Adk Biz Today by Ernest Hohmeyer – AdirondackDailyEnterprise.com | News, Sports, Jobs, Saranac Lake region — Adirondack Daily Enterprise
I was thinking of my father the other day, wondering what he would say if he were still alive and in business today. I remember how he would get inquiry letters in the mail and respond to them several days later by using “snail mail.” Several weeks later if the customer were interested he would receive their deposit and it was dutifully noted by pen on a hand-written reservation system. My father had no brochures, his tourism business relying totally on word-of-mouth. His local advertising consisted simply of two ads: “We are open for the summer” and “We are closed for the season. Thank you.”
I would like to tell you that I am quite aged, or this is really a story of my great-grandfather, but it is hard even for me to believe this was only 20 years ago. His theory was to build it and they will come – provided you can deliver a value product. “Stick with what you know and don’t change it, there is always a demand for a good product.”
Has our economy and business way of life changed to such a degree that it is challenging many of our core beliefs on how to be successful as a business and a thriving community?
Build It and They Will Come? One of the principles we learn early on in school is about the supply and demand theory. If there is a demand for something, there is an opportunity to supply it. The balance between supply and demand affected price, production and other factors like how many employees you would need. If supply was greater than demand, it typically meant rising inventories and lower prices. If demand was larger than supply, then prices would go higher and factories would often respond by hiring new employees.
Many small businesses start or expand based on an idea of an entrepreneur. In some cases, this idea is so strong; they charge ahead figuring out on the fly if there is a sustainable demand. If a certain approach didn’t work, the idea was not really questioned; there was just a problem in effectively telling you why you should “want” this product or service. That was the case with my father and for him and many others it worked.
“In today’s economy, the smartest entrepreneurs are satisfying needs, not wants” was the title story in a recent publication of Inc. magazine. In this provocative article by Leigh Buchanan, the theory is that “demand is what people will buy at a given price” but due to the state of the economy “people are unwilling to buy much at any price.” The prolonged recession is leading to “dramatic changes in spending habits of both consumers and businesses – change that may be here to stay.” These include behaviors such as “simplifiers” or folks that are now living within their budgets instead of accumulating debt are given as one such example. Trends are cited where for the first time since the 1950’s, the ideal house size has decreased from 2,400 square feet to 2,000 and to a growing interest in “greener” homes. Tightening budget belts has created the necessity in cooking more at home and eating healthier is impacting restaurants of all sizes. The days of “build it and they will come” may be over where “you could create supply” – or an idea – and “go in search of demand.”
I concluded from this article you first have to understand the new “demand” including trends related to demographics and perhaps more importantly, new tendencies affecting their behaviors. For example, contractors considering smaller spec houses with perhaps less indulgences and more energy efficient features.
You Succeed By Selling More? Isn’t this the first lesson of business 101? In order to be successful you have to sell more of your products or services or invent new ones. The tendency was to diversify your products or services and find new customers to buy them.
Now, the word is to focus or niche your business, opting to sell more to your existing customers. Strategy & Business magazine talks about “growth through focus” a strategy that targets “few markets, brands” and by “focusing relentlessly on executing a simple but powerful vision.” Other articles talked about the difficulty of finding additional markets and creating ways to sell at a higher level to existing customers. Inc. magazine featured businesses who “thrived by keeping things simple.”
The compound challenges of getting the word out in this overloaded information society with shrinking consumer demand may call for simplified messages and real customer loyalty programs, not advertising driven gimmicks. Most of my Dad’s original customers are dead and the new ones often do not have the same behavior patterns, interests or needs.
Word of Mouth is All You Need? Word of mouth is still one of the most powerful marketing tools a business can have. Word by click and the on-line love-fest with reviews is now a major marketing player along with on-line, off line and social networks. It is hard to believe that many businesses today can survive by word of mouth alone like my father did.
Even GE, when it realized its products “would no longer sell themselves” had to “invent a formidable marketing function from scratch.” In an interesting article about this in the Harvard Business Review (Unleashing the Power of Marketing) historically GE “had been so confident in its technologies that it seemed to believe the products could market themselves.” GE according to this article, had to build a new marketing engine and believed that success would require 3 factors including “principles,” that included “go-to-market activities;” people, who would challenge the status quo including “instigators, innovators” and “integrators;” and finally a “process” to evaluate.
As small businesses, we cannot hire a team for all of this but the point is that marketing is a changing tool that is more than what it was years ago for many of us: simply an awareness and advertising tool. With information technology and a slew of on-line and print material at our disposal that would boggle many of our parent’s minds, we have the capacity as small businesses to access a great deal of the same marketing resources as large companies.
The “power of marketing” is so much more today and there is information at our fingertips from customer trends to demographics that used correctly can help to understand your customer’s “needs,” be an engine for long term sustainability and pave the way to more “direct collaboration with customers.”
Community Marketing: Sit Back & They Will Come? With the national and now world-wide recognition that entrepreneurship can be a vital cog in a community’s health and growth, the competition for small and expanding businesses is immense. Some successful communities have banded together with their neighbors, spent a lot of effort on planning and created niche marketing messages.
The Tri-lakes have done much work on the planning end but may need to consider a coordinated and systematic “go-to-market activities, branding and communications” effort. To do this may require people who challenge the status quo including “instigators, innovators” and “integrators;” as well as a “process” to evaluate.
Our economy needs to grow and we are not the only ones selling the quality of life marketing brand. The Green Mountains, White Mountains, even Belize was recently featured in a major U.S. publication as an “affordable retirement community” and being business friendly.
Marketing can be a powerful tool that is more accessible than ever to our small Adirondack communities. It may need a marketing synergy “focusing relentlessly on executing a simple but powerful vision” that starts in the Tri-lakes, fits into the Adirondack marketing brand and has state support. If we sit back, will they come?