Fizz from ConsumerPop

The Psycographic Approach

Analysts say software companies like NetBooks and ConnectWise play to the diversity of small businesses by avoiding a one-size-fits-all approach.

Michael Speyer of Forrester Research in Cambridge, Mass., who focuses on information technology issues affecting small businesses, said that many high-tech companies segment potential customers by the number of employees they have, overlooking the concerns of entrepreneurs versus those of corporate managers.

By contrast, NetBooks considers factors like how active the owner is as a manager, how much daily control he or she requires, the owner’s attitude toward using technology and whether a venture capital company has invested money in the business.

“I like the fact that NetBooks has taken a psychographic approach to finding out who their customers are and what they really want,” Mr. Speyer said. “This is really what counts. I think the way they characterize the market is spot-on. Stages of development are really what counts.”

Sonal Gandhi, an analyst with JupiterResearch in New York, said that small businesses were more open to using an application developed by one of their own. “There is certain functionality they crave,” she said.

This New York Times article describes business accounting software developed by small business entrepreneurs for small business entrepreneurs.  It's a classic example of someone solving their own problem and finding out that lots of other folks can use their solution. 

But even if you aren't your own best customer doesn't mean that you can't develop products that start with psychographics of consumers rather than demographics or what your engineers can create.  It can be more difficult, more time consuming and more expensive to take this approach but I believe the potential rewards and long term prospects for your product or service are much, much greater.

The Economies of Tiny

Love that line from Seth Godin.  Seth says we don't talk about it.  I'll give you an example.  Fridge Filters.

If you have a refrigerator that dispenses water where do you buy the filters that you need every 6 months or so?  Several years ago I discovered fridgefilters.com where they sell replacement water filters online.  Nothing else (though of late they've branched out a bit into non-fridge bound water filters and a few other accessories.)  Talk about a niche.  But they fill it and fill it well. 

Prices are good to begin with and you get a discount for buying in multiples.  Shipping is inexpensive or free depending on the size of your order.  They've got 5,000 consumer reviews and ratings (average 5 stars out of 5) posted on their site and collected independently by Yahoo! shopping.  When you order your invoice has a handwritten "thank you."  They send you a refrigerator magnet (the rare case when it's the perfect promotional item) so you remember how to get to their website when it's time to order more.  I ordered 3 filters on my last order so I won't be doing business with them for 18 months - but I certainly know where I'll be going to buy again in 18 months.

This business may be tiny but my guess is that the economies of tiny (just replacement water filters and just on the web) allow them to do a superb job at making a mundane and routine purchase effortless and enjoyable.  What do the economies of tiny allow your business to do better than anyone else?

Sometimes the Fundamentals Still Apply

CNN has a show on Saturday mornings called "The Turnaround" where a small business owner feeling stuck gets paired with a mentor who is a successful business person at a much bigger company in a related field.  Last weekend featured Walnut Creek Baking Company and owner Denise Vickers was paired with mentor Gary Rogers, CEO of Dreyers Grand Ice Cream. 

Gary Rogers brought several members of his team to help Denise Vickers with helping transition her business to profitability.  Denise offered a wide range of baked goods from smaller, takeout items to elaborate wedding cakes.  To help Denise determine who her most profitable consumer was so that she could focus her offerings, one of Dreyers' brand managers used, among other tools, a simple sheet with a boxes containing the 4Ps in each corner and a circle in the center with "consumer" written inside.  Using this fundamental marketing framework, Denise was able to realize that her wedding cake consumers were her most profitable and creating gorgeous, delicious wedding cakes should be her focus.  This insight was a crucial ingredient to Denise's ability to bake up a successful turnaround.  (sorry I couldn't resist)

Brand Autopsy has a wonderful ongoing series titled "According to Marketing Bloggers" where marketing bloggers are given the opportunity to engage in a virtual conversation with legendary marketing professor Phillip Kotler and to build upon some of the topics covered in Kotler's book According to Kotler.  The first post asks, Are the 4Ps still a useful framework for marketing decision making?  There is a lively discussion and several worthwhile alternate frameworks are proposed.  However, as "The Turnaround" at Walnut Creek Baking Company shows, there's still room in the business and marketing worlds for the classic 4Ps framework.