Each day thousands of small store-based retailers are confronted with a daunting challenge - compete against the low-price strategies offered by big-box stores and online sellers. Yet, for most small stores, competing on price is usually not a good idea as few possess the purchasing power to buy products from suppliers at the same price level as the big guys. Instead, most small retailers have discovered success more often lies in strategies that focus on targeting niche markets with unique or personalized product offerings that are backed by excellent customer service.
As an example, consider a local coffee shop or café. These retailers often appeal to a small group of customers, who prefer freshly prepared food and drink. They are attracted to these establishments because of their convenient locations (often within walking distance), welcoming atmosphere (small, charming interior) and, of course, free WiFi. These customers enjoy sitting for a while as they chat, tweet or play with their tablets or laptops.
For the small café operators, you would think a store filled with customers sitting around talking and playing with their technology is a marvelous thing, right? Well, according to this National Public Radio story, it may not be so good, at least for one Vermont café. This retailer, August First Bakery & Café,has banned the use of tablets and laptops in their store. While this may seem to be an act of business suicide, their rationale for such drastic action is actual quite interesting. From the August First's perspective, customers who cozy up to a table with their tablets and laptops are spending too much time in the store and not spending enough money. Additionally, and probably more importantly, by taking up store space other customers who are passing by, and who may have money to spend, may decide things are too crowded and will not enter.
Initial results indicate August First's owner is likely correct in her decision as sales have risen since the ban was implemented. However, a decision like this can be risky. Unless a retailer already has a sizeable customer-base, a radical decision like this could backfire.
It is safe to say, marketers in almost all industries, and especially those that market products to consumers, must pay close attention to social media. For marketers, social media offers a number of valuable benefits such as quickly getting messages out to their market, conversing one-on-one with their customers, and monitoring market response. However, unlike advertising or personal selling, which are highly controllable by the marketer, social media options generally cannot be easily controlled and, consequently, some aspects of social media can come back bite a company. This is especially the case when there is a controversial issue. Not only will the marketer's social media outlets be inundated with customer reaction, the news will spread quickly through social media operated by others.
Controversy is especially prone to spreading when what is communicated is more than just a text message. For instance, a good target for fast spreading reaction is when advertisements become controversial. With advertisements, it is hard to describe a potential problem without experiencing the advertisement. That is why social media is so effective in building controversy. People can rapidly and easily share the advertisement through images, video and links.
From the marketer's end, there are two schools of thought when it comes to responding to advertisements that generate controversy. One school says the best response is to remove the advertisement as quickly as possible and beg for mercy. The other school takes the position that controversy raises product awareness and, while some people may not like or may even object vigorously to an ad, in the long-run more people will know about the product thanks to all the social media sharing.
As an example, this story from Time reports on a new advertising campaign for Veet, a hair removal cream targeted primarily to women. Some people who have viewed the ad are taking a stance against the message being presented, namely that women with body hair are more like men. Over the next few weeks, it will be worth watching how social media and other media respond, and if things turn negative, which of the two strategies Veet adopts.
Everyone knows Google is by far the leader in online search. In fact, a report covering search traffic for February 2014 from commercial research provider comScore, shows Google with a nearly 68% share of the search market. For marketers, Google's search dominance cannot be overlooked. Marketers must pay very close attention to how Google's search works when listing sites in response to users' search terms and be ready to make adjustments in order to increase their web traffic. But while Google is the almighty power player in search, marketers would be making a mistake to ignore the other search engines, such as Bing and Yahoo. These sites also offer the potential for good-sized web traffic.
While Google's search power is likely not all that surprising to the average person, what most people may not know is that Google also dominates another area that is essential for marketers – web analytics. Analytics is primarily software that enables website owners to collect, measure and understand who is visiting their website. As we noted in a post from 2012, the Internet provides a tremendous amount of information that can help marketers. And to get to the heart of all this information requires a fairly sophisticated analytics tool. Google Analytics has been the go-to tool for many years because it is easy to setup, easy to access results and, maybe best of all, it is free! Of course, just like search, Google may dominate analytics but other commercial products are also available.
In this story from Internet Retailer, we get insight on different analytics software and on how this software is used by online retailers. As the story notes, more than 50% of the top 1000 retailers use Google Analytics in some form. While some retailers rely on Google Analytics exclusively for all of measurement, others use a combination of tools. A description of the other tools and the retailers' reasons for choosing these options are described in the story.
When it comes to establishing a company in a new market, some marketers believe it is often better being the first company in rather than a follower. The argument for this includes the potential advantages of establishing relationships with buyers, suppliers, the news media and others before competitors enter. Yet being first to market does not guarantee these advantages will happen, thus opening the door for others. For instance, some of the things that can open up the market for competitors include early entrants launching poorly performing products or early entrants who cannot get their message out due to ineffective promotion.
The advantage of being an early entrant especially does not exist when it comes to technology products. The reason is technology can change so rapidly that a similar, though more innovative product can be introduced and quickly steal away customer interest. A good example is the evolving market for television connected devices. These devices range from set top boxes offered by major cable providers, such as Comcast and Verizon, to much smaller devices, such as Apple TV and Google Chromecast. With these major players, one might think this market is too crowded for any new entrant. Internet giant Amazon does not think so. As discussed in this story, the world's premier online retailer has entered the market with its own Internet connected device that will stream movies and even some TV programming, such as ESPN.
Amazon has a track record for entering tech markets late and then succeeding. The most notable is the eBook reader market, which Amazon entered in 2007 with the launch of its Kindle book reader. By the time Amazon entered several devices were already on the market, including a highly promoted reader offered by Sony. Amazon was also a late market entrant in the online streaming music business, following Apple's iTunes by almost four years. In both cases, Amazon quickly became a market leader.
As mentioned, the streaming video market is quite crowded, so things may not go as smoothly as they did with eBooks readers and online music. But given Amazon's marketing power, including a staggeringly large customer database and its strategy of initially pricing products at highly competitive levels, one expects they will become a key player in relatively short period.
Comparative advertising, where one company takes dead aim at another company, can be a remarkably effective way to capture the attention of a target market. For instance, let's assume Product A is the market leader for potato chips to the point where a large percentage of the target market thinks of this brand first when they want to purchase chips. Product B, on the other hand, may be an upstart brand looking to capture some of Product A's market share. Using a strong comparative advertising message, that has Brand B discussing the limitations of Brand A, the upstart brand may eventually get some customers to think of their brand when the need arises for potato chips. This outcome has a higher probability of occurring if the comparison advertisement runs for an extended period and is presented across different media (e.g. TV, Internet, print).
However, comparative advertising is also inherently dangerous, especially when an upstart uses this strategy against a leading brand. Invariably, the market leader will fight back with their own ads that often contain the message "we are the leader and you can trust us, but you cannot trust them." Additionally, if this fight goes on for an exceedingly long time it can lead to serious financial strains on the upstart brand if they want to continue to duke it out.
In order to avoid a protracted battle, an upstart brand may forego direct comparative advertising and instead employ a more subtle, indirect approach. The key to this method is not to directly mention the competitor by name but to allude to them so that most people experiencing the ad can easily recognize the competitor being targeted.
This is the approach being used by Taco Bell as they take on McDonald's. As discussed in this USA Today story, Taco Bell has launched ads that are unmistakably directed to McDonald's, but are doing so without directly mentioning the fast food leader by name. Well, sort of not mentioning them. The ad presents 25 men named Ronald McDonald, who sing the praises of Taco Bell's new breakfast menu.
At this point, it is not clear how McDonald's will respond. A search of the U.S. trademark database shows that McDonald's has trademarked various terms using the Ronald McDonald name, including one from 1967. But whether they will attempt obtain a cease-and-desist order claiming trademark infringement is unlikely as this seems to be more along the lines of being a parody than an intentional infringement.