Is Your Pricing Too Cheap?

by | Oct 26, 2017 | Marketing

How small businesses can get pricing right

Did you know that being dead cheap could be dead wrong for your business? Many small businesses try to be the cheapest, thinking that it’s a certain way to make more sales – but pricing does not work that way.

If your pricing strategy doesn’t go beyond being cheap, you’re at risk!

Consider how Uber prices its rides. Uber originally tried out just being the cheapest all the time. It didn’t work – drivers didn’t want to work for so little money at inconvenient times like late nights, Saturday nights, or holidays. Guess when demand for Uber cars is the greatest (you can read all about this on an Uber blog)? So, Uber created a dynamic pricing strategy linked to demand, as well as a lot of other factors, and it worked brilliantly.

Learn Dynamic Pricing!

Today, most companies use a dynamic pricing model. These can range from the ”early bird special” to sophisticated algorithms, like Amazon. Try being cheaper than them, and they’ll find a way to reduce their prices further than you can, at just the right times.

Because, it’s not all about price. Consumers look at price as one factor among many. The consumer thinks about quality, usability, overall value, look, and feel, along with a number of other aspects – each product has a different combination of consumer-appeal factors.

For many products, price isn’t at all the main aspect involved in consumer choice in evaluating the total value of a purchase. Here’s an example from the Harvard Business Review: “Some products have a much more immediate and dramatic response to price changes, usually because they’re considered nice-to-have, or non-essential, or because there are many substitutes available. Take, for example, beef. When the price dramatically increases, demand may go way down because people can easily substitute chicken or pork.”

More complicated products have more factors to consider; keep in mind that “price elasticity” – the technical term — isn’t just a factor of how well you’re marketing. It is also affected by the type of product you’re selling, the income of your target consumers, the health of the economy, and what your competitors are doing. “You can’t look at it in isolation; you have to look at it in context of the industry and its competitive structure and in the context of consumers’ lives,” as the HBR article explains.

Getting the Price Right

To get pricing right, it must be a part of integrated marketing programs that also consider product, service, quality, competition, price elasticity, and internet channels – each product calls for a selective strategy.

As part of your overall analysis, there are some pricing tactics you might consider:

  • FREEMIUM is one of the most powerful pricing strategies today. Promotions are incredibly effective and, contrary to popular belief, they don’t hurt your image or make you seem cheap. Google, Facebook, the cloud, public organizations, and open source programming all give things away to build their long-term success. What makes freemium so effective is that it builds trust with customers. You give away something of genuine worth, and then the customer believes that you deal in products with inherent value. Gaining customer trust is the most powerful form of marketing.
  • Drop High Maintenance Goods: You need to get customer reaction to your products, so that you can learn which ones the consumers say have high customer service and maintenance attached. Get rid of products that customers have had bad experiences with – this enables you to concentrate on popular ones for which you may be able to earn higher margins. Drop the unprofitable lines and find out what customers don’t want – this will help you to put together a clear pricing strategy.
  • Selling exclusive products and services is another tactic to keep prices and margins higher. You can’t be beaten down by the competition if they don’t really have the product you can offer. Exclusivity is not necessarily just the simple product. It can be quality, service, or just a simple understanding of your needs. Psychological Pricing: Base your prices on factors such as perception of product quality, popular price points, and what the consumer perceives to be a fair value. This pricing relies on a positive psychological impact on the customer.

The key factor in all of this is the value you offer your customers, and this is why building trust combined with pricing psychology are powerful tools. Your customers perceive a value in what you offer in terms of its intrinsic value, and the effects of the product on their lives – i.e. buying a takeaway meal provides good food, but also saves the consumer time in preparation.

Taking all of the pricing factors into account isn’t easy. That’s why we, at StartupConnection, can help you understand how to go about it.

Why don’t you contact us and let us help you to have an effective pricing strategy?

Dr. Bert Shlensky, president of StartupConnection ( www.startupconection.net ) is a graduate of Sloan School of Management at M.I.T. He served as the president of WestPoint Pepperell’s apparel fabrics business & President and CEO of Sure Fit Products. Having provided counseling to over 2,000 clients, he focuses on working with select start up and small businesses.

Beat The Nerds … Creatively!

by | Oct 10, 2017 | Operations

Technology vs. Human Instinct

Technological advances provide efficiency and analytics. The web, AI, cloud, CRM systems, etc. are taking over. Great improvements are being accomplished and organizations are making better decisions. Yet, how do we ensure that creativity and the human instinct continue to be cultivated without us getting too comfortable with our technological supports?  How do we beat the nerds ?

The purpose of this article is not to reduce these efforts, but rather ensure that creativity, innovation, and excellence are also preserved. Specifically, there are several indications that the analytical approach may have some unintended consequences:

  • The stock market is a great indicator of world’s dynamics, and innovative companies like Amazon, Apple, and Alphabet are thriving, while traditional companies like IBM and GE are struggling.
  • Authors, like Adam Grant in the “Originals,” and many others, point out that progress is dependent upon nonconformists and people who go against the grain.
  • Organizations preach objectivity, yet they follow the HiPPO decision process (Highest Paid Person’s Opinions).

How Do Creative and Innovative Individuals Thrive in the Growing Trend of Reliance of Analytics?  Beat the System!!!

This may sound impossible, but here are some easy tips:

  • Challenge Assumptions. Many analytical models contain numerous assumptions that are seldom challenged. In particular. the data can be highly biased, because it can ignore critical factors or be based on preordained goals. If factors are not appropriate, this can result in incomplete or wrongly determined data. Find the parameters the system has missed and provide appropriate information to complete, or redirect, the research data assessment process.
  • Ensure The Analysis Is Dynamic. Our lifestyles have increased in complexity with continual changes; many analytical models avoid difficult issues and, thus, can create incomplete data. Find the issues that have been avoided in your analytical model(s) and advocate for their inclusion and how it affects the outcome.
  • Consider Alternatives and the What-Ifs? Most analytical solutions involve a single outcome. The reality of life and business is the need for varied solutions and backup plans. Review the alternatives, and the different outcomes, which could affect the results and probabilities. For example, bringing diverse resources into a situation can greatly alter the excellence in execution.
  • Understand Risk. In general, we avoid taking risks. It is more comfortable to stay in the status quo than to uproot and change direction. But, we all know those that don’t risk, also don’t succeed. Taking healthy risks is important for growth of self and companies. We are more afraid of losses than the probability of gains. People are more likely to say “I could get fired,” than “I could get promoted,” regardless of the probabilities or impact. There is a balance between risk and caution.
  • Set Multiple Goals. Most analysis focuses on singular goals, like short-term profit. A company needs to consider measuring multiple parameters, such as developmental, personal, staff, and branding.

Analytics and current technological advances provide us tools to make better decisions. The key to success is to not solely rely on them, but to integrate them. Our natural human intuitive forces continue to lead with the support of the new technologies. Freeing yourself from restrictive thought processes, especially in bigger corporations, like “We have always done it this way,” is dead. New paradigms: speed, expertise, flexibility, innovation, and collaboration, produce more dramatic change for organizations. Incorporating new technologies, while cultivating innovation and creativity in the business, will allow new approaches to problem resolution.

Creativity Is Allowing Yourself to Make Mistakes. Art Is Knowing Which Ones To Keep.

Dr. Bert Shlensky, President of StartupConnection.net,  is a graduate of 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 focuses on working with select startup and small businesses.

Shoot First…. Ask Questions Later?


by | Sep 28, 2017 | Marketing

There is value in proper planning and execution, especially related to “Marketing & Sales.”

Yet, how many times have we heard successful business entrepreneur share their success (after many failed attempts) when they didn’t plan on it?

In this post, I will explore how “Not Overthinking and Just Doing” can also be a useful strategy for growing business.  This technique can be employed by all businesses, yet it is the small business owner who holds the advantage of this strategy, as resources are more flexible. In addition, the absence of tiered staff and bureaucracy allows for more inspired and engaging strategies to be implemented faster and adopted as needed.

I will share two examples of how “SHOOT FIRST… ASK QUESTIONS LATER” has served my clients with great success.

SURPRISE SALES” CAN LEAD TO “SURPRISING RESULTS”

DROP PRICES TO INCREASE LEADS
(15% versus the usual 25-30%)

My client “Jane,” a small business owner, has found her sales success to be based on regularly introducing new products.   With each new product, she would carefully plan the new rollout, developing marketing, pricing, and communication strategies for few months at a time.  During her last product launch,  she got antsy, and just posted an introduction on her web site with a very modest sale.

The result was the best single email and ad in a few years.

GO WITH YOUR GUT

Her usual product launches involved strategy, analysis, and tiered introduction of the products.  With this GUT INSTINCT, to just post a modest sale to her new product, the timing and response was just perfect in her category, giving her more exposure, in addition, with Amazon and other retailers (as timing was perfect).

RIGHT PLACE – RIGHT TIME

Had she waited few more weeks or months for all marketing research and strategy to be concluded, she would have missed the “RIGHT TIME.”

This new success has found her a new strategy that she employs regularly now with success. Online business and internet sales now allow us to “test” and “analyze” strategies faster and adapt to the changing market trends.

SPENDING MONEY ON MARKETING & NOT GETTING RESULTS?

Our second client case review is about a service-based business that has failed repeatedly, even though the offered services were very useful to the target audience.  Where did they fall short? Having hired numerous marketing experts to conduct testing, analysis, and creating “ads” and other related marketing tools to drive “traffic,” each marketing project tapped into their budget with no results.

TO DO …OR NOT TO DO?

Market research requires an allocated budget, and implementation time can take months (which small business usually don’t have, as they need sales to keep there doors open). The down side of “Expert Market Research & Planning” for small businesses is that, if the result of all the research and planning was unsuccessful, their budget can be exhausted, and repeated action of the same approach will delay immediate actions that could be taken.

DON’T JUDGE THE MESSENGER

Small business have an advantage, as they can easily test the techniques that work best faster than larger corporations.  After many failed attempts, and many marketing experts later, the company programmer had an idea. With the ease available now to make websites, and all the templates available, he suggested, “Lets create a few mini test websites,” and drive traffic via cost efficient ways.  Use “Google Adwords,” and test which style will resonate, and best convert the traffic into leads.

In the company’s prior approach, each website change involved a lot of research and planning.  This new strategy allowed them, in real time, to test multiple styles. They could focus on the successful ones, and adapt the others based on what they learned. Best of all, this can be done quickly and inexpensively.

MULTIPLY YOUR TESTING

This technique of utilizing your resources to create test sites and other “POP UP-like” sites for your business will allow you to get immediate feedback on what works and what doesn’t, without months of planning each strategy, and waiting for results, only to adjust again later.  In a few days, you can get preliminary feedback on almost anything and develop further tests. You can also do simple AB testing, to make the tests even more valuable. Google Adwords can be tested and quickly modified, based on results.

SUGGESTIONS HOW TO “SHOOT FIRST & ASK LATER”

  • Develop, test, measure, and adapt.  Think outside the box – create pilot test programs you can utilize with your business NOW – without over-planning. This will allow for the gathering of more data faster, and help you find what works best.
  • Focus on winners.  Find your winners, and expand on those techniques.
  • Less talking, more action.  Understand what you know, what you learn, and what you don’t know.  In particular, reduce endless conversation about alternatives, where there is little empirical evidence, but lots of opinions. At the same time, learn from your test results, and execute for your success quickly.
  • Details matter.  Examine the integration of variables and success. Presentation, details, marketing, and pricing can all affect the success of a program. “What did you do that made it work?”

IN SHORT…

We frequently spend too much time analyzing what we don’t know. Allow for some uncertainty and for more testing, especially on the Internet. Make it fast and inexpensive. Most importantly, test to identify real winners, and then, reconfirm, and expand as fast as possible.

Dr. Bert Shlensky, president of www.startupconnection.net, is a graduate of 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 focuses on working with select start up and small businesses.

9 Reasons Why You Should NEVER Fear the Reaper of Market Research

by | Sep 11, 2017 | Operations

No doubt that many avoid any kind of research, let alone market research, like the plague for a lot of reasons. This undoubtedly means your business culture suffers greatly due to a great fear in the office. A cloaked figure of darkness and a scythe, waiting to envelope you in the shadows of despair as you’re engulfed in never-ending data, statistics, and reading. It’s not fun!

Hence Why Your Business Culture Tends to Be More About Action and Results, Not the Preparation That Ensures You Get There

We want results — without a whole lot of work to get there. And don’t get us wrong: there are many things we do on a daily basis, best practices to optimize your business planning with the proven model that gives you the most minimal time crunch and maximum output and results. But hear us on this: you never, ever discount the preparation and planning, meaning the market research!

Fear is a funny thing, honestly. It’s only as terrifying as we make it out to be, but thankfully when you’re in on the trends of today and the power of the Internet, and other best practices you make second nature — there’s no doubt you make this grim reaper of market research more like a puppy dog!

Here are the best reasons for doing market research without breaking a sweat (or fearing death):

  • Google’s Marketer’s Almanac — How easy it is to just click the link and get all the information you need right at your fingertips on consumer behavior changes, especially during the seasons, holidays and special events. Yep, Google has the ability to give you that information in just minutes.
  • American Fact Finder — There’s no better research space than the U.S. census, but holy COW would it take forever for you to research that mile-long grim reaper market research-1book. Thankfully, this website allows you to research all of it with a few button clicks and filters by age, income, year, race and location. Oh, and it’s free to use.
  • County Business Patterns — When was the last time you scouted businesses clear across the country? Probably never. Travel’s expensive, but this site makes it easy as it provides info on the areas and regions for large numbers of all sorts of businesses. Check it out for yourself.
  • Business Dynamics Statistics — Remember all that census data you just found? Guess what: now you can use this site to view the economic data on job creation, startups, openings, expansions, shutdowns, and even closures.
  • FedStats — The best part about finding information on certain industries is getting the info from all sorts of federal agencies. What’s hard is finding that info from those agencies as quickly as you’d like. This site accesses all that info for you immediately, for such verticals as agriculture, education, transportation, and energy.
  • MyBestSegments — This is next-level campaign research stuff when you think about it. We don’t know of any other tool out there that can review any region’s demographics in terms of lifestyle and habits. In other word, click on this site, and you can start researching your locale immediately to determine how your consumer base will react to any campaign you launch and even what competitors are near you.
  • SurveyMonkey — Surveys are the weapon to use, but for many people, they’re hard to create. Unless you use this site.
  • Loop11 — Even sicker and futuristic is this crazy site allowing you to actually test the websites of your competitors secretly. Simply create a form and recruit people. You have to see it for yourself!
  • Userlytics — Definitely last, but most certainly not least, is Userlytics, which does the uncanny. This platform actually allows you to webcam and screen-shot a user testing your mobile apps, videos, display ads, and much more. Talk about real-time and verifiable research….

And you better believe this trend-setting business planning stratosphere will continually evolving. Perhaps even avoiding death and achieving immortality.

That’s Why You Have to No Doubt Shut Off the Fear Due to the Tools. Fear NOT Market Research.

For these days it’s plenty easier getting all the data you need to ensure you have all the information you could get your hands on. And that cloaked demon over there ends up not as scary. Just a guy with bad skin, looking for a corn field to harvest.

Dr. Bert Shlensky, President of The Startup Connection, directs all small business clients toward maximum sales and profit thanks to his 40 years of high-quality experience. He does this through technological, social, and online integration, supercharging your business success into the next level, so don’t hesitate to sign up for a free consultation RIGHT NOW.

Segmentation, Markets, Measurement, Oh My! Key Concepts to Innovate Your Business

by | May 1, 2017 | Marketing

Experts frequently focus on their ideas and execution. However, understanding your market’s key concepts can be just as critical.

“If you don’t know where you are going any road will get you there. “ – Mark Twain

As a business owner, there’s just no getting around having clear definitions for both your market and segments. Many of my clients often hate the work necessary to understand their markets. Having the U.S. population, which is made up of about 300 million people, probably won’t get you’re the results you want. In most cases, using segmentation (selecting targets according to sex, geography, income, age, etc.,) can reduce your market to the 5-10 million level, which is a much sounder target to have. Taking the time to define and segment markets can both, save you time and money, and improve results.

Here are the key concepts to consider in evaluating your markets:

Changing Environment and Structures

We are in a state of constant change that requires new and flexible analysis. Labor force, baby boomers, technology, the Internet are all well-known factors affecting most markets. For example, I have been coaching potential high school entrepreneurs and their focus on cell phone opportunities is incredible compared to older consumer’s. A simple Google search of current market trends for your product will help you stay in the know.

Old Paradigms and Structures are Failing

Many of our largest and seemingly most powerful corporations have experienced no growth or minimal growth or, worse yet, failed over the last ten years. Traditional retailers, magazines and newspapers, coal, and lengthy hospital stays are dying. In contrast, the Internet, cell phones, e-retail, and cloud software are growing exponentially. This may happen even faster as automation and Artificial Intelligence become more accessible. To offset stagnation, when growth slows down, try switching your focus to profit.

Changing Demographics Call for Open Systems and Collaborative Models

The greatest need for change is a commitment to open systems and collaborative models; particularly, in an era of ever changing demographic trends. Open systems typically reject bureaucracy, authority, hierarchy, and closed decision making processes. Instead they encourage participation, diversity, new rules, and, to some extent, chaos. For example, social media has greatly expanded communication and equalized communication. United Airlines response to the recent events is a good example of ignoring viral messages online and their impact on a brand’s image.

One of the biggest outcomes from open systems is the collaborative decision model. As decisions become more complex, the need for diversity, internationalism, innovation, and expertise are expanded.

Defining Your Market is also Based on Understanding Operating Characteristics of your Effort

I frequently argue operations can be the most innovative and best marketing tool. These can include customer service, delivery, price, quality, packaging, costs, going green, distribution etc. Amazon, Uber and Airbnb are the best examples of operations creating new market segments. There are many great resources like Shopify for retail, Mailchimp for marketing, Freshbooks for accounting, and Ship Station for shipping are innovative resources to help manage your business. Researching and discovering which model best fits your business, is a great place to start.

You Need to Welcome Measurement and Feedback

Start by observing, understanding, sharing financials, operations report, and sales reports. Adopt a collaborative management style and incorporating more information, data and analysis into your decision making improves performance and reduces mistakes. Tools like Survey Monkey, Google Analytics, and Google search can facilitate the process.

Simple questions to help you understand your market

Start by answering the following question from your own perspective with a little research, rather than any extensive analysis and time consuming reports. Once you’ve completed your initial answers, conduct research, such as, surveys and revisit these questions for a more complete assessment:

  1. How are your company and its products or services truly different?
  2. Do enough customers care about these differences?
  3. How can you most effectively communicate your differences within budget?

Defining your market can identify significant opportunities and help reduce segments with little potential. In the end, you need to ensure that your offerings meet the needs of your consumer. Ignoring key concepts, such as demographics, market innovations, and operations, can put your business at peril. Similarly, understanding the opportunities in your market and needs of your customers can dramatically and positively affect results.

Dr. Bert Shlensky, president of www.startupconnection.net, offers experience and skills and a team devoted to developing and executing winning strategies for businesses of all kinds. This combination has been the key to client success. His book, “Passion & Reality for Small Business Success,” is available at www.startupconnection.net.