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Screen Test for a Direct Public Offering |
Five: The
Company has natural affinity groups, with discretionary cash to risk for long-term gain. |
Our first DPOs, starting twenty years ago, were consumer banks,
which marketed shares primarily to their depositors. These customers obviously had some
money they didn't need for immediate living expenses, money they had already trusted to
the bank. Most of the DPOs we have worked on since have been directed to large groups of
retail customers, suppliers and employees. But affinity groups can include people who
don't have an existing relationship with the business. For instance, we have found that
people in the same geographic community are likely investors, even if they aren't also
customers. Other groups may be interested in the particular technology or corporate
mission of a business. One of our clients appealed to a whole subculture of believers in
homeopathy. Several wineries and breweries have attracted capital from people who like the
idea of getting in early on a new brand of their favorite beverage. Just the numbers in
your affinity groups is only part of the story. In looking at your demographics, it's also
important to measure the strength of the affinity (how loyal do they feel toward your
company), their ability to part with a significant amount of cash and the likelihood that
they would use that cash to own shares (rather than spend it on some consumer item or put
it away in a savings-type, low-risk investment.) |
Six: Those
affinity groups will recognize the Company's name and consider its share offering
materials. |
One of the advantages in marketing a bank's shares to its
depositors was that they certainly would pay attention to any communication from their own
bank, at least long enough to find out what it was about. Several other DPOs have been for
companies with consumer branded products, and we've carried the logo, slogans and color
identifications through into the share offering materials. We've had companies with names
that were entirely different from their product names, where the marketing challenge was
to transfer the feelings about the known name over to the new one. Creating recognition
for a company with no identification among affinity groups is beyond the present state of
the art. |
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