The economy is affecting my business.
Kids say I make the best lemonade in the neighborhood. My ingredients are: fresh hand-squeezed lemons, real sugar, filtered water, and ice cubes. I charge a premium, 25-cents. My lemonade stand is known for the best-tasting lemonade – fresh squeezed when you order it.
However, the economy has made things difficult. I’m getting fewer customers. Fewer people want to spend their money on a 25¢ handmade lemonade. (They’re settling for Kool-Aid and other just-add-water drinks). Additionally, the cost of cups, lemons and sugar have increased. I can’t pass that increase to customers, so my profit has been reduced.
Here are my costs:
| Costs (per cup) | |
| 1/2 lemon |
5¢
|
| filtered water |
1¢
|
| sugar |
2¢
|
| 5 ice cubes |
2¢
|
| plastic cup |
2¢
|
| labor |
8¢
|
| Other Costs | |
| sign (marketing), table cloth, table rental, flashlight batteries (for evening business) |
1¢
|
|
Total
|
21¢
|
Here are some of the options I have thought of… What advice would you offer?
Trim
Modify my product
- Cheaper, (lower quality) lemons
- Lemon juice from concentrate
- Fewer ice cubes
- Cheaper sugar substitute
- use 1/3rd lemon per drink instead of 1/2
My product is only water, sugar and lemons… With many of the suggestions above, I’m afraid customers may notice the difference in taste. If it’s slight, does it matter?
Reduce price
- I’ve gone from 25 to 22 cents. Should I lower it more? I’m already making less profits that I used to.
Reduce staff
- one neighbor kid staffing instead of two (but this will make the wait times longer)
- find less-skilled kids willing to take less money? (this could affect product and service quality)
Promote
- special offers – discount when you buy two at a time (but won’t people think twice about paying full price in the future?)
- try to get new customers by buying and adding a sign on the street corner to attract people from neighboring blocks
- make, print, and hand-out flyers to kids on the school bus and school yard
Expand
- I’ve been thinking of adding peanut butter and jelly (pb&j) sandwiches… drive sales at lunch time. (although, pb&j isn’t something I’ve made before… and there’s already a pb&j place near the playground)
How would you help me? What’s your advice? Should I cut staff? Get cheaper ingredients? Invest in more signage? Add new products? Other ideas?
OK Paul, I’ll bite. Where’s the location? In front of the house, or on a street corner? Is the location busy? Is there another location that has more traffic? What month/days of the year are you selling? What hours? What’s the weather like?
I’d have to go with more promotion, but with a recession-twist: get one of your existing t-shirts and some sharpies. Get Mom’s permission. Draw lemonade in glass, add price and location, where everywhere. Offer to “decorate” friend’s shirts for free.
Pack up prepared product in thermos, travel by wagon to playgrounds, parks, etc., and sell via “pop-up” storefront. Always wear shirt with location info on it while doing this…. let adult know where you’re going.
If you live where it’s warm enough for citrus trees to grow, seek co-op agreement with tree owner. Can you prune, or pick, or take care of trees for lemons? Your time/labor in return for lemons might be a good trade. And you could advertise “locally grown” or “organic” depending on the lemon situation.
Great exercise in the basics, Paul… thanks!
arrgh… meant “wear” everywhere, not “where” everywhere. Darn predictive spelling…
I saw the graphic on 2 pages (including this one) and didn’t notice the reduced price until I scrolled back and took a second look. I’d get better signage so people know about the special.
You could add stevia, or some other natural sweetener, rather than sugar. Market it as all natural or organic and healthy for kids, this will breakdown the gatekeeper (Mom) and I would raise the price to $.35 to communicate quality and exclusivity.
Raise the price back up to 25 cents and then actively promote the value of your product: “Its a recession and people are already under stress. Imagine what happens to your body when you add chemicals on top of that. Take a break and drink some natural lemonade. It’ll brighten your day”
Paul,
Here are my top 7 things you can do:
1. Outsource the order taking process to an Indian call center.
2. Franchise the whole operation and charge licensing fees.
3. Make a YouTube video about babies drinking sour lemonade (sure to go viral!)
4. For 1 cent you could do a 1/300,000,000th of a second commercial during the Super Bowl (Beat that Miller High Life!)
5. Twitter your way to 25,000 followers.
6. Hire laid off Starbucks baristas (Hey, even Uncle Howie may be available soon!)
7. Ask Washington for government assistance (be sure to travel to D.C. on your tricycle and not your corporate jet)
Happy Friday!
Bill
I wouldn’t add the PB&J, unless you want to risk poisoning customers with Salmonella.
Paul Barsch – My stand is on the sidewalk of our front lawn. We’re the second house in from the corner. (So not super busy, but cars can see our yellow table cloth as they drive by. There is a morning bus stop, so many kids use part of their lunch money to buy our lemonade on the way to the bus.
We’re open from early morning until dinner time. Our busy times are morning school bus rush and then again at 2:30 when kids are coming home. (Sometimes the mail carrier stops over at around 11 am).
The stand is open year ’round and we have four seasons… so we’re not as busy in the winter. (This year we tried hot apple cider when it was too cold for lemonade).
Thanks!
Mandy – I love the thermos idea. Last time we tried to take the cups of our product to the playground, 1/2 of them spilled.
Nice way too, to reduce my cost of lemons.
Michael – I’ll look into getting a fatter marker and make the lettering more bold on my sign.
(You think it’s okay that I’m discounting? Will people be willing to pay 25-cents once the recession is over?)
Thanks for your comments!
Three options to consider strongly…
* Raise your list price and discount back to 25 cents (example 50 cents lemonade now only 25 cents)
* Serve the lemonade in smaller cups, thus lower the cost per cup (CPG companies are utilizing this strategy in these challenging times to keep higher margins despite lower unit volume)
* Bundle your goods (25 cents for lemonade, 2 dollars for PB&J, or 2 dollars for both lemonade and PB&J – the classic WSJ or HBR subscription method)
* Finally, your need a compelling guilt story about the kids (Mom/dad lost their job and we need to eat – forget about truth in advertising!)
This is a fun exercise! Thanks.
James – So upgrade to an even “better” sweetener, differentiate as organic / healthy(er). Maybe agave? Less hyperactivity?
Agreed, mom may like that.
35-cents seems a steep hike when the other stands are selling theirs for 15-cents… That will say quality/exclusive.
I wonder if the customers I lose due to charging more will be offset by the fact I’m making more per serving.
Thanks, James. I’d love to hear what others think about your ideas, too!
Heidi – Ah… so you suggest I stand my ground… hold tight and promote the inherent benefits of the lemonade.
Literally turn the lemons of the recession into lemonade?
All natural, hand-squeezed lemonade – full of goodness, nutrition and the vitamin C to help you cope.
“A cup to help you cope.”
Thanks, Heidi.
Bill – A 1/300,000,000th of a second commercial is basically like doing subliminal advertising… Is that ethical?
Great summary, Bill! Thanks.
Peter – You’re right… now is a bad time for peanut butter, huh?
Although… freshly ground from whole peanuts says gourmet, supports my hand-crafted position AND averts food poisoning…
Hmmm… wonder if mom will let me use the blender?
Thanks Peter!
Who are your best customers? Adults or the neighborhood kids?
If it is adults that have the quarter to spare then maybe you should print out some flyers for the houses around neighborhood touting the tasty, healthy, and authentic drinks you offer. Maybe parents would send their kids over with a few quarters.
I would first approach a cup manufacturer/distributor, and ask for free cups in exchange for having their brand on every cup (for advertising purposes). Then I’d approach a local lemon grower and ask for free lemons in exchange they can have their signage promoting their fruits attached to the lemonade stand. I’d go ask Grandma for the sugar (because Grandmas always have sugar…and thus would get it for free). And finally I would ask a water distributor to donate water in exchange for their brand promotion to make the best tasting and highest quality of lemonade possible.
Then I would begin a marketing blitz on YouTube, Twitter, Facebook, et al talking about the uniqueness of having an old-fashion lemonade stand in the 21st century. And in these times of uncertainty, one thing is certain that the quality and value of a great lemonade made by hand is the culmination of the enduring value of capitalism and branding of “Made in the USA”. I would contact the news media for a little PR push, and start asking the kids in the neighborhood to refer business. For every person they refer, they get a free cup of lemonade themselves. And since grown-ups are bigger, they’ll probably want to purchase more than just one basic cup…so that’s more dollars in your pocket.
Then I’d scout the most convenient location that ensures proper traffic. And then instead of sitting behind the lemonade stand waiting for customers, I’d recommend going out and meeting them shaking their hand, asking them what they do, and if they would like a refreshing cup of lemonade to brighten their day!
And finally I’d leave the price at $ .25 even after getting everything for free…because, after all, you are an entrepreneur, and you definitely cost less than a cup of juice at a coffee shop or deli! So maintain your price, and your profits will soar! Good luck!
Colleen… I like your multi-pronged approach.
I do need to get the neighbor kids to spread the word…
Give away your lemonade for free, and sell ad space on the cups to CitrusCorp for a pretty penny.
Position your lemonade as a premium product by adding Meyer Lemons to supplement each pitcher of lemonade — now you’re selling a blend of hand-squeezed Meyer and Eureka lemons (the lemon commonly sold in the US). Instead of stirring, hand-muddle your exotic lemon blend in the pitcher so you can promote the artistry of your beverage.
Prices can be raised in accordance to your new following.
What about marketing it as green? Bring your own cup? Bring your own water bottle?
Hi Paul:
I concur with most of the comments already suggested. That being said, from a market research standpoint, I haven’t read anywhere WHY kids and some adults prefer your lemonade to those down the street.
Suggest you take your staffer during the off times as well as do some MOS (man on street)with sample in hand of your product and ask key questions:
* What do you like about our lemonade?
* How often do you stop by to purchase?
* Would you like to be part of our special taster’s club? (create a club approach for word of mouth expanded or enhanced products, use as focus group and emphasize exclusivity)
* Would you be interested in a frequent buyer’s club with special offerings/free product after X of purchases?
* Would you be interested in a reduced price for bringing your own cup (the GREEN factor)?
* What if we told you we composted all material and donated extra product at the end of the day to a non-profit children’s day care center? Would that change or reinforce your purchase of our lemonade?
You have a STAND – do you also encourage additional purchases of the product and a casual ‘club’ atmosphere at your stand by having chairs in the later spring/summer with an covering for shelter, coloring books and other fun things to do? Likewise, in fall/winter any warming elements or seasonal decor to create additional customer satisfaction when standing in line to buy and consume your product?
In a recession it’s important to reinforce value and “love” with existing customers.
I agree, I wouldn’t lower the price, I’d add the love factor.
First of all you have to have top notch operations – clean – fast – friendly and really good – word of mouth worthy – lemonade. Keep your price at $.25 Then…
Get regular customers to come back more often by promoting next weeks “special” while they are at your stand.
Ask for referrals and give something free to the referrer
Partner with a charity and give a percentage of each sale back to the group
Cross promote with a non-competing but complimentary business – perhaps the neighborhood popcorn guy – you send him customers he sends you customers.
What differeniates you from your competitors?
My kids LOVE anything painfully sour and will always be enticed by a “double-dog-dare”. Maybe modifying your product to target the thrill seeking could be advantageous? Then promote through a local contest, flat entry fee – How many severely sours can you survive? Maybe you could even tie into this “extreme” theme and lessen your cup expense by distributing through watergun / squirtor distribution. 25 cents for 3 squirts.
Consider an extreme sports sponsorship – creating a product awareness and strengthening your brand through association.
“More promotion” sounds good but it’s not as if that would be cost-free. The new signage costs a little. The copywriting, design and printing of the flyers will cost even more. But, the opportunity cost will be even greater. What else could you done with that time that could have yielded more gross revenue?
And if you get other kids to distribute those flyers, there’s a cost there too.
Music at your stand always attracts attention and the cost is minimal. Maybe three or four balloons too. Create a party atmosphere where kids will be attracted to “the scene” and want to come because “everyone” is going to be there. Make it hip to be at your lemonade stand. Then people will begin to share their experiences and draw more people who “must” experience this for themselves.
Run a Super Bowl commercial where 3 mafioso guys walk up and can’t complete their discussion cuz of all the kids yelling, then say “come to my stand this Tuesday from 6 AM til 2 PM for FREE LEMONADE!!!!!!!!!!!!
PS Buy a couple keywords on Google a few minutes later….
Another thought… building on Catherine’s comment about bring your own cup… how about offering a discount equal to the price of the cup if they bring back your branded cup for a refill? You can brand with those sharpies you used for decorating your shirts.
Sell yourself as premium product. Raise your price to 50 cents, if you sell half the product you still have the same profit. Offer free product to cool and hip people who can hang out and spread word of mouth how great your product is. Hip and cool always sell.
Catherine & Mandy – I really like the idea of offering value for those who bring their own cups.
- It is good for the environment.
- It offers a ‘green’ message.
- It reduces my costs without reducing quality.
- Having a branded cup to refill also provides walk-around advertising.
Thank you for your comments.
Roberta… I love the idea of asking around to understand WHY people prefer my lemonade (or not). Only thing is, we’re not allowed to stay out after dark.
I also really like the idea of offering more than a lemonade STAND by offering seating and a bit of an environment.
Don’t lower the price, increase the love. Nice.
Thank you for your thoughts!
Please keep the comments coming… this is great.
The idea behind this post was to tackle the challenges that all businesses may be experiencing… simplified as a lemonade stand.
It’s interesting to see all of our different approaches based on our marketing style and experience.
I intend on doing *something* with this post and your comments as a recap and future post!
Thanks for your thoughts so far!
This is all quite interesting, and I can see where I can use much of it in my business…
But I’d like to see something like this done for a pure service business? Much of the marketing here is all product and can’t easily be translated to service only, so if that could be possible for a future post?
Hi Paul – since “The Essential Orange” is inspired by a citrus fruit, I have to comment.
There are already some wonderful ideas, here are a couple more:
Brand Differentiation
- Can you leverage the equity of a brand like Sunkist or go organic?
- Can you differentiate the product – what about ice cubes that have real pieces of lemon in them?
- Can you add some theatre to the approach of making the lemonade?
Deliver Tangible/Intangible Benefits
- Ensure your stand communicates refreshment & rejuvenation
- Is your stand in a shady respite from the heat ?
- Can you fulfill a broader need with complementary food items or flavours (and increase ADT too)
DoGood
- Can you tie a % proceeds to a local cause?
- Can you take your stand to events your not-for-profit is hosting and build new customers?
Engage/Awareness
- What story can you tell to create interest? A good story will get you noticed and spread WOM or even get you covered by a local paper
- Develop a Twitter following …. tweet when you have sampling specials
- Sample, sample, sample
- Recruit new customers through treat a friend invites
- Treat your customers well
Karin… hmmm… perhaps there’s some synergy between my lemonade stand and *your* company?! If you’re interested in opening The Essential Lemon, let me know!
Thanks for the great breakdown and for your comments.
Why, print STICKERS, not mere “flyers” of course. Custom stickers make marketing a lemonade stand locally EASY. Plus, the “ads” become highly sought-after limited edition permanent pointers to your lemonade stand that imply the advocacy and recommendation of the person who stuck it up somewhere. What better way to remind people of delicious handmade lemonade than a beautiful logo sticker stuck to the prospect’s fridge, almost taunting them into wishing for the “affordable luxury” you offer.
Here are my recommendations:
* Rebrand. Creating a logo and a new pyramid of associations costs nothing. Your advertising won’t work unless you rebuild your brand from scratch.
* Get PR. You’re an enterprising kid. I’d interview you – put out calls to your local daily commiserating with them about the economy or something.
* Print stickers and give them away with each glass. Heck, I’ll even print you bonus stickers (psst! use code BONUS10 on our website)
* Sell the lemon rinds. Possibly there is a local tea company, caterer etc. that might even consider your usage of the lemons as free labor. You might have to follow certain new regulations to do this.
* Pre-package the lemonade in bottles. Sell at Whole Foods. Put photo of selves on label. Profit.
Srini…
Thanks for the neat ideas.
Kids love stickers! Heck, I still have a collection of Wacky Pack stickers I collected out of loaves of Wonder Bread when I was a kid in the 70s.
I visited STICKERNATION.com and may just buy your product for real.
You gave good advice, but you also wove in YOUR products in a relevant manner. Nice work.
Paul,
If there are other families in the neighborhood -and I’m going to take a big leap and assume there are… why not add a pitcher package for moms who carpool and have to do errand afterwards. You could include small cups for little kids.
Also, find out who works at home in the neighborhood and offer a special weekly lemonade break that they can walk over to – that way they get a walk in and a chance to relax with a healthy drink. You could add cafe chairs and create community.
Finally, I haven’t seen anyone notice the no-caffeine angle. Alot of people don’t want a caffeinated drink later in the day so…that’s another position.
This is fun!
Dale- Big Shoes
Dale…
I love that idea. It even has a nice ring to it… Pitcher Package.
Funny you mention people don’t like decaf in the afternoon… I spend a few hours debating this topic regarding Starbucks, to save money, is only going to be brewing decaf on demand…
More business to my lemonade stand!
Do not buy Stickers from StickerNation.com.. He is a rip off, the stickers are not high quality and wear off easily. Total waste of time. Legal Scam? I’m posting this all over the net!
That is to funny. Nice work.
Kids say that you make the best lemonade in town and .. kids don’t lie
..
So, ‘Modifying the product’ by any of the techniques which you’ve mentioned will probably degrade the quality of the lemonade.
‘Reduction of price’ might increase your sales, but you would barely even out. So simply out of question.
‘Promotion’- would help but considering the market economy, and its eventually parents who end up buying or rather paying for the kids, they would be going for cheaper substitutes and kids would be happy with 2 glasses of ‘not so good’ lemonade against 1 glass of ‘best lemonade in town’. But since the kids already know that you make the best lemonade, the ‘word of mouth’ option can help. Rewarding a kid, when he/she recommends a friend for the first time would help and would be easy on the pockets as well.
‘Expansion’-isn’t a bad idea, but if it doesn’t go well, and together with turbulent economic condition, it could spell doomsday for the lemonade business as well.
‘Reduction of staff’-will either lead to poor quality of lemonade or poor satisfaction owing to long waiting times or worse.. both of them. So would not really recommend this.
Other suggestions:
1. I guess, two varieties of lemonade can be introduced. One regular one priced at 22 cents and one cheaper one like ‘Just add water’ kind.
The investment would be low on the second one, and since you’ve already mentioned parents are preferring the ‘Just add water’ kind, they would be happy to let their kids have that cheaper version of lemonade in your stall. The more affluent ones can have the higher one priced 22 cents.
Thus, a combination of both would cater to a wider set of consumers.
2. Small variation in the glasses can be done without changing the selling price per glass. A taller glass, however, with a shorter diameter, and with definitely lesser volume than the original glass can be used. Kids would be happy to feel that they are being server more lemonade at the same cost.
Communication is as easy as Linomade – mix campaign, design and management like juice, sugar and water!
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