Many would argue that starting a business in these tough economic times is not the least bit prudent, especially a business characterized by low inventory turns and very high elasticity of demand. In the short term, one would not expect a high return on investment from such a business, but with a well-defined long-term strategy, starting any business now is not a bad idea. First, many companies that have been around for at least five years are on the brink of bankruptcy. Its fixed assets exceed its current decline in demand and its debt-to-equity ratios are high. It means less competition. Second, when the economy begins to pick up, your startup will be well positioned to ride the tidal wave with little to no debt and built “tough, nimble, and mean.”
Art may not be as easy to sell now, but that’s not necessarily the case in a better economic environment. Let’s examine the patterns of consumer spending on art in Canada.
o Canadian consumers spent $22.8 billion on cultural goods and services in 2003, more than spending on tobacco, alcohol, and gambling combined.
o The $22.8 billion in consumer spending is three times more than government spending on culture in Canada.
o Culture is a growing market: Consumer spending on cultural goods and services grew by 36% between 1997 and 2003, well above inflation (14%) and population growth (6%).
o Canadians spent $1.2 billion on books (excluding school books) in 2003, 34% more than in 1997 (not adjusted for inflation).
o Spending on live performing arts was $980 million in 2003, an increase of 31% from 1997.
o Canadians spent $530 million on artwork, carvings and vases in 2003, 48% more than in 1997.
o Consumer spending on tickets to museums and heritage sites totaled $410 million in 2003, 23% more than in 1997.
o By comparison, consumer spending on live sporting events was $530 million in 2003.
o 49% of Canadian households spent some money on books (excluding school books) in 2003.
o 37% of households spent money on live performing arts.
o 11% of households spent money on artwork, carvings, and vases.
People spend on art. People are likely to trust local artists if they have a choice and the total cost is affordable. Culture and art are growing in Canada. The trend is likely to increase despite the current economic slowdown.
I cannot stress enough that demographics are the key variable in any marketing effort. It’s no coincidence that many companies spend fortunes conducting primary demographic research before developing a new business segment or entering a new market. Art is especially sensitive to demographic segmentation. Therefore, knowing your customer is key to your success. Let’s look at Winnipeg’s demographics to substantiate the above points.
1. As of the 2006 Census, there were 633,451 people residing in Winnipeg and a total of 694,668 in the Winnipeg Census Metropolitan Area as of May 16, 2006, and 711,455 in the Winnipeg Capital Region, which which makes it the largest city in Manitoba and the eighth largest CMA. in Canada.
2. Of the city’s population, 48.3% were men and 51.7% women. 24.3% were 19 years old or younger, people aged 20-39 represented 27.4%, and those aged 40-64 34.0% of the population.
3. The average age of a Winnipegger as of May 2006 was 38.7 years, compared to an average of 39.5 for Canada as a whole.
4. Between the 2001 and 2006 censuses, Winnipeg’s population increased by 2.2%, compared to the average of 2.6% for Manitoba and 5.4% for Canada. The population density of the city of Winnipeg averaged 1,365.2 people per square kilometer, compared to Manitoba’s average of 3.5.
5. The population of the city of Winnipeg is estimated at 672,300 as of July 1, 2009 and that of the census metropolitan area at 739,300.
Psychographics or lifestyle analysis is essentially the analysis of a person’s daily life pattern. Psychographics are generally expressed as activities, interests, and opinions. A detailed lifestyle analysis is likely to help startups in a number of ways. First of all, the analysis will help to plan an effective marketing strategy. Second, understanding lifestyle patterns will help develop good advertising themes and web content. Third, lifestyle analysis helps designers further improve interior and exterior designs.
There is a need to critically understand people’s spending patterns, especially on art and culture, how they can be facilitated by an enhanced online shopping experience that not only connects them with local artists but also provides many useful services.
In order to effectively tap into the target market on the seller’s side, a comprehensive behavioral analysis must be performed. There is a need to study the needs, perceptions, attitudes and other psychological variables that can influence artists and art houses. The following factors have a profound impact on many artists who would like to adopt an online business model.
1. Inability to learn website development techniques or manage internet based portfolios.
2. Total dependence on traditional ways of doing business and advertising.
3. Attitude, values and perception of online business.
Part of a viable strategy is to inform and persuade customers about the company’s offerings. However, a behavioral problem arises if consumers hold inaccurate beliefs or resist change.
The string of events taking place puts additional pressure on local artists and creative boutiques to keep up with the overhead of the business. On the other hand, consumers are looking for low-cost solutions but are less willing to leave their homes to shop. Consumers are showing great interest in shopping online to save cost. Since the global customer shows great interest in purchasing products and services online, there is a business niche in this market. It is necessary to think of ‘an electronic store that only connects artists with consumers’. There is also a need to educate entrepreneurs on how to increase the reach of their businesses beyond the ‘traditional brick and mortar establishments’. That’s where your company could fit into the picture.