Individualization and Choice

Individualization and Choice has made it to marketing promos

Knowing one promo doesn't fit all.  Brands are giving the end customer a choice

Recently found this flyer at one of our dealers.  This flyer tells me two things.  #1 The Milwaukee brand teamed up with this specific distributor to promote its tools. #2  More importantly, and the main topic of this post, is that brands realized now, one promo or giveaway may not work or be enough to entire one to purchase.  As I always talk about in the past, luxury..individualization, customization are now the norm...its about choice.  This promo allows you to make that choice.  And in turn, probably makes you more likely to buy.

The Receipt Coupon for Repeat Sale

More and more retailers giving an instant coupon to bring you back for a repeat sale

Instant retail receipt coupons to entice you back into the store to buy.

Just doing my normal shopping this week and noticed how almost every retail receipt I had came with another coupon to entice me to come back at a later date to spend more money.

The only thing better than a sale, is a repeat sale!

An Affiliated Marketing Card

It seems every store has their own loyalty and rewards card.  How about one that combines non competing retailers.  Check out my new wellness card by Rite Aid.

ATT, EXXON, MACYs, MOBILE, RITE AID

How about a loyalty and rewards card that covers Gas, Phone, Shopping and Drugs?

Affiliated Marketing has been around forever.  Think of my earlier post.  Its a referral.  In the web world, that referral or click or sale may generate a commission to you.

I always wondered why non competing companies don't do more of this.  There are already collaborations like the Harley Edition for FORD, or a designer who does a collaboration with a store or another brand in cross branding.

The idea behind this is simple.  Be able to build rewards, track info, and maintain or lock that customer in using your company as much as possible.

At the end of the day.  Its about selling as much as you can, to everyone and anyone and to repeat that business.

The New Blockbuster

Remember the days when you went to the video store to buy or rent a movie?

One of the better delivery kiosks I've seen.  Dual machines.  Covered and Lighted.  If only you can use it as an ATM also.

No matter how much technology exists.  Not everyone has high speed internet or a Netflix account.  RedBox, which is owned here in WA State by Coinstar pretty much replaced the video store.

The co-marketing with the restaurant next door is pure genius.  McDonald's. Why?  Because overall, the McDonalds customer tends to be of lowered income who would typically rent a movie (tactile) vs stream a movie.   Another reason is the pure volume of people a McDonald's customers vs other outlets.

RedBox also wins the market by offering movies at prices people are willing to pay for to watch.   Instead of assuming people have the technology at home, RedBox brings the convenience to you.

Wage Marketing

Ivars Restaurants here in the Great Pacific NW jumped right into the $15 min wage debate

No tipping required

Ivars jumped right into the Seattle $15 minimum wage debate by raising their entire staff to $15.

Even though there has been a lot of mis information about the minimum wage for restaurants. Many people don't know how it is a rolling change, and it can include tip income and health benefits.

Ivars decided to jump right in.  Offering a $15 wage + health + 401K.  The Puget Sound Business Journal wrote an article on how this only increased food prices by 4%.  They eliminated the 15% tip but putting an automatic 17% on top of its prices.

Did it make a difference to me?  Nope.  Food prices are going up because of lack of water, and transportation.  Labor is just a small portion of it.

Proud to live in such a progressive area.  According to Bloomberg, with he country's highest minimum wage, Seattle and WA state outpaces the nation in job growth.

Laid Out

New old trend in fashion marketing...lay out the outfit for the uneducated consumer.

Call it the old window display.  Or how to dress it.  One great thing about fashion and fashion merchandising in stores, is the "experts" put the outfits together for you.  They try to inspire.  Create style.  Go bold.

What I noticed in the magazines now, online, and also more in stores is they try to lay more of the product out for you.  Accessorize.  Not only the top, the bottom, and maybe the outerwear.  Its the watch, the socks, the sunglasses etc.

The whole idea of laying it out can be applied and is applied to many industries.  Its just like putting the salsa next to the chips.  The toilet, sink and cabinet all together.  The suite.

All in the effort to increase sales and give each individual component more attention as it is suited/laid out.

Rewards

Many companies are using direct to consumer rebates drive sales

Discount Tire Direct Rebate On Tires

I was quite amazed that I was able to get 60K+ miles from the OEM Dunlop tires.  They were not rated very high and when I damaged one, it costed like $200!

So recently when I had to replace all four, being the consumer that I am, I did some research.  I am a big fan of the Toyo brand of tires and also because Les Schwab here in the Northwest are everywhere I travel.  The tires I was looking at were the new Proxes 4 Plus.  $200 a tire.  After doing some more research, I find the Nitto Brand of tires.  They are owned by Toyo.  The tech they used is a few years older, but they had outstanding reviews and are quiet with long life tread.  I was pretty sold on the $160 tire.  This brand was only sold at Discount Tire.  Lucky me, Discount Tire offered a direct to consumer rebate in the form of a debit credit card.

In many industries, many brands and products have what is known at MAP pricing.  This means everyone has the same price.  This is why when you goto an appliance dealer, the same oven will cost the same no matter where you go.

Retailers try to differentiate by having different models and exclusive models.  Tires are considered commodities.  And these specific tires are probably sold at more than just Discount Tire. 

The direct to consumer rebates serves two purposes.  #1.  Drive sales by lowering the overall cost  and #2.  Keeps the manufacturers MAP pricing the same.  So in reality my tires were not $160 each.  Buy 4 I got $75 back.

This rebate is used across many industries.  Think of a retailer who may sell you the whole package vs one portion of the package.  You buy the whole package, the invoices will be the published costs/pricing...but you get the rebate for the increase business.  This is similar to insurance companies giving you a discount because you buy more (even thought their pricing is upfront vs the backend in the form of a rebate)

Overall this is a widely used trick and cool concept in driving sales.  This rebate lowered my over cost of ownership, the manufacturer and brand got my info as a customer.  MAP pricing in the marketplace is maintained.

Perfect Merchandising

Let me explain why this is perfect merchandising.

Without saying too much:

1.  Beautiful Branded Display Case with Name of Brand (Raised Metal Letter) --this reflects the quality of brand.

2.  Depth of product.  Over 30 unique styles.

3.  Depth of color.  Variety 

4.  Symmetry in presentation.  Catches your eye.

5.  Locked up.  For security, but also for perceived value and desire to touch and get

Store Exclusives

Besides private labels, stores still needs brands.  How do you compete with other stores with the same brand?  You create store specific collections.

Exclusively at Macys

As much as retailers want to only sell exclusive products, or private label ..for fear they will lose to the internet or other competing dealers on price when they invested in the space, inventory and salespeople.  

Retailers still need Brands.  Why so?  Because brands generate the feeling of lifestyle and prestige.  One growing trend in many industries from fashion to fixtures and even power tools, is by offering a branded product that is only exclusive to that retailer.  Meaning you can't get anywhere else...while still leveraging the brand's equity.

This makes it harder for the consumer to buy the exact product over the internet or another retailer.  Its just the one added design or one added feature that you can get in the regular assortment.

This can be a nightmare for a brand.  If they had 100 skus.  Now we have 10 skus only sold to retailer X, and another set of skus sold to retail Y, while everyone can access the 80 other skus.

Will this cause resent from other non exclusive branded retailers or dealers?  Will this be harder to manage from a distribution point?  Will this dilute the brand in someway.  Be interesting to see how it all plays out.  Its just another way retailers and dealers need to protect their brand and space in selling.

Shark Tank Argument - Difference Between Product and Brand

This first quarter has been a blur!  Didn't seem we even slowed down through the holidays.  So because of that, I have been traveling lots and staying in hotels.  Which allows me to turn on the TV which I never get to watch at home.  The background noise of CNBC had a marathon showing of two shows (Car Chasers and Shark Tank)

If you do not know the premise of the show, the Shark Tank has "Sharks"  (Mark Cuban, Daymond John, Kevin O'Leary, Barba Corcoran, Robert Herjavec, and Lori Greiner) sit there listening to pitches from people with ideas, and companies to either create a company, grow sales or save a business.  The sharks then decide whether to invest or not in the presentation...the people, and the companies.

I remember watching the Shark Tank and how much I loved that show.   I think you can learn so much by watching the show, seeing how to present, answering objections, answering questions, and having the answers.  The Sharks are tough with the questions they ask.  The great thing about the show they also give advice on how to answer the questions and what they were looking for or what was lacking in the presentation.

There was one presentation that caught my ear.  I don't remember what it actually was, but more importantly...what general discussion it caused between Daymond John and Lori Greiner.

The people who presented wanted to create a brand.  But they had a product.  Lori, the queen of QVC sell prodcut.  Daymond is about creating a brand.

Know the difference?  Which comes first product or brand?

To me, product is features and benefits.  Brand are the collection of products that reflect your lifestyle and status in life.

Do you buy a product because of its features and benefits or do you buy it because of the brand and what the brand represents and the features and benefits are an innate given?

Guaranteed

Guaranteed Forever!  Lifetime Warranty!  Limited Lifetime Warranty!

Over the holidays I went shopping for tools.  An interesting thing caught my eye.  At Home Depot, looking at their private label hand tools branded Husky...there was a graphic on their packaging that said GUARANTEED FOREVER.

This made me think of how the Craftsman Brand from series started this trend many many years before this. 

Many brands will offer this type of Guarantee to instill confidence in the brand.  Many times even things that are Guarantee Forever, or has a Lifetime Warranty or a Limited Lifetime Warranty has fine print.

The brands are using this type of marketing cause it separates from other brands and inspires confidence in the quality.

The true secret in this type of marketing is that the brands know the replacement cost is so small and chances are the tool is lost or never turned in.  For the less than .001% of transactions that actually someone does turn a broken or defective tool tens years later, the replacement transaction is small.  That is why you never see lifetime or these type of guarantees on big ticket items such as major appliances and things like Automobiles.

Cars, Tires and things that are used and breakdown with usage will always give you a warranty that never exceeds what they were engineered for.

Everything Reflects The Brand

You have read/heard me preach this before.  A brand does not confuse what it is to a customer.  Everything a brand does must reflect its image, its price point, its brand equity.  Case in point, the BEATS Studio 2.0 that I received for Xmas.  Judge for yourself.  Regardless of the product quality, I sure did I feel special getting them and opening them.

One Great Marketing Invention

The gift card.

Starbucks holiday bonanza of styled gift cards

Amazon's new twist on a gift card, the flex card.  Instant gift.

We all know cash is better for liquid transaction, but sometime cash as a gift is not so tactful.  The gift card at least tells the person you know their likes and still allows them to buy whatever they want.

What people dont realized why gift cards are so amazing to business is that sometimes the gift cards go unspent.  The gift card locks up your funds with the company you are at.  So if you are standing in Macy's and forgot to get a gift at the register, you can get a gift card!

To the consumer the gift card is a gift or semi liquid transaction like cash.

To the business, its about getting you to spend more money...as a repeat customer, as a convenience, as a driver, similar to word of mouth..getting people in their stores.

My two examples, The Starbucks...the reason they put so much effort into the design...is to make you like the art..and thing of someone...and buy a gift card.  I probably wouldn't have given a certain person a gift...but $5 as a reward..No biggie right?  $5 more for Starbucks

Amazon was genius in creating their flex card.  Its basically a cardboard gift card you can give anyone...just activate if via your Amazon account.  Viola ...$$$ is spent with Amazon.  They included this with an order I received..so...It probably would of turn me to gift giver or someone to customer.

Genius.  The gift card is one of the greatest marketing inventions EVER.  What is better?  AIR MILES!

Happy Holidays and Happy New Years!

Wishing everyone a happy holidays and happy new years!

The end of year and the holidays got alittle crazy and busy so I didn't have much time to blog the last two months.

About this time a year ago, I launched JimLeung.com to kind of explain what I do, what I see, and my general philosophy on business and things in general. 

I enjoying doing it, more than anything for my own therapy.

Here is to the close of 2014.  And all the greatness and things to come for 2015.

Business Begets Business - Clustering

What happens when you are surrounded by like businesses?  Business goes up

Those who know me, know I read and learn from many sources

Ever hear from businesses that they are afraid of competition or always think there is too much competition, yet they are not delivering on double digit growth or their sales have maxed out.

Interesting read from the Puget Sound Business Journal...When Tom Douglas, our world famous chef and restauranteur who owns 14 amazing restaurants in the Seattle area...opened his second restaurant Etta's after the Dahlia Lounge, he figured a 20% drop in revenue.  Funny thing happen.  Revenue went up 25%.  He believes in clustering.  He has 11 restaurants in one cluster and another developing in South Lake Union.  Each time he opened a restaurant, his other restaurants would do better.  Reason?  He made it a destination.

Ever wonder why car dealerships and banks are clustered together?  Just think of a food court.  You are more likely to go there and more frequently if the area is "a shopping" "an eating" or a "banking area"  Dont like the service at one?  Go next door.  Business begets business.  Traffic drives business.

As I said stated in a previous post, competition is like Cod Oil, it first makes you sick.  They it makes you better.

Dont be afraid of competition.  Be afraid when you no longer have the will to compete.

Business Model - Snap On

I always envied Snap On's business model

Probably the biggest and nicest Snap On mini-SEMI truck I have ever seen!

I have always been intrigued and envious of Snap On's business model.  #1  Professional tools only sold to business and pros and not to home owners.  #2.  Each representative has a protected territory.  #3.  Your truck is your model store, showroom and inventory.  #4.  You service your business by showing up to your client's businesses.  You act as the jobber.  You capture all their needs while there.  No need to ship anything,,,you deliver.

Other companies have tried the "jobber" method of servicing works sites with refillable bins and job boxes of tools.  You uses what is there and you get billed.  Saves the hassle of ordering and delivering.  Truly the best just in time product delivery process.  Works great with commodities like fasteners or hand tools.

I wonder what ways we can transfer this to our businesses.

The Extras

Its always nice to receive the extra swag or details from a purchase you were not expecting.

Taylor Swift's new CD contained faux polaroids picture extras for actually buying a CD.

Yes..I admit it.  I actually bought a CD.  You were expecting me admitting to like Taylor Swift?  I bought this CD vs downloading the album because when an album is great, I do both.  I like the tactile stuff...with the digital stuff.  Besides 1989 was a great year for me.  :) 

The cool thing and the secret to winning fans and champions of a brand or product is the extras one receives without knowing it.  Its like when you buy that sweatshirt, and there is a hidden detail that only you know.  I used to sell to and buy from a website called Digital Gravel.  They always had the latest street fashion and gear.  The amazing thing though, when shopping with them...as in Taylor's CD...Digtial Gravel would always throw in extras..like stickers, photos, posters, patches, keychains and even extra product.  This is done to win you over ..not because of what you bought...whether you are satisfy with that or not, but the extras is what built or is building the brand..the stores brand..or in this case...Taylor Swifts's brand.  

This applies to even non giveaways.  In sales, its the extra things one does that separates the brand.

Supersized

Notice everything seems to get super-sized.

My favorite candy bar getting supersized.

Its really simple.  Costs are fixed.  The wrapping foil it comes in.  The truck that distributed the candy bar to the store.  The labor involved to make it.

It's all about the up sale and margin.  Why not sell something that costs $1.50 vs $1.00.  Remember the costs are fixed.

From the consumer point of view, you think you are getting more value.  You are.  But the manufacturer and retailer is gaining even more gross margin dollars per transaction.

Lets pretend today, this particular store sold or will sell two candy bars.  If they sold the candy bars at $1.00 each.   Total retail sale is $2.00  Lets assume the profit is .30 per candy bar. Thus netting out $2.00 sale, .60 in profit.

Now on the other hand if the two sales of the day walked in and all they saw was the $1.50 bars...and bought those...the retailer gross sales now look like $3.00.  A 50% increase in sales dollars.  Lets pretend the cost of the bars are actually higher, say closer to $1.00 for those $1.50 bars.  For each transaction, the profit is now .50 each.  Net profit is $1.00 vs .60 originally.  A 65% increase in gross margin dollars.

This leads me to a couple of points of this blog post.  #1.  This is why things are supersized.  #2. Why sell cheap stuff, when your costs are fixed and the effort to sell the $1.00 bar is the same as the $1.50 bar.   The consumer wins if they perceive better value.  You win by selling for more profit dollars.

Tough Being First Again

Sold the first transforming A la Carte Sink display in North America

64 sink combinations in one display

What else can I say?  FIRST in NORTH AMERICA.  And YES, very expensive.  Catching up yet?  

Fire Your Customer

Some customers you need to fire.

What do I mean by firing a customer?  Sometimes it is best to part ways with a customer or even a potential customer.  

In this world, there is too much opportunity for business with partners and customers who do value your business, your efforts, and your results for them.

Sometimes you have to analyze if the Return on Investment of any customer is worth the effort or work to service that client

Everything has an opportunity cost.  

If you spend a disproportionate amount of time dealing or taking care of a customer with the return on investment that is low.  The a lost opportunity cost of taking care of a better client or new potential client that gives you a larger return on investment.

Some of you hear or know of this is the 80/20 rule.  20% of your customers drive 80% of your sales.

I'm not saying to fire all your small customers.  You need them to grow and become a large or more balanced part of your portfolio.  What I am saying is if you are spending 10% of your time on a customer that does 1% of your sales.   You are wasting the 10%.  You could be out there with the 10% growing the customer that does 25% of your sales or taking the customer who is 7-10% of your sales and making them 15-20% of your sales.

Some people treat sales or the world like spaghettii .  Throw it all against the wall and see what sticks.

One of the major rules that I live by:  Dont MAJOR in MINOR things.  Know when to triage, know your sunk costs, and know your opportunity costs.