A. The owner has an advertising and promotion plan.
A major weakness in many of the cases studied was lack of advertising and promotion
planning. The owner-managers spent money randomly on advertising to promote particular
items. A clear promotional objective with a well-developed plan of action helps to
cultivate awareness of the business and creates a positive image. Random advertising may
increase short-term sales, but it is not effective in developing market recognition for
the business.
1. The business has an advertising budget.
Budgeting money for advertising encourages a consistent promotional effort and prevents
cash flow problems caused by sporadic and unexpected advertising endeavors. Certain
dependable advertising channels to be included in the budgeting process are the Yellow
Pages, direct mail and flyers, newspaper and radio ads and business cards. The owner may
have to budget personal time for the advertising process as well.
2. The business advertises on a weekly or monthly basis. Potential customers need to
see advertising regularly if it is to have a long-term impact.
At a minimum, advertising should be scheduled on a monthly basis. Weekly advertising is
even more effective, especially in businesses such as retail, variety and grocery stores.
Whatever advertising approach is taken, continuous and consistent advertising communicates
an image that the business has staying power and is reputable.
3. The business has a promotional calendar.
A well-developed annual promotional calendar helps multiply the impact of money spent
on promotion and advertising. By comparing past promotional calendars with their
corresponding source of funds statements, the effectiveness of past advertising campaigns
can be ascertained. This simple procedure is a very effective means of increasing the
impact of advertising on costs and potential profits.
B. The owner uses effective advertising and promotion.
The better the customers' needs are understood, the more convincingly a business can
target its advertising toward those needs. Ineffective advertising is generally the result
of not knowing the customers' habits and desires. Effective advertising, on the other
hand, generally is not the result of blind luck, but the result of knowledge and
understanding.
1. The owner advertises in the Yellow Pages.
An ad in the Yellow Pages lets customers know that the business is permanent. Many
people, especially those new to an area, use the Yellow Pages for first-time buying. An ad
in the Yellow Pages increases the odds of getting new business. In addition, it has the
advantage of targeting the advertising at people who have made a decision to buy.
2. The owner uses newspapers and shoppers.
Many small businesses have found community shoppers and weekly newspapers to be
cost-effective ways to advertise. This is especially true when those who read them also
frequent the area near the business.
3. The owner uses radio and television advertising.
Radio and television are fairly expensive advertising media, but for some businesses,
they are lucrative. The profitability of this form of advertising should be carefully
analyzed before spending large sums of money.
4. The owner obtains no-cost or low-cost media coverage.
Every community has no- or low-cost advertising opportunities. Placing business cards
on bulletin boards, speaking before various community groups, using special events to get
publicity, or donating services to a newsworthy cause are all effective ways of
advertising. Law firms have used politics for years as a low-cost way to become known to
the general public. Pet stores have donated time or supplies to the Humane Society. Office
supply stores provide supplies and surplus equipment to schools, churches and other
goodwill organizations. Some creative thinking often can produce a higher payoff than
traditional advertising approaches.
C. The owner uses effective merchandising techniques.
Attractive displays of merchandise are critical in retail operations. Simple but
effective merchandising techniques might include displaying items near the cash register,
putting high turnover items at the back of the store to draw customers through the store
and placing quality items at eye level. Franchise operations often do an excellent job of
using merchandising techniques. Initiating well-known franchise business methods can be an
excellent way to learn new merchandising techniques.
1. The owner relates display space to sales potential.
Keeping shelves stocked with a balanced inventory ensures that customers can find what
they want when they want it. Having top-quality items at eye level and lower-quality items
below is a technique chain stores use to encourage customers to buy more expensive items.
Older inventory should be displayed prominently and its turnover monitored daily. This can
also help the owner discover the hot selling spot, which can be advantageous in planning
future displays.
2. The owner uses vendor promotional aids.
Vendors put a great deal of time and money into their display packages. Using the
vendor's displays and using vendor-prepared promotional ads with those displays can be an
effective way of leveraging advertising and promotional dollars.
3. The owner understands traffic flow patterns of customers.
How customers move past displays and through the store can be used to increase sales.
For example, most people turn to the right upon entering a building - seeing how the tile
or rug wears is one way of determining customer flow patterns.
4. The owner keeps facilities clean.
Making certain that the store and its merchandise are clean communicates to customers
that the owner cares about them. It is an effective nonverbal way of telling customers
that their business is appreciated.
D. The owner evaluates advertising and promotional efforts.
If it works, don't fix it and if it doesn't, change it. Because advertising uses
valuable resources, the small businessperson must closely monitor the effectiveness of
advertising and promotional efforts. The only way to test advertising ideas is to try
them. However, what works one time won't necessarily work again. In addition, what works
for one store may not work for another. Advertising and promotion are more art forms than
sciences. Too often, small businesses either advertise ineffectively or too little.
Analyzing the results of sales efforts and promotional campaigns and how leads are
generated facilitates the use of advertising dollars in a more effective manner.
1. The owner determines if sales increase with advertising.
If sales don't increase with advertising, it may be a sign that the business owner
doesn't know or understand who the customer is and why he or she buys.
2. The owner ascertains if sales increase after special promotions.
If a special promotion doesn't increase sales, then the business may be in a poor
location or there may not be enough potential customers in the business area. If special
promotions don't increase business, the owner must take a hard look at the business.
Perhaps there just isn't a market for goods or services offered by the firm.
3. The owner endeavors to discover if advertising is reaching intended markets.
Many small businesses become contented when advertising increases sales. However,
additional sales that do not increase profits need reevaluating. Reaching a market other
than the intended one is probably a stroke of luck rather than an act of planning. It's
great the one time it happens, but it cannot be relied upon. One-time (variety methods)
advertising has its advantages, but it is the type of advertising that most small
businesses cannot afford.
