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Marketing and Advertising Tips That Work


We constantly hear mainstream marketing consultants and business couches say "Location, location, location...location is everything". But what if your chosen location and strategic business decisions are based, not so much on faulty data, but on faulty reasoning? Ron Williams, of the Wizard Academy issued a brain teaser in his Monday Morning Memo dated September 20, 2010. It is based on actual statistics in Austin, Texas.

In his scenario Roy stated that half the population live north of a river, and half live south. People rarely drive to the other side of the river to go to a restaurant and nearly everyone stays on their own side. People to the north are better educated, have higher home values and 64% of all discretionary income exists with people who live on the north of the river, while only 36% is found on the south.

The question is, if you are planning to open an upscale restaurant which side of the river would you open your establishment? If you chose the north side you would be in harmony with 92% of the other restaurant owners in the city, while only 8% set up on the south side. But guess what, this is probably the worst choice you could make. Beside paying higher rent on the north side, Although a person's discretionary income will determine the type of home in which they live, and the car that they drive, it has absolutely no bearing on the type of restaurant that they prefer. In fact, statistically it is about even.

So by opening your restaurant on the south side, you will be 1 in 10 upscale restaurants and share over 3.5% of all the profits generated by similar restaurants.  If, on the other hand, you opened on the north side, you are competing against 99 other similar restaurants and statistically share in slightly more than 1/2 of 1% of the pie. Assuming that all restaurants are of equal quality and price, this can make an ENORMOUS difference in the number of customers you should expect, and revenues generated, not to mention a significantly reduced overhead.

So yes, location, location, location is everything, but understand the numbers first. In this example, each upscale restaurant in the south is doing much more business than any single restaurant in the north. So which side of the river would you prefer to operate?

In reading this I immediately thought of a restaurant in Brewster, NY (Putnam County). When the place was first recommended to me I immediately thought, "why would I want to go to a restaurant in Brewster, of all places. Aren't the best restaurants in places like White Plains or NYC? When we first went there I was amazed at the waiting time. The place was packed, as it is every time we eat there. The cuisine is top notch as is the service. Although Brewster is not considered an affluent community by any standard, patrons are from local communities as well as nearby Connecticut. I am convinced that one of the reasons that it is so popular is the fact that it is the ONLY restaurant of its kind in the area, and the fact that it is located in a lesser affluent vicinity makes no difference at all. In fact, if it opened a block away from similar restaurants located in more affluent White Plains, NY or other similar areas, it would probably be less crowed as it would then be forced to share the customer revenue base with several other establishments rather than being unique for its location.

So as Roy Williams so aptly puts it, instead of chasing an illusory target customer, gather data on actual competition to determine who is doing more business than would be expected. As I point out in my article on writing and using an effective business plan, knowing your competition as well as the spending habits of your customers is vital. And once again, let me remind you to constantly evaluate your results, and seek ways in which you can gain repeat business from loyal customers. Fancy advertising or gimmicks may bring the customer into the door, but that in no way is a guarantee that they will remain loyal customers who generate repeat business and expand your customer base through referrals.


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