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3rd edition Marketing Without Advertising by Michael Phillips & Salli Rasberry edited by Peri Pakroo About Nolo Have a legal question? Chances are Nolo can help you answer it, both in print aFpnordor obthnlerlmienees .dweitcha dceosn, fNidoelnoc'se ,m a ismsiioninm huams boef efuns tso a hnedl pe xppeeonpslee, saonldv—e twhehiern leevgearl pOIfonoIaansva nrTdtsi edunmhtdMivhardbophfe a loesedl-loewt en tnrh7deo aso—tnm8 e0 vntaft-f 0 e hsdgodalNrywes,lee te aroe,wgsi o itmcoawpttIoaeenlehernloe-f h nts po l pwd'beet,wets -uah wregl bnopychctneagy, r er koilep aawl-k oe’sen intsve,pnlgd e teav reesferep we soixPdaoeoptuonrmytpripd fbsnmiioeiflene nkeolsaraidngans srs.ldns utt teheiceuaid,rnc doidondtunc t no cyhmd scgeoi oop tn vaduappCiniue vocsretruvrarDa h nalte Wioyilloecsev sna ne te trw bnii9itollPserclileon0Mn e ronatsc s oe lcolcpmate,. d eooaopekDsRau vem sclkoenaaaocari cniffy iftrtwni layosyhc aay-n o.on belg cE lfdtfTnl nlho n ooetw oieahrLhgz ai muttioeliorvdwinoa,rs r is scnfgN hilCae htbdk g asht oe obl eTbhnteb llnoeroaaidop yutds totk s cset yisass ktino,r taotyt .es,fMa'o mn-suo wartc rd rosaptbmogh emikue-beeendde,ts ystarte rwat tttame, ty r eitiwhew o nosayal ene.hikoag nnW ggy oiijudncgdoea t t hegitlbc aaro t ta e llutao lemadnod csls gtso teoowohkaoflnfiy kldseunoye .eldtor.,omkur. yDtoaenuocdreh scni moothmlpoirspgo umyvt eeee vraa.onlll vwoeuesr pa cnlaudnr rttehone at I bnpatrneodrdnouenct t ose,u xmrp abankodionskg, swy ioenu wpr rialilnc ctc?oe Asnstb itsnoou letu htteeo l ylra ewndo etths. ieAg nsbest it can be. “America’s leading source of self-help legal (cid:1)(cid:1)(cid:1)(cid:1) information.” —Y ! 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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. 3rd edition Marketing Without Advertising by Michael Phillips & Salli Rasberry edited by Peri Pakroo 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 editions 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: PoorCompanytoKeep....................................................1/9 E. Honest Ads .......................................................................................1/12 F. Branding...........................................................................................1/14 G. Listings: “Advertising” ThatWorks.....................................................1/15 2 Personal Recommendations: The First Choice in Marketing A. Cost-Effectiveness ...............................................................................2/2 B. Overcoming Established Buying Habits ..............................................2/4 C. BasingYour 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 ofRetail 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 viatheGrapevine..............................................5/2 B. How Employees SpreadtheWord.......................................................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