Small Business Management Chapter 17 PowerPoint

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CHAPTER
17
Promotional Planning

LEARNING OBJECTIVES
By studying this chapter, you should be able to…
17-1 Describe the communication model and the factors
that determine a promotional mix.
17-2 Explain methods of determining the appropriate
level of promotional expenditures.
17-3 Explain how the Internet and social media are
changing promotional practices.
17-4 Describe personal selling activities.
17-5 Identify advertising options for a small business.
17-6 Discuss the use of sales promotional tools.

INTRODUCTION
• Promotion – Marketing communications that
inform and persuade consumers.

17-1 PROMOTION IS
COMMUNICATION
• The basic communication model involves a
sender, a message, a channel, and a receiver.
• An effective promotional strategy will take into
account:
• The promotional mix.
• The costs of promotion.
• The characteristics of the product.
• Learning from competitors.
• Listening to customers.

17-1a The Promotional Mix
• The promotional efforts of a small firm can encompass
nonpersonal (advertising), personal (personal selling),
combined (social media), and special (sales
promotion) forms of communication.
• A business combines these efforts in a promotional mix.
• Promotional mix – A blend of nonpersonal, personal, combined,
and special forms of communication aimed at a target market.
• The particular mix of the various promotional methods—
advertising, personal selling, social media, and sales promotional
tools—is determined by many factors, one of which is geography.
• A widely dispersed market generally requires mass coverage through
advertising or social media.
• If the market is local or if the number of customers is relatively small,
personal selling and point-of-display promotion may be more feasible.

17-1b The Costs of Promotion
• Small firms may not select certain forms of
promotion, especially time-honored media
options, because the costs are just too high.
• The lower costs and more targeted nature of
company websites have led many small firms
to choose electronic media and social
marketing strategies.

17-1c The Characteristics
of Your Products
• Personal selling is an effective method for
promoting products of high unit value and
highly technical products.
• Example: Manufacturing machinery and industrial
insulation products.
• Nonpersonal advertising is more effective for a
relatively inexpensive item.
• Example: Disposable razors.

17-1d Learning from Competitors
• Trying different promotional tactics from those
that established companies are using may or
may not work.
• You may discover that your competitors have
already tried your idea and found that it did not
attract buyers.

17-1e Listening to Customers
• Successful communication includes feedback.
• Read online comments from customers about your
products and about other businesses to learn why
customers are purchasing from them instead of
from you.
• Consider meeting with a group of customers from
time to time to get suggestions on how you can
serve them better.

17-2 DETERMINING THE
PROMOTIONAL BUDGET
• Four approaches that small business owners
often use to determine the appropriate level of
promotional expenditures include the following:
1. Budgeting a fixed percentage of sales.
2. Spending whatever is left over after other
expenses are covered.
3. Spending at the same level as competitors.
4. Determining how much is needed to achieve
objectives.

17-2a Budgeting a Fixed
Percentage of Sales
• For small businesses that operate in stable markets
with predictable revenue streams, the simplest method
of determining how much to budget for promotion is to
earmark promotional dollars based on a percentage of
sales.
• A firm’s own past experiences should be evaluated to
establish a promotion-to-sales ratio.
• Example: If 2 percent of sales has historically been spent on
promotion with good results, the firm can safely budget 2 percent
of forecasted sales for future promotion.
• A major shortcoming of allocating a percentage of
sales is a tendency to spend more on promotion when
sales are increasing and less when they are declining.

17-2b Spending Whatever Is Left Over
after Other Expenses are Covered
• Spending only what can be spared after other
expenses have been covered is a widely used
approach to promotional budgeting.
• This is sometimes called the “all you can afford”
method.

17-2c Spending at the
Same Level as Competitors
• Spending as much as the competition does is
a way to react to short-run promotional tactics
of competitors.
• However, if the competitor is a large business, this
method is clearly not feasible.
• The biggest pitfall of this method is that it
makes you lazy.
• This approach may also result in copying
competitors’ mistakes.

17-2d Determining How Much Is
Needed to Achieve Objectives
• The preferred approach to determining
promotional expenditures is to decide what it
will take to do the job through a comprehensive
analysis of the market.

17-3 PROMOTION USING THE
INTERNET AND SOCIAL MEDIA
• At the end of 2017, there were over four billion
Internet users, representing 54.4 percent of the
world’s population.
• Approximately seven out of every ten
Americans are connecting with one another via
social media sites.
• Companies that fail to recognize how the
Internet and social media are changing how
people communicate and process information
are not likely to prosper.

17-3a The Small Business Website
(slide 1 of 3)
• Three critical startup tasks are related to the
likely promotional success of a corporate
website:
1. Creating a registering a site name.
2. Building a user-friendly site.
3. Promoting the website.

(slide 2 of 3)
CREATING A REGISTERING A SITE NAME
• The Domain Name System (DNS) allows users to find their way
around the Internet.
• Domain names labels have a maximum of 63 characters
preceding the domain designation (.com, .net, .biz, .info., and
.org).
• Domain names must begin and end with a letter or a number.
• A small business’s website should have a descriptive and
appealing name and be user-friendly.
BUILDING A USER-FRIENDLY WEBSITE
• Websites that have slow downloads or do not satisfy customers’
information needs will fail to retain customers.

17.1 Website Design Guidelines (slide 1 of 2)
• Select and register your domain name. Comply with registration rules, and
choose a descriptive and user-friendly name.
• Choose a Web host. Determine the primary purpose of your website, and
then locate a host that best fits that purpose (types of hosts include e-
commerce, blogging, business, and similar options).
• Decide on the layout. Design a site that balances attractiveness with the
ability to interact.
• Provide easy navigation. Do not overload a page. Enable users to access
any content with as few clicks as possible.
• Stay consistent in style. Inconsistency in headings, fonts, page layouts,
color schemes, and terms only confuses visitors and appear amateurish.
• Make sure the website can be accessed by multiple devices. Users may
search for your company from smartphones and tablets, as well as desktops
and laptops.

17.1 Website Design Guidelines (slide 2 of 2)
• Engage in search engine optimization (SEO). Serious competitors are
applying SEO strategies to improve their websites’ visibility. Don’t be left
behind.
• Keep the website fresh. Review your site frequently to remove outdated
material, introduce new links, experiment with new formats, and make other
changes.
• Include a call to action. Think again about your purpose, and invite users to
take the action you are seeking.
• Supply contact information. Be sure that visitors know who you are and
how to get in touch with you.
Sources: Vitaly Friedman, “10 Principles of Good Website Design,” https://www.
smashingmagazine.com/2008/01/10-principles-of-effective-web-design,
accessed May 28, 2018; Andy Crestodina, “Web Design Standards: 10 Best
Practices on the Top 50 Websites,” https://www.orbitmedia.com/blog/web-design
-standards, accessed May 28, 2018; and Denis Pinsky, “11 Website Design and
Development Best Practices for 2018,” https://www.forbes.com/sites/denispinsky
/2018/02/12/website-design-standards/#5a5b23dcf54f, accessed May 28, 2018.

(slide 3 of 3)
PROMOTING THE WEBSITE
• Efforts must be taken to promote websites to both existing and
prospective customers, such as:
• Including the URL on print promotions, business cards, letterhead,
and packaging.
• Designing special direct mail and radio campaigns.
• Placing banner advertisements on other websites.
• Making your website as search engine–friendly as possible is a
necessary activity to attract visitors to a small business website.
• Search engine optimization (SEO) is the process of increasing the
volume and quality of traffic to a particular website.

17-3b Social Media (slide 1 of 2)
• Social media – Social networking and microblogging
websites, as well as other means of online
communication, where users share personal
messages, information, videos, and other content.
• There are many tools available for engaging in
marketing and promotion through social media, such as:
• E-mail.
• E-mail promotion – Delivery of a firm’s message by electronic mail.
• Reciprocal advertising.
• Hyperlinks.
• Hyperlink – A word, phrase, or image that a user may click on to
go to another part of a document or website or to a new
document or website.

17-3b Social Media (slide 2 of 2)
• Blogs.
• Blogs – An online journal that offers a writer’s experiences,
opinions, and more.
• Apps.
• App – Abbreviation for a small, specialized software program.
• Consumer and commercial uses of mobile devices
have exploded in recent years.
• In 2018, 95 percent of U.S. adults owned a cell phone, 77 percent
had a smartphone, and over 50 percent owned computer tablets.
• Small business owners must stay informed about social
media options, such as quick response (QR) codes.
• Quick response (QR) code – A square bar code that
connects to a website, a video, or some other Web content.

17.2 Social Media Marketing Guidelines (slide 1 of 3)
Do’s Don’t
• Do tell stories personalizing your
brand and company. Post videos of
customers using and enjoying your
products.
• Don’t overpromote. Provide more
useful information than promotional
information.
• Do build relationships with opinion
leaders, including journalists. Show
an interest in what others are writing
about. Bloggers and reporters often
ask questions that you or someone
in your company may be able to
answer.
• Don’t waste your time on the wrong
network. Just because “everyone”
seems to be on Facebook doesn’t
mean that your customer will look
there for what you are selling. Make
sure you know your target
customers and where they get their
information.

Do’s Don’t
• Do ask your customers to review the
products they buy from you. People
trust the endorsements and
recommendations of other
customers more than those of
someone who works for you.
• Don’t expect your customers to be
perfect. They will make spelling
errors typing in keywords. Keep
common misspellings associated
with your product and business in
your search engine list to help
people find you.
• Do keep it quick and short. Even
280 characters can be too long at
times.
• Don’t use hype, slang, or
abbreviations. They all look like
spam and make your brand look
cheap.

Do’s Don’t
• Do take keywords seriously.
Keywords bring people to your site.
Emphasize the keywords that your
customers search for in your URL,
in title tags, and in headings.
• Don’t overinvest in social media at
the expense of building content on
your own website.
Sources: Based on “Intel Social Media Guidelines,” http://www.intel.com/content/
www/us/en/legal/intel-social-media-guidelines.html, accessed June 2, 2018;
Christy Hopkins, “Social Media Policy Template & How to Guide,” https://fitsmall
business.com/social-media-policy-template, accessed June 2, 2018; and Ijeoma
S. Nwatu, “Simple Social Media Guide for Small Businesses,” https://www.sba.
gov/blogs/simple-social-media-guide-small-businesses, accessed June 2, 2018.

17-4 PERSONAL SELLING
IN THE SMALL FIRM
• Personal selling – A face-to-face meeting with a
customer.
• Personal selling includes the activities of both inside
salespeople of retail, wholesale, and service establishments
and outside sales representatives, who call on business
customers and final consumers.
• In a small business, every person in the company is a
salesperson.
• The entrepreneur’s responsibility is to make sure that all
employees are prepared to do personal selling.
• For a small business, personal selling is labor intensive.
• It takes you and your employees away from the many other
activities that may be critical to keeping your business alive.

17-4a The Importance of
Product Knowledge
• Effective selling is built on a foundation of
product knowledge.
• With thorough knowledge, the salesperson can
explain the product’s or service’s advantages, uses,
and limitations, and can educate customers by
answering questions and countering objections.

17-4b The Sales Presentation
• The heart of personal selling is the sales
presentation to a prospective customer.
• A sales presentation is a process involving
prospecting, practicing the presentation, and then
making the presentation.
• Prospecting – A systematic process of continually looking
for new customers.
• Sources of prospects include:
• Personal referrals (such as friends and business contacts).
• Impersonal referrals (from media publications, public
records, and directories).
• Market-initiated contacts (from telephone calls and surveys).
• Customer-initiated contacts (from potential customers
that did not lead to an initial sale).

17.3 Successful Sales Techniques (slide 1 of 2)
• Be honest. Your prospect has to discover only one misrepresentation to lose
all trust and confidence in you. You want customers who will come back to
you and tell others how good you are.
• Know your audience. Are you talking with the decision maker, or does this
person need approval from someone else? How is your product or service
used by this customer?
• Know how much time you have, and get to the point. Many people
recognize that time is their most valuable asset. Be sure to respect that. If you
can’t make clear in the first sentence or two why you’re there, you’ll lose your
prospect’s interest.
• Prepare an outline, and rehearse. Be sure to cover all critical issues and
logically order your presentation. Then test your ideas on others. Do they
understand your message?
• Be relevant, and engage the customer. Ask enough questions to know
what is important to your prospective customer and how you can help him or
her. Think of your presentation as a conversation. Be a better listener than a
speaker.

17.3 Successful Sales Techniques (slide 2 of 2)
• Believe in what you are selling, and be enthusiastic. Be able to genuinely
convey what makes your product or service better for the customer than
anyone else’s. But recognize that the world’s best salespeople still hear no
more than yes. Do not let that burn you out.
• Use visuals. Size, technology requirements, safety, and other issues might
limit your ability to show your product. Nevertheless, visual representations
help project customers into a situation where they better understand what the
product will do for them.
• Get reactions from the prospect. If the prospect does not ask questions, it
is a sign that you have not communicated your message successfully. Be
ready with questions of your own, questions that will solicit more than yes-or-
no answers. You want to know what is preventing you from getting the results
that you seek. You want to know how to make the prospect happy.
Sources: Based on Kelley Robertson, “Creating a Powerful Sales Presentation,”
http://www.businessknowhow.com/marketing/sales-presentation.htm, accessed
June 2, 2018; Kevin Davis, “10 Tips for Winning Sales Presentations,”
http://www.businessknowhow.com/marketing/wInslpres.htm, accessed June 2,
2018; and “The Keys to Great Sales Presentations,” http://www.allbusiness.com/
sales/selling-techniques/809-1.html#axzz2jtCKGWqf, accessed June 2, 2018.

17-4c Cost Control
in Personal Selling
• Cost considerations are especially important
for a new business that generally has very
limited resources.
• For a small firm, the most cost-efficient mode of
selling may be to use sales or marketing
representatives, who are self-employed or work for
a company whose purpose is to represent multiple
businesses, thereby spreading out the costs of
selling.
• They will not focus on the business’s products alone, as
the firm’s own employees would, but the company will
have to compensate them only as merchandise is actually
sold.

17-4d The Compensation
of Salespeople (slide 1 of 2)
• Salespeople can be motivated by nonfinancial
compensation as well as money.
NONFINANCIAL COMPENSATION
• Examples of nonfinancial rewards that motivate many
salespeople include:
• Personal recognition (such as an engraved plaque or being
recognized as “Employee of the Week”).
• The satisfaction of reaching a sales quota.
• Opportunities for promotion, advanced education and training,
and job security.

17-4d The Compensation
of Salespeople (slide 2 of 2)
FINANCIAL COMPENSATION
• Two basic plans used for financial compensation are:
1. Commissions.
• This plan is simple and directly related to productivity—a certain
percentage of sales generated by a salesperson represents his
or her commission.
• Such a plan incorporates a strong incentive for sales effort.
• Personnel on commission might be less likely to provide follow-
up service or complete after-sales paperwork.
2. Straight salary.
• This form provides salespeople with income security, regardless
of sales made.
• Working for a straight salary can potentially reduce a salesperson’s
motivation by providing income despite low performance.

17-5 ADVERTISING PRACTICES
• Along with personal selling, advertising is likely
to be part of the promotional strategy for your
business.
• Common advertising media include:
• Television.
• Radio.
• Magazines.
• Newspapers.
• Direct mail.
• Billboards.
• The Internet.

17-5a Advertising Objectives
• Advertising – A strategy to sell by informing,
persuading, and reminding customers of the availability
or superiority of a firm’s products or services.
• Advertising must always be viewed as a complement
to a good product and never as a replacement for a
bad product.
• The importance of honesty in advertising cannot be
overstated.
• At times, advertising may seem to be a waste of
money.
• It is expensive and adds little direct value to a product or
service.

17-5b Types of Advertising
• The two basic types of advertising are:
1. Product advertising – A presentation designed to
make potential customers aware of a specific
product or service and create a desire for it.
2. Institutional advertising – A presentation of
information about a particular firm, designed to
enhance the firm’s image in order to make its
product advertising more credible and effective.
• Most small business advertising is of the
product type.

17-5c Advertising Specialists
• Sources for assistance with advertising include:
• Advertising agencies.
• Advertising agencies provide many services, including:
• Graphic design, artwork, and printing for specific
advertisements and/or commercials.
• Recommendations for media with the greatest “pulling
power” for your product or service.
• Copywriting.
• Assistance with trade shows and merchandise displays.
• Website design and social media management.
• Mailing and e-mail list management.
• Suppliers.
• Trade associations.
• Advertising media.

17-5d Frequency of Advertising
• Advertising should be done regularly, and
attempts to stimulate interest in a firm’s
products or services should be part of an
ongoing promotional process.
• One-shot advertisements that are not part of a well-
planned promotional effort lose much of their
effectiveness in a short period.
• However, some noncontinuous advertising may be
justified, such as advertising to prepare consumers for the
acceptance of a new product or advertising for holidays
and seasonal events.

17-5e Where to Advertise
• Not everyone is a serious prospect for a business.
• Thus, an entrepreneur has to restrict advertising, perhaps by
geography or customer type.
• From among the many media available, a small
business owner must choose those that will provide
the greatest return for the advertising dollar.
• To make an informed selection, entrepreneurs should learn
about the strengths and weaknesses of each medium.
• The most appropriate combination of advertising media
depends on the type of business and its current
circumstances.

17.4 Advantages and Disadvantages of Major Advertising Media

17-6 SALES PROMOTION
• Sales promotion – An inclusive term for any
promotional technique other than personal selling and
advertising that stimulates the purchase of a particular
product or service.
• For best results, sales promotion typically is used in
combination with personal selling and advertising.
• Four widely used promotional tools include:
1. Specialties.
2. Trade show exhibits.
3. Coupons.
4. Publicity.

17-6a Specialties
• Specialty items include calendars, pens, key chains,
coffee mugs, and shirts.
• Almost anything can be used as a specialty promotion,
as long as each item is imprinted with the firm’s name
or other identifying slogan.
• The distinguishing characteristics of specialties are
their enduring nature and tangible value.
• The key to an effective specialty item is that it lasts.
• As functional products, they are worth something to recipients.
• Specialties are personal.
• They are distributed directly to the customer in a personal way,
they can be used personally, and they have a personal
message.

17-6b Trade Show Exhibits
• Trade show exhibits allow potential customers to get hands-on
experience with a product.
• Trade show exhibits are of particular value to manufacturers.
• The greatest benefit of these exhibits is the potential cost savings
over personal selling.
• The following are tips for making an effective trade show exhibit:
• Check out the trade show’s history.
• Apply for a speaking opportunity.
• Pick a good location for the booth.
• Prepare a professional-looking display.
• Have a sufficient quantity of literature on hand.
• Bring the right staff.
• Have the right giveaways.
• Find a partner.
• Follow up.

17-6c Coupons
• Coupons have been used as promotional tools
for over a hundred years.
• Not only do coupons attract customers to
purchase products, they also have value even
if they are not used.
• A study found that consumers who received but did
not redeem coupons actually increased their
purchasing from the stores associated with the
coupons.

17-6d Publicity
• Publicity – A promotional strategy that
provides visibility for a business at little or no
cost.
• Publicity can be used to promote both a
product and a firm’s image.
• It is a vital part of public relations for the small
business.
• A good publicity program requires regular
contacts with the news media.

17-6e When to Use
Sales Promotion
• A small firm can use sales promotion to
accomplish various objectives.
• Small manufacturers can use it to stimulate channel
members—retailers and wholesalers—to market
their product.
• Wholesalers can use sales promotion to encourage
retailers to buy inventory earlier than they normally
would.
• Retailers may be able to persuade customers to
make a purchase.

Key Terms
advertising
app
blog
e-mail promotion
hyperlink
institutional advertising
personal selling
product advertising
promotion
promotional mix
prospecting
publicity
quick response (QR) code
sales promotion
social media

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