978-0134741086 Chapter 9 Part 1

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SECTION III. LAUNCHING THE BUSINESS

CHAPTER 9. BUILDING A POWERFUL BOOTSTRAP

MARKETING PLAN

Part 1: Learning Objectives

1. Describe the principles of building a bootstrap marketing plan and explain the benefits

of preparing one.

2. Explain how small businesses can pinpoint their target markets.

3. Discuss the role of market research in building a bootstrap marketing plan and outline

the market research process.

4. Describe how a small business can build a competitive edge in the marketplace by

using bootstrap marketing strategies.

Part 2: Class Instruction

Introduction

Creating a solid business model and business plan improves an entrepreneur’s odds of

building a successful company. The business plan captures many of the topics discussed,

and in addition, it includes a concise statement of how an entrepreneur plans to achieve

success in the marketplace. This section focuses on building the marketing plan.

Building a Bootstrap Marketing Plan LO 1

Marketing is the process of creating and delivering desired goods and services to

customers and involves all of the activities associated with winning and retaining loyal

customers.

Bootstrap marketing strategies are unconventional, low-cost, creative techniques – small

companies can wring as much or more “bang” from their marketing bucks. This allows the

required marketing investment to fit the often limited marketing resources of the

organization. It demands creativity, ingenuity, and an understanding of customers’ buying

habits.

Refer to Table 9.1, A Seven-Sentence Bootstrap (Guerrilla) Marketing Strategy.

Tracking trends can be a valuable and affordable way to get a pulse on markets. Faith

Popcorn, a marketing consultant and author, offers tips to help spot significant trends:

 Read as many current publications as possible.

 Watch the top 10 TV shows; they provide indicators of consumers’ attitudes

and values and what they’re going to be buying.

 See the top 10 movies; they also influence consumer behavior.

 Talk to at least 150 customers a year about what they’re buying and why. Find

out what they’re thinking by asking questions such as, “will you buy from us

again?,” and “will you recommend us to your friends?”

 Talk with the 10 smartest people you know.

 Listen to your children or younger siblings. What trends are they tracking?

Then the entrepreneur should list the major trends they have identified and briefly describe

how well their products or services match these trends. Market research is the answer.

How to Conduct Market Research. The goal of market research is to reduce the risks

associated with making business decisions. Conducting market research involves four

steps:

Step 1: Define the objective.

Step 2: Collect the data. Individualized (one-to-one) marketing is a system based

on gathering data on individual customers and developing a marketing program

designed to appeal specifically to their needs, tastes, and preferences.

Two basic methods for collecting data include primary research, data you collect and

analyze yourself, and gathering secondary research, data that have already been

compiled and that are available. Primary research techniques include:

 Customer surveys and questionnaires

 Focus groups

 Social media conversations and monitoring

 Test market

 Daily transactions

 Other ideas – such as a suggestion system for customers and employees.

Secondary research, which is usually less expense to collect than primary data

includes:

 Business directories

 Direct mail lists

 Demographic data

 Census data

 Forecasts

 Market research

 Articles

 Local data

 The Internet. Data mining is a process in which computer software that

uses statistical analysis, database technology, and artificial intelligence finds

hidden patterns, trends, and connections in data so that business owners can

make better marketing decisions and predictions about customers’ behavior.

Step 3: Analyze and interpret data.

Step 4: Draw conclusions and act.

Market research with existing customer is also valuable:

 Identifies your best customers

 Enhances your products and services

 Welcomes customer complaints

 Offers exceptional quality

 Understands your customers’ buying cycle

 Calculates the long-term value of customers

Plotting a Bootstrap Marketing Strategy: How to

Build a Competitive Edge LO 4

A company can establish a competitive edge when customers perceive that one

organization’s products or services are superior to those of its competitors. Successful

entrepreneurs often use the special advantages that flow from their companies’ small size

to build a competitive advantage over their larger rivals.

Bootstrap marketing tactics can be instrumental in building a brand for your business in a

number of ways as long as you always focus on the customer. Focusing on the customer

allows you to optimize your marketing and profitability potential. Refer to Table 9.2,

Bootstrap Marketing Tactics.

The following principles can help business owners create powerful, effective bootstrap

strategies.

 Find a Niche and Fill It. A focus (niche) strategy allows a small company to

maximize the advantages of its size and to compete effectively even in

industries dominated by giants. Focusing on niches that are too small to be

attractive to large companies is a recipe for success.

 Use the Power of Publicity. Publicity is any commercial news covered by the

media that boosts sales but for which a small company does not pay. Examples

include: writing an article, sponsoring an event, involving celebrities, being

interviewed on radio or television, being a speaker at local business and civic

organizations, offering or sponsoring a seminar, writing and sending news

releases to the media, volunteering to service on community and industry

boards and committees, sponsoring a community project or supporting a

nonprofit or charity, and promoting a cause.

 Don’t Just Sell, Entertain. It has become critical to gain word–of–mouth

support via social media; to accomplish this requires that you engage and even

entertain customers. For example, develop creative YouTube videos.

 Strive to Be Unique. Create an image of uniqueness for your business. Refer

to Table 9.3 for suggestions for a retail store.

 Build a Community with Customers. Successful companies can interact with

customers regularly, intentionally, and purposefully to create meaningful,

lasting relationships with them. Company Web sites and social media are

important tools. A good example is Etsy.com.

 Connect with Customers on an Emotional Level. Companies that establish a

deeper relationship with their customers than one based merely on making a

sale have the capacity to be exceptional bootstrap marketers because

customers receive an emotional boost every time they buy from the company.

Create a unique selling proposition (USP), which is a key customer benefit of

a product or service that sets it apart from the competition; it answers the

critical question every customer asks, “What’s in it for me?” Ideally, the USP

will be 10 words or less.

 Create an Identity for Your Business Through Branding. Branding refers to

communicating a company’s USP to its target customers in a consistent and

integrated manner. Refer to Figure 9.2, The Connection Between Branding

and a USP.

 Embrace Social Marketing. Businesses recognize that many of their current

and potential customers use social networking sites and are reaching out to

them with social marketing efforts. Three of the most popular are LinkedIn,

Facebook, and Twitter. Refer to Figure 9.3 Social Media Entrepreneurs Use

as Marketing Tools, and Figure 9.4 Benefits of Social Media Marketing.

 Start a Blog. Tips for a successful blogging strategy include: strive to cultivate

the image of an expert or trusted friend on a topic: be patient; be honest,

balanced, and interesting; post blog entries consistently; ask customers for

feedback; use services such as Google Alerts that scan the Internet for a

company’s name and send email alerts when it finds posts about a company; be

cautious; promote the blog via social media and e-mail.

 Create Online Videos. YouTube reports that visitors view 3 billion videos per

day.

 Host a Special Event. The purpose is to reinforce the company’s brand in

customers’ minds and to connect with your business community. This creates a

forum to allow customer to meet you and others.

 Be Dedicated to Service and Customer Satisfaction. Tips include: consistently

track all social media; respond and take responsibility; the customer is always

right, never be defensive; keep a database of all complaints and suggestions. A

company can achieve stellar customer service and satisfaction by: listen to

customers; define superior service; set standards and measure performance;

examine your company’s service cycle; see customer complaints as a

mechanism for improving customer service; when you create a negative

customer experience, apologize and fix it – fast!; hire the right employees; train

employees to deliver superior service; empowering employees to offer superior

service; treat employees with respect and demonstrate to them how valuable

they are; use technology to provide improved service; reward superior service;

get top managers’ support; give customers an unexpected surprise, and view

customer service as an investment, not an expense.

 Retain Existing Customers. The goal is to form loyal, long-term relationships.

Retaining these customers may be the best investment in the future of a

business. Research indicates that repeat customer spend 67 percent more than

new customers. In addition, attracting new customers can cost seven to nine

times more than keeping an existing customer. Customer experience

management is the process of systematically creating the optimum experience

for customers every time they interact with the company. A focus on the

customer can directly correlate to higher customer retention rates and is based

on the response to these four questions: What are we doing right? How can we

do that even better? What have we done wrong? What can we do in the future?

 Devotion to Quality. Quality goods and services are a prerequisite for survival.

Total quality management (TQM) is the philosophy of producing a high-

quality product or service and achieving quality in every aspect of the business

and its relationship with the customer; the focus is on continuous improvement

in the quality delivered to customers. The key is seeing the world from the

customer’s point of view. The following guidelines will help the firm to build a

reputation for quality: build quality into the process instead of relying on

inspections; foster teamwork; establish long-term ties with select suppliers;

provide managers and employees with needed training; empower workers at al

levels in the organization; get managers’ commitment to the quality

philosophy; rethink the processes used to get the products to customers; be

willing to make changes; reward employees for quality work; develop a

company-wide strategy for constant improvement; back up the quality pledge

with a guarantee.

 Attention to Convenience. Studies show that customers rank convenience at

the top of their purchasing criteria. Successful companies must show that it is

easy for customers to do business with them. Conduct a convenience audit

from the customer’s point of view to get an idea of its ETDBW (Easy To Do

Business With) index: is the business located near your customers? are your

hours suitable for customers, would customers appreciate pickup and delivery

service? are employees trained to handle transactions quickly and politely;?do

employees treat customers with courtesy, do you provide a sufficient number

of checkout stations? are you using technology to enhance shopping? do you

offer extras that make customers’ lives easier? can you bundle some existing

products or services to make it easier for customers? can you adapt existing

products to make them more convenient? do you handle telephone calls

quickly and with a real person?

 Concentrate on Innovation. In order to keep up with changing markets, small

businesses must be innovative. Small businesses are frequently leaders in

innovation even though they may lack resources compared to larger

businesses.

 Emphasize Speed. Technology, particularly the Internet, has changed the pace

of business. To be competitive companies must reduce the time it takes to

develop, design, manufacture, and distribute a product, resulting in reduced

costs, increased quality, and increased market share. Time compression

management (TCM) is a marketing strategy that relies on three principles: (1)

speeding products to market, (2) shortening customer response time in

manufacturing and delivery, and (3) reducing the administrative time required

to fill an order. Companies relying on TCM should do the following:

reengineer the entire process rather than attempt to do the same things in the

same way but only faster; create cross-functional teams and give them the

power to attack and solve problems; set aggressive goals for time reduction

and stick to the schedule; rethink your supply chain; instill speed in the culture;

use technology to find shortcuts; put the Internet to work.

In addition to the text –

The Principles of Customer Experience Management (CEM) address the need to

establish:

 An intimate understanding of each customer’s needs, want preferences, and

peculiarities

 A personal, customer-specific message in marketing, sales, service, and advertising

 A consistent, courteous, and professional treatment by everyone

 A responsive, rapid handing of requests, questions, problems, and complaints

 Helpful information and advice delivered proactively

 The involvement of caring, well-trained people

 Long-term view of the company/customer relationship with an emphasis on

sustaining an ongoing relationship

 Frequent and visible demonstrations of commitment to nurturing this relationship

Consider using You Be the Consultant: “.CO Internet S.A.S.”, You Be the

Consultant: Auto Repair Goes Social”, and/or You Be the Consultant “The Impact

of Second-Mile Service” at this point.

Conclusion

Bootstrap marketing offers entrepreneurs significant benefits to create awareness and

promote their businesses. By using clever, innovative bootstrap marketing strategies, such

as the ones described in this chapter, entrepreneurs can put their companies in the

spotlight and create a special connection with their customers.

Part 3: Chapter Exercises

You Be the Consultant: “.CO Internet S.A.S”

1. How would you envision the marketing of .CO Internet S.A.S. to change now that

it is part of a large corporation? Can large companies effectively take advantage of

bootstrap marketing strategies? Explain. (LO 4) (AACSB: Application of

knowledge)

Even after Neustar’s acquisition of .CO Internet S.A.S, the company’s marketing

shouldn’t change. The only difference is that .CO Internet S.A.S. is no longer a start–up

marketing strategy to build the .CO Internet S.A.S.’s competitive advantage:

 Find a niche and filling it

Chapter 9, Page 145

 Attend to convenience

 Concentration on innovation

 Emphasize speed

2. What steps can the new owner of .CO Internet S.A.S. take to maintain the

brand and continue to build customer recognition of it? Refer to Figure 9.2 on

page 354 and use the table below to do the following:

a. List threshold, performance, and excitement attributes for .CO Internet

S.A.S.

b. Identify “proof points” (reasons for customers to believe in the brand) that

support each of the attributes you list.

Threshold Attributes

Performance Attributes

Excitement Attributes

Specializes in tech start-ups

Believe .co refers to

company, not Columbia

Provide “membership”

Home for innovation

Membership benefits

Threshold Proof Points

Performance Proof Points

Excite Proof Points

GoDaddy commercials

Rapid sales increase

Example of a unique selling proposition: .CO Internet provides an Internet home for

innovative technology companies seeking a unique domain name ending in .co, and who

appreciate special membership benefits.

c. Use the attributes and their proof points to develop a unique selling proposition

for .CO Internet.

Chapter 9, Page 146

service that sets it apart from the competition and answer the critical customer question:

“What’s in it for me?”

Example of a unique selling proposition: .CO Internet provides an Internet home for

innovative technology companies seeking a unique domain name ending in .co, and who

appreciate special membership benefits.

You Be the Consultant: “Auto Repair Goes Social”

1. Identify at least three lessons that entrepreneurs can learn from Victory Auto’s

use of social media. (LO 4) (AACSB: Reflective thinking)

Lessons learned may include:

 A bootstrap marketing plan should accomplish three objectives: pinpoint the

specific target markets the small company will serve; choose marketing

strategy to reach that specific targeted group that has the highest propensity to

buy and be an ongoing customer; determine customer needs and wants through

market research. Target customers must permeate the entire business-

merchandise, music, layout, décor, Web site, and the total experience.

 Connect with Customers on an Emotional Level. Create a unique selling

proposition (USP).

 Create an Identity for Your Business Through Branding.

 Embrace Social Marketing.