Anyone else have successes with launching a business with little to no cash?

I hope your fall continues to go so well!

The book on marketing irritates me, perhaps because it seems to make no distinctions between store-level choices vs. manufacturer choices, vs less reputable marketing techniques employed by fringe snake-oil salesmen. All are tarred with the same broad brush. Yes, marketing is selling to people, and to some extent that inherently involves overcoming the reluctance of a customer to purchase your product. And yes, some techniques, particularly at store level, have been refined by insights gained through psychology. And yes, of course some unscrupulous marketers will try to scam you out of money. But the vast majority of marketing is not being done by a bunch of “weasels” trying to screw poor helpless consumers out of their money. That business model makes no sense, as an ultimately dissatisfied consumer will do more financial damage through word of mouth than the initial sale provided in income.

Most marketing instead is geared towards optimizing the match between consumers and solutions. Consumers have problems that they want to solve, and products are marketed to show that they are the best solution to that problem. Psychology is used much more as a means to improve the process of matching potential customers and specific products than it is to convince unwilling customers to buy something they truly don’t want.

The example of the deluxe model breadmaker being put next to the regular model stood out to me as a particularly flawed analysis with perhaps a little corporate amnesia. If the regular model was failing to sell, very few retail stores would then expand the shelf space to accommodate a second–higher priced, no less–SKU of the same product. Unproductive products are a drag on stores–they want to get rid of them, rather than committing MORE space to them. Most likely, the regular model was selling reasonably well, so they introduced a deluxe model to provide a “better” option for customers wanting one. In the meantime, the idea of having a breadmaker was probably just catching on with the general public, so the sales of the regular model took off as people looked for the cheapest entry point for owning a bread maker. It’s not a case of “perceived value”–one reason that people want deluxe versions is that they actually perceive that they get proportionately more value for the extra money.

The fact of the matter is that if you–the consumer–aren’t looking to solve a specific problem, then no marketing in the world will convince you to purchase a product, regardless of how weaselly a marketer might be. If that were possible, then they’d be routinely selling ninja bikes to elderly women or diapers to young frat guys. The key to the situation isn’t that people offer products for sale or try to make them desirable. The key is that you have to clearly define which of your problems *need* to be solved, and what level of solution you truly need (and can truly afford).

I agree it is frustrating that the banks/car companies/anyone with a strong voice in DC is getting bailed out while the rest of us don’t get squat!!

It just frustrates me that the banks don’t seem to have to suffer any consequences for their bad behavior. I’m all for good financial news, and I actually profit from the banks’ good results (because I own stock in them), but at the same time it bugs me that they get a “do-over”. I’m not even really that angry — it’s just another thing for me to shake my head at.

I feel your frustration. But two points. One, as far as bailing out citizens, what do you think of mortgage modifications or “cash for clunkers”? Two, and more importantly, we didn’t bail out banks because we are beholden to banks. Rather, we bailed out the banks to save our economy from a repeat of the Great Depression. A “bailout” of citizens (whatever is meant by that) is not necessary to accomplish the same thing. Bailing out citizens would just be spending money needlessly so as to appear that we are being “fair”.

But to be fair myself, I think you’re angry that the banks have earned big profits (not that there’s not bailout for citizens). There is some indication that this may change in the medium term. But even if things don’t change, good financial news from big banks is a sign that things have turned around, and should be applauded, no? Aren’t you falling into a psychological trap (not unlike advertising) by being angry about it?

Actually, that would be a lot of fun. Kris and I could hold some sort of harvestfest and everyone could make a pilgrimage to Portland. We could share the produce from our gardens and our home-made food. We could make our own special foods (such as my chowder).

On a related note, as I just tweeted, my neighbor (a real “millionaire next door”) just returned from his summer in Alaska. He brought us 30+ pounds of halibut and salmon! He’s home now until after Christmas, I think, and then he heads of for a few months in New Zealand, where he’ll work on farms for folks.

I have high hopes that I’ll be able to spend a week or two in Alaska with my neighbor next summer. Fingers crossed.

Jeff at GoodFinancialCents, 4 Ways to Save For Your Kids College Education – http://bit.ly/tTMPh