Marketing a Marketing a Small BusinessSmall Business

Show me the MoneyShow me the Money

•Prepare a description of the promotional activities

•Develop themes where appropriate

•Select appropriate elements in the promotional mix: Advertising, Personal Selling, Publicity, Sales Promotion

•Compute costs of promotional activity

•Schedule specific activities

•Create activities in detail

•Implement the activities

•Follow-up on effectiveness

•Promotion: Communication activities that inform potential consumers about the existence of goods, services, or ideas which persuade them to buy

•Product promotion: Used to persuade consumers to buy a particular product or service

•Institutional promotion: Used to create a certain image of the business in the eyes of the consumers•Promotional mix: The combination, or blend, or marketing communication channels that a business uses to send its messages to consumers•Media: Agencies, means, or instruments used to promote messages to the public. Examples: TV, magazines, newspaper

•Advertising

•Personal selling

•Publicity

•Sales promotion

Any PAID form of

NONPERSONAL presentation of ideas, goods, or

services

Historical Milestones in Advertising  

Advertising goes back to the very beginnings of recorded history. Archaeologists working in the countries around the Mediterranean Sea have dug up signs announcing various events and offers. The Romans painted walls to announce gladiator fights, and the Phoenicians painted pictures promoting their wares on large rocks along parade routes. A Pompeii wall painting praised a politician and asked for the people's votes.  During the Golden Age in Greece, town criers

announced the sale of slaves, cattle, and other goods.  Another early advertising form was the mark that trades-people placed on their goods, such as pottery. As the person's reputation spread by word of mouth, buyers began to look for his or her special mark, just as trademarks and brand names are used today.

The turning point in the history of advertising came in the year 1450, with the invention of the printing press. Advertisers no longer had to produce extra copies of a sign by hand.

In 1622, advertising was given a big boost with the launching of the first English newspaper, The Weekly Newes. Joseph Addison, the publisher, gave this advice to copy writers; “The great art in writing advertising is the finding out the proper method to catch the reader, without which a good thing may pass unobserved, or be lost among commissions of bankrupts." The September 14, 1710, issue of the Tatler contained ads for razor strops, patent medicine, and other consumer products.

Advertising had its greatest growth in the United States. Ben Franklin has been called the father of American advertising because his Gazette, first published in 1729, had the largest circulation and advertising volume of any paper in colonial America.

Types of AdvertisingTypes of Advertising• Promotional Advertising: Communication

designed to increase sales of products and services.

• Institutional Adverting: Promotion designed to create a favorable image and goodwill for business or organizations.

Media?

• On the average, how much time per week do you spend with the following media?– Television– Radio– Magazines– Newspapers– Internet– Outdoor (billboards, bus signs, etc.)

• Which media do you pay the most attention to advertisements?

• What differences do you see in your media habits and those of your parents?

•Print media: Newspapers and magazines

•Broadcast media: Radio and TV

•Direct mail: Mailings sent by the business to the prospective customers

•Outdoor transit media: Billboards, outdoor signs, posters, marquees

•Other media: Specialty advertising, directory advertising, motion picture advertising

Advantages Obtained by Advantages Obtained by Advertising in NewspapersAdvertising in Newspapers

• High level of reader involvement.

• Circulation is known.

• The cost of local newspaper advertising is low.

• Great deal of flexibility.

• Frequency

Disadvantages Resulting by Disadvantages Resulting by Advertising in NewspapersAdvertising in Newspapers

• Short life span.

• Wasted circulation.

• The quality of production is poor.

Advantages Obtained by Advantages Obtained by Advertising in MagazinesAdvertising in Magazines

• High demographic selectivity.

• Long advertising life.

• Good reproduction quality.

• Advertisements held in higher regard. Prestige/Credibility

How Important is Advertising to Magazines?How Important is Advertising to Magazines?

The chart below shows the top five magazines and the percentage of their revenues generated by advertising, subscriptions and

newsstand sales.

Total Revenue Advertising Subscribers NewstandTV Guide $1,172,127,000 41.9% 43.2% 14.9%People $1,155,395,000 61.8% 18.9% 19.3%Time $962,651,000 68.4% 27.2% 4.4%Sports Illustrated $905,313,000 67.8% 28.6% 3.6%Better Homes & Garden $595,667,000 74.6% 23.0% 2.4%

Source: Http://www.adage.com (1999 figures)

Disadvantages Resulting by Disadvantages Resulting by Advertising in MagazinesAdvertising in Magazines

• Long lead time.

• High cost.

• Inflexibility.

• Lack of penetration.

Advantages of Radio Advantages of Radio AdvertisingAdvertising

• Low cost

• Selectivity

• Flexibility

• Local personalities

• Useful supporting data

Disadvantages of Radio Disadvantages of Radio AdvertisingAdvertising

• Lack of prestige

• Short life

• Shared audience attention

• Audio only presentation

Advantages of Television Advantages of Television AdvertisingAdvertising

• Large audience

• Attention getting ability

• Low cost per exposure

• Personal appeal

• Can have flexibility

Disadvantages of Television Disadvantages of Television AdvertisingAdvertising

• High absolute cost

• High degree of clutter

• Short message life

• Time limitations

• Low audience selectivity

• Ignored messages

Cost to Advertise on the Super Bowl

Year Price Rating Viewers (millions) Cost/Rating Pt CPM1967 $42,000 23.0 22.5 $1,826.09 N/A1970 $78,200 24.0 44.27 $3,258.33 $1.771975 $110,000 25.0 56.05 $4,400.00 $1.961980 $275,000 26.0 76.24 $10,576.92 $3.611985 $500,000 27.0 85.53 $18,518.52 $5.851990 $700,000 28.0 73.85 $25,000.00 $9.481995 $1,000,000 29.0 83.42 $34,482.76 $11.992000 $2,100,000 30.0 88.46 $70,000.00 $23.74

Source: Nielsen Advertising Research, Advertising Age Research.

Cost to Advertise on the Super Bowl

Source: Nielsen Advertising Research, Advertising Age Research.

YearPrice for 30

secondsAvg. Number

HomeAvg. Number Viewers

1967 $40,000 22,570,000 51,180,0001970 78,200 23,050,000 44,270,0001975 110,000 29,040,000 56,050,0001980 275,000 35,330,000 76,240,0001985 500,000 39,390,000 85,530,0001990 700,000 35,920,000 73,852,0001995 1,000,000 39,400,000 83,420,0002000 2,100,000 43,618,000 88,465,0002005 2,400,000 45,081,000 86,072,0002006 2,500,000 45,867,000 90,745,0002007 2,600,000

Advantages of Direct Mail Advantages of Direct Mail AdvertisingAdvertising

• Audience selectivity

• Flexibility

• Lack of direct competition

• Personalization

• Measured performance

Disadvantages of Direct Mail Disadvantages of Direct Mail AdvertisingAdvertising

• Potential high cost

• Lack of editorial matter

• Negative image

Advantages of Outdoor Advantages of Outdoor AdvertisingAdvertising

• Flexibility

• High repeat exposure

• Low cost per exposure

• Ability to be close to purchase point

This ad for a portable email device is aimed at busy travelers looking for convenience.

Http://www.billboardinfo.com Http://www.buyelink.com

Disadvantages of Outdoor Disadvantages of Outdoor AdvertisingAdvertising

• Brevity of exposure

• Limited message length

• Limited selectivity

• Attracts criticism

Advantages of Transit Advantages of Transit AdvertisingAdvertising

• Low cost

• Geographic flexibility

• Large captive audience

• Message length

Http://www.jessicamcclintock.com

Disadvantages of Transit Disadvantages of Transit AdvertisingAdvertising

• Limited target market

• Lack of prestige

Media Mix in the United States

Television38.7%

Radio13.0%

Magazines12.2%

Outdoor1.8%

Newspapers34.3%

Projected U.S. total ad spending = $134.3 billionAd Spending per capita = $437.60

Source: Http://adage.com/dataplace/topmarkets/us.html

The form of promotion that uses PLANNED, PERSONALIZED communication in order to influence purchase decisions and to ensure satisfaction

Types of Personal Selling• Retail Selling

– Customer comes into store and the salesperson’s job is to help the customer and answer questions about the product.

• Business to Business Selling– The salesperson goes to the customer and

selling takes place in manufacturer’s/wholesaler’s showroom or in the customer’s place of business.

• Telemarketing– Process of selling over the telephone.

•Product knowledge

•Selling skills

•Ethical standards

•Belief in selling as a service

•Professional personal appearance

•Communication skills

•Creativity

•Self-confidence

“not”

• Product knowledge– To better serve customers, the salesperson should

be knowledgeable of the product/service.

• Selling skills– Each salesperson should be trained and

knowledgeable of the steps of selling.

• Positive personal traits– To interact effectively with customer, the

salesperson should behave ethically and responsibly and have a positive attitude and awareness of professional appearance.

• Communication skill– It is important that a salesperson be skilled at

verbal and nonverbal language to better serve the customer.

•Immediate feedback

•Flexibility

•Most expensive form of promotion

•High cost per contact

•Multiple contacts often necessary

•Prospecting

•Opening the sale (pre-approach & approach)

•Determining needs and wants

•Presenting merchandise

•Product demonstration

•Handling questions/objections

•Closing the sale

•Suggestion selling

•Reassuring and follow-up

Any activity designed to create a favorable image toward a business, its products or policies.

NONPERSONAL NONPERSONAL form of promotion that is NOT PAIDNOT PAID for by the business or individual which benefits from it; information that is provided to the public by the media or other sources at no cost to the business

•Publicity can be positive or negative

•Publicity has credibility because people believe the media is objective and presents facts

•Publicity reaches a mass audience because a large number of people follow the news, especially the national news

•Publicity is intended to inform rather than to sell

•Publicity does not have a sponsor

•Publicity cannot be controlled by the recipient

•Publicity does have costs when a business engages staff to write news releases for the media

•Held in higher regard

•Helps increase profits

•Easier to do business

•Hiring easier

•Saves advertising money

• Inaccurate information

• May fail to reach the desired audience

• Can cause harm

• Usually not repeated

• Expensive if staff hired

•Fact sheet

•News release

•Radio/television announcement

•Feature article

•News conference

•Press kit

•Captioned photograph

•Keep business in public eye

•Informs public of business philosophy

•Introduces new products

•Combats a negative image

•Publicizes special events

•Create good human relations

Promotional activity other than advertising, personal selling, and publicity which stimulates consumer purchases

Sales PromotionSales Promotion

•Contests•Coupons

•Demonstrations•Exhibits

•Fashion shows•Free samples•Trade shows

Examples of Sales Examples of Sales Promotion ActivitiesPromotion Activities

Objectives of Sale Promotion

1. Increase demand and stimulate sales

2. Inform customers about new and/or improved products

3. Create positive business image

Types of Sale Promotion

– Trade Promotion• Designed to promote to businesses instead of

consumers.

– Customers Sales Promotion• Designed to increase consumer desire to buy

products.

Examples of Trade Promotions

• Slotting allowances: Money paid by a manufacturer to the retailer for placing a product in the store, perhaps in a specific location.

• Buying allowance: Price discount given by a manufacturer to increase the desire of a wholesaler or retailer to purchase the product.

• Trade shows: Provide the manufacturer a place to introduce new items and to gain support for new and existing products.

• Sales incentive/contests: Awards given to salespersons for meeting or exceeding sales goals.

Designed to promote to businesses instead of consumers.

Examples of Consumer Sales PromotionsDesigned to increase consumer desire to buy products.

• Premiums– Low cost items given to the consumer at a

discount or free. – Examples include coupons, free samples, and

redemptions.• Incentives

– Products earned through contests, sweepstakes, and rebates.

• Product samples– Trial size products generally sent through the

mail or distributed at the business at no cost to the consumer.

Examples of Consumer Sales PromotionsDesigned to increase consumer desire to buy products.

• Promotional tie-ins– A strategy in which two or more businesses

combine promotional resources to increase sales.• Product placement

– Increasing product recognition by featuring the item in movie theaters, on TV, or at special events.

• Visual merchandising and display– Coordination of the physical elements of a

business (or a product) to project the desired image to consumer.

Advantages and Disadvantage of Sales Promotion

– ADVANTAGE• Stimulating sales and raising consumer

awareness of the product.

– DISADVANTAGE• Costs involved in promotion of image and

product.• Negative attitudes toward some activities,

such as coupons and rebates, because of expiration dates.

Factors Affecting the Promotional Mix

1. Type of product1. Type of product•Convenience goods

•Shopping goods

•Specialty goods

Factors Affecting the Promotional Mix

2. Product nature2. Product nature

•Expensive vs. inexpensive

•Self-service products

•Technical in nature

•Require installation

•Require demonstration

Factors Affecting the Promotional Mix

3. Stage in product life cycle3. Stage in product life cycle•Introduction--Promotion informs customers

•Growth--Promotion becomes competitive

•Maturity--Promotion focuses on differences in competing products

•Decline--Promotion is sparse, mostly used to sell items before they become obsolete

•Abandonment--Promotion does not take place

Factors Affecting the Promotional Mix

4. Type of customer4. Type of customer

5. Number of customers5. Number of customers

6. Geographic location of customers6. Geographic location of customers

Factors Affecting the Promotional Mix7. 7. Distribution systemDistribution system•Direct channels

•Indirect channels

8. 8. Company history--successes and Company history--successes and failuresfailures

9.9. Available fundsAvailable funds

10.10. Size of sales forceSize of sales force

11.11. CompetitionCompetition