Friday, April 6, 2007

Marketing Project - Local Auction House

Last semester I took the 500 level marketing course for my MBA. We were required to do a psuedo business plan. Of couse I wanted to do one on open source software however we were barred from doing something related to work. While at first annoyed by this, I enjoyed tackling a problem not related to the everyday stuff. Suggested by someone with a background in art and auction houses we noodled on the idea of the auction house. We figured we could tackle this problem with three parameters (a) it has to be regional (Philadelphia) but high end (b) goal is to increase revenue over three years and (c) we needed to bring in folks which where potential future auction house attendees.

Our assumptions about the existing auction market is that it catered to higher income folks typically without children in the home anymore. So our sites were set on regional high-income with families. After thinking about this post the assignment, I realize we could have been further fine grained, in that what age bracket should the children be in and what psychographic behaviors might we want. These things would further help refine the target segment and ability to reach that audience.

The idea then was to introduce a second set of auctions for the auction house to run focusing less on antique art and collectibles, but more on unique items relevant for the decoration, design, and placement within kids environments. We are not talking about toys or items they get the pleasure of breaking ( I have two boys I know the pain ), but items which are treasured used to create a unique environment. Our suggestion was a mixed product line of items 55% art, 25% toys (collectible), 15% clothing (unique, regional designer), 5% misc (leveraging traditional product line).

Realizing that a regional auction house prides itself on brand, tackling the second product line has to be done with the same screening and passion for excellence. The goal is not to increase revenue by just bringing in more feet, but attracting folks with the eye for excellence and potential future auction house goers.

Realize, this was not a scientific study, nor did time allow us to become super-experts but we did have some fun with it. Marketing Plan.pdf

We had four good resources of information
1. Demographic information. On this topic you have to love the government they sure keep track of lot's of information. We used American Fact Finder and the American Community Survey. The information valuable to us (and just interesting i guess )
* about 200,000 folks 25-34 years of age in the Philly area
* about 200,000 folks 35-44 years of age in the Philly area
* And of those 400,000 folks about 19,000 earn greater than 100,000$

2. National Association of Auctioneers Was a great source of information about the auction house. Lot's of good stats in there about how much is spent on auctions, differences between live and web, differences between regions and information on type of products sold at auction.

3. Past sales of an auction house. Pook and Pook has information online of all past sales. We aggregated that information from 2003 to present.
- median for items (referred to as a lot) sold was about 700$
- each year they sold from 5600 to 8000 items sold
- prices ranged from less than 100$ to almost 500,000$
Interesting for me was the range in prices of items sold. While their public auction prices are disclosed they probably do other work as well which is not part of the standard auction process.

4. Attended live auction. This was a great experience. Regardless of the fact I was trying to understand the auction process and the auction crowd the event was a lot of fun. If you have not attended a live art and antique auction you should. As for the auction process I learned quite a bit including that there are four sources of bids
* book - people who write in bids before the event.
* floor - people who live attend the event
* phone - folks who can dial in via the phone to make bids on items
* web - they are connected via Ebay's live auctioneer tools to take bids directly from ebay.
My experience was the HIGH priced items were typically purchased by folks on the phone, rather than the floor.

All in all it was a great experience, both the project and learning a little about the auction process.

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