A J Thompson | Andrew Thompson, Rockhampton Australia

Setting up a Successful Business in Virtual Worlds - Part 2: Know Your Market

XAY TOMSEN | 14 July 2016

Welcome to part 2 of Setting up a business in virtual worlds. In the previous introduction, we discussed why it's important not to just jump in boots and all. The first stage of planning begins now. In Part 2, we look at understanding the market in which your product belongs.

Who are your competitors? - Know Your Market

When I was 13, I'd collect shopping trolleys after school at my local Woolworths supermarket, but every Tuesday, the boss gave me a different duty. I'd swap my work shirt for a T-shirt and sneak across the road to the rival supermarket.

Product packaging 1

I became a secret agent. At least that's how I felt. My job was to casually wander about the store, surreptitiously jotting down their prices without being seen. No doubt, the trolley boy there did the same thing at our store :)

This practice continues today throughout the retail world, albeit generally without the use of small children.

I think it's true to say that EVERY successful business owner knows the range and quality offered by their key competitors. In virtual worlds, that's easy to find out. Open 'Search' and find out who they are. Teleport over, take a look around, jot down prices.

Take note of other things too:

Little things - make notes. If you're worried about getting caught having a snoop around, set up an alt.

If something annoyed you with the experience, e.g. greeter bots or notecard spammers, it makes sense not to replicate that mistake in your own shop. Also, try asking a friend who doesn't have quite as much emotional investment in the exercise to check out the competitor's shop as well. Ask them for their impressions.

How does their product compare to yours? - Know Your Market

Buy some products similar to your own in order to gauge their quality. Yes, seriously. Buy something from your competitors. Don't be scared to support them. Remember, it's a virtual world - everything is cheap as chips. In any case, you're investing in your own future.

Buy it, look it over, check its quality. Some or all of these questions may be relevant.

Something I hear creators say frequently is, "[insert competitor's name] makes rubbish compared to mine - I'm going to put them out of business".

Really, this is a stupid mentality. You need competitors. Managed properly, competitors can actually generate business for you simply by existing. Remember that shoppers look around.

If your competitor - let's call him Fred - is flogging dodgy over-priced product and your stuff is great, he'll make you look like a legend by comparison. Equally, don't be scared to refer a prospective customer to a competitor, especially one who has a far inferior product and still wants to charge a fortune. The customer will come running back to you, and chances are, tell all their friends.

Packaging your products - Know Your Market

When you purchased your competitor's product, did it arrive in your inventory as a box containing the item, or was a folder delivered to your inventory? If it was a box, did the shop have a 'rez zone' that allowed you to unpack it?

I cannot think of a single scenario where any advantage exists in marking a box 'Buy Copy' instead of 'Buy Contents'. What's the difference? Absolutely massive. Let's look at it from the buyer's perspective.

Product packaging 3

Say I've just gone to your shop and bought a shirt. It's copy/mod. Perfect. I click 'Buy'. Now, depending on whether you marked the product box as 'Buy Copy' or 'Buy Contents', this is where I'm going to stay happy or hate you.

SCENARIO 1: You've marked the box 'Buy Contents'

I click 'Buy'. The grid's asset server instantly & automatically generates a new folder in my inventory with the shirt inside it. I right click the shirt and wear it. Looks great - I'm a happy camper. Pleasant transaction completed, I wander about happily to see if you've got a cool pair of jeans to go with my very funky new shirt.

SCENARIO 2: You've marked the box 'Buy Copy'

I click 'Buy'. An exact copy of the product box on the wall is delivered to my already cluttered Objects folder. What was the name of the product I bought? Crap. I right-click your product box again to find its name, then I scroll through my Objects folder to locate the box. OK, I find it. Now I need to rez the box and unpack it to get my shirt out of it. Do you have a rez zone? Yes? Thank God. If you didn't have one, I would have had to teleport home to get my shirt out of the box. I rez the box in-world, right-click it, and choose 'Open'. Now, finally, the grid's asset server generates a new folder in my inventory, with my new shirt inside it. Frustrated by how difficult you've made it for me just to buy a bloody shirt, I right click the shirt and wear it. Yeah, looks OK. Nothing special. My negative experience reflects on my contentment with the product. Then a message flashes up on the screen: "Your object has been returned to your Lost & Found folder due to parcel auto-return. "Shit," I grumble because I forgot to take the opened product box back into inventory. I track it down in my Lost & Found folder then delete it. Then I find the original box in my Objects folder and delete that too because I no longer need it. Hell, I never would have needed it in the first place if you'd just put a moment's thought into the buyer's experience. Damn, that was tedious. Will I buy more stuff off you? Not a chance. I'm never setting foot in your dodgy store again.

So, the moral of the story is: Regardless of the product you're selling, be it clothing, a car, or a house, mark the product box 'Buy Contents'. Happy customer, and the chance of more shopping. The other bonus is that you don't have to provide a rez zone where griefers can get up to mischief.

Landmarks and Notecards - Know Your Market

It's common practice for shops to package landmarks and promotional notecards in a product box. In the case of landmarks, I strongly advise you not to include them. Notecards? Only if they're instructions related to the purchase.

There a two reasons I say this.

First, your shop may move at sometime, or you might want to open another branch and just take copies of your boxes and rez them at the new place. But then you have to change the landmarks. And the notecards too if you pasted a landmark into them.

More importantly though, is that buyers regard this type of spam as exactly that because, well ... that's what it is - unsolicited junk to clog up their inventories.

A great way to stop a person impulse-buying a whole load of extra stuff, is to have them get pissed off because a landmark or notecard flashes up on their screen every time they make a purchase. You know how it feels - I'm sure you've had it happen and felt the same annoyance.

A far better way to retain a customer is to have a group joiner nearby and a few free group gifts scattered about the place to encourage them to join. That way, you get to stay in contact with them and can use your group notices to tell members about your latest offerings.

This works much better than a landmark in an inventory they'll probably never look at again.

What do your competitors charge? - Know Your Market

A golden rule of marketing in every business, in every industry, everywhere in the world, is "Protect Your Price."

If your competitor's product is of a similar quality to yours, then your price should be roughly the same as well. You can of course charge a little more, and honestly, this is the wisest course. Having a slightly higher price, especially where the products are very close in quality, will actually generate more sales.

Why? Because customers expect that you know what your competitors are selling for, and in their minds - if your price is trivially higher - it implies that your product is somehow, indiscernibly better. What the hell, they say, I'll spend the extra 10 whatevers for peace of mind. It's only a few cents in real money. This is an old marketing trick used by the world's biggest companies every day, and it works.

It naturally follows that you should never, never, never undercut your competitor on a product of similar quality. Never. Not ever. I can't be more adamant. By doing this, you have just given your competitor the upper hand. Without them having to even lift a finger, you've inferred that their product is somehow, indiscernibly better than yours. They win the sale, and your cut price tactics fail.

Xay Tomsen a.k.a. Andrew Thompson

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