Marketing makes the world go round. If done well, it puts food on the table and high-priced cars in the driveways of very expensive homes. If done poorly, it drives companies into bankruptcy. So, how do you market products and retire on Easy Street?
In this article, I’m looking at various reasons why some businesses are more successful than others. I’ve drawn these marketing lessons from many kinds of companies. This information applies to almost any business. However, I’ll use examples of gemstone and jewelry marketing as often as I can. As you know, many people have written many volumes about marketing. So, I can’t cover everything. Hopefully, I’ll cover enough to make us all wealthy. (Just kidding, but you never know).
My Business Background
I have over 20 years of experience in advertising, sales, and marketing. I’ve dealt with business-to-business and consumer companies. I’ve managed marketing on the company side and also worked for advertising agencies. For several years now, I’ve owned my own ad agency and a retail store, selling auto service, parts, and tires. So, I know the difficulties of sales in small as well as worldwide markets.
About the Jewelry Business
Retail jewelry fulfills a “want,” not a “need.” You deal with customers who are usually happy and very interested in buying something for themselves or someone they care about. They’re ready to spend discretionary money, hopefully, with you.
In the auto repair business, I deal with customers who are likely not in a good mood for a sale. However, they have a true need. If their cars don’t run, they can’t get to work. No work, no money. They don’t want to spend money to keep their car running. They have to. Sometimes, they have little money for unexpected repairs. In the jewelry business, if you have the right product and make a good sales effort, the sale is usually consummated. (Sometimes, jewelry sales fall through if the customers must reallocate their money. It happens).
Some of my auto repair customers think I’m cheating them because they know very little about how cars operate. So, my store has to educate them or else the sale goes to a competitor. Earning trust isn’t easy. In the jewelry business, you have to educate and build trust, too. Everyone knows you can sell a cubic zirconia for a diamond (at a diamond price). Unless the customers check with a professional gemologist, they may never know the difference. Even with happy customers with the urge to buy, you must earn trust and build a reputation as a reputable business.
The Duh Factor: Inventories
One simple marketing rule can make or break a company. I call it the “Duh Factor,” as in “Duh! I should’ve known this.” Nevertheless, many businesses miss it. The rule?
You can’t sell what you don’t have.
Now, I know some of you are saying, “oh come on, we all know this!” Do you really? Do you know any big retailers in your area getting their lunch eaten by Walmart and other big discounters? These stores move into markets because someone else isn’t stocking the merchandise people want. If the goods customers want or need aren’t in stock, they go elsewhere. The store loses a customer, possibly for good, and revenue from a sale. It’s the “Duh Factor.”
However, there is more to it than this.
Start Your Jewelry Marketing Research
How can you balance your inventory between having something that someone wants to buy and having stock sitting on shelves for years tying up money?
If you’ve been in the jewelry business long, you should have a good idea of who comes into your store. You should know what they want and have bought merchandise accordingly. However, let’s say you want to change this. You want to go further upscale, where profits are higher. Maybe, you’ve seen areas, like selling loose gems, custom jewelry, or rough gems, where you could, hopefully, make more money.
Now, ask yourself some questions:
Can your store’s location (marketing area) support more expensive jewelry?
What’s your store’s reputation?
If you’ve always advertised yourself as the low price leader in the area, you’ll never make it in the upscale market. You’ve already cut off the upscale customers. It’s difficult or impossible (or too expensive) to change their minds. Loose gems with custom-made settings are an easier sell in jewelry marketing. Rough gems may be a different market than what you’ve known. However, with some advertising it could prove profitable.
Now ask yourself, who’s your competition in these new areas? This is probably the most important question.
Advertise Your New Inventory
If you find few or no competitors in your area, you could take the plunge and add the inventory. Hopefully, you learned what new stock to add when you lost sales because you didn’t have what customers wanted. However, you can’t just sit on the new merchandise. Let the public know what you have and offer an assortment wide enough to take care of their demands.
For rough gems, learn what buyers want by contacting gem clubs or faceters in your area. Still, you must get the word out about your new inventory. This can be expensive. Balance keeping this inventory in stock with potential profit. If you have little experience with rough gems, calculating this will be both an educational opportunity and a gamble.
Extending Your Inventory Lines
What if you’re doing well within your business area but want to make greater profits? Try extending your inventory lines. Offer the same pricing structure but with a greater selection. You obviously know what your customers are buying. However, you can make your gemstone and jewelry marketing more effective. Keep track of what you’re selling, to whom, and what geographic areas you’re serving through a database and analytical software.
Learn From Your Inventory
At this point, maybe I’m confusing you more than helping. I wish I could just tell you to order certain kinds of gems, like lab-created emeralds, in certain sizes. Unfortunately, I can’t. You must realize, if you’re losing sales because you don’t have the merchandise in stock, you need to reconsider what you’re selling. Track requests for items you don’t have in stock. Weigh the profit potential of this merchandise to determine whether you should carry them.
Stocking tire sizes and types for my store is always a headache. I could tie up thousands of dollars in tires that might not sell because the car producers decide a particular size isn’t the right size for their cars anymore. Fortunately, there are many wholesalers in my area. I’m able to carry a minimal inventory, and experience has taught me what sizes to stock at all times. If I need an odd-sized tire, like one for a Corvette, I could easily have it within an hour. I make less profit on it because I didn’t order it direct from the manufacturer. Still, considering the carrying costs for a very expensive tire like this, not stocking it was an easy decision.
I’m assuming gem and jewelry wholesalers are not as common as tire wholesalers. However, if you have them in your area and they give excellent service, this might be an option for you. Carry a good and diverse assortment of pieces, but only one of each if you can replace them quickly.