Transcript Small Business Management 12e

part
5
Small Business Marketing
17
Promotional
Strategies
PowerPoint Presentation by Charlie Cook
12e
Copyright © 2003 South-Western College Publishing.
All rights reserved.
Looking Ahead
After studying this chapter, you should be able to:
1. Describe the communication process and the factors
determining a promotional mix.
2. Discuss methods of determining the appropriate level of
promotional expenditure.
3. Describe personal selling activities.
4. Identify advertising options for a small business.
5. Describe sales promotional tools.
Copyright © by South-Western College Publishing. All rights reserved.
17–2
The Communication Process in Promotion
• Communication Process Components
–Source—the message sender
–Channel—the path the message travels
–Receiver—the recipient of the message
• Forms of Promotional Communication
–Nonpersonal—advertising
–Personal—personal selling
–Special forms—sales promotion
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17–3
Similarity of Personal
and Small Business
Communication
Processes
(a)
(b)
A Personal
Communication
Channel
A Small Business
Communication
Channel
Parents
XYZ Company
"We love you"
"Buy my product"
Source
Message
Channel
Options
E-mail
message
Personal visit
to campus
Newspaper
advertisement
Personal sales call
Flowers and a "care
package" sent
Business gift
Daughter
at college
Customers
Receiver
Fig 17-1
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17–4
Promotional Communications
• Promotional Mix
–A blend of nonpersonal, personal, and special
forms for communication techniques aimed at a
target market.
–Makeup of the mix is determined by:
Geographical nature of target market
Size of promotional budget
Product’s characteristics
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17–5
Determining the Promotional Budget
• “How much should a small business spend on
promotion?”
–Allocating a percentage of sales
–Deciding how much can be spared
–Spending as much as the competition
–Determining what it takes to do the job
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17–6
Four-Step Method of Determining
a Promotional Budget
Determining
What It Will Take
to Do the Job
Allocating
Usinga a
Percentage
percentage
of Sales
of sales
Deciding How
Much Can Be
Spared
Spending as
Much as the
Competition Does
Comparison Process
Decision
Promotional Budget
Fig. 17.2
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17–7
Comparing Alternative Promotion Expense Estimates
START
Compute WTDJ
Proceed to develop
promotion at
WTDJ level
YES
Is WTDJ equal to
or less than others?
NO
Key Terms:
WTDJ: What it will take to do the job
APS: A percentage of sales
WCS: What can be spared
ACS: As much as the competition
spends
Compute average of
WTDJ, APS, WCS, and ACS
Compare WCS with
computed average
Proceed to develop
promotion at
average level
YES
Is WCS equal to or
greater than average?
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NO
Seek additional funds
to supplement
promotion
17–8
Personal Selling Techniques
• Personal Selling
–A sales presentation (promotion) delivered in a
one-on-one manner.
–Requires:
Product knowledge
Well-prepared sales
presentation
Ability to build good will
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17–9
Importance of Product Knowledge
• Salespersons use product knowledge to:
–Successfully educate customers about the
product’s advantages, uses, and limitations.
–Answer customer questions and counter customer
objections.
Personal selling becomes order-taking when a
salesperson lacks product knowledge.
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17–10
The Sales Presentation: Prospecting
• Prospecting
–A systematic process of continually looking for
new customers
• Prospecting Techniques
–Personal referrals
Salesperson initiates customer contact through referral
by another party known to the customer.
–Impersonal referrals
Information on potential new
customers developed from public
records and published sources.
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17–11
The Sales Presentation: Prospecting
• Prospecting Techniques (cont’d)
–Marketer-initiated contacts
Market surveys are used to identify prospects
–Customer-initiated contacts
Potential customers are identified
through their contacts with
the firm.
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17–12
Practicing the Sales Presentation
• Improves the salesperson’s success rate.
• Prepares salesperson for customer objections
related to price, product, timing, service, or
need.
–Techniques for dealing with objections:
Convert the objection into the form of a question.
Use third party testimonials or experiences.
Use the boomerang or positive conversion
technique.
Use comparisons.
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17–13
Overcoming Customer Objections
I had problems with a similar
product before and don’t want
to go through that again!
Yes, I understand your attitude, but
have you considered . . . ?
I’m too busy.
That’s why I want to explain how I can
save you time by . . .
I like what you have said, but I
need to wait.
Let’s figure how much you can save
by acting now.
Your product sounds just like
your competitor’s.
There are similarities, but we have . . .
at a better price.
I’m not sure I can risk a
changeover to your product.
Let me tell you how one of your
competitors decided to buy from me.
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17–14
Making the Sales Presentation
• Adapting the sales approach to the customers’
needs:
–Avoid a “canned” sales talk.
–Speak the customer’s “language”.
–Answer every objection explicitly and adequately.
–Be enthusiastic, friendly, and persistent.
–Be personally supportive of
the customer.
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17–15
Customer Goodwill and
Relationship Selling
• Relationship selling
–Building customer goodwill for future sales to
satisfied customers through:
Maintaining a good personal appearance.
Having a pleasant personality.
Using professional etiquette in all customer contacts.
Understanding the customer’s point of view.
Maintaining high ethical standards in the customer
relationship.
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17–16
Compensating Salepeople
• Nonfinancial Rewards
–Personal recognition of employees by the firm
Plaques and “Employee of the Month” awards
Providing “perks” to superior performers.
–Personal satisfaction drawn
by salespersons from doing
their work well.
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17–17
Compensating Salepeople
• Financial Rewards
–Commissions
Compensation paid as percentage of
sales productivity.
Strong sales motivator
–Straight Salary
Compensation paid regardless of
sales made.
–Combination of Commissions
and Salary
Balance of two compensation forms is adjusted to
provide an increasing proportion of commission as
salesperson gains experience.
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17–18
Advertising Practices for Small Firms
• Advertising
–The impersonal presentation of a business idea
through mass media.
• Advertising Objectives
–To sell by informing, persuading, and reminding.
–To serve as a complement to product quality and
efficient service.
–To properly reflect changes in customer needs
and preferences.
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17–19
Types of Advertising
• Product Advertising
–The presentation of a business idea designed to
make potential customers aware of a specific
product or service and create a desire for it.
• Institutional Advertising
–The presentation of information about a particular
firm, designed to enhance the firm’s image.
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17–20
Advertising Decision Factors
• Frequency of Advertising
–With regularity for effectiveness and continuity
Introduction of new uses for established products
Introduction of new products and services
• Where to Advertise
–Appropriate media mix is determined by:
Geographical area for target market coverage
Customer type targeted by advertising campaign
Advertising media customarily used by industry
By type of business
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17–21
Advantages and Disadvantages of Traditional Advertising
Medium
Advantages
Disadvantages
Newspapers
Geographic selectivity and flexibility;
short-term commitments; short lead
time; immediacy; year-round
readership
Little demographic selectivity;
limited color capabilities; low passalong rate; may be expensive
Magazines
Good reproduction; demographic and
regional selectivity; relatively long
life; high pass-along rate
Long-term commitments; slow
audience buildup; long lead time
Radio
Low cost; immediacy; highly port
able; short-term commitments;
entertainment carryover
No visual treatment; short message
life; commercial clutter
Television
Wide, diverse audience; creative
opportunities for demonstration;
immediacy; entertainment carry-over
Short message life; high campaign
cost; long-term commitments; long
lead times; commercial clutter
Outdoor media
Repetition; moderate cost; flexibility;
geographic selectivity
Short message; lack of demographic selectivity; distracting noise
levels
Source: Charles W. Lamb, Jr., Joseph F. Hair, Jr., and Carl McDaniel, Marketing (Cincinnati: South-Western, 1998), p. 509.
Copyright © by South-Western College Publishing. All rights reserved.
17–22
Creating the Promotional Message
• Advertising Agencies
–Furnish design, artwork, and copy for ads
–Evaluate and recommend media with greatest
“pulling power”
–Evaluate the effectiveness of advertising appeals
–Advise on promotion and merchandise displays
–Conduct market sampling studies
–Furnish mailing lists
• Other Sources
–Suppliers
–Trade Associations
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17–23
Web Advertising
• Basic Web Promotions
–A corporate Web site
A firm’s location on the World Wide Web
–Banner ads
Advertisements that appear across a Web page, often as
moving rectangular strips
–Pop-ups
Advertisements that burst open
on computer screens
–E-mail promotion
Advertising delivered by means
of electronic mail
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17–24
Web Advertising (cont’d)
• Basic Web Promotions (cont’d)
–Web Sponsorships
A type of advertising in which the firm pays another
organization for the right to be part of that
organization’s Web page.
–Linkages
A type of advertising in which one firm pays another to
include a click-on (click-through) link on its Web site.
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17–25
Sales Promotion Tools
• Sales Promotion
–An inclusive term for any promotional techniques
that are neither personal selling or advertising
Used in combination with personal selling and
advertising.
• Specialties
–Tangible and enduring functional items of worth
distributed personally to recipients that serve as
reminders of the firm.
Pens, key chains, magnets, and clothing imprinted with
the name, logo, or slogan of the firm.
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17–26
Sales Promotion Tools (cont’d)
• Trade Show Exhibits
–Provide hands-on experience with products.
–Are less costly than personal selling.
• Creating Effective Trade Show Exhibits
–Create moving billboards
–Make the booth interactive
–Qualify sales leads immediately
–Create a presence on the sales floor
–Plan ahead how to use the trade show time
–Recruit customers actively
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17–27
Sales Promotion Tools (cont’d)
• Publicity
–Information about a firm and its products or
services that appears as a news item, usually free
of charge.
Provides visibility for the firm
Requires regular contacts with
the news media
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17–28
Sales Promotion Tools (cont’d)
• When to Use Sales Promotion
–For manufacturers
To stimulate channel members—retailers and
wholesalers—to market a firm’s products.
–For wholesalers
To induce retailers to buy inventories earlier than they
normally would.
–For retailers
To persuade customers to make a purchase.
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17–29