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The Art of War in Adult Novelty Retailing, Part 3

The Art of War in Adult Novelty Retailing, Part 3

July 26, 2002
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" Your adult store can go bankrupt making a profit if you do not have adequate cash flow. "

Continued from Part 2

Setting Organizational Goals
In the broadest sense of the phrase, an organizational goal is a plan to achieve increased equity for your adult store. You should be looking to target a certain level of performance from your adult retail interests and an organizational goal should be set in advance of beginning work to provide a tangible framework for measurement. Organizational goals are often discussed in terms of ROI (return on investment) which is a way of saying are you getting more out of your venture than you are putting into it. Your businesses' organizational goals must be universally applied at all levels of the organizational matrix in order to achieve the caliber of profit you want for yourself. In other words the guy in the warehouse has to internalize the success of your business: even at the lowest levels the most successful organizations have employees and associates that take the organizational targets seriously day in and day out.

There are many common organizational goals that adult retailers and affiliates must consider. As with all things business related, there are strengths and weaknesses to each approach, and what works for the webmaster one house over, may or may not work for you and your adult store or affiliate association. Although there can be some overlap between these general retail goals, in some cases you can pursue one but not another given the finite resources even the largest organizations have at their disposal at any given moment. Success is born of finding the right mix of goals and achievements for your specific market niche.

Profit: Most economic theories revolve on the axis of profit as being tantamount to success and assume for an organization to be most successful it must achieve as high a margin or financial return on its investment as possible for as long as possible. There are several problems to this theory. It does not account for adult retailers which have low margins but sell in great volume, for example. Profit is not the same as cash flow, though many people mistakenly believe it is. Your adult store can go bankrupt making a profit if you do not have adequate cash flow.

Market Share: Many organizations choose to pursue the greatest market share or ratio of the sales revenue of your store in relation to the total sales revenues of your industry. Firms which pursue the greatest market share may not be making the greatest individual profit because market share acquisition is an expensive organizational goal.

Sales Revenues: Some organizations attempt to pursue increased sales revenues which may gain the executive of the organization prominence, promotion and industry power. Interestingly selling more product does not necessarily mean your adult store is making more profit depending on the cost of sales. Revenues are also effected by the method of accounting you choose if you keep inventory yourself - either LIFO (an accounting concept that assumes the vibrator you sell is one that you just bought at a cost of $3.00 and the vibrators left in inventory are the ones you bought last year at $1.00) or FIFO (an accounting concept that assumes the vibrator you sell is the one you first bought last year at $1.00 and the ones left in inventory are those you bought most recently at a cost of $3).

Unit Sales: Many adult retailers concentrate on selling the most units (being the leader in a particular product like Prime Snugger Fit condoms, for example). In some cases adult stores may increase their unit sales without increasing their profits due to the ceiling cost of inflation.

Quality: Very few adult retailers concentrate on quality, yet this can be a worthy organizational goal especially for those who have inadvertently created a negative reputation around poor quality in the past. This is an area virtually all adult retailers must deal with because of the limited quality control standards utilized in foreign made novelties. Defining organizational goals has a profound effect on adult retailers' marketing strategies.

Member Welfare: Some organizations emphasize a commitment to its employees such as industry giant and cooperatively owned Good Vibrations. Having a social commitment to the well-being of your staff, whether you utilize employees or independent contractors, has many positive marketing opportunities and can increase bottom line profitability for retailers whose positive environment increases employee commitment to the organization which lowers training costs and loss of productivity through losing valuable staff.

Defining organizational goals has a profound effect on adult retailers' marketing strategies. An adult store whose primary goal is member welfare may have an entirely different strategy than one whose primary goal is unit sales. Understanding the different levels of an organization and what their effect on marketing is, can be valuable to those who don't intend to stay small forever. Defining for yourself and for your organization what your values, core competencies and key strategies are will surely help drive your marketing dollars to their best possible use.

If you consider capitalism a form of warfare, be sure you are making the best use of your arsenal. Map out your line of attack and make clever use of your assets. If you're small now think of yourself as an elite guerilla military unit and make use of your ability to implement change quickly and efficiently.

Adult retail is a complex industry but you can improve your work everyday by remaining focused and on target, something that I hope this series has helped you to do. Happy retailing!


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