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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... 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 ADVERTISING itable business is to respect what you do and how you do it This means... it’s a double pleasure for Nolo to publish another new edition of Marketing Without Advertising Yes, lots of things about small business marketing have changed in the interim To mention just a few, today many of us routinely use fax machines and e-mail to keep close to our customers, and some of us have learned to use the Internet as an essential marketing tool But some things haven’t changed A trustworthy,... 10/9 11 Marketing on the Internet A The Importance of Passive Internet Marketing 11/3 B Yellow Pages Plus 11/5 C What to Put on Your Site 11/7 D Designing an Internet Site 11/11 E Interactivity and Customer Screening 11/14 F How to Help People Find You Online 11/16 G Active Internet Marketing 11/19 12 Designing and Implementing Your Marketing Plan... personally rewarding business Marketing Without Advertising has been updated to provide a new generation of entrepreneurs with the essential philosophical underpinnings for the development of a successful, low-cost marketing plan not based on advertising But this isn’t just a book about business philosophy It is full of specific suggestions about how to put together a highly effective marketing plan, including... When Not to Rely on Word of Mouth for Marketing 2/7 2/2 MARKETING WITHOUT ADVERTISING “It is the thing you look for, ache for.” —Charles Glenn, Orion Pictures W e hope we have succeeded in getting you to think about the dubious value of advertising for your business, if you hadn’t already independently arrived at this conclusion Now it’s time to talk about a marketing strategy that does work: personal... advertising and a whole lot about marketing We are really the marketing experts for our business because we know it better than anyone else It may surprise you to know how many established small businesses have discovered that they do not need to advertise to prosper A large majority—more than twothirds in the U.S., certainly—of profitable small businesses operate successfully without advertising In this... 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 and concluded, “There is no simple correspondence... explanations without ever considering that the fall-off may be a result of counterproductive advertising Skeptics may claim that you simply can’t sell certain consumer products, beer, for example, without an endless array of mindless TV ads We refer these skeptics to the Anchor Steam Brewing Company of San Francisco, which very profitably sold 103,000 barrels of excellent beer in 1995 without any ad... threshold effects and increasing returns to repetition of ads constitutes a monstrous myth, I believe, but a myth so 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 . 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. 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. Marketing Without Advertising by Michael Phillips & Salli Rasberry edited by Peri Pakroo 3rd edition About Nolo Have a legal question? Chances