Marketing in Second Life is a funny animal. Sometimes it works as hoped, sometimes everything seems to go wrong. During this short time (since last November or something like that) I've had stores in-world I've seen marketing working and not working so well.
Word-of-mouth seems to be most effective way to promote your store, items or services on Second Life. The problem with word-of-mouth is that you must get the word out somehow first. For me the best ways have been the location of my first store (Starlust) and the group of the location, Dead Dolls of SL group, hunts and shopping events, such as Stumblebum Brigade. I have also got some promotion on blogs, which I'm very grateful for.
First of all I'll talk about hunts and shopping events: Especially hunts are great for the traffic and they can be good for your sales... Or not. The problem with hunts is that as they are usually about hunting for free items, most hunters are there solely for the freebies and they are not interested in buying anything. For a store owner and designer this may be a bit frustrating because the store rents still have to be paid and all the texture uploads cost a little. Not to mention all the time one has used to design and produce the items in store. However, as a side note, I have enjoyed taking part on hunts.
Shopping events may or may not work. I've taken part on some and some of them have been pretty good for my sales and some not so good. In my case I think the main problem is that my store is pretty unknown and many of the event shoppers skip it, as they don't know what to expect from my items. I think this way, because I do have recurring clients and I have got some pretty good feedback of my stuff and my store. So it cannot be only because my items are bad.
Sending updates to groups can also work. Or not. Some of the groups get lots of updates, so an update here and there can get lost in the flood. Sometimes someone congratulates me of something they think is a new thing, even if it's been going on for a while and I have been sending several notices about it. Group notices may get ignored for a reason or another. Once in a while a group notice I've sent has done it's work, so I do recommend using groups for promotion in SL.
Location is something that may prove to be important, especially for a new and unknown store. I'm pretty convinced that I wouldn't have any of the "name" I do right now if I hadn't got my first store on Harold, Starlust. Starlust is a busy community and I myself ended up visiting the sims through recommendation of a friend. And I have found many cute stores just by exploring the sims. When I first opened NUT I didn't have a wide network of influential friends on SL or I didn't know almost anyone who could have promoted my brand to potential clients. So my first clients were pretty much people who just happened to walk in my store. This way the location has been really big deal for me. If I had started on a less known sim or if I'd bought or rented an own sim someplace I wouldn't have even the small client base I do at the moment.
At the last thing on this blog post I must send a special thank you to all the people who have believed in me and my creations. My designs haven't been all over the blogs, but some awesome bloggers have promoted them and created some spikes on my sales and traffic. I also have some really special friends who have helped me and told me to keep my head high, even when I have had trouble on paying my SL rents and thought I should close the store all together. Even if running the store hasn't brought bread to my RL table, it has helped me to meet and friend some nice people I'm happy to know.