The Science of Trade Marketing – Issue 2: Customer Census and Classification

First You Find Them
Customer Census is exactly what it sounds like. You are basically taking the strategy you defined at the beginning of this process and using it to determine what your desired customers and prospects might look like. This is, essentially, the potential customer universe for your company. Since you now know what the customer you want looks like, it’s up to you to gather them together into a common platform. This is Customer Census.

There are a number of sources you can use to source your customer list. The obvious first choice would be internal company records of existing customers or prospects. Another good source for potential customers is syndicated, or standardized external, data from a reputable source such as Trade Dimensions or Dun & Bradstreet. It’s important not to discriminate during the Customer Census process. All you’re trying to do is identify the full customer universe, in its entirety, which potentially fits your strategy. You can exclude those customers that represent less opportunity later on during the Trade Coverage Planning process.

Then You Classify Them
Customer Classification is, in short, the process of applying a set of common attributes to all the potential customers in your customer universe. These attributes can be standard to your industry or they can be unique to your company. The important thing is that these attributes will be meaningful to your company and can be used later on to define the relative value of one company in your universe versus the others.

Following are some examples of key attributes you might apply during Customer Classification.

Volume – How much do they purchase or sell in units?
Dollars – How much do they purchase or sell in dollars?
Control – Is it a single entity (independent) or part of a larger corporate or buying group (chain)?
Channel – What trade segment would they fall into (e.g. Food, Drug, Mass, Hardware, etc.)?
Customer Type – Is it a wholesale, retail or buying office type location?
Customer Status – Is it a current customer or a prospect?
Next Steps
There are many potential attributes to choose from and they can be revised periodically based on changes to your business. Whatever attributes you decide on, however, should be associated with the specific customer records in your customer database. These records will be the basis for segmenting your customer universe during the next step in your Trade Marketing planning process. It is now time to move on to that next step in the process, called Trade Coverage Planning.

John is the President of the Frontera Marketing Group, a full service agency in eastern Iowa offering advertising, design and web development services with emphasis on Search Engine Optimization (SEO) and Social Media.

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How to Buy Wholesale Merchandise

When buying merchandise to resell, you will be dealing with wholesale products or surplus products. There is a big difference between these two. If you are running a wholesale business, you will increase you chances of profitability by learning how to buy wholesale the right way. If you are using wholesale products, you are more than likely marking up the prices. After all, you are in business to make a profit right?

To be successful in the retail business, the key is to offer the right type of merchandise, at the right price, and with the right timing. It is so important for your business to find great sources for your product. Once you have decided on what product to sell, you need to locate the best source to buy wholesale merchandise.

Before you start to buy wholesale merchandise to resell, it is a good idea to visit one of your competitors or another place of business that sells a similar product line to yours. Check out their selection and see what brands they carry. What seems to be selling well for them? Check out what items are on the clearance rack. If you choose to visit a store that is far enough away from you to be considered a competitor they just might be willing to share their sources with you. You can often times find product to resell online, by joining a buying group or by going to trade shows.

One of the best places to buy wholesale merchandise is at a trade show. You can find many different suppliers within your market, and see their products. To find an event near you, search online for trade shows within your industry. These shows are not usually open to the public so you need to be ready to show your retail certificate, tad id, or some other proof that you are an established business.

Once you actually open your business, it will be quite a bit easier to buy wholesale merchandise to sell, because the suppliers will be coming to you for your business, not the other way around. Your customers comments will also be helpful when they tell you what products they would like to see you sell in your store.

Types of Suppliers

Manufacturer – Sometimes a manufacturer will sell their products directly to a retailer for wholesale prices. They will usually do this in larger quantities, or they may have a higher minimum order. If there is a certain product that you want to sell, you may want to contact the manufacturer directly and find out if they will sell to dealers. If they do not, you can ask them which distributors they sell to so you will know where to get them.

Importers – With the global economy, it has become much easier to import products than it used to be. You can buy merchandise from the importer or directly from a foreign company. Keep in mind, before you use this type of supplier, make sure to do your homework. You really need to understand all the paperwork, shipping regulations, and costs involved with it.

Distributors – While a distributors usually sells a certain classification of product, they sell a wide variety of goods within that classification. Their prices might be a little higher than if you bought directly from the manufacturer since the distributor needs to mark it up a little for their profit. With a distributor, you can buy a smaller quantity and will usually have a low minimum order. Some distributors will even offer free or lower cost freight on orders over a certain amount.

Other Wholesalers and Liquidators – When you are searching for wholesale priced products you will run into merchandise wholesalers that sell a lot of different types of products instead of just one type. Be careful as these are probably closeouts, returns, or even damaged goods. Before you buy from this type of supplier, make sure that you know the exact condition of the product, as well as the terms of the sale and the price.

Auctions – You can find some good deals using online auctions sources like eBay. Take a look at the wholesale lots category and you will find there is a lot to choose from. Make sure that you know how to buy effectively. Don’t be in a rush or act on impulse. Watch the auctions and take your time, the bargains are there if you wait for them. However, don’t just limit yourself to online auctions. Live auctions are also a great source for wholesale products. Check your local newspaper to find them in your area.

Once you locate some good product sources, make sure that you check them out thoroughly. Call their references and be specific with your questions. You need to make sure that the vendor offers a good high quality product. They need to have a reliable shipping method that is reasonably priced. It is very important that they have a great customer service department. Do an anonymous “trial run” call to their customer service and see how they treat their customers.

Here are some other factors that you want to consider:

Stability of the company
Location of company
Prices of products
Different shipping options
Cost of shipping
Quality of customer service
Specific terms of the sale
Business hours and customer service hours
Ease of online purchasing and website quality

Tips & Warnings

Some places will buy overstock or discontinued merchandise and sell it in large quantities for below wholesale prices. You can get some great deals this way, just keep in mind that they probably ended up in the discontinued or overstock bin because they did not sell well.

You can find bargains in cosmetic seconds. These are products that have some type of blemish but otherwise function properly. Sometimes called scratch and dent, these can be well worth the money, but make sure to check them out first.

Highpoint, NC is the wholesale furniture capital of the United States. Twice a year they have an after market sale where you can pick up bargains on floor samples and clearance items.

Always remember, if it sounds too good to be true, it usually is! If a website makes a lot of fabulous promises, make sure to research them thoroughly.

If you have vowed to “never pay retail” then you know you can find some great bargains at an outlet mall. But their prices can only go so low. How do you find even lower prices? This may require some effort on your part. You may need to obtain a sellers license or buy in larger quantities.

These tips will help you gain the knowledge you need to be successful when you buy wholesale.

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