Marketing: Are we ok, or do we need help?

[RJP]

The hard part for me is finding the fist adapter.

As I always tell clients:

"Somebody had to be the first person to look at a lobster and say "You know, I bet with a little melted butter..."

---------- Post added January 2nd, 2014 at 06:46 PM ----------

It's up to the business to be a rock star and I believe the internet is the perfect platform for making a scuba-business-owner-rock-star.

We will have to disagree on whether that helps the industry.

I'l take the position that someone searching on line for gear, or a trip, etc is alread "in" the market, and that simply re-directing them from one business to a different business is a net zero sum game. So at a minumum that doesn't HELP the industry at all.

I buy gas at a Mobil station I pass on the way home from work. If you build a new "Julie Gas" station a mile before the Mobil station I may stop there instead. And some other people might as well. "Julie Gas" is making more money, and Mobil is making less money, but the total number of people buying gas - and the total amount of gas sold - remains the same.
​

Plus, there's plenty of literature to support that churning customers in that way invariably leads to a spiral of price depression>greater price sensitivity>further price depression. (You essentially train an industry's customers - by encouraging, rewarding, and reinforcing the behavior of shopping on price - to kill the industry.)

If you not only build a new gas station a mile before the Mobil station, but also charge 10-cents less per gallon than the Mobil station, I will for-sure buy more gas at "Julie Gas" instead of Mobil. And a great many other people will as well. So the total number of drivers is the same, and the total amount of gas sold is the same, but the industry overall has suffered as the profit per customer and per gallon of gas has declined. Plus, within a few weeks (days? hours?) the Mobil station will drop their prices by 10-cents per gallon to match the price at "Julie Gas." So now both the Mobil station and Julie station are selling the same amount of gas, to the same number of customers, but both are now actually making LESS money overall than they were previously. And now I - and all of your other customers and all of Mobil's other customers - are keeping our eyes peeled for an even better price!

Sadly, neither of you can lower your price to the point where even one person, who doesn't currently drive, says to themselves "Wow, gas is now so cheap that I'm gonna guy buy myself a car and drive all over the place!" So, the only way for you to grow your business is to undercut Mobil - and vice-versa - hoping that you can garner enough increased sales volume to offset the declining profit margin on every gallon you sell.
​

So if you believe that taking a shrinking pool of new (and existing) customers and systematically decreasing both the absolute and marginal profit per customer is going to help the industry overall... well, you and I (along with anyone who's ever passed an economics class) will have to agree to disagree.

Again, not that there's anything wrong with what you're proposing from the standpoint of the individual business that wants to gain share and doesn't want to - and in fact isn't in a position to - help "the industry overall." But the business model is essentially that of a parasite that weakens, and eventually kills, it's host.

PS - please don't anyone say "but big oil is making more profits than ever" because the analogy above is about consumer behavior and market forces at the customer-level in a competitive market. Not about an oligopoly... and certainly not about gas.

 

[DiveNav]

....... would you rather make $5 in profit on each of a 100 customers or $500 in profit from one customer? Why?

It depends ... on:
- the product type
- the GM, and
- the Cost of Sales of the product

 

[Pullmyfinger]

If you not only build a new gas station a mile before the Mobil station, but also charge 10-cents less per gallon than the Mobil station, I will for-sure buy more gas at "Julie Gas" instead of Mobil. And a great many other people will as well. So the total number of drivers is the same, and the total amount of gas sold is the same, but the industry overall has suffered as the profit per customer and per gallon of gas has declined. Plus, within a few weeks (days? hours?) the Mobil station will drop their prices by 10-cents per gallon to match the price at "Julie Gas." So now both the Mobil station and Julie station are selling the same amount of gas, to the same number of customers, but both are now actually making LESS money overall than they were previously. And now I - and all of your other customers and all of Mobil's other customers - are keeping our eyes peeled for an even better price!

​

Again, not that there's anything wrong with what you're proposing from the standpoint of the individual business that wants to gain share and doesn't want to - and in fact isn't in a position to - help "the industry overall." But the business model is is essentially that of parasite that weakens, eventually kills, it's host.

.

It doesn't seem that Julie is trying to build anything, but is mainly interested in highlighting what other business are already doing.

Just providing that highlighting service for interested business.

The equivalent of a guy on the side walk, flipping a sign, in an attempt to re-direct business. Perhaps it's effective.

"Rock Star" advertising? It sounds like some of the stuff I hear from some people I know that frequently attend business seminars, which always sound like pyramid schemes when I hear them go into more detail.

It's funny, because I actually hear them frequently use the "rock star" term when describing their latest scheme.

Sorry to characterize your venture that way, Julie. But it is starting to sound like the kind of stuff that gets pitched at seminars.

WORLDS BEST SIGN FLIPPER ! - YouTube

I am curious...what are you offering beyond search engine positioning?
If that's mainly what it is, then it's not much more effective than renaming a business "AAA Whatever", to get the first listing in the yellow pages.

It doesn't seem much more effective than that anyway.

 

[RJP]

It depends ... on:
- the product type
- the GM, and
- the Cost of Sales of the product

This is why I said "profit" - which would factor in GM and cost of sales (which is somewhat redundant, actually) - and not sales or revenue.



Ceteris paribus, if your goal was to make $500 in total profit, after everything, would you rather make
- $500 profit from one customer
- $5 from each of 100 customers
- $1 from each of 500 customers
- 50 cents from each of 1000 customers

Why?

 

[Pullmyfinger]

This is why I said "profit" - which would factor in GM and cost of sales (which is somewhat redundant, actually) - and not sales or revenue.



Ceteris paribus, if your goal was to make $500 in total profit, after everything, would you rather make
- $500 profit from one customer
- $5 from each of 100 customers
- $1 from each of 500 customers
- 50 cents from each of 1000 customers

Why?

Either one of these:
- $5 from each of 100 customers
- $1 from each of 500 customers

Why?
Because if I make profit from numerous customers, there is an opportunity for repeat business.

Slam dunking one customer for a $500 profit, probably doesn't leave much room for future repeat business with that customer.

50 cents each for 1,000 customers just doesn't represent much profit, if you factor the amount of time spent with each of those 1,000 customers.

I have probably missed other elements in this, and am curious to see other replies, as well as the ideal answer.

 

[RJP]

I am curious...what are you offering beyond search engine positioning?
If that's mainly what it is, then it's not much more effective than renaming a business "AAA Whatever", to get the first listing in the yellow pages.

It doesn't seem much more effective than that anyway.

FYI - both are HIGHLY effective. Search engine optimization far more so, though, because there's a tacit endorsement of higher search engine results being more relevant. "AAAA Able Locksmiths" might come before "Zeke Zanzibar & Sons" but AAAA is no more relevant. In fact, if Zeke actually sprung for an actual ad in the yellow pages vs a simple listing, folks will assume that he is is busier/better... otherwise how could he afford to run an ad?

Those tricky advertising people...

---------- Post added January 2nd, 2014 at 10:43 PM ----------

Either one of these:
- $5 from each of 100 customers
- $1 from each of 500 customers

Why?
Because if I make profit from numerous customers, there is an opportunity for repeat business.

Slam dunking one customer for a $500 profit, probably doesn't leave much room for future repeat business with that customer.

50 cents each for 1,000 customers just doesn't represent much profit, if you factor the amount of time spent with each of those 1,000 customers.

I have probably missed other elements in this, and am curious to see other replies, as well as the ideal answer.

Note the rules: Your goal is to make $500 profit in total. There is no consideration for anything over and above $500. You are limited to one of the four choices below to achieve that. All other things are equal.
- $500 profit from one customer
- $5 from each of 100 customers
- $1 from each of 500 customers
- 50 cents from each of 1000 customers

 

[0002s]

Thank you ooo2s. I appreciate your insight.

You're saying time and money are a huge barrier to getting involvement in the sport. If there were a way to make things less expensive and convenient you'd have more customers.

Kind of. You really can't make it more convenient and making it less expensive is going to kill the host.

What I'm trying to say is you need to get people to WANT TO choose to spend the additional time and the money it takes to dive over other seemingly more comviement and perceived less expensive sports.

Suggestion:

You get the industry to locally introduce more people to the joy, wonder and excitement they can experience by diving. Imagine the feeling you had the first time you saw a fish and it saw you or when you felt weightless. You need to do this for free and the cost of this needs to be borne by certain participating manufactures and LDS. You will not get everyone to like it. But you WILL increase the base of those willing to take the next step. You incentivize them to take the next step with package discounts for the gear manufactures that supply the demo gear. These people WILL purchase from the manufactures of the gear they tried and WILL purchase some of it from the LDSs that provide expert advise as to what the new divers needs and can afford. Lowest price will not be the #1 driving concern. The LDS WILL get new trip bookings.

People purchase what and from who adds value. Absent of value they will determine that the good and service is a commodity and purchase on price. Unless the market as a whole grows, the hosts will die a no profit death.

-jm2c

---------- Post added January 2nd, 2014 at 10:08 PM ----------

This is why I said "profit" - which would factor in GM and cost of sales (which is somewhat redundant, actually) - and not sales or revenue.



Ceteris paribus, if your goal was to make $500 in total profit, after everything, would you rather make
- $500 profit from one customer
- $5 from each of 100 customers
- $1 from each of 500 customers
- 50 cents from each of 1000 customers

Why?

All things being equal (same item) I want market share @ $50 cents for 1000 = $500 profit.

(although I find it hard to believe that ALL cost are the same for the same items selling between 1 and 1000 as this implies that my product cost drops from $250 to $0.25 for a 1000 item purchase from the supplier. As well as all the cost of sales go equally down as volume increases)

 

[RJP]

You get the industry to locally introduce more people... you need to do this for free.

Wrong.

1.) Getting people to try scuba diving may be a really good idea
2.) Doing it "for free" is a really bad idea

Why?

But you WILL increase the base of those willing to take the next step.

On an absolute basis, this might be true. On a relative basis, this is way off the mark. Offering "free trial" of anything actually has an inverse effect on the likelihood that any individual who tries the product will become an actual/repeat purchaser.

Ever go to Costco when they are handing out "free samples"?
Ever try a free sample of something you know for certain you have no intention of buying?
Would you have paid 5 cents for a sample of something you have no intention of ever buying?*

This is why you will never (I shouldn't say never) see a "Free Trial" coupon for a consumer product. We'll launch a new cereal with "$1 off" or "Buy one, get one free" or a rebate or even a money-back guarantee. But you will generally never see an offer of a free trial.

*Note, in reality I'm not referring to "merchandising" promotions like trying a cookie at Costco; just using this as an example of consumer behavior when things are "free"

People purchase what and from who adds value.

What is the "value" (real and/or perceived) of something that you offer for free?

 

[0002s]

Wrong.

1.) Getting people to try scuba diving may be a really good idea
2.) Doing it "for free" is a really bad idea

Why?

2. Normally I don't like FREE as it has ZERO value. But to get a person to take the time to 'try' something they would not normally do and weren't thinking of trying, I'd try free. Just like a sample I get in the mail for a new product I wasn't thinking of buying. I always try the new product. If I find value in it I buy again. If not is because the product didn't work or was answering a question I wasn't asking.

Since almost everybody doesn't 'need' to dive, getting someone to try needs to be based on an emotional feeling that they will feel "X" if they dive and miss out on "X" if the pass it up. It damn near impossible to describe the feeling of diving without diving.

What is your idea to increase the base?

 

[Pullmyfinger]

FYI - both are HIGHLY effective. Search engine optimization far more so, though, because there's a tacit endorsement of higher search engine results being more relevant. "AAAA Able Locksmiths" might come before "Zeke Zanzibar & Sons" but AAAA is no more relevant. In fact, if Zeke actually sprung for an actual ad in the yellow pages vs a simple listing, folks will assume that he is is busier/better... otherwise how could he afford to run an ad?

Those tricky advertising people...

I'm far from the average consumer.
I have never stopped at a business that had a sign flipper out front.

I have always thought the "AAAAA" whatever in the phone book was pretty cheesy, so I never use those businesses.

I never make online purchases based on a Google hit for a retailer.

I do realize that I'm not the norm when it comes to consumer spending. I'm debt free, and don't have a credit card either....so most advertisements probably aren't targeting me. Which, I take as a compliment.

This is an interesting thread, I do appreciate your insight.