Niche Marketing Matters

While just surviving may be a first priority for many businesses today, the “new normal” in 2010 also presents an unique opportunity for growth and profitability.

Businesses with a vision of new growth and profits will need to nurture entrepreneurship and create an environment that offers room for creativity and innovation. Business leadership has the opportunity to provide the freedom and resources to employees so that they can explore new work processes, solutions, and markets.

The catalyst for this change is creativity — almost childlike in its simplicity, creativity needs the room to blossom and flourish. Linus Pauling once said, “that one must endeavor to come up with many ideas — then discard the useless ones”.

To be creative you have to go a little crazy and empty the toy box on floor. Go ahead and make a mess (despite the warnings of your parents). Play with the ideas. Explore. Have fun. Dream.

For many of us, that means walking around the barriers that our organizations have built and worshiped for many years. Just past these old barriers you will find the hope of entrepreneurship and the joy of creativity.

John Bradley Jackson
© Copyright 2010 All rights reserved.

“You will do foolish things, but do them with enthusiasm.”
-Colette

I love that quote.

Entrepreneurs need to take chances and do unconventional things and risk looking foolish. The mundane mass market is not the domain of the entrepreneur. Instead, it is the under served or overlooked customer segment which begs for a solution. The entrepreneur must be creative to help this special customer.

Sure, it might look foolish to do so and risk of failure is omnipresent, but that comes with the territory. Combine this unconventional path with rabid enthusiasm and you can have sheer madness.

This is the entrepreneur’s essence—foolish, unconventional, enthusiastic, but right on target from the customers’ perspective.

John Bradley Jackson
© Copyright 2009 All rights reserved.

“In order to make an apple pie from scratch, you must first create the universe.”

- Carl Sagan, astronomer

Many “wannabe” entrepreneurs struggle with the idea of coming up with the perfect product or solution. This obsession with being the best keeps them from launching the product. Instead, they stay sequestered in the pre-launch stage trying to perfect the concept by tweaking the product feature set.

Contrast this behavior to successful entrepreneurs who choose to launch their products and fail openly and often in front of God and country. For example, Thomas Edison pushed the envelope when it came to failure. He literally created thousands of filaments for his light bulb before he found one that had a sustainable life. He was undaunted by his repeated failures. He did not fear failure—he relished it since he knew that each time he failed he was one step closer to success.

This fearlessness is a key component of innovation. You can also argue that these reckless innovators are just plain uninformed about the prospect of failure or they don’t really care what people think. It is my contention that this “just do it” mind set works given the alternative of doing nothing.

My advice to entrepreneurs is to welcome failure by launching your products early. Failure is a catalyst for success.

John Bradley Jackson
© Copyright 2008 All rights reserved.

Much is being said and written about how the increased price of oil to over $140 per barrel is injuring our economy. Moreover, the prediction of $200 per barrel by the year end is being heralded as the “Tripping Pont” by many pundits—an unthinkable change in the landscape of western civilization.

My response to these pundits is they may be overlooking the many new opportunities that high priced oil products will bring. Let’s examine some of the marketing opportunities that might be created by $200 per Barrel Oil:

1. Real estate prices will favor the urban areas. A tremendous buying opportunity may be at our feet with prices currently at record lows in metropolitan areas. The up-coming real estate rally will be fueled by high oil prices. Bye-bye suburbs and the rural lifestyles,

2. Telecommuting will finally deliver the promises of value. This includes video conferencing, webinars, and work at home situations.

3. A rush to create “4-day work weeks” will help commuters save money. This will create more recreation time for consumers. Note the State of Utah is trying a one-year 4-day work pilot program to save energy and money; this pilot will affect the majority of Utah state employees.

4. Local tourism should increase . Families will opt to stay at home for vacations and take advantage of local recreation such beaches, museums, and theme parks. Road trips and plane flights will be just too expensive. I have heard these referred to as “Staycations”.

5. Regional oil exploration and drilling will boom. The Feds will create new incentives for exploration for local sources of oil.

6. Oil extraction economics will change. Older oil wells once considered “tapped” when the bottom of the wells turned from liquid to sludge, may now be reopened.

7. Fuel efficient cars seem an obvious solution. The SUV may be dead, but the economy car may have just been named homecoming queen.

8. Alternatives to fossil fuel may get additional tax preferences. Solar, wind energy, and gasoline alternatives will get a boost from the Feds and from the consumer.

$200 per barrel oil will create many new entrepreneurial opportunities—-let’s look at the bright side.

John Bradley Jackson
© Copyright 2008 All rights reserved.

“In order to make an apple pie from scratch, you must first create the universe.” – Carl Sagan, Astronomer

Creating new products can be complex but it is not as complicated as the above quote suggests. Rather, I think new products need to withstand a feasibility test, also known as a concept test. This feedback is critical for a new offering.

Sadly, most entrepreneurs don’t properly test their ideas. Former Apple evangelist Guy Kawasaki joked that at Apple that new products only required a funky name, a few thousand t-shirts, and a media blitz—then they would figure out what the product’s
specifications would be. Apple is greatly admired for innovation, but I wonder if they might even be more successful if they did more concept testing.

Concept testing can use qualitative or quantitative research methods; most commonly, qualitative tools such as in-person interviews and focus groups are chosen for their expediency and live feedback. Essentially, prospective customers are given an early viewing of an offering to assess their reactions before the provider invests more money in the new offering. It forces the entrepreneur to expose the offering to the customer base to solicit real feedback. The test verifies that the benefits of the offering are recognized and valued by the customer. This feedback is essential but sometimes difficult for the entrepreneur to accept, particularly if the feedback is negative.

Sometimes, the test identifies problems such as possible confusion about how the product is positioned with competing products. Often the marketing messages are still in draft form, so this concept test also assists in refining the basic messaging. In fact, concept tests are frequently performed for advertising campaigns to verify that the target customer can understand the benefits of the products.

However, concept testing may not be a good indicator of purchasing behavior. Just because someone understands the benefits of a new product and even admits to liking the product, it does not mean that they will buy it. Additionally, concept testing may identify product attributes that are significant but this type of research can struggle to assess which attribute is more important.

Concept tests typically try to answer the following questions:
1. What is unique about this new product or service concept?
2. How does it compare to competitive offerings?
3. How might it benefit the customer?
4. What are the relative strengths and weaknesses of the new product or service concept?
5. Would the customer buy the product?

Ironically, many startups and entrepreneurs go to market without conducting a concept test; instead, because of their strong belief in the product or service concept they often elect to skip this step. The ramifications are many including failure.

John Bradley Jackson
© Copyright 2008 All rights reserved.

Innovative products need to be marketed and sold differently than other offerings since they require a special customer who is receptive to innovation. Most customers are skeptical and will wait until innovative products are mass marketed.

Here are a few suggestions on how to market innovative products:

• Not everyone will understand the need for the innovation. They will need to be educated about the problem. Think of it from their perspective—why should they care? Help them understand the problem that needs to be solved and how your product addresses that problem.
• Explain how your product is different. People buy things because of the differences not because it is the same. If your
offering is truly innovative, this won’t be a problem.
• Be authentic. Customers are drawn to sellers who believe in the offerings. Your enthusiasm will be contagious and appealing. If you fake it, they will see right through you.
• Position your product as a high-quality alternative. Innovation and quality make great companion benefits. Take the high road.
• Consider the impact of premium pricing. People are aware that innovative solutions cost more. Price the offering based on value.

Innovative products need a customer who appreciates the value of the new product. Don’t waste your time on the late adopters or laggards—they will only buy when they have no other alternative.

Instead look for the innovative buyer or early adopter. Truly innovative buyers leave tracks. They buy other innovative products and visit leading edge websites. The good news is that they will seek you out since they are always on the hunt for the next new thing—so make a lot of noise so that they can find you.

John Bradley Jackson
© Copyright 2008 All rights reserved.

Creating innovative products can come via sheer serendipity, but most of the time they are the result of hard work and taking deliberate steps in an innovation process.

Here are the basics steps for inventing new products:

Awareness: A problem, idea, or random thought jumps up and bites you and it makes you think to yourself, “There has got to be a better way” or “Hey, this is a great idea”.

Incubation: The light is now on and you think about the issue—-you might even obsess over it. You may lie in bed at night thinking of it.

Visualization: Solutions and options start to emerge but they lack structure or form. You may start to write things down.

Illumination: Your ideas are starting to take shape and you are able to articulate them to others. It takes some bravery to do this since many people greet new ideas with skepticism.

Verification: You start to detail the solution or solutions into concrete prototypes.

Alpha Offering: You create a working prototype to prove to yourself and your colleagues that it can be done. It is not ready for customer review since it may be full of bugs and is untested.

Beta Offering: Your solution is ready for some real world testing so you let a few special customers try it out. You can expect some harsh feedback and criticism at this stage.

Redesign: The feedback was valuable no matter how much it hurt to hear it. Many times this feedback sends you back to the drawing board, but it is worth it. Sometimes, this kills the idea off.

Pre-release: A new and improved offering goes back for additional testing by the customer. Your fingers are crossed but often you get even more feedback.

Release: Your offering is now debugged and is ready for customer usage. Now the big question is will be accepted? Will it sell?

Although some innovation solutions come from a moment of inspiration, most come from perspiration.

Jack London said, “You can’t sit around and wait for inspiration. You have to go after it with a club.”

Listen to Jack.

John Bradley Jackson
© Copyright 2007 All rights reserved.

That’s a quote from Vittorio Alfieri, an Italian dramatist considered the founder of “Italian tragedy”. OK, I had not heard of him either, until I saw the quote and looked him up on Wikipedia.

Regardless, this quote reminded me that inspiration may be an important part of marketing and entrepreneurship, but no idea is so great that it cannot be verified or tested. Maybe the biggest mistake that entrepreneurs can make is to love their ideas too much. In fact, loving the idea or thought too much is exactly the wrong orientation since it is not about what the entrepreneur thinks or loves. It is what the customer thinks or believes. Nothing else matters.

Entrepreneurs need to divorce themselves from the emotion of the first idea and become more deliberate and analytical. At this stage, concept testing is just what the doctor ordered. Maybe the best concept test can be done with focus groups.

The purpose of a focus group is to help find answers to difficult questions. A consumer research technique that uses open-ended questions, focus groups can quickly discern key issues and determine why the issues are important. Focus groups are moderator-led discussions of six to ten people randomly selected from a sample list comprised of participants in your target market.

An independent, third party moderator who is trained at managing the complex interpersonal dynamics of a group discussion best conducts “true” focus groups. The goal of a focus group is to smoke out hidden issues, test ideas, and seek feedback from the participants on topics such advertising, new products, or customer needs. The group discussion environment can be a very powerful tool for determining how people feel about the topic.

The client who sponsors the focus group predetermines the objectives of the session, but the format is flexible enough to accommodate the serendipity of qualitative research. You never know exactly what you will learn in a focus group. Most moderators prefer to follow a discussion outline, but they let the discussion lead the way.

A focus group that is poorly or unprofessionally moderated is a waste of time. Generally speaking, focus groups are best left to the professionals. Often small firms will attempt to moderate focus groups by themselves; this is often a poor choice since the entrepreneurs are inherently biased (or, call it passionate) about their businesses and will only hear what they want to hear.

First thoughts should be tested since they are not always the best.

John Bradley Jackson
© Copyright 2007 All rights reserved.

Show me a startup without a business plan and I will declare it a “rudderless” ship. For without a business plan to guide you, a business will just float along chasing one opportunity after the next, while ending up nowhere special.

Business plans are not hard to write, but they do challenge you to think things out ahead of time, while asking you to address the hard questions about who you are and what you really want to do.

The basic elements include:

The Title Page- This includes all the basics such name of the business, logo, your contact info (such as your address, phone, and website), and the date that the plan was prepared. Be sure not to clutter this page up with too many details.

The Executive Summary- This is the single most important part of the plan; virtually all readers (who actually read the plan) read this section. I recommend writing this section at the very end. Wordsmith it to death since it is your principle sales document.

Outline or Table of contents- You know what to do here.

The Marketing Plan- If you piqued the reader’s interest with the executive summary, then this section is typically the next section that he or she will read. If it says one thing, it needs to tell a story about your strategic competitive advantage. This is a statement about how your business does things differently or how it does different things. If you can’t position your business as unique, you might as well break camp and head home. Show’s over.

People and Organization- This section says who you are and why you are qualified. It also reveals who is needed to get the job done. It should say who is on board today and give a vision of what the organization might look like in the future.

Financial- This section is boring and nobody reads it. Wrong. Except the fellow that will write the check. Often this is the weakest section in most plans. This is caused by creating the numbers using a “tops-down” methodology. A much better practice is to start at the bottom with your product, create a time line for product development and launch, figure how many people are needed to manage and sell the products, and then create your forecast. This approach creates a more realistic plan which will be believed by your banker or investors.

Everything Else- All the other stuff goes in the appendix and is used only when it is needed and should be bound separately. Present this second volume only when asked.

John Bradley Jackson
© Copyright 2006 All rights reserved.

Maybe the smartest money ever spent by an entrepreneur is to conduct a “concept test” which is basic market research on an offering before you go to market. Concept testing can use qualitative or quantitative research methods; most commonly, qualitative tools such as in-person interviews and focus groups are chosen for their expediency and live feedback.

Essentially, prospective customers are given an early viewing of an offering to assess their reactions before the provider invests more money in the new offering. It forces the entrepreneur to expose the offering to the customer base to solicit real feedback. The test verifies that the benefits of the offering are recognized and valued by the customer. This feedback is essential but sometimes difficult for the entrepreneur to accept, particularly if the feedback is negative.

Sometimes, the test identifies problems such as possible confusion about how the product is positioned with competing products. Often the marketing messages are still in draft form, so this concept test also assists in refining the basic messaging. In fact, concept tests are frequently performed for advertising campaigns to verify that the target customer can understand the benefits of the products.

However, concept testing may not be a good indicator of purchasing behavior. Just because someone understands the benefits of a new product and even admits to liking the product, it does not mean that they will buy it. Additionally, concept testing may identify product attributes that are significant but this type of research can struggle to assess which attribute is more important.

Concept tests typically try to answer the following questions:

1. What is unique about this new product or service concept?
2. How does it compare to competitive offerings?
3. How might it benefit the customer?
4. What are the relative strengths and weaknesses of the new product or service concept?
5. Would the customer buy the product (admittedly not a reliable vehicle to get this answer),

Ironically, many startups and entrepreneurs go to market without conducting a concept test; instead, because of their strong belief in the product or service concept they often elect to skip this step. The ramifications are many including failure.

John Bradley Jackson
© Copyright 2006 All rights reserved.