In these economic times, retailers and manufacturers are pursuing opportunities in many arenas, although these opportunities are not as readily apparent as they once were. The continued need to grow sales in a saturated, and perhaps declining, landscape where traditional technology growth levels are no longer realistic is forcing those retailers and manufacturers with foresight into more granular views of the world. That’s because, particularly in today’s challenging environment, opportunities are not always apparent at the national level. To find the bright spots - and there are bright spots - you need to drill down.
Local market dynamics can differ radically from what’s happening at the national level in several ways. In some instances, this is due to differences in consumer preferences. In others, it is the mix of competitors or retailers you see when looking at a local level versus a national level. There are often fairly powerful competitors in a given market that are far too small to appear at a national level. Pricing can also vary widely from market to market. For example, the average selling price of a 46-inch television in San Francisco was $1,533 in May, while in Los Angeles it was $1,399.
Another important measure is the quality of the stores. For example, if a manufacturer or retailer in market “A” is doing $500,000 in business and $5 million in market “B,” it might seem that market “B” is performing better. But, what if we knew that market “A” had $10 million in total category sales while market “B” had $200 million? Market “A” is actually a much more productive market for that retailer or brand than market “B.”
So what does this mean for being successful in today’s world? Marketers should focus on seeking opportunities to view the world from new and different angles, look at different demographics and customer opportunities, seek out new retailer or manufacturer partnerships, and mine for growth in regional and local market variations.
The key is establishing marketplace views to spot potential opportunities at various geographic levels and to quickly identify which level optimizes efficiency and impact. Smart decision makers will accomplish this through an analysis of several levels - national, regional market, and store, while maintaining an understanding of the cost of action at each level.
Stephen Baker is industry analysis VP at The NPD Group (www.npd.com) and can be reached at (703) 376-6224 or firstname.lastname@example.org. Follow Stephen on NPD’s blog. Follow NPD on Twitter: www.twitter.com/npdtech.