Joe's Redhots, a hotdog cart selling to office workers, wanted to use popular media such as TV, radio, and newspapers to advertise, along with promotional free product samples and coupons. Joe learned from his suppliers that his competitors in the downtown office area were spending little or no money to promote and advertise their cart luncheon business. He estimated that the most successful hot dog cart spent 5 percent of net sales revenue for promotion and advertising. Joe decided to spend at least 10 percent of his net sales during the first year.

In order for your business to succeed, you generally need to promote your products or services to the same buyers that your competitors are targeting. Even if your business is one-of-a-kind, you still need to tell target buyers that your business exists with some kind of advertising or promotional communication. Public relations (PR) activities are another way to promote the image or reputation of your product. PR is similar to promotion and advertising, but can be more indirect, since some or all of the publicity a company's products and services receive from public relations activities may not be controlled by the company.

A small business positioning strategy statement can be as simple as a one-page document that will act as a guideline to measure the consistency of all marketing programs.

Whatever you're selling, you'll need to communicate about it with your target buyers. Most businesses find that they need all three components of marketing communications (promotion, advertising, and public relations), in some combination. But how do you narrow down the available choices and build a communications program that makes sense? Here's how:

In some cases, a small business can pursue distribution into several different channels. However, most small businesses must prioritize distribution channel and sales force options over several years of growth and evolving resources for the company. For example, food supplements and vitamins are sold through a multitude of channels, including:

For a single small store with direct sales to buyers/end users, going through the exercise of deciding on appropriate distribution and sales force choices may yield new sales and volume gains. For example, Teddy Bear's Flower Shop research finds that most of its customers are located within a radius of a half to one mile of the flower shop.

Distribution systems may evolve over time as a business grows and changes. Consider a small one-store family restaurant named Alice's, with delicious, unique, homemade salad dressings (e.g., Pomegranate Vinaigrette, Rum-Raisin-Orange Ranch, Blue Cheese Catalina). Initially, the dressings were only available to customers eating at Alice's. Then customers begin requesting bottles to buy. Initial sales and distribution of Alice's Salad Dressings were from the restaurant to walk-in customers. The product was packaged in a 32-ounce canning jar with a handmade label.

Our independent architect who specializes in designing residential homes, Life Designs, has a strengths, weaknesses, opportunities, and threats (SWOT) list that includes:

A small company must work harder at focusing limited resources, especially with distribution and sales force options. In some cases, the only sales force option is for the owner to do it himself or herself, as in a small retail shop, or consulting/service businesses.

Obviously, financial resources and cost-effectiveness are important in considering distribution and sales force options. What can you afford, and what will give you the most bang for your buck?

Small businesses may face a particular difficulty in identifying their directly competitive selling channels, not usually in identifying where target buyers buy competitive products.

Strength and weakness analysis is an internal company exercise to gauge your ability to compete effectively. Opportunity and threat analysis is an external exercise centered on competitors and the external environment that affect a company's ability to compete effectively. Taken together, they are referred to as SWOT analysis.

Once you have selected and developed a unique product or business idea, correctly positioned and targeted it to buyers, and developed your packaging and pricing, the selection of distribution channels and sales representation is key to successful marketing.

Whole Planet Beverages, Inc., wants to determine the correct product pricing for a new 12-ounce bottled flavored tea beverage distributed through DSD (Direct Store Delivery) distributors. The optimum price will:

In addition to the primary goal of making money, a company can have many different pricing objectives and strategies. Larger companies may utilize product pricing in a predatory or defensive fashion, to attack or defend against a competitor.

Final pricing levels for products should have flexibility for both increases and discounts to customers. Price increases may be inevitable because of component, ingredient, and processing cost increases. The market may or may not absorb price increases without decreasing volume effects.

The probability of significant sales volume differences at different prices depends upon the price elasticity of the market and number of similar competitors.

Retailers and wholesalers need to consider the issue of markups in their pricing structure, and manufacturers or other product producers need to be aware of the average markup in their industry.

Consumer goods experts suggest the estimated cost of goods should be no more than 15 percent of the suggested retail price because:

The most common errors in pricing are:

Small businesses may have products that would appeal to many different markets or channels of distribution in a single market. However, when you have limited resources, it's often best to select a single distribution channel or a limited number of distribution channels that offer:

Many product categories have significant evolution and life cycles that may affect pricing decisions.

The closer your product resembles competitive products, the smaller the price differences that buyers will tolerate. And the closer the product differences between brands, the greater the probability is that the category is price-elastic, and that brand-switching will occur when products go on sale.

If demand for your product or service changes significantly with slight changes in price, the product category is considered to be elastic with respect to price. If no significant volume changes occur, even with significant price changes, the category is inelastic.

A precise definition of your target buyer is key to designing a package that reflects your buyers' values and will attract buyers to it on the shelf, or wherever else your products or services are available. Knowledge of the target buyer's lifestyle as reflected in the buyer's activities, opinions, interests, and demographics can be manifested in the package names, label design, package copy, and other key communication points.