Discussion – Promoting Your Product/Service
Chapter Ten Small Business Promotion: Capturing the Eye of Your Market
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The Need for Promotion
To get people to buy, you need to make an impression.
Those with interest are sales leads and the most interested are your prospects.
The marketing funnel shows how many prospective customers it takes to find one who will make a purchase.
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Figure 10.2: The Customer Development Funnel for Physical Products
There are three goals: get customers, keep customers, and grow customers.
Taken from Figure 4.11 of The Start-Up Owner’s Manual, ©2016, Steve Blank and Bob Dorf, used with permission.
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Figure 10.3: The Customer Development Funnel for Web/Mobile Products
This slightly different version of the funnel is for internet-based businesses.
Taken from Figure 4.17 of The Start-Up Owner’s Manual, ©2016, Steve Blank and Bob Dorf, used with permission.
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Promotion Using the PESO Model
Advertising is part of conveying your message to your customers.
Paid media – you pay for ad placement.
Owned media – your website, newsletters, emails, signage, etc.
Shared media – called word-of-mouth or referral advertising.
Earned media – public relations and press relations, or “free ink.”
Your promotional mix are techniques that will get you noticed.
Shared media embassies – your gateway to shared content.
Media partnerships – with companies, influencers, etc.
Media integration – where you develop contests, advertorials, etc.
Incentive media – such as sponsorships, brand ambassadors, etc.
At the very center of the PESO model is where your brand and your organizational identity fits, and where everything starts.
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Figure 10.4: The PESO Model: A Hybrid Model of How to Think about the Media Landscape
Source: Adapted from G. Dietrich, “The Four Different Types of Media,” Spin Sucks, June 24, 2013.
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The PESO Model: Your Brand
A brand may seem like the name a firm puts on itself and its products, but it is more than that.
A brand message should project what the firm is about.
Your product/service will likely evolve, so your brand would need to change to reflect this.
Think about what underlies your brand.
Your brand promise shows what your firm will do for the customer.
Branding builds from the value proposition, your competitive advantage, and what you want the firm to represent.
With small businesses, the entrepreneur is part of the brand.
As you develop your brand, you come to know yourself and your business.
You can now start to build the business out into the media landscape.
That starts with a focus on your owned media.
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The PESO Model: Owned Media
Organizational identity is your business/product/service name, including logos, symbols, characters, slogans, hashtags, uniforms, and packaging.
When picking a name, take care when using a personal name, avoid copyright infringement, and allow for future growth.
Owned media: domain name, logo, phone line, business card, brochures, sales packet/marketing kit, online support material, sign, packaging, and promotional novelties – all with a succinct message.
The overlap of owned and shared media are social media embassies.
Your firm’s own branded page on different social media sites.
Includes the usual, but also business directory sites, user review sites, catalogs, and sites like Amazon, eBay, Etsy, and others.
You can use a social media management platform or even pay a customer, friend, or family member to keep an eye on the sites for you.
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The PESO Model: Shared Media
Shared media is the ultimate form of free advertising.
Service providers get customers through referrals or word of mouth.
Social media sites have the possibility of viral marketing.
Creating and leveraging hashtags increases the viral impact.
Where shared media and earned media overlap lie media partnerships.
Potential partners include chambers of commerce, local business organizations, trade or professional associations, and others.
Other forms of media partnerships include sponsorships, co-branding, and co-marketing.
A key type of media partnership comes from influencers, either macro- or micro-influencers.
Donations and community service are other forms of media partnerships which can create publicity in a virtuous cycle.
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The PESO Model: Earned Media
Earned media occurs when others talk about your firm or products in the media and you did not pay them directly for the mentions, called free ink.
A key issue is how newsworthy your material is – it should have public recognition, public importance, and public interest.
Media outlets offer a media kit of their publication schedule, topics, etc.
Start-ups can use a business profit kit to share with the media, or develop a press release using the AIDA formula.
Public relations create a favorable opinion of your firm.
Investor relations do the same for investors, advisers, mentors, and companies with whom you may form important relationships.
Media integration occurs where earned media and paid media overlap.
Contests are a specific form of lead generation.
Another technique is placing advertorials.
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The PESO Model: Paid Media
Forms of paid media include: promotional video for building awareness, audio, print for complex information, locational promotion including OOH, and network advertising.
Advertising costs (CPM) ranging from least to most expensive: online, out of house, radio, television, and print.
With online campaigns, measure goals using key performance indicators (KPIs) and track your organic traffic.
Use search engine optimization (SEO), adding the best keywords and description tags to your web pages.
The overlap between paid and owned media is incentive media.
The best known form is affiliate marketing.
Related to affiliates are brand ambassadors.
Other forms include native advertising, and a variation called sponsored content.
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Developing Your Promotion Strategy
With so many promotional options, a plan is crucial.
In the marketing plan is a one-page overall strategy with a detailed list of the goals, types of activities, and anticipated outcomes of your plan.
These are the main components of your media content strategy plan.
Include future promotional efforts, their schedule, platforms you will use, your budget and costs, and how you will measure success.
Start-ups should focus on brand and owned media, branching out to shared media using social media embassies.
Look for opportunities for partnerships and earned media through affiliates or influencers.
Experience will help you decide on types and amounts of media integrations, paid media, and incentive media to use.
Getting the word out is the purpose of promotion.
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The Process of Personal Selling
Personal selling follows a general formula.
1. Prospect and evaluate.
2. Prepare by finding out what you can about the clients.
3. Present a logical and compelling argument for purchase.
4. Close the sale using one of a number of techniques
5. Follow up to avoid customer’s cognitive dissonance.
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Customer Retention: Keeping and Growing Customers after the Sale
It costs five times as much to get a purchase from a new customer compared to an existing one.
The general approach to keeping customers is customer retention (CR) and there are three major elements to CR.
One is handling problems that crop up after a sale.
The second is customer relationship management (CRM), which focuses on monitoring and promoting customer interest and loyalty.
The third is growing customer sales, which builds from the customer development model and lean business practices.
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Customer Retention: Handling Post-Sale Problems
The ultimate test of any business is how they handle adversity, and complaints are the most frequent example of that ultimate test.
Most dissatisfied customers do not report their dissatisfaction to the company and a third report their dissatisfaction to others.
In reality, most complaints are justified, so use this four step approach.
Prepare yourself and listen.
Accurately reflect.
Apologize and start generating solutions.
Implement and follow up.
The goal is an arrangement the customer thinks is fair.
Avoid using “company policy” as a reason for inaction.
Marketing is about sales and nothing generates cash like sales.
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Customer Retention: CRM in Two Steps
Step 1: Gathering the Data.
Gather performance and contact data from existing customers.
Examples of contact data:
Person, firm, source – unique ID, demographics and contact information, firm information, and source.
Example of performance data:
Purchases, non-purchase events, follow-ups, follow-throughs.
Step 2: Analyzing the Data.
Customer vector reports.
Sales process reports.
Sales outcome reports.
The simplest, and most important analysis is sales by customer.
It is believed that 80 percent of sales come from 20 percent of customers.
Identify those 20 percent and keep them happy.
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Customer Retention: Growing Customer Sales
Selling the same product to the same customers is market penetration, while selling the same customers a new product is product expansion.
When looking for new customers, you seek market expansion or diversification if trying to sell them new products.
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Source: William O. Bearden, Thomas N. Ingram, and Raymond W. Laforge, Marketing: Principles and Perspectives, 4th ed. (Burr Ridge, IL: McGraw-Hill/ Irwin, 2004), p. 57.
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Customer Retention: Mechanics of Growing Customer Sales
Additional sales take four forms in the physical world.
To unbundle is to break a product/service into components.
Up-selling is selling accessories to higher-quality versions.
Cross-selling means to sell related products.
Referrals is a major way to grow sales.
In the online world, a next-sell is an attempt to prime customers to make their next purchase.
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Sales Forecasting
One piece of the marketing efforts that feeds directly into your financial projections, is knowing what your sales will be.
First, determine how many prospective customers you need.
A key issue in determining your number of customers is assessing your hit rate or how many prospects it takes to make one sale.
The next step is to estimate the average amount of sales per customer.
Now create your sales forecast:
Prospective customers X Hit rate X Sale amount = Sales forecast.
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The Need for Promotion – Text Alternative
The graphic shows a funnel with you and your firm shown above the top of the funnel. You use your value proposition, your target market segments and the PESO model to gather one thousand impressions going into the marketing funnel.
In the throat of the marketing funnel, those one thousand impressions turn into two hundred leads and through personal selling, into twenty prospects. Of the twenty prospects, you get two sales. Due to customer retention efforts, you retain one loyal customer.
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Figure 10.2: The Customer Development Funnel for Physical Products – Text Alternative
Rather than a traditional vertical funnel, this concept uses two horizontal funnels joined in the middle at the narrow ends. The funnel on the left is the “Get Customers” funnel and the funnel on the right is the “Grow Customers” funnel. The section in the middle is the “Keep Customers” section.
The left-hand, Get Customers funnel has inputs at the wide end of earned and paid media. This passes through ever narrowing bands of awareness, interest, consideration, and finally purchase. The purchase feeds a viral loop back to awareness.
The right-hand funnel, Grow Customers, also consists of four sections of ever narrowing bands, which are referrals, cross-selling, up-selling, and un-bundling. The referrals section provides a viral loop to the opposite funnel’s awareness section.
The section in the middle, where the two funnels meet is the Keep Customers section and is comprised of customer satisfaction surveys, loyalty programs, product updates, and customer check-in-calls.
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