Yes, it’s a new retail economy.
But before you decide that TV is too expensive on your now-smaller budget and slash and burn your TV advertising plan, please read on.
Fact: Television advertising impact is at an all-time high; in the hands of a professional, TV drives business every time.
Clients often ask how to successfully compete with the larger national chains, particularly in a challenging retail environment.
Competing does not mean you must increase the size of your advertising budget to that of a major competitor; in fact, trying to match a major national company’s spending level usually will prove to be expensive and risky.
Designing a television campaign to help your client win market share versus a national chain requires original thinking before acting. Take the time to reflect on the strengths and weaknesses of your client’s competition as if seen through a consumer’s eyes. Only then should you design an appropriate television strategy.
The best way to grow market share in a down market is to first examine how much more market share you need, then determine where that market share is hiding.
It’s a fact that many businesses survive on very low market-share percentages. Even General Motors has less than 30% of all car sales, which means that 70% of the time car buyers purchase something other than a GM product. So clearly there are always more customers available to you, even if the economy is down 20%.
Why do some business owners blame the economy while others are already at work grabbing massive market-share increases? Because the latter know that you don’t need to participate in a recession. Recession membership is not mandatory. I personally know dozens of companies that are having banner sales and profits this year, in the middle of a recession.
It’s not about what the market is doing to you; it’s about what you are doing to market.
Here’s an example: I recently held a consultive session with a good-sized independent appliance chain. Its market share was estimated to be 15% of its trading area. Sales for 2009 year-to-date were down 20%. Not good, but clearly better than the industry average of -35%. So a -20% sales number means, assuming the total market opportunity is similar to 2008 (they feel it is), that this translates to an increase of three market-share points needed to bring their sales back to 2008 levels. That growth level has become the goal of this company for 2009.
Its current advertising plan was in the millions of dollars with a mix of print ads, free-standing inserts, cable TV ads and radio.
On further review of the company with its middle managers, we noticed other in-store opportunity areas that have not been maximized. (When a retailer’s sales are strong, little attention is paid to its advertising plan. But when sales slide, the first thing to get analyzed is the advertising budget.) Your ad budget should be reviewed quarterly for improvement opportunities, since consumer trends happen much faster now than in the past.
Getting back to the appliance chain’s market-share growth goal, we reviewed several marketing and merchandising areas that can be improved immediately to begin to pull market share from competitors.
Since this company is outdistancing the industry sales pace by 33%, clearly its repeat and referral business is helping the company withstand the recessionary impact. However, a significant opportunity exists in a massive increase in first-time trial customers. We believe that a market-share increase of three points is attainable based on improving the following in its business model and its marketing:
Target working women. These high-earners are missed by print media almost completely. Very few working women even receive a daily paper. However, their paper-reading habit has morphed over time into a morning TV news habit. They often view morning news daily. In fact, household ratings and working-women ratings usually are the same, meaning WW dominate the morning news audience composition. WW also will be more likely to buy higher-profit merchandise and to bring a referral sale to the stores.
Promote 0% financing. When the retailer increases its promotion of 0% financing; it will enjoy more trial sales. The auto manufacturers have popularized 0% financing, and now a significant opportunity exists at the retail level as well. Consumers do not want to use their personal investment dollars for home improvement when their investments are running at negative growth. Apply and aggressively market 0% financing in all advertised appliance and bedding SKUs.
Add short-term urgency in advertising. Adding a “now though Monday” element to all advertising will make the current ad model more action-demanding, and also make it more measureable by managers.
The immediate media recommendations also included the goal of shifting high CPM cable advertising dollars and radio dollars to broadcast TV and local Internet advertising. This change brings a projected 8:1 CPM impact improvement for these ad dollars. Television should air Tuesday-Wednesday-Thursday each week, followed by the run-of-press on Friday, and then the tabloid on Sundays. Airing TV ads in this manner will improve the impact of all printed media as well.
Another way to build customer preference and improve market share is to use a service bundle. The creative bundling of services is a way to help your client’s customer solve several unrelated life issues all at once. In fact, these service bundles save consumers money in a way that they may have not imagined.
This company could offer free delivery, just like any other retailer. Or it could improve its service bundle and offer “Free Delivery-Plus,” which might include delivery, removal of your old appliance and on-site customer orientation for the new product. Offering this better bundle can make a customer choose this chain over a national competitor.
I believe this company will see a 10%-30% sales increase within one year when it employs the recommendations listed above.
Many business owners deserve more market share, but their current advertising and merchandising model limits them to a small customer base. Remove these barriers to entry, and the customers will respond.
Do all of these things and you can begin to easily win market share, in any kind of economic climate.
Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at email@example.com or 941-928-7192.
Get Creative to Increase Market Share
May 3, 2009 • Post A Comment
Yes, it’s a new retail economy.