Posts tagged small business


Most painful marketing mistakes — Part 4 "No value proposition"

May 7th

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Painful marketing blunder number 4: No unique value proposition. The pain factor on this one is VERY HIGH because you’re probably going to spend a boatload of money before you discover that you’re failing.
To illustrate my point, let me take you back, back, back in time to the heyday of Kmart. Here was a company that predated Target and Wal-Mart but lost the retail leadership position it enjoyed because it lacked a clear value proposition.
Kmart pioneered the idea of everyday low prices but could not keep up with Wal-Mart’s dominant global supply chain technology. So it abandoned that idea and tried to sign on designers and celebrities to provide exclusive clothes and home products to compete with Target. This confused its core customers (seniors who wanted to find the latest in polyester) and loyal Target customers wouldn’t be caught dead in a Kmart.
So, it spent a fortune on bigger, newer stores (remember Super Kmart?) that were Target-like but still selling crap that nobody wanted … at prices higher than Wal-Mart.
The company’s last gasp was to leverage the chain’s iconic “blue light specials.” In the 1990s, it created “Mr. Bluelight” (pictured). The company said, “Mr. Bluelight does not just represent a sale or clearance anymore. With Mr. Bluelight, we are making the shopping experience fun. We know there are more people than ever today who see shopping as an escape and a reward, and we are giving them the entertainment and excitement they seek.”
What??? The best thing they had going for them was the blue-light clearance and now they are abandoning it for yet another value proposition: Kmart is FUN and EXCITING? My gentle readers, how’s that for creating a clear value prop for consumers!!
LESSONS LEARNED
So what can we learn from Kmart’s demise? If you’re starting a business, you must conduct upfront research to find your clear points of differentiation – what makes you UNIQUE in the marketplace? Why do customers should buy from you? The prospect’s unmet need your company will satisfy? Once you have that strategy, you need to stick to it with a laser-focus.
If you have an established business, your unique value proposition should be already well-understood – at least your customers understand it or you probably would not be in business! Still, you need to constantly check your strategy, adjust, re-invent yourself and defend your position, like Wal-Mart.
I see many people getting into business who think they can take on existing businesses and simply convince prospects they have a better product or service. They announce to the world, “We might not be first, but we’re going to be better.” That might be true, but if you’re late, and you have to battle well-established competitors, bring a bundle of cash baby! Was Kmart really going to challenge a Wal-Mart that was rolling in cash? Never! A well-managed company is going to defend its marketshare ferociously until you are broke. So, once you have your niche, DOMINATE it.
CAN YOU ‘SPLAIN IT?
Another pitfall is having a great value proposition but not being able to explain it simply. Can you explain what you sell and why you sell it in 30 seconds? Sometimes that can be excruciatingly difficult, especially if it’s a new category or a new technology that requires education. The biggest marketing successes come with simple, but powerful explanations of the product offering.
Here was Wal-Mart’s value proposition: “Everyday low prices. Always.” Compare that to Kmart’s: “Home of the blue light special.” Wal-Mart had a clear point of differentiation and could tell the story in four words, and later ONE word, “Always.”
This economic recession is an excellent time to re-evaluate the relevance of your value proposition. Your customer needs are probably changing. Make sure you are innovating to stay aligned with the new unmet needs that are being created all the time.
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Most painful marketing mistakes — Lack of strategy

May 4th

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Today I’m beginning a new series on the most painful small business marketing mistakes. Follow me for the next few days and you’ll get the whole picture!
Mistake number one is also the deadliest blunder of them all: NOT HAVING A STRATEGY.
I had lunch with a potential new client the other day. He opened an innovative retail business last year and has spent tens of thousands of dollars on advertising. He’s tried everything — print, radio, TV, Internet, billboards. He’s had sales, promotions, and PR events but can’t seem to move sales.
So I asked him, “Who’s your customer?” He said at first he predicted it would be middle-aged women, but then he noticed mostly couples entering the store. He said senior citizens need his product but he doesn’t know how to target them. He tried ads in the UT student newspaper to appeal to college students but it got him nothing. And he thought locals would frequent the store but has seen people drive in from Kentucky and Alabama, too.
You can see that it’s impossible to have an effective advertising campaign without clearly defining who you’re selling to, the customer needs you’re meeting, competition, pricing, and your points of differentiation. In fact, if you don’t KNOW these things, you are probably going to fail.
My friend is firing “buckshot advertising” … just shooting here and there, hoping he to get lucky and hit a customer. What he needs is a guided MISSILE (see, you knew you would figure out the photo eventually!) … and that’s where strategy comes in.
What makes up a strategy?
Some of the key elements of a marketing strategy are:
  • Target demographic and market segmentation
  • Market positioning and points of differentiation
  • Product and service attributes – finding under-served needs
  • Competition and external influences, threats and opportunities
  • Marketing channels
  • Pricing
  • Communications and branding
  • Distribution
Developing your strategy
Going through a methodical process to research and identify your marketing approach is the most important thing you can do for your business. And it’s so LIBERATING! You don’t have to guess any more. You don’t have to play advertising roulette. You can sell with confidence and it will work because you have data, insight and a PLAN!
How do you develop a marketing strategy? If you want to try the do-it-yourself approach, there are many possibilities (free) out there through the SBA and other small business websites. Even Microsoft Small Business and Yahoo Small Business have excellent templates.
The problem is not finding a methodology, it’s having the skill and experience to actually do it. Without a background in marketing and research, most people get frustrated trying to put together a meaningful marketing strategy. It’s difficult and it’s so important. Unless you’ve cornered the market, the effectiveness of your plan is probably the difference between profitability and failure.
 
Call in the troops
One alternative is to look for help. If you pardon my act of shameless self-promotion, that would be me. It’s the kind of work I have done for more than 25 years. If you need me to do the whole project or just need a little guidance, I would be glad to help. There is nothing more rewarding than watching a business grow and come alive with the help of a focused marketing strategy! To learn more, please visit my website at http://www.businessesgrow.com/.
Whether you go it alone or use the services of a marketing professional, please don’t overlook this marketing essential! If you don’t have a marketing strategy, you probably don’t have a business.
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