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September 4, 2019

BY DUSTIN SIGGINS

Budgeting for the marketing of your small business can be a scary process. Many entrepreneurs are risk-takers at the core, but spending money on advertising has no guarantee that marketing dollars will produce increased revenue.

However, marketing is only expensive if it doesn’t make the phone ring.

One strategy that can be highly profitable is the Razor and Blades marketing approach. The theory is that you give the consumer the razor, he or she will return repeatedly to purchase the blades. This strategy can produce amazing results, especially if few of your competitors are using it.

A similar strategy is the price leader marketing technique, which draws customers in with a low price on an everyday item and makes money on everything else. An old friend of my father’s used this strategy to great success at his convenience store in the 1980s. Mark sold his cigarettes at the lowest possible prices because smokers—who were plentiful back then—wanted a fresh pack of smokes every morning. Smokers also wanted a cup of coffee for the road, a newspaper and one tank of gas per week. Many smokers returned on the way home from work for more cigarettes and Mark’s real specialty: high-quality deli and fresh meat.

By using the price leader strategy, Mark branded his store as the lowest cigarette prices in town—but it was everything else that provided the profit for the business.

The Trojan Horse strategy is similar to the price leader marketing model, though it relies on trust of the overall brand to attract customers. This is one of my favorite marketing techniques because a candy store I went to as a kid used it to great success.

If you’ve heard of Chutters in Littleton, New Hampshire, it’s probably because they have the world’s longest candy counter—over 112 feet of all the candy you could want. They’ve gone from being the local candy store 20 years ago to three locations, a worldwide presence and a must-see destination for visitors to Northern New Hampshire.

But their brand is the exact same one which I saw growing up. Candy is what brings customers to Chutters. However, there is huge money in selling maple syrup, chocolate fudge, mugs, stuffed animals, gift items and sweatshirts. Chutters is a major tourist destination in New Hampshire’s White Mountains that has built its reputation on penny candy, but that’s not where all their profit is.

A fourth marketing strategy is the captive-audience model. This model is why movie theaters charge modest prices for tickets—and exorbitant prices for popcorn, candy and soda. Like professional sports venues, theaters charge massive prices for concessions and merchandise because the customer isn’t going anywhere for several hours.

The captive-audience model works great for small businesses. Inns and hotels often have gift shops where guests can purchase a piece of their vacation or a bite of food. This is almost pure profit for the company because these extra items require no additional marketing and little effort. This keeps costs low and the marketing focused on the customer’s real desire—a sporting event, a movie, a vacation, etc.

How can you make your phone ring?

Over 20 years after inception, Chutters General Store is still branding the “World’s Longest Candy Counter.” Convenience stores pull you in with coffee, pastries and gas to sell you a whole lot else. Gillette earns your trust through the razor while eagerly selling you the blades, and movie theaters slather butter on popcorn so you can smell it as you head to the movie.

Is your company marketing with Razors and Blades? The Trojan Horse? The Captive Audience? Personally, I love candy—but for my firm, our candy is writing.

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