Lesson 4

USS Biz Trek

Lesson 4: Galactic Espionage

Lalo: Sometimes, I wonder if this whole exploring thing is worth it.

Jeff: Oh, just be quiet and keep recording. We have to find out what the Gornya are planning.

Lalo: They’re probably going to force the Miranians into trading, just like they do with every other species.

Jeff: I don’t think so. Check that out. They’ve got hyper-drive components, shield generators, matrix capacitors, and hologram illuminators. That’s some heavy-duty stuff! We can’t even offer that kind of hardware for trade.

Lalo: Yeah, the only thing we have going for us is the way we treat our trade contacts.

Jeff: Well, if we don’t make it to Mirania before the Gornya, that’ll just have to be enough.

Sweatin’ the Competition

With any good idea, you will have competition. To survive in your business, you must know what that competition is offering and how you can do better. For instance, by learning more about the Gornya, our pioneers will know what they must do to get the Miranians to trade with them.

This concept is the same in all business. Your competitors won’t tell you how to improve your business directly. But if you watch what they do, you will learn a great deal about how to make your business a success.

Market Research

Step 1: Identify your competitors.

Make a list of everyone who you consider competition. If you are running a babysitting service, you are competing against licensed daycare centers, community mother’s day out programs, grandmothers who baby sit, and maybe even your best friend.

To find the competition in your field, look in the yellow pages of your phone book, the local papers, and on billboards around town. You can even call your local Chamber of Commerce to get information. But the best place to look is in your very own neighborhood — ask your friends and neighbors who they buy from.

Step 2: Pay them a visit.

If possible, visit your competitors’ places of business. Don’t tell them who you are or what you’re doing. Just walk in like any other customer and see how they do business.

Things to observe:

What hours they are open
How they handle customers
How products are displayed
Tools or equipment being used
How they dress for work
Things they say about their products
Prices for products

Things to bring back:

Samples of their business cards

Any free handouts about the business

Brochures or product literature

Their price lists

Samples of order forms or contracts

Flyers or coupon offers

If your competitors do not have shops or offices you can visit, call them on the phone to get the information you need. Describe a typical job and ask what they would charge you for it. You may even want to find out how long it will take them to deliver their products if you place an order today. Last, ask if they can mail you catalogs, price lists, flyers, or brochures describing their products or services.

Step 3: Study the clues.

Make folders to hold information about each of your competitors. In each folder, place notes about your visits or phone calls and all the sample materials you have gathered. Then use your research to answer the following questions:

What is the average price (going rate) my competitors are charging?
What are their main methods of advertising?
Who are their main customers?
How are their businesses like mine?
How are their businesses different?
Can I give customers a better product? How?
Can I give customers better service? How?
Can I give customers a better price? How?

Instead of being upset or worried about your competitors, learn from them. Watch closely. Copy what they do well. Avoid their mistakes. And work harder than they do. After that, you may not have any more problems with competitors.

Pricing Your Goods

One of the main ways you have of beating competitors is through smart pricing strategies. There is an "art" to pricing products. The secret is to keep your prices high enough to make a profit, but low enough to satisfy the customer. These are steps for pricing products that you sell:

1. Keep accurate records of the cost of goods for every product you sell.

2. Define one unit of your product. If you sell neckties or scarves, one unit is one necktie or one scarf. If you are selling cookies, however, one unit is harder to define. You must decide if one unit is one cookie, a dozen cookies, or three dozen cookies.

3. Determine the exact cost of goods for one unit of the product. You may buy neckties in lots of one dozen. But you sell neckties one at a time. What is the cost of goods for one necktie?

4. Set the price by doubling your cost of goods. If the cost of goods for one necktie is $5, the selling price is $10.

5. Compare your price to the going rate to be sure you are within the price range your competitors are asking for a similar necktie.

Pricing Your Services

1. Keep accurate records of the cost of goods for services you provide. Your costs may include equipment and supplies for doing jobs. If you wash cars, for example, you need to include the cost of the soap or any other supplies you use.

2. Define the job(s) you are pricing. Is this a regular wash, deluxe wash, or a detail job?

3. Determine the cost of goods for each job. Then consider your labor.

4. Estimate how long it will take you to do the work. Multiply the number of hours by the amount you need to make per hour ($4.50 an hour x 2 hours = $9 for labor).

5. Add the cost of goods to the amount you are charging for labor ($1 for supplies + $9 for labor = $10 total price for the job).

6. Compare your price to what your competitors charge. If your price falls within the going rate, you have priced accurately. If not, find a way to cut costs or reduce the amount you are charging for labor.

Getting Ready to Sell

Make a complete list of all goods and services you want to promote in your marketing campaign. Put the selling price beside each item on the list.

Next, test or sample all products personally. Get to know your product by using it, wearing it, and tasting it.

Have a "dry run" or practice session to demonstrate the services on your list. Wash your mom’s windows or clean out your dad’s car. Do free jobs to get experience. Then you will be able to tell customers exactly what a pool cleaning job or a car wash includes.

Add details to your price list. What size is an average $15 yard? How long will you take the dog for a walk? What comes in the Easter basket? Use measurements and concrete descriptions to give important details about each of your goods or services.

Make a note card for each product you sell. List all the facts you have about each product. (Price, size, shape, color, style, features, time limits, guarantees, etc.) Read and study your lists until you can talk about your products without looking at the cards.

Get your family to ask you hard questions that a customer might ask. Practice using facts to answer these questions.

Use information about your products to develop a short sales pitch. Practice your pitch on friends and family until you feel comfortable describing exactly what you sell.

Time to Get Trekkin’

In Lesson 3, you focused on learning about your customer. In Lesson 4, you have focused on your competitors and your products. Use the links below to practice your strategies for dealing with the competition. Get ready to get trekkin’!