Taking a closer look at Business Strategy and Competitors

forumsWriting a business strategy and marketing plan is not required in order to start a new business, however it will challenge you to answer important questions regarding every aspect of your business. The business strategy should provide, at minimum, both short-term and long term goals and can be used as a blueprint when making decision during the course of business. One of the most challenging, yet very important, areas of the plan to investigate is potential competition. Such investigations of competitors may include lessons learned from failed competitors from the past, current competition, as well potential competition in the future should a non-competitor decide to expand their business into your market.

Many consumers will compare competitive products on price alone, therefore your marketing strategy should also determine it’s pricing position. The three common pricing methods are undercutting, matching, and premium. Undercutting the competition by pricing your products at a lower price has the potential of increasing market share, but could also suggest to potential customers that your products are cheap and low quality. Matching prices set by the competition requires including a similar feature set as other’s products, however it can be very difficult to stand out and gain market share if you are both selling the same similarly-priced quality items. Premium pricing allows you to stand out from the competition by highlighting exclusive features and an impression of high quality, however due to the higher price the competition might gain a higher market share in the short term.

Every business is unique in how they include social marketing in their long term e-business strategy, however the general goal is to increase interactions with both customers and prospects. Potential prospects will want to submit inquiries about available products including how they compare to the competition. Existing customers will have support inquiries on how to best utilize their recent purchase to benefit them and/or will request new features to be added based on advertisements received from your competition. It is important to reply to these inquiries and monitor review boards and discussion forums for communications between customers and prospects. Fortunately, many product review places allow a follow-up reply to be posted for all to see as a demonstration that the business owner cares about their customers.

Considerations when Setting a Price

priceconsiderEstablishing the selling price of an item requires research into environmental factors in order to support the final decision. Such research identifies which customer base to target and further determines what are the expectations of those customers at different price levels. The current status of the economy can affect this too because if the economy is on the upswing then prices might be tolerated at the high end , conversely if the economy is in or recovering from a recession prices are likely to be at the low end since customers are likely cutting back.

Sales promotions such as discounts and coupons may result in a quick sale or two, however they should be reserved for products at either the beginning or the end of their existence. Once the standard price is determined utilizing a lower “introductory” price for a limited time period after product release is reasonable as long as the limited time period is honored resulting in a higher price later. Another benefit of offering a product at the lower price is it increases market share for the sell against competitors. At the opposite end of a product existence are “close out” sales which in the real world the purpose is to sell remaining stock and free up shelf space while in the virtual world it generally means the product will no longer be offered for sale through an automated vendor or web site. However, nothing prevents the content creator from selling virtual goods on a case-by-case basis upon request unless the creator closes their account and no longer logs into the virtual world.

Premium product pricing, on the other hand, can project value to the prospective end user if it is apparent that the post-sales service and support of the product is better than the rest. This is similar to generic versus name-brand products in a grocery store. For example, some who have worked in the hot dog industry have revealed that the same exact product is being packaged with a generic name on the outside as are the name-brand and yet the former sells for a much lower price than the latter. The latter benefiting from their established brand name and service justifies the higher pricing. Another example is in the computer industry in that while you can buy a computer from a competitively priced small business at the local strip mall that is only open specific hours and closed on the weekend, there are also similarly-equipped computers selling for much more that make available a dedicated 24/7 toll-free call center staffed with knowledgeable service technicians held to strict performance metrics.

Unlike products resold in the real world, merchandise sold within the virtual world are generally only available from the creator themselves. While it’s true that some creators allow franchise stores and others to rez an affiliate vendor the price is generally locked and the commission structure is usually at a fixed rate. Some items sold in the virtual world can be manufactured from supplies offered by the creator and then a levelling system is used to determine the cost-of-goods. Those who have higher experience at manufacturing have the advantage of having a lower cost and therefore can offer the final product at a reduced price.

There’s more to Product Descriptions than just the Features

Before making a purchase many customers, with the exception of some impulse shoppers, will seek out as much product information as they can in advance. The product description should list the primary features in the product, but also outline specific benefits to prospects and how the product or service can result in becoming the solution to actual issues the customer is or will be encountering in the near future. One method of providing this is to include testimonials from past customers and/or encouraging existing users to submit a product review to a third party that is accessible to the public.

Pictures and videos of the item in use are important inclusions when describing a product. Multiple angles should be included under different lighting conditions and of high enough quality to show details, but also compressed to a reasonable size so that the image is visible to the customer sooner rather than later. If the size of the images are large, but the computer and internet connection attempting to display them are at minimum specifications the client might choose to not wait and therefore a potential sale will likely be lost.

In addition, information about the product should mention the specific attributes that makes it stand out against competitive products. Determining this is as simple as reviewing the product descriptions of similar products from other vendors and noting what details they are and aren’t including. Including information where others do not can lead to a competitive advantage. The creator should always make themselves available to answer questions from the potential customer. Be sure to include relevant contact information in the profile and indicate how the creator or support representatives may be contact both when they are online and when they are offline.