Don't Battle over Price

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Thanks to the influx of discount store, it seems like everyone has reduced themselves to trying win customers over price. How many times do you see that someone has the lowest prices, guarantees the lowest price or will match any price.

The Small Business Branding Blog points out that if you try to fight on price, then you reduce yourself to a commodity and as a small business you will loose against the big boys.

Lowest Price Guaranteed – All The Way To The Bottom

As the blog points out, instead of battling on price find ways to create value with your customers. Now there is always going to people who only look at price (but these are the same people who complain about a lack of service and the poor quality of products they buy). As a small business owner you want to concentrate on the customers that can see value in doing business with you.

As a small business owner the biggest advantage you have is to provide better service and better services than someone could receive in a big box store. What kind of services you can provide your customers will depend on what type of business you are in.

One way to find out what your customers would like to see is to ask them. They will be glad to tell you what additional services would make you stand apart. Also look at the business news and find out what the big retailers are dropping such as Layaway programs.

Once again it comes down to finding your niche and making sure you are setting yourself apart from the competitors, not on price but on service and services.

Overcoming Cheap Imports

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The Babe of Business has a good article on how you overcome cheap imports by showing value and quality.

This is another area were your network can come in handy. While your big time competitors have big money to advertise their cheap products, you can use your network to get the word out about your products and the value and quality they have.

For example if someone in your group hears that a customer is planning to head to store “A” to buy a product, they can inform them that your store has a better quality product on sale that will last longer and you can do the same for them.

What you must remember is that you are not selling to the majority who think they are saving some money by buying something for a couple of dollars less but are getting far worse quality. You are marketing toward those who can see the value for the dollar, that they will be getting a better product for there money.

This is why it is so important to stake out your niche and take advantage of it.

Finding your Niche

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In my last entry I talked about staying ahead of the competition and the importance of having a niche. Since it has been some time since I talked about your niche today I will go over what a niche is and use an example to hopefully get your mind working on ideas to find the right one for you.

Basically a niche is the part of the market you go after.

Using the big retailers for example, Nordstrom’s niche has always been its customer service and return policy. People do not go to Nordstrom’s for low prices but for the service and the outstanding return policy. Target’s niche is being a step above Wal-Mart in quality.

Now look at the office supply market. The three major competitors are Office Depot, Staples and Office Max. So what sets them apart from each other? Well you could say that Staples with their “easy button” but many people don’t even remember which store that comes from. The problem with these three stores is that they are not separating themselves from each other so most people either shop at the most convenient location or the one that they have the best experience in.

So let’s assume that you want to open an office supply store and you have to figure out what your niche is going to be. First of all, if you are going to carry the same things the other three stores do you are not going to be very successful because there is no reason for people to shop at your store instead of the others except for convenience or if there is neither of the big competitors in the market.

Now let’s look at the three major areas of the office supply store and see where you can set yourself apart.

One of the big departments in office supply stores is electronics. However, consumer electronics is extremely competitive and there is very little money to be made in them. In fact you may sell a $500 all in one and make $20 dollars profit.

However, instead of selling the basic consumer electronics all the office supply stores sell, you could look at items they do a poor job selling and don’t have much of and that is higher in electronics. If you are looking for a good business copier, specialty printers, or other similar items, the big office supply stores just do not have the inventory or the ability to service this market. However, something you would need to take into consideration is that people who buy these items need excellent serving so how are you going to offer that?

While there may be more mark up in furniture, the big stores have the advertising dollars to pull people in. A majority of people rather get a cheap price than buy something quality by paying a few dollars more. But there is the market for quality and you may not sell as many pieces as the big boys, but you could go for a market that makes you more money in the long run. Once again people spending the money want service, what are you willing to provide? Design services? Set Up and building? That is something you would want to consider.

Finally there is the main office supply area of these stores. Once again you cannot compete by offering the same products they do and in general it is hard to look at having higher end products. However, if there is a big enough market you could consider selling the items that the other stores don’t carry in their inventory but have to order. You could find out from local businesses what items they cannot find in the big stores and work on bring customers in on those items plus having the everyday items.

What it all comes down to is what part of the market you are going to go after to set yourself apart form the competition. It does you no good to try to fight them head to head because you will loose. Find out what the customers need and what the big boys are not doing to satisfy their needs. The better you set yourself apart from the competition the more successful you will be.

What are you doing to stay ahead?

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One of the things we talk about to small business owners is finding you niche. Once you find your niche, does that mean you can sit back and relax? Of course not, because we live in a constantly changing world, and your business needs to evolve on a regular basis or your business will find itself behind the eight ball pretty quickly.

An advantage you have as a small business owner is that you can respond to changing trends faster than the big corporations. Take a look at lodging facilities, some smaller lodging facilities were far ahead of everyone else when it came to offering their customers Wi-Fi service. In fact some of the big chain hotels are still behind the curve when getting an effective Wi-Fi network set up in their facilities.

However, what are these smaller lodging facilities doing now? After all, the big companies are quickly catching up so the smaller places need move the bar up even farther to improve their customer’s experience.

It is no different no matter what business you are running. If you’re small owner you can move faster than the bigger competition but you must be ready for your next move when they start catching up.

So how do you stay up with the latest trends? Research, Research, Research, and when you have done lots of research you need to do more of it. Does not sound like a lot of fun but it is the only way to see what is happening out in the marketplace and to implement new ideas before the big boys catch on.

There are many places where you can research what is happening in the marketplace. Your chamber of commerce is a good source, SCORE, magazines, Google searches, and many others.

The question is, what are you doing to stay ahead?

What Niche?

One of things you will here me talk about all the time is how important it is for you to have a niche to drive your customers base. Wal-Mart has it’s low price niche (even if it really doesn’t have the lowest prices), Nordstrom is known for it’s customer service, and K-Mart is know for?

Now let’s look at one type of chain store that none of the competitors have set themselves apart and that is office supplies. There are three big stores when it comes to office supplies and that is OfficeMax, Office Depot, and Staples.

The problem is what sets these stores apart? I have to admit I used to work for OfficeMax, my wife worked for Office Depot at one time and her sister worked for Staples. So in other words we have all three covered.

If you ask a majority of their customers, they would say that they shop at the store that is most convenient for them. If there is a couple of stores close to each other people may choose one store over the other because of customer service but beyond that they have done little to set themselves apart. In fact I have never seen a market segment in which customers will when writing a check will not remember what store they are in and mistake it for a competitor.

While OfficeMax has tried to set itself apart by not having mail in rebates and Staples is pushing its Easy Button advertising, there is still little to set these stores of apart. They pretty much have the same product and services, at pretty much the same prices.

So what could these stores do to set themselves apart?

Starting A Small Business Series Part II

In the first part of the series we talked about getting ideas for you to start your own business. Now that you have a general idea of what direction you want to do, now we will see how marketable the idea is and where you should go with it. We are keeping this very basic for those going from a blank sheet.

Here is a series of questions to ask to start developing your business plan and to insure that your idea is something to run with.

1. Who would buy your product or service?
2. How big is the market for your product or service?
3. Who is your competition?
4. How will you set yourself apart from your competition?
5. What is your niche?

Once you answer these basic questions you will have a better idea of were to go with idea for a product of service.

Be sure that you are very detailed when answering your questions. We will go through each of these questions in the coming weeks.

A Story of Two Stores

In today's marketplace you either have to adapt or you will not survive. Here is the story of two appliance stores from Spokane, Washington and how they reacted when big box electronic stores first moved into the city in 1996-1997.

Store Number One:

Both stores are located in the northwest area of Spokane. When Future Shop (a store similar to Best Buy but with commissioned salespeople) first opened thier two stores, the owner of store 1 was quoted in the paper as saying they didn't need to do anything different, that they where a great store and would survive.
None of the big box stores located in the same area as either of these retailers where located. However this retailers store was small and dingy. It actually reminded you of a used appliance store instead of a store selling all new appliances.
But like they said in the article they did nothing to adapt to the change with the arrival of the big box stores.

Store Number Two:

Contrast store number one with store number two. Store number two is located not too far south of store number 1.
When the big box stores arrived they saw that they could no longer do business the same way they had been doing business for many years.
What this store did was look at how the big box stores did business and did everything better than the big boxes. They had better customer service, they had free delivery and set up, and they cleaned up there store to make it look better and more inviting than the big box stores.
They also saw that the big box stores did not have the higher end appliances that are actually more profitable than the lower end ones. Also they created areas where customers could try out appliances which most big box stores don't have the ability to do.

Three months after the first big boxes opened their doors, store number 1 was the first of the independent appliance stores to close. However, store number 2 continues on with business that is improving every year.

To compete in this market place you must:

1. Adapt to change.

2. Find out what your competitors do good and bad and make your store better than theirs.

3. Find out what products you can carry that your competitors do not and exploit a market.

4. Have a clean inviting store.

While doing this things do not guarantee success, doing nothing guarantees you will fail.