by Bert Shlensky | Jan 30, 2018 | Marketing
When someone asks you who your customers are, how do you answer? Do you answer based on your perception of them and who’s already purchasing your products or based on actual information? Chances are, you haven’t delved into your demographics as much as you need to.
What Are Demographics?
Demographics are, by definition, the study of a population based on factors such as age, race, sex, economic status, level of education, income level, and employment. It should always be the first step in estimating your potential, limitations, and focus. They are among the most critical and relatively easy factors to consider in your marketing, planning, and strategic decision making.
Uncovering key demographics can be a bit like taking a look in your professional closet. You probably have an impeccable wardrobe, but it’s tough to see all that potential when there’s a giant elephant standing in your way. It’s time to deal with the elephant.
Where to Start
I regularly see business plans that begin with defining their market as the 320 million people who live in the United States and eat, dress, or consume something. No matter what industry you’re in, that is the wrong place to start. You have to dive deeper from the very beginning.
Even if you’re not at the very beginning stages of building your business, you should be studying demographics often and delve deeply into the information at hand. It’s crucial to the success of your marketing efforts.
Here are some staggering statistics that will make you question the audience you’re marketing to, according to the US Census Report. Out of that 320 million people who live in the United States:
- Between 2015 and 2025, the U.S population is projected to grow from 321 million to 347 million.
- 18 million or about 70% of the growth will be over 65 years old between 2015 and 2025
- As a comparison, between 1970 and 1980 the 15-35 population grew 19 million showing the start of the baby boomers as the bubble in the population.
- In contrast the under 65 population will only grow about 8 million people or less than 3%.
- Similarly, the Hispanic population has grown from 3% to 10% of the population.
- Since 1980 States like Florida, Texas and California are dramatically growing while rust belt cities like Cleveland and Detroit are rapidly losing population.
- 50% are one gender, which frequently reduces the market size
- 30-50% of are frequently too poor to buy many products or services.
- Approximately 40% of the U.S. population is between the prime purchasing ages of 25-54.
What’s the point here? The beginning number you should be starting with is actually more like 30-40 million people versus 320 million people before you analyze factors like geography, lifestyles, and ethnicity. This increased diversity demands that you differentiate the totals from your market.
You can start to gather valuable demographic information about your market for free. There is a great tool available from the U.S. Census Bureau that lets you quickly understand the demographics in your locality. It doesn’t take long to gather information and you may be surprised by what you discover.
Understand Your Audience
Studying demographics is an ongoing process. Once you’re at the base line of understanding your potential customers, you must have your ear to the ground and start to identify trends.
For example, If you live on places like Orlando or hurricane regions, this can have a profound effect on your business. It is estimated over 100,000 people moved from Puerto Rico in the last few months. You will not see that number reflected in U.S. Census data.
You can’t just look at the numbers. You have to understand the people that the numbers represent and try to look at the factors that they deal with that you may not dealing with.
Here are some key things to consider when you’re studying demographics for marketing purposes:
- Income: The reality is that the top 1% of the population accounts for about 80% of income and continues to increase while the lower 20-40% continues to struggle. Marketing to struggling service workers requires far different strategies than marketing to Silicon Valley millennials.
- Social Changes: Women and minorities have not always been treated with dignity as consumers. My wife still remembers going to buy a car and being ignored by dealers and being called “honey.” Today, women and minorities comprise a significant portion of both car buyers and dealership employees. This demands respect.
- The Internet of Things: The internet and its usage especially among younger people will continue to explode. Nearly every consumer-based market is dominated by businesses that are capitalizing on the internet of things like Amazon and Google. Recently, UPS increased its Christmas delivery time from 1-2 days because it could not handle the increased demand, which was highly predictable. Similarly, services like Uber, Air B&B, Amazon, and thousands of other businesses are disrupting their individual markets.
- Analytics: Chances are that your competitors are already taking advantage of a myriad of advanced analytical tools. CRM systems are completely changing the game and giving businesses new opportunities to understand their customer base.
Ignoring demographics and demographic trends, whether on a small scale or large scale will be done at a business’ peril. You must make certain to constantly evaluate relevant demographics and demographic trends as they relate to your business both in the now and in the future. This includes both local and national trends. Demographics can be one of the keys to your business’ success or failure.
Contact me to learn more about how you can research demographics in order to help you market your business more effectively and remove that old elephant from your closet.
Dr. Bert Shlensky, president of Startup Connection (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.
by Bert Shlensky | 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.
by Bert Shlensky | 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.
by Bert Shlensky | Aug 4, 2017 | Marketing
We know you know why your brand will be a success. But do your customers know? Not yet, obviously. That’s why when you’re branding your business , you not only need to convey your image representing your vision, mission, and distinctiveness, but also what your product or service can offer to a potential client. Sounds easy, but you might be missing the point when fleshing out what you’ve got to offer — in other words, the product/service doesn’t have to just be good, it has to be good for your customers, and even more importantly, you have to prove it to them.
Now That Doesn’t Sound as Easy, But Thankfully We’ve Broken It Down for You — Into 3 Key Benefits to Branding Your Business
Keep these three things in mind when breaking down your product and service, and you’re that much closer to sealing the deal in nailing a portion of your industry. Your customers will see that your products or services aren’t just good — they’re most likely better than the rest, and something they should have:
- Quality — How would you describe this? Is it about the way the product looks? What it’s made of? How it works? What the results are? How does it compare to the competition? Identify this, know how to communicate it, and you’re well on your way to targeting the sale.
After all, IKEA may be great utilitarian products optimally priced, but they’re not made to last a lifetime. Quality matters.
- 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 — easy payment and delivery, easy contact (24/hr customer service), offering efficiency for your customer in some way.
Heck, even the little stuff we take for granted — remembering customer names, follow-up sales calls, developing personalized solutions — matter way more in terms of convenience than those horrible tip cups you find at the fast-food restaurants.
- And Lastly, 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 1-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. The question is how you get them to come back. What’s the value of your brand? Go beyond the features of the “right now” of what makes your business so awesome. Think beyond and ask yourself how your product/service will benefit the same customer you sold last year.
Think Nieman Marcus, Costco or Amazon, for example: you’ve got uniqueness with each, yet the value‘s all the same. Especially with those free samples from Costco!
All else being equal, you just make sure you have this trinity of aspects in branding your business.
Truly, Your Brand Could Be Anything — as Long as You Focus on Quality, Convenience, and Value
Simply ask yourself how is my brand good, can my customers get my brand, and will they come back over and over again. It’s a magic formula. You now have the ingredients.
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.
