How Small Businesses Use Promotion Strategies to Increase Customer Awareness and Boost Sales

Small businesses (SMEs) with limited budgets and resources have to make strategic choices on promotion – that is, how to raise customer awareness of their products and services. Advertising, sales promotions, direct marketing, personal selling are all methods to raise brand and product familiarity within a target market.

Promotion activity involves using advertising and other marketing techniques to sell products. This article looks at how SMEs put together an effective promotional mix by combining these methods to spread their message and provide a reasonable return on investment (ROI).

Advertising (called an “above the line” form of promotion) can be used to increase brand awareness as part of a general publicity campaign. General advertising is non-segmented (i.e. visible to a wide audience, not a specific niche or demographic segment), non-personal, and non-discriminatory. We live in an age of overt advertising -from billboards, internet banners, television and newspapers, businesses pay for these general messages in the hope that the mass coverage will convert to sales.

For SMEs, advertising ROI is an important consideration. While advertising always leads to an increase in businesses’ costs, a corresponding level of increase in revenue and profits isn’t guaranteed. As adverts are seen or heard by a wide number of people, many of whom have no need or interest in your product or services, the ROI can be relatively low.

For SMEs owners and managers, local advertising (radio, newspapers, or community website) will have a greater impact if the messages are tightly controlled and targeted to a group who is likely to be listening, reading or browsing. Knowing when their target market is listening to local radio, or what page of the local newspaper they are likely to read, or whether they are internet savvy enough to visit the community website, will help craft an advertisement which has stronger impact than a more generic message.

Many SMEs prefer to use direct marketing to reach their markets as it can be highly targeted to reach specific niches and segments. Using methods such as mail shots or emails, businesses can provide individuals with opportunities to take up sales promotions or other calls-to-action.

Sales promotions encourage customers to buy based on a series of prompts which are usually emotional. Using deadlines encourages prompt action as people are afraid to miss out on a good deal. Buy One Get One Free (BOGOF) or 2-for-1 offers, gifts, free samples, and discount coupons stimulate a sense of getting good value or getting something for nothing (at someone else’s expense). Competitions appeal to customers’ gambling instincts which put hope & faith in imminent good fortune.

As with all businesses, SMEs need to cost their promotions properly – many are tempted to offer sales promotions to draw in customers or to keep up with their competitors without considering the impact on their margins. They also need to ensure that their offer is of relevance and value to their target market. If the product or service doesn’t align with their target markets desires or needs, the sales promotion will not be of taken up however generous the incentive.

Sales promotion messages are distributed in a variety of channels and formats from point-of-sale displays, advertising or direct marketing. These prompts are also used in personal selling, which is another component of the marketing mix. Personal selling or 1:1 selling relies on face-to-face communication as opposed to indirect methods like advertising.

1:1 selling is one of the most effective ways of closing a sales and generating an income. Using the other elements of the promotional mix to raise awareness and drive prospective customers to sales personnel can offer the best ROI for SMEs. Using staff who are trained to convert queries into sales, source new markets and develop them, or to develop long-term relationships with clients, can offer a far higher return than other promotional elements.

The higher the value of the product or service being offered, the greater the need for employing a sales person or agent to make direct contact with customers. Before people are willing to invest their money in high-ticket purchases, they need to feel the “know, like, and trust” factor. They need to know more of the business’ integrity and reputation, they need to know what other buyers feel about it (social proof), and they need to have their objections and queries answered.

Ultimately there is no “one-size-fits-all” combination of the promotional mix. What will suit one SME business will not necessary reflect the needs or direction of another. The combination of promotional elements selected needs to take into account several factors including: available resources and skills, type of product or services, the mind-set, demographics, and life-style of the target market, and the size of the market.

For example, larger businesses might consider national advertising as affordable and appropriate. Smaller firms with limited resources and a local market may instead decide to advertise on local radios and community websites, run an advertorial piece or inserts through a local paper, use door-to-door leaflet drops, posters, and social media platforms to promote their services.

Social media marketing is increasingly used by SMEs to reach their target niche. While the upfront costs might be low, SMEs should always remember the main cost factor in social media marketing is time. Following the principle, “time is money”, small businesses need to apply the same strategic and businesses considerations to online marketing as they do for all other elements of the promotional mix.