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ake a look around your community and make a list of truly superior small businesses—ones you trust so thoroughly you would recommend them to your friends, your boss and even your in-laws. Whether your mind turns to restaurants, plumbers, plant nurseries or veterinarians, chances are good your list is fairly short. Now think about all the ads for local businesses that fill your newspaper, clutter your doorstep, spew out of your radio, cover the back of your grocery receipts or reach you in dozens of other ways. How many of these businesses are on your list? More than likely, not many. In fact, I’ll bet the most heavily advertised local businesses are among the businesses you never plan to patronize—or patronize again—no matter how many 50%-off specials you are offered. If, like me, you have learned the hard way that many businesses that loudly trumpet their virtues are barely average, how do you find a top-quality business when you need something? Almost surely,
Marketing Without Advertising by Michael Phillips & Salli Rasberry edited by Peri Pakroo 3rd edition About Nolo Have a legal question? Chances are Nolo can help you answer it, both in print and online. For three decades, Nolo's mission has been to help people solve their legal problems with confidence, a minimum of fuss and expense, and—whenever possible—without a lawyer. Over the years, we’ve offered every tool available to help you get the job done. In the 70s, we began publishing practical, plain-English books containing all the forms and step-by-step instructions necessary to tackle day-to-day legal tasks. In the 80s, when personal computers took the world by storm, we got to work and developed programs such as WillMaker and Living Trust Maker, which took advantage of the speed and convenience of all those bits and bytes. We also added form-packed disks and CDs to many of our books. Then the Internet exploded in the 90s. 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No book, software or other published material is a substitute for personalized advice from a knowledgeable lawyer licensed to practice law in your state. Marketing Without Advertising by Michael Phillips & Salli Rasberry edited by Peri Pakroo 3rd edition Keeping Up-to-Date To keep its books up-to-date, Nolo issues new printings and new editions periodi- cally. New printings reflect minor legal changes and technical corrections. New edi- tions contain major legal changes, major text additions or major reorganizations. To find out if a later printing or edition of any Nolo book is available, call Nolo at 510- 549-1976 or check our website at http://www.nolo.com. To stay current, follow the “Update” service at our website at http://www.nolo.com/ update. In another effort to help you use Nolo’s latest materials, we offer a 35% dis- count off the purchase of the new edition of your Nolo book when you turn in the cover of an earlier edition. (See the “Special Upgrade Offer” in the back of the book.) This book was last revised in: April 2001. THIRD Edition APRIL 2001 Editor PERI PAKROO Cover Design TONI IHARA Book Design TERRI HEARSH Production SARAH HINMAN Proofreading SHERYL ROSE Index NANCY MULVANY Printing BERTELSMANN SERVICES, INC. Phillips, Michael, 1938- Marketing without advertising / by Michael Phillips & Salli Rasberry.--3rd ed. p. cm. Includes index. ISBN 0-87337-608-0 1. Marketing. 2. Small business--Management. I. Rasberry, Salli. II. Title. HF5415 .P484 2000 658.8--dc21 00-056863 Copyright © 1986, 1997 and 2001 by Michael Phillips and Salli Rasberry. ALL RIGHTS RESERVED. Printed in the U.S.A. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission. Reproduction prohibitions do not apply to the forms contained in this product when reproduced for personal use. For information on bulk purchases or corporate premium sales, please contact the Special Sales Department. For academic sales or textbook adoptions, ask for Academic Sales. Call 800-955-4775 or write to Nolo, 950 Parker Street, Berkeley, CA 94710. Acknowledgments With special thanks to Soni Richardson and Michael Eschenbach, Daniel Phillips, Tom Hargadon and Mary Reid. Full Disclosure Note All the businesses and business owners mentioned in the book are real. The great majority operate under their own names in the cities indicated. However, because some of our examples are less than flattering, and for other reasons, including pri- vacy, we have changed the names and/or locations of businesses in a few cases. In some cases, the businesses used as examples in the book do advertise—their marketing ideas are so good we included them anyway. In most cases, if a business used as an example does advertise, it is a small part of their marketing mix. Table of Contents 1 Advertising: The Last Choice in Marketing A. The Myth of Advertising’s Effectiveness . 1/3 B. Why Customers Lured by Ads Are Often Not Loyal . 1/8 C. Why Dependence on Advertising Is Harmful 1/8 D. Advertisers: Poor Company to Keep 1/9 E. Honest Ads . 1/12 F. Branding . 1/14 G. Listings: “Advertising” That Works . 1/15 2 Personal Recommendations: The First Choice in Marketing A. Cost-Effectiveness . 2/2 B. Overcoming Established Buying Habits 2/4 C. Basing Your Marketing Plan on Personal Recommendations . 2/5 D. When Not to Rely on Word of Mouth for Marketing . 2/7 3 The Physical Appearance of Your Business A. Conforming to Industry Norms 3/2 B. Fantasy: A Growing Part of Retail Marketing . 3/5 C. Evaluating Your Business’s Physical Appearance 3/11 4 Pricing A. Straightforward and Easy-to-Understand Prices . 4/2 B. Complete Prices 4/3 C. Giving Customers Reasonable Control Over the Price 4/6 D. Internet Pricing . 4/9 5 The Treatment of People Around You A. Tracking Reputations via the Grapevine 5/2 B. How Employees Spread the Word . 5/3 C. Common Employee Complaints 5/7 D. Handling Employee Complaints 5/9 E. Finding Out What Employees Are Thinking . 5/11 F. Suppliers . 5/13 G. Business Friends and Acquaintances . 5/17 H. Individuals Who Spread Negative Word of Mouth About Your Business 5/19 I. Your Behavior in Public 5/20 6 Openness: The Basis of Trust A. Financial Openness 6/3 B. Physical Openness 6/5 C. Openness in Management 6/6 D. Openness With Information 6/8 E. Openness With Ideas 6/11 [...]... Your Marketing Plan A Your Marketing List: The “Who” of Your Marketing Plan 12/2 B How to Evaluate Your List 12/3 C Marketing Actions and Events: The “What” of Your Marketing Plan 12/5 D Direct Marketing Actions 12/7 E Parallel Marketing Actions 12/15 F Peer-Based Marketing Actions 12/21 13 The Last Step: Creating a Calendar of Events A Marketing Calendar for an Interior... taken over by another broker at fire sale prices Similarly, the huge but little-known agricultural processing company Archer Daniels Midland, headquartered in rural Illinois, made itself a household name by underwriting public REPRINTED BY PERMISSION: TRIBUNE MEDIA SERVICES 1/8 MARKETING WITHOUT ADVERTISING advertising is wasted, and the trouble is, I don’t know which half.” B Why Customers Lured by Ads... your advertising for you Ralph Warner Berkeley, California Chapter 1 Advertising: The Last Choice in Marketing A The Myth of Advertising s Effectiveness 1/3 B Why Customers Lured by Ads Are Often Not Loyal 1/8 C Why Dependence on Advertising Is Harmful 1/8 D Advertisers: Poor Company to Keep 1/9 E Honest Ads 1/12 F Branding 1/14 G Listings: Advertising ... consider advertising useful at less than 19% We think most of them don’t need it either There are four main reasons why advertising is inappropriate for most businesses: • Advertising is simply not cost-effective Claims that it produces even marginal financial returns are usually fallacious • Customers lured by ads tend to be disloyal In other words, advertising ADVERTISING: THE LAST CHOICE IN MARKETINGS... magazine, advertising budgets have doubled every decade since 1976 and grown by 50% in the last ten years “Companies now spend about $162 billion each year to bombard us with print 1/4 MARKETING WITHOUT ADVERTISING and broadcast ads; that works out to about $623 for every man, woman and child in the United States” ( Marketing Madness,” May/June 1996) Information Resources studied the effect of advertising. .. well-entrenched that it is almost impossible to shake.” 1/6 MARKETING WITHOUT ADVERTISING ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 7 Using advertising to make your business television programs The public was well a household word can often backfire; a acquainted with “ADM, Supermarket to the business with a well-advertised name is World,” by the time it became embroiled extremely vulnerable to bad... on advertising, it’s far better to spend the same money improving your business and caring for customers It’s the honest power of this honest message that made me excited to publish Marketing Without Advertising ten years ago Uniquely among small business writers, Phillips and Rasberry were saying the same things I had learned as a co-founder of Nolo that the key to operating a prof- I/2 MARKETING WITHOUT. .. E Honest Ads Lest you become completely discouraged about the possibility of a better standard of honesty in advertising, there is hope At least two nations, Japan and Sweden, encourage honesty in their advertising In ADVERTISING: THE LAST CHOICE IN MARKETINGS 1/ 1 3 1/14 MARKETING WITHOUT ADVERTISING neither country do ads have “fine print” that contradicts the main message, nor do they permit the... For Toys ’R’ Us, decades of advertis- ADVERTISING: THE LAST CHOICE IN MARKETINGS ing simply had no staying power (March 20, 2000, The Industry Standard) One of the biggest successes on the Internet, eBay, used no advertising at all One magazine with a significant audience on the Internet is Consumer Reports, a magazine that carries no advertising By eliminating advertising from its business model, Consumer... of Advertising s Effectiveness The argument made by the proponents of advertising is almost pathetically simpleminded: If you can measure the benefits of advertising on your business, advertising works; if you can’t measure the beneficial effects, then your measurements aren’t good enough Or you need more ads Or you need a different type of ad It’s much the same type of rationalization put forth by