We’ve discussed product, price and place as they pertain to the Four Ps of Marketing. Now let’s talk about the final one: promotion.
Understanding Promotion
Promotion is virtually everything you do to bring your company and your product in front of consumers. Promotional activities include picking your company name, going to trade shows, buying advertisements, making telemarketing calls, using billboards, arranging co-op marketing, offering free giveaways, building and maintaining your online presence, and more. Not all promotions are suitable for all products, of course, so your plan should select the ones that will work best for you, explain why they were chosen, and tell how you’re going to use them.
Promotion aims to inform, persuade, and remind customers to buy your products. It uses a mix that includes four elements: advertising, personal selling, sales promotion, and publicity or public relations.
Buzzword: Co-op Promotion
Co-op promotions are arrangements between two businesses to cross-promote their enterprises. When a soft drink can include a coupon good for a discount on the price of entry to an amusement park, that’s a co-op. Countless variations exist.
Advertising Concerns
Advertising is a large part of marketing and promotion for most businesses. In 2022, businesses spent $153 billion on online advertising, or nearly 62 percent of the whole. Television is a distant second with 22.7 percent. Outdoor advertising was third with only 5.2 percent. Print media advertising in newspapers and magazines combined didn’t even reach 6 percent. Because most businesses cannot afford television ads, except in local markets, the choices come down to (primarily) print and the Internet.
Though the web is the place to be, print still offers some perks. For example, newspapers, magazines, and other forms of print are tangible and stay in people’s view somewhere in the house—even on the rare occasion when the computer is turned off. Brand recognition is still easy to spot on the page or on a sign or billboard. Consumers tend to look longer at a print ad and skim less frequently than when they are looking at ads online, and because there are fewer print ads than in the past, your ad can stand out more. Of course. before you can advertise, you need to figure out why you are advertising: What are your goals?
You may be advertising to raise your corporate profile, to improve a tarnished image, or simply to generate foot traffic. Whatever you’re after, it’s important to set specific goals in terms of such things as revenue increase, unit volume growth for new business, inquiries, and so forth. Without specific objectives, it’s hard to tell what you can afford to do and whether the campaign is living up to expectations.
Also, keep in mind that promotional plans, such as giveaways and freebies—caps, pens, T-shirts, and so on—should also be part of your plan to market your business.
Other Kinds of Promotion
Sales promotion is kind of a grab bag of promotional activities that don’t fit elsewhere. If you offer free hot dogs to the first 100 people who come to your store on Saturday morning, that’s a sales promotion. This category also includes in-store displays, trade shows, off-site demonstrations, and just about anything else that could increase sales and isn’t included in the other categories.
Publicity is the darling of small businesses because it lets them get major exposure at minimal cost. If you volunteer to write a gardening column for your local newspaper or a blog for a gardening website, it can generate significant public awareness of your plant nursery and position you as a leading expert in the field, all for the price of a few hours a week spent jotting down some thoughts on a subject you already know very well. To buy comparable exposure might cost thousands of dollars. Press releases announcing favorable news about your company are one tool of publicity; similar releases downplaying bad news, if necessary, are the flip side.
Public relations is a somewhat broader term that refers to the image you present to the public at large, government entities, shareholders, and employees. You may work at public relations through such tools as your website, company newsletters, e-newsletters, legislative lobbying efforts, your annual report, and the like.
Whatever you do, don’t neglect public relations and publicity. There is no cheaper or more powerful tool for promotion.
Scarcity and Urgency Work
Another popular approach to marketing is to make products more valuable via scarcity and present a sense of urgency through limited-time offers. From highly touted sales to special sales for preferred customers, a sense of “act now” works in your marketing plans. People also see value in a limited edition or an item that is not always easy to get. Don’t make up false scarcity or customers may see through it—but think about what you may run out of and let people know they should order while it’s still available. The home shopping channels made a fortune by having a clock ticking away so that people would run to their phones to purchase an item before it disappeared (until tomorrow). Disney offers its classic films for sale through television commercials that ask you to buy now before the film goes back into the vault for years to come.
Have a Follow-Up Plan
Customers may ask, “What have you done for me lately?” Investors and others reading your business plan want to know, “What are you going to do for me tomorrow?” Any serious business plan has to take note of the fact that every product has a life cycle, that pricing pressures change over time, that promotions need to stay fresh, and that new distribution opportunities are opening up all the time. So, the portion of your plan where you describe how you’ll continue your success is a vital one.
The annals of business are full of companies that turned out to be one-trick ponies that introduced a product or service that zoomed to stardom but failed to follow it up with another winner. In the best cases, these companies survive but fade back into obscurity. In the worst cases, they fail to negotiate the switch from booming sales to declining sales and disappear completely.
Diversifying into more than one product is another good way to reduce the risk. It’s a good idea to divert part of any boost in revenues to studying market trends and developing new products.
Investors looking at a plan, especially those contemplating long-term involvement, are alert to the risk of backing a one-trick entrepreneur. Showing competitive barriers that you’ve erected and systems for developing new products is an important part of calming their fears.
There’s one caveat when it comes to learning new tricks, however. Very simple concepts are the easiest to communicate, and extremely focused companies usually show the fastest growth—although not always over the long term. So you don’t want to appear, in the process of reducing risk, that you’ve lost sight of the answers to the key questions: What are you selling? How are you selling it? And why would anybody want to buy from you?
Business Plan Competitions
If you happen to be a business student, you may be able to enter your business plan in a college business plan competition. These competitions, of which there are more than three dozen in the United States, confer a measure of fame and even some money on the winners. A panel of plan experts including college professors, venture capitalists, and bankers usually judge entries.
Winners are the plans that best lay out a convincing case for a business’s success. Judges can be tough; contestants can expect scathing criticism of poorly thought-out plans.
Venture Labs Investment Competition is the name of the best-known of the nation’s business plan competitions. It’s sponsored by the University of Texas at Austin. Venture Labs Investment Competition calls itself the “Super Bowl of world business-plan competition” and is the oldest of the approximately three dozen business school-sponsored plan competitions. More than two dozen plan-writing teams from as far away as Australia participate in the contest, which began in 1983.
Another major competition is the Rice Business Plan Competition. This very prestigious three-day competition is the largest and richest graduate-level student startup competition with more than $1 million in cash and prizes.
You’ll also find competitions that are not sponsored by universities or business schools such as New York Start Up, an annual competition for New Yorkers starting for-profit businesses that offers cash prizes totaling up to $15,000. Sponsored by the New York Public Library and Wells Fargo, the competition began in 2010.
There are numerous state competitions such as the Rhode Island Business Competition. Started in 2000 by Garrett Hunter, then president of the Business Development Company of Rhode Island, the annual competition is designed for new businesses as well as those in the early development stages. Prizes of cash and in-kind services with a total value of at least $150,000 are awarded to a winner and two finalists.
Elevator Pitch
Sometimes there is simply not enough time for someone to read your business plan or even hear a full presentation. Therefore, you need an elevator pitch. It is the ultra-short version of your plan featuring only the most significant of significant information, all presented in the time it takes for an elevator ride. Of course, the elevator pitch cannot replace the well-thought-out, detailed business plan, but it can drum up interest in reading one. Have such a pitch written, rehearsed, and ready to go. And, keep in mind, it can be harder to write the twenty- to thirty-second elevator pitch than the entire business plan. Each and every word carries more weight because (like on Twitter) you are very limited.
If you want to see winning elevator pitches by other business owners, check out the Entrepreneur Elevator Pitch show. Watching these videos will give you the tips you need to craft your own elevator pitch that will win you the deal, and if you are feeling fired up, apply to be on and get your brand exposure to millions of viewers.
Find Additional Resources
You can get mounds of economic and demographic marketing information—much of it free—from the U.S. Census Bureau. To learn more, contact the following office: Economic and Demographic Statistics, Bureau of the Census, U.S. Department of Commerce, Data User Service Division, Customer Service, Washington, DC 20233, www.census.gov, or call (301) 763-4100.
This article is from Entrepreneur.com
