Commerce: Never give your customers a reason to switch
Offering your customers the right forms, flavors and sizes in the food industry makes sure that they can buy what they want, where and how they want, at a price that provides good value: 16-ounce, 8-ounce, 32-ounce, diet, full flavor, cherry flavor, bottles, cans, individual packs, six-packs, 24-count cases, etc. You may not have flavors in your industry, but you may have different colors, performance levels or service levels. The point is to have the variety of important options your customers want or need versus leaving those offering gaps as open inroads for your competitors.
One of the most common mistakes marketers make in evaluating markets is not defining their completion or market accurately. Sometimes this is done to make their company look better or bigger. An example of this might be a fast food operator who claims to have the largest market share of high-end fast food operators selling sandwiches above $10 in the north side of the city. While this may be true, it ignores the real market battle for “share of stomach” which includes fast food operators selling items below $10, sit-down dining options, grocery store eat-in and take-out options, and make-at-home alternatives. While there may not be any other competition for fast food sandwiches above $10 and it sounds good to say the company is a leader focusing on just a particular portion of the market, that perspective can lead to a very myopic marketing approach.
To really plan for growth and the proper offerings, you need to consider not only the narrowly defined market that you are operating in today, but also ask if it makes sense to move into adjacent to complementary markets based upon the desires and behaviors of your target audience. To tell what they are doing to get their current needs met, you often have to observe first-hand how they are currently getting their end goal met or fulfilled. Very often, that is by an item or process that is not included in the way you define the category, but might be some sort of substitute, make-do product or service they use. This might be because you don’t offer what they want or they are not aware of what you offer.
Trying to cover all of your bases, however, can also create issues for manufacturers and marketers. It is easy for a sales person to ask to add extra products to the line or to keep older, obsolete products because they have a customer who has asked for that, or it’s their favorite. This product proliferation often goes against lean principles that lead to greater efficiency and profit by focusing on the 20 percent of items that make up 80 percent of the sales and profits.
There are some exceptions. Sometimes the sale of one product is tied to the sale of another. This can lead to profitable situations where you “give them the razor for free so you can sell them the blades.” The razor may not be very profitable, but you might make a lot of money and sales from the replacement blades.
In other situations, there may be special services or offerings that are tied to the sale of higher volume profitable items. An example of this might be an educational program or offering that may not make any money on its own, but leads to the ongoing sale of the product or products being explained.
By considering how you define the market you compete in, and making sure that you will have all the appropriate forms, flavors and sizes that your customers want or need, you won’t be giving your customers a reason to switch to a competitor. When you focus your effort on the 20 percent of products or services that deliver 80 percent of your sales and profits, you will be able to make more money with less effort.
About the author: Scott Francis is president of Topline Development LLC, a strategic marketing consulting group that provides new product development and start-up strategies, advertising and marketing consulting, and sales support programs. To learn more about Topline Development LLC, visit ToplineDevelopment.com, or contact Scott directly at (920) 722-1317 or Scott@SnapLabMedia.com.