CAN YOUR prospects tell the difference between your company and its closest competitors? If not, it may be time to overhaul your marketing strategy. Differentiation is at the heart of long-term marketing success, and the key to marketing strategy is originality.
Let's take a look at an old slogan. Most of us instantly recognize "Good to the last drop" as belonging to Maxwell House. This venerable slogan has been successful at differentiating the product from scores of competitors, including many that might otherwise appear virtually identical. Not only has it been hammered home year after year, but the slogan also works because it encapsulates the promise of the brand in a way that's uniquely valuable to the target audience.
Differentiation plays a key role in branding and is the foundation of a competitive advantage. And it profoundly affects your position in the minds of your prospects and customers. Effective differentiation can position you as No. 1 among your competitors--the company or brand customers turn to first--while a poor differentiation strategy can leave you buried in the middle of the pack.
Are you ready to develop your own differentiation strategy? Here are four steps to get you started.
1. EVALUATE COMPETITIVE MESSAGES.
Your first step is to gather and evaluate the marketing materials of your chief competitors, including their ads, brochures and website content. Don't be surprised if you see a lot of "me too" marketing. There's simply a lot of bad marketing out there, and the fact that many of your competitors have no differentiation strategy will work to your advantage.
At least some of your competitors--usually the category leaders--will make promises that resonate with their target audiences. Carefully review the benefit statements your competitors make, and determine what claims set them apart.
2. FIND WHAT MAKES YOU UNIQUE.
For a companywide differentiation strategy, consider what separates you from the competitors you've evaluated. Whether you market a product or operate a service business, such as an accounting firm or a power-washing company, it's essential to clearly differentiate through your marketing how what you offer is of unique value.
Your point of differentiation may relate to the way your product or service is provided, priced or even delivered. The most important thing to discover is the principal benefit you offer that is uniquely valuable to customers and gives you a competitive advantage.
3. TELL THE WORLD.
Your next step is to create a new marketing message that communicates your product or service's unique value. This message should become the core of your entire marketing campaign. To successfully gain a competitive advantage, consistently drive this point of differentiation home until it becomes integral to your brand image.
For example, through its slogan, Maxwell House communicates that its coffee will always taste good, not bitter, down to the very bottom of the pot. When repeatedly communicated through ongoing marketing, it's this assertion about being "Good to the last drop" that differentiates the product and has helped make it successful over the years.
4. KEEP YOUR PROMISE.
Effective differentiation has everything to do with customer satisfaction, which builds loyalty and often trumps price as a primary consideration of consumers. As long as your company can sustain its ability to differentiate in a way that consistently meets consumer expectations, customers may reject lower-cost competitors in favor of what you have to offer.
The bottom line is that customers see the value of what's offered. Rather than go elsewhere for a similar product or service at a lower price, they'll stay loyal because of the "intangibles." Nothing costs you customers faster than a disconnect between the promises made in marketing and the reality of customer experience with your product or brand. So for long-term success, your company or product must live up to its marketing promise.
Contact marketing expert KIM T. GORDON, author of Bringing Home the Business, at www.smallbusiness now.com.
CAN YOUR prospects tell the difference between your company and its closest competitors? If not, it may be time to overhaul your marketing strategy. Differentiation is at the heart of long-term marketing success, and the key to marketing strategy is originality.
The keynote address will feature Dan Pink, author of “Free Agent Nation” and “A Whole New Mind,” talking about how to inject “right-brained,” creative design thinking into an organization. Other topics will include: how to reinvent private label brands; how to design packaging to increase usage; how to measure and enhance the value of new packaging innovations; conducting a retail design audit; marketing to children and pets; sustainable and otherwise “green” packaging; and brand nostalgia.
Ten sites that all marketers should know well.
Alacra Industry Spotlights (Finding Company/Industry Information)
Until 2005, the information found on this site was restricted to subscribers but now it’s open for everyone. What will you get? Informative guides and advice for researching over 40 different industries. The listings and details are impressive and should be a first stop for those not sure of how to begin researching a particular industry.
ClickZ* (Internet Marketing)
Internet marketers’ top news and information site continues to produce useful how-to articles, industry news, statistics and much more. Whether you are a website marketer or advertiser, check this site out on a regular basis to keep abreast of all that is going on in the online marketing world.
CMO Magazine (Marketing Publication)
Chief Marketing Officer Magazine does what many business magazines and specialty marketing sites do not – they allow free access to excellent articles. Since its launch in September 2004 the site has offered articles from its monthly magazine as well as regularly updated marketing news, blogs, webcasts and other features. Let’s hope the site doesn’t go the way of the other business content sites and remains freely accessible. (Update February 2006: Well maybe I should have said that I hope it doesn't go the way of other good sites and close down! Yes, it looks like CMO Magazine published its last issue in January 2006. While old articles are still accessible, the site is no longer producing new content. That's too bad because they did produce high-quality work. Maybe they should consider dumping the print format and resurrect themselves as a web-content site. PC )
Google Analytics (Website Metrics)
Marketers would be foolish to undertake online marketing without having access to website traffic information in order to learn how visitors reach and navigate their site. Over the years there have been many companies offering free website tracking programs. Most of these were advertising supported and provided very basic tracking data. Google Analytics takes the free web reporting to a new level with an extensive array of information items. While the service got off to a slow start when it was first introduced (i.e., too many signed up and overloaded the system), once it is up to speed it should serve as an indispensable tool for small-to-medium sized websites.
MarketingExperiments* (Internet Marketing Research)
How much do you expect to pay for good research designed to improve your online marketing? How about zero, zilch, nada! MarketingExperiments’ unique proposition is to offer results of real controlled testing they conduct on the web. Experimental topics have included setting product price, designing PR news releases, search engine advertising and whole heck of a lot more. Results of their work can have immediate impact for almost any marketing effort.
Pew Internet and American Life Project (Internet Research Reports)
This is another excellent site for getting the results of Internet research studies. While the main mission of this site is to look at the Internet’s impact on a wide range of American activities, a good third of their frequently released reports cover topics of interest to marketers. The reports offer great insight on how people use the Internet and what it means in their everyday lives.
Research on Research (Market Research Design and Methods)
For anyone involved in serious market research this site offers a collection of over 60 articles on topics ranging from A (analysis of variance) to W (weekend audits) with lots more in between (sorry nothing yet for X, Y or Z!). Access does require registration (and probably being added to a mailing list) but the information gained is well worth the effort.
Trendwatching (Idea Generation and Market Trends)
This may possibly be the most interesting new site we found in 2005. The concept: identify and give meaning to emerging trends that could be of interest to marketers. While the stories are sometimes a little over-the-top, they are generally well-written and, best of all, provide insight to trends happening around the world. While these guys may find it challenging to identify new trends each month, so far the job they have done is first-rate.
WebmasterWorld (Internet Marketing)
While the name may imply this is a techie site, the fact is WebmasterWorld is also one of the best places to learn about Internet marketing. Within this forum site, are loads of great tutorials, ideas and insights into getting the most out of an online marketing effort, and especially search engine marketing.
Wikipedia - Marketing* (Marketing Basics)
Back on the list for a second year, the open information Wikipedia continues to develop into a very good marketing information source. It biggest strength lies in offering definitions to a large number of marketing terms.
* Denotes 2005 Best-of-the-Best Marketing Site.
Consumers are faced with purchase decisions nearly every day. But not all decisions are treated the same. Some decisions are more complex than others and thus require more effort by the consumer. Other decisions are failry routine and require little effort. In general, consumers face four types of purchase decisions:
Minor New Purchases – these purchases represent something new to a consumer but in the customer’s mind is not a very important purchase in terms of need, money or other reason (e.g., status within a group).
Minor Re-Purchases – these are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought to other product options (i.e., consumer is brand loyalty).
Major New Purchases – these purchases are the most difficult of all purchases because these are important to the consumer but the consumer has little or no previous experience making the purchase AND is important. This type of decision often (but not always) requires the consumer to engage in an extensive decision-making process.
Major Re-Purchase - these purchase decisions are also important to the customer but the customer feels more confident in making the decision since they have experienced purchasing the product in the past.
For marketers it is important to understand how consumers treat the purchase decisions they face. If a company is targeting customers who feel a purchase decision is difficult (i.e., Major New Purchase), their marketing strategy may vary greatly from a company targeting customers who view the purchase decision as routine. In fact, the same company may face both situations at the same time; for some the product is new, while other customers see the purchase as routine. The implication of buying behavior for marketers is that different buying situations require different marketing efforts.
This takes us back to the basic marketing concept of remembering that the decision-maker is not always the person who pays the bill, a rule frequently forgotten by administrators of hotel loyalty cards who do not allow points to be collected by guests if the bill is being sent back to the company.
Another area often considered to be a male dominion is that of technology. Looking at DVD sales, for instance, we find that in 2002, only a third of women claimed to be their family’s primary DVD purchaser but by 2004 that figure had increased by more than half.
What is interesting here is not so much the size of the market, but the speed of its increase. Therefore, companies that have traditionally geared their marketing to men and continue to do so because the male market has always been their main source of custom may be guilty of backward thinking.
Another aspect flagged up by the speed of change is how challenging it can be for companies to stay ahead of the game when marketing to women. Factors that affect women’s desires and purchasing power such as levels of education, income and independence are all increasing at a more rapid rate than those of men.
What women want that’s different to what men want
The lives of the majority of women today are infinitely more complicated than the lives of their male counterparts. It is the woman in the relationship who will generally be looked to when it comes to the multi-faceted operation of the home. The woman is likely to be the one who keeps the environment clean and organized, ensures the family or partner is clothed and fed, shops, irons, recycles, handles the help, ferries the kids and keeps tabs on everyone’s social diaries. On top of this, she’s very likely to be holding down one of more jobs or developing a business or career.
So the entire running of the household is likely to have the female as the lynch-pin. This often includes the handling of the household finances and yet the majority of financial products, along with cars and technology, are still considered male-gender specific.
How women make the decision to buy
Frequently, when seeking solutions to problems, women will have conducted research online and be extremely well-prepared prior to placing themselves in line for a sales pitch. Any company that does not acknowledge this and insists on wasting a woman’s increasingly valuable time is likely to trigger a negative response as she can feel patronized by a “step-by-step, start from the beginning”, approach that may be unnecessary.
It is not even as simple as the traditional method of asking questions and identifying what she wants because she will make purchasing decisions based, not only on her own needs, but also on the needs of her family. The first consideration should always be an acknowledgement of the complications in her life.
So she needs to know that you understand the problems she faces. Can your sales force show that they identify with her?
Women are three times as likely to learn about a new product from another woman. It is likely that women purchasers assume that another woman can more easily understand her challenges than a man. If a woman is presenting your product and is able to show how your product or service makes sense in the world they both occupy, the purchase is a natural progression.
When the sale is made in this manner, your female purchaser feels valued and acknowledged and knows that she has been offered a solution, rather than having been pushed into a sale which she will inevitably cancel.
Written by Maria Davies
Put your business where people crowd by and you're all set. Get your cash register ready! Online, small businesses fail to act on the fundamental reality of how people use the Web. No one "passes by." They search for "information, information, information."
Any business takes hard work, but learning to build a successful ebusiness may be simpler than you think. Provide in-demand information about something you know or are passionate about. From that point on, everything else should flow effortlessly. Use the following 4-step process to build your Internet business the intelligent way.
Step 1) Content
Web users search for information and solutions. They are not looking for you. They don't even know you exist. They want the information that you hold though. So give it to them. Convert your knowledge into in-demand content. To succeed online, start where your customers start - at the search engines.
Step 2) Traffic
Your content ranks high at search engines like Google, Yahoo! and MSN. Your high ranking content is attracting free, targeted, open-to-buy visitors. These future customers meet you and your products or services at your site. When you provide excellent content, the search engines provide you with free customers! You need visitors and the search engines need to provide excellent search results. It's a win-win situation for everyone involved.
Step 3) Pre-sell
Complete strangers begin to develop trust and confidence in you. They do this because you pre-sell them by over delivering what they were looking for- relevant, original, information that solves their problem or answers their question. Building an online relationship is the most effective way to create raving fans! Word-of-mouth spreads and you receive even more visitors for free.
Step 4) Monetize
Convert warm, pre-sold raving fans into income. This is called monetizing. Believe it or not this is the easy part. You have already created content, received free visitors, and developed a trusting relationship with them.
Monetizing cannot happen if you fail to first execute the content-traffic-presell process. This is where 99% of small e-businesses fail.
Succeeding in any small business is the result of hard work. Learning how to conquer the Internet is simpler than many imagine it to be. Choose the right tools and build your e-empire with ease.
Written by Lynn VanDyke
What is eMarketing?
The frenzy around these new marketing techniques created by e-tailers and supported by the internet rapidly gave birth to a new dimension of what we knew as Marketing: the eMarketing (electronic Marketing).
There are many definitions to what eMarketing is, the simplest and shortest one being formulated by Mark Sceats: eMarketing is Marketing that uses the internet as manifestation media. A working definition is that coming from a group of CISCO specialists: eMarketing is the sum of all activities a business conducts through the internet with the purpose of finding, attracting, winning and retaining customers.
The eMarketing Strategy is normally based and built upon the principles that govern the traditional, offline Marketing - the well-known 4 P's (Product - Price - Promotion - Positioning) that form the classic Marketing mix. Add the extra 3 P's (People - Processes - Proof) and you got the whole extended Marketing mix.
Until here, there are no much aspects to differentiate eMarketing from the traditional Marketing performed offline: the extended Marketing mix (4 + 3 P's) is built around the concept of "transactional" and its elements perform transactional functions defined by the exchange paradigm. What gives eMarketing its uniqueness is a series of specific functions, relational functions, that can be synthesized in the 2P + 2C+ 3S formula: Personalization, Privacy, Customer Service, Community, Site, Security, Sales Promotion.
These 7 functions of the eMarketing stay at the base of any eMarketing strategy and they have a moderating character, unlike the classic Marketing mix that comprises situational functions only. Moderating functions of eMarketing have the quality of moderate, operate upon all situational functions of the mix (the classic 4 P's) and upon each other.
1. PersonalizationThe fundamental concept of personalization as a part of the eMarketing mix lies in the need of recognizing, identifying a certain customer in order to establish relations (establishing relations is a fundamental objective of Marketing). It is crucial to be able to identify our customers on individual level and gather all possible information about them, with the purpose of knowing our market and be able to develop customized, personalized products and services.For example, a cookie strategically placed on the website visitor's computer can let us know vital information concerning the access speed available: in consequence, if we know the visitor is using a slow connection (eg. dial-up) we will offer a low-volume variation of our website, with reduced graphic content and no multimedia or flash applications. This will ease our customer's experience on our website and he will be prevented from leaving the website on the reason that it takes too long to load its pages.Personalization can be applied to any component of the Marketing mix; therefore, it is a moderating function.
Privacy is an element of the mix very much connected to the previous one: personalization. When we gather and store information about our customers and potential customers (therefore, when we perform the personalization part of the eMarketing mix) a crucial issue arises: that of the way this information will be used, and by whom. A major task to do when implementing an eMarketing strategy is that of creating and developing a policy upon access procedures to the collected information.This is a duty and a must for any conscious marketer to consider all aspects of privacy, as long as data are collected and stored, data about individual persons.Privacy is even more important when establishing the eMarketing mix since there are many regulations and legal aspects to be considered regarding collection and usage of such information.
3. Customer Service
Customer service is one of the necessary and required activities among the support functions needed in transactional situations.We will connect the apparition of the customer service processes to the inclusion of the "time" parameter in transactions. When switching from a situational perspective to a relational one, and eMarketing is mostly based on a relational perspective, the marketer saw himself somehow forced into considering support and assistance on a non-temporal level, permanently, over time.For these reasons, we should consider the Customer Service function (in its fullest and largest definition) as an essential one within the eMarketing mix.As we can easily figure out, the service (or assistance if you wish) can be performed upon any element from the classic 4 P's, hence its moderating character.
We can all agree that eMarketing is conditioned by the existence of this impressive network that the internet is. The merely existence of such a network implies that individuals as well as groups will eventually interact. A group of entities that interact for a common purpose is what we call a "community" and we will soon see why it is of absolute importance to participate, to be part of a community.The Metcalf law (named after Robert Metcalf) states that the value of a network is given by the number of its components, more exactly the value of a network equals the square of the number of components. We can apply this simple law to communities, since they are a network: we will then conclude that the value of a community rises with the number of its members. This is the power of communities; this is why we have to be a part of it.The customers / clients of a business can be seen as part of a community where they interact (either independent or influenced by the marketer) - therefore developing a community is a task to be performed by any business, even though it is not always seen as essential.Interactions among members of such a community can address any of the other functions of eMarketing, so it can be placed next to other moderating functions.
We have seen and agreed that eMarketing interactions take place on a digital media - the internet. But such interactions and relations also need a proper location, to be available at any moment and from any place - a digital location for digital interactions.Such a location is what we call a "site", which is the most widespread name for it. It is now the time to mention that the "website" is merely a form of a "site" and should not be mistaken or seen as synonyms. The "site" can take other forms too, such as a Palm Pilot or any other handheld device, for example.This special location, accessible through all sort of digital technologies is moderating all other functions of the eMarketing: it is then a moderating function.
The "security" function emerged as an essential function of eMarketing once transactions began to be performed through internet channels.What we need to keep in mind as marketers are the following two issues on security:- security during transactions performed on our website, where we have to take all possible precautions that third parties will not be able to access any part of a developing transaction;- security of data collected and stored, about our customers and visitors.A honest marketer will have to consider these possible causes of further trouble and has to cooperate with the company's IT department in order to be able to formulate convincing (and true, honest!) messages towards the customers that their personal details are protected from unauthorized eyes.
7. Sales Promotion
At least but not last, we have to consider sales promotions when we build an eMarketing strategy. Sales promotions are widely used in traditional Marketing as well, we all know this, and it is an excellent efficient strategy to achieve immediate sales goals in terms of volume.This function counts on the marketer's ability to think creatively: a lot of work and inspiration is required in order to find new possibilities and new approaches for developing an efficient promotion plan.On the other hand, the marketer needs to continuously keep up with the latest internet technologies and applications so that he can fully exploit them.
To conclude, we have seen that eMarketing implies new dimensions to be considered aside of those inherited from the traditional Marketing. These dimensions revolve around the concept of relational functions and they are a must to be included in any eMarketing strategy in order for it to be efficient and deliver results.
Joining an affiliate program is a neat way to make money from your users. But just as you can join someone else's affiliate program, so you can set up your own program and invite webmasters to sign up. Here are my top 3 tips to succeed with your own affiliate program.
One of the biggest fears new Affiliate managers have is in finding new affiliates. This fear is a stumbling block that stops many site owners from getting started with affiliate marketing. Interestingly, with a proper marketing strategy, getting affiliates may not be very difficult. Given below are some tips that may help in attracting new affiliates.
Find complimentary sites - "Complementary" sites are sites that sell products or services that compliment your offers. If you sell "gardening tools", a site that sells books on "gardening tips" would be a perfect affiliate.
The hardest part of administrating an Affiliate Program is deciding what your affiliates need to help make the sale. But, by carefully categorizing your affiliates, you can easily determine what their needs are and how to accurately meet them.
The first step is to pick at least three types of affiliate. Take a look at your affiliates and try to determine one outstanding characteristic that can easily be compared across the board and choose at least three types of the characteristic.
The Second Step is to determine the needs of each type. Each of your affiliate types will have different needs; some of their needs will overlap, but you should find a distinct difference in many of their needs. If you find that all of them have the same needs, go back to step one and re-think your types.
The Third Step involves the process of creating and compiling linking methods for each group of affiliates. Based on the needs you identified in Step two, create and compile linking methods for each type.
Any time you run a program where your affiliates rely on other signups to generate profits, you will eventually have a problem with spam. One of your affiliates will inevitably get it into their head to blitz the Web with unwanted garbage.
When this happens you need to be ready to take action otherwise it will cost you! Your Internet company can boot you off your server and you can find yourself blacklisted. Not good for business. If you get an email from someone claiming they received spam with your URL, then take it as an early warning.
I am not advising you to immediately terminate the affiliate's account, but be sure to contact them to follow up on the complaint. Let your affiliate know you received a complaint and advise them to remove this person from their list.
If you only get one or two complaints, it's probably not spam, the complainants might simply have signed up for an email list and forgotten all about it. You will know when one of your affiliates is spamming, because you will get anywhere from 10 to 100 complaints in the same day all regarding the same URL.
The best thing to do in this case is to immediately terminate or disable the account of the affiliate URL that was spammed.
Running your own affiliate program can become an extrememly profitable venture for your business. You can recruit a HUGE sales force promoting your products for you, and ONLY pay them when you make a sale!
Even if your company does not have a formal marketing or business plan yet, there are many cost-efficient things you can do to market and promote your company's products and services. Here are 10 simple, tactical ideas to put your marketing efforts on the right track:
1. Focus on Your Core Competencies
Know your target market and the value your product or service will bring to them. Focus your sales and marketing efforts towards these groups. Avoid spending time trying to acquire customers you cannot properly serve.
2. Develop a Clear and Concise Message
Create a 30 to 60-second statement that clearly explains what you do, for whom, and why your target audience should buy from you. Have this message become your company's mission statement and raison d'être. Practice your message and notice how your target audience reacts to it.
3. Create Collateral Materials
Nothing says you are a viable business more than having a company logo, business cards, stationery, brochures, and possibly even a web site. Keep it all simple, and do not order more than a 3-6 month supply of printed materials. Once these pieces are in place, do not be shy about using them.
4. Join Networking Groups
Join or form one or two networking groups with individuals you do not know very well. Tell people what you do and who your target market is. Help others by connecting them with potential suppliers or employers. In time, they will return the favor to you.
5. Network Every Day
Networking is not limited to groups and networking meetings. Carry your business cards with you at all times and be prepared to talk about your company's mission statement at a moment's notice. Your next hot prospect might be standing behind you at the grocery store.
6. Leverage Your Current Customers
Happy customers are your best sales people -- ask them to provide testimonials and/or references for prospects. Consider establishing a customer referral program, and provide free/discounted services or a monetary reward for every customer that they recommend.
7. Develop Alliance Partners
Form strategic partnerships with others who sell a complimentary product or service to your target market. These alliances can be as simple as sharing contacts and leads, or they might take on a more formal structure. Either way, the goal is to broaden your reach beyond your own network.
8. Become an Industry Leader
People like to buy from subject matter experts. Therefore, look for opportunities to share your skills and talents by writing articles or lecturing on a topic within your area of expertise. Even teaching a night course at the local college or community level will give you additional exposure.
9. Don't be Afraid to Try
If you are serious about growth, spend time outside your comfort zone and try new things. Sometimes new ideas will work, and other times they won't. Either way, the process will teach you something new and valuable about yourself and your business.
10. Brainstorm with Others
You are in business for yourself, but that does not mean you need to have all the answers yourself. Whether you are a natural born marketer or one that sees marketing concepts as completely foreign, kick around ideas with others whose opinions and values you trust. You never know where your next “big idea” will come from.
These are just 10 tactical ways in which you can easily market yourself and your business. There are many more ideas that can work as well. Use these approaches as the building blocks to acquire customers and grow sales. However, for the best results, it is recommended that you incorporate your tactical initiatives into an overall marketing or business plan that acts as the compass/guidepost for your company's day-to-day activities.
Written by Rob Engelman
As the number of people using the Internet for their shopping steadily rises, it is increasingly important for retailers to understand why consumers decide to buy products online or offline. According to a recent study conducted by Shop.org and Forrester Research (2006), online retail is expected to hit $211.4 billion this year, a 20 percent gain over revenues of $176.4 in the year 2005. The market will have taken just three years to double from $100 billion to $200 billion.
The largest non-travel categories include computer hardware and software ($16.8 billion), autos and auto parts ($15.9 billion), and apparel, accessories, and footwear ($13.8 billion). Forrester projects that the highest growth rates will be for pet supplies and cosmetics and fragrances, with over 30 percent increases expected.
According to the report, online sales last year rose 25 percent to $176.4 billion. Excluding travel, online retail sales rose 28 percent to $113.6 billion, representing 4.7 percent of total retail sales in 2005.
The study finds the Internet can serve as a means of window shopping. Consumers compare price, find gift ideas and research products. Some of the resulting sales are transacted offline. When it comes to retailing strategies, Forrester is seeing efforts to integrate online and in-person sales. To integrate the experience online and offline, 79 percent of retailers have instituted consistent pricing across channels, and 46 percent allow for customers to buy and redeem gift cards on the Web site as well as at brick-and-mortar locations. Thirty-three percent of retailers have loyalty programs to retain customers, and 26 percent offer in-store product availability information online.
Payment over a secure channel remains an important task. Sixty-three percent of retailers surveyed require card verification value (CVV) codes at checkout. Private-label cards are accepted by 25 percent of retailers. Twelve percent of online retailers offer third-party email payment options, and nine percent accept eChecks. A further seven percent offer third-party credit accounts.
Data in the report are derived from sales data reported from 174 surveyed retailers and publicly available earnings statements. Forecast figures for 2006 are estimated based on the percentage of individual product categories that will move online and compared against a list of top online retailers by category.
Such cross-pollination is becoming more important: According to Forrester, “retailers reported that 22 percent of offline sales are influenced by the Web.” Retail Web sites are also a viable channel to reach new customers; more than one-third (38 percent) of online customers are new to a company's entire business (first-time buyers).
Price is an often overlooked marketing strategy, as many tend to focus on promotions or advertising. Pricing strategies, however, can have a large impact on sales and (more importantly) profit.
For clarification purposes, I am defining price as what your customer pays and/or what the end consumer pays for a product or service. In the case of products not sold directly to the end user, pricing is often described as “wholesale” and “retail.” When the distribution channel is long (such as when there is a manufacturer, broker/distributor, retailer, and end consumer), multiple mark-ups can occur between the wholesale and the retail price.
Your optimal pricing strategy will depend on more than your costs. Forces within your business environment such as your competitors, your suppliers, the availability of substitute products, and your customers come into play as well. Positioning (how you want to be perceived by your target audience) is also a consideration.
There are a variety of pricing strategies in existence. Each strategy is used in a different set of circumstances. Some of the things to consider when choosing the best strategy for your situation are your costs; both short term and long term sales and profit goals; competitors’ activities; and customer lifetime value. While there are others, a few of the more popular pricing strategies to consider are:
*Cost plus mark-up
Here, you decide the profit you need to make before setting the price. Figure out your costs and your selling price is simply your costs plus your pre-determined profit number. This approach helps keep your profitability top-of-mind, but may also result in prices that are out-of-line with customer expectations and worth of your product or service.
When competitive pricing, you look at the prices different competitors are charging and use those prices as a benchmark when pricing your own products. You and your competitors’ positioning strategies will determine whether you price at par, slightly below, or slightly above the competition.
This technique is used when you offer a unique or scarce product with few or no substitutes. The price is set high, resulting in high margins for the seller. Buyers are those that are willing to pay the price because of the product’s prestige and/or uniqueness. In the case of a scarce but necessary product, customers pay the price because they have no choice. Often, price skimming is a short-term strategy as competitors enter with their own products, bringing prices down. In the case of scarce products, either the need passes (salt during an ice storm, for example) or the shortage is temporary. Before considering this technique, be aware that if your customers feel you have taken advantage of them, you will be building “bad will” for your business and undermining the trust customers have in your products or services.
This is the opposite of price skimming. Prices are set low in an effort to gain large market share. Because the penetration price does not cover costs, this is also a temporary strategy. For this strategy to be profitable, customers must be willing to pay your normal, higher price later on.
Here, you price one or more products below cost to attract customers. You hope that those customers will purchase other profitable products from you. This strategy is often implemented as part of a short-term promotion.
This is a tactical move to clear slow-moving or excess products out of inventory. You sell the inventory at a steep discount to avoid storing or discarding the product. End-of season merchandise, perishables that are about to expire, and prior software versions or book printings are examples of eligible closeout items.
*Multiple unit pricing or quantity discount
The customer gets a lower price for purchasing multiple units or large quantities.
*Membership or trade discounting
Here, some customers (those that you know are heavy or frequent purchasers) are given an elite status, which gives them the privilege of a price discount on their purchases. This elite status can be based on occupation, membership in an organization, subscription status, or some other criteria.
With a variable pricing strategy, different customers pay different prices. Often, this strategy is used for project work. Each project has unique characteristics so is priced by the job.
This is offering similar products with different levels of functionality. Each level is priced differently and includes a different bundle of attributes. Software and Web hosting companies often use this pricing strategy. A trial or very basic version may be offered at low or no cost. Upgraded versions are available at higher costs.
Here, several items are sold together at a price less than if they were purchased alone. By bundling a popular item with lesser-known products, you can increase your sales. Additionally, in the case of inventoried items, you may be able to avoid a closeout.
Impact of Internet on Pricing Strategies
Aside from making some pricing strategies more prevalent, the Web has also affected the importance of choosing correct pricing strategies by allowing customers to be better informed and more vocal. In the case of consumer products, the purchaser can go to www.MySimon.com or another price comparison service and in seconds look at a side-by-side price comparison from several online retailers.
There are also numerous forums and discussion boards where members discuss their experience with providers. For example, your customer in Paris can complain or spread praise about you to a potential customer in St. Louis. This means the customer can not only make a better decision before purchasing, but can also better spread the word (both praise and complaints) after the purchase. For these reasons, the Web has made it more important that you remain competitively priced with your competition and maintain sensible pricing practices.
Combined, smart use of both the Internet and available pricing strategies can help boost your company’s bottom line.
Written by Bobette Kyle
There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations.
Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom in order to attract new corporate clients.
This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.
Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.
Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.
Product Line Pricing
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be $2, wash and wax $4, and the whole package $6.
Optional Product Pricing
Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.
Captive Product Pricing
Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.
Product Bundle Pricing
Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.
Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).
Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.
This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.
1) ‘Pay Per Click Search Engines’
This is one of the fastest ways to get targeted traffic. Just set up an account with some of the top PPC search engines and start bidding on keywords related to your product. Use the keyword suggestion tools that the search engines provide to make it easy to build your keyword list. Make a long list of targeted keywords so you can take advantage of the least expensive ones. Then write a killer ad with an attention grabbing headline and start driving traffic to your website.
2) ‘Search Engines’
To get the free traffic from the search engines you will want to get ranked as high as possible. So here are a few tips that should be helpful: Have lots of links to other sites, use the best keywords for your targeted market on your website/sales page and choose your domain name wisely.
3) ‘Write Articles’
Do you want to get a ton of free traffic to your website? Just start writing articles and submit them to related ezines. Always make sure your articles are filled with quality content. And you can include your bylines at the bottom of all articles. Then whenever someone reads your article they will be exposed to a link to your website.
4) ‘Solo Ads in Ezines’
Solo ads should also be a good way to send traffic to your site. Find ezines that are related to your market and place ads with them. A solo ad is someone sending your ad to their list without any other ads. And the people reading your ad will feel it comes recommended from the ezine owner. To search for ezines in your related market just use your favorite search engine and enter: “ezines ________”. Fill in the blank with your related market. Plus you can do a search for the top rated websites in your related market and then contact them to see if they accept solo ads in their ezines.
5) ‘Classified Ads in Ezines’
Now this will be very similar to solo ads but should be a lot cheaper because of the smaller ad space. And classified ads will be sent out with other ads and other content. But use the same strategies as described in solo ads to generate traffic. The secret here is to have a good ad with a great headline to make readers click on your link. The better your ad is then the more money you’ll make. Another thing to mention is if your ads are making you money then keep running them. But you will also want to run split test to try to improve your ads.
6) ‘Ads to AOL Customers’
You could send ads to the 20 million people using AOL to collect even more traffic. Just use the same techniques as in ‘Classified Ads in Ezines’. Again for best results try to create irresistible ads.
7) ‘Banner Ads’
You may want to invest in some banner ads for even more traffic. If you use a word banner ad, then it can be written similar to a classified ad. Some banner ads are cost per impression and others are cost per click. With the cost per click banner ad you only pay when someone visits your site, which may be better. 500 impressions doesn’t really mean anything if no one visits your website. But 500 clicks on your banner ad mean 500 people to your site.
8) ‘Linking to Websites’
Another way to get targeted traffic to your website is by linking to other sites. Only link to reputable sites that you would want to recommend to your good customers. Search for high traffic websites that are related to yours and then try to get them to link to your site. Collect information about these sites so you can send them an email later. In your email compliment them on their site and explain how linking to your site will benefit them. Tell them their customers will be interested in the information on your website. If they don’t agree to link to your site then try exchanging links with them. Also start an affiliate program it’s the ultimate linking system.
9) ‘Viral Marketing’
You can also create lots of website traffic using viral marketing. Create or buy a product that is valuable and has permanent links back to your websites. Then sell or give this product away and then let your customers sell it or give it away. You will have a viral product that can spread all over the internet like a virus and all those links will keep sending prospects back to your websites.
10) ‘Joint Ventures’
Joint ventures are a great way to get target traffic fast. When you do a JV with someone you can promote each other’s product to your lists. Both JVs will make sales and increase their customer lists almost overnight. Once you start developing JVs you can use the results from the first one to promote the next one. And the more JVs you have the more sales you’ll make.
Remember don’t forget to test everything you do to find out what works the best for your products.
Written by Duane Marx
A few points to keep in mind as you add your site to these directories:
• Directories are not search engines. Directories are edited and managed by human beings, whereas search engines are programs that troll the web looking for pages. Your site might be recommended to a directory by one of the site editors, or a very enthusiastic fan of your site, but most likely you will have to introduce yourself if you want to make a directory’s list.
• Be sure the directory is indexed in the major search engines. A quick search at Google, Yahoo & MSN will do.
• Be sure the directory is not banned by Google. You probably won’t get flagged by Google if you are listed there, but the risk is too great – there are hundreds of other places for your link.
• Page Rank isn’t everything. Don’t skip sites just because they have a low page rank. While Page Rank is extremely helpful, it changes over time. A directory with a PR of 3 this month could jump to 6 next month. Also, take note of the Page Rank of the specific page of the directory your site will be listed on. Just like it says, Page Rank is for pages, not for sites. A directory could have a PR of 7, but the page your link appears on might be a humble 1.
• Directories are not overnight traffic. Look around the submission guidelines and to see how long the editors will take to review your site. Free sites can take up to four months to get approved.
• Go after the older directories first. Google values a site’s age, and you should to.
• Review the directory’s guidelines and don’t abuse them. Don’t submit your site every week. Don’t add an unrelated site to a niche directory. Don’t try to trick the editors into adding your site to more than one category if that goes against the guidelines.
Now that you know the basics of evaluating and submitting to directories, here’s a short list of the top sites:
1) Yahoo http://submit.search.yahoo.com/free/request
The world’s best-known directory. This free listing form may take months to result in a link back to your site, but it is well worth a try.
2) DMOZ www.DMOZ.org
This is the granddaddy of all directories, and is greatly respected by Google and the other major search engines. Listings are free, but the wait can be long. According to the DMOZ site, expect your site to appear in the listings at Google, AOL and other major engines about 2 weeks after you’re listed in DMOZ.
3) Zeal. www.zeal.com
A free listing after you register. Zeal is owed by Looksmart.
4) Best of the Web www.botw.org
Requires a $49.95 yearly fee, or a $149.95 one-time fee. Online since 1994. Listing pages usually have a page rank of 4.
5) Directory World www.directoryworld.net
Requires a reciprocal link, but is otherwise free. Good page ranks for listing pages.
6) Clickey www.clickey.com
A free link. Also sorts companies by country.
7) Seoma www.seoma.net
Requires registration and a $15 paypal fee for a link, but the high page ranks make it a bargain (compared to buying a text link).
8) ExactSeek www.exactseek.com
A free link at an established site. You can also upgrade to a “top ten ranking” for $12.
9) What You Seek www.whatyouseek.com
Standard submissions cost $24.99 and will be posted in eight weeks. Velocity submit takes two days and costs $49.99.
10) Really First www.reallyfirst.com
One of the largest directories with over 40,000 links. Poor navigation, but a free link if you add their link to your site.
This not an exhaustive list, but a great start. Also, remember, if you have a new site, getting listed here will help your website get indexed by search engines.
Written by Anik Singal