1. part 5 PowerPoint Presentation by Charlie Cook Copyright © 2003 South-Western College Publishing. All rights reserved. All rights reserved. Promotional Strategies 17 Small Business Marketing 12e

2. Copyright © by South-Western College Publishing. All rights reserved. 17–2 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.

3. Copyright © by South-Western College Publishing. All rights reserved. 17–3 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

4. Copyright © by South-Western College Publishing. All rights reserved. 17–4 Fig 17-1 Similarity of Personal and Small Business Communication Processes

5. Copyright © by South-Western College Publishing. All rights reserved. 17–5 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

6. Copyright © by South-Western College Publishing. All rights reserved. 17–6 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

7. Copyright © by South-Western College Publishing. All rights reserved. 17–7 Fig. 17.2 Four-Step Method of Determining a Promotional Budget

8. Copyright © by South-Western College Publishing. All rights reserved. 17–8 Proceed to develop promotion at WTDJ level Comparing Alternative Promotion Expense Estimates Compute WTDJ Is WTDJ equal to or less than others? Compute average of WTDJ, APS, WCS, and ACS Compare WCS with computed average Compare WCS with computed average Is WCS equal to or greater than average? Proceed to develop promotion at average level Seek additional funds to supplement promotion YES NO NOYES 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 START

9. Copyright © by South-Western College Publishing. All rights reserved. 17–9 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

10. Copyright © by South-Western College Publishing. All rights reserved. 17–10 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.

11. Copyright © by South-Western College Publishing. All rights reserved. 17–11 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.

12. Copyright © by South-Western College Publishing. All rights reserved. 17–12 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.

13. Copyright © by South-Western College Publishing. All rights reserved. 17–13 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.

14. Copyright © by South-Western College Publishing. All rights reserved. 17–14 Overcoming Customer Objections I had problems with a similar product before and don’t want to go through that again! I’m too busy. I like what you have said, but I need to wait. Yes, I understand your attitude, but have you considered... ? That’s why I want to explain how I can save you time by... 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.

15. Copyright © by South-Western College Publishing. All rights reserved. 17–15 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.

16. Copyright © by South-Western College Publishing. All rights reserved. 17–16 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.

17. Copyright © by South-Western College Publishing. All rights reserved. 17–17 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.

18. Copyright © by South-Western College Publishing. All rights reserved. 17–18 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.

19. Copyright © by South-Western College Publishing. All rights reserved. 17–19 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.

20. Copyright © by South-Western College Publishing. All rights reserved. 17–20 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.

21. Copyright © by South-Western College Publishing. All rights reserved. 17–21 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

22. Copyright © by South-Western College Publishing. All rights reserved. 17–22 Advantages and Disadvantages of Traditional Advertising Source: Charles W. Lamb, Jr., Joseph F. Hair, Jr., and Carl McDaniel, Marketing (Cincinnati: South-Western, 1998), p. 509.

23. Copyright © by South-Western College Publishing. All rights reserved. 17–23 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

24. Copyright © by South-Western College Publishing. All rights reserved. 17–24 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

25. Copyright © by South-Western College Publishing. All rights reserved. 17–25 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.

26. Copyright © by South-Western College Publishing. All rights reserved. 17–26 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.

27. Copyright © by South-Western College Publishing. All rights reserved. 17–27 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

28. Copyright © by South-Western College Publishing. All rights reserved. 17–28 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

29. Copyright © by South-Western College Publishing. All rights reserved. 17–29 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.