The Art of the Very Small Start: Part 2

So from Part 1 we really get a gist of the direction of where digital businesses are moving.
If we use Crowdsourcing, which is a way to generate ideas and source for labor, and The Long Tail Effect which tells us that people buy niche products almost as much as mainstream, as a basis for our discussion we can now proceed to flesh out a product marketing plan for the new Web 2.0 environment.
To further solidify my discussion, I will also sprinkle this discussion with examples on how I applied this analytical thinking to my small entrepreneurship project the iPoor T-Shirt and iPoor product brand.
It’s amazing but I always find what you learn in school still applies today. I suppose I was awake eh?
If there was any take away from my marketing class, they were the 5 “P”s, People, Product, Price, Promotion, and Place (distribution). Till this day, I still apply such fundamentals to my design work, and I will do it again here.

People

Always know your market. Personally as a designer and entrepreneur, I find this is the most important category. Thus it’s the first order in any marketing plan.
Most people come up with great product ideas but have no idea how or who to sell the product to. Let me put it straight to you, you don’t earn anything if nobody buys your product, period.
Understanding your customer’s view on consuming behavior, product selection, likes and dislikes, needs and wants, spending power and even web surfing habits are powerful indicators on how you can tailor your product to them.
With the internet you can even afford to conduct super focused marketing and creating products that fit 100% of their needs. But do note the more specific a tailored product the smaller the volumes so you will need to balance it some how.
My iPoor T-shirt is targeted at a group of design savvy people that appreciates a clever design and the deeper meaning it entails. When looking at the Cult of the Mac, my target market are often in the peripheral looking in and may or may not own an iPod. They are internet savvy and because of that, they are well aware there is another world out there other than that of Apple’s viewpoint.

Product

So by knowing your market or the people that you want to sell to, you can now comfortably define your product.
It is not necessary to identify your market first then your product. You could do both concurrently. You could create a product idea first and then refine it or adjust it back and forth until it meets the needs and wants of your target market.
However if we are looking at in a frame work of a “Small Start”, one of the first things we need to look at is a product that is easily sourced and made. There is really no point looking at revolutionary products that will re-invent the wheel as you don’t want to kill yourself by high risk capital investment.
Of cause if you have the financial capital, by all means, but in “The Art of the Small Start” simple products like cups, mobile phones, MP3 players, T-shirts, buttons, prints, scarves, iPod accessories etc are great products to get yourself going.
The trick here is the differentiation factor. What makes your product different from the others out there? Determining this is perhaps is the most difficult part.
Is it a clever idea, a cool looking design, or even something cheaper than the competition?
iPoor was conceptualized as a design that used simple graphics but applied it in a form of a gestalt illusion that is not common in T-Shirt designs in general. That was the main appeal of the product.
At the end of the day, you need to ensure that you are able to source or manufacturer the product to your requirements. Thus again, this supports my list of examples above as almost all are easily obtainable in some way.

Price

There is a certain level of “bootstrapping” in regard to “The Art of the Small Start”.
Therefore product cost and cash flow is very important, you need to carefully calculate all manufacturing and purchasing cost. Also you need to ensure that your margins are comfortable enough for you to survive. Dont forget your break even point.
The trick here is though you need to work both ways, you cannot just flog a product based on cost + your operating markup. You need to know your customer well and the type of pricing he or she is willing to pay for what you are offering.
This is really where Crowdsourcing can help. Your “Crowd”, which you know best, determines the price they are willing to pay and will let you know some how. Or better still, like with what I did with iPoor, I priced the T-Shirt at a lever lower then what my “Crowd” was willing to pay.
At this point in time you might be thinking how T-Shirts of cups are going to make me millions? Think again.
From The Crowdsourcing Blog on Pure, Unadulterated (and Scalable) Crowdsourcing just look at the combined product and pricing strategy of Threadless:

Threadless is a perpetual, online T-Shirt design competition. Artists submit their designs; users vote on them; the highest-rated designs are printed and sold back to the community. Simple. Brilliant. Most importantly: Ridiculously cost-effective. When I talked to him this morning, Threadless Creative Director Jeffrey Kalmikoff told me the company is selling 60,000 T-Shirts a month, has a profit margin of 35 percent and is on track to gross $18 million in 2006. This, for a company with fewer than 20 employees. Crowdsourcing can be very good business indeed.

Promotion

The internet is responsible for the paradigm shift of power from big name manufacturers to mini-product entrepreneurs.
The internet has allowed almost pin-point advertising and promotion to target users. This allows the “small fishes” to apply Niche Guerilla Marketing strategies more efficient than ever.
One of the interesting aspects of the internet is the power of web communities. That’s why myspace.com was worth so much to News Corp.
The lynchpin of Crowdsourcing, web communities, are a bottom up approach to building your business. Focusing on creating a community buzz is extremely relevant in today’s modern internet marketing strategies.
Many companies don’t get it, but digital business today all have strong web communities which further allows the companies to have an intimate knowledge of their prospective buyers. Other benefits include test marketing of new products are virtually free!
This leads me to talk about that “other” community, the blogging community. Blog marketing or viral marketing is done best when it’s genuine. As an example when iPoor was posted on my blog, the “link love” I received was amazing. It even got me a slot in the Sydney Morning Herald’s Domain section on new and notable products. My product moved from internet into a real life publication.
Nothing beats Viral Marketing, and did I mention it’s free?

Place or Distribution

I like to complete my discussion with the 5th “P” which is place or distribution. In other words how on earth are you going to get your product to your customer?
Also if you recall in the “Product” section, we selected products that were small, easy to sourced and handle? Well the main impact of this in “The Art of the small start” is the cost of inventory and distribution. We need ensure that we reduce inventory cost as much as possible.
From Guy Kawasaki’s great post on the tactical implementation of the Long Tail he describes succinctly:

Near-zero inventory carrying costs. If you plan to sell a few units of lots of things it can’t cost you much to keep those things in inventory. This is separate from the cost of production. It might cost Ferrari a lot of money to make cars, but if it will consign them to you for free, what do you care?
Actually, you do care: there’s warehouse space, insurance, and shrinkage. Even digital content like music, movies, ringtones, and photographs require bandwidth and storage. Not only must the product be cheap to make, it must be cheap to keep in inventory.

In our case as we are selling tangible products, there will always be somekind of inventory. For me I did a limited run of 100 Pieces of iPoor T-Shirts that when delivered only takes up about 3 Feet by 1.5 Feet high stack. Perfect for tucking under my son’s cot!
One down side though in “The Art of the Small Start” is you will have to man handle every single piece of inventory you sell. You will need to lick every single stamp, and seal every single padded envelope or box. Nobody said it will be easy, but if you are like me, I enjoyed every single step of the process.
I wish you all the best in setting up your “Small Start” in entrepreneurship! The best part is I now have funds to roll into my next venture. The best things in life come in small packages!
If you have any more questions, please do not hesitate to leave a comment or email me. I’m no expert but I love to share and swap stories.

4 Comments
  • Singapore Entrepreneurs

    August 8, 2006 at 11:58 pm Reply

    The Art of the Very Small Start: Part 2…
    Continuing from our resident contributor, Design Translator’s earlier post on “The Art of the Very Small Start”, he will finally unveil his cards and tell us about the new venture that sprang off from a blog entry. Of course, if you…

  • Martyn

    March 1, 2007 at 2:26 pm Reply

    Nice read on how to start a long-tail model.. Did you manage to sell all 100 pieces of the iPoor T-shirt?

  • Design Translator

    March 1, 2007 at 6:22 pm Reply

    Hi Martyn,
    Thanks for the kind words, yes I did manage to sell them all. It was hard work, as I mentioned in my post, the down side of such long tail businesses is logistics, i had to send each and every one. Put it this way, I am now great friends with people at the post office!

  • envelope seal

    June 27, 2007 at 9:24 am Reply

    envelope seal…
    I found it very useful. Thanks for the knowledge. I am personally trying to follow the advice & try to be independent….

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