ETD: 860 How do I reorganize my business?; How do I promote a cosmetic business; Mercedes Benz’ luxury ‘mass-to-class’ strategy...
E-Tailer's Digest
etd_post at gapent.com
Tue Feb 15 14:03:21 GMT 2005
E-Tailer's Digest --- Everything for the Retailer
Issue #0860 February 15, 2005
George Matyjewicz, Moderator mailto:georgem at gapent.com
Published by: GAP Enterprises, Ltd. http://www.etailersdigest.com
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CONTENTS
[1] Greetings
[2] How do I reorganize my business?
[3] How do I promote a cosmetic business
[4] Mercedes Benz' luxury 'mass-to-class' strategy...
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[1] Greetings.
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Hi All:
Our list members have come through with some ideas for promoting a
cosmetics business which was posted in our last issue. Interesting
material which can help all.
If your business is stalemated, perhaps it's time to analyze it. What are
you going to do to move ahead? It affects major companies like May's and
Federated, so why doesn't it affect you. What do you think?
One of our list members noted that we don't have a translation for
"welcome" in French, Haitian Creole, or Nigerian. Can anybody provide the
translation?
Pam Danziger has an interesting report on Mercedes strategy - sell to those
who are coming up the financial ladder. It's worth considering with any
business.
Tell us about your business, which will remain for posterity at
our "Members: Who Are You?" site. This is a courtesy to our members who
contribute to our forum, and not merely a way to advertise for
free. Anything to do with the retail world, i.e., supplier, retailer,
consulting, etc. http://etailersdigest.com/resources/members/index.htm And
we have a form there for you to tell us about you. As I said when I first
proposed this idea, we have "known" each other for a long time, yet we
often don't know anything about each other. So, tell us who you are and
what you do.
Now, let's get to everything for the retailer.
Sincerely
George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, Ltd.
mailto:georgem at gapent.com
http://www.etailersdigest.com
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[2] How do I reorganize my business?
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I see the May/Federated merge talks have halted, at least for now. It got
me to thinking.
You've been doing the same thing for years. Your growth was slow but
steady, and now competition has come into the market driving down prices
and dwindling your profits. What do you do?
There are choices:
1. Sell your business and cash out.
2. Merge with another company (like May/Federated).
3. Improve what you are doing.
4. Live with it and gradually lose your business.
Let's look at number 3. How do you improve what you are doing?
1. Source for better pricing for your products. Yes, you have been using
that same company for decades, and leaving will kill their business
also. So, ask yourself, is it better for two businesses to die? IMHO,
sourcing of products/services should be a regular part of business. You
need to be sure you are getting the most for your money. Many
organizations have a policy to re-bid their sourcing every 2-3
years. Often they keep the same vendor, but they know they are getting the
most for the money.
2. Raise your prices. There is an old adage in retailing that when
lowering prices doesn't work you should raise them to gain a different
class of customer. Try it. If you are in a service business, it's much
easier to raise prices. You WILL get a better class of
customer. Companies are reluctant to deal with a company who is perceived
as being too cheap - they can't survive, and I need them.
3. Reorganize your line. Analyze your products/services by class of
product or by actual service to see what is profitable. You then need to
determine whether to continue that product/service or change it in some
way. When I was North American Manager of Consulting at a NYSE-traded
company, I analyzed what we were charging for support and learned that for
every $1 of service costs, we were bringing in $1.01. In one month I
increased the fees by 150%. My National Support Manager thought our
business would go down the tubes, which it appeared to do the first two
weeks. The business picked right back up and was profitable.
4. Become more efficient. Analyze how you do business. How long does it
take to process an order? How much time is required to support a
product/service? If you increase business, what is needed to handle the
influx of business. Too often I see companies who have no idea of how much
their operation costs and what they can do to improve their situation. At
a recent engagement, we asked them what it cost to support clients - what
is the critical mass needed, and what is needed to support more
business. They had no idea. Worse yet, the managing partner expected to
bring on a boatload of business, expecting his staff to handle it. Yet the
staff believed they needed more people NOW to handle the work they
presently had.
To quote that famous philosopher Yogi Berra: "When you are at a fork in the
road take it." If your business is standing still or slipping, it may be
time for some new strategy. Perhaps it's time for a Strategic Planning
meeting whereby you take your key people to an off-premises retreat to
analyze where you are and where you are going. It's like recharging your
batteries. Try it - you may like it. We have a paper published on
Strategic Planning which may help. Send me a note and you will receive it
by return e-mail. Send to mailto:georgem at gapent.com?Subject=StrategicPlanning
Good luck.
George
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[3] How do I promote a cosmetic business
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An interesting link below on the cosmetic industry. It does not deal with
the direct selling so much as the marketing aspect of the line. Worth a
read for Phyllis.
<http://www.masterfile.com/info/products/open/042.html?eid=open042&cclean=1108050561224>
Thanks
Sincerely,
-------------------------------
Roslyn Smyth
Deschenes Regnier
Communication Design Marketing
http://www.deschenesregnier.com
204.943.6446 ext. 207
+++ [Next] +++
In reply to "How do I promote a cosmetic business?" I have a few quick tips.
If you are the exclusive U.S. distributor and already have some doctors,
aestheticians, and salons selling your product as stated, then create an
easy method for them to give out free samples to their clients/patients.
These samples should have your web site on them.
Direct mail introduction to dermatologists and more salons as well.
Lots of press releases and well written articles to Women's magazines. If
needed, the NMOA has an advertising directory of women's
magazines. http://www.nmoa.org/catalog/womensguide.htm As well as health
type magazines.
Press releases to trade magazines, both medical type and beauty salon.
Direct mail, or mini catalog/brochure, or postcard to lists of people that
have purchased cosmetics and skin products already.
If you are just launching, and have a tight budget, I would really think
twice about launching a retail storefront right away. Setting one up can
eat up a lot of capital, demand a lot of time, and make for a large monthly
rental expense for a geographically limited client base.
If you do set one up, make sure you have enough back room space to run your
back-end operations for your direct/mail order sales.
--
Best regards,
John Schulte, President and Chairman
National Mail Order Association (NMOA)
http://www.nmoa.org
Tel: 612-788-1673
http://www.nmoa.org/schulte
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[4] Mercedes Benz' luxury 'mass-to-class' strategy...
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In January the car companies were strutting their stuff at the industry's
big auto shows. The Greater Los Angeles Auto Show took place first from
January 7-16, followed by the biggest of all in Detroit's Cobo Hall,
January 15-23. In the recent gush of automobile news, an interesting
story from Mercedes Benz caught my eye. Mercedes Benz USA (MBUSA) just
announced that 2004 was its best performing year in terms of sales volume
with 221,610 units sold. They also announced that December 2004 was its
highest sales month ever in its 40-year history.
And guess what their biggest selling model was in 2004? It was the
entry-level, near-luxury C-Class model (priced $26,000-$54,000). MBUSA
sold more C-Class models last year (69,251 in total) than any other, which
represents a 5 percent increase over 2003 unit sales. Sales of near-luxury
C Class cars accounts for 31 percent of MBUSA's total volume.
Mercedes' next best selling model is its E-Class ($49,000-$80,000), and
trailing far behind is the M-Class ($38,000-$47,000). Four of Mercedes'
pure luxury models experienced a significant drop in unit sales in 2004:
S-Class ($75,000-$125,000) down 11 percent; M-Class, down 14.4 percent;
CL-Class ($90,000-$179,000) down 21 percent; and G-Class
($78,000-$100,000), down 25 percent. The super-luxury SL-Class
($90,000-$179,000) was down just a tad from previous year, 3.3 percent.
At first blush, it might look like consumers are trading down from the
'real' luxury Mercedes models to the lower-priced ones. Some people argue
that this ultimately degrades the luxury value of the brand.
But I disagree. Rather, the net gain of nearly 70,000 new model Mercedes
Benz C-Class cars out on American roads is far better for the long term
success of the company and the brand. They may be sacrificing some
revenues by selling fewer of the more expensive car models, but the company
has attracted lots of new consumers to get 'up close and personal' with the
brand through the more affordable C-Class model.
As a result, MBUSA is building its base of lifelong brand-loyal Mercedes
drivers. The brilliance in Mercedes strategy is to position the brand as
a player across a more expansive range of potential car buyers, rather than
exclude a Mercedes brand car entirely from the consideration of slightly
less affluent car buyers.
Delivering Mercedes-brand qualities and features at a more moderate price
is a luxury marketing strategy conceived with a long range vision. Their
goal is to build lifetime brand loyalty by meeting the automobile consumer
at nearly every price point throughout their progress through different
life stages. So the thirty-something C-class buyer turns into a
forty-something E-Class driver, then on to a fifty-something S-Class
consumer and then back again to a C-Class model after retirement.
The lesson is luxury marketers need to be much more expansive in how they
view their target market and its overall potential
Luxury marketers need to take an expansive view in how they define the
income levels of their target market and look anew at upper-mass income
consumers' overall market potential. No matter how a luxury marketer
chooses to define the average income of their target market, there is a
gray area where a 'less-than' consumer can reach up to their brand of
luxury. Ultimately the marketer will gain big benefits from reaching down
just a little to attract and capture that consumer.
The simple fact is the rich don't become rich overnight. They attain
wealth and affluence over time and progress through different income levels
at different life stages. Creating a loyalty bond with a less affluent
consumer, who tends to be younger, will pay off in the long term as their
incomes grow and their affluence rises.
Pam Danziger,
President
Unity Marketing Online
717-336-1600
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