- Who do I sell to?
- What to sell?
- What price should I set?
- Advertising: Should I do it and how much?
do I sell to?
When you are choosing to whom to sell your
product (target marketing), you must take care to make an informed choice.
A mistake in targeting can be costly or even the downfall of your business.
If you target the wrong buyers, admit your mistake and spend the time and
money on researching who the right buyers are, where they live, what they
can afford to pay and what kind of quality they are looking for. You have
to ask yourself, "Who needs my product the most?" How do we find this out?
Research research research! There are two types of research that the marketing
manager of every successful business employs: primary and secondary.
Primary research is first-hand, new research done for your specific
business. In Dollar Bay, we can do this by getting out on the street! Go to
your competitor's stores and see what kind of shoppers comes in there. Visit
the map of Dollar Bay to learn about the neighborhoods and what type of consumers
lives in each one. Demographics are important because if your store is located
in a high income neighborhood, you probably will not do well selling low price,
low quality merchandise. Lastly, use the "Market Targeting" tool under the
"Research" button on your control panel. It can give you a breakdown of the
various neighborhoods in Dollar Bay.
Secondary research is research done by someone else, for a different
purpose than yours but can be applied to your company. For example, much of
the demographic data in the US originates from the US government's ten-year
censuses. To do secondary research in Dollar Bay use the "Market Reporting"
tool under the "Research" button on your control panel. This will allow you
to take a look at a broad view of the local markets in town and compare them
to your company. Outside Dollar Bay, in your everyday life, you can find secondary
research in your local library in magazines like "Consumer Reports" and "Advertising
As a final note, remember that demographics, while a useful tool,
are not the only tools used in deciding on a target market. Too many times
businesses fail to listen to their customers and fail because they use only
demographics without paying attention to buying patterns. The customer is
the ultimate factor in deciding what to sell.
(Back to top)
Wow! You have your own store, now what do you want to sell???
Unless you are selling highly complex items like computers it is not necessary
to be an expert in a product to sell it in your store. Look around Dollar
Bay and see what other people are selling. If everyone is selling cows, you
sell chickens. It is usually better to have a bigger niche in a small market
than to be a small fish in a big pond. If you do decide to sell cows in a
large cow market, then you have to differentiate yourself in some way. Usually
this means offering better service or setting better prices. Advertise in
different ways than your competition and through different channels. Offer
a wider variety. Essentially, make your store a destination store: one people
will travel across town to visit.
To decide what to sell in Dollar Bay, visit your competition
and see what niches need to be filled. If you pick the wrong item remember
that to sell your inventory at a loss is better than having it gather dust
on your shelves. Then change your core business or your advertising and try
again with new merchandise. Avoid selling too many different types of products,
though. While cows and horses are probably okay to sell together, your customers
might get confused if you start selling cows and convertibles.
(Back to top)
price should I set?
When you order products from suppliers in
Dollar Bay they are automatically marked up to the Manufacturers Suggested
Retail Price (MSRP). In a highly competitive market this just won't cut it.
Your customers will go elsewhere to pay less for the exact same product. Buyers
are no longer price takers, and you have no room to bargain. In Dollar Bay
if your competition is matching or beating your price, you should know! There
are three ways of checking your competition's prices in Dollar Bay.
- Go to their stores and ask their employees the price of
the product you are price checking.
- Check the local newspaper by clicking on the "Newspaper"
button on your control panel. Often times price wars will be reported
- Use the "Market Reporting" tool under the "Research" button
on your control panel to research competitor's prices on a particular
Things to keep in mind before setting your prices too low:
(Back to top)
- Cover your expenses - You have bills to pay every week!
Employees and advertising are not free. You have to balance your prices
with your expenses. Click on the "Ledger" button on your control panel
to see how much you have been paying in expenses each week.
- Don't be a loss leader - A loss leader is someone who sells
one product at a loss to make money on a related, more expensive item.
In Dollar Bay, this strategy will not be effective.
Should I do it and how much?
You have to advertise! There is absolutely
no way to survive in any market without getting the word out to your customers.
Walt Disney Corporation matches every dollar that it puts into its business
with a dollar of advertising! While this could get a little expensive for
a small business owner, it demonstrates the importance of advertising. Keep
the following in mind while determining how you are going to advertise:
- Use only one medium for the highest
cost effectiveness. Just because you can advertise on TV and on the radio
and through the mail and in the newspaper does not mean that you should.
- TV is not necessary! It's an expensive
way to advertise and there is no way to control who sees your ads and
measure their effectiveness.
- If you have a product that needs a
lot of explanation, like computers, use print advertising. Print advertising,
like in a newspaper, is a more efficient use of your money and a great
way to get the word out if you are a new business!
- Like TV, it is hard to control who
sees your radio ads and if they are even effective. If you have a radio
station that targets specific demographics then it will be useful.
- Make sure that you are targeting your
ads to make them the most cost effective. Advertising is expensive so
you do not want to waste your money on consumers who would never be interested
in your product. General advertising does not work at all for some businesses
and many business owners do not grasp this.
- It is hard to measure the results
of any advertising campaign. Just remember that without advertising your
business will suffer.
- Do not mix your messages. Consumers
get confused when you emphasize high quality and free parking. And if
you say that you have low prices and high service, then you should have
the low prices with high service!
(Back to top)
More often than not, service can be the
determining factor for repeat business. This is especially true if you are
selling highly complex or expensive products like computers that need greater
explanation. In Dollar Bay you can increase your service level by
- having an employee (people will not
shop at your store unless you do).
- paying your employee a higher salary.
More highly paid employees are happier and more helpful employees. In
real life training also adds a great deal to your employees ability to
give high service.
(Back to top)
So you are thinking about getting a loan?
There are several factors to keep in mind when making this decision. First
of all, what is your current financial situation? Experts say that the best
time for a business loan is when you do not even need one! When a business
is in a financial crunch the bank may deny a loan request because of the increased
risk of the business defaulting on the loan. The more you owe others and the
lower your net worth, the greater the chances that the bank will not grant
you a loan. On the other hand, if a business is in good financial shape the
bank will be more than happy to grant your loan request and you will have
extra money to fall back on in a time of increased demand or unexpected expenses.
Okay so you decide to get a loan and the
bank has approved. What are the risks now? Well, the first, and most obvious,
risk is default. If you default on paying back your loan, the bank will be
forced to take drastic measures to ensure that they get their money back.
Unfortunately this may ultimately result in your business going bankrupt with
your standing in the unemployment line. The second big risk to getting a loan
is the hidden cost of interest. On some loans, like mortgage loans, the interest
you pay could be more than the total value of your loan. Luckily, here in
Dollar Bay we do not have to worry about interest on bank loans, but it's
something to keep in mind if you ever move out of the city.
(Back to top)