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  July 18, 2014
Business for 5th Graders Part II...

 


"People rarely buy what they need... they buy what they want" 
                                                 ~ Seth Godin

Last week I wrote about speaking to my son’s 5th grade class several years ago regarding what it is that I do during their career month (click HERE to re-read last week’s blog).

After much thought and deliberation (but mostly fear), I determined that what I do is, for the most part, really boring and hard to describe...

It was then I decided lemonadeto try and teach these 10-year old kids about the general nature of business in terms that they could readily understand... a lemonade stand business...

For the most part, business is really simple (at least in theory... as we all know... it is MUCH harder in practice). 

There are 6 basic core competencies in any successful business:

  1. You make something or provide some type of service
  2. You locate potential customers and/or help them to find your business
  3. You sell whatever it is that you make or do to those potential customers
  4. You hire and train other people to help you
  5. You measure things and keep records
  6. You acquire capital to help start and/or grow your business 

In last week’s blog... I discussed the concept of making something or providing a service.

This week, I want to talk about the next two items on the list - Marketing and Sales (items 2 and 3 on the above list).

Marketing and sales are indeed related, but for the most part, they are two separate and distinct concepts (although a lot of companies will make the mistake of lumping both of these jobs together... in the same way that they believe that sales and sales managers use the same skill sets).

You locate potential customers and/or help them to find your business

Although there are many different facets of marketing, marketing is essentially about locating customer and/or helping potential customers find you.

The first thing that needs to be established is to readily determine who your potential customer is. 

You make a product or offer a service.  Now you need to figure out why someone might want/need this particular product or service.  

Does your product or service fill this want/need and what benefits/value does it offer your potential customers?

At our lemonade stand, we are 5th graders who manufacture and serve lemonade.  We have two distinct types of potential customers: 

  1. People who are thirsty
  2. People who want to support a business venture of a 10-year old entrepreneur 

Our lemonade stand provides products and services that might meet the needs of both groups of potential customers.

Once we established who our prospective customer is, we then need to find a way for our prospect to easily find us.

This could be through media advertising, catalogs and mailings, social media, finding a location that is easily accessible (if the business is a retail "brick and mortar" business), search engine optimization (SEO) and/or key word searches.

The key is finding a method that works for your business model.  Try one approach and then another... see which one works best... keep the one that works best... then try yet another and see how it compares to the winner.

In any business, there are multiple channels to reach out to potential customers... the important thing is not so much the channel but rather the message.  

Remember... these are customers you’ve identified that have a need for your product or service... your message needs to convey to the customer that you have a solution to satisfy their needs.

Once again at our lemonade stand, we decide that in order to allow potential customers to easily find us is to locate our stand near thirsty people and people who would want to encourage a small business enterprise by a 5th grader. 

For our stand, we choose a location near a tee box of a public golf course where business men and women might play golf on the weekends.  In the heat, they most likely would be thirsty (meeting criteria #1) and being business minded people, would most likely encourage sprouting entrepreneurs.

We paint a series of bright signs asking the question "Thirsty... Ice cold lemonade at hole 13" and place them strategically at holes 11 and 12 so they can be easily seen by our potential customers...

Lastly, a price needs to be established for your product or service.

Pricing is determined by how much competition there may be for those same potential customers and how much value does your product or service provide to your customers.

The greater the perceived value delivered... the higher the price you can ask for your product or service.

Conversely, if your product or service is widely available by lots of competitors with little or no perceived value for your particular product or service, then the less are you able to charge your customers.

At our lemonade stand, there isn’t another opportunity for golfers to buy a cold drink for several more holes.  Your lemonade is high quality (fresh lemons) and is ice cold.  Your competition (the snack stand at the clubhouse) charges $1.50 for a glass of lemonade.  You decide that you can charge $2.00 since your lemonade is a better quality and is conveniently available.

You sell whatever it is that you make or do to those potential customers

Although selling is closely related to marketing, they are not the same things. 

If marketing is about finding potential customers and helping those potential customers find the business, then sales is about helping to convert prospects into customers and then customers into clients by establishing a relationship of need gathering and solution provision.

Sales opportunities are established by asking probing questions of the prospect to determine what particular needs, wants, and/or desires the prospect may have.

It is only after establishing what the prospects needs are, does a salesperson describe a potential solution to the prospect.

Sometimes, the prospects may have certain needs that cannot be met by the company.  By establishing a trust relationship, the professional sales person will always act in the best interest of the customer by recommending solutions that meet the prospects needs... whether or not those solutions can currently be provided by the company. 

These lost opportunities could potentially lead the company to offer additional products or services.

At our lemonade stand, our 5th-grader, after exchanging pleasantries, asks the golfers a few simply questions: 

  • Are you thirsty?
  • Do you like lemonade?
  • Would you be willing to help a young entrepreneur?
  • Did you know that there are no opportunities to purchase a cold drink for several more holes? 

If the golfers responded positively to any of the above questions, then our young lemonade stand operator will describe their product and the corresponding value to the prospect. 

  • My name is Brandon and I’m in the 5th grade at Washington Elementary.
  • I’m raising money to go to camp this summer.
  • I am selling home-made lemonade that I’m sure that you will agree tastes great
  • It is ice-cold and is guaranteed to satisfy your thirst
  • It is available now instead of having to wait several holes. 

At this point, the golfer will either buy a glass of lemonade, ask for additional information (such as the price or inquire about other types of products), or offer an objection (such as the price being too high or the prospect wanting another solution - perhaps a cup of coffee).

The value is long established with the prospect before price is even mentioned.  The lemonade isn’t the lowest price drink on the golf course but it solves the greatest need at the time.

Sales is also understanding objections and helping the customer to find solutions.

Whereas marketing is about bringing prospects to the lemonade stand (or in this case... bringing the lemonade stand to the prospect)... selling is about making sure that the prospect buys a glass of lemonade.

Both marketing and sales are essential for a successful business enterprise to work but are comprised of very different components. 

Thank you for your support of OptiFuse where we believe that knowledge is power...  

 



Jim Kalb
President

Email -  jimk@optifuse.com
Website - www.optifuse.com
Blog - www.optifuse.blogspot.com 

Twitter - @OptiFuse

Previous Blogs

Business Fundamentals for 5th Graders...

5 Books For Your Summer Vacation...

Riding With Purpose...

A Great Place To Work...

Don’t Be Such a Tool...

Thinking Globally... Acting Locally...

Someone You Can Trust...


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