Small businesses may often miss the boat by thinking they can’t afford advertising or a professional marketing plan.
“It takes months and often years for a new business to gain recognition and build loyal customers,” says John McKie, partner/executive vice president for GodwinGroup in Jackson. “Most businesses are not immediately successful. This means effective marketing efforts must extend well beyond a grand opening period, and this level of funding is frequently not anticipated in the initial business plan.”
Small businesses often fail to define the benefit they actually provide to their customers. By failing to identify the true practical and emotional needs they fulfill, the small business is not able to communicate any benefit to the customer.
“They do not know what they are really selling,” McKie says. “For example, a yard and garden store sells plants and various gardening products. But the real benefit to customers may be the ability to customize their homes and yards in a way that expresses their personality. Or, it may be the sense of accomplishment from creating a flower garden that can be enjoyed by many. Knowing the real benefit is key to success in speaking to customers.”
Small businesses often fail to realistically define their audiences and assess their size and buying power. McKie says while the idea for the business may be sound, there may not be enough interested or qualified customers present to make the business viable in the long run.
Assessing the competition
“Failure to adequately assess the competition is often a mistake,” McKie says. “Established firms, like incumbent politicians, have a base of support that can be very loyal. Established competitors often have more marketing resources available to combat newcomers. It takes vision and enthusiasm to start a business, but sometimes belief in the venture can overcome sound judgment. Overly optimistic estimates of how quickly the business might grow could mean inadequate marketing funding.”
How can smaller businesses compete against larger companies with more marketing muscle? Many products and services are relatively similar, and some have become commodities. McKie says small firms have to find a difference, a need that larger competitors do not meet. When a small business can establish a difference from its competitors, it gives customers a reason to choose them.
“This is typically called finding a market niche,” McKie says. “For example, an IT service company might specialize in supporting less common devices or systems and provide a high standard of on-call service. If larger companies only support the best sellers, this creates a competitive difference that the smaller company can exploit. Another example is a shoe store that carries a selection of narrow sizes, and builds a customer base because of this niche. This differentiation gives customers a reason to select the smaller, more targeted business.”
Culture for the customer
Superior customer service can be a hallmark of a small business. It is often easier for a smaller firm to build and maintain a culture devoted to outstanding customer service. McKie says this kind of service often promotes positive word-of-mouth promotion, which is the least expensive and most trusted form of marketing there is.
“Another important tactic is utilizing the Internet to market the small firm,” McKie says. “In some ways, an effective Web site can be an equalizer. If it tells the small company’s story, sell the products, and gives a way for customers and prospects to interact.”
Scott Coopwood, owner of Coopwood Communications based in Cleveland with an office in Jackson, says small business can compete by outworking the larger companies.
“Be flexible and concentrate on service, service, service,” Coopwood says. “Try to also offer some unique products or services that your large competitor cannot offer and publicize this. Wal-Mart is great example. Regardless of their size, there are just some items that this large corporation cannot offer because the profits aren’t there. However, a small business competing against Wal-Mart can go out and identify the items that Wal-Mart does not carry, and they can start carrying these items. Small businesses just have to find their niche when competing against larger businesses.”
Growing the grassroots
Another technique for small businesses to compete against larger companies who have more marketing dollars is what is referred to as “guerrilla marketing” that places marketing efforts on a grassroots level.
“Be creative with your marketing ideas,” Coopwood says. “Try different ways of marketing your business that might not be conventional. There are just so many ways to go about doing this. I think of the small organization up north several years ago who were working against a policy on an environmental issue concerning some legislation that was about to be passed. They were going up against the federal government. With limited dollars, they approached the actress Meryl Streep about their cause. She bought into it, and the next thing you knew, this international actress was conducting interviews with the national press concerning this issue.”
The small environmental entity received millions of dollars worth of free press on this situation because of Streep’s involvement, and the environmental group prevailed
“This was a smart PR move by an entity with zero marketing or PR dollars,” says Coopwood, whose company handles the marketing for Morgan Freeman’s business in Clarksdale Madidi and Ground Zero Blues Club. “This is a great example of what PR can do. Small businesses on shoestring marketing budgets do have options, they just have to be creative and smart about how they go about it. Obviously, it is far better to have a nice marketing budget.”
What’s the market? Who are the customers?
One of the greatest mistakes he has seen small businesses make when trying to market themselves is not correctly identifying their markets and potential customers. To many, that statement comes as a big surprise. But Coopwood has seen it happen many times.
“So many businesses just don’t know who to sell their goods or services to,” he says. “And no doubt about it, small businesses often don’t adequately fund their advertising and PR efforts. When times are tough and business is down, the first thing a small business will usually cut is their advertising budget, and this is the worst time to cut this line item. In fact, in tough times a business should increase their advertising dollars because they need to bring in the business.”
Small businesses must be savvy with their money. Having a well thought out marketing plan is crucial, says Cindy Hodo, a partner with The Quest Group, West Point
“As a small business owner, I know where my strengths lie and pay professionals for help in other areas such as accounting and legal work,” Hodo says. “The same goes for advertising. If an owner has no experience in the field, it will be beneficial to hire a consultant to put together a marketing plan and help with the execution of that plan, if needed.”
Hodo says a good rule of thumb is to budget 3% to 5% of the business gross revenue for marketing efforts.
Service goes a loooooong way
To compete against larger companies, smaller businesses must offer a quality product or service and have superior customer service.
“Owners should require customer service training for their employees,” Hodo says. “Friendly service goes a long way in today’s technical world. Have a real person answer the phone when possible. There’s nothing worse than calling a business and getting hit with numerous options just to talk to a human being.”
She also recommends looking for niche ways to market the business such as hosting events, buzz marketing, and asking customers for referrals. Businesses should keep a customer data base and stay in touch with those customers. It is easier to keep a customer than it is to find new ones.
Contact MBJ contributing writer Becky Gillette at email@example.com.