8.5 Advertising as part of the communications mix.
“In good times, people want to advertise; in bad times, they have to.
Bruce Barton (1886 – 1967), cofounder of BBDO
8.1 Defining communication
Communication comes so natural to people that we might even forget what it is. Merriam-Webster dictionary defines it as:
“the act or process of using words, sounds, signs, or behaviors to express or exchange information or to express your ideas, thoughts, feelings, etc., to someone else.”
In chapter 1 we used a visual representation of communication. Figure 8.1 shows that in communication it is more than just sending a message to someone, i.e. expressing information. Next to the issue of creating a message that can be sent and received, it is also important to realize that the message will have to result into something, i.e. an exchange occurs. Measuring the feedback tells the sender of the message if the result was obtained. For SMEs this would be to measure if the message has led to more profit (due to “selling more products or services, to more customers, more often, for more money, and at the same time being more efficient”).
Figure 8.1 – graphical representation of communication
8.2 Reasons to communicate
Communication is used for specific reasons, each of which has a specific place in the buying process. Before the actual exchange of a product or service communications are needed to inform and persuade buyers. Buyers might not know about the product or service and SMEs need to let them know that they have a problem and/or the SME has an answer to their problem(s). Sometimes buyers know they have a problem and also who can provide a solution but they need to be persuaded to buy from the SME because of all the competition out there.
Once the exchange has taken place businesses need to keep communicating in order for buyers to remember the company next time they are looking for a similar product or service. Communicating also has to do with frequently reminding buyers of the problem so they come back, this is called reinforcement. Box 8.1 shows some examples of businesses that have recurring customers who might need to be reminded; it is clear that often the service required is of low-interest or unwanted. People only miss the service if it does not work…
Box 8.1
Tuning the piano – Servicing the car – Checkup at the dentist – Checking the boiler and central heating system
8.3 Communication tools
Communication is all about expressing or exchanging information. To do this the entrepreneur can use several tools, although not all tools are used equally. When asked, many people would say that marketing and communication is all about advertising. This is only one of the many tools available. Actually, it might even be the one least used…
The communication tools can be divided into two categories: personal communication tools and non-personal communication tools. Personal means that customers are directly addressed in the communication. Examples of personal tools are personal selling, personalized marketing materials and presence at trade fairs and exhibitions. Non personal tools are the use of Internet (banners and ads), television and radio commercials, printed media, cinema, outdoor media, point-of-sales displays but also the packaging of a product.
Eng and Spickett-Jones (2010: 160/1) found the tools SMEs most use are:
- Personal selling; a sales person (the SME owner?) is in direct contact with a buyer and communicates about the benefits and negotiates the terms of the sale.
- PR and publicity; content and presence in online and offline media that is not paid for by the company.
- Sales promotion; incentives to stimulate sales and that way motivate buyers to buy and pay in the short term.
- Advertising; content in online and offline mass media that is paid for by the company.
- Direct marketing; personalized communication aimed at the buyer. This can done be both online and offline. The difference between advertising and direct marketing lies in addressing the buyer by his name.
- Sponsorships; offering financial or non-financial resources to a person or organization that performs a cultural, sports or other public activity in return for mentioning the business’ name. See figure 8.3.
- Testimonials and writing articles; satisfied customers write about the good products and service of the company or the company writes articles in general and/or specific papers about firm related topics.
Figure 8.3 – difference between advertising (left) and direct marketing (right)
8.4 Word-of-mouth
One of marketing activities the owners of SMEs most mentioned is word-of-mouth [1]marketing. Often what they mean is that they do not do anything and expect (or should we say hope?) that offering a good (“the best”) product or service will automatically lead to satisfied customers who will then talk about the company to their peers.
Word-of-mouth, WOM, is defined as the “informal communication between private parties concerning evaluations of goods and services” (Anderson, 1998: 6) and consists of the recommendation of a product or service to someone else and giving or receiving comments about a product or service. The main issue for entrepreneurs to know is what the characteristics of a message are that becomes talked about and more importantly how to create WOM.
Firstly, WOM occurs all the time. People want to speak to each other and initiate talks without companies telling them what to say. This endogenous WOM is what most SMEs seem to rely on; customers will talk about the company because they offer such a good product or service. It is exogenous WOM, talk about the company designed or engineered by the company, that requires attention (Godes & Mayzlin, 2009: 3).
A company has to understand that people will talk about a product for several reasons, i.e. social reasons (signaling expertise, expressing uniqueness and the desire to converse), emotional reasons (satisfaction or excitement about a product), and functional reasons (asking for or giving information due to complexity). Also the level of involvement about a product and the perceived risk attached to buying or using a product influence people’s willingness to talk about it (Lovett et al., 2013: 6). With exogenous WOM companies only seem to rely on the emotional reasons to exchange information.
In order to create WOM an SME must not only think about ways to tap into the emotional reasons to communicate but the social and functional reasons to talk about the company too. Ways to tap into social reasons are (amongst others):
- Offer a story so people can signal their expertise; often opinion leaders are given information first.
- Give people a “scoop” so they can say they were first to know.
Tapping into functional reasons can be done by:
- Organizing network or user meetings so people can ask other users about the product.
- Facilitating an online discussion board so people can talk to other users.
Lastly, although it might be a no-brainer (for SMEs already rely on this), to tap into people’s tendency to talk for emotional reasons:
- Deliver what is promised (satisfaction)
- Offer more value than people expect (excitement)
Other tools that can be mentioned in the literature are: asking for customer reviews, the use of teaser ads, targeting opinion leaders, creating a novel benefit by product differentiation and explicitly connecting WOM to brand decisions (Lovett et al.: 33).
8.5 Advertising as part of the communications mix.
When asked many entrepreneurs will say that marketing is advertising. This is not true, advertising is part of marketing communications. It is the “activity of telling people about products, events or job vacancies, and making them want to buy the products, go to the events, or apply for the jobs” (COBUILD Dictionary, 2002: 27). SMEs are said to advertise for three reasons, namely to provide for sales leads, to establish sales and to maintain existing relationships (Spickett-Jones & Eng: 16). According to Eng and Spickett-Jones “a typical SME will tend to ‘see’ marketing communications as something they need to do occasionally to boost sales” (Eng & Spickett-Jones, 2010: 162).
Box 8.2 – Using social media as a communications tool
More and more SMEs are using the tools offered by companies like Twitter, Meta (Facebook and Instagram) and Alphabet (Google Search and Google Ads). In the coming years more possibilities will arise like using Tiktok or maybe even playlists and podcasts on Spotify, iTunes etc..
The basic similarity of social media tools is that business owners can set up the campaigns, determine the budgets and monitor the results themselves. The costs of the campaigns are based on results like click-through-rates and the bidding for the keywords by the competition.
Because the SME wants to sell more stuff, to more people, more often, for more money, more efficiently it needs to take three steps into account:
- Improve the campaign; before even testing the company needs to check if the campaign is supportive and consistent with the positioning and segmentation strategy. Then the company can test the campaign to see if the customers understand the campaign and act as presumed.
- Plan the media to be used; the key to media planning is finding the media option that has the highest possibility of generating extra revenues per dollar (or euro) spent.
- Evaluate the campaign; what would revenue have been without the advertising or promotion campaign and what is it now…
Box 8.3 – A/B Testing
When testing, the five characteristics in designing an experiment are:
- The samples should be randomly selected
- Ceteris paribus: hold all other things fixed (measure)
- The results fit the real situation (relevance)
- The experiment precedes the results (causality)
- There must be a comparison group
More information about A/B testing can be found online: A Beginner’s Guide To AB Testing: An Introduction (neilpatel.com)
8.6 Conclusion
All in all communication and advertising go hand in hand. One of the possible ways to communicate is to advertise and advertising is not the only way to communicate. SMEs can use both personal and non-personal methods to express or exchange information. In recent years the use of easily accessible and (relatively) cheap social media have become more popular although the promise of word-of-mouth might be the often used due to the fact that entrepreneurs think they do not have to put in more effort than offering a high quality product or service.
References
Anderson, E. W. (1998). Customer satisfaction and word of mouth. Journal of Service Research, 1(1), 5-17.
Eng, T. Y., & Spickett-Jones, G. (2010). Marketing communications for the SME. Entrepreneurship Marketing: Principles and Practice of SME Marketing, 159.
Godes, D., & Mayzlin, D. (2009). Firm-created word-of-mouth communication: Evidence from a field test. Marketing Science, 28(4), 721-739.
Lovett, M. J., Peres, R., & Shachar, R. (2013). On brands and word of mouth. Journal of Marketing Research, 50(4), 427-444.
Spickett-Jones, J. G. & T.-Y. Eng (2006). SMEs and the Strategic Context for Communication. Journal of Marketing Communications, Vol. 12 (3), p. 225 – 243.
Sweeney, J. C., Soutar, G. N., & Mazzarol, T. (2012). Word of mouth: measuring the power of individual messages. European Journal of Marketing, 46(1/2), 237-257.
[1] Word-of-mouth (WOM) is not to be mistaken with mouth-to-mouth … Mouth-to-mouth is used only when saving someone in need or when marketing yourself towards a third party (often called kissing).