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“The only reason a great many American families don’t own elephants is that they have never
been offered an elephant for a dollar down and easy weekly payments”
—Mad Magazine
Learning Objectives
Students will be able to:
1. Describe the steps in developing an advertising strategy.
2. Explain the differences among promotion, publicity, personal selling, and advertising.
3. Describe the advantages and disadvantages of the various advertising media.
4. Identify four basic methods for preparing an advertising budget.
5. Explain practical methods for stretching a small business's advertising budget.
Instructor’s Outline
I. Introduction
A. Introduction
1. Failing to advertise your products or services would be like preparing a great
party but forgetting to invite the guests.
2. Making your potential customers aware of your business and how your products
and services can meet their needs is an absolute essential element of a business.
3. Advertising and promotion are not “luxuries” but essential components of any
business plan.
B. The USP
1. Owners should build their ads around a unique selling proposition (USP), a key
customer benefit of a product or service that sets it apart from its competition.
2. To be effective, a USP must be unique, something the competition does not (or
cannot) provide--and strong enough to encourage the customer to buy.
3. A successful USP answers the critical question every customer asks:
a) "What's in it for me?"
b) It should express in 10 words or less exactly what a business can do for its
customers.
c) The USP becomes the heart of the advertising message.
4. Sometimes, the most powerful USPs are the intangible or psychological benefits a
product or service offers customers: e.g., safety, security, acceptance, or status.
5. The best way to identify a meaningful USP is to describe the primary benefit your
product or service offers customers and then to list secondary benefits it provides.
a) Building an ad around a USP spells out for customers the specific benefit they
will get if they buy that product or service.
b) See Table 11.1 – A Six-Sentence Advertising Strategy.
A company’s target audience and the nature of its message determine the advertising media it
will use. Some messages are much more powerful in some media than in others.
11. Emphasize the benefits that the product or service provides to the customer
12. Evaluate the cost of different advertising medium
You must be patient, giving the advertising campaign a reasonable time to produce results.
Sales increases are most noticeable four to six months after an advertising campaign begins.
B. Publicity
1. Publicity is any commercial news covered by the media that boosts sales but for
which the small business does not pay.
2. Publicity is obtained by allowing someone, normally a newspaper or magazine
writer, to tell a positive story about your business, or it’s people or it’s products or
services.
3. Publicity can be a powerful influence on how customers view your business.
4. Tactics any small business owner can use to stimulate publicity.
a) Write an article that will interest your customers or potential customers.
b) Contact local TV and radio stations and offer to be interviewed.
c) Publish a newsletter.
d) Contact local business and civic organizations and offer to speak to them.
e) Offer or sponsor a seminar.
f) Write news releases and fax them to the media.
g) Volunteer to serve on community and industry boards and committees.
h) Sponsor a community project or support a nonprofit organization or charity.
i) Promote a cause.
5. Sometimes publicity is a matter of knowing a celebrity or, as in the case of Drake
Bakeries, having a celebrity who knows and loves your product.
Pat Cavanaugh is up at 4:00 a.m. to exercise and in the office by 6:30 a.m. Pat runs his life, and
those of his sales staff from his well-worn day-timer. On a recent sales blitz he and five sales
reps covered 114 appointments in two days. Pat Cavanaugh’s sales skills have resulted in a
2,000% company growth in 5 years.
Recently, Pat has hired key people to help him run the business. What position will Pat hold?
He will be the CEO and the firm’s leading salesperson.
221 Section IV Small Business Marketing Strategies
1. Pat Cavanaugh is an absolutely exceptional salesman who has personally driven the
company’s revenues to new heights. In your opinion, can he continue to grow the firm
or should he concentrate on being the CEO?
Answer: Student’s answer may vary.
C. Personal Selling
1. Personal selling is the personal contact between salespeople and potential
customers resulting from sales efforts.
2. Effective personal selling can give the small company a definite advantage over
its larger competitors by creating a feeling of personal attention.
3. Characteristics of those that are successful at personal selling:
a) Enthusiasm and alertness to new opportunities.
b) Concentration on selected accounts.
c) Through planning.
d) Direct approach. They
e) Work from the customer’s perspective.
f) Spend 60 to 70 percent of a sales call letting the customer talk while they
listen.
g) See customers’ objections for what they really are—a source of valuable
information.
h) Focus on building a rapport with prospects before attempting to sell them
anything.
i) Don’t offer product or service recommendations until 40 percent or more of
the time in the sales call has elapsed.
j) Emphasize customer benefits, not product or service features, when selling.
k) Use “past success stories.”
l) Leave sales material with clients.
m) See themselves as problem solvers, not just vendors.
n) Measure their success not just by sales volume but also by customer
satisfaction.
4. Sales is not a profession that is suited to everyone.
a) Sales requires discipline, persistence, empathy and a sincere desire to sell the
products and services that will benefit the customer.
b) Salespersons must be capable of coping with rejection.
c) Very few potential customers buy on the first few visits or sales calls.
d) Salespersons must be relentless, resilient and very resourceful to become
successful.
5. Closing the sale is aided by some new high-tech tools used as:
a) Win2 a computer software program.
b) Sales Proposal-Architect
c) Salesforce.com
d) Hot Office
e) Hot Data.
6. Most firms develop a “selling systems” which is unique to their market.
a) Elements of a selling system would include the following:
Chapter 11 - Creative Use of Advertising and Promotion 222
D. Advertising
1. Advertising is any sales presentation that is nonpersonal in nature and is paid for
by an identified sponsor.
2. Advertising is a billion-dollar industry whose function is to inform customers of
their choices and influence their buying decisions.
b) Who are my target customers, and what are their characteristics? A customer
profile often points to the appropriate medium to get the message across most
effectively.
c) What budget limitations do I face?
d) What media do my competitors use? It is helpful to know the media
competitors use.
e) How important are repetition and continuity of my advertising message? In
general, an ad becomes effective only after it is repeated several times, and
many ads must be continued for some time.
f) What does the advertising medium cost? Entrepreneurs must consider two
types of advertising costs: absolute cost and relative cost.
(1) Absolute cost is the actual dollar outlay a business owner must make to
place an ad in a particular medium for a specific time period.
(2) An even more important measure is an ad's relative cost, the ad's cost per
potential customer reached.
B. Media Options
1. The relative effectiveness of each media depends on its ability to inform and
influence the customers of your target market.
a) The pros and cons of each advertising media can only be evaluated in light of
the firms advertising strategy.
2. Newspapers
a) Traditionally, the local newspaper has been the medium that most advertisers
rely on.
b) The number of newspapers in the United States has declined since 1960.
(1) This medium still attracts a large percentage of the advertising dollars
nationwide.
c) Newspaper advertisement advantages
(1) Selected geographic coverage. Newspapers are geared to a specific
geographic region, and they reach potential customers in all demographic
classes.
(2) Flexibility. Newspaper advertisements can be changed readily; the owner
can select the size of the ad, its location in the paper, and the days on
which it runs.
(3) Timeliness. Papers almost always have very short publication deadlines.
(4) Communication potential. Newspaper ads can convey a great deal of
information by employing attractive graphics and copy.
(5) Low costs. Newspapers normally offer advertising space at a low absolute
cost and, because of their blanket coverage of a geographic area, at a low
relative cost as well.
(6) Prompt responses. Newspaper ads typically produce relatively quick
customer responses.
d) Newspaper advertisement disadvantages
(1) Wasted readership. At least a portion of an ad's coverage will be wasted
on those who are not potential customers.
Chapter 11 - Creative Use of Advertising and Promotion 224
(3) Target marketing. Once business owners define their target markets, they
can select magazines whose readers most closely match their customer
profiles.
(4) Ad quality. Photographs and drawings can be reproduced very effectively,
and color ads are readily available. Advertisers can also choose the
location of their ads in a magazine and can design creative ads that capture
readers' attention.
e) Magazines advertising disadvantages
(1) Costs. Magazine advertising rates vary according to their circulation rates;
the higher the circulation, the higher the rate.
(2) Long closing times. For a weekly periodical, the closing date for an ad
may be several weeks before the actual publication date.
(3) Lack of prominence. The effectiveness of a single ad may be reduced
because of a lack of prominence. Proper ad positioning, therefore, is
critical to an ad's success. Research shows that readers "tune out" right-
hand pages and look mainly at left-hand pages.
7. Direct Mail
a) Direct mail includes such tools as letters, postcards, catalogs, discount
coupons, brochures, computer disks, and videotapes mailed to homes or
businesses.
(1) Fifteenth-century printers printed the earliest known catalogs.
(2) Direct mail marketers spend almost $200 billion each year to reach their
varied markets.
b) Data mining, as it is termed, holds great promise.
(1) In the future, you may no longer receive mailers to purchase items for
which you have no use.
c) “Junk mail” has proven to be an effective advertising medium.
d) Direct mail advantages
(1) Selectivity. Its greatest strength. Depending on mailing list quality, an
owner can select an audience with virtually any set of characteristics.
(2) Flexibility. The advertiser's presentation to the customer can be as simple
or as elaborate as necessary. With direct mail, the tone of the message can
be personal, creating a positive psychological effect. In addition, the
advertiser controls the timing of the campaign; she can send the ad when it
is most appropriate.
(3) Reader attention. An advertiser's message does not have to compete with
other ads for the reader's attention. Recipients opened and read 48 percent
of their direct mail.
(a) Table 11.6 describes common categories of direct mail campaigns with
examples of each.
(4) Rapid feedback. In most cases, the ad will generate sales within three or
four days after customers receive it.
(5) Measurable results and testable strategies. Direct marketers can readily
measure the results their ads produce. Also, direct mail allows advertisers
to test different ad layouts, designs, and strategies (often within the same
"run") to see which one "pulls" the greatest response.
Chapter 11 - Creative Use of Advertising and Promotion 228
e) Table 11.7 offers guidelines for creating direct mail ads that really work.
f) Direct mail disadvantages
(1) Inaccurate mailing lists. 60 percent of the success of direct marketing is
based on the quality of the mailing list.
(2) High relative costs. Direct mail has a higher cost per thousand (cpm) than
any other advertising medium.
(a) Figure 11.3 shows the breakdown of costs for a typical 3,000-piece
mailing.
(b) But if the mailing is well planned and properly executed, it can
produce a high percentage of returns, making direct mail one of the
least expensive advertising methods in terms of results.
(3) Rising postal rates. One of the primary causes of the high costs of direct
mail ads is postage costs, which continue to rise.
(4) High throwaway rate. The average family receives numerous pieces of
direct mail each week.
(a) Often called junk mail, direct mail ads become "junk" when and
advertiser selects the wrong audience or broadcasts the wrong
message.
Carved wooden figures of Robert DuLong have been selling successfully via catalogs. They are
produced by DuLong'’ Phoenix, N.Y. company, Woodendipity, and are perfect for the catalog
marketplace.
1. What type of products do you purchase from catalogs? How confident are you about the
quality of the products sold in catalogs?
Answer: Student’s answers may vary.
2. What are the most effective advertising techniques employed by the successful catalog
companies?
Answer: Student’s answers may vary. Most common answers are: quality artworks and
pictures, promotional offers, sponsorships with well-known person, and availability of
229 Section IV Small Business Marketing Strategies
(5) Creative entrepreneurs have found other ways to boost their direct mail
response rates, including three-dimensional mailers, computer diskettes,
and compact disks.
8. High-tech direct mail
a) Sending out ads on computer diskettes is an excellent way to reach upscale
households and businesses.
(1) They give advertisers the power to create flashy and attention-grabbing
designs. They also hold the audience’s attention.
b) Compact discs (CDs) offer advertisers the same benefits as computer disks
with one extra--more space to do it in. Companies are using CDs with
interactive ads to sell everything from cars to computers.
9. How to use direct mail
a) The key to a direct mailing's success is the right mailing list.
b) Owners can develop lists themselves, using customer accounts, telephone
books, city and trade directories, and other sources.
10. Outdoor advertising
a) National advertisers have long used outdoor ads, and small firms (especially
retailers) are now using this medium.
b) Very few small businesses rely solely on outdoor advertising; instead, they
supplement other advertising media with billboards.
c) With a creative outdoor campaign, a small company can make a big impact,
even on a small budget.
d) Outdoor advertising advantages
(1) High exposure. Outdoor advertising offers a high-frequency exposure;
studies suggest that the typical billboard reaches an adult 29 to 31 times
each month.
(2) Broad reach. The people outdoor ads reach tend to be younger, wealthier,
and better educated than the average person.
(3) Flexibility. Advertisers can buy outdoor advertising units separately or in
a number of packages. Through its variety of graphics, design, and unique
features, outdoor advertising enables the small advertiser to match his
message to the particular audience.
(4) Cost efficiency. Outdoor advertising offers one of the lowest costs per
thousand customers reached of all the advertising media.
e) Outdoor ads' disadvantages
(1) Brief exposure. Because billboards are immobile, the reader is exposed to
the advertiser's message for only a short time, typically no more than five
seconds.
(2) Legal restrictions. Outdoor billboards are subject to strict regulations and
to a high degree of standardization.
(3) Lack of prominence. Clutter of billboards and signs tends to reduce the
effectiveness of a single ad, which loses its prominence in the crowd of
billboards.
Chapter 11 - Creative Use of Advertising and Promotion 230
f) Using outdoor ads. Because the outdoor ad is stationary and the viewer is in
motion, the small business owner must pay special attention to its design.
(1) Identify the product and the company clearly and quickly.
(2) Use a simple background. The background should not compete with the
message.
(3) Rely on large illustrations that jump out at the viewer.
(4) Include clear, legible type.
(5) Use black-and-white designs. Research shows that black-and-white
outdoor ads are more effective than color ads.
(6) Emphasize simplicity; short copy and short words are best.
(7) Use sharp, eye-catching graphics.
(8) Be located on the right-hand side of the highway. Studies show that ads
located there draw higher recall scores than those located on the left-hand
side.
(9) Use billboards as reinforcement for other methods of advertising and to
remind prospects of where you are and what you do.
11. Transit advertising
a) Transit advertising includes advertising signs inside and outside some 70,000
public transportation vehicles throughout the country's urban areas.
b) The medium is likely to grow as more cities look to public transit systems to
relieve transportation problems.
c) Transit ads advantages
(1) Wide coverage. Transit advertising offers advertisers mass exposure to a
variety of customers.
(2) Repeat exposure. Transit ads provide repeated exposure to a message,
giving advertisers ample opportunity to present their messages to transit
riders.
(3) Low cost.
(4) Flexibility. With transit ads, an owner can select an individual market or
any combination of markets across the country.
d) Transit ads' disadvantages
(1) Generality. It cannot target a particular segment of the market through
transit advertising.
(2) Limited appeal. Unlike many media, transit ads are not beamed into the
potential customer's residence or business.
(3) Brief message. Transit ads do not permit the small advertiser to present a
detailed description or a demonstration of the product or service for sale.
12. Directories
a) Directories are an important advertising medium for reaching customers who
have already made purchase decisions. The directory simply helps these
customers locate the specific product or service they have decided to buy.
b) Directory advantages
(1) Prime prospects. Directory listings reach customers who have already
decided to purchase an item.
(2) Long life. A typical directory may be published annually.
c) Directory disadvantages
231 Section IV Small Business Marketing Strategies
(1) Lack of flexibility. Listings and ads in many directories offer only a
limited variety of design features.
(2) Obsolescence. Because directories are commonly updated only annually,
some of their listings become obsolete.
d) Using directories. When choosing a directory, the small business owner
should evaluate several criteria:
(1) Completeness. Does the directory include enough listings that customers
will use it?
(2) Convenience. Are the listings well organized and convenient?
(3) Evidence of use. To what extent do customers actually use the directory?
(4) Age. Is the directory well established, and does it have a good reputation?
(5) Circulation. Is there an audited circulation statement?
About 33 percent of American men and 36 percent of American women are considered
overweight. For years, marketers ignored this plus-sized segment of the population. Now
companies of all sizes are providing products and services aimed at this target audience. In
1989, Jan Herrick began publishing Royal Resources, a directory of companies offering plus-
sized products and services.
One small company focusing on the plus-sized market is Anne Kelly's Junonia Ltd., a maker of
active-wear that sells its products through a mail-order catalog. Kelly's direct mail catalog
carries items such as bike shorts, swimsuits, sports bras, ski jackets, leggings, and many others.
Within three years, Junonia's mailing list topped 350,000, and sales surged past $2 million.
Like Kelly many companies targeting the plus-sized market have discovered that direct mail is
an excellent avenue for reaching their customers. For many large people, shopping in retail
stores can be frustrating, embarrassing, and painful.
Companies selling to the plus-sized market must exercise caution, however. The problem stems
from America's obsession with thinness. One way many have found to work well is by placing
ads in magazines such as BBW, Radiance, and Dimension and other media that invite
customers to write, fax, call, or e-mail for a catalog.
1. Working with a team of your classmates, develop at least five methods small companies
targeting the plus-sized market could use to reach their customers.
Answer - Using positive ads about having a "real" woman's or man's figure/physique,
piggyback on recent stories about "large" major TV/film stars.
2. What kinds of unique selling propositions should they consider?
Answer - Think of terms that convey "largeness" in positive terms, etc. Focus on benefits
such as convenience, privacy, style, etc.
B. Cooperative Advertising
1. In cooperative advertising, a manufacturing company shares the cost of
advertising with a small retailer if the retailer features its products in those ads.
2. Both the manufacturer and the retailer get more advertising per dollar by sharing
expenses.
3. Cooperative advertising not only helps small businesses stretch their advertising
budgets; it also offers another source of savings: the free advertising packages that
many manufacturers supply to retailers.
a) These packages usually include photographs and illustrations of the product as
well as professionally prepared ads to use in different media.
C. Shared Advertising
1. In shared advertising, a group of similar businesses forms a syndicate to produce
generic ads that allow the individual businesses to dub in local information.
2. The technique is especially useful for small businesses that sell relatively
standardized products or services such as legal assistance, autos, and furniture.
D. Publicity
1. The press can be either a valuable friend or a fearsome foe to a small business,
depending on how well the owner handles her firm's publicity.
2. However, wise small business managers recognize that investing time and money
in public relations (publicity) benefits both the community and the company.
3. The community gains the support of a good business citizen, and the company
earns a positive image in the marketplace.
4. Many small businesses rely on media attention to get noticed, and getting that
attention takes a coordinated effort.
235 Section IV Small Business Marketing Strategies
Chapter Summary
2. Explain the differences among promotion, publicity, personal selling, and advertising.
• Promotion is any form of persuasive communication designed to inform consumers about
a product or service and to influence them to purchase those goods or services.
• Publicity is any commercial news covered by the media that boosts sales but for which
the small business does not pay.
• Personal selling is the personal contact between salespeople and potential customers
resulting from sales efforts.
• Advertising is any sales presentation that is non-personal in nature and is paid for by an
identified sponsor.
• Despite their limited advertising budgets, small businesses do not have to take a second-
class approach to advertising. Three techniques that can stretch a small company’s
advertising dollars are cooperative advertising, shared advertising, and publicity.
Discussion Questions
1. What are the three elements of promotion? How do they support one another?
Answer - Promotion is any form of persuasive communication designed to inform consumers
about a product or service and to influence them to purchase these goods or services. It
includes publicity, personal selling, and advertising. The difference in audiences and forms
broaden the reach and offer variety to the promotional message.
2. What factors should a small business manager consider when selecting advertising media?
Answer - Before considering either the advertising message or the media by which to send it,
business owners must understand their target customers. Business owners should address the
following questions.
What business are we in?
What image do we want to project?
Who are our target customers and what are their characteristics? Where can we
best reach them?
What do my customers really purchase from us?
What benefits can the customer derive from our goods or services?
How do I want to position our company in the market?
What advertising approach do our competitors take?
3. What is a unique selling proposition? What role should it play in a company's advertising
strategy?
Answer - A successful USP answers the critical question every customer asks, "What's in it
for me?" It should express in 10 words or less exactly what a business can do for its
customers. The USP becomes the heart of the advertising message. Owners should build their
ads around a unique selling proposition (USP), a key customer benefit of a product or service
that sets it apart from its competition.
4. Create a table to summarize the advantages and disadvantages of the following advertising
media:
Advantages Disadvantages
Newspapers. Selected geographic Wasted readership
coverage Reproduction limitations
Flexibility. Lack of prominence
Timeliness Declining readership
Communication Short ad life.
potential Buying Newspaper Space
Low costs
Prompt response
Radio
237 Section IV Small Business Marketing Strategies
Poor listening
Universal infiltration Need for repetition
Market segmentation Limited message
Flexibility and timeliness Buying Radio Time
Friendliness
Television Brief exposure
Broad coverage Clutter
Visual advantage Zapping
Flexibility Cost
Magazines Design assistance
Cost
Long life spans Long closing times
Multiple readership Lack of prominence
Target marketing
Ad quality
Direct Mail
Inaccurate mailing lists
Selectivity High relative costs
Flexibility Rising postal rates
Reader attention High throwaway rate
Rapid feedback
Measurable results and
testable strategies
Outdoor advertising
Brief exposure
High exposure Legal restrictions
Broad reach Lack of prominence
Attention-getting
Flexibility
Transit Advertising Cost efficiency
Generality
Wide coverage Limited appeal
Repeat exposure Brief message
Low cost
Directories Flexibility
Lack of flexibility
Prime prospects Obsolescence
Trade Shows Long life
Increasing costs
Chapter 11 - Creative Use of Advertising and Promotion 238
5. What are fixed spots, preemptible spots, and floating spots in radio advertising?
Answer - Fixed spots are guaranteed to be broadcast at the times specified in the owner's
contract with the station. Preemptible spots are cheaper than fixed spots, but the advertiser
risks being preempted by an advertiser willing to pay the fixed rate for a time slot. Floating
spots are the least expensive, but the advertiser has no control over broadcast times.
7. Briefly outline the steps in creating an advertising plan. What principles should the small
business owner follow when creating an effective advertisement?
Answer - An advertising strategy ensures that money isn't wasted. A well-developed strategy
increases the likelihood of good results. The first step is to define the purpose of the
company's advertising program by creating specific, measurable objectives. The next step is
to identify the company's target customers. Answering those questions will help business
owners define their business, profile their customers, and focus their advertising messages on
their specific target market to get more for their advertising dollars. Once the small business
owner has defined her target audience, she can design an advertising message and choose the
media for transmitting it.
8. Describe the common methods of establishing an advertising budget. Which method is most
often used? Which technique is most often recommended? Why?
Answer - There are four methods of determining an advertising budget:
What-is-affordable method--The advertising budget is allocated funds only after all
other budget items have been financed.
Match the advertising expenditures of competitors. This method assumes that a firm's
advertising needs and strategies are the same as those of its competitors.
239 Section IV Small Business Marketing Strategies
9. What techniques can small businesses use to stretch their advertising budgets?
Answer - How to advertise big on a small budget.
In cooperative advertising, a manufacturing company shares the cost of advertising
with a small retailer if the retailer features its products in those ads. Both the
manufacturer and the retailer get more advertising per dollar by sharing expenses. In
shared advertising, a group of similar businesses forms a syndicate to produce generic
ads that allow the individual businesses to dub in local information. The technique is
especially useful for small businesses that sell relatively standardized products or
services such as legal assistance, autos, and furniture.
Publicity--the press can be either a valuable friend or a fearsome foe to a small
business, depending on how well the owner handles her firm's publicity. However,
wise small business managers recognize that investing time and money in public
relations (publicity) benefits both the community and the company.
Other cost-saving suggestions for advertising expenditures include the following--
repeat ads that have been successful, use identical ads in different media, hire
independent copywriters, graphic designers, photographers, and other media
specialists, and concentrate advertising during times when customers are most likely
to buy.