7 Keys to Marketing Genius: The Importance of Place
The following is an excerpt from The 7 Keys to Marketing Genius by Michael Daehn
Ask what are the most important attributes that contribute to business success, and many will say location, location, and location. Where your business resides is indeed an important consideration. Opening an air conditioner store would likely be more successful in Arizona than in Alaska.
Place also deals with distribution and logistics, a world unknown to most consumers. They don’t question how the milk got to the dairy aisle; they just pick up a carton and move on to the next item on their list. The steps involved in getting milk from a cow’s udder in Kansas to a pasteurized, homogenized, vitamin A&D fortified skim milk carton in a Safeway store in Oregon are fairly complicated. Each step in the distribution process is an opportunity for enterprising individuals to make a profit, and/or for manufacturers to keep costs low through disintermediation. Often it is more cost effective for manufacturers to focus on their competencies and to allow distributors to capitalize on their specialized abilities of distribution.
The Internet revolution turned the traditional distribution model on its head. The question for most retailers today is whether to be a brick-and-mortar or a click-and-mortar store. Brick and mortar is a traditional physical location where consumers can visit a building to purchase products. Click and mortar is the name given to Internet businesses parodying the brick and mortar description. Companies expanding either on-line or to physical locations should avoid the line extension trap by giving each location its own identity. The Internet site should have a different name than the physical store and vice versa.
Al and Laura Ries in their book The 11 Immutable Laws of Internet Branding call Law #1 the Law of Either/Or.* Your business should be either on-line or a physical location, not both (at least not with the same name and branding). They also give some tips on determining the best choice for your product:
• Is the brand tangible or intangible? The Internet tends to be a medium for tangible products and a business for intangible products (banks, stocks, insurance, etc.).
• Is the brand fashionable or not? Fashionable products (like clothing) tend to use the Internet as a medium, while non-fashionable products (like computers) tend to use it as a business. For clothes, how do you know if it will fit, what it will look like, and will it be comfortable?
• Is the product available in thousands of variations? If yes, then the Internet tends to be a better choice, because it is difficult for a retail store to house thousands of products. Half of customers leave retail stores without making a purchase because the item is not in stock. You should narrow your product line in retail, or you will lose customers who cannot find the model they want in stock. If you use the Internet, then a wide selection is a competitive advantage.
• Is low price a significant factor in the brand’s purchase? If yes, then the Internet tends to be a business. The ability to check many prices quickly is making the Internet a price-sensitive medium. This makes it difficult to make money with the Internet as a business.
• Are shipping costs a significant factor compared to the purchase price? If so, then the Internet tends to be a medium. Self-service has taken over the marketplace because it is more economical.
The Rieses recommend using the Internet as part of the overall integrated marketing communications strategy regardless of product. If the Internet site is not the business itself, then the Internet should still be used as a medium to promote the physical locations. The Internet is a powerful IMC (integrated marketing communications) tool that is here to stay. We will cover the use of the Internet and interactive tools more in depth in the next section on promotion.
*Ries, Al and Laura. The 11 Immutable Laws of Internet Branding. © 2000 HarperCollins New York, NY. Another great book from Al Ries written with his daughter Laura.