Session 8 Marketing Plan
(1) Session Outline Objective
This session is the beginning of the marketing plan that is written to indicate how you will achieve the revenue projections you forecast in session # 4.
The marketing plan contains four critical elements:
· Your product/service
· Your promotion strategy
· Your pricing
· Your location/distribution network
The marketing plan should be consistent with the research that was done on the niche market. The marketing plan should also contain the specific methods you will use to achieve sales. This session will deal with the first two elements of the marketing plan ( Product/service and Promotion ). The next session will cover pricing and the distribution network.
· Understand the marketing plan importance
· Develop a product/service offering
· Determine a strategy to communicate your offering to your market
· Establish marketing goals
· Measure marketing effectiveness
Marketing is the process of making your potential customers aware of your product/service and encouraging them to try it. It involves making the product/service according to their needs, at a price they are willing to pay and provided to them in the manner they expect to receive it.
Step # 1
Provide a description of your product/service. Write in terms of the benefits it will provide for your target market. Specify the packaging, warranties and other aspects of the product/service that will be a part of your offering.
Be sure to include “add-ons” as part of the product/service. Think of the things that your target audience will need after buying your product/service and consider having these available for sale. An example is a dressmaker. Once a client buys a dress, they will be looking for a purse, shoes, earrings, etc. to complement the purchase.
Packaging and bundling
Another consideration in the product/service is the packaging. In some instances this is extremely important ( gift items for example ) while in others it isn't important at all (e.g. a food co-op where bulk bags are used). Packaging includes the protection and appeal of the product and has significance for positioning in retail establishments.
Bundling is the concept of putting a number of products/services together as a package in order to increase the dollar value of each sale. The best example of bundling I can think of is "Microsoft Office". Everyone wants "Microsoft Word" for writing but "Office" also includes "Power Point", "Excel", "Access". Very few people use these programs but Microsoft sells them because it "bundles" them with the popular word program.
Other examples of bundling can include signing people up for snow removal and lawn care as a "bundled" package that gives a discount. Similarly, lawn mower and snow blower tune-ups can be sold as a bundled service.
Swimming pool service companies also “bundle” the pool opening and closing so that the customer is committed to using that company in the next season.
Some of the best bundling opportunities are with multiple sales of the same product/service. This also locks customers in to your product/service on a repeat basis. So, you can have a summer contract for lawn care that goes from May to September for one price. You can have booklets of 10 car washes that sell for a discount. You can have a member's club that gives discounts or premiums based on frequency and amount of purchases.
It is important to re-visit the types of products/services because this determines the types of promotion that will be used to attract clients. There are three categories for all goods/services. They can be classified as shopping goods, convenience goods or specialty goods.
Shopping goods are products/services that are considered to be the same in the perception of the consumer. As such, they are sold on price alone. Lowest price wins and the seller has a very small profit margin that requires a large volume to make a significant profit. Examples of a shopping good include gasoline and brand name products that are sold through a variety of distribution outlets ( Campbell's Soup, Heinz ketchup, etc. ). That's why grocery stores need to have high volume of customers because they need to sell the products at a low price to compete with all the others who sell the same thing.
An entrepreneur wants to avoid being a re-seller of products/services that are perceived as "shopping goods". If you start a lawn care service and your lawn care is perceived as the same as others then you will be competing on price alone and this will not be good for your profits. In the case of products you need to become a "value-added re-seller" where you create a differentiation based on something other than the product itself. The example of the gasoline station giving away beach balls in the summer is an example of how the premium can become the differentiating factor. Other examples of this are when the gas station can offer a series of collectible drinking glasses with the purchase of gasoline. People are motivated to collect a complete set and will return again and again in order to do so.
In the case of the lawn care, you could differentiate on the basis of providing a free tree or bush of the client's choice for signing a seasonal contract. You could also differentiate on the basis of providing detailed "evidence" of the quality of your service, such as a monthly update on the condition of the lawn, tips for a healthy lawn, etc.
Lawn care is a service and services are intangible ( you can't see them, touch them, etc. ). It's necessary, with services, to provide evidence of the service being performed and the quality and care that went into it. That's why you get chocolates in the hotel room and a sanitized seal on the toilet. That's why you get evidence in your car when you get a grease and oil at Canadian tire.
Convenience goods are products/services that a customer is willing to pay more for because they simplify the buying task and save the customer time. It can also be on the basis of availability, as when shopping good stores are closed. These are good opportunities for entrepreneurs provided the market isn't saturated with competition.
The easiest example is the convenience store that provides all the "shopping goods" products ( Campbell's Soup, Heinz ketchup ) but they provide it:
a) When the shopping goods stores are closed
b) Where they are closer and more convenient than the shopping good store
c) Where they provide delivery that is not available from the shopping good store
d) Where they provide other products/services that the shopping good store doesn't have ( e.g. Campbell's soup, + video rental, + homemade pies, etc.)
Convenience stores can sell at a higher price but they need to attract the "shoppers" with loss leaders. There is a law of retailing that is the bible for success in the convenience business: "65% OF ALL CONSUMER PURCHASES ARE MADE IMPULSIVELY" So, the longer you can get people to stay in your store (music, ambiance, interesting displays, friendly/informative staff, etc.) the more they will spend as they see and purchase impulsive products (impulsive purchases are those that weren’t planned when you went to the store.
What this implies is that convenience stores do not make profits from the "loss leaders" that are the staple products such as bread, milk, cigarettes, etc. They provide these products at cost, or even below cost, in order to make sales on the high profit products that people buy when in the store for bread, milk, etc. That's why convenience stores have so many "impulsive" products near the cash and the staple items are at the back of the store so the shopper has an opportunity to see all the other products for sale. So, going to the convenience store for bread and milk you also end up with lottery tickets, gum, chips, soft drinks and, oh yes, the Campbell's soup that is twice the price of the shopping goods store but it is so convenient.
There are other creative versions of this concept. Canadian Tire offers oil changes at cost but the add-on potential is high because the mechanics can find at least a few things wrong with any car once on the lift. Wal-Mart offers oil changes, one hour photo, pharmacy services and fast food in order to keep the customer in the store longer (the longer you are in the store the more you will spend).
The best category for entrepreneurs because this implies that you are "branded". This means that your product/service is perceived as being superior for some reason in the eyes of the customer. This enables you to charge a premium price and get a loyal, repetitive client who insists on your product/service and won't accept substitutes.
This differentiation can be with your main product/service or some aspect of it. Remember the Beach Ball promotion at the gas station that increased sales because of the differentiation on the basis of the premium offered? Well this is along the same lines but this is a more permanent differentiation There is a restaurant ( Greek ) in Montreal, that provides a free appetizer of fresh pita bread before meals. This restaurant is in a poor location but has a loyal following that travels quite far because of this fresh appetizer. The rest of the food is ok but the pita makes this a specialty restaurant. Eileen's pastry has her Tutti Fruitty cake as her differentiation.
This category is for new products/services that the consumers are not aware of or are not shopping for. Life insurance and pre-arranged funerals are prime examples of unsought goods. A native herbal shampoo, cleaner or other unique product would fit in this category. Consumers may be well aware of shampoos in the market and many may already be insisting on a particular brand. So, when you introduce a new native herbal shampoo they may be curious but they do not perceive the need for the ingredients that you are selling in your shampoo.
There is no better case to exemplify differentiated product than Kanata 2000. This unique, non-profit, housing development has a first generation house which is virtually self sufficient. There is the potential to augment the solar energy with wind energy but that will be something for the next generation.
The product is so differentiated that the project "champions" (Lynn and Eva) had difficulty getting people to see the potential in the project. Now, with a prototype developed, there is considerable interest outside the community for utilization of this new concept.
It took a long time but there is enormous satisfaction in realizing your dreams and seeing them become tangible. The house will probably be duplicated by others, as the popularity increases, but the differentiation of being the "first mover" has been established and Kanata 2000 is way ahead on the learning curve.
Kanata 2000 is not "just another house". It represents a new way of living in keeping with an emphasis on recycling and protection of the environment.
So, although the house "features" solar energy and straw insulation, the "benefits" are savings on energy and the satisfaction of being a consumer who is labeled as being environmentally concerned.
The knowledge that developed from building the prototype was invaluable in creating the perception of Kanata 2000 and the contractors as being leaders in the field of environmentally friendly housing. So, the name is being "branded" whenever the product is showcased and the "Kanata 2000" brand can command premium pricing because of the perception of quality due to the "first mover advantage."
Being the original has its merits in putting yourself in the "specialty" category. It requires a "leap of faith" by the champions and a determined, consistent persistence to move forward. The speed is not as important as the direction. As long as you are moving forward don't get discouraged.
Step # 2
Detail your promotional plan on how you intend to communicate to your niche market in order to:
· Make them aware of your product/service
· Get them interested
· Get them to make a purchase decision
· Get them to take the action step of buying.
Let’s start by differentiating between products and services. There are implications for each in promotion.
Tangible (see, touch, feel, etc.) Intangible (need to provide evidence)
Can put in inventory Perishable (cannot store up)
Standardized Customized (buyer involvement)
Global scope Regional scope
So, promoting services is more difficult. In fact, you, as the entrepreneur are the product when selling services. Your image, your business cards, your logo, your vehicle and your personality are all going to be perceived as reflecting the quality of your service. In a service industry you, and your image, are the best promotion methods. Personal face to face selling is the best method of promotion and the encouragement of “word of mouth/mouse” advertising from satisfied clients ( testimonials ). Free trials to show your expertise, personality and develop a rapport are very powerful. The ability to have a continuing positive relationship with clients will build intense loyalty, allow for premium pricing and encourage word of mouth.
Connecting product to promotion
Each product/service should be promoted differently according to the type of product it is. The following explains the differences:
If your product/service is a shopping good ( undifferentiated in the customer’s eyes – price alone is the decision maker ), then you should try to differentiate by providing excellent service, a unique premium or some other concept to push off from the competition and be established as the brand of choice. You should then promote this difference in all your advertising.
If all your techniques are matched by the competition or if the customers still don’t perceive your differentiation ( Are consumers really aware that the quality of Morgan’s lobsters is above the competition ?), then you will be competing on price. The promotion method for price is to provide price guarantees ( If you find it for less we will match the competitor’s offer ). Another promotion method is to compare prices with competitors ( The Wal-mart shopping basket compared to the competitor ). This can be done through mass mailings, public-sac, flyers at the services complex or other ways to communicate lowest price.
Products in this category are not as price sensitive. Consumers are interested in having the product/service immediately and are willing to pay extra for the convenience.
The promotion for these products/services is to advertise how convenient it is to buy your product/service. You can, for example, provide a delivery service for your restaurant and give out fridge magnets or cell phone cases with your phone number so customers can call whenever they get the urge to purchase. Another example would be for a garage, with towing, to provide free ice scrapers with their phone number on them. When the car owner’s car won’t start then the garage phone number is conveniently on the ice scraper.
The concept is to have your phone number available at a moment to the customer. Another example would be to give out free pocket agendas to your best customers. The customer carries the agenda with them all the time – when they need to call, your number is always right with them.
There are many products/services that are convenient to Kahnawake. Clients would be willing to spend more for the convenience of not having to go to Chateauguay, Delson or LaSalle.
Every business would like to be selling products/services that the customers designate as “specialty”. This means that you have achieved “brand insistence.” This usually takes time and effort.
Promotion in this case is often based on personal selling. Excellent customer service and the ability to provide the customer with information about the benefits of the product/service will often develop loyalty to a particular business. To be able to sell at specialty prices you need to have the customers perceive your offering as the best and worth the extra time, effort and money. This means to differentiate your business from all others. You need to make the customer aware of how much better you are than the competition. This differentiation is not restricted to the product/service. Differentiation can be made on the basis of customer service, special, exclusive premiums (e.g. collection of plates when you buy gas).
The most difficult sale because the consumer is not aware of the need and feels no urgency to buy. New products/services and new businesses need to create awareness before people are willing to take a chance with a purchase. All consumers are “downside risk oriented.”
Promotion has to be geared toward providing information and awareness. The classic promotion for new products/services is the infomercial where you have a half hour to demonstrate the product and create awareness. Free trials, demonstrations and giving the customer a risk-free opportunity to try the product/service. Money back warranties, total satisfaction and deep discounts need to be used in order to develop that “try it you’ll like it” approach. These “early adopters” become the first wave of testimonials to develop a word of mouth promotion campaign. In some cases you can look for highly influential people in your target segment and give them a free product/service in return for a testimonial from them. Others of the target market who see the key influencers using the product/service would then want to emulate.
The method to communicate your business to potential clients requires you to go through a number of steps to move the person to eventually take action and try or buy your product/service.
Attention - you need to get the attention of the person to listen to your message. This is so much easier when they are sensitive to the message ( e.g. they are more likely to listen to a message about food when they are hungry). Many businesses are trying to get peoples' attention and your message needs to at least get noticed for a split second for a potential client to assess it.
Some methods are to use the word "FREE" or have a unique way of presenting your message (e.g. having someone dress up in a costume and hand out your flyers at the post office).
Interest (their need)- The message should have something in it that you know the potential customers would be interested in. For example, if it is close to Christmas, a message that says "Looking for a gift that no one else will be giving this Christmas?" would certainly get the interest of the person.
Desire (your ability to satisfy the need better than others) - There has to be a definite desire to have the product/service before anyone will buy something. This has to be done by describing the product/service, it's benefits and the affordability of it for the potential client. A picture is often an excellent way to get desire but an actual sample of the product/service is even better. E.g. "Personalized candles are a unique gift that will continue to express your love well beyond the Christmas season. A gift that is less than $10 but is priceless because of the personal message that you send to loved ones."
Desire, at Christmas, is often achieved by having a product/service demonstration at a booth or kiosk where many pass by.
Action (Have them do something right away) - There has to be some action taken by the potential customer or the message is lost (decay occurs very soon - people forget and the opportunity is lost). It can be a sale or it can be an action that leads to a sale (Call this 1-800 number, clip this coupon, bring a picture of yourself, etc.). Action requires urgency. If there is a lot of time, a lot of product and no urgency, then people will procrastinate. So, in order to get action on our example, we need to create urgency (For today only you can get a "FREE" 3" candle (value $9.95) with the purchase of a 6" candle. A deposit will ensure your free candle).
In newspaper ads you need to include all steps in order to have success. In personal selling you need to have all steps as well.
Attention (capture initial focus e.g. phone ringing, baby crying)- Nothing gets more attention than meeting a friend or introducing yourself to someone in person. Have business cards that offer a free sample of your product/service and hand them out with a personal invitation to come to your business.
Interest (indicate how you fulfill needs that your client has e.g. Baby sitting service)– Explain about your business and the product/service. This is an opportunity to highlight your differentiation. Desire (Provide information on a special event you are having or perhaps highlight your differentiation, convenience or price)– The business card coupon should have an expiry date to encourage awareness. Another way to create desire is to describe a particular benefit of coming soon (e.g. we have fresh donuts every morning).
Action (call this number, clip this coupon, come to our store for a special gift. You need to move the customer to take action NOW. If they don’t act immediately they will soon forget. One good method is to have a special gift for the first 20 callers or a 50% discount if you come to the store before the end of the week)- The FREE coupon will move the prospect to take action and you will have your first opportunity to build a loyal customer.
Publicity is free and should be used as much as possible. There is an exercise in this session which gets you to consider methods where you can maximize your opportunities for publicity. Some common ways are as follows:
· Write an interesting article on your specialty for the local newspaper ( e.g. Things to do to get your car ready for the winter/summer )
· Get one of your suppliers to provide you with a free promotional item that you use for a raffle or auction
· Approach your suppliers about co-op advertising
· Do your own co-op advertising by providing reciprocal coupons at complementary stores
· Have an information session in your store (e.g. a craft store would have a “How to decorate your home at Christmas” session. This free session would encourage the participants to purchase the materials to decorate their home
· Provide a trophy for a school, youth group, senior lacrosse, etc. (depending on your target market). The annual trophy would be on display ( and in potential customer’s view) every day
· Offer a free product/service to a radio station for them to use as a contest prize
· Offer a free product/service for a non-profit group ( e.g. a restaurant would offer free Christmas dinner to the elderly in the hospital. A taxi service would offer free service on New Year’s eve for partygoers). – this would give you free exposure in newspapers and radio.
Advertising is usually used for the purpose of making people aware of your business, indicating that you have the best prices (shopping good), highlighting your expertise/differentiation (specialty good), showing that you are very close and have delivery (convenience good).
Advertising has to take into consideration the particular target niche that you are selling to:
a) What media does your target client watch? Listen to? What sections of the newspaper do they like best? What times do they listen to the radio? What are their favorite programs?
b) When are they most sensitive to your advertisements (e.g. advertising for a restaurant/food service should be seen when people are hungry – morning, noon, late afternoon, late snack time).
c) Who do they listen to? Who would be a good person for you to advertise through? (e.g. Taxi drivers, barbers/hair dressers, gas station attendants, Business Services Officers could be “bird dogs” for you.
d) Where do they go each day? What is their pattern? This is important so you can have your signs and advertising available where your customers will see them (e.g. if your target market has school age children and drives them to school each day, then having advertisements close to the school would be good).
e) Why do they buy? This will help you decide the content of your advertising message in order to appeal to the needs of your target market (convenience, shopping, specialty).
f) How does your client like to purchase? Availability of financing, delivery, warranties, installation, Master Card/Visa, Interac, and instructions may be some important considerations to include in your advertising.
An important concept in marketing is the “frequency” vs “reach” dilemma. Frequency refers to the number of times a potential client sees your advertisement while “reach” refers to the total number of people that each advertisement reaches.
In some mass market media you may get a lot of “reach” (e.g. the circulation of the newspaper may go to 5,000 people). The question is: How many of those people are part of your target market? If, for example, you are targeting youth and they only represent about 10% of the newspaper’s audience then you are wasting a lot of money in reaching people who won’t be interested in your offer. Newspapers charge by the amount of “reach” they have. In this case you would probably be better to have some promotion at or near the youth center. This would give you a higher percentage of target market reached at less cost.
“Frequency” is a more important feature in promotion. To move a prospect to take a decision and make a purchase requires about 7 “impressions”.
An impression occurs when a person of the target segment sees, hears or is made aware of the existence of your business. The first few impressions create interest and gradually the prospect moves through the buying process. An example: A new restaurant puts an ad in the local newspaper that is seen by a prospect (1st impression). The prospect then goes in his/her car and hears another ad on the radio (2nd impression). The prospect goes to the services complex to get his/her mail and finds a flyer for the restaurant in the mailbox (3rd impression). In the car, the prospect passes by the restaurant (4th impression). At the hairdresser the prospect hears about the restaurant from the hairdresser who went there yesterday (5th impression). On the way home the prospect passes the restaurant again (6th impression). At home there is a discount coupon in public-sac (7th impression).
These impressions may take time to occur (not necessarily all in one day) and, of course, a lot of your advertising is wasted because a specific prospect may miss some (e.g. the person did not get/read the newspaper, may not have paid attention to the flyer, didn’t have the radio on, was out of town, didn’t go to the hairdresser, etc.). As a rule of thumb it takes 27 advertisements to get the 7 impressions needed to move a prospect to purchase – the other 20 ads were not seen by the prospect.
So frequency is better than reach, particularly with small businesses that have a small niche market. It is also important to use a multitude of methods for being visible to your prospects. Understand their patterns of behavior and have opportunities for them to see, hear, touch, taste, smell your product/service wherever they go.
(3) Personal selling
Without a doubt the most effective promotion is personal face-to-face selling. It is very effectivebut not very efficient. You and your sales staff represent the image of the business and your attention to customer service will be a powerful boost to sales.
Some techniques for personal selling:
a) Get involved in groups and associations that your target market belongs to. Joining the Elks, Moose, Legion, Rotary, Parent Teacher Association, or other associations will give you an opportunity to meet with potential clients.
b) Have business cards with a limited time offer on the back ( discount, free sample ). Give them out, with a personal invitation, to potential clients you meet.
c) Have a free information session to talk about a topic that is of interest to your target market and one where you have expertise. (Perhaps on a local radio program or at your store).
d) Encourage testimonials and referrals
The marketing plan begins with a detailed description of the product/service, including add-ons, packaging and the benefits it will have for the target audience.
Understanding the classification of the product/service and the target market buying patterns is essential to develop a solid promotional plan to communicate effectively and efficiently the product/service benefits. The promotional plan should consider the media which would be most effective for the target market and maximizing the most efficient methods initially (publicity, personal selling).
The choice of advertising media should take into consideration the lifestyle patterns of the target audience and be developed around the seasonality of purchasing and be at a time when the consumer is most sensitive.
The marketing plan should provide the details on the methods, time, budget and measurement of the effectiveness of the campaign.
Once a budget is established then it would be important to track the sales that were directly related to the campaign. This can be done through coupon redemption counts to determine which techniques were most and least effective. Consideration should always be given to re-position the marketing plan based on actual information. It does not make sense to continue a plan that is not working – the wise entrepreneur will have his/her finger on the pulsse of his/her target market and modify the marketing plan accordingly.
Exercise # 1
"What" will they buy? (Establish promotion emphasis)
An important marketing concept is to sell "benefits" not "features". The person who wants to purchase a drill bit is not interested in the tungsten composition of the bit ( feature ), they are more interested in the fact that the tungsten bit will make a better hole in faster time ( benefit ). When designing your promotion, emphasis should be on "benefits" to your customers not "features" of your product/service. List, below, some benefits and features of your product/service. We will use them later.
EXERCISE # 2
Develop a plan where you indicate how you can use attention, interest, desire and action steps to advertise your product/service.
EXERCISE # 3
Profiling you and the customer
No one knows your business and your customer more than you do. Before beginning a marketing campaign it is first important to determine what your business is, who your customer is, and what you want to accomplish.
"Without a good understanding of what you want to accomplish then communication is irrelevant"
Describe your typical customer.
Why will they buy from you? (Differentiation to promote)
Where will they hear about you? (Media to use for prospects)
Who influences their buying decision? (Influencers to target)
What groups do they belong to? (promotion)
When will they buy from you? (Seasonality – when should you spend on advertising?)
How often will they buy from you? ("Gold": customer promotions)
How will you communicate with them? (Media to use for "gold")
EXERCISE # 4
What will be your most effective method of advertising? How will you know?
When will be your best time to advertise? (seasonality)
What will be the emphasis of your advertising?
Will your competition advertise? How will you advertise compared to them?
How much will you spend in promotion in one year? Where will it be spent?
EXERCISE # 5
Your objectives and strategy
Alice asks the cat, " which road should I take?" The cat replies, "where do you want to go?" Alice responds " I don’t know" The cat concludes, "Then it doesn't matter which road you take."
"Alice in Wonderland"
The same advice is true in marketing. If you don't have any goals or objectives then "any advertising" will suffice. The starting point for any marketing campaign is to have specific expectations about where you want your business to be after the campaign. It begins with a vision of what you want your business to be, then you need a strategy based on a market analysis, a selection of tactics and media to convey your message, and finally, a method to measure the results of your campaign.
Often, objectives are not set only in sales volume alone. More sales will have more costs associated with it, frequently to the point where the extra costs may not justify the extra sales. For example, to get extra sales you need to spend more on advertising and you may need to hire more people, increase your inventory, offer discounts, spend more on delivery services, move to a larger location, etc.
Set objectives for the next year.
When setting objectives they should always be Specific, Measurable, Action-oriented, Realistic and Time-phased (SMART). In this case, the time period is one year (four quarters).
Determine your objectives in the following areas:
What will be my sales objectives in terms of sales $ per year?
What will be my profit objectives for the year?
What will be my expected return (%) on money spent for promotion?
What will be my expected number of clients? What will be my expected sales per client served?
N.B. marketing is not the only way to reach growth objectives. Better deals from suppliers, more efficient use of your personnel, improved inventory management, and a number of other tactics, can improve profitability without increasing sales. Now that objectives have been established we will look at strategies to reach those objectives.
Strategy depends on the situation you are in with regard to your target market.
There are two key scenarios:
1) Your market is saturated. Everyone in your target segment is already buying from someone. In this case convincing customers to switch to you will be expensive and often result in a price war with competition.
In this situation, you need to either:
a) Offer your product/service on a "try it you'll like it basis" by giving free samples
b) Show clearly the differentiation of your product/service compared to the competition
c) Offer your product/service at an introductory low price to get trials.
2) Your market is not saturated. In this case the market niche is growing or the market niche is not being served in your trading area. There are still some of your target niche who are not aware of your offering or who go outside your trading area for service.
In this situation you can:
a) Increase promotion to prospects to make them aware of your business.
b) Engage in persuasive promotion to get them to purchase in the trading area.
c) Do some market studies ( focus groups/surveys/interviews ) to determine how to alter your product/service to appeal to them
EXERCISE # 6
Maximize "Free" promotion
The logical starting point is to creatively seek opportunities to communicate with your market for the least expense and maximum impact. One advantage that small business has is the ability of the owner to do personal appearances and personal selling. This is not an "out-of-pocket" expense and it has a large impact.
"Personal, face-to-face selling is by far the most effective method for establishing sales"
To begin, you must consider the selling/communication media that you should have available which has little cost to you but a large potential return on money invested in it.
"Word-of-mouth advertising needs to be actively encouraged not passively expected"
Which of the following communication media do you have available?
Item Have available Usage Telephone
2nd telephone line
Customer response cards
Business color scheme
Signs (in store) (P.O.P.'s) ("Open")
Signs (on store)
Signs (on vehicle)
Signs (remote location)
In store events (e.g. seminars, picnics, auctions)
Of the above media, which 3 do you feel you could make more use of? Develop a plan for each that could be implemented within a month.
Plan # 1
Plan # 2
Plan # 3
Exercise # 7
Budgeting and selecting media
This is where small businesses usually need to follow a "what I can afford" strategy. It isn't ideal. The ideal situation is where you determine your marketing plan and then budget according to what you need to do. In small business the entrepreneur is often restricted to a very limited budget. That's why the small business owner needs to use creativity and inexpensive ( but effective ) methods to promote the business.
Typically, a small business should budget between 6 - 10% of gross sales toward advertising. The importance is in selecting the advertising media that gives you the most impact for the least cost. You can spend all your advertising budget in one ad and not get the desired results.
Look for the possibility for co-op advertising from your suppliers and also from complementary small businesses who will co-sponsor events with you (e.g. bridal show).
Seasonality - A critical factor ( Timing your ads )
Every business has seasonality, often linked to holidays or specific seasons. Communicating to prospects or customers should be focused on times when customers are very sensitive to your message. It is difficult to sell the need for winter tires in October, but at the first snowfall everyone is sensitive to advertising.
"Prevention is hardest to sell - solutions are easiest"
Sometimes there is an opportunity to offset seasonality through discounts or selecting new products/services (e.g. selling bicycles in the summer for a ski store).
What are your peak time for sales? What are your weak times for sales? Use "100" as the number for your best time and indicate the other months in relation to that number. Now take your advertising budget and allocate it according to seasonality.
My advertising budget for the year is $_____________
Month Seasonality Budget
January ______ _______
February ______ _______
March ______ _______
April ______ _______
May ______ _______
June ______ _______
July ______ _______
August ______ _______
September ______ _______
October ______ _______
November ______ _______
December ______ _______
(1) Considering the “frequency” vs “reach” issue, would it be better to have a large ad or a small ad in a newspaper?
(2) The importance of image is critical to success. Negative word of mouth travels much faster than positive word of mouth. Competitors will start rumors about you and your business; your employees will mistreat customers who will tell others ( they won’t tell you ); customers will have a bad experience with your product/service and not tell you. What can you do in the face of this inevitable negativity?
(3) How will you find out what section to put your advertisement in the newspaper? How will you determine when to put your advertisement in the newspaper?
(4) Is there an opportunity for you to use your product/service as a fundraiser for a group, where the group would do the sales and you would provide the product/service? How could this be done?