PART 5 Marketing the Product or Service Chapter 11 Small Business Marketing: Strategy and Research Chapter 12 Small Business Marketing: Product Chapter 13 Small Business Marketing: Place Chapter 14 Small Business Marketing: Price and Promotion Marketing your small business entails more than just personal selling or writing newspaper ads. Marketing involves every form of customer contact—plus much more. The theme of this book is creating a sustainable competitive advantage. The topics covered in Part 5 will form the basis for many of those advantages.
All of them flow from one idea: You must understand how you serve your customers better than your competitors. Chapter 11 explores small business marketing strategies and marketing research. Chapter 12 highlights factors related to the products you sell. Chapter 13 discusses location and layout.
Chapter 14 focuses on pricing and promotion strategies. 11 Small Business Marketing: Strategy and Research CHAPTER LEARNING OUTCOMES After reading this chapter, you should be able to: 1. Explain the importance of marketing to small businesses. Describe the process of developing a small business marketing strategy.
Discuss the purpose of the market research process and the steps involved in putting it into practice. C hances are good that if you are reading these words, you have a Facebook page. Your mom, your dog, and the shop where you get your hair cut may have Facebook pages also. In the United States, about 100 million different visi- tors log on to the site each month.
Understandably, entrepreneurs want to try to communicate their wares to any group so large and active. Ellie Sawits, CEO of Frutels, maker of chocolate candies that treat acne, © AP Photo/TimesDaily, Jim Hannon © Image Source/Getty Images Chapter 11: Small Business Marketing: Strategy and Research 265 finds Facebook to be an affordable alternative to paying the high pay-per-click fees for acne-related words on Google AdWords. She says, “For me, the economics of Google just don’t work.” Since Facebook recently made Bing the default search engine, it can enhance its adver- tising model even more than with Google AdWords. The ability to search Facebook provides a wealth of psychographic information—attributes relating to personality, values, attitudes, in- terests, and lifestyles—segmentation variables you will see again in this chapter.
You can extend your advertising to only Facebook users who mention specific words in their profiles or status messages. Howie Goldklang, co-owner of The Establishment hair salon and spa in Milwaukee, will target young women with Facebook pages that mention Justin Timberlake or Lady Gaga. Tim Kendall, Facebook’s director of monetization, says that most advertisers choose to pay based on the number of people who actually see your ad, but you can be charged per person who sees the ad. Twenty bucks will buy a small test ad so you can see which ap- proach is better for your business.
Adam Golomb is head of e-commerce at Eat’n Park Hospitality Group, which runs a chain of 76 restaurants out of Pittsburgh. Golumb wanted to bring more eyeballs to the company Facebook page and made an interesting discovery during testing. He found that his restaurant advertising targeting just women worked much better that those targeting both genders. “The click-through rate dropped dramatically when we went out to both,” he says.
Goldklang reminds that “it is a social network, so if you put up a traditional ad, you’re going to be pushed to the side.” He finds that edgy ads work best for his hair salon, which has a target market of younger clientele. His best-performing ad last year stated, “Spring- time is here. Time to get waxed.” Of course, Facebook will reject your ad if it is too risqué or lewd. All ads must meet the Facebook Advertising Terms and Conditions and Facebook Advertising Guidelines.
Start by checking out www.com/ads/mistakes. Sources: Jason Del Rey, “Fishing for Friends—Advertising on Facebook,” Inc., February 2010, 94–96; Star Hall, “Facebook vs.com,” Entrepreneur, April 2010, www.com; and www.com/ads/mistakes. Small Business Marketing What do you think of when you hear the term marketing? Do you think of selling and advertising? Probably, but marketing is actually much more than just selling or advertising. Marketing involves all the activities needed to get a product from the producer to the ultimate consumer.
Management guru Peter Drucker has stated that businesses have two—and only two—basic functions: marketing and innovation. These are the only things a business does that produce results; everything else is really a “cost.”1 This is just as true for the one-person kiosk as it is for the largest corporate giant. Of course, some selling will always be necessary, but the goal of marketing is to come as close as possible to making selling superfluous.2 A truly customer-driven com- pany understands what consumers want in a product and provides it so that its pro- ducts, to a great extent, sell themselves. Of course, this is not easy.
To paraphrase President Lyndon Johnson: Doing the right thing is easy; knowing the right thing to do is tough. 266 Part 5: Marketing the Product or Service Marketing Concept Many businesses operate today with a customer-driven philosophy. They want to find out what their customers want and then provide that good or service. This philosophy marketing concept is called the marketing concept.
The philosophy of a Businesses have not always concentrated their efforts on what the market wants. Be- business in which the fore the Industrial Revolution and mass production, nearly all a business owner needed wants and needs of to be concerned about was making products. Demand exceeded supply for most goods, customers are determined like boots, clothing, and saddles. People had to have these products, so about all a busi- before goods and services ness had to do was to make them.
This philosophy in which companies concentrate their are produced. efforts on the product being made is now called the production concept of business. production concept After the mid-1800s, when mass production and mass distribution became possible The philosophy of a for manufactured products, supply began to exceed demand. Some selling was needed, business that concentrates but the emphasis remained on producing goods.
World War II temporarily shifted re- more on the product that sources from consumer markets to the military. After the war, when those resources the business makes than were returned to the consumer market, businesses continued producing at capacity, and on customer needs. many new businesses were started. Managers found that they could no longer wait for consumers to seek them out to sell all they could make.
Although these companies still emphasized making products, they now had to convince people to buy their products, as opposed to the competition’s, which inaugurated the selling concept of business. Early in the 1960s, many businesses began to adopt the marketing concept, which, as just explained, emphasizes finding out what your customers want and need, and then offering products to satisfy those desires. Florence Henderson (yes, the mom from the original TV Brady Bunch) admitted that she had a problem—she couldn’t send e-mail from her new smartphone. When Tony Hirsch, a business partner, showed her how, she exclaimed, “I want all my friends to be able to do this!” That desire lead to the crea- tion of FloH Club, a telephone-based tech-support service for seniors.99 a month, members get 24/7 access to help with anything from making an eBay purchase to connecting a printer.
Florence has taped infomercials to reach her target market and expects to draw tens of thousands of new members.3 The business philosophy that broadens the view of the marketing concept is called relationship marketing relationship marketing. Here a business owner recognizes the value and profit potential The philosophy of of customer retention; therefore, the guiding emphasis is on developing long-term, mu- business that concentrates tually satisfying relationships with customers and suppliers. on establishing a long- term buyer-seller relationship for the benefit Of Purple Cows of both parties. In your travels you have most likely passed by many cows: black ones, white ones, brown ones, or some combination thereof.
Unless you have a specific reason for noticing them, such as being in the cattle business, very few cows probably stand out in your mind. In fact, most people would classify cows as boring. Author Seth Godin makes an analogy between most products that consumers see daily with cows: Consumers see so many pro- ducts that seem to be alike that they are all boring. But a purple cow? Drive by one of those, even if it is in a field with a whole herd of black, white, or brown cows, and it would get your attention.
What products stand out in your mind as different? Krispy Kreme doughnuts? Hard Candy cosmetics? Doing and creating things that are counterintuitive, phenomenal, and exciting are important ingredients to marketing small businesses.4 Small businesses can achieve the success that Godin discusses by avoiding the traps of convention and not being afraid to stand out from the crowd by offering unique products and marketing practices. “Purple cows” represent the creation of a competitive advantage or a unique selling point (USP)—topics that volumes have been written about. Take a look at Godin’s Purple Cow for inspiration (you can read it in about an hour).5 Chapter 11: Small Business Marketing: Strategy and Research 267 Marketing Strategies for Small Businesses marketing strategy Your marketing strategy should be decided in the early stages of operating your busi- What the marketing ness. It should state what you intend to accomplish and how you intend to accomplish efforts of a business are it.
The marketing section of the business plan is a good place for the small business intended to accomplish owner to identify marketing strategies. Any potential investor will carefully inspect how and how the business will you have laid out the marketing action that will drive your business. achieve its goals. A good marketing strategy will help you to be proactive, not reactive, in running your business.
You can enhance your marketing plan by making sure that three related bases are covered: • A single-minded focus on the customer to the exclusion of other stakeholders • An overly narrow definition of the customer and his or her needs • A failure to recognize the changed societal context of business that necessitates ad- dressing multiple stakeholders6 Small businesses in the service industries must pay special attention to marketing. When their service is one that customers could perform themselves, such as lawn mow- “A good marketing ing, a marketing strategy is critical. It is also often more difficult to differentiate or estab- strategy will help lish a brand image with services than with tangible products. Can the average car owner you to be tell the difference between automatic transmissions that have been rebuilt by different shops? Probably not.
A marketing strategy that communicates the benefits that consu- proactive, not mers receive is crucial. However comprehensive or simple your marketing plan, it should reactive, in include a description of your vision, marketing objectives, sales forecast, target markets, running your and marketing mix.” Setting Marketing Objectives Your marketing objectives define the goals of your plans. They can be broken into two groups: marketing-performance objectives and marketing-support objectives.8 Objectives for marketing performance are specific, quantifiable outcomes, such as sales revenue, market share, and profit. For example, an objective of this type for a local insurance agency could be “to increase sales of homeowner’s insurance by 10 percent for the next fiscal year.” Objectives for marketing support are what you must accomplish before your performance objectives can be met, such as educating customers about your products, building awareness, and creating image.
Like any goal you want to accomplish in business, marketing objectives need to be (1) measurable, (2) action-oriented by identifying what needs to be done, and (3) time- specific by targeting a date or time for achievement.