watchyer market segments?

Mike LeCompte CPF

MGF, Master Grumble Framer
Jul 20, 2005
Knoxville TN
On the other thread on average ticket price, Bob Carter and others make an interesting observation: it's really not about the size of the ticket, but what percentage of buyers do you have: low-end, medium or high-end.

so got an idea.

For three months starting now, I'll track low, midrange, and hi customers.

My definition:
Lo- up to $150
Mid--to $300
Hi--over $300

Anyone care to adjust the numbers? Ok give me input.

here's the idea: if a group of us keep figures for a few months, maybe Mike can do a poll in, say April or May 1, on market segments. Or we can just post another thread.

Now I know this isn'tthe greatest time of year; like Dec-Feb are killer months for us, and we slow down in March thru May sort of. But still, I would suppose the AVERAGES would stay the same.

But give me input on that too. I'm honestly curious as to what market segments we have, but let's define first what "Lo-Mid-and Hi" might be. Then we can all start checkin' this out.

tell me if I'm way off on this.
Mike-Establish your own criteria; run it for awhile and then adjust to what makes sense.

The only real purpose is to create a comparative baseline

Once you establish this criteria, then validate the profitability of each "segment"by determining the average Cog for each segment. I'll suggest that most "higher" end will have a lower CoG. You might make the argument that you might actually increase your Gross Profit Dollars (those that actually pay the bills), but, it will yield some interesting data

But, the most valuable tool will be when you actually see where your business is growing or not growing

Balance of Sale is a most important tool and we use it constantly to help find problems and set corrective courses of action
Originally posted by Mike LeCompte CPF:

My definition:
Lo- up to $150
Mid--to $300
Hi--over $300

I think it would also depend upon the size of the framing. A 20x30 at $150 would be low end, but an 8x10 at $150 would be high end I would think (or at least mid). Otherwise you're still just talking about the size of the ticket.
bob&marky: yeah, you guys make sense. Probably still talking average ticket price. O well, it was a thought. Will still keep the numbers, tho just for curiousity sake
Personally, because we do sell readymades 1.5x2" up to 16x20s, I would adjust that low-end to top at more around $120. The mid spread of $120-300 is good, because it will capture most of the ConClear and some hand wrap mats. The step into Museum, and conservation packaging will definatatly jump past that $300 and not look back.

I wouldn't worry so much about the size. Size is overrated anyway. Lo-enders still don't get size when you quote a mount and cheap black frame on their Atomic Mutant Tanker Ants Destroy <strike>Cincinatttiiia</strike> NYNY movie poster at $110....

"But I only paid $10 for the poster..."

As for the $120, that will capture that American Choice sweet photo frame with a hand wrapped silk mat and 1ply gold leafed slip mat @ $190, with the wedding photo for their 75th anniversary. :D

It's still a view of the "level" of customer walking through the door.
I think an alternative method might be to establish those "market segments" that determine what we look for

For example, if you use a POS system and fixed multipliers (that includes conservatively about 97% of us) then you have a pretty uniform mark up system. In that most will have inordinately higher markups on lower per/ft mldgs and inversely true for higher priced

So, raw dollars might not effectively apply

But, if you suggest that low end means mldg under $8/ft or items you use to attract customers at "reduced" prices, then you might have a more meaningful qualifier

For example, a Larson 214do in any size might be a "low end" offering. Okay, you put two suede mats, a double filet and Museum glass. Does it still become "low end"?

So, because I am an old-school retailer and still use cash registers (okay, it's an elctronic with more whistles and bells than we ever use), couldn't you simply ring up that transaction based on the standards you wish?

And, that might mean that packages for posters and quick fits, etc might be Category A, and that middle of the road dbl mat goodies might be Category B and that nifty handwrapped mat with the 24K Goldleaf might be Cat C. Don't you think you can look at a piece and make a rational judgement of which group it best fits? Sure, you might get a few "grey area" choices, but this ain't rocket science.

Then, every day that total is carried over to a wekly report, then a monthly report, then a yearly (by month) report and Up Jumped the Devil, and you have meaningful, comparative data.

And, let's face it, without data, we are just a bunch of jerks with opinions

Now, if we leave our analysis to average tickets, how does that identify potential problems?

Lets say that in '05 your ticket went up $3, but your sales were down 3%? Where do you go next?

Or, your ticket went down $3 and your sales up 3%?

But, if you track categories (or segments or departments) then you can say that Category A was up 7%, while Category B was down 3%. Now, at least you know where to look.

And, if you wish, track average ticket sales for each category. At least, then it has some relevance.

And, Jerry, on a personal note, I am no fan of UI pricing. It never reflects costs of the specific product that is probably used. It might flush out in the end. But, to me, it is lazy. And, I always seem to take the hard way.

My favorite example is Museum Glass.

If you have a size that is, say, 58UI. It might be a 24x34 and come out of a 24x36 lite. Or it might be 20x38 and that bad boy will definitely come out of a 32x40 lite. Compare the difference in costs between those two lites for exactly the same retail price
As always ask a question and get as many different answers as posts on the topic. There are so many variables: location, size of market, demographics, variety of offerings, abilitites of sales staff, purchasing proficiency, store hours. These comparisons become less and less useful until you are TRULY comparing apples to apples and taking into account ALL variables. For me I pay no attention to such comparisons as they relate to my business. What similarity is there in some ambiguous number posted by a one person operator in a town with a population of 10,000 who approaches framing "for the fun of it" open 10-5 five days a week and who frequently closes to do errands; to a 3 store operation open seven days a week with a well trained staff of ten in a SMSA of 2 million?

Not intending to be argumentative or pretentious I just feel in order for the figures to be valid the basis for any analysis must be consistent in their criteria.
No question, Tim. These numbers are used for self-analysis. They have no bearing on anyone else's biz. And do they ever need to be consistant

Here is how we use them

If we have a category that is declining at say, 5%, yet we have another category growing at 6%. We might suggest that our sales are "flat"

Yet, the wiser merchant, might look at the decreasing segment and see what might correct that slide. If we can get it back to "flat" then we show an overall increase in our total sales. Where we put our inventory allocation depnds greatly on that type of analysis

Or, we see a category showing that 6% increase. Perhaps we need to feed that line with more inventory or more prominence to leverage and expand that growth, perhaps growing it by even more than 6%?

I, too, put much stock in anyone else's numbers. Don't think they are relevant and not sure if they are accurate. But, my own numbers are really important in helping me understand shifts and directions

Critical, in my opinion
Originally posted by Bob Carter:

My favorite example is Museum Glass.


I'm not trying to be argumentative here.

However, glass is really the only item that can be purchased in multiple sizes. Matboard and foam board for the most part is available in two sizes. Moulding is always purchased in one unit, by the foot.

The basic process that we perform is not unlike what a restaurant or chemical company does. We take a partially or wholly pre-made product that is 'big' and break it down to a 'small'. Those are terms used by the chemical industry. Meaning, we take a box or stick of moulding (big) and alter it into a finished product (small) for the end user.

Using United Inches is an effective way to calculate what percentage the finished product uses of the 'big'. Using square inches would be no different, it is a percentage.

Due to space limitations of my newer location I now for the most part purchase glass in the same two sizes as all the other sheet products, 32 x 40 and 40 x 60. I have set up code table pricing on each item based on the two available sizes.

Having said that, I too will buy AR and Museum glass based on the need for the job.

By not utilizing UI as a base of measure, are you suggesting that a customer buying an 8 x 10 cut mat should be charged the same amount as if it was 32 x 40?
Heck, no Jerry. I think that 8x10 mat needs a "logical" price; that being less than an 11x14 but more than a 5x7

But, how about that 8x42 mat. Should it be the same price as a 22x28 mat, even though it comes out of an oversize board? Sure, we can come up with the "unusual" applications. But, I am certain that most clients don't care much whichway we set our pricing. I just am more comfortable with a graduated, what-it-comes-out-of pricing

I also appreciate the limitations of some POS systems