The Isolated Entrepreneur

It is very important for businesses to understand their customers and their shopping habits.

EMarketer released a great article, “College Perfect for Word of Mouth“, that summarizes several recent studies on the methods Americans use to gain information about products.

A study by Youth Trends shows that the top two methods college students use to gain information about a product are word of mouth (friends & family) and TV.

Only 29.6% of people over 65 use there friends and family for product information.

From the 2007 Center for Women’s Business Research Fact Card.

• Women-owned firms employ nearly 13 million people and generate $1.9 trillion in sales.
• Between 1997 and 2006, majority women-owned firms grew by 42%.
• 83% of women business owners are personally involved in selecting and purchasing technology.
• 2.4 million firms are owned 50% or more by women of color.

Summary of SBA, Office of Advocacy, Second Quarter, 2007: The Economy and Small Business (PDF)

Although the economy grew, small business owners and consumers have a more pessimistic outlook.

• The economy grew an annualized value of 3.4% in the second quarter - most of the growth is in net exports and private investments of non-residential construction.
• The NFIB optimism index fell to 96.0 in June and hiring plans for small businesses faded.  (The historical average for this index is 100.2. )
• The economic and business mood seems to reflect higher energy costs and the housing slow down.
• Unemployment rate is 4.5% which means businesses are still finding it hard to fill open positions.  Every industry except construction, manufacturing and retail trade gained jobs during this quarter.
• Short term interest rates stayed relatively the same.
• The current Senior Loan Officer Opinion Survey shows that the demand for small loans has weakened and banks are tightening their standards for small commercial and industrial loans.
• The core annualized inflation rate (does not include food and energy) grew 2.3%.
• The overall consumer price index grew by a annualized 5.2%.  A significant portion is due to higher energy and food costs.  The cost of West Texas crude oil was up nearly $7/barrel since March.

From WOMMA Blog,

• 19% of teens’ word of mouth happens online, versus only 7% for adults.
• 75% of teens talk about media and entertainment.
• 68% talk about recreation and hobbies.
• 67% talk about technology.
• 65% talk about telecom.
• 62% talk about food and dining.

Posted by WOMMA Editor on August 8, 2007 6:22 PM

American Association of University Women Educational Foundation recently released its new “Behind the Pay Gap” study detailing how women persistently and consistently earn less than men - even after adjusting for parenthood and occupational differences.

The Facts 

• New female graduates earn about 80 cents to a dollar earned by their male counterparts.
• After 10 years, the gap widens to 31%.
• Men not only earn more, they rise faster.

Some reasons cited by the study are possible gender discrimination and women gravitating to lower paying occupations.

Suze Orman has another possible reason - women take what is offered without negotiating.

Read more in Suze Orman’s article, “Fill in the gender pay gap by defending your worth” (Philadelphia Inquirer, July 29, 2007).

Summary of BusinessWeekOnline’s article, “The Pet Economy“, August 6, 2007.

Dogs and cats, once family pets for kids, are now popular among empty nesters, singles, and couples without kids. This shift in pet owners is important because, without kids in the household, they have money to spare.

Pet Trends

• 63% of American households (71 million homes) have at least one pet.
• Americans now spend $41 billion/year on their pets (double that of a decade ago).
• After electronics, pet care is the fastest growing retail sector (6% per year).
• Annual compound growth rate for core vet services over the last ten years is 10%.
• 42% of dogs now sleep in the same bed as their owners (34% in 1998)
• Half of all dog owners consider their pets comfort when purchasing a vehicle.
• A third of all dog owners purchase a birthday gift for their pets.

Specialized Services

• Doggy day care centers
• Doggie hotels instead of kennels
• Organic pet food and catered gourmet meals
• Braces, cosmetic surgery and artificial balls for neutered pets
• Specialized clothing for pets
• Pet Psychotherapy
• Pet cremation & funeral services

There is a of buzz about a new report by a new ScanAlert Study called “Digital Window Shopping: The long delay before buying” (get a free copy).

The study says, on average, a consumer takes over 34 hours to make an online buying decision (up from 19 hours in their 2005 study). This is significantly longer than if a customer were buying a product from a brick-and-mortar store.

E-commerce customers do research online before they make purchases. Not only do they do price comparisons, but they also seek out product reviews by experts and people who have purchased the product in the past.

This may account for some of the 60% shopping cart abandonment rate (MarketingSherpa).

Increase Your Competitiveness

• Excellent customer service reduces negative customer reviews. Bad news travels faster than good.
• Quick turnaround from customer ordering to delivery. The major corporations get products into the “mail” within 24 business hours.
• Regularly interact with your sales/customer service representatives to get feedback on what they need to better serve customers.
• Good exchange/return policy.
• Product web pages give information a customer needs to make a decision. Include product dimensions, product awards such as Consumer Reports Ranking, manufacturing warranty, product specifications/details.

Resources:

• ScanAlert study, Digital Window Shopping 2007
• Online Marketing slow to Generate Sales - new ScanAlert Study, WebMetricsGuru, July 10, 2007.
• E-Commerce Customers Today Taking Longer to Buy, StorefrontBacktalk, July 5, 2007.