However, the advertising game need not be the high stakes, crap shoot many retailers visualize. It's not a lottery, dependent on chance or luck. Rather, advertising consists of ideas and how-to essentials that work to produce sales and benefits.
Advertisers have used these essentials for many years to communicate and build markets for their products and services. Their advertising gamble has been successful; at least most of the time. The odds are very good these essentials will work for you, too.
Large businesses, with multi-million dollar budgets, use advertising agencies and skilled experts to prepare and transmit their communications. The smaller, independent retailer must work harder to plan and prepare public messages. When one has a business to run, acquiring the expertise to market wares or services is always a continuing struggle.
This article, and those to follow, are condensed from numerous articles run in this publication and other sources. Here are many of the answers to help you understand the advertising mystery, starting with reasons to advertise, planning and budget considerations.
There are many reasons to advertise. Here are five good ones:
1. To attract new prospects and customers.
2. To retain current and regain former customers.
3. To identify yourself and your business by building an image.
4. To introduce products and services, both new and improved.
5. To feature special promotions, prices, fashions, services and benefits.
More Compelling Reasons
The Small Business Administration (SBA) estimates:
75 percent of products carried in a particular retail store or studio are the same as those of another outlet down the street or in a mall. Accounting procedures are the same. Sales methods are basically the same. Management techniques are similar. Location is a factor.
But, the store image created by pricing and advertising is the main success element. "No businesses today, large or small, can grow and prosper without a sound program of advertising and communications," says the SBA.
Why Plan Ahead?
The business to plan for is there!
1. 50 percent-plus-The percentage of retail failures caused by lack of preliminary planning, according to another SBA report. 11 billion-plus dollars-Average annual U.S. sales of window coverings. Billions more (no really accurate estimates, just questimates by economists)-sales of interior home products. $800-plus-Median expenditures per U.S. home for window coverings. Seven (industry estimates)-Windows redecorated for every new window decorated.
Are you getting your share? You probably can increase your sales substantially right in your present market area. How? By communicating more and better with customers and prospects through advertising, publicity and personal contacts.
2. Increase advertising expenditures? The standard advice on how to increase business share is to "spend more on advertising." That may not be the right thing to do at all. It's necessary to spend correctly the funds you have available. Proper planning and homework is essential.
3. Major planning steps?
A. Analyze your market.
• Present customers. Prospects. Locations. Other statistics.
• Check your image. Services. Advertising style. Pricing. Need a new image for store and self?
• Competitors' image. Comparisons of pricing, services, benefits. Find your own niche?
B. Set marketing goals.
• Evaluate current sales. Average sales. Profit per sale. Best sellers. In-store closing percentages. In-home closing percentages.
• Which media to use?
• Long-range needs. Sales or closure rates desired. Products and benefits to feature.
C. Set up timetables.
• Budget schedules-weekly, quarterly, yearly? Lead times for media and direct mail.
• Co-op moneys? Materials from suppliers?
• Industry knowledge. Magazines. Shows. Seminars. Other materials.
Why Keep a Budget?
50 percent-Estimated percentage of independent retailers who do not keep a regular advertising budget. Their systems of unplanned budgets include:
1. No regular records.
• Rely on word-of-mouth referrals, personal contacts (networking) and occasional publicity. They also use directory listings, business card handouts, direct mail cards and advertising specialties (gifts).
• Charges for this alternative advertising are usually put under "miscellaneous expenses."
2. A hit-and-miss schedule.
• No regular advertising schedule or long-range program. Use an occasional ad to boost business with a special promotion of some kind.
3. Meet-or-beat expenditures.
• Advertisements run because of competitors' ads or pricing. If you attempt to keep up with their promotional efforts, you must match their advertising to some degree. You should plan a schedule and expenditures to meet or beat what you estimate they will spend.
4. Contingency allowances.
• As a store-front retailer, you will be solicited for complimentary ads in special annuals, one-time programs, souvenir cards and "local" directories. Most retailers keep a special "blood money" subsidy for these irregular, but necessary ads.
Other retailers keep a regular advertising budget. Their methods of planning budgets include:
1. Percentage of sales.
• A budget based on last years' gross income. The percentage depends on various factors. Schedule ads, usually on a weekly basis, with an extra allowance for quarterly or semi-annual promotions. Keeping records is easy with this method, but necessary, unplanned insertions may call for revisions. For flexibility, plan a budget on projected sales, rather than using last year's figures.
2. Specific tasks.
• Base your records on planned marketing goals not just an increase in sales. Example: Target ads to reach special marketing areas and audience such as new home owners, senior citizens, condo owners, ZIP code areas, varied age groups. This method requires added effort and costs for collecting audience and media data. But, you will have more accurate records for targeting your ads.
3. Growth allowance.
• Regardless of your budget method, set aside some amount for special ads or promotions to spur sales growth if and when needed. Call it a business growth expenditure.
Once you have an advertising and promotion plan, with budget and schedule, stick to it. Keep changing insertion or ads and you probably will waste money. Long-range, you can't determine what will work and what won't.
Here are the major categories that most retailers, large and small, set up in their schedule sheets and computers.
1. Sales and marketing objectives, usually yearly or six-month intervals.
2. Total yearly budget, by month and quarters. Most include a contingency amount for unscheduled items, as noted above.
3. Advertising schedules and expenses by month.
• Newspapers, radio and television-Insertion dates, name or brief description of ad or commercials, frequencies, costs for creative and production.
• Direct mail-Invoice enclosures, folders, cards, newsletters, etc. by mail dates, product and mailing costs.
• Directories-Yellow pages and specials, usually with yearly costs.
• Publicity releases-Dates of release with preparation and mailing costs.
• Special promotions-By month and costs.
• Unscheduled advertisements or promotions-By month and costs.
• Miscellaneous-Model homes, consumer clinics or seminars, coupons, samples, contests, etc.
• Space to evaluate results and to compare against marketing objectives.
What to Budget?
Any budget you use should allow some flexibility to meet changing conditions. Most small business owners include the following:
• All paid media advertisements and commercials
Local newspapers Radio time Directories Newspapers inserts Shopper guides Television time Direct mail materials Local magazine ads Production costs and creative for the above items.
• Many retailers also include various of the following:
Samples Publicity materials Videotapes Catalogs Photographs and prints Consumers information booklets and folders Advertising specialties (gifts and premiums) Production costs for the above
• Some budgets add gray area items as:
Point-of-purchase materials Sales portfolios Instruction sheets Clinics and seminars Business cards Home show participation Telemarketing Market research Community good will activities Social and business memberships
Keep your records as accurately as possible. You'll need them for business and tax reasons; also to determine which ads, commercials, promotions and other activities are worth repeating.
John J. Lichty is a consultant and senior editor for Draperies & Window Coverings magazine. He has more than 30 years experience in the planning and administration of
various consumer, trade and retail advertising programs.