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Marketing on the right side of the road
8/12/2010 9:07:44 AM

Photos: left - Clay Blackburn. Right - David Peters
Has this ever happened to you?  You are driving down a road and notice that on the right side of the road there are businesses that seem to be thriving. There are cars in the parking lot, people moving in and out of their doors; all the signs that commerce is happening. However, on your left, just across the street from the thriving commercial center, there are all the signs of failed businesses. Buildings are for sale or lease. Weeds are growing in the cracks in the sidewalks. It is deserted.

  How can one side of the street be buzzing with life and the other side is rusting into oblivion? All due respect to my friends in real estate who are chanting in unison, "location, location, location” but I believe there is a basic marketing principle at work in these kinds of situations. I would say that choice has more to do with which side of the street thrives and which side fails.

Several years ago, I was working with the food service and hospitality industries when fast food franchises began to move inside gas stations. The idea of the convenience store along interstate highways expanded to include a food court. At that time, franchises such as Subway, McDonalds, Taco Bell and Pizza Hut were opening inside these fueling stations. Here is an interesting thing that happened. If a convenience store (we’ll call it C-store #1) was the only store at an interstate exit, and the next exit had three other C-stores (#2, 3 and 4)  with the same basic offerings, C-stores #2, 3 and 4 would each outsell C-store #1. Even though #1 had a captive audience and no competition, it would under-perform. Why? It has to do with perceived choices. If my competition is sitting across the street, the consumer has the power of choice. You may not be keen on the fact that the customer can choose either you or you competition, but hear me out. They can always choose between you and your competition whether you are across the street or at the next exit. The question is, will you even be considered as a possibility when you are perceived to be the one and only choice? Probably not. When you empower your customers with choices, they are more likely to spend money with you than when they are left with a single choice.

Choice is something we have grown very accustomed to in an affluent capitalist society. In fact, we have become so accustomed to it, we find it odd when choices are limited or non-existent. Thus, when you allow the customer to make some decisions about your product, you have a better chance of making a sale. In the case of C-stores, the more choices there were, the better everyone did in sales. In fact, in the next generation of C-stores, Yum! Brands began to put a choice of three restaurants in one store when they paired KFC, Taco Bell and Pizza Hut. Choice is a powerful marketing tool.

What goes into choice as a marketing tool? Let’s go back to the left and right side of the road. What caused all of the businesses on the left to shut down while their counterparts on the right side of the road thrived? For one, I would say that consumers tend to segment shopping areas from one another based on their convenience. They don’t see both sides of the road as one area, but two. If there is any inconvenience to the consumer in an affluent society, they will pass you by. They can purchase what you have somewhere else. Convenience is a factor in making choices. This can be pretty petty too. If I have to sit at a stop light for longer than one minute waiting to turn into a shopping center, I feel like my time has been violated. If I can easily maneuver my vehicle into and out of the shops on the right side of the road, I will choose them over the left side shops. How long will you wait at the light before you think this is a major inconvenience and choose the other side of road?

Another impact of choice is perceived value. In the mind of the consumer, there is a cognitive value or devaluing of one business over another based on its neighbors. (Yes, I hear you once again real estate friends!) When the first business closed its doors on the left side of the road, it had an impact on the judgments that buyers made about the other businesses surrounding its location. Choice has been limited by one. Pretty soon, dollars start crossing the street where choice is plentiful. Limiting choice always devalues a business in the judgment of the buyer. That is why it is very important to be seen in your marketplace with other players. You might not be operating a retail operation in a strip center, but you need to have a presence with your customers in the arenas where others are seen. If you are perceived to be operating on the right side of the road, your value as a company goes up. It is all a part of marketing choice.
 

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