Preneur Marketing - The Blog of Entrepreneur Pete Williams

So you have an idea to market a nuclear-powered mouse trap or, like a few of the entrepreneurs mentioned earlier, you are going to market an existing idea better. You need to be able to clearly communicate what sets you apart from your competition. Whether you term it a unique selling proposition, strategic competitive advantage or differentiating statement — and there are many more — you need to define it.

The concept of having a USP was developed by Rosser Reeves over 60 years ago, in an attempt to distinguish similar products from one another. (Reeves is now in the Marketing Hall of Fame.) What do you stand for and why is your business different? Ask yourself a simple question — why will my clients come to me, and not my competitors? If you can answer this, you have your USP. It is a statement of benefit, a consumer’s buying motive, a strategic competitive advantage; whatever you want to call it, you must define it. If you can’t identify it, how will your customers? Your USP can be included in the title of your business, or as a catchphrase or slogan. I know you have probably heard this before, but that is because it’s so important.

Think about what USP means: unique selling proposition. This must be something that only you can offer that is useful to your market. Good service is not a USP. The best service is. Cheap prices are not a USP. The cheapest prices are. A pizza shop that delivers has no USP. A nursery that delivers might. Phone help available 24 hours is not a good USP for a furniture store, but it might be for a vet. Find the USP that suits your business and your market, and incorporate it into EVERYTHING your company does, from changing the lining of the rubbish bin to issuing gift vouchers to advertising. Make it succinct and memorable, so that your clients will remember it and instantly recognise your business.

The areas you can base your USP on are:

• Selection: The average widget store carries 3 to 7 widgets, some even have as many as 15 widgets, but our store always has 27 different types of widgets in stock. For example, Blockbuster’s get it first time or get it free offer. Their USP is that they have more copies of each movie than their competitors.
• Service: Willy’s Widgets has 12 expert widget staff to assist you with your every need. Or, We will be at your door within two hours, guaranteed. For example, FedEx — absolutely positively be there overnight. This was a FedEx innovation.
• Price: We always have $50 widgets for sale at $34. Or, We will beat any price by 10%; for example, Bunnings Warehouse. Their USP is that they will always be cheaper.
• Quality: We simply make the best widgets, regardless of cost. For example, Mercedes Benz — sheer driving pleasure. Do you think ‘We will beat BMW prices by 10%’ would work for Mercedes? Of course not. Part of what Mercedes sells is prestige, which means they don’t have to concentrate on prices. In fact, being expensive is expected in this market.

Look at the business from the perspective of your customers — what will be the most important feature of your business for them? If you wish to portray an upmarket image, you can use words such as ‘exclusive’ or ‘quality’ to describe your USP. If your service is fast, use ‘rapid’, ‘quick’ or ‘speedy’.

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Many people in business don’t know the difference between advertising and publicity. The two have the same ultimate goal, which is to increase sales. But they are very different.

Advertising is when you pay for space or time to promote your product or service. You can do this in newspapers and magazines, on television, radio, and billboards, on the side of a bus, in a cinema, on the side of a building — the possibilities are just about endless (and people are coming up with new ways to advertise all the time). You create your own advertising message, and you pay to have the ad created. You then pay for the advertising space. Even a basic advertising campaign can cost thousands of dollars, and larger corporations spend millions of dollars on this each year.

Publicity, on the other hand, is when you send out a media release, stage an event or do anything that attracts the attention of the media. The aim is to have the media attract attention to your business for you. The biggest difference compared to advertising? Cost! Generating publicity can be done for next to nothing.

As an example, let’s compare receiving the same amount of space in a newspaper through advertising and publicity. A reasonably large ad in a major daily newspaper could cost you thousands — or tens of thousands — of dollars. Or you can receive the same amount of space — in the form of an article about you or your business — for the cost of sending a fax. You don’t have to pay for space, or to have an ad designed. Just write a press release, surf the net to find out who to send it to, and that’s it. Think about that in terms of percentage return on dollars invested. It doesn’t get much better for attracting attention and generating sales.

And what about if you happened to get on television? You could end up as one of those feel-good stories at the end of the news, or maybe you will be featured on Today Tonight because of the revolutionary new product you have invented. How much would that air time have cost you in the form of advertising? More than most small businesses can afford.

Publicity can give you massive exposure for just a few dollars, it generates sales, and it creates awareness about your product or service. Publicity is the cheapest form of marketing that exists, and it produces the biggest gains. Used properly, publicity can make you rich.

For more info on getting publicity for your business visit www.RenegadePublicist.com

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Any business can barter their goods or services. For example, if you are looking at opening a florist you could approach a local restaurant and offer to supply them with fresh table flowers each week, in exchange for a $100 meal every Sunday. The cost to supply $100 worth of flowers to the restaurant would not actually be $100; maybe the wholesale price is only $30. Thus as the florist you get to eat out each week, have a $100 meal, and save $70.

Today there are organised third-party record keepers called trade exchanges that have thousands of members in almost every industry that help facilitate these types of contra transactions. It’s a small but rapidly expanding segment of the economy. The member directories of these exchanges are the size of a large Yellow Pages, and they have members all over the world. The exchange acts as a conduit. It’s like a bank, and a lot of people lose sight of this fact. The exchange simply acts as a conduit in the transaction.

Basically you are going to get the best benefit from your trade exchange if you use it only in your ‘down time’ or when you have excess stock — it’s not designed to replace cash business, only compliment it. There are a few costs involved , but basically during your quieter periods you can offer your products or services for ‘barter dollars’ which you keep in your bank until you have the need for a product or service offered in the exchange.

To explain how this work let’s use a typical example. Let’s say you are a florist again, wishing to get some printing done for your business so you can attract extra sales. In the ‘cash economy’ the printer might charge $10,000 for the flyers, brochures and business cards that you need. If you approached the printer to try to work out a direct contra (like the one with the restaurant above), it’s fairly unlikely the transaction would occur as the printer would have no use for, say 1000, $10 bunches of flowers to cover the cost of $10,000 for the printing.

However, with the use of a trade exchange this contra deal is possible as trade exchanges offer members an interest-free line of credit to initiate and support trading. If the florist and the printer are members of the same trade exchange, the florist can use their interest free line of credit to pay for the $10,000 worth of printing, in what are referred to as trade dollars (T$). Instead of being in debt or owing the printer directly, the florist now owes the ‘exchanges’ T$10,000. To pay off this debt of T$10,000, the florist over the next 12 months might sell T$2000 worth of roses to the printer, T$500 worth to an accountant, and T$6000 to a reception centre, and so on, all of whom are members of the trade exchange. So you can now see how this contra transaction could work and be facilitated using an exchange.

Let’s look at it from a dollars and cents perspective:

For a florist to sell 1000 T$10 bunches flowers and pay off the T$10,000 debt, they would obviously incur out-of-pocket costs to purchase the flowers at wholesale. I am not a florist, but for this example let’s use the same costs as above and say the average wholesale cost of a bunch of flowers (which they sell for $10) is $3. They will incur a total ‘cash’ cost of $3000 to supply 1000 bunches to the exchange members.

Being a member of a trade exchange is not free. There are fees involved for the exchange to act as the record keeper. These fees are described and explained below, but for the sake of making this explanation easier let’s say the fees for selling T$10,000 worth of flowers is $1000 in cash. Therefore the total cash cost to the florist to pay back the T$10,000 in flowers is only $4000 ($3000 for the flowers and $1000 in fees) — that’s a $6000 SAVING in CASH!

In other words, at the end of the day they have received $10,000 worth of printing for the cost of only $4000. They are only having to pay 40 cents on the dollar for every purchase they make using the trade exchange — now that’s power! But it gets better. These 1000 bunches of flowers are generally going to be sales they would not have otherwise made. That’s new business to the florist, and they have saved the 1000 bunches they may have had to otherwise throw out and write off.

Looking at it from the printer’s point of view, they have received $10,000 worth of new business they would have otherwise had to forfeit, which they can now spend on accounting services, holidays, phone bills, graphic design, and whatever else they need, which they would have otherwise had to pay cash for. Again, to provide the T$10,000 in printing the printer may only have had raw costs of $4500.

What about overheads and wages, you may be asking; they were not included on the calculations. Exactly right! As the idea for activity in a trade exchange is to bring news sales and/or take up downtime or idle stock, there are going to be no extra overheads to provide the additional services. It’s only the incremental costs that need to be considered. The rent is already being covered by your cash customers, as are the wages and electricity, and all the other overheads. A trade exchange is designed to help milk every spare moment of downtime (printer) or idle inventory (florist).

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