Marketing Strategy for Skin of Gold
I would like to share an early-stage project with you, to give you a feel for the approach I’m designing to creating new marketing strategies.
So in this post I would like to share my thought process (so far) and to start to explore the reasons why a particular marketing strategy makes sense.
My ultimate goal is to break down the logic of “when this, do that” for all small-business marketing strategy decisions, so that the process of deciding what to do becomes simpler for all of us.
The product in question here is called “Skin of Gold” and it is a small-volume, artisan-made face cream produced in the United States. (See the current website: http://skinofgold.com)
The product itself is distinctive. Here are just a few key points…
- The product contains pure 24ct gold (which has powerful antibacterial properties) as well as silver and a range of other organic natural ingredients.
- It is made about once per month in small quantities (production literally happens in a dedicated room in the maker’s home).
- The makers, Botanical Joy, claim it can positively help to reawaken the skin’s own natural healing abilities, and they have told me a number of stories of the cream’s effectiveness against blotches and other skin conditions.
- The majority of sales are to repeat buyers.
Let’s do a brief Circuit analysis, as a sanity-check…
- Brand: There is very little about the Botanical Joy brand, which is okay, as when you sell a single product, the product pretty much is the brand. The website does mention that they donate 15% of profits to environmental causes.
- Product: From what I can see, the product is excellent and unique, with a reasonable number of positive testimonials. The product is free from a range of ingredients found in even well-known brands (e.g. Lancôme) that the makers say are toxic.
- Proposition: The overall (global) proposition is that the cream can replace your moisturizer, toner, and serum. (Works with all skin types, including combination dry/oily skin.) That means you can simplify your skincare routine, saving time and possibly money.
- Problem: Can address a range of skin problems, possibly including aging. There is an issue that the sellers are prohibited by law to claim certain benefits (even if they’re true).
- Market: Primarily women over the age of 30, in the USA, Canada, the UK, and also Australia (where skin health is a much bigger issue and the benefits of gold are better known). Customers are likely to treat their skin with great care, and will be sensitive to issues around holistic health.
It’s Far Too Cheap!
One of the first things that occurred to me is that the product is too cheap! A one-month supply (50ml bottle) currently sells for $47, however I believe many women will happily pay much more than that — particularly considering the exclusivity (low volume), cost of ingredients, and the fact that this one cream could negate the need for a range of other treatments.
I would advise putting the price up from $47 to $99 (if not more), which will have a dramatic effect on profits. (If the product costs say $15 to produce, $47 means a gross margin of $32, whereas a $99 price point would deliver $84 — 162% MORE profit for a price increase of 110%.)
Additionally, I would argue that an affordable price might set inappropriate expectations for the target customer. You expect a $47 product to be as good as other products in that general price range. But you expect an exclusive $99 product to be at least twice as good.
Play on Exclusivity
I love to flip potential perceived negatives into positives. In this case, the product is produced in very small batches, which might be viewed as “unsuccessful”, however it could be flipped into “artisan” and “exclusive.”
Exclusivity can create urgency, which would also lend itself to price elasticity (i.e. prospects and customers might tolerate a higher ticket price).
Add into the mix the fact that the majority of production goes to repeat customers and demand could be heightened further.
I have also suggested to Botanical Joy that the bottles themselves could be reviewed, to suit a more up-market angle.
I think the product design itself should more closely match the specific features of the brand and the product.
Compare the current packaging to one alternative that I found in minutes on Alibaba.com.
So I would recommend making more extensive use of the colour gold, and I also like how the alternative bottles connote other high-end healthy products (specifically royal jelly), which can only be a positive association.
My Proposed Strategy
After consideration, and taking into account the fact that it would not be feasible to increase production too fast, the crux of the strategy I would propose is a challenge.
You know the kind of thing…
Try Skin of Gold for One Month, and IF You're Not Convinced It's THE BEST Skin Product You Have Ever Used, Return Your Empty Bottle to us for a 100% Refund!
The problem I now face is to decode WHY a challenge backed by a money-back guarantee could be the right approach!
The idea here is that, if I can figure out the factors that make this a good strategy, then next time I come across a business with a scenario that matches the same combination of relevant factors, we could assume that the same strategy should be considered.
That process is the crux of Open Source Marketing.
After deconstructing the relevant factors, the next step of the process is to revisit the Circuit to ensure that each factor is represented by questions. (In future, my ultimate goal will be to automate the strategy process into some kind of wizard!)
(That’s why I have added a few more questions to the Circuit today. It keeps getting better — and longer! But the good news is that, by constantly testing this process with new case studies, we’re building a comprehensive and truthful model that can in theory be applied to any marketing challenge!)
Break it Down
So now comes the hard part… Why is “challenge” a good strategy??
Here are my ideas so far.
- Great product, with tangible, demonstrable benefits (*). This may seem obvious, but we need to be confident that our product will actually deliver on its promises if we’re going to make a powerful claim for ditching your existing product/s. In this case, we can!
- Emotive topic (*). Women who care about their skin (and aging) can really care! Clearly, there is some inertia we have to overcome with our call to “take the challenge” so we’ll need to be confident that the benefits we’re promising are not just realistic but emotionally engaging too.
- “Switch” proposition (*). We’re taking the position of a challenger brand/product, and asking customers to ditch their existing (incumbent) products and to try our product instead for a fixed period of time.
- High margin (*). This is a requirement for a money-back guarantee. You have to be able to honour every request for a refund without hesitation. Of course, this is much easier for digital products (which have a near-100% profit margin) and trickier for services (which have a hard cost), so where there are real costs (i.e. services and physical products) there must be sufficient margin for a MBG to be viable.
- High customer loyalty (+). This may not be a critical factor, rather a positive factor. Basically, a regular repeat purchase pattern reinforces the high margin, effectively creating higher LCV (lifetime customer value), thereby further off-setting the risk.
- Minimal cost/risk of switching (+). We’re not asking someone to switch car brands or move house here. And we’re not asking them to commit to spending $100s per month. In fact, it may be that (even at a higher $99 price point) they could end up paying no more than they spend now on their beauty régime. Also, if they don’t prefer our product, there’s very little risk, as they can just go right back to what they were using before. I’m also listing this as a positive factor (+) rather than a key factor (*), because of course we are often persuaded to spend significant amounts when we are convinced of the benefits and value.
Test the Assumptions
Next, we can do an intellectual exercise where we ask the question…
Should we assume that the “Challenge” strategy could apply in every case where these same factors are evident?
I don’t think we can ever say that with 100% certainty, because we could find counter-indications in future case studies that override or negate these factors. However, I would say that, in principle at least, we can be confident that the answer to the question will be affirmative.
Note: My marketing strategy includes more steps and phases, including rolling out a continuity program (“get the product for a significant discount if you subscribe to receive one bottle every month”) plus expanding the market through carefully-selected affiliate partners. However, taking a lean approach, none of those will apply until we have first tested and proven the immediate assumptions.
I’d love to get your perspective. Is there something I’ve missed? Or do you disagree with my conclusions?
Please share your thoughts. This is an open-source process, so everyone’s view counts. Thanks 🙂
About the Author
Ben Hunt has over 20 years' experience in web design and marketing, and has written numerous books, courses, and presented at seminars round the world. In 2010 Ben created the world's most complete web design course, and in 2015 founded Open Source Marketing.