Marketing is more critical than you know

YOU'RE a company executive. Business isn't what it was in the boom time of 1999. You want to trim your budget. You take a look at your expenses and conclude immediately that the most expendable item is advertising/marketing, so you scale back.

You have made a very big mistake.

“Companies that do it suffer the hardest,” said Bill Kunkelman, president of Crowe Marketing in Reading, Pennsylvania, and a former vice president of marketing for the Morgan Corp. “You're cutting off your nose to spite your sales curve. It's a proven fact. Sales increases follow ad increases. They don't precede it. Sales declines follow ad cutbacks.

“Whatever advertising you do — even if it's matchbook covers, shirts, and caps — if you're doing as much as the overall average of your competitors or a little more, over an average of four years, you will see a greater increase in your sales than they will. That's a proven fact. And if you're less than the average, you'll see a sales decrease and you'll lose market share.”

Kunkleman's presentation, “Increase Distributor Sales Through Targeted Marketing,” took the audience through the language of marketing and provided a strategy to improve marketing by using a variety of innovative channels.

He said no one can control the economy. What can be controlled is the quality of a company's marketing efforts.

He said there's an old adage: Nothing happens until somebody sells something … but a lot happens before somebody buys something.

What the buyer does

In the buying process, a buyer:

  • Recognizes and defines a need.

    “For example, ‘I need a truck,’ ” he said. “The big fleets are consolidating. They are looking at miles, freight times, and what the consumers are buying. They're very interested in planning ahead, because you can't buy 500 trucks like that. But the individual — the local farm, the local business, the local trucking company — is more interested in the feeling in his gut. What is he seeing? Does he need to plan ahead for equipment? What's the lead time? Is it a good time to buy? It's been a traditional process, and you have the opportunity for a lot of interaction.”

  • Collects information.

  • Investigates alternatives and evaluates options.

  • Executes a decision: somebody sells something.

    “The market is over there — that's your customer,” he said. “To some people, it seems obvious: ‘We know how to get there. We'll go sell.’ It's not simple. How do you get there? Marketing is everything. You need to get from your role as manufacturer or distributor to the customer, to your market.”

What marketing achieves:

  • Conception: create a product and features.

    “It could be better steel, lighter aluminum, longer warranty, safety switches, more cubic capacity,” he said. “Maybe you come up with a coin-operated manure spreader. Not very practical, but it's a new idea.”

    Kunkelman said he read a report in which a group of scientists, educators, journalists, mathematicians, and engineers got together and discussed the state of world technology. They published a voluminous report, concluding that there was “absolutely nothing left to invent, that everything worth having had already been invented.” The year? 1902.

    “So when you talk about what's available to you,” he said, “there are all kinds of new ideas: adapting your current product, adding new features, making it work better.”

  • Pricing: establish value.

    “Marketing helps a fair market value that both the buyer and seller can agree upon.”

  • Promotion: influence your market.

    “You've got to tell people about your product — features, benefits — and in a way they understand,” he said, “and you've got to talk to the people who give a darn about what you have to say.”

  • Distribution: move goods.

    “Why is there a Ford dealer in nearly every town?” he said. “Why is there a pharmacy on every corner? Because you're bringing the product to the people who need it. If you have sub-dealers in certain geographic areas, you're recognizing the role of distribution. We want to get out there and bring it to the people. Marketing does it.”

    He said that when the state of Pennsylvania put scratch-off lotto tickets in stores and vending machines, sales skyrocketed because it became an impulse buy.

    “If you were a national manufacturer of snowplows and you elected to have only one dealer, you would not have very good distribution,” he said. “You have to find a need, find who needs the need — or create a need, like Bill Gates did — and then fill that need.”

Targeting

Who's going to buy the product? You have to define the buyer, and that is done by targeting.

“If you don't target, you're wasting your time and money,” he said. “Is there anybody here who doesn't want to make money? Well, when you have to sell a product and make money, and you have limited funds to use, you have to advertise and promote in a way that recognizes targeting. You can't afford to buy two pages in the Wall Street Journal to advertise a snowplow. You're going to do niche marketing in little specks.”

Ways to get there:

  • Public relations.

    “It's a company's communications and relationships with various publics. Publics? Plural? Your community and customers are your public. But so are your stockholders, customers, employees, society, supplier, government.”

    He said a good example of bad PR was Met Ed's reaction to the crisis at Three Mile Island Nuclear Station in 1979.

    “Met Ed was telling everybody Three Mile Island was not going to melt down, that it was under control and we had no problems,” he said. “There was a planned and well-executed program of public misinformation. But we came this far from a meltdown — one that probably would have killed 1.5 to 2 million people, and the area from Harrisburg to Philadelphia would have not been inhabitable for decades and generations beyond that.”

    He said a good example of good PR was Perrier's reaction to the discovery of benzene in its water in 1990.

    “Rather than go, ‘Don't tell anybody,’ they jumped to the public and said, ‘We made an error and we will pull all of the water from the shelves, and we will not resume selling until it's perfect and we can certify it. When they solved the problem, they got back to the public with broad-based information. Not only did sales get back up to where they were, but they went well beyond that.”

  • Sales promotion.

    “These are things that stimulate the consumer/dealer to purchase, other than personal selling, advertising, and publicity. You think to yourself, ‘What's left?’ What's left are trade shows, samples, working demonstrations, displays, literature, premiums, coupons, contests, demos. They're attention-getters.”

  • Advertising.

    “It's communication to inform or persuade a particular target audience. It's paid, non-personal, and the producer is identified.”

Media

The various advertising media:

  • Broadcast: radio and TV.

    “If I were to buy a 30-second TV spot on the 5 O'clock news in Philadelphia, depending on my buy and how much and how often, I might expect to pay $1,000, $1,500, even $5,000 for that commercial. I also have to product it. But on a cable network — highly targeted to suburban audience or only sections of the county — I can buy a network that fits my demographics. I buy 30-second commercials in Pennsylvania for as little as $15 or $20 a spot.”

  • Print: newspaper, magazine.

    “Magazines have greater opportunity for you — consumer publications or trade publications. There are more than 5,000 major b-to-b publications in the US. Everybody says, ‘Well, the internet is going to put an end to publishing. We're going to end up having a paperless society.’ Well, I went to a luncheon where the speaker talked about the paperless society. She observed that in the last two years, that topic — the paperless society — had given rise to 35 new publications. I get 168 trade publications — everything from Trailer/Body Builders to Hog Farmer — because I have clients in those markets. And there are some amazingly effective local publications that cover a couple of counties.”

  • Direct mail.

    “I don't recommend it unless you have a very finely tuned targeted list of prospects you're going to mail to. A mailer has to be hard-hitting, and it's expensive to get out there.”

  • Outdoor: billboards.

    “A rule of thumb: six seconds, eight words. Most billboards allow you to see a message for six to eight seconds. They can only read and absorb a certain number of words. So if you do go for it, make them hard-hitting and succinct.”

  • Point of sale.

    Do you have a showroom, a literature rack, a sign that lists specials of the week?

    “You should,” he said, “because you have a captive audience. They're there for a reason, even if they're only passing through.”

Advertising

Tips for better advertising:

  • Use clean, clear, uncluttered information.

  • Buy as big an ad as you can.

    “Space sells. People call me and say, ‘I want to run a one-column, 4"-deep ad in a newspaper, and I want to list 26 pieces of used equipment, and can we get a couple of pictures in there, and don't forget that I have an address and e-mail?’ You kidding me? You'd need a magnifying glass to see the result.” He said that because of newspaper advertising rates, it might be more productive to buy 75 commercials on cable TV than a one-time newspaper ad.

  • Use color.

  • Present features and benefits of your product.

    “They don't want to know about you. And don't overstate them. You're in the b-to-b world. You don't have to sell beer with frogs — or flatulent horses. You can talk about the real products and real features and real benefits of what you sell.

    “Don't use hyperbole or exaggerate. If you've got good stuff, it will sell itself when you tell people what it does.

    He said advertising's effectiveness depends on frequency and reinforcement.

    He said that out of 150 people surveyed after seeing an ad that ran three times, 81 remembered seeing it. But when that frequency doubled to six times — based on six insertions or six times — 40% more people recalled seeing it.

    “The competitive edge always goes to the frequent advertiser,” he said, “because buyers are more likely to make a decision or choose a supplier based on that recall.”

    He said that publications are by far the most effective form, reaching 95%, compared to trade shows (41%), sales people (34%), catalogs (25%), direct mail (23%), and directories (15%).

    “You need to look at good, solid trade publications with the distribution and audience you're looking for,” he said. “When people pick up a magazine and they only see you once, there's still an opportunity for multiple exposures. Sixty-five percent of the first time through, people see your ad. But every person goes through it two or three times. By the time they've done it three times, 85% have seen your ad — another good reason to be in print, because you can't play back the radio and TV commercials. But that printed piece is there.”

Internet

He said the Internet isn't a business tool, it's a survival tool.

“You have to know how to use it,” he said. “Ten years ago, 86% of buyers you sell to initiated contact themselves. They picked up the phone or wrote for literature. Not today. 1995: 98% of buyers were satisfied with phone interaction. 2002: 93% visit Web sites versus making phone contact.

“The buyer's going to come to you. He loves the anonymity of the Internet. It's quick and he doesn't have to hassle with your sales people. He can, at his leisure, go to your site and get all the information he wants. He can short-circuit the traditional buying process. Only when he's ready to buy does he need to talk to you. He can get competing quotes, specifications, investigate other types of equipment.

“You have to remember e-business is more than e-commerce, because you have to use the Web to build customer relationships. I know people who have automated response mechanisms for their e-mail. Somebody e-mails their site and says, ‘I want more information.' As soon as he hits the button to submit, back to him comes, ‘Thanks for inquiring.’ They're acknowledging who you are.”

He said companies need to build features into their Web site to promulgate their businesses and restore customer relationships. Have a news site, inform them of available specials.

“If you remember nothing else about the Internet, remember three words: content is king,” he said. “People want to get real cute with their Web sites, add flash and animation. There are three or four screens of this before they get to anything the customer is looking for. A rule of thumb with Web sites: Gone in eight seconds. That's about how long it takes to lose people if you're not good enough to keep them.

“People say, ‘I got 1,000 hits.’ That's nothing. That's like passing cars on the road. We want to talk about how many spent time on your site. How many perused everything? When you create navigation, nothing should be more than three clicks away from the home page — not more than three layers deep.”

Oh, and one more thing: Get an expert to do it.

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