The Great Shrinking Business Model

As a business model, Redbox is on its way to completely replacing Blockbuster. And the company has accomplished this goal in a remarkably short time period. Examining the two business models reinforces the importance of creativity, flexibility and appealing to changing market demands in our own businesses.

Redbox wins this competitive fightLaunched in 2002, Redbox is the company placing movie and game rental kiosks in prominent places around the country (i.e., those ubiquitous red boxes). Blockbuster, of course, is the retail chain with a similar function founded in the 1980s and enjoying success through the early 2000s.

From their about page, one learns there are 34,600 Redbox locations in the US, and 68% of the population lives within a 5-minute drive of one. Blockbuster, meanwhile, boasts of just 2,500 stores across the entire globe– down from 6,500 stores in 2010. Clearly, Redbox is on the ascendency.

I call this competition the great shrinking business model. For local movie and game rental, Redbox learned that a kiosk could take the place of an entire retail store. It was quite a revolutionary business decision to implement a strategy that relied entirely upon glorified vending machines.

But the model certainly makes business sense. In a convenience-driven market where almost all consumers own and use credit cards, renting a movie for about $1/day on the way home from the grocery store is easy to understand and simple to do. Selling through a kiosk also allows consumers to rent media 24-hours-a-day.

By taking advantage of evolving consumer behavior, Redbox benefits from a streamlined overhead– with fewer employees, drastically reduced leases and lower insurance rates than required to run a full-size retail store. These optimizations allow Redbox to offer the exact same product as Blockbuster more conveniently and for a cheaper price.

Blockbuster is the market loserSome might argue that the experience of interacting with a movie buff employee at a retail movie rental store makes the visit worthwhile. Perhaps, but it seems that the corporate nature of Blockbuster killed that experience along with the neighborhood video rental store  years ago. My last experience at a Blockbuster included an uninterested employee mumbling “hi” to me without even lifting his head out of box of movies he was sorting. Frankly, I feel the kiosk is more friendly.

By analyzing the business models, it comes as no surprise that Redbox is quickly eliminating the market need for Blockbuster. This rapidly shrinking business model should make you think about your industry– are you the clever innovator or the stodgy competitor about to be taken by surprise?

Marketing 101: What is a Brand?

The basic marketing question, “What is a brand?” is rarely even adequately covered in marketing classes. But understanding your business’s brand is the most crucial concept for any marketing effort to be successful.

So, what is it, then?

Your brand is the essence, the soul, of your business. Your brand is what your business values. It’s what makes your business valuable and useful to customers, suppliers, employees– and yourself. Your brand is why your business exists.

See, it’s pretty important, eh?

The excellent movie, Jiro Dreams of Sushi, shows a beautiful example of branding. From the film’s introduction:

Sushi Branding“JIRO DREAMS OF SUSHI is the story of 85 year-old Jiro Ono, considered by many to be the world’s greatest sushi chef. He is the proprietor of Sukiyabashi Jiro, a 10-seat, sushi-only restaurant inauspiciously located in a Tokyo subway station. Despite its humble appearances, it is the first restaurant of its kind to be awarded a prestigious 3 star Michelin review, and sushi lovers from around the globe make repeated pilgrimages, calling months in advance and shelling out top dollar for a coveted seat at Jiro’s sushi bar.”

Jiro Ono has spent his entire working life (since he was nine years old!) honing his brand. He goes so far as to ensure his suppliers put their heart and soul into their businesses, as well. His son, Yoshikazu, says, “Our tuna vendor only sells tuna. Our octopus vendor only sells octopus.” And their rice vendor refuses to sell Jiro’s special rice blend to anyone but Jiro, claiming no one else could possibly prepare it properly.

The soul, or brand, of every business in this film is ever-present. They put their heart and honor into being the very best and consciously defining what they do and who they are.

Perfection is not just a platitude for these businesses. If the tuna dealer can’t find any fish he considers perfect, there’s no tuna for sale that day. Jiro’s apprentices spend 45 minutes massaging the octopus to ensure it is tender enough to serve.

Watch the trailer: Jiro Dreams of Sushi

Watch the trailer: Jiro Dreams of Sushi

When a business knows its brand, marketing decisions become much easier. Sukiyabashi Jiro would never consider switching suppliers to lower costs or starting mass sushi production, because it wouldn’t fit their purpose. They know who they are, so they also know who they aren’t.

To truly direct a business and its employees, a brand must be specific enough to escape being generic. It has to answer the question, “Why does this business exist?” Answers like, “To be the most trusted provider of…” aren’t meaningful or unique enough to give your brand life– on the whole, aren’t your competitors pretty trustworthy, too?

For defining a compelling and meaningful brand, small businesses have the advantage over big ones. The soul is a unified thing, and it’s hard for large businesses to unify behind one purpose and set of values. Small businesses have the vision of one person (or a small group of people) to give them a truly purposeful brand. Don’t you think it’s worth answering the question, “What is my business’s brand?”

Don’t Make These Marketing Design Mistakes!

Route 52 near Cincinnati is an interesting drive– it follows the Ohio River, takes you through some cute small towns and, surprisingly, presents drivers with a stark marketing lesson. That lesson is to think like a customer.

On my drive, I first  encountered a restaurant whose logo includes a whimsical mouse wearing a chef hat and handling your food:

If there is a mouse on the sign, isn’t it reasonable for customers to assume the restaurant has a lax rodent policy? Either way, a restaurant never benefits from an association with mice.

Next, I drove past a gynecology clinic featuring a mermaid on their sign:

I’m certainly not an expert in this field, but I’m not sure mermaids would even require a gynecologist.

When designing a logo and other marketing materials, businesses must think like their customers. It doesn’t matter how cute, clever or “different” the logo might be if customers are off-put by the concept.

Here are some marketing design tips to help you think like a customer:

  • Understand your customer’s expectations. Would a customer think you are a better doctor with a mermaid on your sign?
  • Consider common associations in our culture. Will customers have a pleasant impression of your restaurant when they associate it with a mouse?
  • Be practical, then be creative. First answer the question, “What are we trying to say to customers?” Then, you will be able to create fun, interesting messages that resonate with customers.
  • Ask others for their opinions. An outside opinion can be valuable to gain insights you might have overlooked.

Marketing by Design

Design isn’t the veneer that’s slapped on at the end of a project. It isn’t just “pretty” or “nice to have.”

Design doesn’t come from consensus. It’s not something a committee of competing interests can develop.

Design isn’t just for objects. Companies shouldn’t confine design to the “Design Department.” Services, experiences and even marketing strategies should be designed.

True design is the complete, unified whole as envisioned by one person or a small group of cohorts. If you’ve been reading the Steve Job’s biography (and who hasn’t?), these concepts should sound familiar. I’m thrilled such a popular book is championing the key essence of true design. Apple and Pixar’s successes prove that dedication to true design works– more than works. True design results in “insanely great” things.

So, how are you designing your company and your marketing? Who has the vision? Where’s the passion? If you can easily answer these questions, you’re doing design right.

Use Your Product to Sell Your Product

If you’ve got a great product or service, what’s the best way to market and sell it?

By letting customers try it out!

Lighthouse Carwash does this whenever they open a new car wash. For the first few days, all the washes are free. It helps them build a customer base by showing just how great the service is.

Busken Bakery in Cincinnati does the same with their business catering service. Their flyer promoting the service is pretty nice:

But it isn’t nearly as enticing as the free dozen donuts that accompanies it:

Who wouldn’t trust this bakery to cater their next business breakfast after tasting these delicious donuts? (My apologies to anyone dieting this January.)

Not only does giving samples allow customers to experience your product, it’s a much more cost-effective marketing effort than almost any other tactic. For instance, compare the cost of a free car wash or dozen donuts to the price of a radio commercial.

When you’ve got a great product you can sample, your customers get a delightful experience, and your business stays in the marketing budget. See why it’s the best?

The Exciting World of Planning and Zoning

City planning and zoning divisions can be a thorn in a marketer’s side. But if you don’t know the ordinances of your town, you could end up like this guy, who was slapped with a $500 fine for marketing with chalk on the sidewalk. The next time you have a breakthrough outdoor marketing idea that hasn’t been tried in your area, check the local codes to ensure there’s not a reason no one else is doing it.

Ordinances can be tricky, so read carefully. A client of mine is located in a township that will only allow businesses to display an outdoor banner if they are approved for a permit. The permit allows the business to display the banner for 15 days, but you can only have one permit every six months. We had to prioritize which two 15-day periods in the year were most important to the business and plan far ahead to make sure we received permit approval in time.

Dont be scared. They are just people in suits.

Don't be scared. They are just people in suits.

If you have to present your outdoor marketing plan at a council meeting, leave nothing to the imagination. Create mock-ups and show pictures from where the idea has been implemented elsewhere. You’re trying to convince a committee, so your visual evidence should be as compelling as possible. By showing council members your plan is aesthetically pleasing, you will remove their fear of marring their town’s image.

The imagination of the marketer often is at odds with the strict codes of some planning and zoning divisions, but through careful planning, you can make your outdoor marketing as effective as possible.

Sign of the Times

Today’s blog post is not about Prince- sorry to disappoint. Instead, it features of some of the best signs I’ve encountered around the world.

In my travels, I’ve always taken an interest in the signs that businesses use to promote themselves. A sign can be a powerful motivator for a potential customer- either to buy from you or to pass on by. Or, a sign can blend into the landscape, escaping a potential customer’s attention altogether.

These nine great signs demonstrate what make a sign effective. First up, we have the St. Louis Science Center.

This sign mirrors the shape of the Science Center. It shows that design can incorporate both creativity and functionality- it’s beautiful and easy to read. Also in St. Louis is this dramatic and interesting zoo sign.

Everyone knows what a zoo is, so the designer had a little fun with the shape and presentation of this sign. However, most businesses should follow the Shrimp Factory’s example below.

This sign shows you exactly what you will get: a seafood dinner in a classy atmosphere. Another take on the restaurant sign is this Art Deco sign for the Signature Room at the Ninety-Fifth in Chicago.

Don’t you want to eat at such a cool place?

Next up, we have a little Hebrew for you.

I may not be able to read Hebrew, but I certainly know what a giant coffee cup and arrow mean. This 3-D sign perfectly describes what you can get at this business. When it really counts, though, signs should be multilingual.

Danger. Mines.

The clever building below is a carwash, which isn’t readily apparent at first glance, so the sign is essential. I really like this company, so you might want to learn more about their business model at their website, Lighthouse Carwash Solutions.

This British tube sign makes so much more sense than the American “Exit.” What could be clearer than “Way Out?”

And I’ll leave you with this interesting sign. I can’t decide if it’s good or bad, although it’s quirky. What do you think?

“We sharpen anything but your wits,” and “We fix anything but a broken heart” are certainly interesting ways to talk about the service commodities of sharpening, repairs and key-making. Does it make you want to be their customer?

Marketing for Appearances

Have you ever driven past a small business and thought it looked dingy, dilapidated or outdated? Have you ever been on a website that felt cumbersome to use, with the information you sought hard to find? Perhaps you think the business owners must not care anymore, or they don’t have the budget to fix things up. Even worse for the business, you might not think anything, but simply keep driving or surfing the web.

If it’s been awhile since you invested in your business’s appearance, customers could be thinking the same about you. After a few years, a business owner’s familiarity with her surroundings can cause her to overlook the slow decay of time.  Take a fresh look at the impression you are making on customers when they see your business for the first time.

You only have one chance at a first impression, goes the adage. And your first impression with customers is crucial- what they notice first sets the tone for how or if they will do business with you.

Your business’s exterior needs to be welcoming, easy to understand and clearly explain who you are. Your exterior could be a brick-and-mortar store, a website or even your sales team. Here are some examples to get you thinking.

Good Exteriors for Marketing

The Pink Box is a boutique in my neighborhood that shows a great exterior appearance, with a fresh sign and interesting window display. It’s easy to know when they are open and what you can buy from them.

My favorite part of The Pink Box’s exterior is this cheerful open sign. On chilly or hot days when the store must keep the door closed, this sign serves as a beacon to everyone on the square.

There’s a lovely inn in Carmel, CA that looks just as lovely when you first drive up. The Candle Light Inn looks inviting, and it’s easy for newcomers to know where to park when they arrive.

Not to overload on the pink, but the Olde Pink House Restaurant in Savannah, GA does a great job of communicating their stately yet fun vibe with their exterior.

The menu board on the front steps also helps customers know what kind of food to expect.

Camp Washington Chili hasn’t been around since 1771 like the Olde Pink House, but they have been in the same location since 1940. They’ve really kept their exterior fresh and updated, which contributes to their continued success. And with that sign, you certainly know what they sell!

Not-so-good Exteriors for Marketing

Often, seeing bad examples is just as useful as seeing good ones. Here are some unfortunate businesses that really could stand to improve their exterior appearance.

The BonBonerie is one of the best and most creative bakeries in Cincinnati, OH. For a new customer, it’s very difficult to find the entrance, because it is facing the parking lot, not the main street. This kind of confusion could cause a customer to drive away instead of stopping in.

This exterior inspires more questions than appetites. Did Laurie and Debi have a fight? Is this supposed to be a joke? What exactly is the name of this restaurant, anyway?

Casbah is a great Moroccan restaurant in Savannah, GA, with an inspired decor, great staff and delicious food. But you could never tell from the outside. If your sign is old and faded, and your canopy is dingy and worn, many new customers will pass you by.

To see some examples of websites and logos, read my articles, “Web Design Essentials for Small Business” and “Small Business Logo Design.”

There’s good news. Even if your business looks more like the bad than good examples, you can start making things better today. Your website might need a redesign, or your building a complete remodel, but there are small steps you can take to incrementally improve your appearance. Need some ideas? Send me an email or call me at 513.833.4203.

Marketing Podcast: Farm Marketing & 4-H

Recently, my colleague David Weatherholt sponsored a young 4-Her raising a pig. He brought her on his radio show, “Getting Down to Business”(in Anchorage on Fox News Talk 1020), to discuss the adventures of young entrepreneurialism.

This topic inspired me to do my Marketing Matters segment on farm marketing. Just like with 4-H, farms need to keep their marketing fun and creative. I’ve had some experience with marketing farms. My brother’s family owns Legacy Farms Boer Goats, my niece and nephew show animals, and several of my acquaintance are farmers. In my podcast, there are many interesting tips that you can start applying today.

You don’t need to own a farm to enjoy this show, though. I’ve included David’s interview with Grace, the 4-Her, and many of my marketing ideas apply to any small business.

Listen or download below:

Farm Marketing and 4-H

Download the Farm Marketing and 4-H MP3 file here. (15.7 MB)

Creative Marketing Campaigns for Small Business Podcast

Dave Weatherholt invited me on his show, “Getting Down to Business” to talk about creative marketing ideas for small business. What’s the most creative thing I could think to say?

“Every experience a customer has with you, they consider that marketing.”

Talk about room for creativity! If everything is marketing, then everything needs to be designed with your customer in mind.

During the show, I did offer listeners some creative marketing campaign ideas, while advising all small businesses to create a good strategy before embarking on creative promotions. Dave and I also discussed effective small business marketing campaigns and the reason for their success.

Download the advertising and promotions for small business MP3 file here. (13.38MB)