A basic lesson in business from the Apprentice.

So the Apprentice is back on our TV screens and with it the usual lessons in how not do do business! The first episode saw the teams challenged to buy fish at Billingsgate market and to sell it at a profit, the group that made the biggest profit would win. This is a basic business principle that every would be entrepreneur should be able to master but one group failed miserably. I think there are three key lessons that every business owner needs to remember:

  • Buy at the right price
  • Control costs
  • Be where the customers are

Buy at the right price

We saw the losing team manager buy a significant amount of fish from the first supplier they spoke to at the price the vendor wanted to charge! We should always shop around or at least know the market rate and then haggle. If you know what others are charging for an equivalent product you have a good starting point for your negotiations.

Control costs

Having bought their fish at an inflated price our losers then went on to make the most enormous fishcakes ‘because that’s what the specification said’. This meant that they couldn’t keep their costs down to the level where they could make a profit. It’s a mistake I often see in start-up businesses. Every time you add a little extra this or that your profit margin is compromised unless there is scope to put up your prices to cover the additional costs.

Be where your customers are.

2015-07-21 21.49.11

There’s a time when people want to eat lunch and a time when it’s too late. Lunch has to be ready when your customers want to eat.

Probably the biggest mistake that our hapless losers made was taking too long to prepare their dishes so that they missed the lunchtime trade. You can’t make money when no-one wants to buy. Could you be guilty of taking too long to get to market with your idea because you want it to be perfect or because you aren’t prepared to invest in the help that will get your product or service out there? It’s an easy mistake to make but a good product delivered on time will make more money than a perfect product launched when the market has already been satisfied.

Did you spot any more lessons in this episode? Why not share them here?

I’m sure I’ll be returning to the Apprentice for more blog posts in the coming weeks that is if they don’t drive me to mad first!

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Another classic marketing lesson from the Apprentice

A product may need to appeal to both the consumer and the customer. Here the customer is advised of the lower fat content whilst the consumer is reassured by 'the same great taste'

A product may need to appeal to both the consumer and the customer. Here the customer is advised of the lower fat content whilst the consumer is reassured by ‘the same great taste’

Regular readers will know that I frequently find inspiration for these blog posts in the Apprentice and the latest episode is no exception. The task was to create and brand a ready meal product and then to pitch it to three leading supermarket chains. The team that lost appeared to have the better product, so why did they lose? They lost because they made the classic mistake of confusing their consumer with their customer!

The customer and the consumer may not be the same person; we need to appeal to both.

Alex’s team decided that they wanted to make a healthy ready meal for children. Nothing wrong with that as an idea, where it went wrong was that they focused their branding entirely in appealing to children. They called their brand ‘Deadly Dinners’, described it as ‘Horrible Healthy Food’ and offered it in black packaging typical of a Hallowe’en product complete with a skull and a ‘bloody’ font! The focus group of primary age children loved it. But…

Who is the customer?

Who buys food for the kids in the supermarket? That’s right, it’s Mum. What mother is going to buy a ‘Deadly Dinner’ for her precious offsprings? I can’t be the only mother who has struggled to get her children to eat healthy food so I’m certainly not going to buy a brand that re-enforces my children’s perception that healthy food is horrible. The supermarkets know that too so they are not going to give shelf space to a brand that mothers won’t buy.

What’s the difference between a customer and a consumer?

The customer will make the buying decision but may not necessarily be the user of the product or service, that is the role of the consumer. So when your customer and consumer are the same person life is straight forward, it gets more tricky when your customer and consumer have significantly different interests.

This is often the case with products for children which are usually bought by parents or grandparents whose primary concerns are going to be around health, safety and education. A child, on the other hand, is going to be most interested in fun and entertainment and is it cool.

But products for kids aren’t the only ones that are affected by a difference between the customer and the consumer. How many husbands have bought their wives sexy underwear only to see it exchanged for something more ‘sensible’? How many purchasing departments have made decisions based on value for money only to have the purchase spurned by the users because it doesn’t do the job properly?

Appealing to both consumer and customer 

To return to the Apprentice for a minute. Alex’s group snatched defeat from the jaws of victory. Alex had had an idea for a product that taught geography by introducing food from around the world. That idea could have been made to work for both the consumer and the customer. Parents would have liked the educational element and if the packaging had been made fun, perhaps by borrowing ideas from Innocent Smoothies, the kids might have liked it too. That’s the win-win of appealing to both consumer and customer.

‘So who do you need to appeal to?

Are you appealing to both the consumer and the customer? Do your marketing materials appeal to both consumer and customer? Would your sales increase if you adapted your pitch to address the interests of both groups?

Is it time to shut up and listen?

This week Zeeshan Shah heard the inevitable words, ‘You’re Fired’ as he was booted off the BBC’s ‘The Apprentice’. Few disputed Lord Sugar’s decision. Shah had to go because he was the Project Manager on the losing team. His team lost because Shah knew it all and was too arrogant to listen to other people’s ideas. The episode really brought home how important listening skills are in business.

Line art of a screech owl.

A wise owl knows how to listen.(Photo credit: Wikipedia)

You probably know the poem:

“A wise old owl sat on an oak;
The more he saw the less he spoke;
The less he spoke the more he heard;
Why aren’t we like that wise old bird?”

The wise old owl knew a thing or two about listening. Listening is such a vital skill it’s worth making an effort to perfect it. If we don’t listen effectively how will we understand our customers, our prospects, our staff or our nearest and dearest?

As American chat show host Larry King said, ‘I never learned anything whilst I was talking.’ So why do so many people think they need to talk all the time? Try talking and listening at the same time, it’s even more difficult than rubbing the tummy and patting the head in unison! What right do we have to do all the talking? I get particularly cross with those people who ask a question and then carry on talking without waiting for an answer.

Effective communication is a two way process and in most instances it requires active participation and an exchange of information by both parties. Listening effectively is hard to do. According to research we think at between 500 and 800 words per
minute and yet we speak at just 125 to 130! The natural tendency is to let our brains wander instead of listening properly. We might be contemplating what we’re going to eat or do in the evening; we may be thinking about our shopping or to do lists; we may be planning our response. We may be thinking that the speaker is an idiot! Whatever else we are doing we are not fully concentrating on the message.

We may also fail to listen because, like Zeeshan, we think we know it all, that we have nothing more to learn. Wrong! There is always something we can learn. Sometimes we need to be reminded of something we once knew but have forgotten.

If we don’t focus on our listening we can miss something really important. It might be the clue that allows us to make a big sale. It might be a cry for help. It might be our light bulb moment. But if we’re not listening we’ll miss it!

The advantages of developing acute listening skills are tremendous in life in general and in business. Very few people are really good at listening so an exceptional listener can give a business a competitive advantage. It is by listening carefully that we know what our customers really want and can tailor our sales pitch to show them how we can deliver. It is by listening carefully that we can hear the message our staff want us to hear and take appropriate action before a major problem develops. It is by listening carefully that we can spot business development opportunities.

“I like to listen. I have learned a great deal from listening carefully. Most people never listen.”

Ernest Hemmingway

So I’m off to listen with a bit more care and attention. I wonder what new discoveries await me? What about you, will you spend just a bit more time listening?

The Apprentice and the 7Ps of the Marketing Mix

So the Apprentice is back on BBC TV here in the UK and amid the egos and the back stabbing there are already plenty of business lessons in evidence. There are so many fundamental mistakes that I wonder how many, if any, of the candidates have ever considered any basic business concepts.

Pale Ale

Today’s task was to design and sell a new beer. Pale Ale (Photo credit: Wikipedia)

Today’s episode showed the two teams charged with developing, marketing and selling a new flavoured beer. The team which made the most money would win. This was a great task in that it required the application of all of the 7Ps of the marketing mix:

  • Product
  • Price
  • Place
  • Promotion
  • People
  • Process
  • Physical Evidence

So let’s see what we can learn about the 7Ps from today’s episode:

Product:

One idea that Team Evolve considered was a beer for the female market. Fortunately the women in the team quickly made it known that that was a bad idea. Women do not drink beer in large enough quantities to support a beer designed for that market, those who have tried have failed.

Lesson: Our products must always be something that enough customers will want to buy often enough for us to stay in business.

Price

Team Endeavour tried to sell their beer at a premium price at a St. Alban’s beer festival when all of their competitors were undercutting them. Whilst there was some logic to their strategy given that their bottles would potentially be collectors’ items  ultimately this decision probably cost them sales. On the other hand their starting point in trade negotiations was too low in comparison to their cost price leaving them with little scope for profit when the trade buyers negotiated hard.

Lesson: Expect trade buyers to be tough negotiators and be really aware of your cost price and margins. Start high enough to give you room for negotiation. If you are going to charge a premium price for a product make sure that prospects understand and want the added value.

Place.

Team Evolve lost because they didn’t sell in the right places. They relied too heavily on a pub based beer festival where their just weren’t enough customers and then moved to a wine bar on the river. Really! If people wanted to drink beer they wouldn’t be sitting in a wine bar.

Lesson: The right location is vital. You have to be selling where there are enough of your target customers with money to spend. People will not go out of their way to buy from you.

Promotion

Promotion wasn’t a key test in this episode and, with professional help, both teams came up with decent branding ideas for their product. However I have to wonder about the wisdom of calling a beer ‘A Bitter this’, plays on words can backfire. Team Endeavour did recognise that punters at the beer festival might be willing to pay a premium price for a bottle of beer which would be likely to become a collectors’ item.

Lesson: Get professional help with branding. Understand your target market and promote your product to meet their needs and interests.

People

Both teams had dissent in their ranks. I suppose that is inevitable in a competition where there can only be one winner but internal arguments gave potential buyers a very bad impression of each team and in some cases allowed buyers to negotiate even harder.

Lesson: People buy people. Everyone in a customer facing role has to be professional and a team player. Ground rules and operating procedures must be agreed and adhered to by all team members and debates and arguments kept away from customers and prospects.

Process

In fairness, when teams are developing product for a one off sale there really isn’t a lot of process involved. However one team did recognise that their trade customers would want pump clips to advertise the beer and provided them.

Lesson: Process is about setting up our businesses to serve our customers easily and without delay. It’s about recognising their needs and meeting them.

Physical Evidence

How can you expect to sell barrels of an unknown beer to the trade without offering the buyer the chance to taste the product? Yet this is what team Endeavour tried to do. They went on a selling mission without samples and unsurprisingly were treated with disdain.

Lesson: Buyers want proof. They buy with their senses, sight, smell, taste, touch and sound. Samples are vital. Where people can’t sample the product, for instance when buying on the Internet, then testimonials and guarantees are essential.

So there we have it, a complete lesson in the marketing mix from one episode of the Apprentice. It will be interesting to see whether the candidates will have learned these lessons as the series develops. Time will tell.

It’s not a good idea Melody!

Did you watch week 9 of the Apprentice on BBC1? It was another pressurised task to develop, brand and pitch a new biscuit in two days. Yet again there were a number of lessons in business.

As part of the task the teams were allocated a focus group with whom to test out their ideas. Tom suggested an ’emergency biscuit’. It bombed. He dropped it. Melody suggested the new ‘popcorn’. It bombed. She said the focus group didn’t know what they were talking about!

Last week Melody pushed through her idea because four people agreed with her. This week she said 11 people didn’t know what they were talking about because they rubbished her idea.

Melody’s mistake is one we can all make. We get an idea. We think it’s great. We nurture it. We develop it. It consumes all our waking thoughts. Then we research it and people tell us it won’t work, they don’t like it, they wouldn’t buy it and we don’t want to listen. But listen we must. An idea is not a good one just because we think it is!

There’s not much point in research if we don’t listen to it. If people don’t like our idea we need to find out why. By asking questions and being open to the answers we might well find we can adapt our original idea into a much better product or business.

So Melody start listening to what people are telling you and take note or the next thing you’ll hear is, ‘Melody, You’re fired’! And if you have a great idea just make sure your target market agrees with you or you could be pouring money and time down the drain.

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