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.
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.
A lot of my clients want a marketing strategy that involves internet marketing. Usually just online advertising is fine, but to more fully utilize the tools available to a small business, an internet marketing component should be part of a marketing strategy.
Internet marketing sounds straight forward enough and to some degree it is. However, it can get quite confusing when one goes beyond simple advertising on one website. Mix in compensation methods, market segmentation, success metrics, etc. then it gets fairly complex. As such, I put together an overview of internet marketing.
This post is a 30,000 foot outline of internet marketing (online advertising). As such, it is just an overview and not meant for detailed explanation. Each concept can be more deeply studied.Some of the terms are interrelated, meaning they are not mutually exclusive and can be blended with one another. Please keep in mind, marketing =/= advertising, although the two terms are frequently interchanged advertising is a component of marketing. Therefore, some of the concepts are more directed about marketing the company and/or product rather than just advertising.
This overview is pretty broad so skip to the end to find out what you as an entrepreneur/small business owner can do to utilize internet marketing for your company. The first two sections are: Delivery methods and Compensation methods
Display advertising: This is the most common and probably what everyone is most familiar with. The process can be straight forward or quite complicated.
Example: Pretty much every website you’ve ever visited.
Related: Web banner advertising, frame ad (i.e. traditional banner), pop-ups/pop-unders, floating ad, expanding ad, trick banners, news feed ads
Display advertising process overview: This is where the real difference between traditional vs. online advertising is seen. In traditional (and simple online) cases, the advertiser contracts with the website publisher and the ad is displayed. This is hardly done anymore beyond small relatively unknown websites. In a more complex case, the advertiser hires a marketing firm that might handle everything including content creation and placement (this is not the case many small startups face. Scroll down to the end for actionable info). The component that separates online advertising with traditional real-world advertising is the real-time bidding process at an ad exchange. An ad exchange is a platform that facilitates the buying and selling of media advertising inventory from multiple ad networks. Prices for the inventory are determined through bidding. The approach is technology-driven as opposed to the historical approach of negotiating price on media inventory.
General diagram of the display advertising processSource: Wikipedia – Ad exchange
Ad network: An online ad network is a company that connects advertisers to web sites that want to host advertisements. The key function of an ad network is aggregation of ad space supply from publishers and matching it with advertiser demand. The fundamental difference between traditional media ad networks and online ad networks is that online ad networks use a central ad server to deliver advertisements to consumers, which enables targeting, tracking and reporting of impressions in ways not possible with analog media alternatives.
Interstitial: Ads that appear before the main content of the site is loaded. Kind of like a pop-up, but the ad appears in the same window instead of a new window.
Example: Bvlgari’s ad on Forbes
Related: Text ads
Search engine marketing: You type in ‘auto mechanic’ and the first search result that comes up is a doctor’s office, usually near you. This isn’t necessarily an “advertisement” (remember marketing =/= advertising) but it brings awareness of the business to the customer by displaying it in a list of other auto mechanics. What rank it shows up on a search engine’s result is a mixture of keywords, backlinks, tags, page titles, daily bidding budget, etc.
Example: Google Adwords, Bing/Yahoo Ads
Related: Search ads, SEO, sponsored search
Social media marketing: Advertising on…social media! Each platform has their own pricing, terms and conditions. However, their reach is expansive and consistent. Facebook, for example charges as little as $5 per day and you can choose your target market, key words, photos, etc. I wouldn’t recommend social media marketing for startup B2B companies, but a great resource for businesses in other sectors.
Email advertising: Often synonymous with spam. Success is mixed but a resource to consider. Unsolicited emails are not encouraged unless you are very sure the target is receptive to your product/service. However, if the recipient is a former customer, it is a great and direct method of communicating deals, specials, updates, etc. You can easily create your own email list or hire email marketing companies such as Constant Contact to do this.
Online classified advertising: Online classified are relatively inexpensive but less targeted. An engaging headline, attractive photos (if attachments are allowed), and a persuasive yet succinct text body are essential for success with this advertising channel. This is not a suitable advertising channel for high-end/luxury brands’ products/services.
Example: Craigslist, eBay Classifieds
Affiliate marketing: Sometimes called lead generation, affiliate marketing is when advertisers organize a 3rd party to generate potential customers for them. Third-party affiliates receive payment based on sales generated through their promotions. The affiliate earns a commission when the visitor completes a desired action such as a link click, email submission, filling out an online form, completing an online purchase, etc.
Example: Product review blogs
Related: Affiliate network, CPM, CPC, CPA
Content marketing: An article, video, how-to-guides, quizzes, etc. (i.e. content) that is meant to market a product or business. This can be a relatively expensive strategy suited for more established companies. Companies can hire “brand journalists” to write articles about a wide range of subjects relevant to their company. The articles I post on this website is a very simple version of content marketing.
Native advertising: A type of “disguised” advertising that matches the form and function of the platform upon which it appears. In many cases, it is displayed as either an article or video, produced by an advertiser with the specific intent to promote a product. The word “native” refers to the similarity of the content with the other media that appears on the website. The post the link takes you can be the company’s page or an article discussed in the Content Marketing section above.
Online marketing platform: This is software designed to help manage all of your marketing in one platform. Your marketing manager or hired marketing firm will most likely utilize software of this sort. As a startup, depending on your marketing strategy, using an online marketing platform is probably not necessary.
Due to the accurate data on views, various types of multimedia, and other metrics that digital advertising allows for over traditional channels, several compensation methods have come into favor in the industry. Furthermore, because advertisers can track action online (unlike if a radio advertisement has been heard or a TV commercial seen) compensation methods is largely separated into impression and action.
Cost per mille (CPM): With this impression method, advertisers pay for every thousand displays (a.k.a impressions) to potential customers.
Cost per click (CPC): Advertisers pay each time a user clicks on the ad/link with this action method. CPC is recommended as a compensation method if you want the customer to visit your site. If your goal is just to build awareness of your company then CPM is recommended. CPC is growing in popularity though, with two-thirds of all online advertising compensation methods being CPC. One concern with CPC is accidental clicks. Thus, click rates using CPC has to be lowered to account for accidental clicks.
Cost per engagement (CPE): This action method aims to track not just an impression but if the viewer interacted with the ad.
Cost per view (CPV): This is mainly for video advertisements and is appropriately the primary benchmark used in YouTube ad campaigns.
Fixed cost: This is the most straightforward and arguably the most cost (in)effective compensation method. This is mainly time duration dependent and as such the cost is measured in cost per day (CPD).
There are other, less common methods as well as hybrid methods but as a startup it is unlikely you will see them.
Wow this is great and all, so how do you as a small business owner use this to advertise online?
It’s pretty straight forward: Search engine marketing (Google Adwords and Bing Ads) and Social media (typically Facebook). If you do that you’ll probably be ok and have most of your bases covered. The trick is getting your demographics, budget, and keywords on point. Internet marketing is an art that almost anyone can do but takes a skilled professional to do well.
All my business plans come with a basic marketing plan which can be expanded into a full fledged marketing plan that breaks down a company’s full marketing mix including branding, timing, advertising channels, pricing, and more.
Of course almost every company needs to advertise. But where? Targeted advertising is most effective. So just put a sign at where your market hangs out (what’s “market”? check out my article on some commonly mistaken business terms)? You can put up a sign but it comes off as inauthentic and lazy. You have to deliver the brand message/concept in a way that will be received.
H&M is sponsoring Coachella for its seventh year. Premier music festivals can make over $1 million by selling stage-naming rights to corporate sponsors. However, other businesses are getting on the ground-level and making for a more interactive experience. One way is experiential marketing / promotional events: Levi Jeans’ Pool Party at Coachella. Yeah, you know it’s commercial but it still creates a positive association with the brand. Yes, the same positive association used on all animals to create habits. Habits = sales, if ingrained deeply enough.
Where do you find where your market hangs out? Google industry trade shows, magazine, clubs, etc. Selling knitting needles? Find influential people on Pinterest and send them a sample. Opening a bakery? Go get a booth at the local farmer’s market and get to know those in the neighborhood. In Supermensch: The Legend of Shep Gordon, Shep sold out Alice Cooper’s show in London by having a billboard truck advertising Cooper’s show breakdown in Piccadilly Circus (one of London’s busiest roadways) during rush hour traffic. So for hours people helplessly saw in person and on the news, Cooper’s ad while stuck in traffic for pennies on the dollar!!! There are only as many ways to promote your business as the imagination allows.
So don’t just spend a ton of money and blow it into the wind. Do a ton of research and then inject that into a targeted promotion as part of an overall marketing campaign strategy.
According to the National Retail Federation, American consumers will have spent $6.9 Billion USD on Halloween costumes, decorations and related items this year. This includes haunted houses, and candy.
So, wow did it go from a niche holiday to the 2nd most lucrative holiday behind Christmas?
Halloween used to be only popular among school aged children because they get candy. Now, the holiday is not just for kids. Adults are embracing it full-on. Some 13% of Americans ages 18-44 say Halloween is their favorite holiday, reports DDB Worldwide. There are just as many adults costumes are here are children’s costumes in the stores. Including “Sexy Pizza Rat“.
It probably started like most trends: Organically. A small bunch of young adults in relatively isolated enclaves throughout the nation that wanted to partake in costuming. Then other people saw how fun it was and then the number of participants grew into a measurable amount.
Slate has a pretty interesting article theorizing about its beginnings at the Halloween parade in New York City’s Greenwich Village. This parade for all-ages, first started in the early-70’s, began as a neighborhood event organized by a local puppeteer and mask-maker. Its fun and popularity then spread to San Francisco and Los Angeles.
The appeal to adults is not a difficult concept to grasp. “There are several reasons [for its adult popularity],” says Denise Delahorne of DDB Worldwide, a global marketing communications network in a recent 2012 Forbes article, “There’s no stress to it. You don’t have to travel or deal with relatives. There’s not the holiday pressure to find a date if you are single. You can wear whatever you want and not be judged. There’s the fantasy, role-play element.”
Businesses saw this trend (the power of market research!!) and seized this market opportunity. Voila! Halloween as we currently know it came to being.
Not Just Halloween
Because of these reasons, ancillary (niche) markets have begun reaping the benefits of costuming. Now, dressing-up has gone from beyond Oct. 31 to dates throughout the year at comic book conventions, anime expos, etc. and throughout across the United States and beyond.
The commercialization of Halloween isn’t unique though. In fact, Christmas wasn’t always about retail. An event that might have happened in the Spring over two millennia ago eventually became linked to a 4th-century Greek bishop known for gift giving. This act of gifting, over centuries, became more commercialized. In even in the 1800’s letters were written lamenting that “Christmas wasn’t the same as it used to be.”
We also did it with Valentine’s Day. For better or for worse, the next step might be commercializing Thanksgiving. Then we can have 5 uninterrupted months of “holiday” spending. If I were commissioned to do a marketing/PR campaign to commercialize Thanksgiving, I would investigate the underlying psychology that differentiates Thanksgiving from the other holidays (see the Denise Delahorne quote above). Maybe a little DIY, a little up-cycling/repurposing, gluttonous eating, etc. Then craft an activity/event that addresses these elements. Next craft the marketing communications that implies the psychological elements in the advertising of the product/service I’m selling.
I was helping a client last month decide on a brand name for an athletic apparel company. I took the various concepts and elements they wanted to portray and came up with several candidates. To do this I did a psychographic analysis of what they want their brand to portray compared to that of their competitors. This is one below is one I did for a swim wear client:
After they chose a name walked them through the trademark search process. To do this:
Sales is a lot about psychology. In the book The Art of the Sale, former foreign correspondent for London’s The Daily Telegraph and Harvard MBA Philip Delves Broughton discusses how a merchant in Tangier, Morocco has sold to the likes of Yves Saint Laurent.
Abdel Majid Rais El Fenni is a salesman of fine objects and furnishings deep in the heart of the Medina (old town) of Tangiers. His customers range from the suspicious and clumsy cruise passengers who sweep through the city on the lookout for the quick and the cheap, to interior designers and antique dealers from around the world looking for treasures for their clients, to the rich and famous themselves — Elizabeth Taylor was a customer — who trek to Majid’s store to shop.
One of the many reasons of his success is his ability to read the customer. He understands that sales opportunities develop quickly and that sales strategies must be readily tailored to meet the needs of his customers, and that he must quickly uncover his customers’ true desires. Not all customers just want a bargain. Some want a piece with a fascinating history. Some want to show off in front of their friend how good they are at finding the “best.”
This falls in line with what my international marketing professor always said, marketing isn’t about fact, it’s about perception.
Sales is an intricate art that takes a lifetime to master but is simply put, the most important aspect of business.