Penetration Pricing

Have you ever seen a Marketer come out with a low price, on a new line of item that they where trying to introduce into a already established market? Will then you have seen "Penetration Pricing"; it is a know practice of a Retailer cutting the cost to get their item into the Market, they intend to make the profit from mass sales. Walmart does this in some case's; but the real winners in this game are:

Dollar Store's like Dollar General, Family Dollar, and Dollar Tree. These types of stores are the fastest growing retailers in America opening 1500 stores a year. What makes these stores different from most is that they are right in your neighborhood; they are small and there fore only need four employee's to operate with (low Overhead), and their sales strategy is to sell lots at low prices.

So maybe with Penetration Pricing there is a answer for the Giant Mega Stores like Walmart, Target, and the such. Who says that the neighborhood stores are gone, they have just Franchised and joined up under Penetration Pricing to curve out the own niche in the retail world.

Franchising

Have you ever thought about open a franchise? Did you know that sells from franchise's is about 40% of the retail and trade yearly; so that means franchising is a big business, and most Franchisers know how to how to sell and protect their franchise. Not only do you have to do your homework when selecting a franchise to start in, but the franchiser also does it homework on you. Remember they have their name or product on line; so there is always rules and commitments that must be met before they let you in.

Have you ever heard of "McDonald U"; this is a School that will teach you how to operate/manage a McDonald Restaurant, and you staff. Also did you know you could go to the following link to find how to attain a Franches:

http://www.mcdonalds.com/corp/franchise/franchisinghome.html

But you need to make sure that you have $300,000 to hand over for your franchise; plus 4% of your monthly sales (Service Fee).

How does Soda Companies Franchise? Did you ever go into a Fast Food place and ask for a brand that you like and the wait staff says sorry we don't sell that brand? Well that is the soda companies franchising their product; they give low deals and provide operating equipment, under an agreement with the establishment for sole rights of their goods. So remember that when you want a Dr Pepper and they say we have Mr Pibb!

Retail Prices

Have you noticed that the Retailers have had to cut prices numerous times to sell their goods these days? Has this conditioned the American buying power to buy at these low prices? Especially when it seems that the vast majority of us have little money to freely spend on life's little extras. So this leads back to the title of this post "Retail Prices"; what is a Retailer to do now? How does a Retailer raise the price back up that will reap big rewards/profits?

You could keep your price's low; and go with EDLP (everyday low pricing), as Walmart and other retail giants have done. But one problem with this is that you (the retailer) will have to sell large quantise; to ensure that you make a profit, and that might be harder then you think. So what happens to the smaller retailers; that do not have the high volume of sales, to keep their prices low to compete against the larger retailers? Bankruptcy which is happening allot right now! Raise your Price's and hope that your loyal customers keep you alive. Or have better customer service then the larger retailers have; this way with the increase in prices the customer will know that it is for the customer service aspect you provide. This might last a little while until a large retailer gets on the band wagon and provides a high level of customer service; then you are in the a slow sinking pit of quicksand.

So is the fate of the American retail world in the hands of the large retailers? And would this be so bad for the buying buck? what happens when we are down to a handful of retailers? What then happens to the prices? If there is no competitions then you can charge anything you want (monopoly is ugly if you are buying, but great if you are selling.

Lots to think about, so have fun buying all your dreams while they are on sell.

Idea Generation

Have you ever wondered how Companies come up with New Idea's? I have; you would think that one day there would be no more to come up with. So where do they come up with the idea's? We will go over this topic and hopefully we can get to the source of all new idea's.

If you where a company that made it money from given the customer what it wants, then who or what would be your main stakeholder? I bet it would be the customer that you are getting to buy your product? So in order to retain your customer base you would have to emprove or update your product; and who would know best when to do this? Your customer is the Answer, due to he is the one using the product.

So if you are customer savy and listen to your customer when they are complaining or praising; or asking for a change or modification, this is one way to come up with new idea's.

What about your Employees; do you think they could come up with new ideas? Proably it only makes sense, they have been working with that product and the customer. So if a company support employee involvement; and compasated emplyee's with good ideas, then more employees would come forth. Plus employee buy-in into a project will give that project a better chance of sucess, so get your employee involved.

What about Distributors could they come up with new idea's for your products? Many products are made by one company and moved by Distributors in store locations; so the distributors would be the person on the front lines. They are often interfacing with the store owners and customers; there fore they would get all kind of feed-back. And most Distributors want the products that they move to do good; if the company that makes thoes products goes belly-up, then they lose money as well.

Types of Consumer Products

Did you know that there are different types of Consumer Products? First of all what is a Consumer Product, a Consumer Product is anything that is bought to fill a need. So what are the types of Consumer Product's; the first one is Convenience Products, second is Shopping Products, third is Specialty Products and lastly is Unsought Products. Lets look at each of these and discuss what they are.

"Convenience Product" is the quick buy item's that we usually don't go looking for; like candy, soda's, car washes, combs and the such. These are the items that we don't plan on buying, and really don't put that much thought into. We usually get these item has a second buy when we are out looking at something else, like when we go to the Grocery Store and they are in most every store.

"Shopping Products" these are the items that are more expensive then Convenience Products, so the consumer usually spends more time comparing several brands, stores, or styles before choice and planning the buy. These items are like a washer and dryer, refrigerator, televisions, furniture, clothing. These are the items that we will usually have for a longer period of time and we usually want to get the biggest bang for our buck.

Now lets look at "Specialty Products" these items are more expensive then Shopping Products, and there is usually lots of Planning that takes place before the purchase is made. Also the customer most of the time only wants one Brand Name and will not settle for any other; like Rolex, Bose, or Corvette. When these items are bought it is to reflex a certain status to the world, and a lot of show sometimes go with it after the purchase. Most of the time you have to go to a specialty store to buy.

Lastly is "Unsought Products" these items are the things that the buyer usually are not seeking, and many of them are New Products. These items are tings that we do not like to spend money on or care to think about, like insurance, burial plots, encyclopedias. These items are usually have aggressive selling techniques, and a sales force actively seeking consumers.