Database To Track Strategic Buyer Groups
An advanced marketing strategy for small retailers is to focus on key strategic buyer groups within their industry. This can be done readily by leveraging a small retailer’s localness to stay close to key buyer groups. Concretely, a data base of buyer preferences must be maintained and updated regularly. In this database, a retailer should record the following information about each customer:
1. All Merchandise Purchased
2. Any Special Treatment Given or Requested
3. Family and Friends Mentioned or Who Are Current or Potential Buyers
4. Relevant Changes In Living Situation
These pieces of information will help retailers identify and target groups of buyers willing to trade up, or more importantly for this economy, maintain the price for performance balance. For most small retailers, it is important for them to stay away from trying to entice Wal-Mart preferring buyer groups. They usually can not compete on price – and should not waste resources targeting buyers who trade down on price for lower quality, service, or performance.

How To Effectively Lower Prices For Maximum Profitability
There is a case where lowering prices for small retailers is effective and desirable – but without trading down price for performance. A retailer can maintain the price performance proportionality by offering small samplings of items or services for proportionately lowered price points. This accomplishes several objectives:
1. Increases Opportunistic and Incremental Sales
2. Allows Sampling of Higher-Priced Product Offerings
3. Obtains Price-Conscious Buyers W/O Competing Directly With “Big Box” Retailers

Small Retailer Example Of Lowering Price Points
Surfin’ Seafood, a Seattle-based seller of freshly caught seafood, is a great example of a small retailer offering a sampler type package to price-conscious customers. They expect to lose about 50% of their sales this holiday season as a direct result of corporations in the area cutting back on their discretionary expenditures of packaged seafood as holiday gifts for employees and customers. To regain some of this projected loss, they introduced a $50 gift package with fewer pieces versus their typical packages which sell for between $85 and $195. Surfin’ Seafood’s offering is a classic example of moving down price points to capture substantial incremental sales without disproportionately sacrificing performance, perceived quality, and the reputation that a small retailer has achieved. This kind of move can be highly beneficial and profitable – but it is tricky and must be done strategically and with care!

Three Characteristics Of Good Blue Ocean Strategy For Small Retailers
In the final analysis, for a small retailer there are three Blue Ocean characteristics of a good strategy. First, diverge from targeting price-elastic buyer groups, and understand the key dimensions of high utility for your customers – record key information about them and all customers. Second, focus on buyers willing to maintain and continue buying in a given price range even in this economic downturn – leverage your localization advantages such as closeness to key customer groups and understanding many aspects of the local market. Lastly, develop a tagline or brand motto which concisely differentiates your offerings in the market – and more importantly, among your key buyer groups. Small retailers can do better than just survive using these strategies – their businesses can prosper as their nimble boats sail the Blue Ocean Seas unfettered.

Find New Channels of Potential Business – Blue Ocean Spaces
Small retailers are going to have to look for Blue Ocean Spaces, and find new channels of potential business. While these businesses are too small to own a marketspace, they can certainly carve out profitable niches. There are three areas which small retailers can focus on to develop new business: geographic, demographic, and usage (both occasion and type). They can carry merchandise and services centered around a locale – and have offerings which are highly relevant to a given community. This is a Blue Ocean which large national chains will find very difficult to follow because many are very centralized in structure. As a smaller craft in the Blue Ocean Seas, local businesses can more adeptly cater merchandising, marketing, and operations to uniquely fit communities, towns, cities, and regions.

Look Beyond Current Buyers Demographics
Small businesses can also look outside of the demographic profile of current buyers to target additional customer groups. This can be done effectively by evaluating alternative or complementary industry buyer groups. Small retailers can look for synergic “hooks” to fulfill the needs for either of these groups. A business mentioned in the WSJ article, Charles Mayer & Company, is an up-scale boutique seller of china, crystal, and decorative accessories in Indianapolis. An example of them targeting a complementary buyer group would be to develop an interior design service which shows home- and condo-owning customers the appropriate matches of various pieces to rooms and homes being re-modeled or built. This look across industries would also yield very synergistic opportunities to bundle with partner companies. To further extend our previous example, Charles Mayer & Company could join with an interior design firm outright to provide pieces for a price discount or items which are exclusive to the given designer.

Blue Ocean Spaces Through Alternative Usage For Product Or Services
The third way a small retailer can discover or create a Blue Ocean Space is through alternative usage for their goods or service offerings. This can take the form of different types of usage for their offerings, or different or varied occasion usages for their goods and services. Possible variations on usage fit well with the previously mentioned opportunities to bundle with other goods and services. Alternative uses for a small retailer’s goods or services can be uncovered by looking at a buyer’s experience with related products or services. These retailers should observe and evaluate these buyer’s experiences before, during, and after a given product or service is used. This will yield rich insight into how to extend, alter, or retract their offerings in terms of recommended uses for their given products and the services they offer around them. For example, small auto repair shops have observed the success of “oil change only” shops such as Jiffy Lube, and now include even more discounted oil change services of their own as a front-end bundled offering when repairing other parts of a customer’s car. In this case, the usage occasion was changed from a scheduled maintenance item to an upfront service and opportunistic sale for a small retailer.

John Christian and Other Small Jewelers’ Dilemma
John Christian is a small custom jewelry company in Austin, Texas who like most jewelers was facing the “crunch” of dramatically higher raw material costs, soaring metal prices and lowered consumer spending in a weak economy. In 2006, the company posted $6 million in revenue, and saw this figure slip to $5 million in 2007. Because most jewelers are small manufacturers and tend toward customization, they lack economy of scale to offset higher raw material costs. In addition, creativity and custom service aren’t enough to offset margin squeeze and the revenue loss. To address these losses, John Christian has sought to lower raw material costs by creating alloy/metal blends like “platanium” – a stainless-steel alloy with the luster of platinum and the strength of titanium, and using basic or less fancy material in the production of their items.

Lower Cost New Brand and Occasion Strategy
John Christian created a new brand around platanium items. In marketing this lower-cost brand, they were concerned about inadvertently cannibalizing the sales of their higher-end jewelry lines. To market this new line without eating away sales from those items, they need to target specific buyer groups with specific “usage occasions” for purchasing their products. An example of John Christian utilizing a related strategy is cited by their CEO, Wes Weaver, when he speaks of their development and marketing a line of stainless steel rings targeting military personnel with the seal of the Army, Navy, Marines, or Air Force. A usage occasion strategy which would likely be highly effective and revolve around marketing uniquely celebratory personal days such as birthdays, anniversaries, or courtship milestones – and discrete holidays such as Valentine’s and Sweetest Days.

Dimensionalizing Occasion Attributes
This new product line and many jewelry buys tend to be occasion-oriented purchases. To this end, a jeweler such as John Christian should initialize its marketing strategy by dimensionizing occasion attributes. Romance, family, and rarity are factors which are highly relevant to jewelry item purchases.

Carved Creations Line Marketed To Mid-Range Customers
John Christian also created a brand, Carved Creatrions, centered around engraved jewelry in platanium and sterling silver. This line has its own separate website, and all items are less than $200. They have targeted this line through “regular” mid-range mediums such as USA Today and Us Weekly. To date they’ve sold $100,000 of these items. By being creative in their strategy, John Christian is growing and prospering despite rising costs and reduced spending, proving that with the right marketing and strategy – small companies can still sparkle!

Hybrid Strategy
As for Vosges chocolates sold in other retail stores, the demographics and lifestyle of the store’s patrons are key factors in the movement and sales of the product. Given the broad range of its product line and the holes in the chocolate market, Vosges can use a hybrid strategy and “pick off” the very high-end “niche” space with its truffles and $300 Bamboo Boxes by continuing to sell in retailers like Bergdorf Goodman. But their most substantial opportunities lie in the huge marketspace gap between Godiva and drug store chocolates. This mid-range affordable luxury area is already evidenced by the success of their top-selling $7.50 milk chocolate bar infused with Applewood-Smoked Bacon. Vosges needs to continue to develop similar types of products to capture the affordable luxury mid-range chocolate, and partner with appropriate channels like Whole Foods. This will dramatically raise the brand awareness, and more importantly, make the brand more accessible to a large variety of consumers. This is where Vosges’ greatest growth opportunity lies, and less so than with ultra high-end products.

Be A Wider Ranging Affordable Luxury
Katrina Markoff’s goal for Vosges Haut-Chocolat to be an affordable luxury like Marc Jacob’s apparel brand is appropriate, smart, and obtainable. Wisely, she initially based her product line on out-flanking high-end chocolates like Godiva. This strategy raises awareness in this marketspace, but not with mainstream consumers. To become a more widely-known brand and to grow substantially beyond its $12 million in revenue for 2007, Vosges should develop a wider ranging product line for the gap between high-end chocolates and drug store chocolates. This will not dilute its brand, but enhance its equity and reach. Vosges should leverage the wide reach of appropriate retailers like Whole Foods to dramatically increase volume, sales, and profitability. There are very few players with high brand awareness in this space now – can you even name one? And, are they national? Vosges can own two spaces simultaneously, and use both to enhance and leverage the other. By pursuing this hybrid strategy, Vosges would become even more well-known than Marc Jacob’s in clothing – and possibly develop a loyal customer base like Starbucks. This space owning strategy is an excellent fit for Vosges to build its niche and broaden its appeal. And for a chocolatier – how sweet it is!

Location and Marketspaces
Vosges Haut-Chocolat has five stores: two in Chicago, two in New York, and one in Las Vegas. In addition, Vosges is opening a store in Los Angeles. As with all retailers, location is critical to success. Because Vosges is a very high-end product, store locations are even more important than normal. For Vosges, geography is a critical access point to its marketspace. It is a paramount factor to gaining consumers willing to pay premium prices for chocolate. All its store locations need to link geography to a luxury-seeking demographic. In my white paper, “Innovating Your Marketing Strategies”, I talk about this Kaleidoscope marketspace factor. In this case, geography links directly to demographics, and dictates the ability to sell a certain kind of item at a premium price point.

The Two Key Ingredients For Vosges’ Stores
Vosges needs one of two ingredients for the success of its retail locations: high foot traffic or to be a point of destination. For its Chicago and New York stores, Vosges seems to combine both, with high foot traffic areas and high-end locations. Although the New York locations are relatively expensive, the exposure and awareness gained for the brand justify the costs. As for the upcoming Los Angeles store, it must be in a destination location, because this market does not have a lot of foot traffic. Geography (as it relates to the demographics of foot traffic) is vital to the Chicago and New York stores, because it dictates the likely customers. This is vitally important to Vosges because theirs is a luxury product with a relatively high-price point – it can’t be situated just anywhere. The Las Vegas store does not seem to have either of these elements working strongly in this way. One might argue for Vosges to emulate the Starbucks model of trying to market a ubiquitous affordable luxury with its own locations in geographies with mid-range demographics. However, the nature of the product as a non-staple food item, and relatively non-habitually consumed, makes it unlikely to be successful in non high-end locations.

“Blue Oceaning” A Tired Industry
Spanx has succeeded in reviving a tired industry by casting it in a fresh new light according The Wall Street Journal’s August 7th issue.  A la Blue Ocean strategy, Sara Blakely and Spanx have rendered the competition irrelevant by transforming the grandmotherly product of shapewear into cool and hip.  It has raised the dimensions of packaging and image, created the new dimension of invisibility and fit, and infused emotion through coolness.  This has enabled Spanx to own the high-end marketspace of designer clothes wearing women. 

Connecting To A Space Through Two Dimensions: Useage and Demographics
In line with the strategies outlined in my forth-coming book, Owning Marketspace, Sara owns two space factors/dimensions: usage and demographics.  The usage type and occasion of the product are key – seamlessness and shapeliness under pricey garments typically worn when “going out” or for special events.  Spanx captures a younger, fashion-conscious demographic. Both these dimensions are critical to developing this Blue Ocean for this business, and Sara Blakely has deftly, coolly captured this marketspace. 

I am willing to talk with blog participants live via phone for free consultations.  I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities.  For any of these request, E-mail me .  I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist – writing to inform, enlighten, and inspire.  Author of forth coming book, “Owning Marketspace”.  Available for consulting and speaking engagements.

Spanx Sara Blakely Blue Ocean Strategy Owning Marketspace Shapewear High End Marketspace Turbo Tagger

Owning A High-End Hosiery Marketspace
Sara successfully sought to dominate and own a marketspace in the hosiery industry of high-end shapewear.  From the outset, she focused on high-end department stores where women would pay a premium price for an item that would make them look better in their pricey designer clothes.  This product used classic Blue Ocean Strategy, updating the image of shapewear by raising the dimension packaging and the “cool” factor.  Spanx products have sassy names such as Hide & Sleek, and its packaging is slick and colorful.  This is quite revolutionary in light of the sea of beige cases that other manufacturers use. 

I am willing to talk with blog participants live via phone for free consultations.  I am also available to companies, businesses and organizations for consulting engagements and speaking opportunities.  For any of these request, E-mail me .  I will help my readers in any way possible – I want to share my knowledge and expertise.

Mike Bolden marketing expert and blue ocean strategist – writing to inform, enlighten, and inspire.  Author of forth coming book, “Owning Marketspace”.  Available for consulting and speaking engagements.

Sara Blakely Spanx Shapewear Blue Ocean Strategy High-End Shapewear Hide & Sleek Turbo Tagger