Deck 11: Small Business Pricing, Distribution, and Location

Question 1

Visit two stores - one where you belong to the target market and one where you do not. Make a list of all the atmospherics you detect and explain how they appeal to the target market.

Answer 1

Usual things are the type of music in the background, colors, products offered, layout of the store, the types of amenities offered and the like.

Question 2

The chapter mentioned several unique guerilla marketing pieces that stood out from the rest - the landscaper who used a plastic sandwich bag of decorative stones with his business card and the decorator whose ad was on a wallpaper scrap. Come up with two or three new innovative ways of presenting your message.

Answer 2

Guerrilla marketing is a promotional strategy in which a business uses unconventional interactions to advertise their products. It is a low-cost strategy which includes hanging small pamphlets on doorknob hangers and flyers struck under windshield wipers. It is a tactic that yield maximum results.
Nowadays creative guerrilla marketing is spreading widely. People are using creative ways to make their would-be customers happy and surprise. Examples can be a decorative business card or extremely attractive removable wallpapers. Viral videos and publicity stunts also come in the same category. Following are some creative ways which can be used with reference to the guerrilla marketing:
• Street act or road play have a great impact on the viewers. A group of people can perform a task showing the quality of shoes they are wearing. The gripping power and the appealing designs will attract people especially youth. This act can also be done inside malls which provide a separate space for these performances. Similar way can be used to promote sports-wear.
• The vendors delivering milk and other dairy products can attract the customers by making available all the daily need products and circulate the same using guerrilla marketing. As a promotional offer they can offer discount offer for early birds. It will help in capturing a large market as daily needs can't get replaced and if people are getting them all at one platform, what could be easier than that.
• Yoga and meditation classes are in great demand nowadays. Attractive one-page pamphlets highlighting the unique selling propositions. It can include 2 days free demo sessions. Special evening sessions for working women will make the idea even more interesting. The concept of weekend classes will also be fascinating for the ones which can't take out time during weekdays.
The ideas are many, a creative mind is what the people require. They are pulling out too creative ways to attract the customers. They are surprising the customers by the approaches they choose to promote their products. Many people don't even look at the pamphlets and brochures, but even 5 to 10 percentage conversion rate is good at such a low-cost strategy.

Question 3

THE RISE AND FALL OF AUCTIONDROP 50
Randy Adams had a garage full of stuff too good to throw away. It was so bad that his car would no longer fit. His wife suggested selling some of the things on eBay, but Adams wasn't sure it was worth the effort. He'd have to take digital photos of everything, post auctions, wait for bids, arrange shipments, hope payments came in, and hopefully eventually get rid of everything. Also, as a new "eBayer," he had no feedback from previous sales, something that can make or break a seller as buyers are sometimes reluctant to use untested sellers. Of course, if he had these problems, so would a lot of other people. This sounded like an entrepreneurial opportunity to Adams, and so he started AuctionDrop in San Carlos, California, in March 2003. For a percentage of the selling fee, AuctionDrop will do all the work for you photos, posting, monitoring, packaging and shipping, and payment collection. When the firm started, it amazed customers by selling 92 percent of everything it had listed compared to the typical eBay average of 50 percent. If the item isn't sold, AuctionDrop would ship it back to you or donate it to charity and provide a tax receipt for you. AuctionDrop wasn't the only company doing this. Isoldit ( www.i-soldit.com ), Quik-Drop ( www.quickdrop.com ), Auction Wagon ( www.auctionwagon.com ), Door to Door Auctions ( www.doortodoor.com ), and PictureitSold ( www.pictureitsold.net ) jumped into the market, creating a nationwide industry of drop-off centers offering similar services. At first the future seemed rosy. In less than a year, AuctionDrop had five stores with plans for 15 to 20 more. They slowed this expansion schedule down when Randy realized that the stores weren't bringing in a lot of profit. A city needed only one location to get the work done efficiently. Having multiple locations just meant more fixed costs and less profit. His thought was that arranging for places where customers could drop off their goods would be a better way to go long term. So he negotiated an agreement with The UPS Stores that provides more than 3,800 sites, worldwide.
But to fund his original plans for growth involved taking outside money, and those investors wanted to see returns. Randy estimated 10 items a day per UPS store, but while UPS was willing to receive, pack, and ship the goods, it was only one of a myriad of services they provided. AuctionDrop did not get anywhere near the volume they expected from these stores, and Randy couldn't afford to advertise nationally. Meanwhile the clock was ticking and the investors getting impatient.
CASE DISCUSSION QUESTIONS
1. If you were starting a similar service, where would you locate What sort of building would you want
2. Compare the costs and benefits of AuctionDrop's original store-based model with the model using UPS for drop-offs. What was needed to make each work What would you imagine to be the impact on AuctionDrop's profit margins of each approach
3. How could AuctionDrop let eBay and UPS users know they are available

Answer 3

Randy Adams had an idea to provide central services for eBay sellers - take photos, post ads, package and ship, all for a fee. Initially, the idea was well received, but competition and lack enough profit to satisfy investors caused the business to ultimately fail
1. The location would need to be easily reachable to customers, but not necessarily in the shopping district of town. Less expensive locations just off major roads would be satisfactory. A small storefront area with a counter would provide a professional look, but the bulk of the space should be out-of-sight for photography, packaging and the like. A protected delivery area would insure no weather problems for drop-off and pick-ups.
2. The store-based model meant higher costs of facilities - rent, utilities and the like - but it also ensured that AuctionDrop gave the product 100% of its attention throughout the business. AuctionDrop had one mission only and could focus on doing that well. On the other hand, using UPS meant that they could take advantage of the company's economics of scale and also not incur facilities' expenses. This method, however, required a huge amount of start-up capital - the paying back of which certainly impacted the bottom line.
3. For eBay, they may have been able to purchase advertising space at a reasonable rate. Search-engine marketing using "eBay" and other related terms may also help. AuctionDrop could have also contact major eBay sellers directly and see about setting up a few major accounts.
UPS may have also allowed putting a link on their WebPage for a moderate price. While the advertising budget AuctionDrop had was low, something simple, like a well-done sign in the window of each UPS store would have been relatively inexpensive.

Question 4

Keep a list of direct marketing you experience for a week. Which messages did you find particularly appealing Why Which ones were you more likely to ignore

Question 5

If you were starting a similar service, where would you locate What sort of building would you want

Question 6

What direct response ads can you recall seeing or hearing lately Which ones were more effective Why

Question 7

Focus on Small Business: Steve Niewulis and Tap It!
Steve Niewulis, a minor league baseball player, came up with a solution to a problem all baseball players have-keeping the baseball bat handle dry between pitches. He invented Just Tap It!, a rosin bag attached to a wristband so a player could dry the bat handle between pitches. While it seemed like the perfect product for all the major sports stores, the stores were not interested because they prefer to buy from companies with several products in their product lines. Undeterred, he began attending trade shows and association meetings for high school coaches, tennis association meetings, and other similar venues. He was able to set up a booth displaying his product for just a few hundred dollars, and he created interest, recognition, and sales. At one show, he met up with Baseball Express, a catalog that targets high school, college, and minor league teams. Since he already had orders and customers using the product, he was able to show Baseball Express that this was a product it should carry. Niewulis's company Tap It! now sells thousands of units not only to baseball players, but also to athletes who participate in other sports such as basketball, tennis, golf, and rock climbing.
Niewulis's original intent was to market to major sports stores. How would you describe the market he finally targeted Is there a commonality

Question 8

Pick a hobby or sport you enjoy. If you had developed a product related to that hobby or sport, what are likely groups, associations or other organizations might be good places to set up a sales booth at their meetings

Question 9

Some of the most innovative start-ups have been firms that have dared to buck tradition in their distribution choices, like Netflix.com who distributes rental video through mail from their Website. Select four small businesses and come up with unique distribution systems for them. Beyond the differential advantage, what other advantages might this give the firm

Question 10

Assume you have developed innovative new business software and want to sell it internationally. Without doing any research, come up with a list of likely countries. Why did you choose the ones you did If the product had been a nutrition bar or soft drink, would the list be different Why

Question 11

Select a product or service and pretend you are able to start that business anywhere in the United States. Using the Skills Module in the chapter, find a location different from your hometown or school location that would be appropriate to situate your business. What criteria did you use to make you selection

Question 12

THE STORY BEHIND SIGNS AND SIGNIFIERS
What happens when the distribution channel itself is falling apart Up until the threshold of the new millennium, there were six major record labels that were the source of all hits: BMG, EMI, Polygram, Sony, Universal, and Warner. If one of them didn't pick up your band, you lived in poverty and obscurity. By 2011, the industry was in disarray. More music was being sold by more companies than ever before, because digital distribution of MP3s made obsolete a lot of the manufacturing requirements and expenditures of the big record labels.
So with the old giants in trouble and hundreds of small distributors being super-specialized by genre, like
Reggaeinc.com for reggae, how does a new talent get recognized by the public
That was the problem facing JD McPherson, who was an art teacher in the outskirts of Tulsa, Oklahoma, who had a long-time fascination with old rock-and-roll, rockabilly, and R B. He dreamed of developing a record using the old styles and technologies of music combined with the best aspects of postmodern music like the Clash and the Pixies. He put together a couple of songs and connected with producer Jimmy Sutton via My Space. Sutton liked what he heard and the two exchanged music and ideas for months via the Internet.
After about six months, Sutton finished his new Chicago home and all-analog studio-complete with old-fashioned microphones and a studio-grade tape recorder, and McPherson arrived with his ideas for an album. Bringing in Alex Hall, who handled the engineering and drums, the three banged out the album called Signs and Signifiers in a week in 2010, produced on Jimmy's own Hi-Style Records label. JD figured to get the MP3s out to the public and to take gigs to build his fan base-the usual distribution model for part-time musicians.
JD's general goal of growing his music changed gears when he was laid off from his teaching job. That motivated him to do whatever it took to make a success of his music. And that probably meant getting picked up by a record label, even a mid-sized one, to get a broader distribution through the multiple channels every record label cultivates full time. The key to the strategy was to make enough noise and visibility to get some label attention.
To accomplish this, JD and Jimmy approached building distribution like the record itself, involving the old and the new. Sutton made a limited run of actual records to send to key decision makers to grab attention. Meanwhile JD and Jimmy made a YouTube video ( www.youtube.com/watch v=aZGn4LncY0g) of the track of the album, "North Side Girl," and pushed it to their friends and followers. The video went a bit viral, getting 350,000 views within a few months, dovetailing with the attention the records received from key music gatekeepers including those at National Public Radio, who named JD an "artist you should know" in 2011 ( www.npr.org/2011/12/07/143267601/5-must-heardiscoveries- of-2011-from-kexp ), and continued to like him ( www.npr.org/2012/05/18/153000478/jd-mcphersonwhen- a-punk-goes-vintage ). The question was, would this be enough to get the attention of a record label, and enough ahead of other musicians to get a distribution contract
What is the model for distribution that JD and Jimmy are using for their original effort

Question 13

What other possible spin-off business could be generated from eBay's success

Question 14

THE STORY BEHIND SIGNS AND SIGNIFIERS
What happens when the distribution channel itself is falling apart Up until the threshold of the new millennium, there were six major record labels that were the source of all hits: BMG, EMI, Polygram, Sony, Universal, and Warner. If one of them didn't pick up your band, you lived in poverty and obscurity. By 2011, the industry was in disarray. More music was being sold by more companies than ever before, because digital distribution of MP3s made obsolete a lot of the manufacturing requirements and expenditures of the big record labels.
So with the old giants in trouble and hundreds of small distributors being super-specialized by genre, like
Reggaeinc.com for reggae, how does a new talent get recognized by the public
That was the problem facing JD McPherson, who was an art teacher in the outskirts of Tulsa, Oklahoma, who had a long-time fascination with old rock-and-roll, rockabilly, and R B. He dreamed of developing a record using the old styles and technologies of music combined with the best aspects of postmodern music like the Clash and the Pixies. He put together a couple of songs and connected with producer Jimmy Sutton via My Space. Sutton liked what he heard and the two exchanged music and ideas for months via the Internet.
After about six months, Sutton finished his new Chicago home and all-analog studio-complete with old-fashioned microphones and a studio-grade tape recorder, and McPherson arrived with his ideas for an album. Bringing in Alex Hall, who handled the engineering and drums, the three banged out the album called Signs and Signifiers in a week in 2010, produced on Jimmy's own Hi-Style Records label. JD figured to get the MP3s out to the public and to take gigs to build his fan base-the usual distribution model for part-time musicians.
JD's general goal of growing his music changed gears when he was laid off from his teaching job. That motivated him to do whatever it took to make a success of his music. And that probably meant getting picked up by a record label, even a mid-sized one, to get a broader distribution through the multiple channels every record label cultivates full time. The key to the strategy was to make enough noise and visibility to get some label attention.
To accomplish this, JD and Jimmy approached building distribution like the record itself, involving the old and the new. Sutton made a limited run of actual records to send to key decision makers to grab attention. Meanwhile JD and Jimmy made a YouTube video ( www.youtube.com/watch v=aZGn4LncY0g) of the track of the album, "North Side Girl," and pushed it to their friends and followers. The video went a bit viral, getting 350,000 views within a few months, dovetailing with the attention the records received from key music gatekeepers including those at National Public Radio, who named JD an "artist you should know" in 2011 ( www.npr.org/2011/12/07/143267601/5-must-heardiscoveries- of-2011-from-kexp ), and continued to like him ( www.npr.org/2012/05/18/153000478/jd-mcphersonwhen- a-punk-goes-vintage ). The question was, would this be enough to get the attention of a record label, and enough ahead of other musicians to get a distribution contract
If they get a contract from a larger record label, what kind of distribution arrangement would be in place

Question 15

Focus on Small Business: Steve Niewulis and Tap It!
Steve Niewulis, a minor league baseball player, came up with a solution to a problem all baseball players have-keeping the baseball bat handle dry between pitches. He invented Just Tap It!, a rosin bag attached to a wristband so a player could dry the bat handle between pitches. While it seemed like the perfect product for all the major sports stores, the stores were not interested because they prefer to buy from companies with several products in their product lines. Undeterred, he began attending trade shows and association meetings for high school coaches, tennis association meetings, and other similar venues. He was able to set up a booth displaying his product for just a few hundred dollars, and he created interest, recognition, and sales. At one show, he met up with Baseball Express, a catalog that targets high school, college, and minor league teams. Since he already had orders and customers using the product, he was able to show Baseball Express that this was a product it should carry. Niewulis's company Tap It! now sells thousands of units not only to baseball players, but also to athletes who participate in other sports such as basketball, tennis, golf, and rock climbing.
What other methods could Niewulis use to get this product to his customers

Question 16

THE STORY BEHIND SIGNS AND SIGNIFIERS
What happens when the distribution channel itself is falling apart Up until the threshold of the new millennium, there were six major record labels that were the source of all hits: BMG, EMI, Polygram, Sony, Universal, and Warner. If one of them didn't pick up your band, you lived in poverty and obscurity. By 2011, the industry was in disarray. More music was being sold by more companies than ever before, because digital distribution of MP3s made obsolete a lot of the manufacturing requirements and expenditures of the big record labels.
So with the old giants in trouble and hundreds of small distributors being super-specialized by genre, like
Reggaeinc.com for reggae, how does a new talent get recognized by the public
That was the problem facing JD McPherson, who was an art teacher in the outskirts of Tulsa, Oklahoma, who had a long-time fascination with old rock-and-roll, rockabilly, and R B. He dreamed of developing a record using the old styles and technologies of music combined with the best aspects of postmodern music like the Clash and the Pixies. He put together a couple of songs and connected with producer Jimmy Sutton via My Space. Sutton liked what he heard and the two exchanged music and ideas for months via the Internet.
After about six months, Sutton finished his new Chicago home and all-analog studio-complete with old-fashioned microphones and a studio-grade tape recorder, and McPherson arrived with his ideas for an album. Bringing in Alex Hall, who handled the engineering and drums, the three banged out the album called Signs and Signifiers in a week in 2010, produced on Jimmy's own Hi-Style Records label. JD figured to get the MP3s out to the public and to take gigs to build his fan base-the usual distribution model for part-time musicians.
JD's general goal of growing his music changed gears when he was laid off from his teaching job. That motivated him to do whatever it took to make a success of his music. And that probably meant getting picked up by a record label, even a mid-sized one, to get a broader distribution through the multiple channels every record label cultivates full time. The key to the strategy was to make enough noise and visibility to get some label attention.
To accomplish this, JD and Jimmy approached building distribution like the record itself, involving the old and the new. Sutton made a limited run of actual records to send to key decision makers to grab attention. Meanwhile JD and Jimmy made a YouTube video ( www.youtube.com/watch v=aZGn4LncY0g) of the track of the album, "North Side Girl," and pushed it to their friends and followers. The video went a bit viral, getting 350,000 views within a few months, dovetailing with the attention the records received from key music gatekeepers including those at National Public Radio, who named JD an "artist you should know" in 2011 ( www.npr.org/2011/12/07/143267601/5-must-heardiscoveries- of-2011-from-kexp ), and continued to like him ( www.npr.org/2012/05/18/153000478/jd-mcphersonwhen- a-punk-goes-vintage ). The question was, would this be enough to get the attention of a record label, and enough ahead of other musicians to get a distribution contract
What are the financial trade-offs of the two approaches What is the benefit of each approach

Question 17

What would be good traffic generators for a fast food restaurant For an office supply shop For a tattoo parlor

Question 18

THE STORY BEHIND SIGNS AND SIGNIFIERS
What happens when the distribution channel itself is falling apart Up until the threshold of the new millennium, there were six major record labels that were the source of all hits: BMG, EMI, Polygram, Sony, Universal, and Warner. If one of them didn't pick up your band, you lived in poverty and obscurity. By 2011, the industry was in disarray. More music was being sold by more companies than ever before, because digital distribution of MP3s made obsolete a lot of the manufacturing requirements and expenditures of the big record labels.
So with the old giants in trouble and hundreds of small distributors being super-specialized by genre, like
Reggaeinc.com for reggae, how does a new talent get recognized by the public
That was the problem facing JD McPherson, who was an art teacher in the outskirts of Tulsa, Oklahoma, who had a long-time fascination with old rock-and-roll, rockabilly, and R B. He dreamed of developing a record using the old styles and technologies of music combined with the best aspects of postmodern music like the Clash and the Pixies. He put together a couple of songs and connected with producer Jimmy Sutton via My Space. Sutton liked what he heard and the two exchanged music and ideas for months via the Internet.
After about six months, Sutton finished his new Chicago home and all-analog studio-complete with old-fashioned microphones and a studio-grade tape recorder, and McPherson arrived with his ideas for an album. Bringing in Alex Hall, who handled the engineering and drums, the three banged out the album called Signs and Signifiers in a week in 2010, produced on Jimmy's own Hi-Style Records label. JD figured to get the MP3s out to the public and to take gigs to build his fan base-the usual distribution model for part-time musicians.
JD's general goal of growing his music changed gears when he was laid off from his teaching job. That motivated him to do whatever it took to make a success of his music. And that probably meant getting picked up by a record label, even a mid-sized one, to get a broader distribution through the multiple channels every record label cultivates full time. The key to the strategy was to make enough noise and visibility to get some label attention.
To accomplish this, JD and Jimmy approached building distribution like the record itself, involving the old and the new. Sutton made a limited run of actual records to send to key decision makers to grab attention. Meanwhile JD and Jimmy made a YouTube video ( www.youtube.com/watch v=aZGn4LncY0g) of the track of the album, "North Side Girl," and pushed it to their friends and followers. The video went a bit viral, getting 350,000 views within a few months, dovetailing with the attention the records received from key music gatekeepers including those at National Public Radio, who named JD an "artist you should know" in 2011 ( www.npr.org/2011/12/07/143267601/5-must-heardiscoveries- of-2011-from-kexp ), and continued to like him ( www.npr.org/2012/05/18/153000478/jd-mcphersonwhen- a-punk-goes-vintage ). The question was, would this be enough to get the attention of a record label, and enough ahead of other musicians to get a distribution contract
With thousands of musicians distributing their music via YouTube and specialized music download websites, what other techniques should JD be using to support his efforts to get public and media attention

Question 19

Choose a business that you might someday like to start. Try one of the direct marketing address providers' Websites listed in the chapter and locate a list that you feel would be appropriate to reach that market. Which list did you select and why What would it cost

Question 20

How could these businesses let eBay users know they are available

Question 21

Focus on Small Business: Steve Niewulis and Tap It!
Steve Niewulis, a minor league baseball player, came up with a solution to a problem all baseball players have-keeping the baseball bat handle dry between pitches. He invented Just Tap It!, a rosin bag attached to a wristband so a player could dry the bat handle between pitches. While it seemed like the perfect product for all the major sports stores, the stores were not interested because they prefer to buy from companies with several products in their product lines. Undeterred, he began attending trade shows and association meetings for high school coaches, tennis association meetings, and other similar venues. He was able to set up a booth displaying his product for just a few hundred dollars, and he created interest, recognition, and sales. At one show, he met up with Baseball Express, a catalog that targets high school, college, and minor league teams. Since he already had orders and customers using the product, he was able to show Baseball Express that this was a product it should carry. Niewulis's company Tap It! now sells thousands of units not only to baseball players, but also to athletes who participate in other sports such as basketball, tennis, golf, and rock climbing.
Would this method have worked as well had the product been something like baked goods Or mural painting What methods would work better for these sorts of products

Question 22

What competitive clusters can you identify in your hometown or school location

Question 23

Select a major high customer contact business category - restaurant, retail, dry cleaning, beauty salon, etc., etc. - and visit two or more different providers. What do you see in their store layout that seems to work well and what suggestions do you have for things that might work better

Question 24

What products could be sold in vending machines that currently are not What about party sales