Missing Your Marketing Bus

by Dr Greg Chapman, MBA

Ever have a marketing plan that seems a great idea at the time, only to see it fizzle and even backfire through circumstances beyond your control? A great example of that landed in my mailbox a day or two ago. (I have cut off the name of the business- which is a well known handy man franchise.)




The government cancelled the home insulation scheme over a month ago, and I still received this offer. When you receive such a flyer in your mail, what do you start to think about the provider of this service? “Are they one of the dodgy firms that caused it to be closed down?” Even if it was just poor timing, it is not a good look and reflects poorly on the business to be associated with such a disreputable scheme.

To be fair to the business, there would be timing issues here beyond their control. There is the printing lead time for a large number of flyers. There is also the distribution lead time. However, they would still have had time to withdraw this ad, even if there may have been significant cost penalties; but they proceeded with this promotion, presumably because of their financial commitment. Perhaps they figured it would still provide some brand recognition.

What they didn’t consider was possible brand damage. Now if you were a franchisee paying marketing fees to this franchisor, would you believe your money was being well spent?

Sometimes when the marketing bus pulls out and leaves you behind, you are just better off cutting your losses and choosing another route rather than trying to climb back on to a bus to nowhere.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Do Your Customers Fight Like Cats and Dogs?

by Dr Greg Chapman, MBA

One of the most popular articles I have ever written was Are Your Customers Cats or Dogs? In it I warned that businesses can have both Feline (High Value Customers) and Canine (Budget Customers) but you need to ensure that you keep them apart. After all, we know what happens when you put Cats and Dogs together. (I am talking about market segmentation!)

If your segmentation is poor, you find that your customers are looking over the fences and seeing that the grass appears greener on the other side. Perhaps your budget offer might appeal to the customers you previously thought to be premium.

In market segmentation, I often like to compare Qantas and Jetstar. Both, of course are owned by the same company, but one is cheap and cheerful, and the other is focused to the business traveller. While the business traveller is still cost conscious, they want reliability and flexibility. Jetstar does not offer this, with delays far more frequent.

However, within Qantas you have a choice of classes, within which the Jetstar vs Qantas reliability does not exist. Whether you are at the front of the plane or the back of the plane, you arrive at the same time, even though it may take you a bit longer before you are at the taxi rank.

For international flights, this becomes even more difficult to justify in the difference between Business and First Class especially since fierce with competition Business today, is as good as First ten years ago (the margins were very high). About the only reason you would fly First internationally today is because you can’t afford your own private jet (Loser!).

So now we see Qantas is dramatically reducing its first class offer. As a result of competition, the segmentation between First and Business has collapsed and companies find it harder to justify the premium for First except for the very top executives.

How does this relate to small business owners, who are still weighing up the cost of Jetstar vs back of the plane Qantas? In fact it does not just apply to small business.

There was a situation where there was a confrontation between the Australian Government and Bonds on closing down an Australian plant because high union rates of pay had made them unprofitable, and they transferred their production offshore. There was an awkward situation when the minister and the CEO where on the same plane. However, there was no meltdown on the plane, as the minister was seated in first class and the CEO was travelling economy. (Your taxes at work.)

For small business, the message is that if you have both Feline and Canine customers, that they can’t look over the fence. While you have competitors, it is unlikely to be as ruthless as the international aviation industry which is highly subsidised and dysfunctional.

So you can offer both Premium and Economy services, just as long as you can keep the cats and dogs apart.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Breaking the Link between Cost and Price

by Dr Greg Chapman, MBA

Businesses often use simple formulas to calculate their prices. Usually based on some on some mark-up, so in a store all items might be priced with a 60% mark-up on cost with the 60% covering wages, overhead, and hopefully profit.

In a businesses where prices are easy to compare, this practice is rife, but for more complex services or businesses which package their products in ways that can’t be compared, this restraint need no longer apply.

Many years ago in Melbourne, I heard Kevin Dennis, the used car king, being interviewed about how he started in the auto industry when he left school. He always had a passion for cars, and had the opportunity to be interviewed by the principal of two different car dealerships for a job. One was a new car retailer, and the other was a used car dealer.

He found out where they lived and saw that the used car dealer was far wealthier than the principal of the more prestigious new car business. Which is why he went into used cars.

New cars are commodities. Used cars have histories that make them difficult to compare and value, and so the margins are far higher. The used car dealer also gets to bargain twice, when buying and when selling. Quite often a new car dealer can make more money from the trade-in at their associated used car lot than they can from the new car where margins are fixed.

Pricing on value also depends on being able to sell to those who value the utility of the product rather than the cost of supplying it. This is beautifully illustrated in the video below (caution some mildly strong language).



While this is of course exaggerated, a similar shop in a less wealthy area with the items poorly presented would not be making the margins of the store in this video. Environment, presentation and packaging are all important elements in the establishment of value.

These are just some of the steps to take to break the link between cost and price.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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How Do You Charge Your Customers?

by Dr Greg Chapman, MBA

We had just finished a meal at a restaurant, which while quite reasonable, was not otherwise memorable. The bill came to a little over $100. I would have normally left a tip of around 10%.

As we were on holidays I wanted to preserve my cash, so I offered to pay by credit card. It was then I was informed, that yes they did accept credit cards, but there would be an extra 1.5% charge added to the bill.

This restaurant was in a resort area (in Australia), and none of the other establishment we had visited had charged extra for credit cards. For them it was just seen as a cost of doing business, with a recognition that people were more likely to buy something if they did not have to pay cash.

As someone ‘in the game’ I like to look at what is done well, and what is not. If it is done well, I like to recognise it, if not, I like to recognise it.

So I made the point that I would have been happy to have paid a 10% tip, but since they were slapping a 1.5% charge on the bill that no other restaurant did, I did not think any further additions were necessary. So they lost 8.5% by trying to recover 1.5%.

These sort of imposts just annoy customers, especially if you are the only one doing it. Phone companies can do this as all their competitors do it, and their margins are nowhere near the size of those of a restaurant and savings on credit card costs are a significant bottom line addition for them. Further, they offer many other payment options other than just cash. Phone companies even charge you for sending you their invoices, because that is the standard. This leaves the field open to a company that offers a service with no extra charges as a point of difference!

For the restaurant, the equation is different. Do they think that they will save more money by applying this charge than they might lose by turning off customers? If they were concerned about the 1.5% credit card charge, why not just put up their prices by 1.5%? Do you really think that someone would cross the street to another restaurant because their prices were 1.5% dearer? Could they even tell, given that the menu was unlikely to be similar enough to compare prices?

At a restaurant, the meal is meant to be an experience. As you leave in good humour, and perhaps a little light headed after a glass or two of wine, you don’t want to affect the tip because you appearing to be cheap (particularly if your average bill is around $100).

Personally, I am happy to take most credit cards in my business, even Amex with its 3% fees! I want it to be as easy as possible for clients to pay me. (As an aside, I used to accept Diners Club, but only 1 person in 3 years ever used the facility, but boy was he excited to find someone who actually took the card. Perhaps I should have charged extra!) I believe these charges are a small price to pay to complete the sale.

Costs are always important in any business, but the way you charge can affect your image almost as much as what you charge.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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How to Get the Best Marketing Advice for Free

by Dr Greg Chapman, MBA

Is there an elephant in your industry? There is usually at least one. They spend $100,000’s on branding, customer surveys, demographic analysis and focus groups. They spend even more on campaign analysis, testing and measuring to work out what works and what doesn’t. If you are a small guy, how can you compete with that?

Well you can. Just become a flea on the elephants back. That is what “Crazy John” Ilhan did. In retail, probably the most costly decision is your location. Go for a low cost location, and you get no traffic. If you go for a high cost location, and it is the wrong sort of traffic, you go out of business. Rather than spending a lot of money on geo-demographic surveys to identify customer shifts, he waited for Telstra or Optus to open a store in a new expanding area, and then open a store opposite and offered every passer-by lower prices.

By being a flea on the elephant’s back, he let the elephant take him to the fertile feeding locations they had spent large sums identifying.

So how might this work for your business? Perhaps you have a motor mechanics business with half a dozen staff. You don't see yourself in competition with BMW, and BMW certainly doesn’t see you as a competitor. You worry about the guy who is about the same size half a kilometre away. So you spend your time checking out what he is doing. This will probably result in a me too strategy, and ultimately the death spiral of a price war.

Alternatively, you could look in another direct. You could pay the same high price marketing company that BMW uses for advice, or you could get that advice for nothing. Drop in to the local BMW service centre and look around. See how clean their service area is. Check out their comfortable waiting rooms. Look at how their staff is presented. BMW spends millions on developing their image.

Now how difficult would it be to give your garage a lick of paint. Supply clean uniforms for your staff. Clean up your waiting room and put in today's paper and a coffee machine? How much do you think that would cost you? Probably $1-2000.

You are still not trying to compete with BMW, just to learn from them. When you start to apply these ideas to your business, the guy down the road won't even be in the game. You will probably even be able to lift your prices! Savvy marketing does not mean high cost marketing.

It is always the little things that make a difference, and you can get all this high price marketing advice for nothing by just opening your eyes and turning your head in the right direction.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Defining Your Customers

by Dr Greg Chapman, MBA

An important part of any small business' marketing is understanding the nature of their customers. Are your customers Cats or Dogs?

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Never Forget Marketing 101

by Dr Greg Chapman, MBA

So Chicago lost the Olympics. What happened? Clearly there was a lot of backroom manoeuvring - offers made, deals done. Then the US President and his wife attended the final IOC pitch to seal the deal. What did they then do? They talked about what getting the deal would mean to them. This was particularly the case for Michelle Obama.

They both forgot rule 101 in Marketing.

It is not about you, it is about your buyer. It is about everyone’s favourite radio station WIIFM.
That is: What’s In It for Me?

Now probably the deal had been done with Rio well before the Obamas arrived in Copenhagen, so the final pitches were just for show and the aggrandisement of the IOC. If that is the case, the Chicago bidding team did not understand the bidding process. If the deal was already lost (and clearly comprehensively lost to be eliminated in the first round) they played their trump card for nothing, and in the end, humiliated the Obamas. Do you think Chicago will get any support for future bids or favours?

The Chicago bidding team were clearly not listening to the signals. They would have been there. You have to remember in any bidding process, the buyer will want the losers to stay in till the end, so they can extract the best deal from the winner, so they would be saying encouraging things even if they knew you had lost. Before they played their biggest ace, the bidding team should have known that they had the deal whether the Obamas were present or not, and their presence was just a payment of respect to the IOC for awarding them the bid.

It appeared, however, the Chicago bidding team must have really believed that great speeches by the Obamas would get Chicago over the line. If the speech was the thing that was going to change people’s mind and win the bid, it was the wrong speech. While the Obamas have a lot of goodwill in the international arena, the IOC still listens to WIIFM. Even the international general goodwill the Obamas have is based on WIIFM.

It is useful for small business owners to remember the lessons that too often the big guys forget. The same rules apply, no matter who you are.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Advertising - Can We Live Without It?

by Dr Greg Chapman, MBA

Imagine you walked into a supermarket, and you recognised almost none of the brands. There was aisle after aisle of goods to purchase, and you had to stop to read every single packet to see whether you would like this cereal or those biscuits.

This could only occur if you had not been exposed to any advertising before you walked into the supermarket. In our current world, of course, that is impossible, as we grow up with advertising around all around us, but yet this has happened to me.

I have encountered this situation a number of times when I have shopped in a supermarket in another country. I had no exposure to the local advertising and was confronted by a large variety of brands which were literally foreign to me. I was overwhelmed by choice. A simple buying decision, which might have only taken me a few minutes at my local supermarket while I located my favourite brands of particular categories, was greatly extended while I tried to determine which of these new brands would satisfy my needs.

Without the advertising, I did not know what the benefits of each brand were. I couldn’t find out the ingredients without lengthy label examinations. In a number of cases I just opted for the cheapest because I didn’t want to waste more time.

This is an interesting experiment you can try if you are travelling internationally, and you are looking after yourself, rather than just living in a hotel where everything is provided. I believe you cannot understand a country if you have not done your weekly shopping in one of its supermarkets.

Without advertising, there would be no range. Most products would become commodities with no points of difference. There would be only the most basic features. There would be no niche products for special needs. We would be unaware of all the benefits. Prices would probably be higher as there would be no competition.

So when your product is discovered on a store shelf, or on your website, can your buyers readily determine the benefits your product provides and for whom and your points of difference? Is your offer clear, and do you have a call to action? Ideally when they have found your product, they will have already been exposed to your advertising, so the final decision is quick and painless unlike the confusing frustrating ones I had to make without the benefit of advertising.

Enjoy this wonderful paean to Advertising – but a strong language warning at around second 6, after which all is ok and very funny.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Working with Your Business Owner Friends

by Dr Greg Chapman, MBA

While driving around I heard a song on the radio from my youth. I didn’t truly understand it then, but I understand it more today. Although it was not written about business owners, it has a message for us.

The song is about how we need each others’ help to get what we need and want. In business, this means finding others of a like mind who we can work with. For large businesses regulatory competition issues come into play…. and lawyers. Two big businesses can’t combine and work together without getting a lot of unhelpful attention. There are just too many stakeholders – which is code for people who want to tell the business how it should be run for their benefit, but are not so interested in its success as to want to invest in it!

Take the alliance between Coles and Shell, and between Woolworths and Caltex, there have been a lot of complaints by ‘stakeholders’, although not from shareholders! The biggest losers from this arrangement have been the independent supermarkets and petrol stations. Some argue consumers may also have lost, but after scrutiny by the regulators and the government’s ill fated GroceryWatch and FuelWatch schemes, evidence of that has been very difficult to find.

In small business, because we aren’t changing the marketplace, we can be far more creative. You can exchange vouchers with as many business owners as you want to extend your reach. You can work on joint projects and events. You can advertise in each others’ newsletters.

You can create a referral ring. A classic example of that is the wedding mafia. This often consists of a photographer, a printer, a florist, a venue, and an event planner. If any one of them gets a wedding, they all do! This type of arrangement could quadruple a small business’ reach, which is very difficult for big businesses to do in the same way.

These strategies are the most powerful ones available for small businesses. They cost little to organise, although they will take time to find the right partners and time to plan.

Remember a small business owner is never alone and when they work with other owners, they are far more likely to achieve the success they desire.

To be successful in business, all you need is a little help from your business owner friends.

(OK I admit it, this is just a thinly veiled reason for me to post a song that brings back happy memories. Enjoy.)



What do you think? Remember, the best commenters this month will receive a $500 printer.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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How One Business Spends 50 cents to Make $100

by Dr Greg Chapman, MBA

The best earning marketing dollars are spent on your customers rather on advertising where the money goes to some media mogul. Consider this example:

Coles is currently offering to pay the GST on feminine hygiene products under the banner “Why should you be taxed for being a Woman”. Why are they doing this and will it work?

This is a fairly emotional appeal, but as a male I can be objective on this (he says quickly ducking to avoid sharp objects being propelled at him by the females in his life).

Clearly many women feel this is an unjust tax. It was very controversial when first introduced, although the then opposition and now government has done nothing to remove it.

Firstly, by raising this issue, Coles gets far wider coverage than their advertising would otherwise reach. It becomes a topic for talkback radio and newsletters like this.

Secondly, the actual cost for Coles on a typical product of value around $5 will be 50 cents. Given the tight margins in supermarkets, this might be most if not all the gross profit on the item.

Thirdly, it is most unlikely that a woman will visit Coles to buy these products only and go somewhere else to do her weekly shopping. In fact she is likely to get her $100 weekly groceries at the same time as the purchase of these products.

Finally, would someone change where they do their weekly $100 grocery shopping for just 50 cents? If the 50 cents off had been for razor blades or Cornflakes it would just be seen as another special, easily ignored, but in this case, Coles are appealing to women’s feeling of injustice, and some might just change to support the principle.

Will it work? As in all these strategies there is only one way to find out.

Can you think of a way of spending money on your customers to get them to try you?

Will you convert to Coles, or do you just see this as cynical manipulation?

What do you think? Remember, the best commenters this month will receive a $500 printer.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Are Your Customers Cats or Dogs?

by Dr Greg Chapman, MBA

Our dog is not particularly active, suffering as he does from a touch of arthritis, but he loves his food. If you give him fillet steak, or just plain dog food from the can, he eats it with equal gusto. He will eat what our cat doesn’t finish from her bowl. In fact if she throws any of it up, he will eat that too. He is just not that fussy. In fact the only thing we have found he won’t eat is brussels sprouts. (I can’t say that I can blame him.)

Our cat on the other hand is quite fussy. She is rather partial to mince topside- and won’t eat cheap cat food. It has to be the type of food you get from those small containers which are twice the cost of the larger cheap brands. If you put out something she regards as inferior, she will leave it… for our dog. She would never go near the dog’s bowl.

So what are your customers like? Are they cats or dogs? Are they only interested in the premium cuts, or couldn’t tell the difference between topside and reprocessed meat.

The problem many business owners create for themselves is trying to sell a service that only felines will appreciate and pay for to their canine clients and then are upset when they focus on price. There is nothing wrong with having canines as clients, but they will not appreciate and pay for topside.

If you have canine clients (and there are a lot more of them than the felines) make sure that your service is designed to meet their needs rather than your ego.

You can of course have both feline and canine clients but make sure the message you present to each does not confuse.

When you understand if your clients are dogs or cats, you will know what food they will appreciate and pay for and be able to keep them happy and faithful for many years.



All you need to do now is to Empower yourself and take action ...

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Best Salesperson in Your Business

by Dr Greg Chapman, MBA

A common myth in which many small business owners believe is that all they need to do is find a great salesperson to be successful. They already know how to make great widgets, and they are really good at providing their service to their clients, but if they just had someone who is good at door-to-door to bring in new customers, their business would be brilliant!

The problem is to find great salespeople. On average, most sales people are average. By definition, half are below average! You can, of course train a new sales person, but if you are not great at sales, it will be the blind leading the blind.

You may find a great salesperson – they certainly exist. A great salesperson may be good at selling lots of things, but the thing they are best at selling is themselves. They know their value. They know the value of the business they generate.

Unfortunately, many business owners truly don’t understand the value of great salespeople and will not pay for the best. They are expensive. They like to have uncapped commissions. They will probably be the most expensive people in the business. They will also most likely leave you when they realise you need them more than they need you. The really great salespeople work for themselves. The ones that stay are the average ones.

Large businesses with many sales staff know that they must continually invest in sales training and have sales managers to drive performance in an effort to keep them above average. In contrast, small businesses try to hire salespeople with these skills already in place. They try to get them on the cheap. Only the average ones are cheap.

For any business that has been around a number of years, the owner will have developed some sales skills. They are also likely to be the best salesperson in their business. This is as you would expect, as they have the greatest incentive. The profit goes to them. They are also responsible for the training and support of any sales staff, whose skills and motivation will almost certainly be less.

However, some business owners truly dislike the sales process. They would like to be left alone to build their widgets with someone else providing the customers. The only way that they can do this is if they get a job working for another widget maker.

Business owners need to make the choice on whether they want to stay in love with widget making, or fall in love with owning a widget business.

Marketing and sales is part of every business and the owner must take a lead in these areas. This is what differentiates the owner from the employee that just makes widgets.The owner must be prepared to be the best in marketing and sales so they can lead their sales team. This means investing in education and training for themselves if they are unsatisfied with their existing sales results.

In small business, the best salesperson must be the owner. It’s their business. If they can’t sell it to others, who else can?

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Discount Price Wars

by Dr Greg Chapman, MBA

When competition is stiff or times are tough, and businesses experience a slump in sales, the natural response of business owners is to reduce their prices. In response to this, they find their competition starts to do the same, and before you know it, you are in a price war.

Price wars are like trench warfare. You may gain a few meters in territory here, whilst the other side gains a few meters from you around your flank. And both sides incur large losses. In this type of battle, it is a war of attrition, and the last person standing wins while bleeding red ink. They also inherit a decimated market landscape with their buyers educated to expect discounts.
A number of negative impacts occur to your business when you discount. The most obvious one is the loss in margin, which you hope to make up with increased sales. In most cases, this does not happen.

The next problem that may occur is that you get a reputation as a discounter, with potential customers waiting for your sales times, particularly if they are seasonal. (I like to buy a new car when dealers are trying to get rid of their last year models from their stock. Major savings are to be had at such times and they are much more willing to negotiate.)

Discounting may also confuse your message to your best buyers, especially if you are attempting to appeal to an up market clientele who are price insensitive. An example of this is the upmarket department store David Jones who when they want to shift old stock, they somewhat snootily declare “As you know David Jones do not have sales, but next month is our annual clearance.” Clearly they do not want to be known to their up market clientele as discounters, but they still want to move their old stock.

Finally, after you finish discounting, how do you lift your prices again? If someone comes in after your sale has finished, and asks you to give him the same 25% discount offer this week as you had last week, it is hard to justify a negative response unless…. you have a clear reason for the sale in the first place. In the case of car dealers, it is to make way for the new model, even if the only difference is a cosmetic facelift. For retailers, it is selling off the last of their summer range before winter.

So if you are discounting, you must have a reason other rather than you are not making as much money as you used to. The reason must be transparent and short term so as not to damage your relationship with your best buyers. Your discounting may indeed attract more buyers, but many may be price shoppers who will not stay loyal to you when your prices do eventually return to normal. These people will be off finding bargains elsewhere, and in the meantime you may have damaged your brand in the eyes of your best buyers.

Most people lose money when they discount. Learn How to Discount Your Way to Higher Profits, by subscribing to The Small Business Achiever. Also in this month’s issue:

• How to Track Your Profits So You Can Drive Them Higher
• Which Online Directories should You Use to Boost Your Google Rankings?

The Small Business Achiever – Business Owner Brief is Your Shortcut to Success and Your Unfair Business Advantage.

May Your Business Be – As You Plan It!

Dr Greg Chapman

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Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Increase Your Prices by Packaging Value

by Dr Greg Chapman, MBA

In any buying decision, this is question that must be answered by the buyer: “Is the product or service worth it?” Or more generally, is the offer made by the seller is equal to the dollars that they are asking for it.

Let’s take a simple example, water. If you wanted a drink of water, and you went to a pub, and they served you water from a tap, what would you expect to pay? It would probably be free. If you went to a kiosk, you could buy bottled ‘mineral water’ in a basic plastic bottle, and it might be $2-3.

If you were at a boutique restaurant, you might be able to get water from the Greenland icecap, presented in a special designer bottle with a stunning label, a bottle that you would like to take home as a souvenir. It might cost you $87.

It is still just water. Only a chemist, with certainty, could tell the difference between the three by measuring the levels of trace minerals in them, (although the tap water may be obvious if it has a lot of chlorine in it).

Is the water from Greenland worth it? Sure there is cost to get it from Greenland to the restaurant in Australia, but the cost of the water, the packaging and delivery might be $10 with bulk production, compared with $0.50 for the bottled Australian mineral water production and delivery. You also have to pay for the restaurant’s overheads, but they usually provide water free anyway. Even if you could you really tell the difference between this water and the water from an Australian mineral spring, how can it be worth $85 more?

So why would people pay for $87 for a bottle of the Greenland icecap water? This water could not even be considered rare, since the Greenland icecaps are 3km thick and contain enough water to raise global sea levels by 100m, but it is novel and ties into the quest by some people for the natural and unusual. It would be for the ‘experience’. To be able to say that they have tasted it to their friends. They have the beautiful bottle on display at home as proof and an opportunity to recount the experience to whomever will listen. Perhaps to impress their guests. There may have been other reasons, but I bet it wasn’t because they were thirsty.

Do you think they would have paid $87 for the water if it came out of the restaurant’s kitchen in a plastic cup? Of course the waiter would have treated opening this bottle in the same way as an expensive bottle of wine, and it would be served in beautiful crystal water glasses. The waiter would have poured it reverently, stepped back while you tasted it, and nodded your satisfaction. In this process, the waiter is acknowledging your good taste and sophistication. This would have all been part of the experience— and the packaging!

While packaging is one of the most common ways to increase prices of a product, it also applies to services. You can either sell your time by the hour or package it and sell the value of your service, at a higher rate. To do this however, you must change your service so it can be offered as a package.

[This is an excerpt from Issue 106 of the Small Business Achiever – Business Owner Brief where strategies for packing your products and services are explained in detail. The Small Business Achiever is your Unfair Business Advantage, where all the steps are revealed.]

May Your Business Be – As You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Small Business Marketing in a Downturn

by Dr Greg Chapman, MBA

With all the bad news on TV, everyone is looking at tightening their belts. There is nothing wrong with that, as during the good times, we can all get a little bit flabby.

So is marketing a place where you should start the cutting?

It depends.

If your marketing is working, it will be generating 10 or 20 times its cost in bringing in new business and getting repeat customers. If that is the case for your business, why would you cut it? So the first thing to look at is whether it is working. If it is not, of course you should stop it, but you should do this anyway.

If it is working, should you keep it going unchanged?

It depends.

A recession may mean that your target market is buying less, or even buying differently. While it may still pay for itself, it may be less effective. It is possible that these changes create opportunities for you. By monitoring your marketing results and talking to your customers, you can identify these opportunities.

What often happens in a recession is a buyer who usually will take a premium offer will be more interested in a mid-level offer, and those usually focused on that level, will consider more budget offerings. This does not mean you should discount. A better strategy is to create offers that appeal more to this price sensitivity whilst maintaining your margins.

Look at the downturn as an opportunity to do the housecleaning in your business that you have been putting off because you have been too busy. It is also a good time to work ON your business, to not only bulletproof it against harder times, but also because it is something you should be doing ALL the time.

If all around you are slashing and burning, measured pruning, and focused marketing will allow you to continue to grow by taking your competitor’s share in a weakening market without following them downmarket with discounting. This, of course, does not mean that you should not take advantage of the discounts offered by your suppliers who have no other strategy!

Don’t follow lemmings. If you want different results to those of your competitors, you must do different things, and be different. Do a stocktake on your business today, and plan for where you want to be in the future.

“If you can keep your head when all about you are losing theirs …….Yours is the earth” Rudyard Kipling

If you are unsure how to do this, please use this complimentary Mission Statement Tool.

Your action plan:

• Take some time out,
• Trim the fat,
• Eliminate marketing that isn’t working for you, and
• Use the opportunities create with the new environment.

"In the midst of difficulty lies opportunity" Albert Einstein

May Your Business Be – As You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Buying and Selling on Price

by Dr Greg Chapman, MBA

All businesses should endeavour to create points of differences for their product or service, but what about if you are selling an undifferentiated product, something that is truly a commodity, such as petrol or even bottles of Coca Cola (which of itself is not a commodity, but you will get exactly the same product whether it’s from a milk bar or supermarket, here or across the country). Businesses that sell commodity products tend to sell with price as a point of difference.

There are two things that influence this:

• geographical location (convenience and cost of supply), and
• buyer knowledge of the market place.

Taking the first point, geography, this is about how far you are prepared to chase a bargain. You might drive across town to save $100 on a refrigerator, but would you do the same for a $1 saving on a six pack of Coke? Probably not. Economists call this the cost of shoe leather- this distance and effort you would give in time and money to achieve that saving.

What does this mean for your business? When setting commodity pricing, you only need to survey your competitors in your ‘economic’ neighbourhood.

The second factor influencing this is the buyer knowledge of your price difference. If they don’t know about it, they will not find you and may pay more than they should. This is why petrol stations have massive signs proclaiming their prices. Which brings me to the latest government efforts to increase consumer knowledge of prices. Will this really help small business and give lower prices to consumers?

First of all there is FuelWatch currently only operating in WA. Most motorists when they are low on fuel, like to fill up while they are already in their car on some other errand, rather than make a special trip. Generally this means they may pass half a dozen petrol stations (depending on the length of the trip) and will be able to see variations in price on station signage, and would be able to determine a good price for that part of their city at the time they are wishing to fill.

Service stations are highly competitive changing their prices several times a day. Can you think of any other product where that happens? The station owner will opportunistically drop their prices if their sales are low, and increase them when it is high. This is exactly how a good market should operate. By enforcing the price changes once per day, the motorist will be the loser. I would also expect that the independents will lose, as they are the most nimble. This will ultimately see a loss of competition- the opposite of what the government is trying to achieve.

The other scheme introduced by the government is GroceryChoice. In this scheme, the results that are reported are a month old, while grocery prices change at least weekly. (At least FuelWatch reported daily.) Also the baskets used are not transparent, so you have no idea whether this represents what you would buy. So consumers will ignore this, and still look to newspapers to see where the best prices are every week.

At one level, you might argue that this is a largely harmless waste of taxpayer funds, but there is a more ominous side. While people will not use this site much, when they do it will re-enforce the supermarket duopoly between Coles and Woolworths (Safeway). These two chains monitor their competition’s prices very closely. The website results prove this with only cents different between the two.

Where there is a significant difference is between the big chains and the independents whose prices are higher. Now there will be independents that are cheaper for some things than the big two, but because there are so many of them, the government has lumped them all together. However, from the consumer perspective, it ‘proves’ that they are cheaper than the independents. No wonder Coles and Woolworths love this! Once again, by interfering in the market, the government will drive the independents out and lessen competition, resulting in higher prices.

If businesses are selling commodities, and selling on price, advertising that fact is important, but when governments involve themselves in the marketplace to fix something that is not broken, casualties are inevitable and ultimately consumers and small business owners are the losers.

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Segmenting Your Market’s Mind

by Dr Greg Chapman, MBA

One very well known marketing strategy is to segment your market and provide different offers to each segment specially targeted to that segment. If you were Ticketmaster, you might send information on the new opera season to the older segment of your database, and information on touring pop groups to the under 30’s. (Of course there are people under 30 who like opera, but when you want to get the most for your advertising buck, you go where the numbers are.)

Segmenting your market by age, gender, geography, income etc is done all the time by good marketers, but what if you could segment your market by the way they think? How powerful would that be? Saab have done just that. Unfortunately, I can’t give you a link to this novel online ad which is currently showing in the Faifax media, as they rotate their ads, but I will describe it so you will recognise it.

Have you seen the spinning ballerina test? See an example here. It is a rotating image which can be used to tell if your left brain or right brain dominates your thinking. Psychologists tell us that the person who is left brained tends to be more logical, methodical and organised. The right brainers, on the other hand, tend to be driven more by instinct and emotion and are more creative. They also say if you see the lady rotate anticlockwise, you are left brained, clockwise, you are right brained.

So back to the ad, which starts off with this rotating lady. It asks you to see which way the lady rotates for you and then asks you to select the appropriate button. You then get taken to a Saab ad in which the copy is tailored to whether you are left or right brained. If you are left brained, it tells you how many horsepower the car has and how fast it will accelerate and gives you details on the dimensions. If you are right brained, it explains the experience of power and the thrill you get with the acceleration, and the luxurious feel and comfort that the car gives you.

So Saab has created an ad which has been crafted for the way you think and you select the ad that is most likely to be a selling success for you!

For the record, I have seen the lady spin both ways.

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog

Use Your Points of Difference to Stand Out

by Dr Greg Chapman, MBA

One of the biggest problems we all have in small business is standing out. Almost everyone has competitors of some description. It could be the person down the road that promises to undercut whatever price you offer. It could be the elephant in your marketplace- for example, if you are a small telco, the elephant is Telstra.

Or your competition could be a myriad of me-too suppliers in highly competitive marketplaces all driving the prices down to the point where no-one makes any money.

So how do you stand out from all this competition? You make sure your business is different in some way to all your competition, and you make sure potential customers who value that difference, and will pay more for it, know about it. The first step in differentiating your business from everyone else’s is to answer the question:

Why Should I Buy from You?

Can you answer this question? You must have an answer. If you don’t know, you customers certainly won’t, and you will find you are just competing on price and barely surviving.

The answers to the question: “Why should I Buy from You?” are your Points of Difference (POD). This is arguably the most important marketing strategy to get under your belt. In marketing speak it is also called your Unique Selling Proposition or USP. What this means is that you are defining why your product or service is different to everyone one of your competitors. When you have your USP, you actually have no competitors, because your offer is unique.

Great in theory, but just a word of warning. This also means that your product cannot be considered universal any more, and your USP will appeal to a more narrow group of customers, or a Niche.

So what does this mean in practice? You might be the cheapest. This will, of course, attract a lot more business, which will compensate for your lower margins. However, this will not appeal to everyone. Lowest cost, usually means no frills. Jetstar is a no-frills airline, but Qantas still has lots of passengers who want the extras, and are prepared to pay for it. So Qantas and Jetstar promote themselves to different audiences.

Maybe you said your Point of Difference was the quality of your service. I am now going to say something that may shock you:

Quality of service is not a good enough reason for people to buy from you.

Everyone says they have quality service. Have you ever heard anyone say: “Buy from me, my service is lousy?” Quality is a given, a pre-requisite today. Everyone says they offer a quality service. So what’s the answer? Surely ‘quality’ counts for something?

Regular subscribers to the Small Business Achiever - Business Owner Brief will already know who their competitors are. In Issue 101 – where this full article is published, subscribers learned how to create Points of Difference for their business.

In Issue 103 of the Small Business Achiever I explain how these points of difference can be used o the fundamentals of how to increase your prices with your Points of Difference can be used in your ads and on your website.

In Issue 103 of the Small Business Achiever - Business Owner Brief find out:

The Anatomy of Ads that Sell

Creating a Structure that will Drive Your Business Growth

Designing a Website that Generates Leads for Your Business

Get step-by-step advice that will improve your business every month.

May Your Business be as You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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The Australian Small Business Blog