By Harley Rolfe
The Marketing Process
The things that precede customer contacts--research, location selection, packaging, design, pricing, market plans--prepare us to enter the market and keep track of how well we're doing. These expressions may have a big-company ring to them. Be assured that these activities are performed in all organizations, regardless of size, in one fashion or another. The question relates to how well the execution of them satisfy today's needs.
After getting his offering and plan right, the marketer needs to inform the market about the work done and convince the target users. Various methods are used, from advertising to mailing to sales people, all of which are considered segments of the media and comprise tools for the marketer to use to get to the group he had in mind. These tools are used after completing the initial job of getting the message and product right. This latter is the stage that most folks associate with marketing. I assure you, however, that this phase of the activity is wholly dependent on the first part being done well. This phase has little punch until the product is designed and the marketer knows why each market segment will respond to his pitch.
Divide and Conquer
"Did you say market segment?" Yes. The self-storage market is really a collection of different tenant groups. Each group is separate from the others, and each is deriving utility or value differently than the others. You are striving to achieve a clutch of unique offering elements or features needed to show each segment that you are there for them. Take some very common uses of self-storage: a couple moving from their apartment to their new home vs. a lawyer required to keep his case records for seven years. Both make use of the same kind of unit, but both are completely different in how they derive utility or value from the unit. The basic truth that drives the marketer is that while the unit may be the same, the use is different. If the use is different, then the segment is different. We want to take a bead on each segment.
Time for Sherlock?
The marketer is looking for clues leading him to the different groups or segments that make up his tenant and prospect clientele. Take rental period, for example: Some tenants keep a unit for a few months, others for a matter of years. Is that significant? Definitely. And for several reasons:
- It is a clear indication that radically different uses are at work. Different uses mean different segments and the need for different appeals. We can isolate users by term and find out why there are differences.
- Different uses/segments can mean different values. Different values can lead to different prices. For the same unit? Yup.
- Extended-stay tenants are more valuable to a facility than a short-term user. We said early on that marketing could help us with facility value. One of the determinants of facility value is the degree of risk. (Ask any appraiser.) The greater the risk, the less the value for the same amount of income. Short-term users who vacate require facilities to find a subsequent user to restore income flow. A long-term user reduces that factor--hence reduced risk (higher value) for the facility ownership. Doesn't it make sense to look for longer-term users?
The typical self-storage operator deals with each of the various separate segments as if none of the others existed. In most cases, a given tenant doesn't know his self-storage neighbors, let alone how they derive benefit. Accept that idea and the rest follows naturally. Let's go back to the discussion about hotels from last month's column. What are their segments? I'm most familiar with resort hotels. Are they comparable to self-storage? Amazingly so. A typical selection of guest types on a summer evening in the Rockies would range from senior-citizen bus-group tours to business conventions to family reunions to bicycle-travel groups to individual families to honeymooners--you get the idea. They all are using identical guest rooms. Yet, each of these guest types wants different qualities from their lodging experience. The job of the hotel marketing people is to design ways to give each one what they want. That is no different than our various segments all using identical style units, but doing so for very different reasons. So you see, we're not at all alone.
Mountain Men Had a Word for It
Lone mountain men made a living by being able to read the country and pick the right clues. Sometimes tracks, sometimes scat, sometimes a bent twig. They had a word for it. They called those clues ... signs. They could unerringly find or avoid what they needed by finding telltale signs. Various kinds of self-storage uses also exhibit signs for the marketer. We've discussed rental period, but there are others (frequency of access, size of unit, who owns the stored goods, etc.) Those differences help define various markets or segments. They are evidence of different uses and bear closer examination.
But these "tracks" aren't the whole story in uncovering the various segments in your facility. You will find that similar tracks are being generated by very different kinds of use. A retailer may keep a unit for an extended period, using it to store small-volume items to which he doesn't want to commit valuable display floor space. An engineer for an international company parks his belongings with us and goes overseas for a couple of years, expecting to return afterward. The two have extended rental periods, but the similarity ends there. In both these situations you would need to do some old-fashioned sleuthing by simply observing and interviewing. The best time is at sign-up, but you presently have a whole yard full of existing users for which you may need better market ID. And it would be good to know the segment story of previous vacates. The result will be to categorize all (hopefully) of your tenants (past and present) such that you can identify and segmentize all of their uses. Now you have a very useful tenant database. That's research as it used in this discussion. It is such knowledge that makes for hard-nosed marketing.
Marketing for Keeps
Let's shift gears and broadly outline what goes on when one engages in marketing "for keeps." It's not like dousing a fire. When a fire's out, it's out. Marketing is a continuous, never-done process. All the activity that is prelude to actually contacting the prospects is often called product planning. It is on-going. It is not a give-it-a-shot-and-hope-for-the-best kind of affair. Why? Your rivals will copy your better approaches. Occasionally, you will just plain miss. You will figure out better ways. And there are human reasons. We all respond to changes. It's in the genes. Our eyes quickly notice change--so do our minds. So, if you want to command attention, don't stand still. Look around--you see new models in everything from cars to hemlines. Are all the new things really better? Maybe and maybe not. It's great if they are ... but that isn't necessary in order to have the desirable effect of change. The process is what's important, and the fact that it's like the Energizer bunny--it keeps going and going...
A Nice Surprise
There are some that feel that promotion expenses are dead weight--something they don't wish to do, but don't know how to escape. They would be happily surprised to discover that the addition of promotions enhance the value of their product. It's as simple as saying that things that are familiar are preferred/trusted, rendering such products more preferred and thus valuable. The unknown is spooky, alien, something to be avoided. What's the difference between Joe Blow's hamburger and McDonald's? The meat's the same, along with the bun and fixings. The difference is barrels of promotion from TV to Ronald McDonald houses. How about Sunkist or Chaquita fruit? Which do you pick first--one of these or a no-name fruit next to it? We pick those products whose organizations have lifted them out of the realm of commodities and made them known and preferred by branding them and telling us about them. Our point is that there are other factors that determine value to the customer beyond the physical features of the item. We can tap into that source of additional value while using marketing techniques to achieve the other purposes.
To Market or Not to Market?
With due apologies to the bard, this is a unique self-storage question. Many in the industry are hesitant about marketing and downright teed-off that they are even called upon to deal with these questions. This isn't what they thought they were getting into when they bought in. Isn't it true that we have depended on tenants to figure out how our units can be useful to them? As long as the units rented and the tenants paid on time, we haven't paid much attention to how they got utility or value from the unit.
That kind of approach works well enough when the demand exceeds the supply of units in the local market area. But when that period passes, it may be time for a different approach. Most other industries regard marketing and the need to confront and surmount competition as the norm. Or they use it to locate and exploit niche markets or gain more control over the blend and behavior of their customer base. They use marketing techniques to conceive new approaches that will help them thrive in their demanding marketplace.
The tone of this writing suggests that the choice to market will be unanimous. That isn't true. Many may choose to continue as they are. From my own background, there are many lodging facilities that choose to go with the flow and take what comes their way. When times are good, they prosper. When things slow down or new facilities are added to the supply, they can struggle. Lowering price is the prime competitive weapon, and you don't need much marketing skill for that. We are addressing those that see the need to "do something." You're not breaking new ground. Plenty of businesses have preceded you and for the same reasons. The next couple of articles deal with the mechanics of what's involved.
You're doing business. Many marketing decisions have been made already. You've picked a name, unit mix is set, you have prices, people have been hired and trained, and you have an ad in the Yellow Pages. The question is whether the methods used earlier are up to the task that are now being dictated by a different set of market conditions and objectives. When formalized, marketing activities or phases go by names you have probably heard--such terms as market research, segment identification, product design, facility organization, developing the marketing plan, media selection, etc., will creep into your vernacular. (We get to these in the next article.) This all might sound heavy for a 400-unit facility. Be mindful that marketing deals with the human habits and behavior as encountered in a marketplace. For self-storage, buyers take units one at a time. Whether the facility has 200 or 1,000 units makes little difference to the buyer.
See you next time.
Harley Rolfe is a retired marketing specialist whose career includes executive-level marketing positions with General Electric and AT&T. He owned lodging and office facilities for more than 20 years and now works as a part-time office assistant for a self-storage facility in Nampa, Idaho. Mr. Rolfe holds a bachelor's degree in economics from Wabash College and a master's degree in business administration from the University of Indiana.