“I’m not playing anymore!” A phrase most often yelled by a child (or an adult) who isn’t winning. We all know these people: they aren’t happy unless they’re in first place, they own ALL the Monopoly properties, and the other team is crying. We’re taught not to be sore losers, but we often forget to acknowledge the negative effects of being a poor winner—especially when it comes to the cut-throat world of economics where everyone is striving to create the best decisions at any cost. Learn why beating your competition isn’t everything.
However, we need to stop focusing on crushing the
competition and concentrate, instead, on creating more win-win scenarios. When
developing the best business strategies for your company, you might think it’s
imperative to get rid of any and all opposition, but competition makes us
better. When an athlete has a strong opponent to go up against, you better
believe they’re going to train harder and longer and, ultimately, get stronger.
With the right mindset, we can learn things from competitors and they will push
us to excel.
How can you
adopt a “Win-Win” mindset in order to generate better results overall?
Understand
That Sharing Does Not Equal Losing.
The tendency is to think that it’s always a zero-sum
game, meaning that there can be only one winner and everyone else must,
therefore, be a loser. But, this outlook makes it impossible to create
sustainable business models. Rather than looking to create win-lose situations,
it’s much more beneficial to find ways to “grow the pie,” as they say.
Costco is a great example of this: They provide a
package deal, which doesn’t add to their bottom line, but still provides the
consumer with benefits that enhance their shopping experience. Other examples
include dinner or airline packages, which include add-ons that make customers
feel like they’re getting more for their dollar, but simultaneously don’t
actually raise the business’ production cost. They key here, however, is to
make sure that your free offerings are desirable. The goal is to increase value
for everyone.
Rethink
“Compromise.”
Too many people, falsely, assume that a compromise
means they’ve lost or that they’re being forced to forfeit something. In
actuality, compromising usually makes you stronger. By listening to the needs
and understanding the goals of your partners (both personal and business), you
build and strengthen the relationship.
When you are willing to consider another party’s
interests, they will, in turn, be more open to catering to your own. In
particular, you might discuss things like price, service, quality, and
reliability. Different transactions hold varying expectations (i.e. to someone
stuck in the rain, availability is more important than price or even the quality
of an umbrella while quality is a crucial factor to someone purchasing a car). Finding where to give and take will help
create an improved outcome for all. In the end, communication is essential to
producing win-win outcomes.
Recognize That
Success Does Not Equal the Failure of Others.
How many profitable barbershops, Italian restaurants,
and grocery stores exist in your neighborhood? Enough said.
Be Open to a
New End Goal.
We often go into situations with a precise vision and
set expectations, but this limits potential. If we’re able to keep an open mind
and test different ideas (i.e. pricing, delivery time, production style, etc.),
we might discover a scenario which strays from our original idea, but
ultimately achieves better results for all parties involved. This requires open
communication between suppliers, colleagues, customers, and even competition.
It also means being open to feedback. Look, listen,
and analyze. Face it: you don’t always know what’s best and the insights of
others may be the missing link to improved productivity and the key to creating
the best business model for your company.
Accept That
Failure Is Part Of Success.
It’s
often said that if you aren’t making mistakes, you aren’t trying hard enough. It’s
safe to say that the experiences of these innovators illustrate this point:
Thomas Edison, one of the greatest inventors of all time, had 10,000 failed trials with his light bulb.
Stephen Spielberg, famed movie director, went solo after being rejected three times from the University of California.
Bill Gates and Mark Zuckerberg, both college-dropouts, went on to… well, you already know.
So: Try. Fail. Learn. Improve. Losing is where we
grow. Too often, winning provides a sense of false security. Accept that
there’s always going to be someone striving to do what you do better than you
do it. And then keep pushing yourself to be your own very best.
Once we accept that success isn’t built on the failure
of others, we open ourselves to a multitude of opportunities. Consider
different perspectives, encourage innovation, and accept the inevitability of
mistakes. You might be surprised at how beneficial it is (and how good it
feels) to win and watch others win simultaneously.
Looking for a one-word answer? If only! As you might have
guessed: It all depends. When considering price
integration, it’s important to remember that products and services must
meet minimal standards based on each specific circumstance. Simultaneously, risks
need to be taken as you strive for an exceptional customer experience. As you
develop your own strategy for price integration, consider the following questions:
What are the differences between a good quality
meal at a reasonable price vs. an expensive gourmet meal with special ambiance?
When it comes to gas, for how much of a savings
and to what distance are you willing to go out of your way to purchase cheaper
gas rather than utilizing your local station?
How much do you buy on impulse vs. shopping for
specific needs and taking time to search/compare prices before purchasing?
How important are image, brand, and experience
in your purchase decisions?
Do you prefer being unique or do you tend to
buy the same old thing? (i.e. Do you stick with what you know—say, hamburgers or
pizza—as opposed to trying new things?)
Provided the quality meets acceptable standards,
do you value quantity or quality?
These questions illustrate how varying factors take
precedence in different situations. Therefore, it’s essential to have a
comprehensive grasp on what it is you’re offering while also fully
understanding what your consumer views as important.
Before we move on, let’s define some key terms:
Value is
the perception of the utility relative to the cost.
Price is
the amount of money per unit or total that a consumer spends.
Quality of an
item refers to the actual craftsmanship or durability of the item or service.
Quantity, of
course, is how many of an item you get for the price.
Cost is
not exactly the same as price. Cost can also refer to the amount of effort
involved to obtain the product/service or the “opportunity cost” of missing out
on some other deal or experience by buying your product.
Here are a few key things to consider when it comes to
price integration:
Don’t try to be all things to all people—you
will probably fail at most of them. In some places, for example, customers view
the most important aspects of ordering a cup of coffee to be speed, quality,
and freshness. In other places, customers value the conversation that comes
with the service.
Product definitions keep changing. Airlines add new fees, restaurants bundle meal offerings, and
warrantees get updated in both price and characteristics. One of the most
critical aspects of pricing, often considered from more of a cost perspective,
is the product or service offering itself.
What is your
competition doing and what do your customers expect? For example,
warehouse clubs thrive by selling multiple units at lower prices per unit while
other industries (think candy bars and airfare) raise prices by creating the
ever-shrinking product/offering. Another factor to consider is shipping fees—free
shipping is virtually expected with most online purchases.
Logistics, sourcing,
and distribution efficiencies are critical factors in your marketing efforts.
They may be used to reduce costs for you and lower prices for your
customers. For example, sharing resources like Amazon, Uber, Air B&B,
and Grub hub can eliminate complexity and create efficiencies . Similarly,
shipping times, delivery methods, using direct shipping, etc., can affect consumer
perceptions and satisfaction.
Ultimately,
the CONSUMER determines the effectiveness of your offerings and whether or not your
offering has the characteristics they’re seeking.
Discussing price
integration can often feel a little like asking the age-old question, “What
came first: the chicken or the egg?” However, when factored in together, value,
price, quantity, and quality will determine what the weakest link is in any price
integration strategy. Each aspect deserves singular attention at specific
times, in various circumstances. But try to avoid exclusive focus on any single
element for too long—it may be devastating to your business. Knowing your
strengths is great, but not recognizing your weaknesses can ruin you. In order
to succeed, it’s crucial to identify what you do best and how you can effectively
make your product/service stand out from the rest.
Interested in a FREE business
consultation? Email or call and we’ll set up a time to discuss the strengths
and weaknesses of your price integration strategy.
With a PhD from the Sloan School of Management at M.I.T., Dr. Bert Shlensky prides himself on his customized approach to help each client address their specific business needs. He’s mentored a few thousand clients at Score and his own practice, grew Sure Fit products from $50 million dollars to $150 million in, was President of WestPoint Pepperell’s Apparel Fabrics Business, and headed the $400 million Culet Shirt Group. He knows how to take a business to the next level and can help you lead your company to greater profitability and success. Visit StartupConnection.net today!
Pricing products or services used to be simple and straightforward. Production and distribution techniques have changed dramatically and become more efficient. This has resulted in great value and pricing opportunities for huge retailers like Costco and Amazon. Online store price changes occur instantaneously, with immediate visibility and accessibility to consumers. There is more diversity in consumer pricing behavior today. The high-end consumer who buys $1,000 shoes in better department stores visits merchants like T.J. Maxx and Amazon to shop for unbranded commodities at a 20-40% discount. Here are some effective pricing strategy ideas to consider for even small businesses:
Analyze
bundling and unbundling.
To coin a phrase, “Do
you sell it your way or our way?” Bundling — if done
correctly — can both improve a product offering and satisfy the
customer, such as selling complete meals or LEGO sets. Bundling can also
be a way to increase profit by adding elements such as high margin warranties
to low margin items like electronics. Bundling can also enhance sales and value,
such as offering extra services in places like fitness centers or nail salons.
Unbundling has also
become popular. Spirit Airlines offers no-frills fares and charges for every
service to maintain perceived low prices. Generic brands represent another
form of unbundling by charging lower prices in exchange for lesser branding.
Pricing
psychology can also dramatically affect your image.
After you have worked long and hard to develop a rational and effective pricing strategy consumer can react strongly to psychological presentations. These can include practices such as: pricing at “$9.95” (instead of $10.00), eliminating the actual dollar sign, unmonitored purchase limits, offering some items for free, selling two for $9.95, or changing colors and font sizes.
Varying Prices
can increase volume and Increase Profits.
One of the most
successful efforts by sports teams and airlines is variable pricing. The
simplest thing is they have ranges in seat prices by location, game or time. The
biggest change is in varying prices by time, seasonality, or holiday, to
develop revenue in off peak periods. While these examples can utilize
sophisticated and expensive computer models, the most noted model is very
simple. Specifically, the early bird special in Florida has been around as long
as I can remember.
“Free” is not
a dirty word
The
concept of “Freemium” is more than a business model. It’s also a pricing
strategy. Offer a free product or service, then offer ‘pay-to-upgrade’
features, and you have a Freemium strategy. Remember that companies like
Google and Facebook were built on free offerings for entry, followed by a host
of upgrades and “for pay” services. Ancillary aspects of the Freemium
strategy include samples, blogs, demonstrations, contributions to charities,
etc. — these can all create awareness and build long term volume at little or
no initial cost. An older variation is to basically “give away razors and
printers” to sell the “blades and ink.”
Consumers
Love Promotions
Contrary
to some popular opinion, “promotion” is not a dirty word and the use of
promotions is not synonymous with diluting the value of your brand. You have
many opportunities to find new ways to increase volume today, including pop up
shops, selling through Amazon or Wal-Mart marketplace, seasonal programs, and
bundling.
Manage your
Product Mix
Essential
to the process of effective pricing is to understand the entirety of your
product mix. Getting people into the store with loss leaders is a proven
strategy. Seasonal retailers use promotions like “back-to-school” or national
holidays to drive traffic to the store (or website), where customers will load
up on the non-sale items. Most important have the items customers want in stock
and avoid items or products that don’t sell like odd colors, sizes or
contents
Consider Service
and Quality After the Sale
Many customers will opt to stay with a company in large
part because of the quality their service after the sale. Some other factors that can affect price decisions are quality,
availability, selection, return polices, and guarantees. When you have a small
business, you have the flexibility to look your customer in the eye and take
that extra step to make sure your customer is happy. A key example is that restaurants
and retail stores can suffer major declines if customers have to wait too long.
Use Efficiencies
of Logistics, Sourcing and Distribution
Another aspect of effective pricing strategy that can provide major competitive advantages has to do with logistics, sourcing and distribution efficiencies. These may be used to reduce costs for you and prices for your customers. For example, Amazon is able to employ such efficiencies to operate on a 15-20 percent margin while traditional retailers have to work on 40-50 percent margins. Similarly, shipping times, delivery methods, using direct shipping, etc., can affect pricing and profits
Final Words
Entrepreneurs who recognize that traditional pricing models no longer apply in today’s world of business will be better able to price their goods and services appropriately in this “Brave New World.” Effective pricing strategies vary widely depending upon the factors we have discussed. The most important suggestion from this blog is to consider alternative pricing tactics and consider the entire pricing package. You must aggressively manage and innovate your entire pricing package rather than simply reacting to short-term changes in the market or competitive pressures.
I’d love to hear your examples of how managing pricing has enlarged your perspective without harming your brand. You can find me at Bshlensky@startupconnection.net or 914-632-6977
Dr. Bert Shlensky earned a PhD from the Sloan School of Management at M.I.T., mentored a few thousand clients at Score and his own practice, grew sure Fit products from $ 50 million dollars to 150 million in sales including $ 60 million of direct internet sales, was President of WestPoint Pepperell’s apparel fabrics business and headed the $400 million Culet shirt group. In short, he knows what works and can help you lead your company to greater profitability and success. StartupConnection.net provides small business owners real solutions to real problems. Contact us today!
SEO is frequently touted as an effective marketing tool for small business. I receive 3-5 e-mails per week from companies that provide SEO, promising things like first page placement, with inexpensive and quick results. SEO can be highly effective, especially within a comprehensive program. Is SEO overrated for small businesses? I think these claims should at least be reviewed.
SEO is frequently marketed as a silver bullet. However, it is only a piece in the puzzle of a total marketing program. Integrating programs with social media platforms, like LinkedIn, Facebook, and Twitter require continued posting and new efforts. In particular, key factors such as differentiation, innovation, and attention require additional effort. Also, the pursuit of SEO algorithms can detract from the innovation and differentiation of the project.
SEO is not as easy as advertised, and like most things, it must be done well. This includes developing content, key words, links, marketing phrases, and pitches, in addition to continued maintenance, measurement, and modification.
It is not cheap – SEO consultants frequently charge $1000-$3000 per month. If you do it yourself, SEO requires significant time spent in branding and writing.
It takes time – SEO consultants generally say it takes 3-6months to even start showing results
Almost by definition, the big guys win. SEO placement is governed by clicks, and the more you naturally get, the more likely you are to get hits.
Another concern is the math – It is generally agreed that you need to focus on high placement, as first place in a search accounts for about 60% of clicks (and the first page 90-95% of clicks). Between 2013 and 2018, Google revenues have increased from $55 million to an estimated $140 million, which has two implications. First, paid search must work for many advertisers, because it is growing so fast. Second, paid search is increasingly taking up first page listings (which makes SEO that much more difficult.)
SEO advocates frequently ignore providing documentation of economics and results in determining when is SEO overrated. In contrast, Google goes out of its way to provide free analysis of clicks, conversions, and pathways to success.
Nevertheless, there are ways to benefit from using SEO:
The most important way is to have an integrated program, including social media, website development, and other marketing tools (like email, targeting, networking, and paid searches). Facebook, Twitter, LinkedIn, Google Plus, Pinterest, and industry sites should all be considered.
I frankly believe that networking and targeting can be the most productive techniques, because they engage interested clients. Getting email addresses and posting are key tools to make SEO more effective.
Focus on getting content and processes right. For example, spelling and inappropriate language can kill a campaign. It is always better to be polite and positive.
Evaluate your effort and measure your results, and change tools when you see success or failure.
Always consider how you are reaching your potential client and being interesting to them.
Don’t be afraid to test and experiment. In particular, if you are using outside resources, be sure to develop clear goals and measures for success.
SEO can be more effective for local postings, especially for service enterprises like repairs and restaurants.
In short, SEO and social media can produce great results. However, they must be done well, they must be part of a total marketing program.
Dr. Bert Shlensky, president of Startup Connection ( www.startupconection.net ) has an MBA and PhD from the Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business, and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select start-up and small businesses.
The potential and strategies of branding are critical today, yet the practices and requirements are dramatically changing. In particular, branding is still dominated by marketing, differentiation, and promotion activities. Right now, technology, customer needs, and operations are becoming vital components of the branding process.
In particular, I argue that many branding experts focus too much effort on packaging, advertising, logos, and copy. At the same time, they often ignore issues like value, service, quality, culture, and our digital environment. If you don’t believe that, just compare the focus of many brands on department stores versus places like Amazon and Costco.
Here are some ways to improve branding:
1. Digital Branding
Brand management frequently does not pay enough attention to the digital world. Branding efforts need to be comprehensive, so it is good to support your efforts with a web site, social media, brochures, etc.
Automation, efficiency, and digital solutions have also allowed us your focus on solutions rather than just meeting customer’s needs. Market the real product your customer wants to buy. For example, the same customer may want the prestige of a designer purse name, and then buy generic labels at the grocery store to save money.
2. Operations
Service, image, and culture are frequently the biggest (and often least expensive) opportunities for small companies to develop a brand and differentiate themselves. Some suggestions:
Focus on your target market, segment, and your ideal customer.
Be polite, listen and then act based on what you have learned.
Become a trusted resource to your prospects by providing information that will help them make a good choice.
Build an email list and send informative mailings on a regular basis.
Keep in touch with potential customers and existing customers.
3. Quality
Quality needs to vary by customer and need. Let’s face it: IKEA makes great utilitarian, well-priced, and good-looking furniture for many young people. However, it really isn’t made to last a lifetime. Other products (like pizza) probably have more variance in the perceptions of the consumer than in the actual quality of the ingredients.
4. Convenience
In this day and age, if you’re not offering some sort of ease of use or accessibility, you’re dead in the water. So, try and angle your brand to offer some sort of convenience, such as easy payment, delivery, and contact (24 hour customer service). These are just some options for offering efficiency to your customer in some way.
5. Value
It’s one thing to nab the customer…. But to keep them coming back? That’s the golden ticket. Your product or service can’t be just a one-time thing. It has to be a many-time thing! It’s called customer retention – keep them coming back, and you’ve got guaranteed revenue.
Remember that value can vary, and it often depends on the situation and the perceptions. For example, Nieman Marcus, Costco, and Amazon all offer quite different products, but since they have quite effective value, many customers shop at all three retailers. As an aside, I love the free samples at Costco.
6. Company Culture
In researching this blog, I searched branding on Google. The articles barely mentioned culture (if at all), which I consider to be one of the most important components of branding. Creating and maintaining a positive company culture is a critical component in achieving excellence and establishing a great brand. A great strategy, without a supportive culture, will undoubtedly fail… I’ve seen it happen too many times.
Setting the right expectations, providing support, and accepting responsibility as a leader are all non-negotiable aspects of nurturing the culture in your company. In addition, you must never cease to measure what seems unquantifiable (in order to consider your attempts at creating a successful company culture).
There is no better example of this than the Golden State Warriors, who just won their third NBA title in four years. Much of the attention is given to their super stars, but if you look behind that, you see how the entire organization (including the training staff, coaching staff, medical staff) are all united to create excellence and a unified brand.
In summary, branding and differentiation are two of the key areas required to bring even the greatest new products and services to market. These two strategies are linked and are primarily a function of ensuring that your product or service meets the needs of your consumer.
As one expert said “We all know the adage…. features tell, benefits sell.” If this is true, why do so many entrepreneurs still speak in terms of the features of their product or service and not its benefits? Your prospective customers does not care what your product or service does… they only care about what it does for THEM!
Ready to achieve success by improving your company culture? Contact us today.
Dr. Bert Shlensky, president of Startup Connection (www.startupconection.net) has an MBA and PhD from the Sloan School of Management at M.I.T. He served as the President of WestPoint Pepperell’s apparel fabrics business and President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he now focuses on working with select startup and small businesses.
Many marketing guides start with developing strategy – understanding your focus and defining your brand. I argue that execution and excellence are more important than developing vague brand and marketing strategies. As Walt Disney said:
“Do what you do so well that they will want to see it again and bring their friends.”
While this quote may seem obvious, it has a number of implications that are frequently ignored. For example, when I talk to marketers, they frequently discuss the latest hot trend – targeting, SEO, social media, videos, paid search, etc. However, how we execute these strategies for our situation may be more important than the specific program. In addition, many marketers downplay measuring the results of marketing efforts. Now, digital marketing allows you to develop, test, measure and adapt. You can now test various programs and strategies before making expensive commitments. Paid search is an example where key words, offers, and links, are frequently the keys to success. Thus, testing various alternatives can dramatically help focus a program. However, many advocates will recommend spending thousands of dollars a month with little clue of what will work. Similarly, many marketing programs get enamored with technology while ignoring basic execution concepts. For example, I recently read some exciting marketing plans from a client that included videos, links, and many other details. However, they were so focused on technology that they forgot simple things like phone numbers, e-mail addresses, and how they would help their customers.
Here are some tips related to execution in your marketing programs:
Goals – What are your long-term volume and image expectations? Are you building sales just for today, or are you seeking long term customers? What are your organizational and financial resources? Who is your target market? What is your competitive positioning? The answers to these questions can change during the marketing strategy process, and they will affect your program as you begin to execute in the real world.
The Internet – It’s fast, centralized, and cost-effective. Traditional print media and many retailers are dying compared to Internet retailers like Amazon (who represent between 35-45% of internet consumer sales, and are growing at about 20% per year.)
Pricing, Stock, Forecasting, and Value – Now with the ability to reach customers in remarkable ways, you must consider all of these as part of your plan.
Product Expectations and Customer Service – You’re a brand. People expect a certain kind of quality based on your target demographic, so keep that aligned with your goals.
Develop, Test, Measure, Adapt – This is the scientific method for a Lean Startup Strategy, and thanks to the Internet you can do all of this really quickly. One of the key recommendations of Eric Ries in The Lean Startup is to “test, measure, and pivot until you get it right.”
Customer Retention – Satisfied customers are the best, most cost-effective way to grow a business.
Traditional Advertising – While firms generally are spending less money on traditional media, it can still be an important component of good marketing (especially if your products and services lend themselves to such media).
Distribution – How are you selling your products or services? Trends in distribution are changing rapidly, and your process needs to be in sync with the times. For example, automation and customer service are replacing the direct salesperson. Money can be saved by eliminating traditional channels and substituting direct shipping and the Internet
Integration – The key to an excellent marketing plan is to employ all of the tools you consider relevant and affordable, and to develop a targeted plan with clear action steps and benchmarks. First and foremost, the plan must fit your goals and your budget. It is then critical to measure the results and adjust to maximize your goals and profit.
Risk and Openness – I encourage you to consider more risk in our changing environment, and I also suggest changing the business culture to encourage more risk-taking. I often say, “If you aren’t making mistakes, you aren’t trying hard enough.” Mistakes mean you and your business are growing. Consistently exploring alternatives and evaluating your decisions will help you figure out what’s working.
Measurement – A number of general guidelines should be followed when making goals and measuring them. First, make goal-setting a process and communicate these goals to those involved. Second, be certain to understand the different needs in different situations. Third, be sure to use clear and simple measurement tools. Fourth, be sure to use the process for improvement (rather than simply as a tool for criticism). Focus on the mediums that work the most; not based on trends, but on what has the best outcomes.
Dr. Bert Shlensky has an MBA and PhD from the Sloan School of Management at MIT. He is the President of the New York-based consulting firm The Startup Connection, where he uses his 30 years of high-level business experience to guide his clients towards maximum sales and profit. For a free consultation, please visit www.startupconnection.net.
When you want to stand out, reach out to Bert for the tools that will build your “sticky” brand. My focus is on understanding and analyzing your dilemmas and challenges, so your company becomes profitable faster.
Call (914) 632-6977 or email me at bshlensky@startupconnection.net. Don’t leave without signing up for our useful free eBook!
Feeling stumped or overwhelmed? Contact Bert at (914) 632-6977 or Email to start the process. Thanks!
SEO is frequently touted as an effective marketing tool for small business. I receive 3-5 e-mails per week from companies that provide SEO, promising things like first page placement, with inexpensive and quick results. SEO can be highly effective, especially within a comprehensive program. Is SEO overrated for small businesses? I think these claims should at least be reviewed.
It is not cheap – SEO consultants frequently charge $1000-$3000 per month. If you do it yourself, SEO requires significant time spent in branding and writing.
The potential and strategies of branding are critical today, yet the practices and requirements are dramatically changing. In particular, branding is still dominated by marketing, differentiation, and promotion activities. Right now, technology, customer needs, and operations are becoming vital components of the branding process.
In researching this blog, I searched branding on Google. The articles barely mentioned culture (if at all), which I consider to be one of the most important components of branding. Creating and maintaining a positive company culture is a critical component in achieving excellence and establishing a great brand. A great strategy, without a supportive culture, will undoubtedly fail… I’ve seen it happen too many times.
Many marketing guides start with developing strategy – understanding your focus and defining your brand. I argue that execution and excellence are more important than developing vague brand and marketing strategies. As Walt Disney said:
Here are some tips related to execution in your marketing programs: