MARKETING STRATEGIES FOR THE GROWING BUSINESS
INTRODUCTION
Marketing continues to be a mystery . . . to
those who create it and to those who sponsor
it. Often, the ad that generates record-break-
ing volume for a retail store one month is re-
peated the following month and bombs. A cam-
paign designed by the best Madison Avenue ad
agency may elicit a mediocre response. The
same item sells like hotcakes after a 30-word
classified ad, with abominable grammar, ap-
pears on page 35 of an all-advertising shopper
tossed on the front stoops of homes during a
rainstorm! The mystery eludes solution but de-
mands attention.
This publication is devoted to the idea that
your marketing results can be mproved through
a better understanding of your customers.
This approach usually is referred to as the
marketing concept.
Putting the customer first is probably the most
popular phrase used by firms ranging from giant
conglomerates to the corner barber shop, but
the sloganizing is often just lip service. The
business continues to operate under the classic
approach - "Come buy this great product we have
created or this fantastic service we are offer-
ing." The giveaway, of course, is the word we.
In other words, most business activities, in-
cluding advertising, are dedicated to solving
the firm's problems. Success, however, is more
likely if you dedicate your activities exclu-
sively to solving your customer's problems.
Any marketing program has a better chance of
being productive if it is timed, designed and
written to solve a problem for potential cus-
tomers and is carried out in a way that the
customer understands and trusts. The pages
that follow will present the marketing con-
cept of putting the customer first. Marketing
is a very complex subject; it deals with all
the steps between determining customer needs
and supplying them at a profit. In addition
to some introductory material on marketing,
this publication includes practical material
on the marketing approaches to budgeting, lay-
out design, headline writing, copywriting and
media analysis. You have to spend money on
marketing; the purpose of this publication is
to help you get the most for your money, or
the most "bang for the buck."
THE MARKETING CONCEPT
Unfortunately, there is still a misunderstand-
ing about the word marketing. Many people, in-
cluding top executives, use it as a sophisti-
cated term for selling. Marketing representa-
tive is commonly used in ads to recruit sales-
people. Actually, marketing is a way of manag-
ing a business so that each critical business
decision is made with full knowledge of the im-
pact it will have on the customer.
Here are some specific ways in which the market-
ing approach differs from the classic, or sales,
approach to managing a business.
- 1. In the classic approach, engineers and de-
signers create a product, which is then given to
salespeople who are told to find customers and
sell the product. In the marketing approach, the
first step is to determine what the customer needs
or wants. That information is given to designers
who develop the product and finally to engineers
who produce it. Thus, the sales approach only ends
with the customer, while the marketing approach
begins and ends with the customer.
- 2.The second major difference between the sales
and marketing approaches is the focus of manage-
ment. The sales approach almost always focuses on
volume while the marketing approach focuses on pro-
fit.
In short, under the classic (sales) approach
the customer exists for the business, while
under the marketing approach the business
exists for the customer.
The marketing concept is a management plan that
views all marketing components as part of a total
system that requires effective planning, organi-
zation, leadership and control. It is based on
the importance of customers to a firm, and states
that
- All company policies and activities should
be aimed at satisfying customer needs.
- Profitable sales volume is a better company
goal than maximum sales volume.
SELF-ASSESSMENT QUESTIONNAIRE
In order to conduct a successful marketing pro-
gram you must be able to answer the following
questions:
- 1. What type of business are you in
(manufacturing, merchandising or service)?
- 2. What is the nature of your product(s)
or service(s)?
- 3. What market segments do you intend to
serve? (Describe the age, sex, income level
and life-style characteristics of each mar-
ket segment.)
- 4. What strategies will you use to attract
and keep customers?
- Product
- Price
- Place
- Promotion
- Persuasion (personal selling)
- 5. What is your unique selling proposition
(USP)?
- 6. Who is your competition, and what will
you do to control your share of the market?
MARKET RESEARCH
To use the marketing concept effectively in a
growing business, you should
- Analyze your firm's competitive advantage.
What do you do best?
- Identify specific markets you now serve.
- Determine the wants and needs of your present
customers.
- Determine what you are now doing to satisfy
those wants and needs.
- Prepare a marketing plan that allows you to
reach out to new customers or to sell more
to your present customers.
- Test the results to see if your new strate-
gies are yielding the desired results.
Market research must be used in each of these six
steps to help define your business for your custo-
mer's interests, not your own. It is the process
of learning what customers want or need and deter-
mining how to satisfy those wants or needs. It is
also used to confirm whether the customer reacted
to a marketing program as expected. The benefits
of market research include
- Learning who your customers are and what they
want.
- Learning how to reach your customers and how
frequently you should try to communicate with
them.
- Learning which advertising appeals are most
effective and which ones get no response.
- Learning the relative success of different
marketing strategies, thus improving return
on investment.
- Learning how not to repeat your mistakes.
The dilemma for the small business owner is that,
properly done, market research is quite expensive,
takes time and requires professional expertise.
Acquiring all the necessary data to reduce the
risk to your venture may cost so much and take so
long that you may go out of business. The answer
is to find a quick and inexpensive way of getting
enough data to help you make the right decision
most of the time. Some obvious pitfalls are
- Using a sample that does not represent the
total market.
- Asking the wrong questions.
- Not listening to the responses.
- Building in biases or predispositions that
distort the reliability of information.
- Letting arrogance or hostility cut off com-
munication at some point in the marketing
process.
If you have a limited budget, develop the skills
to hear what your customers and potential custo-
mers are telling you. Some techniques worthy of
consideration are
- Advisory board - Occasionally convene a group
of local people, whose opinions you respect,
to act as a sounding board for new ideas.
Choose your group with extreme care; one or
two negative thinkers can distort the thought
process of the entire group.
- User group - Gather customers together to dis-
cuss new ideas. Their opinions can help you
keep your business on track. Pick a neutral
setting where the people will talk. Be sure
to reward the participants and share the
credit for good ideas.
- Informal survey - If you seek feedback from
customers by simply asking, How was every-
thing? you can be seriously misled. Most
people, even those with legitimate complaints,
are reluctant to speak out because they are
afraid of appearing foolish. This tendency is
probably more widespread in smaller communi-
ties, where friendships often stand in the
way of critical review. Also, if your atti-
tude is such that customers feel complaining
will not do any good, you may be antagonizing
customers without even knowing it. One solu-
tion is to take a few customers aside and ask
them some sincere questions about how your
business met their expectations and where it
fell short. If the customer appears uneasy,
do not press the issue - you will only force
him or her to give you pat answers to escape
the situation. If you get a good response,
take notes. Follow-up letters thanking the
customers and telling them what you plan to
do with their suggestions will bring you
friends for life.
- Suggestion box - A suggestion box is a simple
idea that works, but only if you do the fol-
lowing:
- Read the suggestions on a regular basis.
- Do something about the suggestions you
receive.
- Reward those who give you good ideas by
posting their names, writing letters to
them or rewarding them with money or other
things of value.
The principle at work is: If you reward good re-
sults, you will get more good results. If you do
not reward them, you will end up with an empty
suggestion box and the mistaken idea that every-
thing is fine.
- Sample survey - Canvass the neighborhood to
gather data. If you wish to remain anonymous,
line up some marketing students to perform the
survey or engage a local marketing agency. Be
sure you establish a technique for getting a
random sample as most people naturally attempt
to attract respondents with whom they feel com-
fortable. Be sure to test your questionnaire to
see that the questions are easily understood
and are meaningful (see Appendix A for a sample
survey).
- Focus group interview - Get 10 to 15 people
together in a relaxed setting and encourage
them to talk about products or services they
like or dislike. Use a moderator who can lead
the group discussion without inhibiting the
thought processes or limiting the expression
of ideas and opinions. Tape record the session
for later analysis.
- Brainstorming - This is a variation of the
focus group, in which participants are en-
couraged to freewheel in their thinking to
produce as many suggestions as possible with-
out analyzing them. Again, a trained modera-
tor will obtain the best results.
- Complaint analysis - Encourage your customers
to contact you directly if they have com-
plaints. Respond to every complaint with a
courteous letter assuring that you will cor-
rect the situation. A few disgruntled custo-
mers can be harmful. If your customers feel
that they can work with you to solve their
problems, you are sure to be successful.
- Comparison shopping - Arrange with someone
in a similar business located out of town
to come to your town to shop your business
and several of your competitors. Then re-
turn the favor and compare notes. This will
avoid the danger of your becoming compla-
cent about your premises and overlooking
things that may be annoying or confusing to
your customers.
- Customer analysis - Tabulate information
about customers regularly to determine such
data as
- Age.
- Size of buying group (family, household,
etc.).
- Sex of the decision maker in the group.
- Geographic location - Sort checks and
sales slips by ZIP code, or ask customers
to mark their home on a map with a colored
pencil. Tabulate visitors versus local
residents.
- Average amount of purchase.
- Coupon usage.
- Response to recent advertising.
- Radio station listened to.
- Newspapers read.
- Response to mailings.
- Full price buyers versus those who respond
to sales or specials.
- Special populations in your area, such as
college students, military personnel, senior
citizens, hospital visitors, convention at-
tendees, sports spectators, fair attendees,
farmers, seasonal workers, car pools, pet
owners, home owners, boat or recreational
vehicle owners and athletic participants.
The more you know about your customers the
better you will be able to satisfy and even
anticipate their needs.
- Customer want list - Keep a notebook at your
cash register and write down every request you
receive for items you do not carry or have in
stock. Periodic review of the list will give
valuable clues about sales you are losing or
new products and services you should consider
carrying. You may learn of fad items, products
being heavily advertised or items and services
your competitors have dropped. Your customers
may be telling you they are dissatisfied with
your competition and would prefer buying from
you. You will be able to tell if other busi-
nesses in the area are in trouble, even before
they know it themselves. You may also discover
ways to make additional income by adding new
departments or product lines or by developing
a special-order business if your customers are
willing to pay the added shipping costs and
wait for delivery.
- Industry analysis - On business trips or vaca-
tions, visit businesses similar to yours. Take
pictures of signs, storefronts and displays,
and talk to the owners to compare notes on new
products, services and marketing techniques.
Subscribe to trade journals and attend trade
shows to keep current on marketing develop-
ments in your industry.
- Sales representatives - Representatives who
call on other similar businesses in your area
can provide valuable information on business
trends, new items and changes in the industry.
Be sure the information is reliable.
- Advertising notebook - Each ad that you run
represents an investment. To make sure you
maximize your investment, cut out each ad
and tape it to a page in a three-ring note-
book. (For a radio or TV ad, write a short
description.) Enter the date, medium and
cost of the ad. Record the results of the
ad in sales, inquiries or coupons redeemed.
Divide the cost by the results to get a cost-
per-inquiry factor that you can use to compare
your ads and the media in which they appeared.
- Exit interviews - When someone leaves your
employ, be sure to spend sufficient time to
find out exactly why he or she is leaving.
Probe deep to learn what may be occurring
in your business that causes hard feelings,
employee conflict or customer dissatisfac-
tion. It is important that your employees
leave with a good feeling about you and
your business, so they will not spread un-
founded rumors. Also, you may wish to keep
them as customers. Employee turnover and
training can be expensive to a business,
so try to find out what you must do to keep
employees and then decide if they are worth
the price.
SELF-ASSESSMENT QUESTIONNAIRE
In order to conduct a successful marketing pro-
gram you must be able to answer the following
questions:
- 1. What type of business are you in
(manufacturing, merchandising or service)?
- 2. What is the nature of your product(s)
or service(s)?
- 3. What market segments do you intend to
serve? (Describe the age, sex, income level
and life-style characteristics of each mar-
ket segment.)
- 4. What strategies will you use to attract
and keep customers?
- Product
- Price
- Place
- Promotion
- Persuasion (personal selling)
- 5. What is your unique selling proposition
(USP)?
- 6. Who is your competition, and what will
you do to control your share of the market?
EXPANDING YOUR MARKET
When expanding your business, explore all the
strategic alternatives available to you. Select
the one that makes the most sense and then pre-
pare a marketing plan on how to implement that
strategy. There are at least a dozen common
strategies and a variety of strategic combina-
tions or special situations to choose from.
Expansion of Present Location
Learn to spot telltale signs of saturation in
your present facilities. Grocery stores, for
example, keep track of abandoned carts. When
a shopper fills a cart and then leaves because
the checkout line is too long, the grocer should
realize that there is a serious problem. If you
are experiencing bottlenecks, think about adding
to your facilities. Determine how many additional
customers you could service by building up or
out and compare the additional sales to the cost
of construction and temporary inconvenience.
Relocation
If it appears unlikely that you can draw more
customers to your present location (at a reason-
able cost), consider moving closer to your cus-
tomers. A location on Main Street, in a shopping
mall or an industrial park may cost you more in
rent, but if you gain exposure to new customers
it may be a sound investment.
Additional Outlets
Reaching the most customers may require opening
several outlets at convenient locations through-
out your market area. In addition to the added
costs of real estate and multiple inventories,
carefully analyze the cost and availability of
labor and training, and the cost of hiring a
manager for each location and installing an ef-
ficient monitoring system. Your advertising
dollars may become more efficient since your
radio, TV and newspaper ads cover your entire
market. The multiple locations will make it
more convenient for customers to find you.
Downward Vertical Integration
If your profits depend on the prices you pay
for raw materials, your most profitable growth
strategy may be to buy a farm, mine or process-
ing plant to produce your own materials. This
strategy also may make sense if your product
quality is based on a consistent supply of goods
at an acceptable quality level.
Upward Vertical Integration
Most small manufacturing businesses that start
are forced to conform to the existing marketing
channels and sell through established manufactur-
ers' representatives, jobbers or dealers who have
access to the market. As you grow, however, it
makes sense to analyze your distribution system
to see when you can improve your situation by hir-
ing your own sales team, contracting with distri-
butors, buying a truck fleet, opening retail stores
or factory outlet stores or doing anything else you
need to do to get closer to your market. Remember,
every time someone gets between you and your custo-
mer, it either reduces your revenue or increases
your operating costs. Also, it impedes the provider-
consumer communication that is essential to a good
marketing program.
Exporting Goods or Services
Literally, there is a world of markets available
to you if you are willing to learn how to get
started. The U.S. Department of Commerce's U.S.
and Foreign Commercial Service and the U.S. Small
Business Administration can help you explore po-
tential foreign markets for your product or ser-
vice.
Tourists' Business
When you are looking for new customers, don't
ignore tourists who could be attracted to your
area. Work with your local convention and visi-
tors' bureau to determine the impact if you co-
operate with local tourist attractions or hotels
and restaurants to get more people to visit and
spend money in your community.
Franchises
Franchising as a growth strategy offers advantages
if you are short of expansion capital, yet have a
concept that can be packaged and taught to people
who wish to invest in a business. The legal prob-
lems can seem overwhelming, but with a good plan
and competent advice, you can develop a franchise
system that could prove extremely profitable.
License Agreements
If you have a technical process or service, you
may be able to find people in other markets who
would be willing to pay you a royalty for the
rights to use your process. Perhaps you could
sell raw materials, secret ingredients, special
tooling or promotional materials to your license
holders.
Direct Marketing
Selling directly to your customers is one of the
oldest and most effective methods of marketing.
Today, there are few door-to-door salespeople;
most direct marketing is seen in party plan selling
and through mail, TV and magazines. Direct selling
requires good selection and training techniques and
a commission plan plus liberal incentives.
Telemarketing
If you have a good list of prospective customers,
telemarketing may be an effective method of inform-
ing them about your business, qualifying them for
sales follow-up or selling your product or service
to them. Professional firms can be used, or you can
set up your own telephone room. Here again, recruit-
ing and training are critical because only a few
people can do telemarketing well.
Private Label
One method of reaching out to new markets is to
sell your product under the name of your distri-
butor or retailer. However, you cannot build cus-
tomer or brand loyalty because the consumer does
not know you are the producer. Another potential
problem is that, should the owner of the label
find a cheaper producer, you may be out of the
business.
THE MARKETING PLAN
The marketing plan is a problem-solving document.
Skilled problem solvers recognize that a big prob-
lem is usually the combination of several smaller
problems. The best approach is to solve each of
the smaller problems first, thereby dividing the
big problem into manageable pieces. Your market-
ing plan should take the same approach. It should
be a guide on which to base decisions and should
ensure that everyone in your organization is work-
ing together to achieve the same goals. A good
marketing plan can prevent your organization from
reacting to problems in a piecemeal manner and
even help in anticipating problems. Before your
marketing plan can be developed, research must
give you the basic guidelines: for whom you are
designing your product or service (market segmen-
tation), and exactly what that product or service
should mean to those in the marketplace (market
positioning). Below are some guidelines to help
you develop a marketing plan to support the stra-
tegy you have selected for your organization.
Market Segmentation
Your marketing plan should recognize the various
segments of the market for your product or ser-
vice and indicate how to adjust your product to
reach those distinct markets. Instead of market-
ing a product in one way to everyone, you must
recognize that some segments are not only differ-
ent, but better than others for your product.
This approach can be helpful in penetrating mar-
kets that would be too broad and undefined without
segmentation. No matter what you are making or
selling, take the total market and divide it up
like a pie chart. The divisions can be based on
various criteria such as those listed below.
Demographics
This is the study of the distribution, density
and vital statistics of a population, and in-
cludes such characteristics as
- Sex.
- Age.
- Education.
- Geographic location.
- Home ownership versus rental.
- Marital status.
- Size of family unit.
- Total income of family unit.
- Ethnic or religious background.
- Job classificationblue collar versus salaried
or professional.
Psychographics
This is the study of how the human characteris-
tics of consumers may have a bearing on their
response to products, packaging, advertising
and public relations efforts. Behavior may be
measured as it involves an interplay among
these broad sets of variables:
- Predisposition - What is there about a per-
son's past culture, heredity or upbringing
that may influence his or her ability to con-
sider purchasing one new product or service
versus another?
- Influences - What are the roles of social
forces such as education, peer pressure or
group acceptance in dictating a person's
consumption patterns?
- Product Attributes - What the product is or
can be made to represent in the minds of con-
sumers has a significant bearing on whether
certain segments will accept the concept.
These attributes may be suggested by the mar-
keter or perceived by the customer. Some typ-
ical ways of describing a product include
- Price/value perception - Is the item worth
the price being asked?
- Taste - Does it have the right amount of
sweetness or lightness?
- Texture - Does it have the accepted con-
sistency or feel?
- Quality - What can be said about the qua-
lity of the ingredients or lack of artifi-
cial ingredients?
- Benefits - How does the consumer feel after
using the product?
- Trust - Can the consumer rely on this parti-
cular brand? What about the reputation of
the manufacturer in standing behind the
product?
Life-Style
Statements consumers make about themselves through
conspicuous consumption can be put to good use by
research people who read the signals correctly. By
studying behavioral variables, such as a person's
use of time, services and products, researchers
can identify some common factors that can predict
future behavior.
ZIP Code Analysis
In his book The Clustering of America,* Michael
J. Weiss described the research efforts of the
Claritas Corporation. In 1971, company president
Jonathan Robbin started with the idea of analyz-
ing the 254,000 U.S. census blocks and 36,000
ZIP code areas to find out what types of people
live in each. Based on the theory that birds of
a feather flock together, he reasoned that, as
neighborhoods develop, the people who move in
are attracted by a set of common life-style fac-
tors in a pattern called social clustering. He
analyzed each ZIP code according to hundreds of
characteristics under the headings of social rank,
mobility, ethnicity, family life cycle and housing
style. He found 34 key factors that accounted for
87 percent of the variation among U.S. neighbor-
hoods. His computers then assigned each ZIP code
to a cluster type and ranked them from highest to
lowest standard of living (see Table 1).
*Michael J. Weiss, The Clustering of America
(New York: Harper & Row, 1989).
The important thing to recognize about the 40
groups in Table 1 is that each spends its money
in particular ways because the people in that
neighborhood have common values. As you move up
the zip quality scale, it is obvious that people
have more money to spend, but unless you have
what that group thinks is important or desirable,
they aren't going to buy. And, more important, if
their friends and neighbors don't like what you
have to sell, your chances of making the sale are
pretty slim. A sample analysis of the data in
Table 1 follows. The average American spends 2.6
times his or her annual income on a home (calcu-
lated by dividing the median home value for each
cluster by the median income). According to Table
1, the Bohemian Mix cluster spends almost twice
the average on housing because, while its members
earn less money than neighboring clusters, their
higher education level gives them the confidence
and desire to invest in a larger house. The busi-
ness owner must learn how home purchase relates
to all other purchases for each cluster and how
all purchases fall into a pattern. The pattern
has to do with how the people in each cluster
place values on and gain acceptance and pleasure
from purchases, leisure activities and member-
ships that contribute to the life-style of that
particular neighborhood.
In 1978, Claritas launched PRIZM - Potential
Rating Index by ZIP Markets - which refined the
40 rankings by cross-referencing with magazine
subscription lists, new car buyer lists, TV view-
ing diaries, and warranty card, voting records
and sales records for thousands of products and
services. With this new level of data sophistica-
tion, marketing people obtained an amazingly ac-
curate picture of who lives in the 40 types of
neighborhoods.
The largest single cluster, for example, is No.
10 - Blue Chip Blues. These are the top-of-the-
line blue-collar folks who have parlayed a high
school education and skilled-labor jobs into
suburban comfort and active leisure lives. By
comparing this cluster's life-style expendi-
tures with those of other clusters and the na-
tional average, we can cumulate data such as
those reflected in Table 2.
Such information is indispensable to direct mail
marketing firms, but almost any growing business
can benefit from better information about past
and present customers. Start by recording ZIP
codes from checks you receive, ask your customers
to write ZIP codes on your charge card slips and
categorize your cash sales by ZIP code. Such in-
formation gathered over time will give you clues
to such questions as
- Where do your present customers live?
- What areas are growing or declining?
- What is the influence of tourists, students,
military or other specialized populations?
- Does advertising increase sales in certain
areas?
- What is the effect of competitive activities
on your sales?
- How can you find more customers like the ones
you have now?
The real key to successful marketing is to identi-
fy the market segments you wish to reach and then
tabulate the results of your marketing efforts un-
til you find out what works best for you-and then
keep repeating your successes.
Table 1 - Clustering of U.S. Neighborhoods According to Standard of Living
ZIPa Median Median Percent Percent Home value
quality Cluster income home college U.S. to
value grads households income ratio
1 Blue Blood Estates $70307 $200000+b 50.7 1.1 2.8 2
Money & Brains 45798 150755 45.5 0.9 3.3 3 Furs
& Station Wagons 50086 132725 38.1 3.2 2.6 4 Urban Gold
Coast 36838 200000+b 50.5 0.5 5.4 5 Pools & Patios
35895 99702 28.2 3.4 2.7 6 Two More Rungs
31263 117012 28.3 0.7 3.7 7 Young Influentials
30398 106332 36.0 2.9 3.5 8 Young Suburbia 38582
93281 23.8 5.3 2.4 9 God's Country 36728
99418 25.8 2.7 2.7 10 Blue Chip Blues 32218 72563
13.1 6.0 2.3 11 Bohemian Mix 21916 110668 38.8
1.1 5.0 12 Levittown USA 28742 70728 15.7 3.1
2.5 13 Gray Power 25259 83630 18.3 2.9
3.3 14 Black Enterprise 33149 68713 16.0 0.8 2.0
15 New Beginnings 24847 75364 19.3 4.3 3.0 16
Blue-Collar Nursery 30077 67281 10.2 2.2 2.2 17 New
Homesteaders 25909 67221 15.9 4.2 2.6 18 New
Melting Pot 22142 113616 19.1 0.9 5.1 19 Towns &
Gowns 17862 60891 27.5 1.2 3.4 20 Rank & File
26283 59363 9.2 1.4 2.3 21 Middle America
24431 55605 10.7 3.2 2.3 22 Old Yankee Rows
24808 76406 11.0 1.6 3.0 23 Coalburg & Corntown 23994
51604 10.4 2.0 2.2 24 Shotguns & Pickups 24291
53222 9.1 1.9 2.2 25 Golden Ponds 20140 51537
12.8 5.2 2.6 26 Agri-Business 21363 49012 11.5
2.1 2.3 27 Emergent Minorities 22029 45187 10.7 1.7
2.0 28 Single City Blues 17926 62351 18.6 3.3
3.5 29 Mines & Mills 21537 46325 8.7 2.8 2.2
30 Back-Country Folks 19843 41030 8.1 3.4 2.1 31
Norma Rae-Ville 18559 36556 9.6 2.3 2.0 32
Smalltown Downtown 17206 42225 10.0 2.5 2.5 33 Grain
Belt 21698 45852 8.4 1.3 2.0 34 Heavy
Industry 18325 39537 6.5 2.8 2.2 35 Share
Croppers 16854 33917 7.1 4.0 2.0 36 Downtown
Dixie-Style 15204 35301 10.7 3.4 2.3 37 Hispanic Mix
16270 49533 6.8 1.9 3.0 38 Tobacco Roads
13227 27143 7.3 1.2 2.1 39 Hard Scrabble
12874 27651 6.5 1.5 2.1 40 Public Assistance 10804
28340 6.3 3.1 2.6
National Median $24269 $64182 16.2 100.0 2.6
PRIZM (Census Demography) Claritas Corporation 1987.
a) ZIP quality is a socioeconomic ranking based on income,
home value, education and occupation - a kind of pecking
order of affluence. Although jobs have no social status
per se, they're rated in a complex weighting system on
the basis of how much education and training they require.
b) Because the upper census limit for home values is $200000+,
the figure for Blue Blood Estates and Urban Gold Coast
are estimates.
Table 2 Life-Style Expenditures of Blue Chip Blues Cluster
High usage Index* Low usage Index*
Life-style
Campers/trailers 202 Jewelry 91
Above-ground swimming pools 197 Civic clubs 81
Watch ice hockey 173 Watch roller derby 77
Preferred stock in own company 173 Imported champagne 76
Bicycles 154 Malt liquor 69
Hedge trimmer 153 Tennis 67
Second mortgages 153 Jazz records/tapes 54
Lawn tools 153 Movie cameras 51
Bowling 151
Automatic garage door openers 149
Racquetball 145
Desk-top calculators 137
Vans 136
Salt-water fishing 134
Push lawn mowers 132
Compact cars 132
Diet pills 129
Magazines/newspapers
Skin Diver 192 Wall Street Journal 77
Bride's Magazine 162 New Yorker 74
4 Wheel & Off Road 159 Harper's 69
Golf 154 Town & Country 54
Cars
Chevrolet Sprint 194 Saab 67
Buick Riviera 175 BMW 5 Series 49
Plymouth Turismo 174 Ferrari 46
Pontiac Grand Am 171 Jaguar 41
Ford EXP 171 Rolls Royce 23
Food
Children's vitamins 126 Canned corned-beef
hash 94
Frozen pizza 125 Whole milk 92
Mexican food 122 Cold cereal 89
Powdered soft drinks 120 Canned stews 84
Source: SMBR and MRI data bases Claritas Corporation 1987.
*Index numbers indicate percentages of users in each cluster
indexed against the national average. An index of 100 equals
the U.S. average for that category. An index of 300 means
the cluster has three times the national average for that
category.
Market Positioning
You must realize that your product or service
cannot be all things to all people. Very few
items on the market today have universal ap-
peal. Even when dealing in basic commodities
like table salt or aspirin, marketing people
have gone to all sorts of extremes to create
brand awareness and product differentiation.
If your product or service is properly posi-
tioned, prospective purchasers or users should
immediately recognize its unique benefits or
advantages and be better able to assess it in
comparison to your competition's offering. Po-
sitioning is how you give your product or ser-
vice brand identification.
Positioning involves analyzing each market seg-
ment as defined by your research activities and
developing a distinct position for each segment.
Ask yourself how you want to appear to that seg-
ment, or what you must do for that segment to
ensure that it buys your product or service.
This will dictate different media and advertis-
ing appeals for each segment. For example, you
may sell the same product in a range of packages
or sizes, or make cosmetic changes in the pro-
duct, producing private labels or selecting sep-
arate distribution channels to reach the various
segments. Beer, for example, is sold on tap and
in seven-ounce bottles, twelve-ounce cans and
bottles, six-packs, twelve-packs, cases, and
quart bottles and kegs of several sizes. The beer
is the same but each package size may appeal to a
separate market segment and have to be sold with
a totally different appeal and through different
retail outlets.
Remember that your marketing position can, and
should, change to meet the current conditions of
the market for your product. The ability of your
company to adjust will be enhanced greatly by an
up-to-date knowledge of the marketplace gained
through continual monitoring. By having good data
about your customers, the segments they fit into
and the buying motives of those segments, you can
select the position that makes the most sense.
While there are many possible marketing positions,
most would fit into one of the following categories:
Positioning on specific product features - A very
common approach, especially for industrial pro-
ducts. If your product or service has some unique
features that have obvious value this may be the
way to go.
Positioning on benefits - Strongly related to
positioning on product features. Generally, this
is more effective because you can talk to your
customers about what your product or service can
do for them. The features may be nice, but unless
customers can be made to understand why the pro-
duct will benefit them, you may not get the sale.
Positioning for a specific use - Related to bene-
fit positioning. Consider Campbell's positioning
of soups for cooking. An interesting extension is
mood positioning: "Have a Coke and a smile." This
works best when you can teach your customers how
to use your product or when you use a promotional
medium that allows a demonstration.
Positioning for user category - A few examples:
"You've Come a Long Way Baby," "The Pepsi Genera-
tion" and "Breakfast of Champions." Be sure you
show your product being used by models with whom
your customers can identify.
Positioning against another product or a competing
business - A strategy that ranges from implicit to
explicit comparison. Implicit comparisons can be
quite pointed; for example, Avis never mentions
Hertz, but the message is clear. Explicit compari-
sons can take two major forms. The first form makes
a comparison with a direct competitor and is aimed
at attracting customers from the compared brand,
which is usually the category leader. The second
type does not attempt to attract the customers of
the compared product, but rather uses the compari-
son as a reference point. Consider, for example,
the positioning of the Volkswagen Dasher, which
picks up speed faster than a Mercedes and has a
bigger trunk than a Rolls Royce. This usually works
to the advantage of the smaller business if you can
capitalize on the American tradition of cheering
for the underdog. You can gain stature by comparing
yourself to a larger competitor just as long as
your customers remain convinced that you are trying
harder.
Product class disassociation - A less common type
of positioning. It is particularly effective when
used to introduce a new product that differs from
traditional products. Lead-free gasoline and tube-
less tires were new product classes positioned
against older products. Space-age technology may
help you here. People have become accustomed to
change and new products and are more willing to
experiment than was true ten years ago. Even so,
some people are more adventuresome and trusting
than others and more apt to try a revolutionary
product. The trick is to find out who are the
potential brand switchers or experimenters and
find out what it would take to get them to try
your product. The obvious disadvantage of deal-
ing with those who try new products is that they
may move on to another brand just as easily.
Brand loyalty is great as long as it is to your
brand.
Hybrid bases - Incorporates elements from several
types of positioning. Given the variety of pos-
sible bases for positioning, small business own-
ers should consider the possibility of a hybrid
approach. This is particularly true in smaller
towns where there aren't enough customers in
any segment to justify the expense of separate
marketing approaches.
THE MARKETING BUDGET
Resource allocation is a critical part of any mar-
keting plan. To simplify budget preparation, it is
recommended that investments in labor, material
and services be broken down into the five Ps of
marketing:
- Product - The item or service you have to sell.
- Price - The amount of money you ask your custo-
mer to pay for your product.
- Place - Where a product is now and how it is
transported to your customer.
- Promotion - The advertising and publicity neces-
sary to complete a transaction.
- Persuasion - Personal selling of your business.
Each of the five Ps represents an investment in
dollars, materials and services. We can represent
this as a system of pipes consisting of a tank of
money, which represents the total marketing bud-
get, a main pipe through which the dollars flow
and five valves that control the flow of money to
each of the five Ps (see Figure 1). The concepts
of market planning, segmentation and positioning
are shown as filters. Budgeting is the process of
setting the valves to meet the needs of each mar-
keting task for each segment and then monitoring
the results over time to make sure you remain on
target.
As your market segments change, you will have to
reset the valves. The important thing is to have
in place an effective marketing research system
that gives you the confidence to move in the right
direction for the right reason.
The Product (or Service)
When consumers think about using a product or ser-
vice, they consider its advantages and disadvanta-
ges. In other words, they ask, What's in it for
me? Therefore, it is not enough to define your prod-
uct and its features; other questions must be an-
swered. Think first of your perception of your prod-
uct or service and then find out how your customers
see it. Ask yourself questions such as
- What is a description of our product or service?
- What image does it have in the market?
- What are its features and benefits?
- In the eyes of the consumer, is there a way for
us to provide our product or service more ef-
fectively?
- Where does our product or service fit in a prod-
uct life cycle?
-- Introduction (maximum investment in develop-
ment).
-- Growth (investment in marketing).
-- Maturity (maximize profits).
-- Decline.
-- Marketing decision - At some point during
this declining stage, you must decide
whether to invest more money in the product
(i.e., create a new and improved model re-
quiring additional investment and generating
a new life cycle) or to discontinue it.
Figure 1 - A Marketing Model for Small Busines
* Marketing budget *
* in terms of *
* dollars available *
* for investment *
* Marketing Plan *
* Segmentation *
* Positioning *
*
*Product/ * * Price * * Place * * Promotion * *Persuasion*
*Service * * * * * * * * * *
* *Strategy * *Transpor-* *Advertising* *Personal * *Acceptance
* *Comparison* * tation * *Publicity * * Selling * *Basic need *
*Deals * *Storage * *Signs * *Direct * *Discre- *
*Coupons * *Retail * *Point-of- * * Mail * * tionary *
*Credit * * Store * * Purchase * *Telemar- * *Convenience*
*Layaway * *Wholesale* *Special * * keting * *Fad *
*Delivery * *Repair * *Events * *Endorse- * *Luxury *
*Installa- * * parts * *Word-of- * * ments * *Packaging * * tion
* *Service * * Mouth * *Door-to- * *Value * *Warranty *
* * *Repeat * * door * *Selection * * * *
* * Sales * *Party plan* *Amount * * * * *
* * * * * (size) * * * * * *
* * *
There are a number of pricing strategies you can
use to achieve your growth goal. Each has the po-
tential of producing a profit, and most are tied
to the critical relationship of price-to-sales
volume and stock turnover. Some strategies you
may want to consider are listed below.
Price Skimming
This refers to the practice of charging high
prices for the purpose of maximizing profit
in the short run. It works best when
- The product is unique and people are will-
ing to pay extra just to have it. There are
trendsetters in society who always are look-
ing for something new and are willing to pay
the price. A larger number are followers,
and they will buy your product if it is ac-
cepted by the leaders. The followers, how-
ever, will not pay the higher price.
- The cost of development is high and there is
a chance of early obsolescence or imitation
by competitors.
- You have a strong patent position, or your
product would be difficult to copy.
The real disadvantage of skimming is that it at-
tracts competition. Your competitors will soon
figure out what you are up to, and the high prof-
it potential will encourage them to copy you.
They may produce cheaper versions of your product
or style, referred to as knockoffs in the market.
Once you have meaningful competition on price,
your skimming days are over and you run the risk
of ending up with a warehouse full of products
that cannot be sold at any price.
Penetration Pricing
The opposite of skimming is to introduce your prod-
uct at such a low price that you will quickly gain
a large share of the market. The purpose is to dis-
courage competition. However, eventually you will
have to raise your prices to start making some prof-
it and, when you do, you will learn much about cus-
tomer loyalty.
Buying a Market Position
A variation of penetration pricing is to buy your
way into the market with free samples or heavy
coupons, for example, 50 cents off on a 69-cent
purchase. This tactic is usually used by big com-
panies because it takes considerable financial
backing and it may be six months or more before
it starts to pay off. Small marketers can use it
to the degree they know what they are doing and
can control the process. Frequent follow-up is
important to ensure samples are not going to pro-
fessional collectors but are reaching potentially
strong customers.
Loss Leader
This refers to promoting a few items at a sizable
reduction to attract customers. The idea is that
the increased traffic will result in greater sales
of your regular-priced merchandise. The reductions
have to be on recognized brands and items pur-
chased frequently enough so customers know the
prices and can recognize the savings. You must
keep switching leader items - people are not going
to buy catsup four weeks in a row regardless of its
price. The danger is that you may develop a follow-
ing of cherry pickers who will breeze into your
store, scoop up the specials and buy nothing else.
Multiple Unit Pricing
You can increase the size of your individual sales
by offering a meaningful discount for larger pur-
chases. A liquor store usually will offer a dis-
count or throw in a free bottle of wine when you
buy a case. The same idea applies to the "baker's
dozen," a discount on a "set" of tires or selling
beer and soft drinks by the pitcher. This is a
good technique for building customer goodwill, but
you will not see your customers as often. The
trade-off, of course, is that you save time and
money on containers and packaging, save time by
writing up fewer sales and, perhaps, can make your
delivery service more efficient by selling by the
truckload. Variations are "two-fors," "six-packs,"
"cheaper by the carton" and "bulk price."
Suggested Retail Pricing
This is the practice of selling at prices set by
your suppliers. It is convenient because many prod-
uct lines are available prepackaged and prepriced.
However, you lose flexibility and must live with a
set percentage markup. (To combat this disadvan-
tage, some suppliers offer "two-for-three" options
using the retail price). Because suggested-retail
or retail-price-maintenance plans are illegal in
some states, the practice usually is a loser. Us-
ing a slightly different strategy, Panasonic pub-
lished a "minimum retail" price list showing a high-
er "average retail"; some stores use such gimmicks
as "compare at" or "nationally advertised at" to im-
ply that the "official" price is at a certain point.
Discount Pricing
The discount store usually offers lower prices as
a trade-off for spartan interiors, lack of sales
help and the efficiency of central checkouts.
These stores typically work on a 35 to 38 percent
markup compared to 42.5 to 45 percent for a depart-
ment store. Since discount stores depend on the
efficiency of greater volume to cover operating
costs, they must maintain, or at least promote,
good prices.
Full-cost Pricing
This pricing is calculated by adding the costs of
the product or service plus a flat fee or percent-
age as the margin of profit. During inflation, you
must keep track of your costs to make sure that
you are charging enough. In many business lines,
owners have come to realize that when they replace
their stock, the wholesale price has often risen
above their retail price. If they do not raise
prices rapidly enough, they are faced with dimin-
ishing inventories at a constant dollar investment
or with having to invest more money to restock
their shelves at the constant level.
Keystone Pricing
This refers to the practice of setting the re-
tail price at double the cost figure, or a 100
percent markup. It is most common with jewelry
items and in specialty shops, high-ticket fa-
shion shops and department stores. Typically,
the merchandise is subject to drastic clear-
ance markdowns on items that are slow sellers
or held past the season.
Price Lining
This is the technique used by most retail stores
of stocking merchandise in several different
price ranges. A hardware store, for example, may
carry hammers in good, better, and best categor-
ies at $3.49, $6.49 and $9.98, respectively, and
a professional model at $17.95. The theory is
that people buy products with different uses in
mind and with different expectations for quality
and length of useful life. If you do not carry a
range of prices, you may lose the customers who
cannot find the product at the right price. Price
lining simplifies buying and inventory control
because you buy only for the price levels that
you know your customers will accept and eliminate
those goods that fall outside the levels you want
to carry.
Competitive Advantage
Here is where you copy or follow the prices set
by your competition. Based on your service image,
you can set your prices equal to, above or below
those of your competition. This strategy requires
constant vigilance by reading the ads and shop-
ping your competition. It is a more passive tech-
nique because you're always following your compe-
titors. Chances are your more aggressive competi-
tor can make better purchases than you. A varia-
tion of this is the we-won't-be-undersold routine,
where you offer to meet or beat the prices of all
your competitors.
Pre-season Pricing
Many manufacturers offer price discounts or dated
billing as incentives to buy early. This is im-
portant to manufacturers because of production
planning and the lead time necessary for ordering
raw materials. For the retailer, the same princi-
ples apply; also, off-season specials may be a
way to profit in business on a year-round basis.
When you sell at a lower price to get the early
sales, you may be borrowing from later full price
sales. On the other hand, anyone who has tried to
buy snow tires during the year's first snowstorm
knows the extent of delivery problems. In this
case, early sales at a lower price would have al-
lowed the merchant to serve the customers better
and to capture sales that may be lost due to lim-
ited service facilities.
Price Is No Object
This refers to certain marketing situations in
which the quality of the product or service is
far more important than the price. If you need
a kidney transplant, for example, you are not
going to shop around and haggle over price.
And even if you do press the doctor, he proba-
bly will quote you a range with a $5,000 spread
rather than giving a specific number. The same
is often true with high-ticket fashions and
jewelry. Using the same psychology, expensive
automobiles and boats are not sold on price.
They may use a starting at or base price to
get people interested, but the prices of the
options are usually in very small print. The
extreme of this attitude is that if you have
to ask the price you probably cannot afford
the item anyway.
Place
Where the product is located when the potential
customer is exposed to a buying opportunity can
often mean the difference between success or
failure. The distribution plan for a given prod-
uct may be determined by several of the factors
listed below.
Product Characteristics
- Perishability - Refrigeration or frozen stor-
age requirements can severely restrict place
options and raise operating expenses.
- Bulk - A product requiring large display
space, or one that is heavy, may restrict
transportation options as well as display
opportunities.
- Displayability - Package design that prevents
stacking on store shelves can severely re-
strict customer exposure. (Log Cabin syrup was
originally packaged in slanted-roof metal con-
tainers. As supermarkets placed increased value
on shelf space for customer selection, the in-
ability to stack the log cabins forced a change
in package design.)
- Buying requirements - If the item must be tried
on to determine fit or if it must be demonstra-
ted before the sale can be made, the place ele-
ment is more restrictive than for a product that
requires no package opening at the time of pur-
chase.
Customer Characteristics
- Impulse versus planned purchase - Items display-
ed in a high-traffic area can increase unplan-
ned purchases.
- Frequency of purchase - Items purchased once
a week usually require more outlets than those
purchased once a year. Grocery stores, for ex-
ample, always outnumber retail furniture out-
lets.
- Distance - How far is the customer willing to
travel to purchase your goods or services?
Use Characteristics
How the customer uses the product after purchase
also can determine place characteristics.
- Do you need to train the customer to use your
product, or supply instructions or a repair
parts list?
- Can you make more sales for service contracts,
accessory items, consumable supplies, repair
parts or companion items?
Location
For most small businesses, especially those in-
volved in retail, finding the best location at
the lowest price becomes an important considera-
tion. You can draw customers to a poor location
but the cost of advertising is often prohibitive.
You should learn how much money you have to pay
for the better location and see how that compares
to the cost of drawing the same number of custo-
mers to the poorer location. Do not overlook
parking, public transportation, quality of the
neighborhood, sign restrictions, lighting, traf-
fic flow and other factors that determine your
store's convenience and safety.
Promotion
Perhaps the most versatile of the five marketing
Ps is promotion. It covers all phases of communi-
cation between the seller and the potential cus-
tomer. It is versatile because a change in budget,
media or target audience can be made quickly. Pro-
motions also can be effectively changed for speci-
fic market segment efforts. Major promotional con-
cerns include the following.
Budget
Because promotional costs can originate from sever-
al sources, it is vital to establish a written bud-
get and closely monitor actual costs. The budgeting
procedure is simplified if separate budgets are pre-
pared for advertising and promotional activities.
Sales goals in dollars, units or both are usually
the basis for promotional budgets.
Timing
Selling when the consumer wants to buy is a funda-
mental factor in the marketing concept. Promotion-
al efforts, whether in-store or through mass media
advertising, should be timed to coincide with max-
imum seasonal or cyclical demand.
Distribution of Promotional Efforts
- Advertising - The major portion of a firm's pro-
motional budget is advertising. Some advertising
media, such as the Yellow Pages, where a speci-
fic amount is charged each month, can be budgeted
as fixed advertising expenditures. The mass me-
dia-newspapers, radio, TV, direct mail and maga-
zines-should be individually budgeted to achieve
sales goals, improve your image and expand your
customer base.
- Promotion - Many firms classify promotion as a
separate budget category. In this case, promo-
tional efforts include in-store displays, sam-
pling, specialty advertising, giveaways and
other nontraditional media efforts.
- Publicity - This is the no-cost element, mean-
ing there is no charge by the newspaper or other
medium for carrying a news release or feature.
There will be an internal cost, however, for the
preparation of publicity releases and photogra-
phy. Many businesses miss publicity opportuni-
ties because they do not have a written market-
ing plan. Every promotion or addition of person-
nel is an opportunity for free publicity, but
only if the news release is prepared and sent
to the media. Business expansion, remodeling,
automation or changes in product name all de-
serve a publicity program.
Promotion Strategy
All advertising and other promotional activities
should be in tune with the firm's stated posi-
tion in the marketplace. This suggests that not
only advertising themes but also media selection
must be based on building and strengthening that
position.
- Benefit approach - Regardless of your media,
to make your marketing concept work in adver-
tising messages you must analyze each product
and service in relation to these two elements:
-- Product point - Those features built into
the product or service. Product points are
usually highly touted in advertising messages,
but they are relatively ineffective unless
they are integrated with the second ingredi-
ent.
-- Benefit - The advantage a customer re-
ceives after purchasing the product. Your ad-
vertising should promise benefits and make
those promises believable by naming the prod-
uct points that will produce the benefits.
For example, "You'll feel better about your
family's safety (benefit) when they are rid-
ing on the new steel-belted radials from Arm-
strong-thanks to the interwoven blankets of
steel embedded deep in the tread (product
point)."
- Media - Consider many types of media in your
promotional campaigns.
-- Newspapers
-- Shoppers
-- Television
-- Radio
-- Billboards
-- Direct Mail
-- Magazines
A full discussion of these media is included
under "Media Available to Advertisers."
In summary, the importance of promotion in the
overall marketing strategy suggests you devote
time to its written plan and constantly monitor
the plan's performance. Be creative but avoid
cuteness. Stick to the benefit approach, and
your customers will respond.
Persuasion
Your business's success will depend on your
ability to persuade others to take actions
that will help them while also helping you.
This is referred to as a win-win situation.
Both parties in the transaction must receive
a benefit in value or in satisfaction. There
are many buying motives that may bring a cus-
tomer to your business:
Gain Utility Conformity
Time saved Productivity Saved effort
Health Convenience Money saved
Comfort Happiness Need
Protection Pride (vanity) Want
Pleasure Fear Economy
Amusement Love Luxury
Security Profit Safety
The key to successful selling is to determine
which motives brought the customer to you and
then develop a sales presentation that will
convince the customer that you and your prod-
uct can meet those needs. This process can be
broken down into a series of steps:
- Prospecting - This is the activity of iden-
tifying potential customers or running ads
to entice people into your store.
- Pre-approach - This includes planning what
you will say to customers and what evidence
or displays you will need to enhance your
presentation.
- Approach - This may include a greeting,
statement of objective or series of ques-
tions to determine exactly what the custo-
mer wants. Learn as much as possible about
the customer and his or her buying motive
before you begin your presentation.
- Presentation - This is the opportunity to
tell customers everything they need to know
to make an intelligent buying decision.
- Dramatization - Show enthusiasm for your
product or service.
- Proof - Words may not be enough. You may
need to show facts and figures, endorse-
ments, testimonials or other means of back-
ing up your claims.
- Visualization - Help your customers visual-
ize the satisfaction they will derive from
buying now.
- Demonstration - If possible, let the custo-
mer experience the product. Many items are
difficult to sell without a test drive.
- Trial close - This is a statement or ques-
tion designed to let you know how close the
customer is to making a buying decision.
- Uncover objections - Find out why the custo-
mer is not ready to buy.
- Meet objections - Go back over your presenta-
tion to clear up misunderstandings or doubts
the customer may have.
- Final close - Ask a question that causes the
customer to make a buying decision in your
favor.
- Follow-up - This includes all the steps you
take to write up the sale, arrange delivery,
receive payment and ensure customer satis-
faction.
The above process may be inefficient in many
selling situations. The genius and creativity
of advertising is its flexibility in precondi-
tioning the customer and answering some objec-
tions. Certainly your reputation, attitude and
the atmosphere of the selling situation can do
much to alleviate fears or concerns in the mind
of the customer. Your best prospect often is a
satisfied customer or the friend or relative of
a satisfied customer.
For many products or services, direct mail and
telephone selling can be used to complete the
sale or to qualify prospects for a personal
follow-up.
Motivation is an essential ingredient in per-
suasion. You and your employees must maintain
a positive mental attitude. You must learn to
sell yourself, your company and your product.
And your attitude must be one of serving the
customer first, with the realization that your
success depends completely on your ability to
serve the customer.
THE ADVERTISING BUDGET
This section will concentrate on how to pre-
pare a written, detailed advertising budget.
This differs from a budget that details spe-
cific dollar amounts for anticipated receipts
and expenditures, usually handled by a certi-
fied public accountant (CPA) or other finan-
cial advisor. These professionals seldom do
more than allocate a specific amount for ad-
vertising and treat it the same as rent-i.e.,
as an annual expense item.
Returning once again to the marketing approach,
a sound advertising budget should be based on
consumer habits and preferences. Unfortunately,
most retail advertising today appears as an at-
tempt to solve a store's problems. Promotions
reading "We Are Overstocked," "We Must Reduce
Inventory" and 'Our Loss Is Your Gain" are
commonplace and do very little to stimulate the
reader to action. The first requirement of suc-
cessful advertising for the retail store is to
work toward solving the consumers' problems.
This publication's approach to preparing an
advertising budget will, therefore, be based
on the following assumptions:
- Timing of advertising will be determined
by consumers' preference for buying rather
than when the store would like to sell.
- Items to be featured in advertising will
be selected on a basis of probable popu-
larity with customers rather than on a
store's desire to reduce inventory.
- Headlines and copy for advertising will
always be customer-benefit oriented.
- Any medium will be selected on its ability
to reach the right prospects. Personal fa-
vorites and prejudices prevent objectivity
in media selection.
The complete advertising budget must provide
specific written answers to each of these
questions:
- How much should I spend?
- When should I spend it?
- Where should I spend it?
- What media should I use?
How Much Should I Spend?
Since the cost of advertising must be paid
from sales revenue, it should always be ex-
pressed as a function of expected sales
dollars. The two most popular approaches are
- 1. The number of dollars considered neces-
sary to successfully promote the sale of a
given item at a given price. (Example: $10
of the $300 selling price for each refrige-
rator will go to advertising so that $3,000
in advertising should sell 300 units and
produce $90,000 in sales.)
- 2. A flat percentage of every anticipated
revenue dollar will go toward advertising.
(Three percent of an estimated $100,000
annual sales volume will result in an ad-
vertising budget of $3,000.)
This section will concentrate on the second
approach because it allocates advertising
costs for all product lines. Although fewer
than 50 percent of the items carried by most
stores are never advertised, their sale is
the direct result of customer traffic created
by the advertised items and, therefore, all
merchandise sold should contribute to the
overall cost of advertising.
Setting Sales Goals
In both approaches, the first step in prepar-
ing an advertising budget must be setting
sales goals. Just how many television sets
do you expect to sell in a month, a season,
a year? Or what will the retail sales volume
for the entire store be in each time frame?
Setting sales goals can be a guessing game,
but basic research into past sales perform-
ance, the quantity and quality of competi-
tion, the economic forecasts for your area
and characteristics of the population in
your market area can help make the guess an
educated one. The U.S. Department of Commerce
publishes statistical information about consu-
mer expenditures, retail sales and expense
statistics. An hour or two spent in the gov-
ernment publications section of your local
public library can pay big dividends. Another
source for statistical data is the business
association that serves your industry.
Although the first sales goal you set will be
an annual figure, monthly sales goals can never
be determined by merely dividing the annual
figure by 12 months. One of the certainties of
marketing is that consumer habits change con-
stantly. Yet those very changes make the con-
sumer predictable since there is a predictable
pattern of consumer desire for almost every
known commodity. While this consumption pat-
tern may vary from month to month, the annual
pattern repeats itself with remarkable consis-
tency. The chart shown in Appendix B will give
you an idea of the variation in annual sales
patterns for just a few stores. For example,
while the average retail jewelry store can ex-
pect 23 percent of its annual sales volume in
December, the lumber yard or building materials
store can expect only 8 percent of its annual
sales during the same month. The figures on the
chart represent average figures from stores of
all sizes and from all parts of the United
States. They have been recorded and averaged
for five consecutive years, so your store's
actual percentages may vary slightly.
Your next step after setting an annual sales
goal is to determine what percentage of that
annual volume you should anticipate for each
calendar month. You may elect to use the na-
tional figures for your industry, but using
your actual sales figures will give much more
reliable numbers. To determine what percent-
age of your annual sales were achieved in any
given month, merely divide that month's dol-
lar volume by the annual dollar value and mul-
tiply that amount by 100. Your monthly share
of sales percentages will be even more accu-
rate if you compute it for each of your last
three or four years of sales and then average
the percentages for each month. When you ar-
rive at your monthly percentage of annual
sales, you can provide a picture of the cyc-
lical nature of your business by plotting the
percentage figures on the graph provided in
Appendix C.
The worksheet in Appendix D will be the first
step in preparing a written advertising bud-
get for your firm. Fill in the dollar volume
for your store for the last year in the upper
right-hand corner. Next, enter the annual
sales goal you project for the coming year.
Remember to consider elements such as infla-
tion, the condition of both the local and na-
tional economies, any major changes in your
competition and changes you may have made in
your store (e.g., expansion, remodeling or
the addition of new product lines or brands).
Annual sales estimates often are made on a
sales-per-square-foot basis, then converted
to gross sales by multiplying the square foot
index by the total number of square feet de-
voted to selling space. Using industry indi-
ces, you can calculate your share of the mar-
ket by comparing your sales with
estimates of your competitors' sales.
The third item required at the top of Appendix D
is the percentage of gross volume you plan to in-
vest in advertising. Appendix E shows the average
percentage invested by 74 different industries in-
cluding retail and service establishments. Remem-
ber, these published numbers are average figures;
your location, competition, reputation and market
area may dictate an adjusted percentage of sales
for advertising. If your firm is new, you may want
to double the average percentage figure during the
first year just to establish yourself. By multiply-
ing the projected volume for the planned year by
the percentage allocated for advertising, you will
arrive at the dollar amount of the advertising bud-
get for the year. You have answered the question,
"How much should I spend?"
When Should I Spend It?
Although you know how much money you plan to in-
vest in advertising, your budget also must indi-
cate how much of that amount to spend during
each of the 12 months. Do this by transferring
the figures you plotted in Appendix C to the
first column of Appendix E these are the same fig-
ures. Then multiply the projected volume for the
year by the percentage figures for each month and
insert the results in column two of Appendix D.
You now have refined your annual dollar sales goal
into a dollar goal for each calendar month.
The final column in Appendix D can be completed
in one of two ways. You can multiply the percent-
age figures in column one times the projected
total advertising budget or multiply the project-
ed monthly sales figures by the annual advertis-
ing percentage rate. Either procedure will give
identical figures for the projected monthly ad-
vertising budget column. The completed Appendix
D will give you a written guideline that includes
your monthly sales goal and monthly advertising
budget. If your business is a one-product type,
this simple worksheet could serve as your total
budget preparation guide. You should regularly
monitor your firm's actual performance against
these projected goals, and when there appears to
be a deviation from the goals, reevaluate the
original goals and perhaps adjust them upward or
downward.
Where Should I Spend It?
Many firms, especially in the retail field, can-
not settle for only the data in Appendix D since,
over the years, they may have added several de-
partments with their own sales patterns. The work-
sheet in Appendix F is designed to target monthly
advertising dollars toward the department or item
where they will be most productive. Preparation
of this worksheet begins with another review of
your firm's past sales records. The left-hand por-
tion of the worksheet provides space to record the
relative monthly importance of each of three de-
partments. Make up a sheet to provide for the num-
ber of departments in your firm and divide the
total volume for each month by each department's
volume and multiply by 100. This will give you the
percentage importance of each department to the
total store volume. The totals for all the depart-
ments should equal 100 percent for each month.
Figures for the total ad budget column are merely
transferred from the third column in Appendix D.
Since being unpredictable is perhaps the most pre-
dictable of all human traits, we recommend that
you build in some flexibility. In this example,
the worksheet calls for saving 10 percent of each
monthly advertising budget as a reserve fund.
This fund will not be used during the year but
will be held back for contingency use. It will be
nice to have if a 12-inch snowstorm hits the day
after your full-page ad appears!
The net media budget column is completed by sub-
tracting the reserve figures for each month from
the numbers in the advertising budget column.
Finally, complete the columns labeled Departments
A, B and C by multiplying the percentage figures
on the left side of the page by the figures in
the net media budget column. For example, if De-
partment A in your store did 40 percent of the
store's total volume in January, you would multi-
ply the net media budget figure for January by 40
percent and enter that figure under Department A
on the right side of the worksheet. When this
worksheet has been completed, you will have a
written guide telling you when each advertising
dollar should be spent and on which department
(or item) it should be spent. If you prepare
and follow the breakdowns in Appendixes D and F,
your advertising will be timed to solve consum-
er problems by matching your maximum expenditures
with maximum consumer desires.
What Media Should I Use?
The final step in preparing your advertising bud-
get is to allocate advertising dollars to speci-
fic media by using the worksheet in Appendix G,
the Media Budget Allocation Form. The worksheet
provides a special column for fixed advertising
expenditures. Because the monthly costs of adver-
tising in the Yellow Pages, other directories and
outdoor advertising signs are fixed costs, they
should be subtracted from your net media budget
before the remaining dollars are assigned to news-
papers, radio stations and other media. The advan-
tage of completing this worksheet is that you will
have your total advertising expenditure for an en-
tire year on one sheet of paper.
Preparing these worksheets may seem tedious, but
the effort will be well worth your time. If you
have a computer, create the budgeting format on
your terminal. Automating this procedure will
provide a system for tracking the actual sales
performance against your targeted goals. Remem-
ber, when actual performance deviates from pro-
jected performance over a two- or three-month
period, it is time to seriously reevaluate the
original sales goals. Performance below project-
ed goals, if it continues, will increase the
percentage of sales your advertising is costing
while continued sales performance above project-
ed goals may justify higher advertising expendi-
tures.
Whether or not you use the forms presented here,
take the time to prepare a written advertising
budget for your firm that is based on future
sales goals rather than on past years. You will
notice the difference where it really counts-in
profitability!
MAKING ADVERTISING WORK FOR YOU
Appeal to Consumers' Needs
Human behavior, according to psychologist Abra-
ham Maslow, is always the result of one or more
of five basic needs or motivating forces.* Mas-
low classified these in a sequence he refers to
as "the hierarchy of human needs."
His theory is that until a lower-ranking need is
satisfied there is no desire to pursue a higher-
ranking need. Below are the five human motiva-
tors, beginning with the basic or lowest-ranked
need and continuing to the highest.
- 1. Physiological needs - Include hunger,
thirst, reproduction, shelter, clothing,
air and rest.
- 2. Safety-security - The need for security,
stability, dependence, protection, struc-
ture, order, law, tenure, pension and in-
surance.
- 3. Love-belonging - The need for belonging,
acceptance, love, affection, family and
group acceptance and friendship.
- 4. Self-esteem - The need for recognition,
respect, achievement, responsibility,
prestige, independence, attention, im-
portance and appreciation.
- 5. Self-actualization - The need for satis-
faction, the desire to achieve fulfillment
through reaching self-set individual goals
or aspirations.
*Abraham Maslow, Motivation and Personality (New
York: Harper & Brothers, 1954).
The advertising practitioner will do well to be-
come familiar with the Maslow theory of human mo-
tivation because it stresses once again that mo-
tivation is always an individual act. The most
your advertising message can hope to do is to
present an appeal strong enough to stimulate
action toward satisfying one of the basic human
needs.
If there is one rule that will be most helpful
in preparing effective advertising, it is this:
The message must put the desire of the poten-
tial customer before the advertiser's desire.
Please read that one more time! The rule may
sound like a simple one to follow, but fre-
quently advertising messages take the form
of a plea to customers to respond and solve
the advertiser's problem.
Visualize the felt tip pen you probably use
every day. When it was manufactured the raw
materials were converted into these product
features: a plastic barrel, a plastic cap, a
supply of ink, a felt tip and a metal pocket
clip. These are the total product points in
the felt tip pen. What's amazing is that none
of those things have anything to do with why
you will buy the pen! You buy any item only
for how it will benefit you. The key, of
course, is benefit. Effective advertising
must promise the consumer some benefit he or
she will receive after buying the goods or
services advertised. Product features should
be cited only to make the promised benefits
believable. Here is an example of how you
can advertise the felt tip pen by promising
benefits and then using the product features
to make promised benefits believable.
- You can drop this pen on concrete from 20
feet in the air and it will not break be-
cause it is made of a strong plastic.
- You can draw a jet black line for more than
100,000 yards, thanks to the large supply
of quality ink.
- This pen will not leave an ink stain on
your shirt or in your purse, thanks to the
snug-fitting plastic cap.
- When you bend over this pen will not fall
from your pocket because it features a
strong spring steel clip.
Although this technique appears logical, many
advertisements ramble on and on with all the
product features while the potential customer
asks, "What will it do for me?"
Using the benefit approach can be simplified
by preparing a worksheet on which each prod-
uct you plan to advertise is dissected into
(1) the benefits the buyer will enjoy by own-
ing this product and (2) which product fea-
tures will help convince the potential buyer
that the promised benefits are likely to be
true. Using the benefit approach is the best
advertising technique for each advertising
medium. It is also the selling technique used
by all top salespeople. Practice it-it works!
Techniques in Presenting the Advertising Message
The buying decision is seldom a purely rational
one-emotions influence your behavior. As you ex-
plore various techniques for presenting your ad-
vertising message, do not ignore psychological
and emotional appeals. For example, red, a strong
color suggesting excitement, increases reader in-
terest when used in sales ads. While the princi-
ples discussed here relate most specifically to
print ads, they can apply to all media.
Determining Layout Shape and Design
Behavioral scientists have determined that of all
the rectangular shapes, the vertical rectangle of
approximately three units wide by five units deep
is the one the public is exposed to most and,
therefore, the one people find most comfortable.
The advertising world refers to this shape as the
golden rectangle of layout. It is believed that
an advertising message receives higher readership
when presented in this size.
In Appendix H is a drawing of this three-unit by
five-unit shape. Notice the dot on the vertical
center line, one-third of the way from the top of
the ad. This is called the focal point. It is the
point to which the eye is attracted first, at
which the eye enters the ad. Next, note the wavy
line extending from the upper left-hand corner of
the ad to the lower right-hand corner. This re-
verse s is the path that the eye follows, called
the gaze motion path. Your objective should be to
reinforce the ease with which the eye can follow
this path. How you place elements of your ad can
invite the reader's eye to follow this path or to
leave your ad completely before getting your mes-
sage. If your artwork, for example, is located
near the curves in the gaze-motion pattern, it
will invite your reader to leave the ad at that
point and turn the page. The gaze motion also re-
inforces the principle that the best place for a
headline is at the top of the ad where the reader
starts the visual journey through the ad. The
worst place for your logo is the lower left-
and corner; the eye prefers to leave the ad at
the lower right-hand corner, so your logo will
have greater impact there.
The dotted lines divide the ad into vertical
and horizontal halves to stress balance in your
layout. Formal or symmetrical balance occurs
when the elements on the left side of the verti-
cal center line are in the same position and of
the same size or density as corresponding ele-
ments on the right side. This formal balance is
not as interesting to the eye as informal or asy-
mmetrical balance, obtained by balancing weights
on one side of the center line with weights of
varying densities at greater or lesser distances
from the center line on the other side of the ad.
Visualize ad balance as being similar to a see-
saw where weight near the outer end of the board
can be balanced by heavier weights nearer the ful-
crum on the other end of the board. In designing
your ad layout, place illustrations, copy blocks,
headlines and other elements so they appear bal-
anced without formality.
Communicating Desired Layout to Printer
In submitting any printed advertising message to
the media, the only way to ensure that your ad
looks the way you intended is to provide adequate
instructions. Layout means blueprint to the type-
setter or printer. Your layout should be a full-
size replica of what you want the finished adver-
tisement or brochure to look like. Here are some
guidelines to use in preparing layouts.
- 1. A layout should accurately indicate where
all parts of the completed message are to be
located with respect to the borders. This
must include the location and approximate,
if not actual, dimensions of all artwork.
- 2. There are five parts to a comprehensive
layout:
-- Headline - Print all headlines right on the
layout sheet, making the headline fill the
width you want. Give the printer a close ap-
proximation of the desired type size by the
size of your lettering. On each line, put
the exact words you want to appear and use
capital letters or upper and lower case let-
ters the way you want the type set.
-- Illustrations - Use a copy machine, if pos-
sible, and paste a copy of any artwork or
photograph on the layout sheet where you want
it to appear. If you plan to reduce or en-
large the artwork, show the finished height,
width and the location on the layout sheet.
-- Copy - Copy refers to the text in your adver-
tisement. Do not letter in the copy on your
layout sheet. Use two parallel lines to rep-
resent each line of copy and draw these
lines in the exact position on the layout
sheet. These parallel lines should show
whether you want the copy set flush on both
right and left margins or if you prefer a
ragged edge on the right margin (see Figure
2). Each block of copy should be positioned
properly on the layout sheet and then should
be keyed, i.e., assigned a circled letter of
the alphabet that matches a separate block
of copy supplied on copy sheets. Copy sheets
should be typewritten, double-spaced and
should include all words and prices to be
typeset, including any headlines you have
lettered on the layout. Leave a two-inch
left margin on the copy sheet to give the
mark-up person space to code for type style
and size.
-- Price - It is generally a good idea to let-
ter your prices right on the layout if they
appear anywhere other than within regular
copy lines. Show the price as it should ap-
pear, including the relative size of the
cents to dollars portion of the price and
any dollar or cent signs you want used.
-- Logo - The logo is your firm's name, whether
you have a standard, exclusive design or you
merely want your name set in type. Let the
layout show the desired location and size.
It also is helpful to letter in your address
and phone number. If you have a logo design,
do not paste the original art work on the
layout. Make a copy and paste the copy in
the desired position. Ask the printer to make
a photo reproduction (PMT) of your logo and
keep the original artwork for future use.
Figure 2 - Justified and ragged right margins
*
* Headline (Justified) *
*
*
*
*
*
*
*
* Headline (Ragged) *
*
*
*
*
*
*
In addition to these key elements, your layout
also should contain instructions, written out-
side the ad borders and circled. A line from an
instruction circle may lead to the specific area
within the ad if it helps clarify instructions.
Instructions should include the dimensions of
the ad stated in inches (width depth). For a
newspaper ad, the width should be stated in col-
umns and the depth in inches or lines, depending
on the paper's policies. Other instructions can
include the insertion date, reference to the en-
largement or reduction of artwork, the names of
typefaces desired and special typesetting re-
quests. Remember, your layout will serve as the
blueprint for your ad. The finished product can
be only as effective as the original layout. The
copysheet that accompanies your layout also
should contain the size of the ad and the inser-
tion date. Use a paper clip rather than stapling
the copy sheet to the layout. This will prevent
tearing when the two sheets are separated for
production.
Strengthening the Elements of Your Advertisement
Headlines
Since the headline is the first contact your read-
ers have with your message, it must reach out to
them. Promise them a benefit. Tell them how they
will be better off if they read the rest of the
ad. Use action verbs. Save ten dollars is a strong-
er heading than Savings of ten dollars because of
the verb.
Headlines can be classified into the following
five basic types; effective headlines frequent-
ly combine two or more of these kinds.
News Headlines
This form tells the reader something he or she
did not know before. Using the word news does
not make it a news headline. "Now - a copy ma-
chine that copies in color" is an example of
this type headline.
Advice and Promise Headline
Here you are promising something if the reader
follows the advice in your ad. "Switch to Amoco
premium, no-lead gasoline, and your car will
stop pinging."
Selective Headline
This headline limits the audience to a specific
group. For example: "To all gray-haired men over
forty." Caution! Be absolutely sure you do not
eliminate potential customers with this type of
headline.
Curiosity Headline
The intent here is to arouse the reader's interest
enough to make him or her read the ad. The danger
is that this headline often appears "cute" or "cle-
ver" and fails in its mission. An example: "Do you
have trouble going to sleep at night?"
Command or Demand Headline
Watch out for this one as most people resist push-
iness, especially in advertising. "Do it now!" or
"Buy this today!" This headline generally can be
improved by changing to less obtrusive wording
such as: "Call for your key to success!"
One common misconception about headlines is that
they must be short and easy to understand. This
is not always true. Here is a headline that was
used extensively in print ads by Ogilvy and
Mather for one of their clients: At 60 miles
an hour, the loudest noise in this Rolls-Royce
comes from the electric clock.
Illustrations
There are three primary reasons for using illu-
strations in an advertisement.
- To attract attention to the ad.
- To illustrate the item being featured.
- To create a mood in the mind of the reader.
Everyone has heard, A picture is worth a thou-
sand words; in advertising, the illustration
frequently helps the reader visualize the bene-
fits promised. You can almost feel the warmth
of the tropical sun when you see the photos in
January travel ads. Cost and practicality may
dictate whether your ad uses photographs, art-
ists' drawings or merely canned artwork. Any of
these can make the ad more appealing to the
reader's eye.
Copy
If you follow the three principles of good copy,
your ads will be effective:
- Good copy should be clear.
- Good copy should be crisp.
- Good copy should be concise.
Clear, crisp and concise . . . the three Cs of
copywriting suggest that the words in your ad-
vertising message merely do a good job of com-
municating. Do not use big words when small words
can make your meaning clear. Use colorful, des-
criptive terms. Use the number of words necessary
to make your meaning clear and no more-but also
no less! Selecting the right words is critical to
the success of the ads. Recent research conducted
at Yale University found that the following 12
words are the most personal and persuasive words
in our language.
You Discovery Safety
Money Proven Results
Love Guarantee Save
New Easy Health
Notice the overused word free is not on the list.
REMEMBER THAT WHEN YOUR MESSAGE IS PRINTED IN ALL
CAPITAL LETTERS INSTEAD OF UPPER- AND LOWERCASE
LETTERS, IT IS FAR MORE DIFFICULT FOR THE READER
TO FOLLOW AND REMAIN INTERESTED. EVEN IN HEADLINES
ALL CAPITAL LETTERS SHOULD BE AVOIDED.
Price
Should you or shouldn't you put prices in your ad?
Yes! Yes! Yes! Since price is the one factor that
allows the consumer to determine whether an item
represents an adequate value, an ad without price
makes the buying decision difficult if not impos-
sible for the reader. Can you imagine how uninter-
esting your daily newspaper would be if there were
no prices on the food store ads or the department
store offerings? Yes, price belongs, and it be-
longs whether you are advertising a home for
$175,000 or a ballpoint pen for 49 cents.
Logo
Can you visualize the corporate logos for such
firms as Chevrolet, Ford, Playboy, Borden or
Levi Strauss? There is an identification advan-
tage in developing a logo design exclusive to
your firm. Using a logo also helps give your
advertising continuity. Use the logo consis-
tently on all printed pieces, including sta-
tionery. Use it in Yellow Page advertising,
on the side of your truck or company car, on
bags or boxes and anything else your customers
or prospects may see.
Type
The typeface you use in advertising plays an im-
portant role in how the message comes across.
Printers are very knowledgeable about typefaces
and happy to help you make choices.
MEDIA AVAILABLE TO ADVERTISERS
If you understand the concept that advertising is
a multiplication of a selling conversation, then
the basic ingredients of advertising media are
easier to grasp. First, there must be an audience.
A newspaper printed as a single copy could not
function as an advertising medium unless the single
copy were passed from person to person to create a
worthwhile audience. (In that case, the advertiser
probably could go from one individual to another
and be more effective while reaching at least as
many prospects in the same amount of time.) A po-
tential advertiser will require evidence that an
audience does exist, and will want to know the
size and location of the audience, as well as
other characteristics.
The second ingredient on which an advertising
medium can be evaluated is its acceptance in the
marketplace. Acceptance is related not only to
the total number of customers in an audience,
but also to the composition of that audience as
compared to the target audience of the advertis-
er. Advertising over a closed circuit television
program received only by occupants of nursing
homes would not be very profitable for a real
estate firm attempting to sell starter homes.
In addition to an audience's acceptance and
size, the medium also must have a usable fre-
quency of exposure. Most retailers and other
local business establishments rely on their
advertisements' reaching potential buyers regu-
larly, some even several times daily. A medium
with a once-a-year or even a once-a-month fre-
quency might deserve nothing more than a very
small part of a retailer's advertising budget.
Remember, one way advertising functions is by
repetition; a commercial message increases in
audience awareness after more than one exposure.
Various advertising media will be examined from
the standpoint of these three basic ingredients:
the audience (coverage) each enjoys; the accept-
ance (impact) of the medium on the audience; and
the ability to expand its initial impact by being
available more than once or twice in a particular
time frame (frequency).
Paid-circulation Newspapers
Almost every community has a newspaper. About
1,700 of the paid-circulation papers in America
are daily papers and several thousand additional
local papers are published weekly. Paid circula-
tion means the audience reached pays to have the
paper delivered to the home or pays a per copy
price to pick it up at a newsstand or vending
machine. Newspapers are the most popular adver-
tising medium for most local businesses.
Today's newspaper no longer enjoys its former
role as the almost exclusive source of news;
that privilege applies only in those very few
areas not served by radio or television. News-
papers remain, however, a strong factor in their
sphere of influence. Below are some characteris-
tics of paid-circulation newspapers that make
them appealing to advertisers.
- 1. Most paid-circulation papers, both daily
and weekly, reach the majority of homes in
their primary city or town.
- 2. The size of the audience is easy to de-
termine and verify.
- 3. The newspaper offers a predictable fre-
quency of publication: once, twice or up
to seven times a week.
- 4. Newspapers generally are bought by people
representing all segments of the population.
High- and low-income families, urban and
suburban residentsall are subscribers to the
local newspaper.
- 5. Newspapers offer several options to adver-
tisers. Large or small ads, words alone or
words with graphics, black and white or color,
news or specialized feature page positioning.
- 6. The printed advertising message has both
permanence and desired obsolescence. A reader
can refer back to or even clip and save your
ad, yet tomorrow's edition is new and fresh
and eagerly sought by the same reader.
- 7. The newspaper is the only medium in which
the audience also advertise. The want ad or
classified section of most newspapers serves
as a local marketplace where individual buy-
ers and sellers gather to trade their trea-
sures and buy and sell each other's services.
- 8. Newspaper pasteup permits you to request
special locations for ads that tie in with
your market segments. Sports, business, so-
ciety, food and news are the most common sec-
tions.
There are limitations to the newspaper as an adver-
tising medium.
- 1. You could possibly miss potential customers
who choose not to have the paper delivered.
- 2. Your advertising message must fight for the
reader's attention. There may be hundreds of
ads in one paper, as well as dozens of articles
and features for the reader to spend time on.
If the total time spent with a newspaper is
only 20 minutes or so, as some surveys have
found, you can see the odds against your one
ad reaching a really significant number of
subscribers.
- 3. To some advertisers, another limitation of
newspapers is the time required to get the
message into the reader's hand. The advertis-
ing deadline for some sections of large metro-
politan papers may be one week or more in ad-
vance of publication date.
Advertising in newspapers is always priced by
units of space. Rates for classified advertising
may be priced per word or per line while display
ads (the bordered ads that frequently contain il-
lustrations as well as words) are usually priced
per column inch or agate line. A column inch is
a space one column wide by one inch deep. The
agate line is 1/14th of a column inch. The cost
of newspaper advertising is determined by the size
of the circulation, the degree of the paper's dom-
inance in the marketplace, and by the increasing
costs of newsprint, ink, labor and transportation.
The paid-circulation paper is the oldest of the
mass media and continues to be the largest, as
measured by volume of advertising dollars. It is
used by industry giants as well as the corner drug-
store. As a retailer or other small business owner,
some of your advertising budget will most likely
end up in your local paid-circulation newspaper.
Free-distribution Newspapers
Although far from new (the first newspapers
in our country were distributed free), today's
free-distribution paper is different from paid-
circulation newspapers. Although the shopper
type papers contain mostly advertising and
little feature material, they remain a highly
productive advertising medium in hundreds of
cities and towns. Many of the earlier shoppers
have grown into full-fledged newspapers with
news, comics and features, and a frequency of
delivery that approaches seven days a week.
They offer the advertiser most of the advan-
tages of paid-circulation papers, including
the permanence of print, the versatility of
color and graphics, and high readership of
personal want ads. One advantage over paid-
circulation papers is their ability to reach
a very high percentage of the market area.
Because they are free, they are delivered to
every home. If readers like what they read,
they soon come to depend on the paper. Studies
show penetration and acceptance by more than
90 percent of the residents in the circulation
area of free-distribution papers.
To verify the number of papers delivered, pub-
lishers of free-distribution papers may employ
auditing firms to come into the delivery area
and certify the number of copies printed, the
number of carriers used and the number of house-
holds that regularly report receiving a paper.
Many of these papers have audited proof of cover-
age approaching 100 percent of the homes in their
markets.
The phenomenal growth of free-distribution papers
in recent years is related to the increased so-
phistication of marketing and advertising technol-
ogy. The computer made possible the measurement of
sales in market share. Not only do today's merchan-
dise movers target to sell more of their products
each year, but also to sell them to ever larger
shares of the total population in each area. Since
daily and weekly paid newspapers often do not reach
a substantial number of consumers, the total cover-
age concept of the free-distribution papers has
proven they have outgrown their reputation as throw-
aways! Today, Sears, K-Mart, JC Penney and dozens of
smaller department, discount, food and apparel chain
organizations regularly use the free-distribution
papers for total coverage of certain market areas.
Another growing function of the free-distribution
papers is their ability to serve as the distribu-
tion vehicle for advertisers' own preprinted
flyers, sections or merchandise catalogs. Many
publishers will custom design for your special
promotion a delivery system that will deliver the
preprinted section to every home within a speci-
fied area, such as the 12 square blocks immediate-
ly surrounding your business.
If there is a free-distribution paper in your mar-
ket area, it deserves an inquiry. Advertisements
in it may prove to be the most effective dollar
invested in your advertising budget.
Direct Mail
We would be remiss not to mention the U.S. Postal
Service and its ability to deliver your advertis-
ing message. The direct mail advertising message
can be highly personal and powerfully effective.
You know how saturated your home mailbox is with
nothing to buy contests giving you chances to win
new houses, cars, world cruises and big checks
for every month as long as you live. While there
is no obligation for you to buy anything, there
is always something available for salesubscrip-
tions, books, records, videos, personal products,
real estateusually at discounted prices. The give-
aways are possible only because enough people are
tempted by what is available, and what they buy
can be traced to direct mail advertising. In al-
most every business there is an opportunity for
increased business through intelligent use of
direct mail advertising.
Because the per-piece cost of direct mail is much
higher than most forms of print, it must be used
carefully, selectively and efficiently. Mailing
lists are difficult to prepare, expensive to buy
and are partially obsolete the day after they have
been completed. Because people die, move away or
get mad at you at an alarming pace, keeping an ac-
curate mailing list is not easy. Still, direct mail
can be an efficient way to deliver a sales message
to a specific target audience. If your audience is
composed of doctors, lawyers, dentists or school
teachers, for example, only direct mail offers you
the chance to direct your ad to that target au-
dience with no waste circulation.
Direct mail also makes couponing and sampling prac-
tical. It can help isolate advertising response to
one segment or another and compare returns in one
area with those in another.
The most critical part of any direct mail program
is the mailing list. Keep a list of all your cus-
tomers, either by asking them to fill out a mail-
ing list card or by taking their names off the
checks you receive each day. Hold contests to get
your customers to fill out an entry form. As your
list grows, you may need to buy a computer or hire
a mailing firm to keep the list current and to
prepare mailing labels.
Magazines
Print media also include magazines. While most
national magazines are not practical as an ad-
vertising medium for local businesses, some
local magazines may be. City magazines are now
published in hundreds of cities and towns. They
may look as sophisticated as their national coun-
terparts, and they are edited to local tastes.
They use color, photography and professional writ-
ing and editing to create high-interest stories
about people, places and things. They frequently
are distributed free to certain people on special
lists restricted to higher income families. In
this way they can reach relatively exclusive au-
diences, but the frequency of publication (usually
monthly) restricts their use as a basic medium.
Many regional and national magazines include clas-
sified ad sections that may be useful for promot-
ing the availability of a catalog or for selling
individual products. The advantage of magazines is
that they have highly defined readerships that al-
low you to focus on specific market niches. If,
for example, you run an ad in a boating magazine,
you can be fairly sure the people who subscribe
either own a boat or are looking for one. The
Standard Rate and Data Service (SRDS) publishes
a complete listing of all the magazines that
serve particular market interests; it is avail-
able in the business section of most libraries.
Brochures
For many small businesses, a printed brochure may
be helpful to establish credibility and tell your
story in more detail. Computer typesetting and
laser printing have reduced the cost of producing
a brochure. Free layout help is available at many
copy centers. You can keep your costs down by
using standard 8.5 x 11 inch paper and by using a
triple-fold design that will fit into a standard
business envelope.
Other Local Print Media
Don't overlook drop-point media such as booklets
available for free pickup in high-traffic areas
like convenience stores, banks and motels. These
may include guides to local television programs,
listings currently available from real estate
firms, entertainment or sporting events. Evalu-
ate each booklet on its ability to provide enough
value to justify using it.
Radio
In America, 280 million people own more than 300
million radios! Only radio can take your advertis-
ing message to people while they ride bicycles,
walk in the park, ride in cars or climb mountains.
Radio brings a sense of urgency to its listeners
that is second to none. Contrary to the predic-
tions of doom during the advent of television,
radio is alive and well today, and radio advertis-
ing is a major part of the plan for advertisers of
every size and description.
In its pre-television days, radio was the na-
tional advertisers' most economical way to com-
municate with millions at a time. Syndicated
programs of music, drama and news were a common
part of the American life-style. With the advent
of television, radio moved to the automobile and
the beach. Along came the transistor and radio
moved to the shirtpocket. Today radio is every-
where. Millions awake to the sound of clock ra-
dios, and for many the radio is the last sound
they hear before going to sleep. How can a small
business use this sound-only medium for effective
advertising? Only by understanding it and capi-
talizing on its strengths.
Today's radio station is judged on its effective-
ness not only by the number of its listeners, but
also who those listeners are. Many of today's sta-
tions have positioned themselves to reach a se-
lective audience instead of a total market. In
one marketplace, one station may play only country-
western music, another rock music, a third only re-
ligious music, while others feature 24-hour news
broadcasts or talk shows. As an advertiser, format
programming allows you to buy advertising on sta-
tions whose listener characteristics most closely
coincide with the profile of your firm's customers.
Buying time on a given station also can help you
reach audience segments that you may want to tar-
get to help expand your firm's total market segment.
Radio advertising is sold on the basis of time.
That time can vary from an entire program, which
includes your commercial announcements, to spot
announcements ranging from 10 to 60 seconds.
Price ranges are higher during drive time (the
hours in the morning and evening when the maxi-
mum number of people are in their cars going to
or from work, school or other daytime activities)
and lower during the time when more people are
watching television. Most stations offer package
rate plans with a specified number of commercials
guaranteed within a particular time slot. Also,
consider buying flights of commercials, i.e., an
intense saturation of 30-second or 1-minute spots
in a relatively short period of two or three
weeks. Repeat this flight technique during key
promotional times of the year.
The sounds you can employ on radio include not
only the monologue of a man's or woman's voice,
but dialogue and dramatic conversations, vocal
and instrumental music, and sound effects of
every imaginable nature, used individually or
in combinations. The size of radio's audience,
like the circulation of newspapers, is audited
by independent organizations and available to
advertisers through station sales representa-
tives. Arbitron, one of the auditing firms,
conducts its survey by having a sample number
of households keep a written diary of the radio
listening habits of each occupant during a pre-
determined period (usually one week). Arbitron
then summarizes the various stations' listeners
by time of day in 15-minute segments by sex and
age of listener. An advertiser can use the Arbi-
tron data to select the station or stations that
best cover the desired target audience.
Radio advertising frequency is as high as you
can afford. Many stations now broadcast 24 hours
a day, seven days a week. The number of commer-
cial minutes any station can air in each segment
of programming is limited by the Federal Communi-
cations Commission (FCC), but there is still the
opportunity to have a message repeated frequently
in any given period. It is also possible to have
the radio station come to your business for a re-
mote broadcast with customer interviews, prize
giveaways and other crowd-drawing techniques.
Television
Watching TV is the most common leisure activity
in our country today; many surveys report average
daily television viewing time as high as five or
six hours. It is no wonder it has grown into a
giant advertising medium. Television always has
been a popular medium for large retailers, but
its effective use by small- and medium-size busi-
nesses is becoming more popular because of lower-
ed production costs and the ability of cable TV
to reach smaller market areas.
The power of television is its ability to appeal
not only to sight and hearing simultaneously, but
also to strengthen that appeal by the dimensions
of movement and the realism of full color. If you
have invented a new product, TV advertising can
show and tell many people about it and actually
show them the benefit of ownership. Since they
saw how it works and the package it comes in,
customers will recognize it when they are at the
store and be psychologically reminded of how it
works and how great it would be to have it. If
the hammer had never been invented until you came
along, just imagine the number of words in print
advertising it would take to equal the effective-
ness of a 60-second television spot during which
a hammer pounded a nail to fasten one piece of
wood to another!
Television advertising is sold by the time the
message takes. There may be additional charges
for writing, talent, props, on-location filming,
music and editing. Audience loyalty is a disad-
vantage in TV advertising. The audience tunes
to a given channel for entertainment they know
they will find at a particular time. If a foot-
ball game, popular movie or some other prefer-
red form of entertainment appears on another
channel, the viewer does not hesitate to change
channels without leaving the couch. While view-
ers are loyal to the entertainment value of tele-
vision, they show very little loyalty to the sta-
tion itself, especially as cable can bring 40 to
50 viewing alternatives into the home. Viewers,
however, do tend to have favorite news, weather
and sports telecasting personalities, which can
influence the size of your audience and its con-
sistency during certain time periods.
Other developments that could affect television
advertising are the availability of many differ-
ent stations through cable companies, all-shopper
channels, all-sports channels, all-news stations,
the use of home television screens as monitors
for in-home computer and game systems, and the
popularity of video movie cassettes. All of these
may reduce the size of the audience a television
station can guarantee its advertisers.
Many rating services measure the size of televi-
sion audiences. National programs are measured
daily and a station's audience size can be esti-
mated fairly well. Your local television repre-
sentative can explain television's penetration
within the station's area of dominant influence
(ADI) and how that area may conform to your
firm's trade area.
Outdoor Media
Despite restrictive legislation, billboards and
other outdoor display signs still perform a
strong advertising task in many areas. Instant
communication is the key to successfully using
billboards. Directed at drivers with only split
seconds to divert their eyes and to passengers
who can at best get a fleeting glance, wordy or
complex messages are worthless. Photos or strik-
ing art combined with a firm name and a one- or
two-word headline or slogan are common.
Audience totals are determined by how many sign
locations you buy and the total traffic passing
each sign. Outdoor advertising is usually sold
on a basis of gross rating point (GRP) evalua-
tion. The GRP of any medium is the number of
persons exposed to a message compared to the
total number of persons that make up the market.
One shortcoming is that the same person may drive
by the same billboard three or four times a day
and be counted as four separate people. Your
local outdoor sales representative can explain
how many locations are necessary for you to
achieve 50, 75 or 100 gross rating points, and
what that exposure will cost you over varying
time periods.
Other Media for Advertising
We could spend considerable time just trying
to complete a list of all the other ways a
business can advertise and probably still
leave some out. Pencils and pens with your
firm's name imprinted, skywriting, business
cards and even sandwich boards all can per-
form an effective advertising role for some
advertisers. You must evaluate each one on
its ability to get your sales message to the
maximum number of prospects in a believable
manner and at a reasonable price. No text-
book or consultant can do the job for you.
After you have read and listened, go to your
local media representatives and ask for their
help. They have everything to gain and nothing
to lose by putting your firm's best interest
ahead of their desire to make a sale.
REFINING YOUR ADVERTISING FOR GREATER RESULTS
One of the greats in the advertising business,
David Oglivy, preached this philosophy to would-
be advertisers: Never run an ad unless you have
a Unique Selling Proposition (USP).* It's still
a sound philosophy. If you can substitute your
competitor's logo in your ad and it still makes
sense, you are not going to get your money's
worth out of the ad. Having a USP, as it has
come to be known, is difficult with today's
brand name merchandise and competitive pres-
sures, but it is important.
Every item you advertise and every word and il-
lustration you use becomes a part of your firm's
image. Your ability to develop a USP depends on
your knowing what you want your image to be and
then doing those things and only those things
that reinforce that image.
A men's clothing store can become the store with
fashions for the man who thinks young. A nursery
can create the image of the home of the talked-
to plants that will respond to you. A car dealer
can develop a following and a reputation for his
automatic three-year trade-in plan. Once you have
arrived at a USP that you think will appeal to
your customers, translate the idea into a selling
slogan of three to ten words that can be used as
the theme of your advertising campaign. Use it
consistently until your customers learn to asso-
ciate your business with the selling slogan.
*David Ogilvy, Ogilvy on Advertising
(New York: Random House, 1985)
But be careful. A few years ago Excedrin decided
to position itself as the headache remedy for
many different kinds of headaches, like headache
No. 43 or No. 27. Their TV commercial showed the
agony of each headache by the number. What hap-
pened? People went to their drugstores and said
I think I've got headache No. 43. Give me a pack-
age of Anacin. They sold the concept of the head-
aches beautifully but not the exclusivity of Ex-
cedrin as the best relief.
If you want to position your business in the mar-
ketplace, select your target market. How old are
they? What do they have in common? What are their
goals and ambitions? When you have learned all
you can about them, go back and learn more! Then
start talking to them, and only to them, in your
advertising. Talk to them about themselves and
their desires. Then tell them how the goods or
services you sell are perfectly suited to help-
ing them achieve those desires.
Timing Each Ad for Impact
While your budget will tell you how much you
have to spend each month, you must refine your
plan to know how many ads will run each week
and on which days. In planning your ad insert
schedule, be aware that the best results are
obtained by strengthening already strong sales
days, not by trying to make bad days better.
If large employers in your area have paydays
on the first and fifteenth of the month, time
your advertising to coincide. If you use more
than one medium, attempt to coordinate your
efforts by scheduling a radio blitz to coin-
cide with a big print campaign or special
store event.
Using Color
Adding color to a black-and-white advertise-
ment not only increases readership, but can
substantially increase the sales response.
Retailers, however, frequently use too much
color in their ads. Remember, color works
because of its contrast with noncolor areas;
use it in one or two strong clustered areas
rather than scattering it throughout your
ad. Keep in mind that colors also communi-
cate psychologically. Here are a few popu-
lar colors and their common associations.
- Red - Suggests excitement, heat, strength
and is a good color to use in a sale ad.
- Yellow - Conveys brightness, airiness, re-
freshment. Warning: yellow gets lost on
white paper, so always surround areas of
yellow with a border of black or another
dark tone.
- Blue - As a cold color, can convey formal-
ity and haughtiness in its darker shades
and fragility, daintiness and youthfulness
in the lighter tones.
- Orange - A color of warmth, action, power.
- Green - Another cool color, suggests cheap-
ness and coldness in its darker tones while
conveying freshness and crispness in its
lighter shades.
- Purple - A color of royalty and stateliness.
- Maroon - Suggests luxury, solidity, quiet-
ness.
- Brown - Implies age, wholesomeness, utility.
- White - Means purity, cleanliness, chastity.
- Black - Conveys mystery, strength, heaviness.
Research on the productivity of color in news-
paper advertising invariably shows increased
readership as well as increased sales from ads
that use color. Adding color raises the cost
of the ad, but the increased results are sub-
stantially greater than the increased costs.
Critiquing Your Ads
We can learn great lessons from the past. If
your firm has been running ads, dig out a few
from a year or so ago and see how many of
these common no-no's you can find.
- 1. Does your ad contain words like "our,"
"I" or other personal pronouns? They are
poor communicators, try using "you" and
"yours."
- 2. Is the ad uninteresting to look at over-
all? It may be balanced too formally. Try
using an odd rather than even number of il-
lustrations to help achieve informal balance.
- 3. Does your firm have a logo? Develop one
so the name of the firm is not just set in
the same type as the rest of the ad.
- 4. Has your layout allowed the reader's eye
to stray from the preferred gaze-motion path?
If your invitation to the eye causes readers
to leave your ad, you will not get them back.
- 5. Is your logo in the upper left corner or
the lower right corner of the ad? Those are
the two best spots for it.
- 6. Does your headline promise the reader a
benefit?
- 7. Is your copy clear, crisp and concise? Be
sure to use the product points that make the
benefits you promised believable.
- 8. Have you used a headline in capital let-
ters? Don't!
- 9. Have you told the reader what each item
costs? It is very difficult to reach a buy-
ing decision until the question "How much
is it?" is answered.
- 10. Does your ad contain any misleading
statements? Any attempt to misinform or
mislead the reader may lead to a sale, but
in all certainty it will lead to lost cus-
tomers and could lead to court. Honesty is
still the best policy.
As you continue to expand your business in the
months and years ahead, use the tips presented
here. Prepare a budget and review it frequently.
Select your items for advertising to help solve
consumer problems and then present your adver-
tising message as a form of planned communica-
tion. Ask your media representatives for help
in understanding their product.
REFERENCES
Maslow, Abraham. Motivation and Personality.
New York: Harper & Brothers, 1954.
Ogilvy, David. Confessions of an Advertising
Man. New York: Random H. Wolff, 1963.
Random House, 1985.
Weiss, Michael J. The Clustering of America.
New York: Harper & Row, 1989.
APPENDIX A: CUSTOMER SURVEY
If you are a business owner, these questions
are for you. Have you conducted your own pri-
vate interview of customers? Have you person-
ally talked to at least 50 to 60 customers to
find out what they like or dislike about your
business, products and service?
A personalized business survey is a simple
thing to prepare and implement. If you do
it regularly, you can find when and where
things are breaking down in your service.
Use a piece of 8.5 x 11 inch paper with the
following types of yes and no questions:
- 1. Is the service we provide meeting your
highest expectations? If not, what areas
can we improve?
1.
2.
3.
- 2. Are we providing the brands and lines
you want and expect? If not, please list
what is needed.
1.
2.
3.
- 3. Is our business clean and pleasant to be
in at all times? How can we improve it?
1.
2.
3.
- 4. Do you feel the business is truly a part
of the community?
it a friendly place?
prices competitive?
are getting good values?
You may want to include more specific questions,
but the key is to keep the survey short and to
the point. Keep it personal by preparing and
signing it yourself. Leave room for written com-
ments.
Questionnaires should not be stacked at the
cash register for casual distribution. Per-
sonally present them to customers along with
a self-addressed, stamped envelope.
What can you learn from this? Plenty. What
can customers learn? Well, it shows you care
and that is always a sales plus.
APPENDIX B: ANNUAL SALES BY STORE TYPE
Percentage of the Year's Total Sales Each Month
(Five Year Average)
Store Type Jan. Feb. Mar. Apr. May Jun.
All retail stores....................... 7.4 7.0 7.9 8.1 8.6 8.6
Department stores....................... 6.3 5.7 7.2 7.6 8.0 7.9
Drug and proprietary stores............. 8.0 7.5 8.0 7.8 8.2 8.1
Eating and drinking places.............. 7.3 7.0 7.7 8.0 8.8 8.9
Family clothing stores.................. 6.3 5.7 7.8 7.6 8.1 7.7
Furniture, home furnishings stores...... 7.6 7.2 7.7 8.0 8.3 8.5
Gasoline service stations............... 7.8 7.2 8.0 8.2 8.7 8.8
Grocery stores.......................... 8.4 7.4 7.9 8.0 8.6 8.3
Hardware stores......................... 6.2 5.7 6.3 7.9 9.3 9.8
Household appliance, TV, radio stores... 8.2 7.1 7.4 7.7 7.9 8.4
Jewelry stores.......................... 6.0 5.0 6.0 6.0 8.0 9.0
Lumber yards, building materials dealers 5.9 6.3 7.3 8.3 8.7 9.4
Men's and boy's wear stores............. 7.9 6.2 7.1 7.2 8.0 8.1
Passenger car, other automotive dealers. 7.5 7.8 8.8 9.3 9.4 9.9
Shoe stores............................. 6.6 5.9 8.8 7.5 8.0 8.2
Tire battery accessory dealers.......... 6.6 6.0 7.3 8.7 9.0 9.3
Variety stores.......................... 5.9 5.8 7.5 7.2 8.3 7.8
Women's apparel accessory stores........ 6.8 6.3 7.6 7.6 8.0 7.9
Jul. Aug. Sep. Oct. Nov. Dec. Year
All retail stores....................... 8.5 8.3 8.2 8.7 8.3 10.4 100%
Department stores....................... 7.6 8.0 8.0 8.7 9.5 15.5 100%
Drug and proprietary stores............. 8.1 8.2 8.2 8.5 8.2 11.2 100%
Eating and drinking places.............. 9.2 9.3 8.7 8.8 8.1 8.2 100%
Family clothing stores.................. 7.5 8.2 7.6 8.8 9.1 15.6 100%
Furniture, home furnishings stores...... 8.2 8.4 8.2 8.8 9.0 10.1 100%
Gasoline service stations............... 9.2 8.6 8.1 8.5 8.3 8.6 100%
Grocery stores.......................... 8.7 8.4 8.2 8.9 8.0 9.2 100%
Hardware stores......................... 9.4 8.7 8.3 8.9 8.5 11.0 100%
Household appliance, TV, radio stores... 8.6 8.2 8.0 8.6 8.3 11.6 100%
Jewelry stores.......................... 6.0 7.0 7.0 8.0 9.0 23.0 100%
Lumber yards, building materials dealers 9.5 9.6 9.3 9.5 8.3 7.9 100%
Men's and boy's wear stores............. 7.4 7.2 7.5 8.7 9.3 15.4 100%
Passenger car, other automotive dealers. 9.3 8.2 7.9 8.4 6.7 6.8 100%
Shoe stores............................. 7.3 8.8 9.3 9.3 8.7 11.6 100%
Tire battery accessory dealers.......... 9.2 8.6 8.1 8.9 8.7 9.6 100%
Variety stores.......................... 7.5 8.0 7.9 8.4 8.9 16.8 100%
Women's apparel accessory stores........ 7.3 7.9 8.0 9.0 9.1 14.4 100%
Source: U.S. Department of Commerce
APPENDIX C: SHARE OF ANNUAL SALES BY MONTH
%
24
* * * * * * * * * * *
22
* * * * * * * * * * *
20
* * * * * * * * * * *
18
* * * * * * * * * * *
16
* * * * * * * * * * *
14
* * * * * * * * * * *
12
* * * * * * * * * * *
10
* * * * * * * * * * *
8
* * * * * * * * * * *
6
* * * * * * * * * * *
4
* * * * * * * * * * *
2
* * * * * * * * * * *
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
APPENDIX D: PROJECTED SALES AND PLANNED AD VOLUME
Projected Sales Volume by Months and
Planned Monthly Ad Volume
Previous year's gross annual volume $
Projected volume for planned year $
Percentage of gross volume for advertising $
Projected total annual budget for advertising $
Projected
Projected monthly
% of annual monthly advertising
Month sales by month sales volume budget
January
February
March
April
May
June
July
August
September
October
November
December
100
Total
(annual total (total annual
volume) ad budet)
APPENDIX E: AVERAGE ADVERTISING INVESTMENTS OF RETAIL STORES
Advertising and Promotion as a Percentage of Sales
Business credit institutions .2%
Commercial printing .2%
Services-equipment rental and leasing .2%
Services-advertising agencies .3%
Security and commodity brokers .4%
Services-building cleaning and maintenance .4%
Office computing and accounting machinery .5%
Retail-auto dealers and gas stations .5%
Savings and loan associations .5%
Services-engineering and architect .5%
Services-linen supply .5%
Insurance agents and brokers .7%
Services-research and development laboratories .7%
Services-computer and data process .9%
Office furniture 1.0%
Retail-mobile home dealers 1.0%
Services-detective and protective 1.0%
Services-hospitals 1.0%
Ship/boat building and repairing 1.0%
Retail-grocery stores 1.1%
Farm and garden machinery and equipment 1.2%
General building contractors 1.2%
Travel trailers and campers 1.2%
Retail-drug and proprietory stores 1.3%
Transportation services 1.3%
Personal credit institutions 1.4%
Services-nursing and personal care facilities 1.4%
Silverware and plateware 1.4%
Motorcycles, bicycles and parts 1.5%
Bakery products 1.7%
Motor vehicles and car bodies 1.7%
Retail-apparel and accessory stores 1.8%
Hardware 1.9%
Paints, varnishes and lacquers 1.9%
Services-automotive repair and service 1.9%
Retail-lumber and other building materials 2.0%
Hotel and motels 2.1%
Cigars 2.2%
Retail-shoe stores 2.2%
Musical instruments 2.3%
Retail-variety stores 2.3%
Footwear except rubber 2.4%
Household appliances 2.5%
Services-management consulting and PR services 2.6%
Watches, clocks and parts 2.6%
Retail-women's ready-to-wear 2.8%
Retail-department stores 2.9%
Retail-eating places 2.9%
Retail-sewing and needlework stores 3.0%
Finance-services 3.2%
Photographic equipment and supplies 3.2%
Radio/TV receiving sets 3.4%
Radio/TV broadcasters 3.5%
Pens, pencils and other office materials 3.6%
Real estate 3.6%
Services-miscellaneous amusement and recreation 3.6%
Services-motion picture theaters 3.7%
Services-educational 4.1%
Services-personal 4.3%
Jewelry-precious metals 4.4%
Retail-jewelry stores 4.5%
Retail-household appliance stores 4.7%
Bottled and canned soft drinks 5.7%
Retail-mail order houses 5.9%
Candy and other confectionery 6.1%
Cigarettes 6.3%
Toys and amusement sport goods 6.3%
Malt beverages 6.5%
Soap and other detergents 6.5%
Drugs 7.8%
Retail-furniture stores 7.8%
Phonograph records 8.6%
Perfumes, cosmetics and toiletries 8.8%
APPENDIX F: DETERMINATION OF ADVERTISING MEDIA BUDGET
Sales
* Percentage of total store sales *
* contributed by each department *
* Month * Dept. A * Dept. B * Dept. C * Total *
* Jan. * * * * 100% *
* Feb. * * * * 100% *
* March * * * * 100% *
* April * * * * 100% *
* May * * * * 100% *
* June * * * * 100% *
* July * * * * 100% *
* Aug. * * * * 100% *
* Sept. * * * * 100% *
* Oct. * * * * 100% *
* Nov. * * * * 100% *
* Dec. * * * * 100% *
Advertising
* * *Less * Net * * * * * *
Total * reserve * media * * * * * * ad
* 10% of * budget * * * * * Month * budget *
budget * monthly * Dept. A * Dept. B * Dept. C *
*$ *$ *$ *$ *$ *$ *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
* * * * * * *
APPENDIX G: MEDIA BUDGET ALLOCATION FORM
* PLAN *
* Gross * Less * Net *
* budget * reserve * budget *
* * * *
19-- *--% Sales* ----% *---%Total*
* Jan. * * * *
* Feb. * * * *
* March * * * *
* April * * * *
* May * * * *
* June * * * *
* July * * * *
* Aug. * * * *
* Sept. * * * *
* Oct. * * * *
* Nov. * * * *
* Dec. * * * *
*TOTALS * * * *
* Allocation *
* Fixed * Print budget * Electronic * * *
*adv. exp.*
*
*--% total* media * media * media * media * media * ----% * 100% *
* Jan. * * * * * * * * *
* Feb. * * * * * * * * *
* March * * * * * * * * *
* April * * * * * * * * *
* May * * * * * * * * *
* June * * * * * * * * *
* July * * * * * * * * *
* Aug. * * * * * * * * *
* Sept. * * * * * * * * *
* Oct. * * * * * * * * *
* Nov. * * * * * * * * *
* Dec. * * * * * * * * *
*TOTALS * * * * * * * * *
NOTE: Step 1: Transfer advertising budget figures
from Appendix D to Plan portion.
Step 2: List all fixed monthly advertising
expenses (example-Yellow Pages).
Step 3: Determine percentage of total budget
to be allocated to each category.
Step 4: Apply each media's percent share
against net budget dollars and record
dollar amounts.
APPENDIX H: ADVERTISING LAYOUT GUIDE
* - Gaze * *
* - Motion * *
* - Path * *
* - * *
* - *
* Focal * - *
* point
* * - *
* * - *
* * - *
* * - *
* * - *
* - - *- *
* - * *
* - * *
* - * *
* - * *
* - - * - -> *
"GOLDEN RECTANGLE"
3 Units Wide
x
5 Units Deep
APPENDIX I: INFORMATION RESOURCES
U.S. Small Business Administration (SBA)
The SBA offers an extensive selection of
information on most business management
topics, from how to start a business to
exporting your products.
This information is listed in The Small
Business Directory. For a free copy con-
tact your nearest SBA office.
SBA has offices throughout the country.
Consult the U.S. Government section in
your telephone directory for the office
nearest you. SBA offers a number of pro-
grams and services, including training
and educational programs, counseling
services, financial programs and con-
tract assistance. Ask about
- Service Corps of Retired Executives
(SCORE),a national organization spon-
sored by SBA of over 13,000 volunteer
business executives who provide free
counseling, workshops and seminars to
prospective and existing small busi-
ness people.
- Small Business Development Centers
(SBDCs),sponsored by the SBA in part-
nership with state and local govern-
ments, the educational community and
the private sector. They provide as-
sistance, counseling and training to
prospective and existing business
people.
- Small Business Institutes (SBIs), or-
ganized through SBA on more than 500
college campuses nationwide. The in-
stitutes provide counseling by stu-
dents and faculty to small business
clients.
For more information about SBA business
development programs and services call
the SBA Small Business Answer Desk at
1-800-8-ASK-SBA (827-5722).
Other U.S. Government Resources
Many publications on business management
and other related topics are available
from the Government Printing Office (GPO).
GPO bookstores are located in 24 major
cities and are listed in the Yellow Pages
under the bookstore heading. You can re-
quest a Subject Bibliography by writing
to Government Printing Office, Superin-
tendent of Documents, Washington, DC
20402-9328.
Many federal agencies offer publications
of interest to small businesses. There is
a nominal fee for some, but most are free.
Below is a selected list of government
agencies that provide publications and
other services targeted to small busines-
ses. To get their publications, contact
the regional offices listed in the tele-
phone directory or write to the addresses
below:
Consumer Information Center (CIC)
P.O. Box 100
Pueblo, CO 81002
The CIC offers a consumer information
catalog of federal publications.
Consumer Product Safety Commission (CPSC)
Publications Request
Washington, DC 20207
The CPSC offers guidelines for product
safety requirements.
U.S. Department of Agriculture (USDA)
12th Street and Independence Avenue, SW
Washington, DC 20250
The USDA offers publications on selling
to the USDA. Publications and programs on
entrepreneurship are also available through
county extension offices nationwide.
U.S. Department of Commerce (DOC)
Office of Business Liaison
14th Street and Constitution Avenue, NW
Room 5898C
Washington, DC 20230
DOC's Business Assistance Center provides
listings of business opportunities avail-
able in the federal government. This ser-
vice also will refer businesses to differ-
ent programs and services in the DOC and
other federal agencies.
U.S. Department of Health and Human Services (HHS)
Public Health Service
Alcohol, Drug Abuse and Mental Health Administration
5600 Fishers Lane
Rockville, MD 20857
Drug Free Workplace Helpline: 1-800-843-4971.
Provides information on Employee Assistance
Programs.
National Institute for Drug Abuse Hotline:
1-800-662-4357.
Provides information on preventing substance
abuse in the workplace.
The National Clearinghouse for Alcohol and
Drug Information: 1-800-729-6686 toll-free.
Provides pamphlets and resource materials on
substance abuse.
U.S. Department of Labor (DOL)
Employment Standards Administration
200 Constitution Avenue, NW
Washington, DC 20210
The DOL offers publications on compliance
with labor laws.
U.S. Department of Treasury
Internal Revenue Service (IRS)
P.O. Box 25866
Richmond, VA 23260
1-800-424-3676
The IRS offers information on tax require-
ments for small businesses.
U.S. Environmental Protection Agency (EPA)
Small Business Ombudsman
401 M Street, SW (A-149C)
Washington, DC 20460
1-800-368-5888 except DC and VA
703-557-1938 in DC and VA
The EPA offers more than 100 publications
designed to help small businesses under-
stand how they can comply with EPA regula-
tions.
U.S. Food and Drug Administration (FDA)
FDA Center for Food Safety and Applied Nutrition
200 Charles Street, SW
Washington, DC 20402
The FDA offers information on packaging and
labeling requirements for food and food-
related products.
For More Information
A librarian can help you locate the specific
information you need in reference books. Most
libraries have a variety of directories, indexes
and encyclopedias that cover many business topics.
They also have other resources, such as
- Trade association information - Ask the li-
brarian to show you a directory of trade
associations. Associations provide a valuable
network of resources to their members through
publications and services such as newsletters,
conferences and seminars.
- Books - Many guidebooks, textbooks and manuals
on small business are published annually. To
find the names of books not in your local li-
brary check Books In Print, a directory of
books currently available from publishers.
- Magazine and newspaper articles - Business and
professional magazines provide information
that is more current than that found in books
and textbooks. There are a number of indexes
to help you find specific articles in periodi-
cals.
In addition to books and magazines, many libraries
offer free workshops, lend skill-building tapes
and have catalogues and brochures describing con-
tinuing education opportunities.
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