I’ve been in business over twenty years and I’ve seen a lot of business models. It always intrigues me to see the difference between those who go after only the high end markets (The Neiman Marcus models), those who only go after the masses and the low end markets (The Walmart models), and those who attempt to market to both.
The Middle Is Gone
News Flash! There is nothing in the middle, really that’s just the way it is. Business is not an oreo cookie with tasty creme in the middle, instead you have a viable market at the top and the mass market at the bottom. You need to know where you are or risk being out of business. Oh, and read on to find out the pros and cons of each . . .
Good News!
Now the GOOD NEWS is that there is plenty to go around at both ends. In the case of the Walmart model there are always more people joining the mass market so that opportunity is never ending. You simply have to provide the right product or service at the cheapest price point to be able to play. They don’t care as much about benefits or features as they do about price.
Personally, I rarely make a decision based on price, instead I weigh benefits, transformational value, and even features. That puts me at the Neiman Marcus end of the market and I like to work with clients who are there too. Now, don’t misunderstand, the high end of the market doesn’t mean out of reach, it does mean that you will likely stretch yourself to get there. That is the point, if everyone could be there, it wouldn’t be any different than the low end, now would it.
The Top vs. The Bottom
The cool part about the top end is that you have to work with far fewer to make as much or a lot more money than when you work with the masses. Yes, your selling cycle might be longer, but the quality of the clientele you work with is superior and is likely to create fewer headaches than when you work with the bottom of the market. For example, professional experience has taught me that those purchasing at the bottom are incredibly needy, whiny, and often major complainers while those at the top are independent, self reliant, and fun to work with. Just my experience, perhaps yours is different. Love your comments below!
The $95 T-shirt vs. The $20 T-shirt
What woke me up to this is a recent chance meeting I had with a guy in the “apparel business.” That was his terminology and it sounded good to me. As we talked, it turned out that he was in the “t-shirt” business but because he considered it apparel, was playing at the top end, and limited his designs to create exclusivity, and he was marketing by association with high end product and personality placement, his model said Neiman Marcus.
This is in contrast to a friend of mine who has been coming up with t-shirts in the college market, mass distribution attempted, and a price point quite literally 1/3 of what the “apparel business” guy was able to get. And this friend is constantly scrambling for the next order because his margins are so much thinner.
What This Means To You
Now, I’m not saying you can’t make it big at the Walmart level, a lot of people do. I’m simply suggesting that you take a closer look at your business because I’m betting that you have the opportunity to climb on up to that Neiman Marcus level sooner than you think and enjoy more income with fewer clients, less whining, and more fun. Fewer clients means less time invested in your business, I know because I’ve done it both ways. Fewer clients, when they are the right clients, and you charge what you are worth can totally transform your business from one of stress and chasing to one of ease and delivery with passion.
As always, I value your comments, your opinions, and your models. Share them in comments here. And find me online, make it a personal invite to Facebook, Twitter, and LinkedIn.
Love this article Melissa, I know I am definitely striving for the Neiman Marcus model as I continue to revamp my business and what we offer. Thank you for the insight and always being willing to share from your own experience.
Blessings, Jana 🙂
Also Melissa, how do I put my picture up to be next to my comment? Thanks in advance 🙂
Blessings, Jana 🙂
Jana,
I’ve no doubt you will be Neiman Marcus in your market! To put you pic up, use gravatar!
Hugs, Melissa
Good afternoon, Melissa.
How timely your post is for my business partner and I. We have just launched a new service and are also new to the area in which we operate. In short we have no credibility or reputation yet to help carry us forward.
His response to this is to price our product and service very low to get the first few clients and thereby secure the necessary testimonials. My view is that this sets us off with Walmart branding. I believe there is a risk that we will earn a reputation for being ‘cheap’ by the bargain hunters, before having chance to get recognition for the value of what we do.
I appreciate his perspective, but also firmly believe we should be aiming to be a ‘Neiman Marcus model’ from the outset. My thinking is that if we offer a bargain basement service alongside the non-existent middle range model and our Neiman Marcus (priced the same as the middle range model to appear that it gives added value over both the other two), we should be able to achieve a respectable return and gain the credibility we clearly need at this time.
I might be wrong, but it seems better to me to charge what we’re worth in the first instance, than try to hike the price once we have a few clients under our belt.
Kind regards,
L
Linda,
You are absolutely right, the first few clients you accept are often an indicator of the kind you will attract in the long term, big picture. Hang on to get the right one’s in the door for your Neiman Marcus product and service!
Hugs, Melissa
Hi Melissa,
Been in the art business for decades, and these rules stilll make sense to me.
Have your base price, (time materials ect.)-then use this rule.
If you have too much stock, lower your prices, if your stock is low, raise them.
Lots of artists put themselves into their work (they can’t help it), and having a body of unsold work stifles the creative process.
Have a great weekend,
Joyce
Joyce,
You are so right and running the occasional VIP special with overstocks can generate more buzz . . never discount!
Hugs, Melissa
We are on the higher end/aspirationalish! The furniture we sell is fairly pricey however it is not as much of an investment as trademarked iconic chairs. We also have moderate to higher end “new modern” designs, American made and European. We redesigned our website when we purchased it to feel like a higher end boutique. Although some “inspired by” and reproduction furniture is by it’s name implied to be “cheap” ours is not that. We have sourced higher end and well made furniture designed in the “style of” famous architect/designers. Many consumers do not want used originals nor $4,000.00 chairs and we believe the beauty of these designs should be offered to a wide range of consumers.Our typical customer is educated, sophisticated, and has a clear sense of their design aesthetic. We do too, we want our brand to project a “coolness” factor which we reiterate daily through our blog, FB page, twitter and pinterest…etc.. We are much more then just selling furniture we are a resource for information and stories about the furniture and designers (complimentary eBooks), what’s happening internationally in architecture and green design. Having said all this, it is hard as a small business to monetize all of our efforts in this very challenging economic climate.
The surest way to leverage is with personality and character, anywhere beyond the Walmarts decisions made aren’t price only but on service, convenience, and personality. Bring that personality front and center and watch what happens. You will become irresistible and unforgettable!
Hugs, Melissa
You are sooo correct on this subject…We should all be striving for the Neiman Marcus client….BUT, it means we should ALWAYS give Neiman Marcus SERVICE. We all have products & creativity but Service is the highest value and most appreciated by ALL clients!
Service, exclusivity and an unforgettable experience! Right you are Michelle,
Hugs,
Melissa
Excellent post Melissa! The foundational principle underlying my business plan is that I make furniture that I can’t afford (yet!). That definitely puts me in a “Neiman Marcus” model! However, I have had high-end clients that were ultra-whiny-needy-bossy-rude, so your rule doesn’t hold for everyone. Have a great weekend!
Yitz,
Here’s the cool part, at the high end of the market, you can refuse to serve a client. You call your own shots. Never forget to design your business to serve YOU!
Hugs,
Melissa
Hello Melissa,
You will soon be able to own a piece of the Neiman Marcus model. The company just filed for an IPO.
I hope you’re having a fantastic day!
David
Yes David,
I heard that they were going public, kind of surprising after all these years. Be interesting to see how that impacts the company service and performance.
Hugs, Melissa
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