Beating the Big Box RetailersWritten by Brett J. Daly
A question that faces many small business owners is how to compete with big box retailers. Wal-Mart is a common target. To their credit, they've established a highly efficient distribution system and a really simple business model. They'll win on price due to distribution efficiency and economies of scale. So, this isn't meant to be a shot at Wal-Mart or any other big box player. However, I for one can't help but to hope that there always will be a spot for smaller players. They may not be able to win on price, but they can provide outstanding service and bring profits back to their respective local community.
So, question becomes, how do you win? Business 2.0 published a pretty good article in their May 2005 issue titled "How to Beat Wal-Mart?" What's particularly interesting is that some folks have been successful even competing on price. Save-a-Lot competes by providing convenience of a smaller store in local neighborhoods that aren't name brand. To me, that seems to take away direct brand competition, which is a good thing. The Dollar Tree also attracts those looking for low price in a small store with simple pricing. In fact, their operating margins are higher than Wal-Mart's. Finally, Costco succeeds via providing higher-end products to those who want good items at lower prices. Small business is a primary market, one that Sam's Club is now going after.
With all that said, fighting on price is a battle you'll likely lose. Especially if you are offering identical items. Wal-Mart will almost always beat you on price, although there are big box players who are less focused on price. So it might be a little more feasible against one of them. Still, I'd differentiate along other lines. Service is obvious one. Going after a more upscale segment is another feasible route, although it is dependent on your local community's demographics. With all that said, it is still helpful to remove inefficiencies in your business. This will make you more competitive on price, and you can let other factors put you over top.
Using Direct Mail to Improve BusinessWritten by Brett J. Daly
Direct mail continues to be a very targeted and effective way to market to customers. It's far more likely to be read than e-mail promotions. Especially when coupled with offers, such as coupons, medium can be a very cost effective method of promotion.
There are a number of necessary fundamentals. First, you must have an objective. It may be to increase store sales. Perhaps an offer such as a free gift will do trick. Just be sure to have a clear purpose. It reduces chance of passing along a confusing message.
Then, you'll need to have a mailing list. Perhaps you have a customer database you've been collecting. This is obviously a good group. Additionally, there are list brokers who can help you get lists that are very targeted, in terms of geography and interests. These are useful for attracting new customers, while your database is great for increasing purchases from your core of customers.
The next step is creating piece. Working internally or with outside freelance copy writers and graphic designers are possible routes. Letters should clearly explain benefits. Use "you" instead of "we." Offers should have deadlines to create a sense of urgency.