DOCUMENT RESUME

ED 373 252 CE 067 086

TITLE Promotion. Unit 15. Level 3. Instructor Guide. PACE:Program for Acquiring Competence in Entrepreneurship.Third Edition. Research & Development Series No.303-15.

INSTITUTION Ohio State Univ., Columbus. Center on Education andTraining for Employment.

PUB DATE 94

NOTE 28p.; For the complete set, i.e., 21 units, each doneat three levels, see CE 067 029-092. Supported uy theInternational Consortium for EntrepreneurshipEducation, the Coleman Foundation, and the Center forEntrepreneurial Leadership Inc.

AVAILABLE FROM Center on Education and Training for Employment, 1900Kenny Road, Columbus, OH 43210-1090 (order no.RD303-15 IG, instructor guide $4.50; RD303-15 M,student module, $3; student module sets, level1--RD301M, level 2--RD302M, level 3--RD303M, $45each; instructor guide sets, level 1--RD301G, level2--RD302G, level 3--RD303G, $75 each; 3 levels andresource guide, RD300G, $175).

PUB TYPE Guides Classroom Use Teaching Guides (For,acher) (052) Guides Classroom Use

Instructional Materials (For Learner) (051)

EDRS PRICE MF01/PCO2 Plus Postage.DESCRIPTORS *Advertising; Behavioral Objectives; Business

Administration; *Business Education; *CompetencyBased Education; 'Entrepreneurship; LearningActivities; *Marketing; Mass Media; Merchandising;Postsecondary Educacionf, Salesmanship; SecondaryEducation; *Small Businesses; Strategic Planning;Teaching Guides

IDENTIFIERS *Program for Acquiring Competence Entrepreneurship

ABSTRACTThis instructor guide for a unit on promotion in the

PACE (Program for Acquiring Competence in Entrepreneurship)curriculum includes the full text of the student module and lessonplans, instructional suggestions, and other teacher resources. Thecompetencies that are incorporated into this module are at Level 3 oflearning--starting and managing one's own business. Included in theinstructor's guide are the following: unit objectives, guidelines forusing PACE, lists of teaching suggestions for each unitobjective/subobjective, model assessment responses, and overview ofthe three levels of the PACE program. The following materials arecontained in the student's guide: activities to be completed inpreparation for the unit, unit objectives, student reading materials,individual and group learning activities, case study, discussionquestions, assessment questions, and references. Among the topicsdiscussed in the unit are the following: options for promoting abusiness, costs of media options, options that match target marketand image, materials that represent the image, promotional budget andcalendar, and evaluation of promotional activities. (KC)

MT 15LEVEL

PACETHIRD EDITION

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COLLEGE OF EDUCATIONTNE Coar3 STATE UNWEASTY

Program for AcquiringCompetence inEntrepreneurship

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Objectives:

Discuss the options for promoting your business.

Analyze costs of media options.

Discuss promotional options that best match yourtarget market and image.

Describe techniques to prepare materials that representyour image.

Develop a promotional budget and calendar.

Identify strategies to evaluate promotional activities.

U S DEPARTMENT OF EDUCATION

ED9CATIONAL RESOURCES INFORMATIONCENTER IERICI

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TO THE EDUCATIONAL RESOURCESINFORMATION CENTER (ERIC)

INSTRUCTOR GUIDE

Unit 15

PromotionLevel 3

HOW TO USE PACE

Use the objectives as a pretest. If a studentis able to meet the objectives, ask him orher to read and respond to the assessmentquestions in the back of the module.

Duplicate the glossary from the ResourceGuide to use as a handout.

Use the teaching outlines provided in theInstructor Guide for assir -ce in focusingyour teaching delivery. the left side ofeach outline page lists objectives with thecorresponding headings (margin questions)from the unit. Space is provided for you toadd your own suggestions. Try to increasestudent involvement in as many ways aspossible :o foster an interactive learningprocess.

When your students are ready to do theActivities, assist them in selecting thosethat you feel would be the most beneficialto their growth in entrepreneurship.

Assess your students on the unit contentwhen they indicate they are ready. Youmay choose written or verbal assessmentsaccording to the situation. Model re-sponses are provided for each module ofeach unit. While these are suggestedresponses, others may be equally valid.

2BEST COPY AVAILABLE

Objectives Teaching Suggestions

1. DISCUSS THE OPTIONS FORPROMOTING YOUR BUSINESS

What is promotion and its options?

2. ANALYZE COSTS OF MEDIAOPTIONS

What are the factors associatedwith media costs?

3. DISCUSS PROMOTIONALOPTIONS THAT BEST MATCHYOUR TARGET MARKET ANDIMAGE

How do you adequately time youradvertisements?

What are the characteristics ofyour target market and image?

4. DESCRIBE TECHNIQUES TOPREPARE MATERIALS THATREPRESENT YOUR IMAGE

How do you develop personalimage and credibility?

5. DEVELOP A PROMOTIONALBUDGET AND CALENDAR

What is the promotional budget?

Review the four elements of promotion. In this section, adver-tising is emphasized. Ask students to name all the differenttypes of advertising they can think of. Discuss the advantagesand disadvantages of each form of advertising.

Ask students which form of advertising is most expensive (TV).Next, ask which form of advertising is the most expensive perviewer or reader. Discuss the concepts of reach and waste. Askwhich form of advertising has the longest lead time and whichhas the shortest. (National TV-longest, local newspaper-shortest). Rank other media according to lead time.

Describe several business situations and ask students when theywould run their advertisements. Emphasize the importance oftiming in advertising.

Refer back to the business situations mentioned above. Describethe target market and ask students to identify the appropriatemedia to employ.

Mention several well-known businesses in town that have differ-ent images. Ask students to describe these business images andrelate their images to their promotional techniques.

Describe a hypothetical business. Start by giving students thegross sales of one million dollars. Ask students to calculate thepron. ,tional budget using the percent of sales technique. Dis-cus., the disadvantages of the percent of sales technique.

Objectives Teaching Suggestions

6. IDENTIFY STRATEGIES TOEVALUATE PROMOTIONALACTIVITIES

Why is evaluating success or fail-ure useful?

Ask students how they could determine whether their promo-tional campaign was successful. Discuss customer awarenessand sales.

MODEL ASSESSMENT RESPONSES

1. The four major promotional methods to be included in promotional mix are advertising, personal sales,public relations, and sales promotion.

Advertising is a paid form of a nonpersonal message communicated through the various media.

Personal sales is a one-to-one promotional communication.

Public relations is a form of communication primarily directed to image building. Publicity is one formof public relations that does not necessitate payment, employs a wide variety of media, and is often shownas news or items of public interest.

Sales promotion includes activities, materials, devices, and techniques used to supplement the advertisingand marketing efforts. Examples of sales promotion a.7e couponing, sweepstakes, and taste tests.

2. Classified ads are paid advertisements in newspapers which contain only copy and usually involve a fewlines of one newspaper column.

Display ads appear in a newspaper or magazine and use pictures, art, or different styles of type or print toattract the reader's attention.

Yellow page ads are found in the telephone book.

3. The following factors are associated with media costs:

(1) Reach = the number of viewers or readers in the audience.

(2) Frequency = how often a medium is used.

(3) Message permanence = the number of exposures one advertisement generates and how long it remainswith the audience.

(4) Persuasive impact = the ability of a medium to stimulate consumers.

(5) Lead time = the time required by the medium for placing an advertisement.

4. The following four approaches used to set promotional budgets are: percentage of :ales, "all you canafford," return on investment, and objective and task.

The percentage of sales is simple to use but may not reflect the market.

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The "all you can afford" approach is used by businesses with limited resources. Usually the moneybudgeted is far less than what they would like to spend, but allocating more would endanger solvency.

The return on investment approach relates promotional expenditures to profit goals. It is difficult todetermine accurately the effect of promotional expenditures on sales and profitability.

The objective and task approach clearly ties promotional expenditures to stated objectives, emphasizesmarketing research to determine how to promote, and examines the costs associated with objectiveattainment. However, it is difficult to estimate the costs of obtaining promotional goals.

5. A business must pay for advertising, but not for publicity. Publicity may have greater credibility thanadvertising. However, a business owner has less control over publicity than advertising.

6. Advertising is appropriate for geographically widely distributed markets. Compared to personal sales, itshould be used for lower ticket items. For example, most grocery items are advertised.

Personal sales is suitable for geographically concentrated markets and large ticket items. For example,personal sales are very important when selling industrial chemicals.

Sales promotion is used to support the other areas of promotion. It is particularly important for productswhich are purchased on "impulse". Point-of-purchase displays in the grocery store and various competitions

are examples of sales promotions.

Public relations is used to improve the image of a product, service, or business. Publicity is part of publicrelations. Since there is not a direct charge for publicity, businesses seek positive publicity whenever theyhave an event of interest to the public. A business would seek publicity for the opening of a new facility.

Program for AcquiringCompetence inEntrepreneurship

Incorporates the needed competencies for creating and operating a small business at three levels of learning, with experiences and

outcomes becoming progressively more advanced.Level 1 Understanding the creation and operation of a business.Level 2 Planning for a business in your future.Level 3 Starting and managing your own business.

Self-contained Student Modules include: specific objectives, questions supporting the objectives, complete content in form of answers

to the questions, case studies, individual activities, group activities, module assessment references. Instructor Guides include the full text

of each student module and lesson plans, instructional suggestions, and other resources. PACE,Third Edition, Resource Guide includesteaching strategies, references, glossary of terms, and a directory ofentrepreneurship assistance organizations.

For information on PACE or to order, contact the Publications Department at the

Center on Education and Training for Employment, 1900 Kenny Road, Columbus, Ohio 43210-1090(614) 292-4353, (800) 848-4815.

Support for PACE, Third Edition provided in whole or in part by:

International Consortium for Entrepreneurship Educationand

International Enterprise AcademyCenter on Education and Training for Employment

The Ohio State University

5

The Coleman Foundation

Center for Entrepreneurial Leadership Inc.Ewing Marion Kauffman Foundation

Your Potentialas an

Entrepreneur

UNIT 15LEVEL 3

Promotion

Nature ofSmall Business

BusinessOpportunities

Global MarketsThe

Business Plan

Help forthe

Entrepreneur

Types ofOwnership

Marketing Location Pricing FinancingAnalysis Strategy the Business

LegalIssues

BusinessManagement

HumanResources

Selling

RecordKeeping

FinancialAnalysis

CustomerCredit

RiskManagement

Operations

CENTER ON EDUCATIONAND TRAINING FOR EMPLOYMENT

COLLEGE OF EDUCATIONTHE OHIO STATE UNIVERSITY 6 Research & Development Series No. 303-15

Program forCompetence. inEntrepreneurs

urin

PROMOTION

BEFORE YOU BEGIN . . .

1. Consult the Resource Guide for instructions if this is your first PACE unit.

2. Read What are the Objectives for this Unit on the following page. If you thinkyou can meet these objectives now, consu't your instructor.

3. These objectives were met in Level 1 and Level 2:

Level 1

Define the concept of promotion.

Describe the promotional mix.

Discuss the importance of promotion.

Level 2

State the purpose of promotion.

Identify the four components in the promotional mix.

Discuss the role of public relations and publicity.

Discuss the options for sales promotion.

Analyze media available.

Discuss the promotional campaign.

4. Look for these business terms as you read this unit. If you need help with themeanings, ask your instructor for a copy of the PACE Glossary contained in theResource Guide.

Advertising costsAll you can afford budgetBillboardsBroadcast mediaClassified adDisplay adFrequencyLead timeMediaMessage permanence

Copyright © 1994, Center on Education and Training for Employment,The Ohio State University. All rights reserved.

Objective and taskPercentage of salesPersonal imagePersuasive impactPromotional budgetReachReturn on investmentScatter adSpotsTelemarketing

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PROMOTION

WHAT ARE THE OBJECTIVES FOR THIS UNIT?

Upon completion of this unit you will be able to--

discuss the options for promoting your business,

analyze costs of media options,

discuss promotional options that best match your target market and image,

describe techniques to prepare materials that represent your image,

develop a promotional budget and calendar, and

identify strategies to evaluate promotional activities.

WHAT IS THIS UNIT ABOUT?

Promotion is used to project an image of abusiness to prospective customers and toprovide information that helps customersmake buying decisions. Consumers oftentake a great deal of time in gathering infor-mation before they make the decision to buyregularly from a business. If they can't getthe necessary information or if they getinformation that is contradictory, they arenot likely to make that commitment.

It used to be that promoters talked aboutdemographicsinformation about the age,income, and sex of prospects. Over the lastdecade, however, a more definitive way of

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measuring potential customers/clients hasemerged. Called psycho graphics, it evalu-ates the lifestyles and behavior of people.This system classifies people according towhat motivates them. Do they prefer thetried-and-true, or are they trendsetters? Thisunit will tell you how to find out.

WHAT IS PROMOTIONAND ITS OPTIONS?

Every day we are all bombarded by an esti-mated 15,000 commercial messages. If aproduct is to compete effectively, we needto understand exactly what promotion is.Promotion is communication. Specifically,

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promotion is all communication activitiesundertaken by a business to inform peopleabout its products, services, corporate image,or social intent. If the entrepreneur is tocompete effectively in the business world,she needs to know what options are avail-able. The four components of the promo-tional mix are: (a) advertising, (b) personalsales, (c) public relations, and (d) salespromotion.

A. ADVERTISING

There are numerous advertising optionsincluding advertising in newspapers, maga-zines, The Yellow Pages, and directories,radio and TV commercials, and billboards.The best form of advertising depends on themarket, the product, and the promotionalbudget.

CLASSIFIED ADS

Classified advertisements (ads) are placedwith newspapers, magazines, and journals.They are generally grouped in special pagesat the end of the publication because theycontain only copywhich is the words of anadvertisement, and no pictures. Each wordcosts money and in order to stay within abudget, requires the business owner to cutthe ad to the barest necessity of words. Thiscan be deadly since readers need enough in-formation to entice them to respond. "Themore you tell, the more you sell" is a posi-tive way of looking at classified ads.

DISPLAY ADS

Display ads are ads that appear throughout anewspaper or magazine and use pictures, art,or different styles of type or print to attractattention. They can be made of several

colors in order to get attention or simply inblack and white to compete with other colorads on the page. Most businesses likedisplay ads because they allow the businessname to be in the public eye at a reasonablecost.

There is a cross between a classified ad anda full-fledged display ad. It is called ascatter ad. These are small, usually onlyone-twelfth or one-sixth of a page. Severalof the same ads are often scattered througha newspaper or area magazine.

Scatter ads only work for certain things. Ifyou can find one or two words to expressthe problem you solve, they may be ideal.Here are some examples: An acupuncturistmight say "Headaches?" "Car trouble"might be the flag waved by an auto me-chanic, whereas a psychologist might say"Marital problems?" and a doctor "Hemor-rhoids?" This ad might continue with"Cured without surgery in 15 days! . . call555-5555." This kind of an ad campaigncan have striking results when usedcarefully.

Display ads are larger and make more sensefor new businesses. Here you have moreroom to tell a story. You can more force-fully appeal to your target audience's desirefor quality, comfort, style, savings, conveni-ence, fun, love, or status.

YELLOW PAGE ADS

Statistics show that people refer to theYellow Pages 49,000,000 times on a typicalday! Did you know 50 percent of these ref-erences result in the purchase of a product orservice? For many small businesses, this isthe smartest place to put advertising dollars.

People don't let their fingers do the walkingunless they are actively interested in buyingsomething. Consequently, they literally sellthemselves on your product or service beforethey call.

Another variation to consider is The Busi-ness-to-business Yellow Pages. Chicago pio-neered the first of these several years ago.Today more than 20 large metropolitan areassport such editions. They go to businessphone locations and carry headings of inter-est to businesses. Rates for business direc-tories are comparable to slightly higher thanthe consumer directories.

Others who opt to find this an especiallyviable promotion medium include tanningsalons, videotape and disc renting, computersystem design and consulting, auto rentingand leasing, carpet cieaners, florists, insur-ance agents, typewriter and computer repairfacilities, temporary help agencies, and travelagencies.

The ad for the Yellow Pages should includethe business name and phone number inlarge, bold letters, your logo, and youraddress. The idea is to establish trust.Citing years in business, size, family man-agement, or association memberships helpsconfirm your reliability. Be sure to notespecial features or unique qualities thatseparate you from your competition. Ofcourse, you will phrase these things as bene-fits, not features. Always remember youaren't selling you or your businessyou areselling solutions to people's problems. Thelist of features shown in Figure 1 will stimu-late ideas applicable to your particular ad.

There are other considerations, too. Adsappear in a given section according to theirsize. So, half-page ads precede quarter-page

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ads, which precede eighth-page ads, and soon. If you feel advertising in The YellowPages is pivotal to your success, then investa large portion of your overall promotionbudget here. It might be wise to considercross-reference under several headings aswell. A secretarial service, for instance,could also list itself under "Office Services-Stenographers" or "Writers." Some unusualbusinesses will want to run ads or listings inbooks for nearby communities as well.

It may not be necessary to purchase a largedisplay ad. Half-inch type-only ads, andeven bold listings, help set you apart. Ifyour budget allows it, a way to really standout on the page is to incorporate a secondcolor into your ad. Many people indicatethat including red in an ad attracts the eyeand gets faster recognition. Many businessowners are undecided, however, on whethercolor is really worth the extra money.

SPECIALIZED DIRECTORIES

Besides The Yellow Pages, there any manyother specialized and regional directories.Virtually every industry has one. They aretypically divided into categories, arrangedlike dictionaries, and updated annually. Ifyou don't know about these opportunities, goto the library and look in Directories inPrint. Some of these listings are free for theasking. To make your business appearstronger on the page, remember to use everybit of space the listing forms allow.

As in all promotion, it is essential to trackresults. Most of your inquiries will come byphone, especially if a toll-free number isincluded. For more sophisticated monitor-ing, there is call forwarding. With thistracking method, calls go to a different

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Convenient locationCredit cards acceptedAwards you've wonExtended hours (evenings/weekends)National brands you work onRush service availableFree pickup and deliveryOne-stop/full-service establishmentFree initial consultationPersonalized service/custom workSpecial financing arrangementsOn-call 24 hours

Free estimates/examsCaring concernNo muss/no fuss attitudeOn-site serviceCertified employeesMobile unitReferences furnishedSatisfaction guaranteedConfidential helpPreventive careAlways on timeSpecial rates for seniors

Figure 1. Features to highlight in ads for The Yellow Pages

number, then are automatically routed toyour regular switchboard. The customernever knows the difference, as there is nointerruption. You get a bill each month withthe time and date of each call. To get thisexact record of the number of inquiries,you'll pay around $35 per month plus 20cents or so per call. Another interestingcompromise is to connect your toll-freenumber to a dedicated key phone thatrecords who called, for what, and when.

BROADCAST MEDIA

Broadcast mediathe world of radio andtelevisioncan lead to a huge influx ofbusiness. The power of the airwaves is aneffective advertising tool. The downside, ofcourse, is that it is expensive. There is littlepoint in buying a few commercials. In mostcases, you have to commit to approximatelythree months before you have a right toanticipate striking results.

Radio advertisements, or spots, are a goodsolution for many businesses. They allowyou to reach a small geographic area at anaffordable price. Unlike TV, most stationsdo not add production costs. They come in15-, 30-, 45-, or 60-second spots, tailored toyour specific needs.

To begin investigating radio, think about theformat of your local stations. They willprobably range all the way from country toclassical, easy listening to heavy metal.Some service businesses can be matched tothe type of listener who tunes in differentstations. A golf course would do best toadvertise on the classical or easy listeningstation, whereas a bowling alley might trythe country station.

Contact the station and ask to have theadvertising sales manager call on you. Ifpossible, insist on the sales manager; thatindividual can help educate you. Also, itwould be advantageous to you and your

business to invest the time to cultivate arelationship with a local sales representative.

Radio spots can be bought in one of twoways. Either as run of station (ROS) or forspecified times. ROS is cheaper because thestation can plug your spots in to undesirabletimes, such as late at night. Ideally, youwant morning drive time (7 a.m. to 9 a.m.)or afternoon drive time (3 p.m. to 6 p.m.).People listen to their radios while theycommute to and from work. This is a primepromotion period. Of course, if you aretrying to reach teenagers, it is a differentstory. Then you want early evening andSaturdays.

Television spots may not be out of yourreach, especially if you sidestep the networkaffiliates for cable TV. Here a prime 30-second spot that reaches perhaps 40,000households may cost only $40. One of thereasons you pay less is you reach a smallerarea, which is desirable for an entrepreneurwanting to pinpoint only a 20-mile radius.Cable also allows you to target youraudience.

Do not overlook the fact you will be chargedfor production of the commercial spot.Prices typically range from $200 to $1,500.Of course, if you hire nationally knowntalent and directors, costs will skyrocket.

Speaking of prices, the published rates arenot cast in stone on either radio or TV.Naturally, stations are not going to discountrates just before Christmas, during primetimes, or especially for popular shows. Theyare often open, however, to negotiation withsavvy entrepreneurs. You have nothing tolose by asking!

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BILLBOARDS

Most businesses require billboards or signsof one sort or another. The most obvious isthe one identifying a store or office. A day-care center might opt for something big andbright, whereas a dress shop wants a signthat is professional and dignified. If yourbusiness is easily recognized by a symbol oremblem, try a sign cut in that shape. 'Abicycle shop could do this nicely.

Think about the character of your businessand the image you want to portray. A duderanch would use rustic wood with bold,routed lettering. On the other hand, an up-scale hairdresser might use calligraphy on agold background.

Signs do indeed have far-reaching possibili-ties. What about removable magnetizedones for you and key employees to put onyour automobiles? Speaking of cars, person-alized license plates are another way to usepromotion. Another is bumper stickersgiven to customers to get your business'sname out in the public.

On a more casual basis, some owners havebeen known to promote their ventures withsandwich boards which are two advertise-ment boards placed so that they can be readfrom both directions. This type of promo-tion was popular during the 1950s. Ofcourse, tee shirts, jackets, and caps arepopular vehicles to promote the business.An amusement park might use inscribed bal-loons; an association, decals; a theatercompany, posters. Is an adjacent storefrontempty? You might pay the owner a fewdollars a month to put a small sign or dis-play in the window. This is a cheap way topromote a timely special or event. If you

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believe in doing th:ngs in a "big way," whatabout skywriting, blimps, or banners towedby an airplane?

B. PERSONAL SALES

Whether you consider the personal sales ofa clerk in a store, or the personal sales of theexternal sales force, few businesses can sur-vive without sales. It is very important toproperly train the sales staff, so that they caneffectively approach the customer and closethe sale. Clerks for small ticket merchandiseare usually paid by the hour. However,clerks for large ticket merchandise andexternal sales people are usually paid with acombination of salary and commission. Formore about selling, see PACE Unit 16.

TELEMARKETING

Telemarketing is the use of telephones tokeep in close contact with target customers.It became popular with the introduction ofWide Area Telephone Service (WATS), the800 toll-free number, in 1967. There is nodoubt that you can ring up extra results withtelemarketing and there are four areas oftelemarketing to look at for success.

First, telemarketing is a cost-effective way tofollow up on leads. Over the phone you canquickly qualify prospects to determine whois hot and who is not.

Second, the telephone allows you to stay incontact with existing customers. You canuse it to herald the arrival of a new serviceyou know they might like or to canvassactive accounts on behalf of a special offer.

Third, telemarketing provides a quick way toactivate old or forgotten accounts. Because

it is far cheaper to do more business with anexisting account than it is to find a new one,this is a key point. One phone call may re-veal a simple problem you can quickly re-solve, thus bringing the customer back intothe fold.

Fourth, how about usiii, your telephone as agoodwill tool? In today's busy high-techworld, few businesses ever call and thankpatrons for their business. Nor do they tact-fully suggest the customer might want tomention this product or service to a friend orrelative. Because word of mouth is a topmotivator, such referrals can quickly boostthe bottom line.

C. PUBLIC RELATIONS

The purpose of public relations is to createand maintain favorable relations between thebusiness and its public. Public relationsincludes media publicity. The advantages ofpublicity are that it has greater credibilitythan advertising, and the business ownerdoes not directly pay for it. The disadvan-tages of publicity is that the business ownerhas little control over it. For more informa-tion about public relations, see PACE 15,level 2.

D. SALES PROMOTION

Sales promotion techniques include sampl-ing, contests, sweepstakes, premiums, cou-poning, and displays. Many small busi-nesses spend more on sales promotion thanon advertising. It is often used to improvethe effectiveness of other promotional mixingredients. For a physical product, thedisplay of may make or break the sale. Formore about sales promotion, see PACE 15,level 2.

WHY IS CHOOSING THEMEDIA IMPORTANT?

Media analysis will be different if you aredealing on a regional basis around yourhometown, rather than in a national arena.If your sphere of influence centers aroundone community or area, the print ad choicesare less confusing. There is probably onemajor daily paper, plus several smallerneighborhood newspapers and a free shopperor two. In large metropolitan areas, theremay also be an alternative newspaper thatappeals to a target crowd, a New Age publi-cation, a senior citizen paper, maybe even anethnic publication. Often there is a regionalmagazine, such as Arizona Living Magazine,Chicago Magazine, and the Ann Arbor Ob-server (see Figure 2).

Newspapers have an immediacy that can bea real advantage. Because of the short timerequired to be at the newspaper before beingprinted (known as lead time), you can run anad at the beginning of the week and be get-ting calls from it by the end of the week.This also allows you to capitalize on timelyevents or situations. If your city just hasbeen hit with a heat wave, promoting yourair-conditioning repair service would be astroke of genius. A locksmith might want toplug in some quick ads to counteract a localwave of burglaries. You might also want toplan your promotional advertising to coin-cide with the payroll days of large localindustries.

It is best to avoid Wednesdays and Fridays.These are the "clutter" days when papers arechuckfull of grocery and entertainment ads.Sunday is a good day because people spendmore time looking at the paper. As with

9

magazines, a few big metropolitan dailiessuch as the Los Angeles Times and the Hous-ton Chroniclepublish zoned editions. Re-member, though, that there is one distinctdisadvantage with newspaper advertising:tomorrow there is a new paper. The lifespan of an ad is very short.

Magazines are often kept around for months,so your message keeps selling. There is alsoprestige value to having your ad next to thatof some Fortune 500 company like Ford Mo-tor Company or AT&T. Then, too, ads sim-ply look better in magazines because photo-graphs reproduce well on the slick paper.

Obviously, price is going to be a prime con-sideration. At first glance, TV may appearto be the most expensive media. However,if you are able to effectively target usingtelevision, the price per customer contactmay be relatively low. In some cases, youmay decide to pay a higher price because aparticular publication is positioned ideally toreach your target market.

One of the most important considerations iswhether a particular media will reach yourtarget market. A funeral director or con-valescent home may elect to advertise in asenior citizen newspaper. A bakery will farebetter in a women's magazine or cookingspecialty section of the newspaper than inthe traditional press. If you wish to targetheads of dual career families, easy listeningradio stations during drive time may be yourbest media bet.

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Medium

Dailynewspaper

Weeklynewspaper

Television

Market Coverage Advantages Disadvantages

Direct mail

Magazines

Radio

Businesspaper

Billboards

Transit

Telephonedirectories

Flyers

Entire metropolitanarea, local editionssometimes used

One community

Regional or national

Advertiser selectsmarket

National (most withregional editions),regional, or local

Entire metropolitanarea

National or regional

Entire metropolitanarea or one location

Urban communitywith a transitsystem

Entire metropolitanarea (with localsupplements)

Single neighborhood

Short lead time, concentrated mar-ket, flexible, passalongs, surroundedby content

Same as daily

Reach, low cost per viewer, persua-sive impact, creative options, flexi-ble, surrounded by programs.

Precise audience, flexible, personalapproach, no clutter from othermessages.

Color, creative options, affluent au-dience, permanence of message,passalongs, flexible, surrounded bycontent

Low costs, selective market, highfrequency, immediacy of messages,surrounded by content

Selective market, high readability,surrounded by content, permanenceof message, passalongs

Large size, color, creative options,frequency, no clutter of competingmessages, permanence of message

Concentrated market, permanenceof messages, frequency, action ori-entation, color, creative options

Low costs, permanence of message,coverage of market, specialized list-ings, action-oriented

Low cost, market coverage, littlewaste, flexible

General audience, heavy ad com-petition, limited color, limitedcreativity

Heavy ad competition, limited col-or, limited creativity, small market

High minimum total costs, generalaudience, lead time, short message,limited availability

High throwaway rate, receipt bywrong person, low credibility

Long lead time, poor frequency, adclutter, geographically dispersedaudience

No visual impact, commercial clut-ter, channel switching, consumerdistractions

Restricted product or service appli-cations, not final-consumer-oriented

Legal restrictions, consumer distrac-tions, general audience, inflexible

Clutter of ads, consumer distrac-tions, limited audience

Clutter of ads, limited creativity,long lead time, low appeal to pas-sive consumers

High throwaway rate, poor image

Figure 2. Summary of advantages and disadvantages of various promotional media

WHAT ARE THEFACTORS ASSOCIATEDWITH MEDIA COSTS?

The small business has a wide variety ofmedia from which to choose. Each offersspecific benefits in terms of what the smallbusiness owner is willing to pay. Whenselecting media, these factors should beconsidered: cost, reach, frequency, messagepermanence, persuasive impact, and leadtime.

Advertising costs should be assessed in threeways. First, the total costs of a medium arecalculatedfor example, $30,000 for a full-page color ad in a national magazine. Sec-ond, per reader or viewer costs are com-puted. Costs are expressed on a per thou-sand basis, except by newspapers which usea cost per million base. If the $30,000 ad isplaced in a magazine with a circulation of1.8 million, the cost per thousand is $60(1,800,000 divided by $30,000 equals $60spent per thousand people). Third, waste,which is the portion of the audience that isnot in the business's target market, is ana-lyzed. Because media appeal to mass audi-ences, waste is a significant factor in adver-tising. To reach 1,000 people may be only$60, but most media accounts receivablemanagers will still require you to pay thefull $30,000 leaving $29,940 in lost promo-tion dollars.

Reach refers to the number of viewers orreaders in the audience. For television andradio, reach is the total number of peoplewho are exposed to an advertisement. Forprint media, reach has two components, cir-culation and passalong rate. Circulation isthe number of copies sold or distributed to

6

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consumers. Passalong rate is the number oftimes each copy is placed with anotherreader. For example, each copy of News-week is read by about six people. The pass-along rate for magazines is much higher thanfor daily newspapers. This brings down thecost since several people will read the samemagazine, such as at a doctor's office orlibrary.

Frequency is how often a medium can beused. It is greatest for newspapers, radio,and television, where ads may appear dailyand advertising strategy may be easilychanged. Telephone directories, outdoor ads,and magazines have the poorest frequency.An ad in The Yellow Pages may be placedor changed only once a year.

Message permanence refers to the numberof exposures one advertisement generatesand how long it remains with the audience.Outdoor ads, transit ads, and telephonedirectories yield many exposures per mes-sage. In addition, magazines are retained byconsumers for long periods of time. On theother hand, radio and television ads last only5- to 60-seconds and are over.

Persuasive impact is the ability of a mediumto stimulate consumers. Television often hasthe highest persuasive impact because it isable to combine audio, video, color, anima-tion, and other appeals. Magazines alsohave high persuasive impact.

Lead time is the time required by the medi-um for placing an Avertisement. It isshortest for newspapers and longest formagazines and telephone directories. A longlead time means a business must plan itspromotion program 6 months or more in ad-vance and risk incorrect messages in achanging environment. Television may also

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require a long lead time because the numberof ads it can carry is limited.

In recent years there have been many mediainnovations. These include regional editionsand zip-code marketing (ads placed in spe-cific geographic areas) to revive magazines;newspapers improving their computer skillsin placing ads; advertising on cable televi-sion; televised commercials in supermarkets,movie theaters, and airplanes; and special-ized Yellow Pages directories.

particular ad is shown and when to advertiseduring the year. In the first decision, thesmall business owner must balance audienceawareness and knowledge with irritation ifthe ad is placed often during a short periodof time. For example, a business owner mayrun ads repeatedly, but changes them oftento avoid the problem of becoming a nuisanceto the viewing public.

Second, the small business owner mustdetermine whether to advertise- throughout

Timing Advertisements

HOW DO YOUADEQUATELY TIMEYOUR ADVERTISEMENTS?

in deciding where to run ads, timing re-quires two major decisions: how often a

the year or in concentrated periods. Dis-tributed advertising maintains company andbrand recognition, balances sales, and in-creases sales in nonpeak periods. It is usedby most manufacturers and general merchan-dise retailers. Massed promotion concen-trates advertising during peak periods, maxi-mizes seasonal sales, generates short-runconsumer enthusiasm, and ignores sales in

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nonpeak periods. Specialty manufacturers tive for reaching small numbers of people.and retailers use this method. When the market for products becomes larg-

CHARACTERISTICSOF

Projection

Geographic Distribution

71°°ItMARKET AND IMAGE

WHAT ARECHARACTERISTICSOF YOUR TARGETMARKET AND IMAGE?

The size, geographic distribution, and socio-economic characteristics of the small busi-ness target market also help dictate the in-gredients included in a product's promotion-al mix. Market size determines, to some de-gree, the promotional mix composition. Ifthe size is quite limited, the promotional mixwill probably emphasize those elements bestsuited to small quantities, such as personalselling or displays. This can be quite effec-

er, a business may use advertising and salespromotion because these methods can reachmasses of people at a low cost per person.For example, if your product is geared tochildren, you might consider using a videoadvertisement attached to the beginning ofchildren's videos. Many video companiesare using this new form of advertising tohelp the small business entrepreneur withbusiness development.

The geographic distribution of customers canalso affect the combination of promotionalmethods used. Personal selling is more fea-sible when customers are concentrated in asmall area than if they are dispersed acrossa large geographic area. An example of thisis the Western states of the United States.

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One of these states sometimes equal the totalof the Northeastern states in size yet thepopulation is under 1 million people.

The distribution of a target market's socio-economic characteristics, such as age, in-come, or education, may dictate the types ofpromotional techniques that an entrepreneurselects. For example, personal selling maybe much more successful than print adver-tisements for communicating with less-educated people.

However, when examining the target market,another important element to consider is theimage of the business. The image you pro-ject and the reputation your business culti-vates can spell the difference between suc-cess and failure. Image building must beproactive, not reactive. You can do tangiblethings to become a power in your field.

HOW DO YOU DEVELOPPERSONAL IMAGEAND CREDIBILITY?

Locally performed services rely heavily on

the people providing the services. Many ofus choose a mechanic, family doctor, orneighborhood beautician simply because welike the person. Although the 21st centurymay see a small increase in national fran-chises and chains, individual and small busi-ness entrepreneurs will play the key role.Consequently, the entrepreneur will continueto have high visibility.

The philosophy of the small business ownersets the tone for the whole business. Howwill you posture your enterprise? Will youfoster an attitude of caring? This is the

image you project to the community and canbe the success or failure of the small busi-ness. To develop a positive image, differententrepreneurs do different things. Mechanicspick up and deliver the cars they repair.Dentists provide earphones with soothingmusic and interesting graphics on the ceilingof treatment cubicles. Banks offer drive-upservice, stay open on week-ends, and maketheir meeting rooms available free to non-profit groups. Real estate agents provide"get-acquainted" packages to folks consid-ering a move to the area. Appliance repairfacilities arrange for rush shipping of criticalparts. The list could go on and on. Someplaces have a knack for making you feelmore like a guest than a customer.

No matter what business you are in, thereare ways to show your customers you con-sider them special. In the process, thebusiness owner becomes special to them.You provide a lasting value and build agenuine relationship.

WHAT IS THEPROMOTIONALBUDGET?

The goal of promotion is for an organiza-tion to communicate with its target marketsand persuade target customers to purchase itsproducts, services, or ideas. Part of thepromotional planning process is decidinghow much money the business is willing toinvest in this communication and persuasion.This is called the promotional budget.

Theoretically, setting the promotional budgetshould be approached from an economic per-spective, that is, money should be spent on

promotion until the point at which marginalrevenue equals marginal cost is reached. Intheory every additional dollar spent on pro-motion (the marginal cost) should have somepositive effect on sales (marginal revenue).As long as sales increase more than totalcosts, a business is better off by promotingmore. However, when costs start increasingmore than sales, no more money should bespent on promotion.

In actuality, the theoretical approach isalmost impossible to use. The exact effectpromotional expenditures will have on salesis hard to determine, and the total costsassociated with the new sales level may beequally difficult to estimate. Additionally.competitive reactions are not directly con-sidered. In setting the promotional budget,most companies use one of four techniques:percentage of sales, all you can afford, re-turn on investment, or objective and task.

Percentage of Sales. A simplistic and,unfortunately, widely used promotional bud-geting technique is the percentage of sales.Businesses using this technique set theyearly promotional budget at a constant per-centage of sales. Besides being easy, thistechnique is also conservative because it tiesexpenditures to sales.

All You Can Afford. Businesses with limitedresources often adopt a promotional budgetbased on what they can afford. Usually, themoney budgeted is far less than what theywould like to spend, but allocating morewould endanger solvency.

The problem with this technique is that thebudget and the promotional objectives areunrelated. A business can easily miss profit-able promotional opportunities under the ex-cuse "We cannot afford it."

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Return on Investment. The rationale for thistechnique is that promotion should be view-ed not as an expense, but rather as an invest-ment in future corporate sales. Using thistechnique, the business owner estimates theprofit-generating potential of promotionalexpenditures and computes the return oninvestment from these expenditures. Theowner then approves promotion costs thatmeet some of the criteria for an acceptablereturn on investment. The advantage to thistechnique is that it relates promotionalexpenditures to profit goals. Additionally, itapproves only the best promotions, whichforces the development of more effectivepromotional strategies.

The failing of this technique is the inabilityof small business owners and managers toaccurately estimate the effect of promotionalexpenditures on sales and profitability. Al-though a -easonable approach to promotionalbudgeting this failing has limited the use ofthe return on investment technique to only afew small businesses.

Objective and Task. With the objective andtask technique, the business clearly outlinesthe promotion objectives it wishes toaccomplish, then determines the promotionalbudget necessary to reach these objectives.The advantage of this techniqu?. ;.- that itclearly ties promotional expenditures tostated objectives, emphasizes marketing re-search to determine how to promote, andexamines the costs associated with objectiveattainment. One disadvantage is the diffi-culty in estimating costs of obtaining promo-tion goals. Another is that measurement ofperformance against goals can be difficult.Still, this is by far the most realistic promo-tional budget technique.

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WHAT ARE THE STEPSIN PROMOTIONALPLANNING?

The following figure suggests the steps indeveloping a long-term promotional plan. Itbegins with the broad promotion strategyand ends with a promotion calendar and adetailed budget. Information should begathered for each of the items listed. Youmay need help in gathering information forsome of these steps.

Figure 3 may suggest that promotional plan-ning is a very complex process. It can alsorequire a great deal of planning time. Forother businesses, it is not that difficult.Experience in promotional planning willmake the task much easier. Steps 1-5 inFigure 3 are actually completed in the Mar-keting Plan. They simply need to be review-ed at this time. If the remaining stepsare too time consuming or complex, thebusiness owner may want to use an advertis-ing agency or other promotion expert.

WHY IS EVALUATINGSUCCESS OR FAILUREUSEFUL?

The success or failure of promotion dependson how well it helps the business achieve itsobjectives. Creating customer awareness andincreasing sales are two distinct goals;success or failure in attaining them must bemeasured differently. Furthermore, promo-tion is sometimes extremely difficult toisolate as the single factor leading to acertain image or sales level.

Following is a variety of examples dealingwith the evaluation of advertising success orfailure:

Igloo, a division of Anderson, Clayton,and Company, tested a promotional cam-paign for its Playmate personal-size icechest. It found that the campaign in-creased brand awareness by 300 to 400percent, and sales rose by 25 percent.

A study on hometown grocers revealedthat ads stressing patronage increasedsales up-to-200 percent.

An analysis of more than 800 commer-cials found that celebrities were notoverly effective in gaining brand prefer-ence with sales rising only about 2 per-cent, but they did contribute to higherlevels of recall about the ads in whichthey appeared.

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Step I. Market CharacteristicsA. Describe current customersB. Describe prospective customers

Step II. Environmental Factors Affecting Pro-motionA. LawsB. EconomyC. Consumer perceptions of promotion

(likes and dislikes)D. Technology (production processes,

cable TV, and so on)

Step III. CompetitorsA. Names, locations, marketing mixesB. Strengths and weaknesses

Step IV.

Step V.

Step VI.

Business DescriptionA. Owner's goalsB. Marketing mix (product, price,

place, promotion)C. Business strengths and weaknessesD. Anticipated changesE. Marketing goals

Promotional Planning FactorsA. Unique customer groups

1. Information levels and needs2. Information sources used3. Buyer behavior

B. Competitors' promotional behavior1. Product information provided2. Brand information provided3. Emotional/rational appeals4. Methods/media used

C. Methods/media available1. Strengths/weaknesses of each2. Costs to use3. Experience and skill in using

each method/mediumD. Estimated budget available

Promotional Planning FactorsA. Unique customer groups

1. Information levels and needs2. Information sources used

Step VI.

Step VII.

Step VIII.

Step IX.

Step X.

Step XI.

3. Buyer behaviorB. Competitors' promotional behavior

1. Product information provided2. Brand information provided3. Emotional/rational appeals4. Methods/media used

C. Methods/media available1. Strengths/weaknesses of each2. Costs to use3. Experience and skill in using

each method/mediumD. Estimated budget available

Promotional Objectives

Information to be Communicated

Methods to be Used (selling, advertis-ing, sales promotion, publicity)A. Objectives for each methodB. How method will be usedC. Customer group to be contactedD. Relationships among methods

Media to be UsedA. How each medium is to be usedB. When each medium is to be usedC. Relationship among media

Preparation RequirementsA. Time required for preparationB. Cost of preparationC. Who will prepare the promotionD. Training requirements (selling, dis-

play, and so forth)

Promotional ScheduleA. PlanningB. ImplementationC. Relationships among method and

media schedules

Step XII. Final Promotional Budget

Step XIII. Methods of Evaluating PromotionalActivities

Figure 3. Promotional planning steps

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ACTIVITIES B.

The following activities are designed to help Work in teams of four to six. List theyou apply what you have learned in this following media: (1) newspapers, (2) maga-unit. zines, (3) The Yellow Pages, (4) directories,

and (5) billboards. Prepare three creativeads for each medium and tell what market it

INDIVIDUAL. ACTIVITIES is targeted to. How does each medium dif-fer from the others?

A.

Plan a promotional campaign for your class.What items will be necessary to include inorder to get other students interested inenrolling?

B.

Choose five magazine advertisements thatyou believe show good use of promotion andthen choose five that defy good promotionaltechnique. Tell why you chose each andwhat can make each of them better in pro-moting the product or service.

GROUP ACTIVITIES

A.

Work in teams of four to six. Each teamshould choose a new or improved product orservice. Identify all of the media in whichit is being promoted, and estimate the effec-tiveness that each played in the promotionalcampaign for that product or service.

2 :3

CASE STUDY

Spring Foods Company is a relatively smallbut very successful food producer. Thecompany's main product lines are wholegrain cereals, canned meats, and cannedprepared dishes. Three large supermarketchains buy Spring Foods products and shareexclusive rights tc distribute them in a 200 -square -mile area that surrounds the company.The customers of the supermarkets gladlypay a few cents more for the products be-cause they know that the Spring Foods labelmeans top quality.

The company has done well enough to be-lieve it could profit by investing in expan-sion, but what direction should it be? Anarticle in last December's issue of Fortunemagazine made Cliff Whitehead, promotionsdirector, begin to think seriously about onepossible additional market. The article be-gan: "One of the fastest-growing and per-haps most profitable food products of thedecade is some stuff that most people won'teat. Luckily for the food manufacturers, theproduct isn't meant for peopleit's for theirdogs and cats."

"I think that's for us," Whitehead toldShawn Batterherry, executive vice-presidentof the company. "Look at those figures.People are spending over a billion dollars ayear on prepared pet foodthat's more than

they spend on two staple food items, cerealsand baby foods, combined. And we've al-ready got the production facilities that canturn out pet food!"

"Yes," said Batterberry. "We've got thematerials and the plant to make itif themarket is really there. You know, ti,is pet

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food business has grown so rapidly that it

could be just a fad; it could die just asrapidly."

"The latest market data show that the nation-al market is going to keep on growing. My

next step is to find out how to promote theproduct to our target market here in ourarea," said Whitehead. He did a survey ofthe area in which Spring Foods products aresold. The survey revealed the following sig-

nificant information:

Nationwide, approximately one-half ofall households have pets. In the SpringFoods area, almost two-thirds of thehouseholds have pets.

Dogs tend to be owned by people livingin houses; the cat population is ownedby people living in either houses orapartments.

Nationwide, nearly one-half of the dogsand one-third of the cats eat preparedfood (the industry considers the remain-der an exciting untapped market). In theSpring Foods marketing area, slightlymore than one-half of the dogs and near-ly two-thirds of the cats eat preparedfoods.

The fastest-growing kinds of pet foodsare quality brands, such as those thatfeature meat rather r-,n meat by-pro-ducts. The most popu'ar of these aremade by major food producers.

In the Spring foods marketing area, newhousing is planned at a somewhathigher-than-average rate, with most of

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the increase expected in suburban one-family houses.

Sociologists see people's attitudes towardtheir pets as another aspect of the in-creased interest in ecology. More andmore people see themselves as just onepart of the whole natural world, and petsare considered another part of that natur-al world.

DISCUSSION QUESTIONS

Cliff took his idea to the company's management committee. Atter listening to his report, somemembers of the committee were still not convinced about the advisability of trying to promotetheir product as pet food and win a portion of the pet food market. Below is a list of theirobjections. What was the reason for each objection and how might Cliff have answered each?

1. "In our area where we promote our products, more dogs and considerably more cats are al-ready being fed prepared foods than in the rest of the country. That means the untappedmarket in our area isn't so impressive and would require a hugh promotional budget to startthis project."

2. "Six big companies already have nearly three-fourths of the pet food market. What chancedoes our product have against these established products?"

3. "Wouldn't it hurt the image of our foods if people began seeing our label on pet food?"

4. "According to the figures, people are spending nearly $50 a month on the average to feedtheir pets. Why, that could buy almost a ton of food for hungry people. Don't you thinkpeople are going to wake up and stop buying gourmet pet foods? No promotion we couldthink of can counter that!"

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ASSESSMENT

Read the following questions to check your knowledge of the topics presented in this unit.When you feel prepared, ask your instructor to assess your competency on them.

1. Identify and briefly describe the four major promotional methods that can be included in abusiness's promotional mix.

2. Discuss the differences between classified, display, and Yellow Pages ads.

3. List and discuss the factors associated with media costs.

4. Discuss the advantages and disadvantages of the four approaches to setting promotionalbudgets.

5. How does publicity differ from advertising?

6. How can a product's or service's characteristics influence the composition of its promotionalmix? Discuss your answer and give examples for a product and a service.

REFERENCES

Bonoma, Thomas V. The Marketing Edge: Making Strategies Work. New York, NY:Macmillan Free Press, 1985.

Mason, Ralph E.; Rath, Patricia M.; Husterd, Stewart; and Lynch, Richard. Marketing:Practices and Principles. New York, NY: Glencoe Book Company, 1986.

Meyer, Warren; Harris, Edward; Kohns, Donald; and Stone, James. Retail Marketing forEmployees, Managers, and Entrepreneurs. New York, NY: Glencoe PublishingCompany, 1988.

Pride, William M., and Ferrell, 0. C. Marketing: Concepts and Strategies. Dallas, TX:Houghton Mifflin Company, 1989.

Putman, Anthony 0. Marketing Your Services: A Step-by-Step Guide for Small Businesses andProfessionals. New York, NY: John Wiley and Sons, 1990.

Rauchman, John T. Marketing Today. New York, NY: Harcourt Brace Jovanovich, 1994.

Wilcox, Dennis L.; Ault, Phillip H.; and Agee, Warren K. Public Relations: Strategies endTactics. New York, NY: Harper and Row, Publishers, 1989.

Level 3

PACE

Unit 1. Your Potential as An Entrepreneur

Unit 2. The Nature of the Small Business

Unit 3. Business Opportunities

Unit 4. Global Markets

Unit 5. The Business Plan

Unit 6. Help for the Entrepreneur

Unit 7. Types of Ownership

Unit 8. Marketing Analysis

Unit 9. Location

Unit 10. Pricing Strategy

Unit 11. Financing the Business

Unit 12. Legal Issues

Unit 13. Business Management

Unit 14. Human Resources

Ig> Unit 15. Promotion

Unit 16. Selling

Unit 17. Record Keeping

Unit 18. Financial Analysis

Unit 19. Customer Credit

Unit 20. Risk Management

Unit 21. Operations

Resource Guide

Instructor's Guide

Units on the above entrepreneurship topics are available at the following levels:

* Level 1 helps you understand the creation and operation of a business* Level 2 prepares you to plan for a business in your future* Level 3 guides you in starting and managing your own business