face. I picked this episode because it was a little more in-depth and enlightening than other episodes in that Foley he talks about:
having the discussion with this wife about moving in with her parents if the company fails,
how everyone is similarly able including Harvard MBAs,
how Peloton is only recently profitable after 7 years
There are also great questions asked by interviewer that touches on market trends such as arcades no longer thriving due to user experience-to-price dynamics (i.e. video game consoles vs arcades due to quality of experience), penetration/awareness strategy which led to their distribution model given that malls are making an industry correction, and lastly the trademark question: “How much of this was because of your intelligence and hard work, and how much of this was just luck?”
FYI, I always discuss market and industry trends, launch and penetration strategy, as well as bootstrapping in all my business plans.
According to data from the Census Bureau and IRS the average age of successful business founders is 42; so the 20 year old entrepreneur is a true rarity.
The team looked at data around the 2.7 million people who founded businesses between 2007-14 and went on to hire at least one employee. Along with average entrepreneur age, they also learned those new ventures with the highest growth had an average founder age of 45.
The researchers broke out the data into high-tech employment, VC-backed firms, and patenting firms. Across the entire United States, the average founder ages were 43, 42, and 45, respectively for those divisions.
Part of this reason is because experience, social capital, skill sets, etc. play a large factor in the success of a business. So even if you’re over 40, roughly 50% of successful entrepreneurs are above that age.
Fast fashion’s continued domination in addition to the popularity of yoga pants/leggings has helped finish a 15 year run.
Consumer purchasing habits have changed due to the great recession. However as consumer spending has increased with the improved economy, tastes have changed.
But that growth has reversed in recent years. Sales of super premium jeans — brands like 7 For All Mankind, True Religion, Joe’s Jeans and Hudson — fell 8 per cent last year, according to market research firm Euromonitor International. Overall, jeans sales grew slightly in 2016 after two years of declines, as Americans traded down to lower-priced brands like Levi’s, H&M and Forever 21.
Instead, buys are increasingly filling their closets with yoga pants and leggings, which they’re wearing not just to the gym, but also to run errands and meet up with friends. True Religion’s $319 skinny jeans have been replaced by Lululemon’s $98 yoga pants.
It’s summer and festival season is here. Events are big business with over 87 million people attending trade shows, conventions, & conferences; while 32 million people attend music festival. Some annual industry and market stats:
Events are targeted. So attendees are in your market, many in your target market. Renting a booth, depending on the event, can be fairly inexpensive. This is an economical means of raising awareness for your product/service for the following reasons:
You are not locked into a commercial lease contract
Can test the viability of your product/service
Get targeted market feedback
Some of what you may need depending on the event:
Mobile merchant services such as Square
Email collection method
Banners and booth appeal
Or compelling marketing materials (videos, images, samples) of your product/service.
Question: How should new products/services be created?
A) Make a novel untested product/service then find customers for the product/service?
B) Find a group of customers, find one of that group’s unmet need, then create a product/service to address than unmet need?
Reason: The development process of the product/service will take time irregardless of choice A or B. However, with choice B, the likelihood or having to rework the product/service to make it more closely meet the needs of the target market is lower. Also, with choice B, you have a better idea of the size of the target market. Having a market large enough to grow your business is very important. More on that below.
A great example of choice B is Girls Auto Clinic. Girls Auto Clinic is a brilliant combination of female-focused auto repair shop and salon.
Founder Patrice Banks felt what many of us feel when car issues come up:
“I felt like an auto-airhead. I hated all my experiences going in for an oil change, being upsold all the time for an air filter,’ she said. “Any time a dashboard light came on, I panicked.” – Patrice Banks, Girls Auto Clinic Founder
Of course many people come up with business ideas like how Patrice did: through personal experience. However, where most people fail is that their own experience might be too niche. In other words, the market might be too small. How do you know if your market is too niche? Market research. Market research is a process of analyzing factors such as demographics, purchasing habits, direct and indirect competitors, macro and microeconomics, and other elements. As much art as science, thorough market research is a critical step before moving forward with any concept.
Market research is one of the many services I offer at the most competitive prices in the industry. Contact me and let’s find your niche for your new business.
According to a new Credit Suisse report, up to 25% of U.S. shopping malls may close in the next five years.
What are the reasons? Of course Amazon and online shopping is a major reason. However, another factor is mall overexpansion. Currently there around 1,200 malls in the US. Between 1970 and 2015, the number malls grew more than twice as fast as the population. As such, it is predicted that within the next 10 years, that number will decline to 900.
Of course brick-and-mortar retail stores will never completely disappear because of the needs listed above and because of the fact that humans are social by nature. Just the type and make-up of retail stores will change. Possibly pop-up stores (a strategy utilized with great effect by Halloween stores) will become more common?
What to do with vacant buildings? That’s a lot of land that could be used for other use. Maybe mall owners will lower their rental rates. In some areas of Manhattan, retail rents have declined 10-15%.
More housing? Closures from major chains like Macy’s and J.C. Penney are pouring up to 37 million square feet of space back into the market. That could reduce some housing costs. Although, generally more expensive housing markets have greater discretionary spending which is often used for shopping. Also, the time and cost to demolish existing structures, rezone, and rebuild into residential properties along with its infrastructural linkages is not insignificant.
Some mall owners have indicated that vacant properties will be renovated and updated in efforts to attract new tenants and raise rental rates.
What to do?
Who knows that the future will bring but keep in mind that juggernauts like Walmart, Macy’s, and Sears are affected. So starting a service or online store that doesn’t compete with what Amazon sells is a safer option. Brand your own product (e.g. Bonobo, Dollar Shave Club) and controlling your own distribution is another option (of course be aware of knock-offs). B2B businesses (e.g. no one buys industrial components at malls) is insulated from mall closures.
Services such as dentistry, restaurants, car mechanics, large difficult-to-ship products such as mattresses, etc. will remain (so far) an insulated industry.
Analyses such as what I have done above is a small and cursory part of the industry/market analysis and strategy consulting services I provide to clients.
Small Business Saturday saw a record 112 million shoppers this year, setting a new record for the retail event. This was a 13% increase over last year’s SBS.
Part of this increase is greater awareness with 72 percent of U.S. consumers now know about Small Business Saturday. That’s a slight uptick from the 70 percent in 2015. Additionally, almost nine in 10 Americans view small businesses favorably, according to a poll conducted on behalf of the Public Affairs Council.
When selling something as ubiquitous as water, differentiation from your competitors is key. How do you differentiate? One way is through the right marketing mix. The marketing mix is comprised of: Product, Promotion, Price, and Placement. Also known as the 4 P’s of Marketing.
Product: Of course it’s not just water. There is value added features, such as electrolytes, flavors, caffeine, anti-oxidising manganese, etc. that companies are emphasizing to differentiate their product from the competition.
There was Life, Volvic, Ugly, Sibberi (birch or maple), Plenish, What A Melon watermelon water, Vita Coco, Coco Pro, Coco Zumi, Chi 100% Pure Coconut Water, Rebel Kitchen Coconut Water and coconut water straight from the nut (“you have to make the hole yourself”, explained a shop assistant). Also: an electrolyte-enhanced water pledging to hydrate you with 40% less fluid than ordinary water (Overly Fitness), a birch water offering “a natural source of anti-oxidising manganese” (Tapped) and an alternative birch water promising to “eliminate cellulite” (Buddha). There was also a “water bar” – a tap in the corner of the shop – that, according to the large sign hanging from the ceiling, offered, for free, the “cleanest drinking water on the planet”, thanks to a four-stage process conducted by a “reverse osmosis deionising water filter”.
You can read more about the concept of “product” from a marketing standpoint in my post about the failed McPizza.
Price: Another way to differentiate yourself from the crowd is by pricing your product/service at a rate that is considerably higher than your competition. How about a $100,000 bottle of water?
This self-proclaimed “champagne of waters” quickly won FoodBev Media’s Beverage Innovation award for the “World’s Best Still or Sparkling Water”. A case of 24 500ml bottles is $72, while a bottle from the “Luxury Collection, Diamond Edition” will cost you $100,000. It has a white gold cap set with more than 850 white and black diamonds and holds the profoundly questionable honour of being the world’s most expensive bottle of water. If you buy it, Riese will present the bottle to you in person at a private water tasting anywhere in the world.
Promotion: Promotion goes beyond just advertising. What do you communicate? Once you’ve exhausted the typical “it’s delicious!” “it’s cool!” “it’s a great value!” You can go into educating the market about the process, the people, the ingredients, etc. that goes into your product/service. It might be the same things as your competitors, but if you say you “add double the standard amount of X” while your competitors just say “they’re delicious!” then your market might assume your competitor does not add double the amount of X.
Fiji water, for example, contains 210mg TDS, including 18mg sodium, 13mg magnesium and 18mg calcium. (Fiji appears to have pulled off some fairly heavy-duty trademarking, including “Untouched by man™” and “Earth’s finest water™”.) Compare those numbers to San Pellegrino, which contains quadruple the TDS, at 925mg, including 33.6mg sodium, 53.8mg magnesium and 178mg calcium. Fiji, with far fewer solids, tastes smoother, while the San Pellegrino is bolder, saltier and naturally fizzy.
Melted iceberg essentially has no taste, having the lowest TDS (9mg) of any water on earth. It is like the ur-water, the water that pre-dates all other waters. “This is your starting point,” said Leonard, gravely. “Your baseline.”
Surprising right? Now tell me you’re not at least a little curious as to how the various waters taste. If the marketers did their jobs right, you might at least be open to trying the product once.
Placement: Placement mainly deals with distribution. Which is, where does your customer purchase your product/service. You’re not going to sell a $10 bottle of water at a gas station. You have to sell your product/service at where your market is. They are upper-middle class, baby boomers living in Massachusetts? Distributing through Whole Foods or Wegmans is a start, if you can meet their supply chain management requirements.
The dress code of the clientele in Planet Organic, Notting Hill is gym chic. On a hot day in mid-August, the men wore mid-thigh shorts, pectoral-enhancing vests, neon Nikes; the women were in black leggings and intricate ensembles of sports bras and cross-strapped Lycra. They had all either just worked out, were about to work out, or wanted to look as if working out was a constant possibility.
They examined the shelves. As well as the usual selection of kale crackers and paleo egg protein boosters, there were promises of wizardry, such as a packet of Alchemy Organic Super Blend Energy Elixir (£40 for 300g of powder). But never mind the food. Life, in 2016, is liquid. Opposite a display of untouched pastries and assorted bread products (who, in Planet Organic in Notting Hill, still eats bread?), were the waters.
The marketing of bottled water is pretty amazing amazing. Some is ridiculous snake-oil shilling. Some may have benefits, depending on the needs of the individual, that regular water cannot meet. Nonetheless, it is a $5 billion dollar industry in the US that is projected to grow 5-6% over the next five years.