Selling on a shoestring - small-business owners and marketing technique

Nation's Business, Nov, 1989 by Nancy Croft Baker

Selling On A Shoestring

When an unemployed Sophia Collier concocted Soho Soda in her kitchen one blistering August day in 1977, she knew the unique product would launch a business.

She also knew that in order to sell her natural soda, she had to learn about marketing--beginning with the basics.

Although she had to do her marketing on a bare-bones budget for years, Collier's American Natural Beverage Co. grew into a multimillion-dollar enterprise.

By defining her market and working with small convenience-store chains, Collier carved a niche in the gourmet-soft-drink industry that would attract takeover offers from the likes of the Seagram beverage company, which recently purchased Collier's firm.

Collier's successful strategy came about more by necessity than by design.

She had no money to put someone on the payroll to distribute her product, and she couldn't negotiate favorable contracts with other distributors, she explains, because she didn't really understand the product herself. So she delivered bottles of her soda from the back of her Jeep--on a budget so tight that she couldn't park at a meter unless it had time remaining on it. And by becoming her own distributor, she learned more about her product than she could have discovered if she had someone else doing the job, she says.

"I recommend for anybody who's going to start a business to sell the product yourself. Get to know your product, understand it," she says. "You hear customers' objections, and it's a way to have personal market research right from the customer."

To survive and expand in today's competitive marketplace, businesses large and small must constantly keep their names before their target markets. Unfortunately, when the economy tightens, marketing is typically one of the first business expenses to be trimmed. It is when times are tight, however, that savvy marketing is most critical.

Collier and dozens of other entrepreneurs, small-business owners, and association marketing managers share their secrets to marketing success on skinny budgets in The Frugal Marketer: Smart Tips for Stretching Your Budget (AMACOM, $15.95). The book was written by J. Donald Weinrauch, a professor of marketing at Tennessee Technological University, in Cookville, and by this author.

Following are some examples--adapted from the book--of how you can compete with big competitors without spending big bucks on marketing.

Setting The Stage: Market Research

Before considering whether to hire an expensive marketing consultant to develop a strategy, a business owner should take a good look at the resources already at hand. Inventory records, customers, employees, suppliers, and competitors are wonderful gauges for demographic trends, and they are good sources of feedback on products and service.

Teach employees to be good listeners when customers make a purchase. Encourage employees to ask customers if they have suggestions for improvement, if they would like to see the business offer particular products not already offered, or why they do--or don't--frequent the business.

Some suppliers and vendors offer demographic information to preferred customers as a special service. Subscribing to a news-clipping service to track media coverage on competitors also gives a perspective of how a business is positioned in the marketplace.

Contact a local Small Business Development Institute or Small Business Development Center for free or nominally priced market-research assistance. Small Business Institutes, affiliated with the Small Business Administration, are housed at universities and colleges and provide intensive management assistance by teams of qualified college students in business disciplines. Small Business Development Centers are staffed by professional business volunteers and typically are located in offices of the Service Corps of Retired Executives (SCORE), in chambers of commerce, or in community centers. All are listed in local phone directories.

Always Say Thank You After A Sale

A free yet often-overlooked marketing technique, says Phyllis Miller, a Los Angeles marketing consultant, is thanking the customer after a purchase. "I watched a salesman take money for an entire computer system and not say thank you or escort the customer graciously to the door," she says. If you want to encourage repeat business, reassure customers that they have made a good choice by shopping at your business, and let them know you appreciate their patronage. "It doesn't cost you a penny, and it can increase sales dramatically, since so few marketers do this," says Miller. This personal approach will stand out in a customer's mind.

Make Your Advertising Pay For Itself

When a Midwestern video store wanted to distribute a coupon book within the community, it went to other area businesses for funding. The businesses--even competitors--paid the video store an advertising fee for including their coupons. The video store used the advertising funds to produce a snappy coupon booklet imprinted with its logo. The booklet also was designed to hang conveniently on a doorknob as a reminder to the customer that it should be taken along on shopping trips. Participating stores received inexpensive advertising, and the video store paid no production expenses. Other businesses have used the same technique with calendars and other items used frequently by customers.