Chapter 11 - Creative Use of Advertising and Promotion

“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

“Advertising is the “wonder” in Wonder Bread”

—Jeff I. Richards

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.

II. Developing an Advertising Strategy

A. The Strategy
1. An advertising strategy ensures that money isn't wasted.
2. A well-developed strategy increases the likelihood of good results.
3. The first step is to define the purpose of the company's advertising program by
creating specific, measurable objectives.
a) Some ads are designed to stimulate immediate response.
b) Other ads seek to build name recognition.
c) Still other ads strive to draw new customers, build mailing lists, increase foot
traffic in a store, or introduce a company or a product into a new territory.
4. The next step is to identify the company's target customers.
a) Before considering either the advertising message or the media by which to
send it, business owners must understand their target customers.
b) Business owners should address the following questions:
(1) What business are we in?
(2) What image do we want to project?
(3) Who are our target customers and what are their characteristics? Where
can we best reach them?
218
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What do my customers really purchase from us?

(4)
What benefits can the customer derive from our goods or services?
(5)
How do I want to position our company in the market?
(6)
What advertising approach do our competitors take?
(7)
5. 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.

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.

GAINING THE COMPETITIVE EDGE:

Making Your USP A Force in the Success of the Business

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.

Table 11.2 offers 12 tips for creating an effective advertising campaign.

1. Plan more than one advertisement at a time.

2. Set long—run advertising objectives.
3. Use advertisements, themes, and vehicles that appeal to diverse groups of people
4. View advertising expenditures as investments not as expenses
5. Use advertising that is different from your competitors’ advertising
6. Choose the media vehicle that is best for your business even if it’s not number one
7. Consider using someone else as the spokesperson on your TV and radio commercials.
8. Limit the content of each ad
9. Devise ways of measuring your ads’ effectiveness that don’t depend on just two or three
customers’ responses
10. Stop the ad if something does not happen immediately
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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.

III. Advertising versus Promotion

A. Definition
1. The terms advertising and promotion are often confused.
2. 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.
a) It includes publicity, personal selling, and advertising.

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.

IN THE FOOTSTEPS OF THE ENTREPRENEUR

CEO and Head Salesman – Knowing What It Takes to Drive the Business

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:
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(1) How to initiate contact with the potential customers.

(2) Encourage the prospect.
(3) Request an invitation to demonstrate your products or ask when the
prospect can visit your facilities, depending on which is most appropriate.
(4) Demonstrate in ways important to the prospect your product or services
superiority.
(5) Provide tangible proof of that superiority.
(6) Begin the sales negotiation process.
(7) Ask for the customer’s business and complete the financial and
operational components of the negotiations.
7. Any system can be improved over time and no system is appropriate for every
potential client.
8. Salespersons need to be encouraged to be creative.
a) Before making a sales call, a salesperson should set three objectives:
(1) The primary objective. The most reasonable outcome expected from the
meeting. It may be to get an order or to learn more about a prospect's
needs.
(2) The minimum objective. The very least the salesperson will leave with. It
may be to set another meeting or to identify the prospect's primary
objections.
(3) The visionary objective. The most optimistic outcome of the meeting. This
objective forces the salesperson to be open-minded and to shoot for the
top.
9. The entrepreneur and each member of the sales staff should be in agreement on
the expected sales volume and the appropriate profit margin to be earned.
a) The sales process in continuous and consequently positive feedback on
customer satisfaction sets the stage for the next sales cycle.

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.

IV. Selecting Advertising Media

A. Introduction
1. After the message of the advertisement is determined, and it remains the media
that will best deliver that message.
a) The advertising media blend chosen by a firm needs to both have impact and
be reinforcing.
2. Understanding the qualities of the various media available can simplify an
owner's decision.
3. The owner should consider several questions.
a) How large is my firm's trading area? How big is the geographic region from
which the firm will draw its customers?
223 Section IV Small Business Marketing Strategies

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

(2) Reproduction limitations. The quality of reproduction in newspapers is

limited.
(3) Lack of prominence. The typical newspaper is 65 percent advertising. This
disadvantage can be overcome by increasing the size of the ad or by
adding color to it.
(a) Proper ad placement in the newspaper can increase an ad's
effectiveness.
(4) Declining readership. Newspaper ads would be least effective for small
businesses targeting young people, who are least likely to read newspa-
pers.
(5) Short ad life. The typical newspaper is soon discarded and, as a result, an
ad's life is extremely short.
e) Buying newspaper space.
(1) Newspapers typically sell ad space by lines and columns or inches and
columns.
(2) Most papers offer discounts for bulk, long-term, and frequency contracts
and for full-page ads.
(3) Advertising rates vary from one paper to another, depending on such
factors as circulation and focus.
3. Radio
a) Radio permits advertisers to appeal to specific audiences over large
geographic areas.
b) By choosing the appropriate station, program, and time for an ad, a small
company can reach virtually any target market.
c) Radio advertising advantages
(1) Universal infiltration. Virtually every home and car in the United States is
equipped with a radio. Radio reaches 77 percent of all customers each day
and 95 percent of customers each week.
(2) Market segmentation. Radio stations design their formats to appeal to
specific types of audiences. Stations have listener profiles that give
entrepreneurs the ability to pinpoint virtually any advertising target.
(3) Flexibility and timeliness. Radio commercials have short closing times
and can be changed quickly.
(4) Friendliness. Radio ads are more "active" than ads in printed media
because they use the spoken word to influence customers.
d) Table 11.3 offers a guide to producing effective radio copy.
e) Radio advertisements disadvantages
(1) Poor listening. Customers will hear ads, but they may not listen to them.
(2) Need for repetition. Listeners usually do not respond to radio ads after a
single exposure to them.
(3) Limited message. Radio ads are limited to one minute or less, so small
business owners must keep their messages simple, covering only one or
two points.
f) Buying Radio Time
(1) Stations follow various formats--from rap to rhapsodies---to appeal to
specific audiences.
225 Section IV Small Business Marketing Strategies

(2) Radio advertising time usually sells in 10-second, 20-second, 30-second,

and 60-second increments, with the last being the most common.
(3) Fixed spots are guaranteed to be broadcast at the times specified in the
owner's contract with the station.
(4) 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.
(5) Floating spots are the least expensive, but the advertiser has no control
over broadcast times.
(6) Many stations offer package plans, using flexible combinations of fixed,
preemptible, and floating spots.
(7) Radio rates vary depending on the time of day they are broadcast
(8) See different time classifications.
(9) Some stations may also have different rates for weekend time slots.
4. Television
a) In advertising dollars spent, television is tied with newspapers in popularity.
b) A 30-second commercial on network television may cost well over $500,000.
(1) A 30-second spot on a local cable station may go for $200 or less.
c) Television advertising advantages
(1) Broad coverage. About 97 percent of the homes in any area will have a
television, and those sets are on an average of 7 hours and 8 minutes each
day.
(a) The nation's 200-plus cable channels now draw 50 percent of
television viewership.
(b) Cable television offers advertisers the ability to reach specific target
markets much as radio ads do.
(2) Visual advantage. Research shows that 46 percent of television ads result
in long-term sales increases and that 70 percent of campaigns boost sales
immediately. The ability to use sight, sound, and motion makes TV ads a
powerful selling tool.
(3) Flexibility. Television ads can be modified quickly to meet the rapidly
changing conditions in the marketplace. Advertising on TV is a close
substitute for personal selling.
(4) Design assistance. The television station from which a manager purchases
the airtime often is willing to help design and produce the ad very
inexpensively.
d) Television advertising disadvantages
(1) Brief exposure. Nearly half of all adults engage in other activities during
television commercials and are likely to miss them.
(2) Clutter. The typical person sees 1,500 advertising messages a day.
(3) "Zapping." "Zappets," television viewers who flash from one channel to
another, especially during commercials, pose a real threat to TV
advertisers.
(4) Cost. A 30-second ad can cost several thousand dollars to develop, even
before the owner purchases airtime.
 Chapter 11 - Creative Use of Advertising and Promotion 226

e) Table 11.4 offers some suggestions for developing creative television

commercials.
5. The World Wide Web
a) Businesses of all sizes may find that advertising online is more effective with
the incorporation of larger “virtual” billboards.
b) Banner ads are new standardized ad formats intended to supplement the
traditional 5-inch wide by 1-inch high.
(1) The small rectangular banner ad may be to small to deliver a more
complex marketing message.
(2) One-half of one percent of viewers click on banner ads.
(3) The new larger formats include “skyscrapers” that run the length of the
page on one side, and rectangles that are up to 3.5-inches wide by 3-inches
high.
c) Cookies are full-page ads and push technology ads.
(1) Cookies are small programs that attach to users' computers when they visit
a Web site.
(2) They track the locations users visit while in the site and use this electronic
footprint to send pop-up ads that would be of interest to the user.
d) Full-page ads are those that download to Web users' screens before they can
access certain Web sites.
(1) They are common on popular game sites that sustain high volumes of Web
traffic.
e) Push technology ads appear on users' screens when they download
information such as news, sports, or entertainment from another site
f) See Table 11.5 offers guideline for Internet ad campaigns.
g) Direct e-mail can be either solicited, where an individual asked to be placed
on an e-mail list, or unsolicited.
(1) Internet users as intrusive and unethical are viewing unsolicited e-mail,
(spam).
(2) “Solicited mailers are gaining momentum and customer response seems to
be strong and said to be 5 times more cost effective than traditional direct
mail and 20 times more cost efficient than banner ads.
6. Magazines
a) Nearly 9 out of 10 adults read an average of seven magazines each month.
b) The average magazine attracts 6 hours and 3 minutes of total adult reading
time.
c) The reader is exposed to 89 percent of the ads in the average issue.
d) Magazines' advertising advantages
(1) Long life spans. Few people read an entire magazine at one sitting. In-
stead, most pick it up, read it at intervals, and come back to it later.
(2) Multiple readership. The average magazine has a readership of 3.9 adult
readers, and each reader spends about one hour and 33 minutes with each
copy. And magazines have a high "passalong" rate; they are handed down
from reader to reader.
227 Section IV Small Business Marketing Strategies

(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.

IN THE FOOTSTEPS OF AN ENTREPRENEUR

You Can Find It In the Catalog

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.

To be successful, a product has to be ready for catalog.

 The product needs to be unique and invoke and “isn’t that neat” response from those
who see it.
 To get noticed by the catalog companies through exhibiting at trade shows; hiring a
manufacture rep; attempt to get some positive attention for your product in the media;
and cold calling, if necessary.
 Must have the capability to produce the product in sufficient quantity to satisfy demand.
 Must be priced in a way for both you and the catalog company to earn a reasonable
profit.
 Must cultivate a positive relationship with the catalog company.

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

customer service including return policy.

(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?

IN THE FOOTSTEPS OF AN ENTREPREUR

A Tough Market to Reach

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.

13. Trade shows.

 Chapter 11 - Creative Use of Advertising and Promotion 232

a) Trade shows provide manufacturers and distributors with a unique opportunity

to advertise to a preselected audience of potential customers who are inclined
to buy.
b) Thousands of trade shows are sponsored each year.
(1) Business owners need to begin by:
(a) Carefully defining their goals regarding what a specific trade show
might contribute to sales.
(b) Evaluate the alternative shows based on both cost and size and type of
audience.
(c) Staff your booth with the right people. Individuals must be willing to
be on their feet and work hard. Lastly, create a “lead” retrieval system
that insures your capability to continue communications with them in
the future.
c) Trade show advantages
(1) A natural market. Comparative shopping is easy, and the buying process is
efficient.
(2) Preselected audience. Trade exhibits attract potential customers with a
specific interest in the goods or services being displayed.
(3) New customer market. Trade shows offer exhibitors a prime opportunity
to reach new customers and to contact people who are not accessible to
sales representatives.
(4) Industry information. Trade shows provide excellent opportunities for
entrepreneurs to find out what is happening in their industries and to size
up their competitors--all in one place. Observant entrepreneurs can spot
key trends.
(5) International contacts. Many small companies make their first
international sales at trade shows, which are extremely popular with
foreign businesses.
(6) Cost advantage. As the cost of making a field sales call continues to
escalate, more companies are realizing that trade shows are an economical
method for making sales contacts and presentations.
d) Disadvantages of trade shows
(1) Increasing costs. The cost of exhibiting at trade shows is rising quickly.
(2) Wasted effort. A poorly planned exhibit ultimately costs the small
business more than its benefits are worth.
14. Specialty Advertising.
a) As advertisers have shifted their focus to "narrow casting" their messages to
target audiences and away from "broadcasting," specialty advertising has
grown in popularity.
b) Advertisers now spend more than $3 billion annually on specialty items.
c) Specialty advertising offers several advantages:
(1) Reaching select audiences. Advertisers can reach specific audiences with
well-planned specialty items.
(2) Personalized nature. A small business owner should choose items that are
unusual, related to the nature of the business, and meaningful to
customers.
233 Section IV Small Business Marketing Strategies

(3) Versatility. The rich versatility of specialty advertising is limited only by

the business owner's imagination.
d) Disadvantages to specialty advertising:
(1) Potential for waste.
(2) Costs. Some specialty items can be quite expensive.
15. Special events and promotions
a) A growing number of small companies are finding that special events and
promotions attract a great deal of interest and provide a lasting impression of
the company.
b) The more creative the entrepreneur the higher the probability that the even
will both attract potential customers and earn excellent coverage in the media.
16. Point-of-purchase ads
a) In the last several years, in-store advertising has become more popular as a
way of reaching the customer at a crucial moment--the point of purchase.
b) Research suggests that consumers make two-thirds of all buying decisions at
the point of sale.
c) Self-service stores are especially well suited for in-store ads.

V. Preparing an Advertising Budget

A. Approaches
1. One of the most challenging decisions confronting a small business owner is how
much money to invest in advertising.
2. There are four methods of determining an advertising budget: what is affordable,
matching competitors, percentage of sales, and objective-and-task.
3. What-is-affordable method
a) The owner sees advertising as a luxury, advertising is an expense, and not as
an investment that produces sales and profits in the future.
b) The advertising budget is allocated funds only after all other budget items
have been financed.
c) The result is an inadequate advertising budget.
4. Match the advertising expenditures of competitors
a) Match in a flat dollar amount or as a percentage of sales.
b) This method assumes that a firm's advertising needs and strategies are the
same as those of its competitors.
c) Relying on this technique can lead to blind imitation instead of a budget suited
to the small firm's circumstances.
5. Percentage-of-sales approach
a) The most commonly used method.
b) This method relates advertising expenditures to actual sales results.
(1) It is preferred to relating them to profits because sales tend to fluctuate
less than profits.
c) A useful rule of thumb when establishing an advertising budget: l0 percent of
projected sales the first year in business; 7 percent the second year; and at
least 5 percent each year after that.
6. The objective-and-task method
a) Is the most difficult and least used technique.
 Chapter 11 - Creative Use of Advertising and Promotion 234

b) It also is the method most often recommended by advertising experts.

c) The owner links advertising expenditures to specific objectives.
d) The task method builds up the advertising funds by analyzing what it will cost
to accomplish the specific objectives.
e) A common problem with the method is that managers tend to be overly
ambitious in setting advertising objectives, and, consequently, they set
unrealistically high advertising expenditures.
7. Most small companies find it useful to plan in advance their advertising
expenditures on a weekly basis.
a) A calendar like the one pictured in Figure 11.4 can be one of the most
valuable tools in planning a small company's advertising program.

VI. How to Advertise Big on a Small Budget

A. Introduction
1. The typical small business cannot afford to hire a professional ad agency.
2. Unless a small company spends more than $10,000 a year on advertising, it
probably doesn't need an ad agency.
3. For most, hiring freelance copywriters and artists on a per-project basis is a much
better bargain.

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

5. One successful publicity technique is cause marketing, in which a small business

sponsors and promotes fund-raising activities of nonprofit groups and charities
while raising its own visibility in the community.

E. Other Ways to Save

1. Other cost-saving suggestions for advertising expenditures include the following:
a) Repeat ads that have been successful.
b) Use identical ads in different media.
c) Hire independent copywriters, graphic designers, photographers, and other
media specialists.
d) Concentrate advertising during times when customers are most likely to buy.

Chapter Summary

1. Describe the steps in developing an advertising strategy.

 Define the purpose of the company’s advertising program by creating specific,
measurable objectives.
 Analyze the firm and its target audience.
 Decide what to say and how to say it, making sure to build the message around the
company’s unique selling proposition (USP).
 Evaluate the ad campaign’s effectiveness.

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.

3. Describe the advantages and disadvantages of the various advertising media.

• The medium used to transmit an advertising message influences the consumer’s
perception—and reception—of it.
• Media options include newspapers, radio, television, magazines, direct mail, the World
Wide Web, outdoor advertising, transit advertising, directories, trade shows, special
events and promotions, and point-of-purchase ads.

4. Identify four basic methods for preparing an advertising budget.

• Establishing an advertising budget presents a real challenge to the small business owners.
There are four basic methods: what is affordable; matching competitors; percentage of
sales; objective-and-task.

5. Explain practical methods for stretching a small business’s advertising budget.

 Chapter 11 - Creative Use of Advertising and Promotion 236

• 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

 A natural market  Wasted effort

 Pre-selected audience
 New customer market
 Industry information
 International contacts
Specialty Advertising
 Cost advantage
 Potential for waste
 Reaching select audiences
 Personalized nature
 Versatility

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.

6. Describe the characteristics of an effective outdoor advertisement.

Answer - Identify the product and the company clearly and quickly. Use a simple
background. The background should not compete with the message. Rely on large
illustrations that jump out at the viewer. Include clear, legible type. Use black-and-white
designs. Research shows that black-and-white outdoor ads are more effective than color ads.
Emphasize simplicity; short copy and short words are best. Use sharp, eye-catching graphics.
Be located on the right-hand side of the highway.

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

 Percentage-of-sales approach--The most commonly used method. This method relates

advertising expenditures to actual sales results.
 The objective-and-task method--is the most difficult and least used technique. It also
is the method most often recommended by advertising experts.

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.

Step into the Real World

1. Contact a small retailer, a manufacturer, and a service firm and interview each one about his
or her advertising program.
a. Are there specific advertising objectives?
b. What media does the owner employ? Why?
c. How does the manager evaluate an ad's effectiveness?
d. What assistance does the manager receive in designing ads?
2. Contact several small business owners and determine how they establish their advertising
budgets, and why do they use the method they do.
3. Collect two or three advertisements for local small businesses and evaluate them on a scale
of 1 (low) to 10 (high) using the following criteria: attention-getting, distinctive, interesting,
concise, appealing, credible, USP-focused, convincing, motivating, and effective. How
would you change the ads to make them more effective?
4. Browse through a magazine and find two ads that use sex to sell a good or service--one that
you consider effective and one that you consider offensive. Compare your ads and reasoning
with those of your classmates. What implications does your discussion have for advertisers?