Sales Strategies for Small Businesses: Product Development, Pricing, Positioning and Branding
The Sales Process
Getting more sales for your small business can seem challenging. It's tough to know where to begin. A variety of strategies are at your disposal to get more sales or larger orders, or both.
The best way to begin the task of increasing sales is to breakdown the marketing and sales process into its major components. This series of articles will look at each phase of the sales process. This article looks at the first two:
- Product development and pricing (see below)
- Positioning and branding (see below)
- Lead generation
- Conversion/ close
- Placement/ delivery
- Post-purchase relationship
- Customer feedback and product improvement
This is a holistic approach to sales. Each phase of the process feeds into the next. Product development helps determine how you position your product in the marketplace, which in turn influences your promotion strategy, and so on.
Each stage can have a significant impact on sales. You may have a great, friendly sales team that customers enjoy speaking with. But if your delivery system is poorly developed, and it takes three times as long as expected for the customer to receive their product, this will hurt sales. People will see the organization as well-intentioned but incompetent. They will be less likely to return.
When we look at sales in a holistic way, we quickly see weaknesses that hold us back from making more sales. Finally, note that this process is a cycle. The last stage, customer feedback, leads directly into the first, product development.
8 Step Sales Cycle
Sources for Market and Industry Information (free and paid)
Product Development and Pricing: How to Begin
This is the stage where you design your products and services and price them appropriately for the market. Ideally, especially if you have been in business for a while already, you should have some valuable customer feedback to help start this process.
These are the six major considerations that should factor into product development and pricing:
1. Your market and industry. This includes direct feedback from your customers and clients. A variety of websites, blogs, magazines, industry publications, academic papers and other sources can give you great information on the nature of your market and current trends in your field. Much of this information is free or low cost. Several free and paid resources are listed to the right.
You can conduct research through in-person networking. You can also interact with members of your industry or target market online through social media, blogs, and online forums. Prepare a set of questions to ask and get involved in conversations with them. You can also conduct research by visiting competitors and seeing the kinds of products they are offering, how they compare with yours, and the prices they charge.
2. Your past experience in business. The most useful information is what you, as a businessperson, have experienced firsthand. Don't discount your unique experience--it is your best friend. Pay attention to past successes and failures. Learn from history.
3. Your experience as a consumer. This is a great source of information that many businesspeople completely forget about. If you were a consumer, would you be willing to pay the price being asked for the product being offered? If so, why, and if not, why not?
4. Your costs. Your prices must account for your costs. When you have a price that people will pay for, in large enough numbers to cover your total costs, you have a successful business. This is the primary task of all small businesses.
5. Your objectives. If you have specific goals for the short term or long term, this will affect your product development and pricing policies as well. For example, you may want to underprice a new product for the purpose of generating buzz and interest, expecting it to really take off and be a major source of revenue in the future.
6. Your mission. Your company's purpose, mission and passion should all play a role in product development. The last thing you want is to find yourself pushing a product that you don't believe in.
Examples of Pricing Models
- Free product/ service, with revenue from advertisements/ sponsors
- Freemium: free basic service, and a paid premium service
- Cost-based: price determined by a markup on your costs
- Tiered or volume pricing: price increases with increased usage
How to Increase Sales with Product Development and Pricing
Change the prices. This is the most straightforward change you can make. Research and previous experience will help you decide to either:
- Lower your prices. You may be charging prices that are too high for what people are willing to pay.
- Raise your prices. Or the reverse, you may be getting significant numbers of customers, but perhaps your prices are too low. Maybe you can increase prices without severely impacting demand. This is especially relevant if you have significant variable costs (that is, costs that are incurred on a per-customer basis).
Also consider adjusting your basic pricing model (more information listed to the right).
Change the products. Consider making changes to the products and services being offered:
- Packaging existing products in different ways can create new products. For example, instead of selling drinks and food items individually, a restaurant or diner may package them into "meals" that command a lower total price than what the customer would pay if they bought each item individually. This can stimulate demand by simplifying the menu and offering more compelling products.
- Quality. Customers may perceive your products and services as low quality (rightly or wrongly). Spending extra money, time or labor on them can increase quality. If you are convinced that the quality is a matter of perception, then focus on branding and promotion (see below).
- Change the number of products/ services being offered. Too few products, and you miss out on valuable markets. Too many products, and customers may get lost in a web of choices, or they may lose a clear sense of what exactly you sell.
- Your team’s unique strengths. Do some of your staff have special talents that you are not utilizing? Suppose you make software, but one of your team members has a talent for writing. He/she could write informational e-books on software-related topics that can be sold on your website to generate extra cash flow, and as a promotional tool.
- Consider your weaknesses. Every small business has limited resources. Are you spending valuable time and money on products and services that you are weak in? You should focus on products that can be created and delivered most effectively and efficiently.
- What are your most profitable products? Do you have products that are in effect being subsidized by others? You should eliminate products that cost too much for what they earn, or that actually lose money. Put more time and money into the most profitable offerings.
- Create new products. Needless to say, there may be unmet demand in the market that you can take advantage of.
Positioning and Branding: things to consider
- Your cost structure. If you have low costs relative to your competitors, you may want to use a low-cost positioning strategy. Relatively high costs imply an emphasis on quality and uniqueness.
- Your company’s existing identity. A clothing brand that has a reputation for cheap and comfortable garments will have a tough time transitioning to a high-end, fashion-forward image.
- Your team’s unique strengths and weaknesses. If you have friendly customer-oriented people on your team, play that up and position yourself as a friendly, easy-to-work-with company. Provide customer testimonials to that effect. Consider what kinds of people you have on your team. If they come from a similar background as a customer who would be interested in low costs, that may be a natural positioning strategy for you.
Positioning and Branding
The power of branding is well-documented. Billions of dollars are spent every year on creating, developing, promoting and maintaining brands. A brand is basically about an image and a concept. How do customers feel about your company and its products and services? Once you have a strong product offering with appropriate prices, it is time to decide how to position them to get the greatest amount of sales.
The video below demonstrates Apple's attempt to convey a concept and an image for their Macintosh product in 1984. It has become known as one of the most compelling commercials of all time, and is an example of pure branding. Nowhere in the ad do we actually see the product, nor is an explanation of its features anywhere to be found.
Positioning is where we see two major strategies come into play: (1) low-cost strategy, and (2) differentiation strategy. In the low cost strategy, you position yourself as an affordable alternative to higher-priced competitors. Your target is cost-conscious consumers. In the differentiation strategy, you target consumers for whom cost is not a major issue, and emphasis is on the high quality of your product/ service. Using the wrong positioning strategy can make sales suffer.
Apple Macintosh 1984 commercial
Ideas for Positioning your Company
- Consider changing your company’s tag line or motto to better communicate your intent and identity.
- Including photos of your team members and happy customers on your website can convey a more personal and relatable image.
- Changing the logo, colors, design or layout of your website are small changes that can make a big impact as well.
- Changing your company’s name may be an option for you.
- Tell a unique story behind the founding of the company or the founder’s biography
- Emphasizing the company's history and track record gives a strong sense of reliability and dependability. It seems like a small thing, but it makes a difference in the mind of the customer.
How to Increase Sales with Positioning and Branding
Here are the main positioning strategies you can employ:
1. Differentiation. Ways to execute this strategy include:
- Drawing attention to the product’s unique qualities
- Comparing your product with similar products in the market only on the basis of quality
- Explaining the process of making your product, what goes into it, what the workers do and how
- Interesting facts such as where a particular ingredient comes from, or prominent people who have purchased and used the product
- Intentionally use words, images, models, actors and themes in your promotion that “filter out” unsuitable leads. A cosmetic company will use images and voices of women and themes such as beauty that will automatically filter out men and those not interested in makeup
2. Low-cost. Ways to execute this strategy:
- Drawing attention to the product’s affordability and practicality
- Providing a brief explanation of why you are able to charge such low prices (for example how your company is able to purchase large amounts of supplies in bulk from vendors)
- Comparing your product with similar products in the market on the basis of price
- Emphasizing themes that will resonate with your target market like the family budget, pragmatism, or the desire to do something fun on a budget
3. Mixed. In a mixed strategy with both differentiation and low-cost aspects, you are positioning as affordable and high-quality at the same time. You can simply adopt elements of both strategies here.
- Sales Strategies for Small Businesses: 6 Major Promotional Strategies
- Sales Strategies for Small Businesses: Lead Generation and Closing the Sale
- Sales Strategies for Small Businesses: Product Delivery, Customer Relationships and Customer Feedbac
- How to Setup a Bookkeeping and Accounting System for Small Business
- 5 Ways to Control Costs
- Money Management in Business
- Top 10 Product Pricing Models For Startups - Business Insider
Is your price right?
- The Secrets of Exceptional Marketers | Inc.com
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