Wise words from one of my favorite bands (Rage Against the Machine), “know your enemy”. In marketing, you are competing with other companies, and even industries (look at how movie theaters compete against DVD, and television) for scarce money. In order to succeed, you need to arm yourself with all the knowledge you can about your competition. You need to know their strengths, weaknesses and strategies, so that you can develop your plan to defeat them. Great, so you already knew that. But how do you go about obtaining this information? Here are some quick tips for you…

1. List your direct and indirect competitors. How are you going to learn about your competition if you don’t even know who they are? As one of my old mentors (and good friend, you know who you are) would say, “make a list”. Don’t forget to include both direct (companies that provide similar products or services to yours) and indirect competitors (companies that provide products or services different from your own that satisfy the same need).

2. Pay them a visit. After you have your list, you should visit your competitors website and learn what you can. Not only will you learn about their products and / or services, you will also learn how they are marketing themselves, what they think of their own brand, and you will be able to get an idea of which type of customers they are targeting. You can also learn about their history, and the officers of the company. If there is a trade show, visit them and find out all you can. If they have a store, go in and patronize them. Find out what you can up close and in person. It’s important to do this early so that you will get a fresh impression of what type of business they run.

3. Dig a little deeper. Visit www.hoovers.com and check out their financials. If they are a publicly traded company, then there are tons of sources to go to get additional information. Go to www.dnb.com and check out a credit report. Remember those officers you learned about in the previous step? Google them and find out more about them. This will let you know a little bit more about how decisions are made at this company.

4. Set a date to follow-up. Like all marketing, competitive analysis is a process not a project (we’ll probably discuss this in detail in a future post). This means that you need to set up a follow-up date in your calendar so that you can go through the process again, and find out what’s changed. If you’re dealing with professionals, then your competition is looking at you just like you’re looking at them, and they’ll react to whatever strategy you’ve chosen to take them down. Do yourself a favor and stay vigilant.

Once you know all about your competition, you can use this information to find out what you can do better or differently than them. Develop your strategy and watch the competition suffer. We’ll talk more about how to take these suckers out in the future.

Hey, I’m not an expert on competitive analysis, so if any of you readers have anything to share, let me know in the comments, or email me at edwardviator@evil-marketer.com

Many times, when we discuss how to grow business we only discuss tactics. However, I think an overall understanding of the strategy behind the tactics is the more appropriate place to start. Afterall there are only four ways to grow your business, and an almost infinite number of tactics to accomplish these. I’ll illustrate these points using one of my favorite pastimes, comic books. Here we go…

1. Get new customers: This is where many tactics focus; “how can we get more customers?”. This is vital to success, and is the best way to begin growing your business.

Comic publishers are constantly creating new books, and re-launching others. How many times have we seen a new issue #1 come out. One of my favorite comic characters is The Punisher. The guy has about 20 #1 issues (Punisher ongoing, Punisher War Zone, Punisher Max, Punisher War Journal volume 1 and 2, etc). Look at how many comic book movies have been released. As a matter of fact, look at how many times comic characters are licensed period (tooth brushes, action figures, bed sheets, etc). Sure, the comic companies make a ton of money licensing these heroes and villains, but the licensing opportunities also serve to create interest in the comics. Don’t even get me started on crossover issues; moving right along….

2. Increase the average dollar amount per transaction: This may seem like a “no brainer”, and it is. If the average transaction is worth more money, then of course, your business will increase. This is assuming that the same amount of customers purchase your product or service; obviously you will need to focus on the laws of economics. Simply increasing the price isn’t what I’m talking about. This could also mean lowering cost or adding value added merchandise / services (did someone say “bags n boards”?). Basically, think of any way that you can increase the average dollar amount of the transaction.

If you read comics, you probably realize that prices have been slowly increasing over the years. (insert old man voice) Why when I was a kid, sonny, comics used to be a buck per comic, now the average price is about three dollars. Some special issues are even four dollars per issue. But remember, it’s not just about price. Increasing the number of books you take home each month is also part of this equation (enter the crossovers, and event stories).

3. Increase the average number of transactions per customer over a certain period of time: Notice the part where I said “over a certain time period”. This timeline is very important, and many marketers seem to leave it out. Basically, if a customer purchases more often, then you will grow your business.

New comics come out every week, but for the most part a new issue of a given book will come out once per month (12 issues a year). Let’s say, you have good taste, and read Deadpool. That means that you have three books per month that you may consider buying. Oh but wait, he’s also going to make an appearance in that new X-Men book, so you may want to consider that one too. You get the idea. Now imagine buying books for more than one character with each character appearing in multiple books. Punisher + Deadpool + X-Men + Spider-Man + etc = you, broke.

4. Increase the length of time your average customer stays loyal to your business: A customer will only be a customer for a finite period of time. Even a lifetime customer will go away at some point. We all die at some point afterall, however business is forever… in theory anyway.

I can’t remember where I read it, but I remember seeing somewhere that the average comic book reader sticks around for about 4-5 years. By creating event stories that are basically sequential, companies like Marvel comics have been extending this readership past the 4-5 year mark. Beginning with Avengers: Disassembled (and continuing with House of M, Civil War, Planet Hulk, The Death of Captain America, The Secret Invasion, Dark Reign, and The Siege), Marvel has offered at least one major story per year, each one building on the momentum from the previous story. This creates a much larger epic arc for each character and keeps readers coming back to see what will happen next.

These are the only four ways you can grow your business. As you can see, the tactics are nearly limitless, but by understanding each strategy, you will have a much clearer understanding of which tactics to employ, when, and for what purpose. Remember, good marketing should lead to sales.

What do you think?

For years, companies have searched for ways to “eliminate the middleman.” Well, we’ve gotten to the point where this is a reality for many types of businesses. Unfortunately, many companies mistakingly see this as a problem, not a solution. The first trend that Seth Godin discusses in Meatball Sundae: Is Your Marketing out of Sync? is “direct communication and commerce between producers and consumers.” Basically this means that consumers now have (and expect) the ability to communicate directly with companies. This also means that it’s possible for companies to market and sell directly to consumers.

In the past businesses relied only on mass media to reach customers, but today the average consumer is going out of their way to avoid these interruptions (commercials are skipped, radio stations are changed, ads are forgotten). So much money has been wasted, and continues to be wasted on marketing to masses of people. Only a small percentage of people will even pay attention, much less be moved, by these mass marketing messages. So why do companies spend so much time and money on these methods? Because it’s the way it’s always been done. Like I said in an earlier post, instead of spending a ton of cash on ads, I would instead hire a team of excellent marketers that can take advantage of the free and cheap tools on the internet… but (you guessed it) that’s another story.

So, how can you take advantage of this new trend? Well for one, you should be immediately responsive to your customers. When they send you and email, they expect a reply. And fast. I’ve been guilty of leaving email unanswered for too long, and I’m sure you have too. It’s a mistake, and smart people learn from mistakes. Be smart, and remember that every unanswered email is a missed opportunity for you. Every interaction with the customer matters, and yet many companies seem to go out of their way to avoid customers (how many times have you been given the runaround?). This is a big opportunity for you to differentiate yourself and your company. Instead of ignoring those emails, answer them; engage yourself with your clients.

One of the advantages of this type of communication is that you can learn more about your customers, and even begin designing products based on their needs. In the past, companies created products and then used marketing to find customers. Now, you can communicate with your customers and create products and services that are specifically tailored to their needs. Pretty cool, huh? Godin has tons of examples in his book, and I’m sure you could think about many more.

Another way to take advantage of the changing relationship between companies and consumers is to begin taking part in permission marketing. Godin talks alot about this, and it’s easy to see why. With mass media becoming less and less effective (and therefore more and more expensive), permission marketing is the way to go to reach customers. Here’s how it works, instead of spamming tons of people with a message that may or may not pertain to them, you should find (and eventually build your own) communities built around the types of people that your product appeals to. Talk to them, respect them, don’t waste their time. Godin outlines some basic rules for permission marketing. Here’s the short version…

1. Serve your customers, not yourself.
2. Permission is not to be bought and/or sold.
3. Keep your message relevant. If it has nothing to do with the customer and their life, they will leave.
4. Legal print and privacy policies are meaningless. If you do wrong by your customers (even if you are legally correct) they will leave.
5. Respect your customers.
6. Strike first, strike hard, no mercy sir! (okay, I just made that one up)

Next we will discuss trend 2, “Amplification of the voice of the consumer and independent authorities.” See you then.

Notable quotes from this section:

• “The fact cannot be denied: Your people (customers, employees, prospects, readers, whatever) want to be heard. They demand it.”
• “An inbound e-mail is not (just) an expense; it’s (also) an opportunity - a chance for your organization to eliminate barriers and have a dialogue with a prospect or a customer.”
• “The job of marketing is to grow the organization, and growth comes, obviously, from putting yourself in front of people who didn’t know about you before you got there.”
• “Outbound marketing now demands respect for the people on the receiving end.”

It’s time for another book discussion. This time, I’m reading Meatball Sundae: Is Your Marketing out of Sync? by Seth Godin. The general idea is that not all organizations are optimized to take advantage of the new marketing opportunities out there today. Instead many companies are still focused on old marketing techniques. Godin discusses 14 trends that have re-shaped marketing, and illustrates how you can optimize your business to take advantage of these trends. Since the organization of the book is a bit different (and you really should read it yourself), I won’t be discussing the book chapter by chapter. Instead, I’m going to discuss each of his 14 trends in turn.

Let’s start the discussion by defining old marketing vs new marketing. Godin describes the era before advertising as a time when small and local businesses thrived. Products were usually made by hand, and sold locally. Many of these companies failed to invest properly in marketing to the masses and therefore died out when the advertising age hit. The era of advertising is what really describes “old marketing”. Godin define’s old marketing as “the art of interrupting masses of people with ads about average products.” (reminds me of those old toy commercials when I was a kid) Many companies are optimized to take advantage of this approach. However, we are in the era of “new marketing”, and many companies aren’t set up to take advantage.

“New Marketing” Godin says, “leverages scarce attention and creates interactions among communities with similar interests. New marketing treats every interaction, product, service, and side effect as a form of media.” See the difference? Let’s break it down a bit. Old marketing relies on a limited number of media outlets (print, radio, television, etc); new marketing has unlimited media outlets. Old media is focused on appealing to masses; new marketing focuses on appealing to niche audiences. Old marketing is based on marketer-to-consumer communication; new marketing is based on consumer-to-consumer communication. Old marketing sells with features; new marketing sells with stories. The book outlines many more differences, but you get the idea.

Think about it for a few minutes. From the ground up, many companies are designed with this old marketing approach in mind. They create average products for the average consumer, and use mass media to let the world know. If this describes your approach to marketing, then you will not be able to take full advantage of all the new marketing opportunities available. I’ve talked about companies using social media poorly. Many times, it’s because they focus only on the new toys and not enough on organizational changes. If you want to take advantage of new marketing opportunities, you need to create outstanding products and then tell stories directly to the people that you’ve gained permission to talk to.

What do you think defines old marketing and new marketing? Do you agree that we are in a new era? Discuss in the comments or send me an email.

Next time we’ll discuss the first trend, “direct communication and commerce between producers and consumers”.

When is the last time you received a hand written letter in the mail? Most of the business communications we receive are delivered through email or typed letters. Why not? It’s certainly faster to mail merge, or email blast people. You can communicate quickly, and in the case of email, for free. However, because it is so rare now, you can really stand out from the pack if you send hand written letters to your associates and / or customers. It may cost you a bit more, but you will definitely get noticed. This doesn’t mean that you should forget about email / twitter / etc, but if you are trying to build a relationship then you should definitely send out hand written letters. When you do, don’t follow a script, instead you should personalize the letter, be authentic.

In this day in age, everyone is trying to keep up with the latest technology, but don’t let that stop you from using all methods available to you as a marketer.

Can you think of any other low-tech solutions that may be effective to stand out from the crowd? Comment below or email me.

In this link, Robert Middleton (founder of Action Plan Marketing) discusses an interesting tactic in pricing. I’ve actually heard this one before from a sales person I used to work with. Just like all sales people, he constantly had to face clients unwilling or unable to pay the price for the product or service he was selling. I asked him what he did in those situations and he told me “tell them you can lower the price, by taking away one of the features.”

I was amazed by the simplicity. But you know what? It works. Lower the value of your product, and then the price will follow. It takes you the same amount of time and money to produce the product; it takes the same amount of work and effort. Why should the price be lowered? Especially in these troubled economic times, most customers will be willing to do a little extra work if it will save them money. If they aren’t then they are basically valuing their time over yours.

Another tactic that Robert discusses in the link is to create tiered levels of the product or service. You know, Platinum, Gold, or Silver (hopefully you have more creative names than that, but you know what I’m talking about). Once the client has bought in on the value of what you offer and is ready to discuss price, the discussion becomes “which of these do you want” rather than “do you want it or not”. 

Agree / Disagree? Hit that comments button below or email me at edwardviator@evil-marketer.com

Check out this article then come back here so we can discuss…

Ready?

So what does this mean for you evil marketers out there? Not only should you think about contingencies (come on, they released electronic versions of their books, and didn’t have the foresight to see that they could be pirated?!), you should also look at it from the side of the competition. Big companies anger their customers all the time. This could be a huge opportunity for your little known brand to step up to the plate and knock it out of the park.

If you notice a competitor doing something annoying, you can really set yourself apart by leveraging this and taking an opposite action (and of course, don’t forget to announce it to the world). Barnes and Noble and Borders both use a customer loyalty card. However, Barnes and Noble charges for theirs while Borders doesn’t. Guess which one I have in wallet? My favorite book store, Half-Price Books doesn’t even offer a customer loyalty card, but that’s probably a different discussion.

Everybody enjoys a good sale. A reduced price can be an excellent way to penetrate a market, excite unmoved customers, or re-brand. There are tons of reasons to discount products, but you should be aware that reducing your price too much or too often can really hurt your brand in the long run. It’s common sense if you think about it, but if your company has made mistake #4, you probably haven’t thought about it at all.

If I was to have a laptop, worth about $500 in my possession, and told you that I’d sell it to you for $100 bucks, would you buy it? Maybe, but you would definitely go into that deal thinking “I wonder what’s wrong with it.” If you discount a product too low, customers will wonder, what is wrong with your product. There must be something, otherwise, you’d sell for more. Why leave money on the table after all. Also, what about your customers that paid full price in the past? If you lower your price too much, you will create some seriously bad feelings for your formerly loyal customers. On the other hand, severely lowering your price could be okay if you offer a catch of some sort (like those free or cheap phones that require expensive contracts), but those propositions are annoying for a whole different reason.

I don’t watch much television (I prefer to rot my brain with comics and video games), but I remember when I was a kid I’d hear about the Foley’s red apple sale (Foley’s is/was a local department store). I mean it seemed like they had a “red apple sale” every month or so. Even though I was young, even I understood that no one was excited about these sales. They occurred too frequently, and no one was really excited by them. If you are putting your products on sale too often, you are actually creating less excitement for them.

There are other ways to make your products attractive to your customers. Don’t be lazy about it. Sometimes a promotion doesn’t necessarily have to include a price break. Find other ways to increase the value to the customer, and then you’ll be on the right track. Remember, customer’s purchase products based on perceived value (tired of hearing this already?). Price is just one component of value, so don’t overlook other ways to increase value.

Well, those are my top 5 pricing mistakes. I’m sure there are more out there. If you know of one I haven’t mentioned already, go ahead and comment.

If you’re in business, then you want to make a profit. Let’s break this down, there are basically three variables that control profit… costs, sales, and price. Profit, by definition, is revenue (sales x price) - costs. While most companies spend a ton of time and effort cutting costs, and improving advertising / marketing / sales activities, most do not spend this same time and effort on pricing practices. Personally I don’t really understand this. Pricing is just as important as the other variables, and can also affect your sales volume (a more effective price will naturally result in an increase in sales).

Lately companies have been focusing more and more on cutting costs in order to improve their “bottom line”. Cost cutting has been refined down to an exact science (though many cost cutting efforts in fact have a negative effect on profit, but that’s a whole other story). Likewise, most companies are constantly working on new marketing efforts, some more effective than others. However, when it comes to pricing many companies wing it; they base prices on the wrong things, or even worse, they don’t have a person that decides on pricing strategy.

Most companies have a chief financial officer,a director of sales, and a director of marketing. Why not have someone in charge of pricing. Every company should have someone who’s sole purpose in life is to define the pricing strategies for each product. Make sure they use actual methods, and aren’t just pulling prices out of the air.

Different products have different customer segments, each of whom will have different perceptions of value (based on different criteria). So with all of these variables, why is that some companies try to make the same profit margin on different product lines? This is a rookie mistake, and shows that you don’t really understand your customers very much. Remember, the first rule of marketing is you do not talk about marketing… sorry, the first rule of marketing is to segment the market. If you’ve done this properly, then you should have an idea of what your customers expect from your product and can price competitively.

I’m not going to talk to much about this, because I think it’s kind of common sense. Look at it this way, if you stick with a set profit margin, then you may be pricing too high or too low. The golden rule of pricing is that the optimal price point is one that matches the most that a customer is willing to pay. How much a customer is willing to pay depends on their perception of value. The profit margin of a different line of products is totally irrelevant. Instead, you should focus on segmenting your customers and finding out how to price each product line accordingly.