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CONTENT/TEACHING OUTLINE Unit D: Marketing a Small Business COMPETENCY: 10.00 Identify the function of promotion in small business. OBJECTIVE: 10.02 Describe the elements that make up the promotional mix. A. Define terms related to promotion. 1. Promotion: Any form of communication a business or organization uses to inform, persuade, or remind consumers about its products/services. 2. Product promotion: Communication used to persuade consumers to buy a particular product/service. 3. Institutional promotion: Communication used to create a favorable image of the business in the eyes of the consumer instead of promoting a product/service. 4. Promotional mix: The combination, or blend, of the different types of promotion. 5. Media: Agencies, means, or instruments used to deliver promotional messages to the public. B. Describe the elements of the promotional mix. 1. Advertising: Any paid form of non-personal presentation of ideas, goods, or services. a. Types of advertising (1) Promotional advertising: Communication designed to increase sales of products and services. (2) Institutional advertising: Promotion designed to create a favorable image and goodwill for a business or organization. b. Five categories of advertising media (1) Print: Oldest and most effective category. Includes newspapers, magazines, direct mail, signs, and billboards. (2) Broadcast: Uses verbal communication. Includes radio and television. (3) Specialty: Inexpensive, useful items with the name of the advertiser printed on them. Includes such items as hats, t-shirts, pencils, and pens. (4) Online: Advertising messages delivered on the Internet. (5) Other: Creative means of advertising such as in movie theaters, on video rental tapes, skywriting, air balloons, and airplane banners, in sports arenas, and many others. c. Advantages and disadvantages of advertising (1) Advantages include a large number of people to view the message with a high rate of frequency of exposure. The Small Business Entrepreneurship D-121 costs per potential customer are usually lower than other forms of promotion. Advertising messages can be controlled by the business. (2) Disadvantages include not being able to select a specific target market. Some media are too expensive for small business owners (TV). The advertisement can be too short or not give enough information about product. Some types of print advertisement are perceived negatively. 2. Personal selling: A form of promotion that uses planned, personalized communication to influence decisions and to ensure satisfaction. a. Types of personal selling (1) Retail selling: Customer comes into store and the salesperson’s job is to help the customer and answer questions about the product. (2) Business to business selling: The salesperson goes to the customer and selling takes place in manufacturer’s/wholesaler’s showroom or in the customer’s place of business. (3) Telemarketing: Process of selling over the telephone. b. Characteristics of an effective salesperson (1) Product knowledge: To better serve customers, the salesperson should be knowledgeable of the product/service. (2) Selling skills: Each salesperson should be trained and knowledgeable of the steps of selling. (3) Positive personal traits: To interact effectively with customer, the salesperson should behave ethically and responsibly and have a positive attitude and awareness of professional appearance. (4) Communication skills: It is important that a salesperson be skilled at verbal and nonverbal language to better serve the customer. c. Steps in the selling process (1) Prospecting/preapproach (2) Approach (3) Determining needs (4) Product presentation/demonstration (5) Overcoming objections (6) Closing the sale (7) Suggestion selling (8) Relationship building d. Advantages and disadvantages of personal selling (1) Advantages include the flexibility of being able to communicate with the consumer to influence purchases and get immediate feedback. (2) The disadvantage is that it is the most expensive form of promotion. Small Business Entrepreneurship D-122 3. Public relations: Any activity designed to create a favorable image toward a business, its products, or its policies. Includes such things as donations to charity. 4. Publicity: Information that is provided to the public by the media or other sources usually at no cost to the business. a. Types of publicity tools (1) News release: A prepared statement or story that provides newsworthy information about the business or organization providing it. It should answer the five basic questions of who, what, when, where, and why. (2) Press conference: A meeting to which a business or organization invites media for the purpose of distributing information about a newsworthy event. (3) Press kit: A folder containing feature stories, articles, photographs, and/or new releases about the company, product or persons which has been prepared to assist the media. b. Characteristics of publicity (1) It can be positive or negative and cannot be controlled. (2) It reaches mass audiences because many people follow the news. (3) It provides believable, valid news often viewed as an endorsement. (4) It is intended to inform about the business, not sell a product/service. (5) No sponsor is identified. There is usually no cost unless the business pays for a press kit to be assembled. c. Advantages and disadvantages of publicity (1) Advantages include helping to create positive image, therefore increasing profits and saving advertising money. Introduces new products and fosters good human relations. (2) Disadvantages are that timing and method of presentation may fail to reach the target market and inaccurate or negative information could be released. 5. Sales promotion: The variety of activities other than personal selling, advertising, and public relations that are used to increase consumer purchases. a. Objectives of sales promotion (1) Increase demand and stimulate sales (2) Inform customers about new and/or improved products (3) Create positive business image b. Examples of trade promotions - designed to promote to businesses instead of consumers. (1) Slotting allowances: Money paid by a manufacturer to the retailer for placing a product in the store, perhaps in a specific location. Small Business Entrepreneurship D-123 (2) Buying allowance: Price discount given by a manufacturer to increase the desire of a wholesaler or retailer to purchase the product. (3) Trade shows: Provide the manufacturer a place to introduce new items and to gain support for new and existing products. (4) Sales incentive/contests: Awards given to salespersons for meeting or exceeding sales goals. c. Examples of consumer sales promotion - designed to increase consumer desire to buy products. (1) Premiums: Low cost items given to the consumer at a discount or free. Examples include coupons, free samples, and redemptions. (2) Incentives: Products earned through contests, sweepstakes, and rebates. (3) Product samples: Trial size products generally sent through the mail or distributed at the business at no cost to the consumer. (4) Promotional tie-ins: A strategy in which two or more businesses combine promotional resources to increase sales. (5) Product placement: Increasing product recognition by featuring the item in movie theaters, on TV, or at special events. (6) Visual merchandising and display: Coordination of the physical elements of a business (or a product) to project the desired image to consumer. d. Advantages and disadvantages of sales promotion (1) Advantages include stimulating sales and raising consumer awareness of the product. (2) Disadvantages include costs involved in promotion of image and product and the negative attitudes toward some activities, such as coupons and rebates, because of expiration dates. Small Business Entrepreneurship D-124