Market Penetration: A Fun Last Topic

Here are some tips for increasing your market penetration:

1. Maintain or increase your product's market share by using more aggressive pricing, launching a smart ad campaign, and look for avenues of sales promotion.
2. Secure dominance in growth markets by finding a new a growing demographic, psychographic, or sociographic to market to. For example, if you notice that people over the age of 65 are starting to buy a particular clothing item a lot, market to those people to capture that growing demographic.
3. DESTROY YOUR COMPETITORS!...with loyalty programs to guarantee a place in the market share. Many grocery stores and websites do this now where you sign up for a membership to receive bonus deals and coupons. Kmart tried this tactic a little too late and now they are hard to find. 
4. This sort of ties in with number 3, but try to get your customers to use your product in greater quantity or more often. After introducing a loyalty program or mailing list, you can continue to advertise a new product or a product that has something new with it. For example, Kraft Mac and Cheese removed the artificial dyes from their "cheese" powder to make it seem like a healthier value (it is still cheese powder, people). 

For all you avid readers out there, Smartling has a pretty comprehensive list about the basics of market penetration (how to plan, when to penetrate a market, how to, etc.) that I will link right here: https://www.smartling.com/market-penetration/

This will be the last blog post for this class. Hopefully everyone learned a lot. I can see I had some regular clicks from within the class so that was neat. Good luck in the Entrepreneur World everyone! 

Subscription Services: The Model of the Future

Have you heard of services like Nature Box or Blue Apron? Ipsy? Loot Crate? Birch Box? All of these are part of a hot new trend: subscription box services. These are services that promise "curated boxes" of whatever genre of products the consumer is interested in. Like make-up? Try ipsy. Like geek gear? Try Loot Crate. There are so many of the services now, and they are relatively cheap to subscribe to, ranging from $10 to $40 per month. So what makes these so appealing to customers? Is this just a fad or a real business venture?

You might be surprised to find out these business are actually quite lucrative. One entrepreneur made a subscription box service that earned $50,000 in 6 months. And the overheard for these businesses is pretty low. Finding products to put in the boxes, hosting a website, and covering shipping costs are the main costs these business face.

These businesses are popular with the younger generations who like the mystery of whats in every box. The boxes are a good example of what it means to know your customers. People want these boxes and the experiences they provide. Many of these boxes have received capital investment and it has quickly become a multi-mullion dollar industry.

These subscription services have somehow managed to market a box without telling you exactly whats in it. This teaches us that strong marketing can be more important than the product itself. Understanding what your customers need, seeing the costs of a businesses, and making relationships with other companies can make a business successful. I think what we have learned in this class, most of all, is that how you market your company is how successful it will be. So put in the research, the time, and the money to develop your brand.

Have You Tried Turning it Off and On Again?

Product Support is something many of us probably don't think about on a daily basis. If our internet is acting up, we find a customer service number. Bad experience at a restaurant? Send a tweet to the company. Need help setting up a program? Live chat is a few clicks away. The fact that many of us only know the hassle of dealing with the support instead of finding it is key. Companies invest in services, instruction manuals, and website to help users remain satisfied when things go wrong (except for Pearson, they are the worst). So what is support?

I focus on customer service a lot (perhaps because examples are so readily available), but customer services is such a general term. Support is more than fixing an order at a restaurant or smiling when greeting a customer. Support is anything a company provides to help customers solve problems. Furniture from IKEA comes with an instruction manual. That is a form of support. If the furniture is broken, there is a number on the box or receipt to call a service desk to get it replaced. That is support.

Tech companies like Apple and Microsoft have good examples of what support can mean. Microsoft stopped mainstream development of their widely popular operating system Windows 7 in January of 2015. That means they stopped creating products and changes for it. However, they will continue to release security updates (if any breaches are found) until 2020. That is supporting a product. Even when switching from Windows 8 to Windows 10, they gave consumers about a year for a free upgrade to Windows 10. This gave users an incentive to upgrade, but also ample time to make the switch. They released the new OS with trouble shooting software and compatibility fixes. Again, that is support.

Obviously, no one in this class is a tech mogul (yet 😉) but we can look at these things as examples. How can your small business provide support for your product or service? Will you provide a phone number they can call if they have problems? Will you invest in highly detailed instructions? Will you offer warranties in case something breaks? These things can make or break a company's reputation with consumers. It is worth considering if you do not want to end up like Pearson; they are the worst.

Shopping for a Gaming Computer

Recently, I have been in the market to buy a gaming computer. Millions of Americans have a console (Xbox or Playstation), but they have one major draw back: their hardware quickly falls behind the ever-changing gaming market on the computer. (This part is not about my current point, but it does bring up an interesting question about supporting a product, for another post I suppose).

Back to the narrative, I have been scouring the internet looking for "Gaming Computers" and there is a popular debate surrounding them: pre-built or home built. That is, do I buy a computer that is ready to play or order all the parts and assemble it myself to save some money? Both options require that the consumer know a little something about computers. Lets look at this example (http://www.ibuypower.com/Site/Computer/Desktops). Simply scrolling down the page, you'll see the absolute garbage can of letters and numbers that is "computer specifics." Does the average person know the different between a Radeon R7 GPU or an NVIDIA GTX GPU? What is an Intel i5 CPU? WHAT IS A GPU OR CPU? 

I only cited one example, but it seems all the pre-built pc markets and part retailers expect the user to do the research to figure out what they need or want to play their games. I think these cites should absolutely tell the specifics of each computer or parts, but none of them answer the average buyer's simple question: Does it do games good? (intentionally obtuse). How do we know buyers want simple plug-and-play systems? Look at the console market I have already mentioned. If you buy an Xbox, you know it will play all the Xbox games in the Xbox store to the best of its ability. 

Hunter, how is this about marketing?

Right, yes, marketing. It seems we have two independent solutions to the same market. Gaming computers are the highly customizable yet overly-complex way to play video games. Consoles are the layman's quick fix to having something that can play Call of Duty. And this extends to many markets. You can buy a simple slingshot, or you can buy a slingshot with a laser sight and a telegraphic scope (for some reason). My point is, figure out who your company is in the market. Are you the complicated yet personal solution, or the simple, guaranteed-to-work product? Do you expect people to have knowledge about a certain area before they purchase your product? 

As a closing thought: I guarantee the company that figures out how to keep the premium price of PC's while having the simple marketing message  "This will play your games perfectly" will break into both markets, and may rise as the preferred choice. Dell's line of PC's named Alienware almost had this idea right, but they executed it the wrong way. They released a customizable console (Alpha) that runs on Steam OS (Steam is a online market for games). The problem is the Alpha limits people to only using Steam games that are compatible with it. It is my opinion that having a three standardized computers guaranteed to run games at Medium, High, or Ultra settings would have much better success breaking into the market. Cosmetic customization would help meet the "I am an individual" market of the Computer Gaming community.   

Double I's

A topic that I enjoy musing about on Sunday drives or while strolling down a grocery aisle is: what makes my preferred brands successful? Lets check out this video first.

In this video, Scott Galloway talks about several services I interact with on a daily basis. Snapchat, Facebook, Amazon, Walmart, Apple. All these companies are common but Galloway discusses why some are more successful than others.

Spotify v. Apple Music
Though I am not quite an audiophile, I do enjoy music as much as (if not more than) the average person. Spotify and Apple both have streaming services that allow users to listen to musics from thousands of artists, but I definitely prefer Spotify. Why is that? Well, I enjoy my usual playlist, but I also want to find new music. I find it much easier to find new artists I like with Spotify because they analyze what I listen to. They create a "Discover Weekly" playlist for me to listen to each Sunday to find new music. And as an added bonus, they send me an email at the end of the month telling me my most played songs, the number of unique artists and tracks listened to, etc. It is equal parts interaction and intelligence.

Amazon v. Walmart
No surprise here, I prefer Amazon to Walmart. Though I do a buy some groceries from Walmart, it is rare I venture in there for non-grocery items. Amazon offers 2-day delivering directly to my door which is convenient enough that I do not mind the wait. Amazon shows me relevant items, offers surveys, etc (again). Walmart just feels impersonal and un-tailored like a suit that is "one size fits all".

I know this class is more focused on small scale business ventures, but it seems the underlying point in what we learn is that some principals in business are constant. Creating something for a customer that feels personal and relevant can go a long way to establish your brand. I believe that a company NEEDS to be intelligent and interactive. It is increasingly easy to gather user data, but often times it seems that user data is squandered on deciding what items to stock up on. Inventory is important, but having a better experience for customers can increase your movement of inventory.

Value Propositions

Recently, our instructor went in to more detail about what a value proposition is. A Value Proposition should tell employees, potential business partners, and customer who and what your company is. I decided to raid my pantry to see if I could find any good examples of value propositions:

Telula Green Zing Beverage: Green Zing is a healthy blend of juiced leafy greens and citrus with just a hint of ginger. It's packed with health nutrients, antioxidants, and a crisp, bold taste designed to fill you up with healthy fruits and veggies from the farm. 

What we can capture from this is that 1) they use fresh vegetables 2) it is designed to be healthy and delicious and 3) it can supplement a meal.

Progresso Soup: For over 100 years, our kitchens have crafted honest, soul-satisfying recipes with real ingredients you're proud to serve.

This establishes a history of the company, tells that it is honest (both in ingredients and business), and and says that you the consumer would be proud of the soup. 

Mom Brands (Malt O Meal): Great cereal doesn't have to be expensive. Since 2007, American families have saved over a billion dollars on breakfast cereal by choosing our brands over the more expensive varieties. And they haven't sacrificed taste or nutrition. Maybe that's how MOM Brands has become the fastest growing cereal company in America.

This one is probably the best example. It establishes that their cereal is less expensive but is good and nutritional. The company is family owned and growing quickly. It is a message to consumers and potential partners. 

Obviously, if you are not in the food industry, your value proposition should not sound as appetizing. However, what we can learn from these examples is what kind of message you should try to send. If you company is a clean option like Telula, promote that "value". If you have a history of good service like Progresso, use it. If you are the "less expensive" option, let it be known.

Market Surveys: Speaking to Consumers

In order to fain an understand of what people want or how they feel about certain product and ideas, companies use market surveys to gather data. This data can then be used on advertisements strategies, product development, or establishing a market. While market surveys are helpful, it is unlikely that your small business will be able to afford on of the big marketing firms. For this reason, I have gathered and thought of some ways to do your own market survey:

Email: Probably the easiest and most convenient for both parties, emails can be the "fire and forget" method. Asking customers to leave their email in exchange for small discounts can be a great way to 1) build up your database of potential survey-takers and 2) build customer loyalty. I recommend the email method most. Think about it: how many companies currently have your email?

Telephone: phone numbers are easy to get but more labor intensive. Instead of sending a mass email, business will have to call each number on their list, which takes time. Also, many people forward numbers they do not recognize. Numbers can be effective to gather market information, but it is a longer, more difficult process.

Mail: Probably the slowest method, mail can be used to conduct the same surveys. However, companies must rely on customer to their mail the surveys back or bring them to a physical location. For this method, it is highly recommended to give customers an incentive to do so. Mail can be easy to manage and it relatively easy to send off. The return is largely uncertain.

In-store Survey: a great way to gauge how your customers feel is to simply ask them. Having paper surveys in your store can be a quick and easy way for your customers to give feedback. Unfortunately, the delivery of this is fairly limited. You can only reach the people in the store.

Most important for collecting this data is be openly grateful for what consumers give you. If offering incentives is possible, do it. Keep in mind, only the willing will be giving you information. Sometimes purchasing data or doing independent research will be necessary.

Customer Service

We have all heard about it, experienced it, and may have been a part of it. It seems its now just a business buzz word. So, what is "Customer Service"?

To me, customer service is anything a company does to make a customer feel more welcome and comfortable doing business with that company. It can be anything from complementary robes at hotels to fixing a wrong order at a restaurant. Panera Bread is a fascinating example. One thing they pride themselves in is "Panera Warmth". Panera Warmth is having the right atmosphere, helpful associates, and a devotion to fixing mistakes. For example, if a customer orders a sandwich and it was made improperly, the customer can keep that one and the production team will make an entirely new one for them. Is it giving away food? Kind of, yes. However, the cost of a sandwich is worth preserving that relationship with the customer. Essentially, $1.25 in ingredients can ensure future investments of far more than that. That is smart customer service.

The unfortunate thing is most people do not realize when they are being "served". People may remember good customer service, but they will definitely remember bad customer service. As a college student who looks for deals on books and supplies, I run into companies like Pearson who have terrible customer service. It is a chore to contact them and a struggle to get the issues resolved. To this day, I have several problems I have not been able to remedy because their customer service is just...bad.

Companies should invest heavily into having open forms of communication for their customers. What tends to happen is by failing to correct customer service problems, companies lose even more business for the future. It is not just a buzz word. Having awesome customer service can make or break your company.

Market Differentiation

Discussion

Market Differentiation is anytime a company focus on one or more specific things about their product and tries to use that as their "edge". For example, products use "Organic" or "All Natural" to highlight themselves as the "healthy choice". Game consoles market their ability to play games at higher resolutions or on faster networks than their competitors. You can look at most products and see what they use as their selling point. Sometimes it is as simple as being cheaper, but there are more complex options like a guarantee of great customer service. 

Ideas

For the company that I am developing, I have researched what other companies have done in my field. So far, there are no competitors in the market, at least for the audience I want to capture. So, I have to spend much of my time imagining what their selling point will be. For my product, I can boast that it will be domestically produced, offer a service with the product, and offer incentives to medical professionals. From my reading, I can tell that the other companies doing the research similar to mine are not focused on these 3 areas. 

To differentiate your product, it is important to understand how you are similar and different from your competitors. If you own a small store, advertise your more "personal experience" for customers or spectacular customer service. Basically, be aware of what people do not like about your competitor. 

Observations

Amazon has the infrastructure to offer "free two-day shipping" for their premium members.

Walmart is a large store that offers "convenience" and low prices. Target is a store that offers convenience (same) and quality (different). 

Location Research: Huntsville, Alabama

Industry
Huntsville, Alabama is a city that is rapidly becoming an industry-leader in technology and science. The city is host to many different industries but the three large ones are: Aerospace/Defense, Advanced Manufacturing, and Bio-science. Red Stone Arsenal is host to many companies and agencies like NASA, ATF, US Army Command, and the FBI. There is also 12 research industrial parks like Cummings Research Park.

There are over 200 different manufacturing companies that create parts for the auto and aerospace industry leader. Many "local manufacturing operations are located in one of the area's publicly owned industrial parks with sites and infrastructure currently in place for immediate and future growth."

The city also features "a wide range of  manufacturing [for] telecommunications hardware, circuit board and communications sub-component assembly and design, sensors and radars for advanced missile systems and detection, and software engineering."

All of these industry and manufacturing opportunities could be beneficial for a product highly dependent on manufacturing and information technology.

Taxes
Huntsville offers tax incentives for companies. Most categories of taxes have abatable terms which companies must meet and get approved. These abatable taxes essentially mean that companies, assuming they meet the right requirements (depending on factors like industry, location, etc), could stand to pay less in taxes and earn more profit.

Building Options
There are 85 industrial buildings for lease in the Huntsville area that are around the size I am looking for. Further individual research will have to be done, but there are plenty of options for a business to grow and develop in.

Transportation
Huntsville has access to several railroad lines, I-65, and a National Airport. Many of the industrial buildings are in close proximity to other companies, lodging, amenities, and high traffic areas. Having routes to receive and ship are a definite must, but it looks like Huntsville has that covered.

Video Games: A Hobby and a Business Venture

If you are like me, the prospect of a new console or release of upcoming video game gets you mighty excited and impatient. For a long time, I viewed my simple hobby as child's play. There are people out there making video games just for fun. It's true that many game developers love to make and create games, but things are a little more complicated these days. Now, "gamers" see a consistent trend of publisher imposed deadlines and the installation of "microtransactions." I will break this down for industry outsiders.

So assuming you like to play the popular games like Call of Duty, Battlefield, or Assassins Creed (there are many more unmentioned titles), that means you like games that are at the peak of the industry. There are game developers and game publishers. That is an oversimplification of a complex industry, but that is the jest of it. More recently, games have started marketing paid downloadable content (DLC), premium memberships, and the aforementioned microtransactions. So now we have a base game selling for $60. Then usually there are 4 DLC releases over a year that are about $15 dollars each or people can opt into the "premium" membership and save about $10 by paying $50 upfront. Alternatively, there are microtransactions which are small purchases of $1 (give or take) to make the game easier or more enjoyable. The fact is, video games are always asking for more money. It isn't cheap to make a video game, but there is definitely a growing trend in finding alternative routes for videos games to keep making money 1 or 2 years into their cycle. Time for some stats:

"Total revenues for the industry in the U.S. hit $23.5 billion last year—a 5% jump over 2014, according to the Entertainment Software Association, the industry lobbying body, which also hosts the E3 trade show in June."

"The recent open beta for DICE’s upcoming Battlefield 1 has broken EA records.

The studio has revealed that the game was played by 13.2m people" in a week of free access.

"Sony has sold 40 million units of the PlayStation 4 globally the company announced today."

Trend: The numbers (active users and sales) in the video game industry just keep getting bigger.

Where to Sell?

Small business have a lot of decisions to make when deciding how to deliver their product. Should they have a store front, a place where customers visit to buy products? Do you make a deal with an existing retailer (Walmart, Target, etc.) to sell your products in their store? Are online markets a viable option? All these options should be considered.

Store Front
Having a store is a great way to have a public appearance for your potential customers. You can control what products are sold, the atmosphere that customers experience, the staff that people meet, and the layout of the building. Stores are great, but usually only appeal to a local audience. Store owners that want to expand their reach either need to have an online market place or have multiple stores across a wide area. A store needs to be able to bring in customers to pay for staff, fixed costs rent or utilities), and promotions.

Deals With Retailers
Having your product sold with a popular retailer like Target can be a great way to capitalize on their success. Large retailers already have devoted customers who like the products and convenience they can offer. Selling in one of these stores has its own unique drawbacks.  These stores of full of potential customers, but even more potential competition. Unlike an individually owned store, you will be forced to compete with the other products that retailer stocks. Also, many of these large retailers have to approve your product. Walmart has an online submission process where suppliers can get their products approved to be sold in stores. However, they require a lot of information about your business including:

• Federal Taxpayer Identification Number (TIN)
• GTIN/UPC Membership Number
• Dun & Bradstreet Number
• Company Information
• Ethnic Origin
• Company Contacts
• Company Manufacturing
• Company Accounts
• Company Promotions
• Company References
• Company Sales

Understandably, those large stores need to protect their assets, but making a deal with them opens the door to a lot of regulation. 

Online Markets

Amazon. Etsy. Ebay. You probably recognize these sites. Online stores are becoming popular as the number of active internet users continues to grow. Most stores have an online website as a way of convenient shopping. With an online store, people can shop for your products whenever they please. You can customize exactly how your page looks and operates if you choose to host your own website. However, online stores need to be maintained. Payment options need to work, servers need to be able to host the traffic, and the design needs to be intuitive. People need to know how to find the products they want, how to buy them, and how they receive them. Owners need to have options to deliver their products. Mailing and shipping costs can be expensive. Having an online marketplace can be a great supplement to an existing store but may not be a viable standalone option. It is difficult to create a presence with customers using only a web page. 

Opportunities for Promotion

Amazon Launchpad
Amazon Launchpad is a service to help start-up companies reach new user bases. Users also gain access to many of the the delivery options that Amazon Prime uses every day. It is estimated that 54 million people are active Prime members. On average, Prime users spend $1,100 a year with Amazon, not including the subscription fee. Though it is not guaranteed all of those people with be interested in your product, using Launchpad may help your company find its audience and build your brand.

Facebook Ads
Facebook is one of the more popular websites in the world. It is the most popular social network on the internet with an estimate 1.7 billion monthly active users. Companies can set a budget to run Facebook ads, and Facebook with automatically find people they think will be interested in your product. Alternatively, you can select a target audience. Those with many competitors may need to spend more on Facebook ads to reach the most people. Having a Facebook presence like a page also helps.

YouTube Ads
Similar to Facebook, YouTube has an advertising service. I am sure you have seen an ad before being able to watch your favorite YouTube channel's content. YouTube lets companies pick how much they want to spend and select several different aspects of their target audience like age, sex, interests, and location. YouTube can be a great way for businesses to engage younger audiences. Another popular practice on YouTube is to sponsor specific channels to try your product and have them make a video about them. This doubles as selecting an audience and having a face for your product. YouTube also has a built in analytic system so you can see who views and interacts with your ads.

Google Analytics
Google is the most popular search engine by far. Though this does make it difficult to stand out from your competitors, it is possible to improve your search rank and engagement. With Google Analytics, users can see how keywords on their site are ranked, how many people see their site based on those keywords, and how many clicks those words get. Smart businesses know how to work around important keywords to their business. The video below gives a few examples:

The Old Fashioned Way
Though businesses should absolutely have an online presence, it is possible to partner with local businesses to advertise your product or service. Simply having brochures in various locations around town can help you earn some local customers. The downside is that it is not as easy to see engagement with those brochures. This is not a very good solution for reaching new markets, but it can be a way to get some customers in a fairly inexpensive way.

Domestic Production

Do you care where your products are made? Do you even think about it? For many Americans, there is a trend of nationalism that drives the want for U.S. made products. According to Consumer Reports, 80% of Americans would rather buy domestic products. 6 in 10 of those same people would be willing to pay a 10% premium for domestic products.

Break down of consumers by Consumer Reports.

So what does this mean exactly? Should we charge American consumers 10% more just because they might be willing to pay for it? No. However, it can be used to decide if the cost of domestic manufacturing is worth it. A little extra money spent "in house" could yield some large profits. Being a domestic company can be a selling point to the majority of your potential clients. This is a trend that many large companies are catching on to:

"Walmart, the nation's largest retailer, earlier this year announced it will boost sourcing of U.S. products by $50 billion during the next 10 years.General Electric is investing $1 billion through 2014 to revitalize its U.S. appliances business and create more than 1,500 U.S. jobs."

While I do believe that international trade is necessary and beneficial, I believe it is a civic duty to buy domestic when possible to support the American economy. However, just because it is an American company does not mean their products are manufactured domestically. When you pay for the next iPhone, be mindful that many of Apple's products are made in China. 

Cost Per Unit

One of the most important things for a companies success is making a profit on whatever they produce. To make a profit, a company has to consider many of the costs for operation and production. Companies must take an honest look at:

Fixed Costs: expenses that do not respond to change in production output like building rent, depreciation, mortgages, and interest payments. Fixed costs should be pretty constant.

Variable Costs: expenses that changes often depending on production. These include the cost of materials, labor, and shipping for each product.

Determine Unit Costs: (total amount of fixed cost + variable costs) divided by (total number of units produced).
Knowing the unit costs helps companies determine when they will make a profit. Keeping an eye on the numbers and how they affect profit are important to avoid waste.

This video is great at showing cost calculations:

Diabetes in America: The Untapped Business Venture

The writing is on the wall. Diabetes in America (No, excuse me) around the world is a large problem. According to a 2014 report from the CDC, about 29.1 million people in America have diabetes (both diagnosed and diagnosed). That is 9.3% of the population. Think about it for a minute, do you know someone with diabetes? For most of you, the answer is probably yes.

Let's take that a step further. According to the same report, about 25% of people over the age of 65 are diabetic. These same people are at higher risk of non-traumatic lower-body amputation. Here is a snapshot of some more statistics:

• In 2010, about 73,000 non-traumatic lower-limb amputations were performed in adults aged 20 years or older with diagnosed diabetes. 
• About 60% of non-traumatic lower-limb amputations among people aged 20 years or older occur in people with diagnosed diabetes.

And that idea is interesting to me...

Nickles and Dimes in Design

Taking an Entrepreneurial Marketing class sounds exciting. Like many people, I have had ideas for products or sudden epiphanies of "why haven't they made this?". I do not yet know what product or service I would like to work on, but I have been viewing through some videos to get some ideas.

One video I stumbled across got me thinking about product design for mass production. Though this class seems more aimed at small business, this video is worth a watch. Bill Hammack does a great job at explaining how small design changes can have major effects of cost per product and product durability.