Monday, June 29, 2015

Bulk Up on Chunky Outliers

Statistical outliers are data points that don’t fit in with the majority patterns. It might be the group of consumers in a National Retail Federation survey who say they purchase gifts well in advance of need. Or it could be the shoppers in a sporting goods trade publication report who say they’re having trouble finding lacrosse equipment. When that group is statistically chunky—the frequency is high enough, even if not large—it could be a niche market for the small to midsize business, and targeting to a niche is how many such businesses thrive when competing against larger ones.
     Be sure your niche is defined by what shoppers want. That sounds obvious, and it is. Still, I’ve seen retailers fail because they choose as their niche something they enjoy doing, failing to sufficiently attend to the preferences of their target populations.
     Update your niches whenever necessary. Consumers are drifting from the general to the specific, from the one-size-fits-all to the specialty and the customized. In introducing niches, reach out with a line extension and then pull in and eliminate your weaker lines. Avoid abrupt changes in your merchandise mix unless one of your niches is itself defined as always having something new for the customer to consider, as Grocery Outlet and Cost Plus World Market do.
     To bring what you love to offer your marketplace closer to what the marketplace wants, cultivate the desire for the niches. Show customers what you think they should be hungry for, then evaluate how thoroughly they buy your pitch and your products. As you do this well, you’ll be creating your own chunky outliers.
     If you’re looking for chunky outliers in data sets compiled by others, be sure to explore what’s behind the numbers. One of my favorite examples of the reason for this comes from a BloombergBusiness article that said Deutsche Lufthansa AG’s Frankfurt airline facility transported 110 million animals in one year. This was more than the 106 million people carried by all Lufthansa units together during the same period.
     Is the airline primarily an animal freight company? Not really. Of the 110 million, 80 million were tropical fish. That leaves dogs, cats, and race horses. Yet less than 2% of Lufthansa’s total cargo revenue comes from transporting the creatures, and cargo revenue is but a part of the airline’s total. 
     Lufthansa can accurately say they’re primarily a passenger carrier.

For your profitability: Sell Well: What Really Moves Your Shoppers

Click below for more: 
Define Your Niches by Your Shoppers’ Desires
Reflect Carefully on Marketing to the Mirror
Explore What’s Behind the Numbers

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