Page 52 - Duct Tape Marketing

36 Part I: Getting Started in Marketing

Using the cash register to steer
your business

Your product analysis will detail exactly which products your customers are
buying. You can put this information to work as you prioritize and manage
your product line.

ߜ Sell what people want to buy: Study your list for surprises. You may
find products that are performing better than you imagined. This knowl-
edge will alert you to changes in customer interests that you can ride to
higher revenues. As an example, the bookstore owners in Table 3-1 real-
ized when they scoured their product analysis that nearly a third of all
revenues were coming from the combined activity of beverage/pastry
and magazine sales. This finding led to the decision to move the maga-
zine display nearer to the café, giving each area a greater sense of space
and bringing consumers of either offering into nearer proximity, and
therefore buying convenience, of the complementary offering.

ߜ Promote the products that you’ve hidden from your customers: You
may have a product line that is lagging simply because your customers
aren’t aware of it. When the bookstore in Table 3-1 realized that only
3 percent of revenues were coming from sales of pens and writing sup-
plies, they decided to try boosting the line by enhancing and moving the
display to a more prominent store location. Sales increased. Had the line
continued to lag, though, the owners were ready to replace it with one
capable of drawing greater customer response.

ߜ Back your winners: Use your product analysis to track which lines are
increasing or decreasing in sales and respond accordingly. If the book-
store in Table 3-1 is fighting a decline in book sales (perhaps due to sales
erosion by deep discounters and online booksellers) while sales of cards
and gifts are growing, the owners might decide to capitalize on the trend
by adding an array of reading accessories, including lamps, bookshelves,
and even reading glasses.

ߜ Bet on product lines that have adequate growth potential: Before com-
mitting increased marketing dollars to a product line, use your product
analysis to project your potential return on investment. For example, a
glance over the bookstore revenues shows that 3 percent of sales result
from audio book rentals. If the store could double this business, it would
increase annual revenues by only $18,000. Realizing this, the owners need
to ask themselves: What is the likelihood that we’re going to double this
business — and at what cost? On the other hand, if the bookstore could
increase café sales by just 20 percent, it would realize $19,000 of addi-
tional revenue, which the owners might decide is a safer marketing bet
and a stronger strategic move.