Time for lesson # 9 from our young businessman Daniel. (Invest profits wisely.)

So you’re selling some of your product, there’s finally a little coin of the realm leftover, what should you spend it on? Yes, of course! That big screen TV you’ve … wait, that’s wrong.

You’d be surprised how many entrepreneurs make the mistake of going on a spending spree the first time they pay for the groceries and have a little more cash at the end of the month. Sometimes it takes years before they make any extra money, so the moment they do it’s play-time.

It’s tempting. Don’t give in.

Marketing Lesson # 9 is simple. Take the extra money and invest it back into your business like Daniel is doing.

That idea doesn’t necessarily blow the leaves off your tree does it? But it’s the right choice.

Where to invest will be dictated by your circumstance, your business and your vision, but often books are one of the wisest choices.

If you’re great at crunching numbers, buy a book on marketing. If you’re a marketing guru, reverse that. I don’t believe in wasting time doing something someone else can do better, but a working knowledge in every area of your business is vital.

Gotta go, I’m looking at a Costco e-mail full of big screens … and trying to resist.

Also in this series:

• 10 Marketing Lessons from a 12-year-old Entrepreneur
• What’s Your Passion?
• 5 Tips for Becoming an Expert at Your Craft
• 5 Ways to Stay Motivated
• Get Them in Your Gravity Well
• Grass Roots Marketing
• What is Your Product Worth?
• How to Market Your Product
• Business Card Marketing
• Yellow Page Advertising: Waste? Or Found Wanting?
• Yellow Pages, Revisited
• Marketing 101: The Law of Line Extension
• When Line Extension Works

Tags: HeBlogsSheBlogs.com, investing profits, Law of Line extension, Marketing 101, marketing lessons

In their seminal marketing book, The 22 Immutable Laws of Marketing: Violate Them at Your Own Risk!, Al Ries and Jack Trout argue against the concept of line extension—which is exactly what Daniel is trying to do with his products. The “law” is this: trying to introduce new products under your established brand is almost impossible to make work.

Once you’re in the consumer’s head with one product, it’s hard to get into their head with another.

Example:

When Xerox was the god of the copier world, they decided to start selling computers. The huh? going through your head right now is testament to the fact they failed miserably. They were known for copiers, but computers? No way. They spent millions trying to establish themselves as a computer manufacturer. Whoops. (By the way, IBM tried to sell copiers; it worked about as well as Xerox’s idea to sell computers.)

Would you buy a DVD player from Nike? Probably not. I know, that’s extreme, but would you buy a soft drink with the swoosh on it? History says no.

Did you know A1-Steak sauce spent $18 million dollars on A1-Poultry sauce? Yeah, I’m not using it on my chicken these days either.

On the other hand we have Amazon that started out in books and has successfully extended their brand to include almost everything in the known universe.

So why did it work with Amazon and not with the other examples noted above? We’ll explore that next time and talk about whether Daniel (our 12-year-old entrepreneur) is going to succeed or not with his plan of line extension.

Also in this series:

• 10 Marketing Lessons from a 12-year-old Entrepreneur
• What’s Your Passion?
• 5 Tips for Becoming an Expert at Your Craft
• 5 Ways to Stay Motivated
• Get Them in Your Gravity Well
• Grass Roots Marketing
• What is Your Product Worth?
• How to Market Your Product
• Business Card Marketing
• Yellow Page Advertising: Waste? Or Found Wanting?
• Yellow Pages, Revisited

Tags: HeBlogsSheBlogs.com, Law of Line extension, Marketing 101, marketing lessons