Bottled Water, Fresh Fruit, and the Price of Gasoline

Are you in retail? Have your sales been affected by gas prices?

I just eavesdropped on a conversation between the managers of two local stores.*

They both noted that store traffic has decreased, and the telephone is ringing much more consistently, since the price of gas passed $3.50 per gallon. People are now calling to confirm inventory before they drive to the store.

There's no doubt that, as surely as it's effecting the rest of our economy, the price of gas is effecting retail sales, too.

There's also no doubt that this is a time of great opportunity for those businesses who recognize what's happening, and have the courage to take immediate action.

The change in consumer behavior will be short lived.

People will return to their old habits.

How do I know?

Because they always do.

When the Mother Earth News was a fledgling publication, people worried about protecting the ecology. Later they joined the conservation movement, then the environmental movement. Today, they're enlisting in the green movement.

Roughly every decade the name changes. And every decade new people get involved. The old people are only willing to discomfort themselves so far.

Green is a great promotional tool.

Unfortunately, it runs counter to our consumer-centric way of life.

Have you seen the ads from the bottled water company claiming their thinner plastic bottle has less impact on the environment? Do you secretly wonder if people truly worried about the effects of plastic in landfills would drink tap water? They aren't. They don't.

The Toyota Yaris gets 40 mpg with a standard gasoline engine. The Lexus LS 600h L is a hybrid which gets 22 mpg. Care to bet how many people are so concerned about the price of gas that they switch from the Lexus to the Toyota? They aren't, and they won't.

For that matter, wouldn't repairing the existing car rather than buying a new one be the ultimate in recycling?

People worried about the cost of gasoline should logically move closer to their jobs, wouldn't you think? Today the average home-owning family demands another bedroom, another bath, an attached two car garage, and at least 800 square feet more living space than they did 50 years ago. Will they give up those larger suburban homes to economize? They aren't, and they won't.

Purchasing bedding, draperies, or carpets made of recyclable fabrics reduces the demand for new natural fibers by as much as 15 percent. More than 15 percent, and they wouldn't be able to make the resulting fabrics fire retardant. Will people risk their families' safety to recycle? They won't, and they don't.

Do we really need fresh fruit in January? Apparently we do, even if it's flown in from the southern hemisphere on giant transport jets with excessive “carbon footprints.” In any economy, some people will pay a premium to get exactly what they want.

Please don't misunderstand. I'm not passing judgment. Frankly, my job is to help sell fruit in January. I'm merely pointing out the realities of human nature. People are willing to accept only a certain amount of discomfort before they revert to form.

$4.19 a gallon? Drivers will get used to it.

Some of us remember when gas was $0.25 per gallon. We remember the grumbling when it hit $1.00. This story has been replayed a few times, and people always adjust. They will not change their consumption patterns for homes, bottled water, fresh fruit, or even gasoline... it will just take them a bit to grow accustomed to the changes.

What's driving shoppers' fears today is the speed at which prices are increasing.

How can shoppers explain what's happening? Most can't. And that inability to articulate leaves them simply threatened enough to invoke survival behaviors. People scared (consciously or unconsciously) for their family's survival look for security. They hunker down and wait for the threat to pass. In the short term, they'll spend money reluctantly, and only when they must.

But they will continue to buy.

Turn this highly-predictable behavior to your advantage. As my dear friend Tyler Engberg told me back in 1971, "There is great money to be made at times of confusion."

Capitalize on confusion.

As long as people perceive a problem, you'll gain market share by offering a solution.

Ad another body to your payroll if necessary, and cater to your customers survival fears. In your advertising, invite people to save gas by shopping with you.

Offer to check your inventory in order to be sure you have specific items in stock before your shoppers make the trip.

Offer order fulfillment and save them the trip. Confirm that you have the goods in stock, then take your customer's credit card numbers and ship items to them at their homes or offices.

And, for goodness sakes, learn their names.

But if you intend to do these things, move quickly.** As soon as shoppers adjust to higher gas prices your competitive advantage goes away.

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* One of those managers was my wife. She, the other manager, and I were all having lunch at the same table. As much as I find a certain appeal in assuming the James Bond persona, I wasn't sneaking around spying on my retail brethren.

** Need help crafting such ads? Come to the Boom Your Business Seminar in Nashville August 1 and 2, and catch Chris Maddock's Ad Writing 101. Can't make it to Nashville? Call me.

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Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about retail strategies to counter high gas prices may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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A Business Seminar For the 21st Century

The formula used to be simple. You advertised. People responded. They called. They came. They bought what you sold.

Today fewer are calling. Fewer are buying. And if you're in business for yourself, you're probably asking yourself “What happened?”

I have the privilege of working with an exceptional group of marketers in the Wizard of Ads ^® organization. Nearly five years ago the partners began talking to our clients about social changes that were beginning to effect the business landscape.

Those changes are no longer predictions.

They're upon us. They're a direct result of the Internet – but not for the reasons you may suspect. You see, value is created when there's an information imbalance.

Sometimes the inequity is obvious. If you had a medical doctor's knowledge, for instance, you wouldn't need to consult one.

But sometimes the information spread is not as easily recognized. Successful retail merchants know where to buy at wholesale, how to ship, and how to competitively price in order to keep shoppers buying from them. Yes, their profit comes from buying low and selling higher, but it also comes from the retailer's specialized knowledge – what to buy, how much to buy, how to price it.

But the Internet places massive amounts of information just a few keystrokes away, and for free, which changes your entire relationship with your customers. They now dictate exactly how, and under what circumstances, they're willing to do business with you.

What can that retailer do?

What's the new strategy when the information that always delivered profit no longer provides a competitive advantage? Businesses that services rather than goods face the same issues. The consumer mindset has changed. Advertising which produced results since World War II isn't working as it used to.

Twice a year the Wizard of Ads ® partners from around the world * congregate to bring each other up to speed on our various areas of specialized knowledge.

We've never before offered to share these insights with the general public.

That's about to change.

The Boom Your Business Seminar in Nashville, August 1 & 2 will provide 200 owners access to the most powerful business seminar ever offered to small business.

Want to know How to Fight the Big Boys and Win? Mike Dandridge, author of the One Year Business Turnaround will tell you exactly how it's done. Mike grew a small electrical supply company into a million dollar a month powerhouse in a small town while flanked by Lowe's on one side and Home Depot on the other.

Do you suspect you're not effectively marketing to women? You're probably right. Michelle Miller, author of The Natural Advantages of Women, and co-author of the new The Soccer Mom Myth will tell you exactly what to do, and how in The Motherlode: Hitting the Vein of Gold in Marketing to Women.

If you instinctively know that customers need to discern a difference between your business and your competitors, Scott Fraser will show you how to apply the lessons of one of America's strongest brands to the local level in Commodity Revolution; Differentiate Your Business at the Local Level.

Clay Campbell's Get Big Results From Small Ad Dollars presentation will let you in on simple marketing techniques that are invisible to your competitors. They work especially well when you have more time than money. Clay is the author of How to Get Big Results From Your Small Ad Budget, and Leading the Above Average Life.

Does your company have a web presence? International web expert Dave Young, author of Why We Blog, will show you how to make your site more persuasive, generate more leads, and increase your on-line revenue in Your Website: The Marketing Tool for the 21st Century.

Then web strategist Paul Boomer will teach easily-implemented techniques to improve your customer's on line experience in 10 Things You Can Do TODAY to Improve Your Website.

Finally, web video producer extraordinaire, Rex Williams, will detail the keys to becoming personable, direct, and real to people you've never met in his Building Relationships On-Line presentation.

Many small businesses constantly struggle to create an appropriate marketing budget. How much is enough? How much is too much to spend in advertising your business? In How to Calculate Your Ad Budget, Ray Seggern will not only make the budgeting process simple, he'll share a secret on-line tool which does all of the calculations for you. (Ray will also show you how to buy word-of-mouth, and how to budget for that).

Tom Waynek has spent years studying the signals radiated by both predators and their prey, and has distilled six key business truths in Signaling Theory: What Are You Really Saying to Your Customers? Tom will teach you how to make powerful marketing statements to increase store traffic, sales, and word-of-mouth.

Do you suspect your ads could be better, but you're not sure where to start? Take Ad Writing 101 from one of America's top copywriters and writing teachers, Chris Maddock. You'll be able to apply Chris' techniques to advertising copy and to brochures and web sites.

In Thinking Outside the Box, engineer-turned-poet Peter Nevland looks at those crazy little ideas that most of us dismiss as impossible, and shows how nearly every great businesses success starts as one. When you understand how to recognize and harness those ideas, you'll also see the dangers of not implementing them.

Marketing (and all other social trends) will make more sense after you've seen Michael Keesee's The Pendulum: Marketing in 2008 and Beyond. You'll recognize the driving and predictable forces shaping society and make better decisions on communicating with the public after this multi-media presentation.

As a regular reader of this blog, you've seen my P.A.I.N. series of posts. I'll be explaining which messages work better on TV, which in newspaper, on radio, in outdoor, and in Yellow Pages in my presentation Marketing P.A.I.N. - Explode Your Advertising ROI Through More Effective Messaging.

Sound like information your company could put to good use? Yeah, I think so, too. I hope you'll make plans to join us. There are only 200 seats available, though, and word-of-mouth on this event has already sold roughly half. Don't put off this decision or you'll miss out.

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* Wizard of Ads has offices in Australia, Great Britain, Central America, Canada, and the U.S.

I have an extra pair of tickets to the Boom Your Business Seminar. If you're a business owner ready to take your company to the next level, drop me a note, and briefly tell me the issues you're facing. I'll give the tickets to whomever I think might get the most benefit from attending.

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Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about the Boom Your Business Seminar or about the Wizard of Ads ^® partners may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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Military Positioning as Marketing Strategy

Your company is the newcomer. You're the young upstart that has innovated, and is generating significant buzz. How can you expect the leader in your business category to react?

The expression “level playing field” implies a fair contest. In battle, as in marketing, a level field is the last thing we want. Military strategists from Genghis Kahn to Douglas MacArthur have all understood the advantages of taking the high ground. We're not referring to any moral superiority, but rather to the literal highest point in the physical terrain of the battlefield.

The first army on the field claims the high ground. And field position makes up the bulk of military strategy.

Look at the high ground advantage geometrically. There is only a narrow angle at which shots fired uphill can hit their intended target. But shooting downhill opens the enemy to exposure from three or four times as big an area. The easier target will suffer greater casualties.

In the 80s marketers studied the writings of Carl von Clausewitz and Sun Tzu and tried to apply battlefield strategies to marketing “warfare.” The parallels work on a superficial level, and the illustrations can make key marketing concepts come to life.

I offer one such illustration.

Imagine two military sections (small squads of 12 soldiers), each under the command of a sergeant. One firmly entrenched at the top of the hill. The other trying to take that hill.

They each take aim and fire. The attacking section, shooting through the narrow aperture provided by the terrain, hit about 20 percent of the targets they shoot at. The defenders, without such limitation, manage to hit 60 percent of the time.

After the first volley, seven of the twelve attackers are shot (60 percent of twelve bullets), leaving five standing. Only four of the defenders were wounded (20 percent of twelve, rounded), leaving eight.



The second volley takes out three more attackers, leaving only two standing. One additional defender is wounded, leaving seven.



The third volley wipes out the attackers with no additional injury to the defenders.



It works this way nearly every time.

Like the military parallel, marketing field position is largely determined by the first army in the field.

Uh, lemme rephrase that.

Marketing position is created by the first product in the consumer's mind. This is why it's critical that your company be first in the minds of your prospective customers. Its the reason the incumbent nearly always gets re-elected. Its the reason Coke still outsells Pepsi. Its the reason nobody sells more prepared chicken than the Colonel.

How is marketing dominance achieved?

The easiest way is to actually be first.

That's a rough requirement when your company is second, or third, or even farther down the list of competitors. Someone else already owns the high ground.

The second way to claim a winning position is to create a whole new mental battlefield and be first to occupy it.

If you can't be the first lawn and garden equipment store in your community, be the first which doubles the manufacturer's warranty. If you can't be the first pawn shop, be the first that only deals in jewelry.

Astute readers will recognize this strategy as specialization.

One more point. The market leader also gets the benefit of the halo effect. Because the leader is so well known, it's usually assumed that the leading company is “better.” Which means when people hear good news about your industry, they figure it's news about the better known company.

If you think about the ramifications of this for just a minute, you'll have the answer to the original question.

Copying for fun and profit.

How does the established competitor defend his hill against you, the innovative new upstart company?

By doing exactly what you're doing.

As long as the innovation is peripheral to the core business, the market leader can squash the upstart by simply offering the same innovation.

Sadly, (for you) by duplicating, they're also likely to get credit for the innovation, and you're likely to be seen as a small copycat.

But when your innovation IS the core business?

Then you own the high ground on a brand new marketing battlefield, which places you first in the minds of customers who see value in your innovation.

The best thing that can happen to you in this case is your competitor, the market leader, changes the way he does business to remain competitive. If his customers perceive that he's abandoning his core business, he'll lose a significant number of those customers.

If the established radio station with strong personalities shuts them up to take on the new “more music” radio station, the established competitor loses listeners who tuned in to hear those personalities talk.

When the established Chinese restaurant replaces moo goo gai pan or sweet and sour pork with spaghetti, tater tots, and cheeseburgers on the buffet, the established competitor's image is diluted and less appealing to those customers prefer Chinese cooking.

As soon as the established overnight courier service, in an attempt to combat the new inexpensive courier, limits the cities to which the “overnight, or else” guarantee no longer applies, this established competitor will start losing market share among customers who's jobs depend on guaranteed delivery.

Defending against innovation.

If the new competitor's innovation is only tangential to the core business, he should copy the upstart. If it's critical to the core business, a savvy market leader shouldn't overreact to the new competitor's innovation. He won't be able to stop it, either.

Which kind of innovation will your company offer your market?

Where's the new high ground?

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Chuck McKay is a marketing consultant who helps customers discover you, and choose your business. Questions about strategically claiming your marketing position may be directed to ChuckMcKay@ChuckMcKayOnLine.com.

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