Marking Southern Alberta

It would take thousands of pages of information and analysis to fully discuss marketing. I'm just going to focus on three elements of marketing in Southern Alberta, location strategy based on traffic flow, pricing, and demographics. These three elements of marketing are closely linked and I will try to describe those links with out making it too complicated.

Every city has traffic flow patters. A traffic flow pattern is the series of regular routes people take to get from point A to point B. All trips have a purpose such as getting to work, shopping, visiting friends, or seeking entertainment. For shopping, the main factors that people consider when choosing a route are distance, retail square footage (of one store or a combination of stores in the area), and convenience. In the Google map below, consider a person on the West Side or even some one on 10th Ave. S and 13th St. S. This person has to buy groceries.

Once a decision to shop on the south side has been made, both the westsider and the southsider have similar probabilities of ending up in the same store. The majority of grocery shopping in Lethbridge is done between Walmart, Superstore, and Costco. Traffic flow favours businesses on the west side of Mayor Magrath simply because most people live north of the mentioned stores and that means they can make a simple right turn in to a parking lot instead of changing lanes to make a left turn in to Superstore. Also, many shoppers are two store shoppers and a trip to Costco and then Walmart is very easy.

In smaller towns prime locations tend to be those next to highway exits where the traffic can stay on the same side of the road where the exit placed them. The point is that businesses have to take advantage of city planning which has a major impact on how traffic moves. The exception to this general rule is what is known as the 'destination store,' the retail establishment that is unique (lacks competition), is always on the top of people minds for a specific product or service, or has a high demand for its product. Examples may be a wine store with the largest selection, Canadian Tire, and even Walmart.

If you are ever in a conversation where someone says they HAVE to go to X store but might do some other shopping then the HAVE-to store is the destination store. Some destination stores have such a powerful draw that visitors might drive to a different town or city just to shop there - IKEA or lulu lemon for example. If your product or service is complementary to a destination store's then consider locating right next to it. Even direct competitors operate within a minute of each other - Walmart and Superstore as above feed off of each others' traffic. But to locate next to your competition be ready to spend a lot on marketing or lowest price. Demographics (age, income, family size, sex, level of education, etc.) plays a large role in location strategy, the type of business that is likely to succeed, and ways in which to advertise. Demographics are important in smaller towns (under 50,000) but in populations over that number (but not always) locating to where a specific age group or income bracket lives could be very beneficial. Even if you are not locating to an area because of its specific demographic profile, knowing an area's demographics will help when you do advertising because that knowledge will help you in deciding which parts of the city to advertise. One example of targeting might be by age. People 18-24 generally do not read the local newspaper. This age group is more likely to be found on the Internet or for Lethbridge, at the College or the University.

Stats Canada provides a demographic profile of Lethbridge, Lethbridge Country, and all of the other areas in Southern Alberta. Understanding lifestyles is what takes demographics to the level of psychographics. I haven't seen a psychographic profile of Lethbridge but such a profile would allow a business owner to better understand and predict purchasing behaviours and the likelihood of response to various advertising appeals from specific neighbourhoods or the entire town or city. Psychographics tend to be based on demographics but give a more colourful description than just a list of numbers. The reason psychographics are used is because not all people who make between $60,000 and $80,000 live the same way. Often, living in a city for a long time will give anyone a good sense of what people do.

Unfortunately, most advertisers do not track response rates to advertising other than from casual feedback from a business owner. Having access to a psychographic database can save hundreds or thousands of dollars in advertising costs. One problem with using demographics or psychographics is a tendency to stereotype people or for the user of the information to use their personal opinion a little too much. The opposite may also be true; another problem with marketing information is to overly rely on the data and to not use any gut instinct. Something I've found quite interesting about Lethbridge and other areas of Sothern Alberta is price perception.

There are several shops in Lethbridge that offer near identical products to those in Calgary's Kensington area but what can be had in Lethbridge for $50 is $200 in Calgary. Shopping in Calgary seems to carry a measurable status level (apparently that level is worth $150). More true to the case is that many shops in Calgary set their pricing to the market, not the value of the good. What might be a case of taking advantage of a cash and credit rich city is an opportunity for businesses outside of Calgary to draw customers to their towns (though getting the message out would probably have a high price tag unless a great deal of creativity was used).

Pricing is one of the most difficult decisions to make. Many business operate on keystoning which is to pick one number such as 1.5,2,3, etc. and to multiply the wholesale price by that number. So what was purchased for $10 becomes $15 at a keystone of 1.5 ($10 x 1.5 = $15). The reason keystoning is used is that it is very easy in implement. The problem with keystoning is that price point and up-selling sales and merchandising practices can become quite difficult. Setting price points (the price differences between two different sizes of the same product or two different brands of the same kind of product) can be used to motivate customers to but a more expensive item if they perceive greater value. Depending on how your wholesaler or distributor prices its goods, keystoning might not be a good idea. You can see strange pricing in almost any store, examples might be a one litre liquid soap refill costing more than two 500 ml refills. Other elements of pricing are also important to note.

Particular is the cost of gas. If you operate a midrange restaurant, something better than Mc Donald's but not upscale then the cost of gas at the pump can have a very strong influence on your sales. The relationship between the price of fuel and how well a restaurant does is that middle income earners prefer to not eat fast food and choose mid scale restaurants. When the price of gas goes up, one of the first things to be cut from the budget is eating out or if they do eat out, they eat out less often or at cheaper restaurants.