NNCO_SMB Starting your small business

Small business and marketing

About this free course

This free course is an adapted extract from the Open University course .

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Contents

- Introduction

- Learning outcomes

- 1 Customers, consumers and clients

- 2 Buying behaviour

- 2.1 Complex buying behaviour

- 2.2 Dissonance-reducing buying behaviour

- 2.3 Habitual buying behaviour

- 2.4 Variety-seeking buying behaviour

- 3 Marketing approaches

- 4 Communicating with customers

- 4.1 Advertising

- 4.2 Sales promotions

- 4.3 Personal selling

- 4.4 Public relations (PR)

- 4.5 E-commerce and m-commerce

- 5 Social media in marketing

- 5.1 Responding to customer use of social media

- 5.2 Using social media

- 6 Working with customers

- 7 Your customers

- 8 Personal reflection

- 9 What you have learned in this section

- Section 2 quiz

- References

- Acknowledgements

- Glossary

Introduction

Welcome to the second section of the Starting your small business course where you will look at the relationships between businesses and customers and explore how a business can attract, and more importantly keep customers. Once completed you will have the opportunity to obtain the ‘Small business and marketing’ badge. This section will take approximately three hours to complete.

In this section, you will:

- look at the customers, consumers and clients in your business

- look at the role of marketing in small businesses

- explore some basic marketing principles and different ways of communicating with customers

- identifying target customers

- work out a suitable marketing approach for your business.

Figure 1  Starting your own small business handbook

View description - Figure 1  Starting your own small business handbook

To help you along the way, there are a number of activities where you can reflect on what you have been learning, and think about how you can apply these new skills and knowledge in practice.

Learning outcomes

By completing this section and the associated quiz, you will be able to:

- describe how a small business could use marketing to attract customers

- identify how social media links small businesses to their customers.

1 Customers, consumers and clients

Any business is totally reliant on the people or businesses who use and pay for the products or services, even social enterprises require money to operate.

The customer:

- is the individual buying from an organisation

- can also be another organisation, for example, when a bookstore buys from a book publisher

- could also be the consumer if the person or organisation uses what has been bought. This is not the case with the bookstore: there the bookstore is the customer of the publishing company and a person buying a book from the bookstore is likely to be the consumer.

Figure 2  Who is the consumer?

View description - Figure 2  Who is the consumer?

Here are two simple examples that highlight the distinction:

- You choose, buy and eat an ice cream. Here you are the customer and consumer.

- Your child chooses and eats an ice cream but you pay for it. Here your child is the consumer and you are the customer.

This short video from John Foster discusses why it is important to pay attention to customers:

Watch the video at YouTube.com.

View transcript - Uncaptioned interactive content

The term ‘client’ is generally associated with the provision of professional services (such as accountancy and legal services). In these contexts, the specific service being provided is normally discussed and agreed between client and provider. While the client has more influence over the specification of the product or service being provided.

If we take the example of one of our case studies, Red Bush Brewery, the customers could be the local shops purchasing the bottles of beer directly from the brewery. (To open the case study in a new tab on a PC, hold down the Ctrl key when clicking.) Local people entering the shop and purchasing the beer from the shop could then be classed as the consumers. Imagine now that Red Bush breweries is approached by a hotel chain that wants them to produce a special beer in hotel branded bottles. The hotel might discuss the taste, size and ingredients in the beer. In this case the hotel is more of a client than a customer.

Activity 1

Allow about 15 minutes

Consider the other mini case studies.

Can you identify the customers, consumers and clients for each of them?

Note your thoughts on this table and then click ‘save and reveal comment’ for some suggestions.

Business

Customer, client, consumer examples

Bike-a-lot

Provide your answer...

JJ Components

Provide your answer...

Mucky Pets

Provide your answer...

Turn-it-round

Provide your answer...

View comment - Activity 1

2 Buying behaviour

Try thinking about customers differently, rather than thinking about them ‘buying’ a product or service, think about them ‘exchanging value’. Customers need to feel that the value they receive is equal to or greater than the value they give.

Watch this short video, where this concept is discussed.

Watch the video at YouTube.com.

Consumers do not all make buying decisions in the same way. Depending on the type of product being bought, consumers may or may not search for different amounts of information on the product beforehand. Consumer behaviour is often explained according to one of the following four types of behaviour:

- complex buying behaviour

- dissonance-reducing buying behaviour

- habitual buying behaviour

- variety-seeking buying behaviour.

Which kind of behaviour consumers engage in depends on how involved they are in a particular purchase. This partly depends on their personality and partly on the kind of purchase being made.

Figure 3  Assael’s four types of buying behaviour

View description - Figure 3  Assael’s four types of buying behaviour

2.1 Complex buying behaviour

Figure 4  Complex buying behaviour

View description - Figure 4  Complex buying behaviour

- Characterised by high consumer involvement and significant differences between brands.

- Tends to occur when a purchase is expensive, risky or purchased infrequently, or when consumers use the product to express themselves.

- Happens rarely, examples include buying a:

- house or flat

- car

- specialised IT equipment

- wedding dress.

Figure 5  Buying a wedding dress is classed as complex buying

View description - Figure 5  Buying a wedding dress is classed as complex buying

In this kind of buying behaviour, consumers are most likely to go through all or most of the stages of the buyer decision process discussed next.

2.2 Dissonance-reducing buying behaviour

Figure 6  Dissonance-reducing buying behaviour

View description - Figure 6  Dissonance-reducing buying behaviour

- Consumers are highly involved in the purchase, but have difficulties determining the differences between brands.

- ‘Dissonance’ can occur if consumers worry afterwards that they may have made the wrong choice. Examples include:

- financial services products, such as insurance or investment

- Consumer will choose such products on the basis of price or convenience and then seek further confirmation, after the purchase, that they made the right choice.

Figure 7  Using recommendations and rankings for services and goods – dissonance-reducing buying

View description - Figure 7  Using recommendations and rankings for services and goods – dissonance-reducing ...

2.3 Habitual buying behaviour

Figure 8  Habitual buying behaviour

View description - Figure 8  Habitual buying behaviour

- Most frequently demonstrated type of buying behaviour.

- Consumers are not very involved in the purchase. Occurs when item is:

- bought very frequently

- does not cost much money

- perceived to have few significant differences between brands.

- Consumers tend to buy the same brand again and again out of habit, but if their particular brand is not available, or if there is a good offer on a competing brand, they may switch quite easily. Examples include:

- household detergents

- soap

- toothpaste.

This is the area where marketers often use promotions to entice consumers.

Figure 9  The same basket, week-in, week-out – habitual buying

View description - Figure 9  The same basket, week-in, week-out – habitual buying

2.4 Variety-seeking buying behaviour

Figure 10  Variety-seeking buying behaviour

View description - Figure 10  Variety-seeking buying behaviour

- Consumers perceive significant differences between brands but are not particularly involved in the purchase.

- Many groceries fall into this category. Examples include:

- different types of biscuit

- bread

- ice-cream.

- Consumers often alternate between different brands for variety.

Figure 11  Trying out a different coffee at the coffee shop – variety-seeking buying

View description - Figure 11  Trying out a different coffee at the coffee shop – variety-seeking bu ...

Activity 2

Allow about 20 minutes

Consider the five mini case studies. (To open the case study in a new tab on a PC, hold down the Ctrl key when clicking.) What sort of consumer buying behaviour would you expect for each of them?

Complete the following table and then click ‘save and reveal comment’ for some thoughts.

Business

Expected consumer buying behaviour

Explanation

Bike-a-lot

Provide your answer...

Provide your answer...

JJ Components

Provide your answer...

Provide your answer...

Mucky Pets

Provide your answer...

Provide your answer...

Red Bush Brewery

Provide your answer...

Provide your answer...

Turn-it-round

Provide your answer...

Provide your answer...

View comment - Activity 2

3 Marketing approaches

Marketing is based on thinking about the business in terms of customer needs and their satisfaction. Marketing differs from selling because:

‘Selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not concerned with the values that the exchange is all about. And it does not, as marketing invariable does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse and satisfy customer needs.’ (Levitt, 1960)

In other words, marketing has less to do with getting customers to pay for your product as it does developing a demand for that product and fulfilling the customer's needs.

In order to understand the nature of marketing it is helpful to consider marketing in a number of different contexts. The basic principles of the marketing concept, i.e. the importance of making customers central to the business’s marketing efforts, apply to virtually all marketing contexts. However, at a slightly more detailed level, there are differences between marketing to consumers and marketing to other organisations.

Figure 12  Marketing

View description - Figure 12  Marketing

Consumer marketing

A ‘consumer market’ refers to individuals and families who buy products and services for their own consumption. This is distinct from business markets, which consist of businesses (and other organisations) who buy goods and services in order to incorporate them into their own production or other organisational processes. Consumer markets therefore exclude all types of buying by organisations. Consumer marketing is perhaps the kind of marketing that most people think of first, when they think of marketing.

Business-to-business marketing

This is where businesses sell to other organisations (not just other businesses, even though that is what it is called). Purchases by organisations account for over half of all economic activity in industrialised countries (Ellis, 2011), even if business-to-consumer marketing is more visible to the general public. Typically, several organisations are involved in producing every product or service sold to a consumer or end-user. An example of this would be farmers selling milk to a dairy, the dairy processes the milk and then sells it to the supermarket. We are starting to see innovations where the middle man is being cut out.

Social marketing

Social marketing is the idea that the tools of marketing can be applied to health and social behaviours. Marketing techniques have been used to shift various behaviours such as exercise, smoking, drinking and drug use (Hastings and Domegan, 2014).

Fundraising

Voluntary sector organisations that depend on donations to carry out their work increasingly use marketing techniques for their fundraising activities. They may conduct market research to find out what motivates those who support particular causes and how best to reach them. And they increasingly provide techniques similar to ‘after sales services’ to let donors know how their funds are being used and what is being achieved with the money.

Activity 3

Allow about 10 minutes

Consider the five case studies and think about which of the forms of marketing you could expect them to undertake based on these descriptions. (To open the case study in a new tab on a PC, hold down the Ctrl key when clicking.)

Show your thoughts by writing the names of the businesses in the boxes below. You should limit the businesses to a maximum of two types of marketing.

Type of marketing

Business

Consumer marketing

Provide your answer...

Business-to-business marketing

Provide your answer...

Social marketing

Provide your answer...

Fundraising

Provide your answer...

View comment - Activity 3

4 Communicating with customers

Businesses need to communicate with customers, Marketing is one term used for this communication. A business essentially needs to give customers either:

- information about the product

- information about the business.

We will now look at five approaches to getting this information through:

- advertising

- sales promotions

- personal selling

- public relations

- e-commerce and m-commerce.

4.1 Advertising

Figure 13  Local sandwich board advertising a takeaway shop

View description - Figure 13  Local sandwich board advertising a takeaway shop

Advertising is carried out at a distance and communicates with a large number of people through a paid media channel. These channels include television and radio, print media such as newspapers or magazines, billboards, leaflet drops, cinema advertising, the internet in the form of advertising banners and pop-ups on websites, sponsored links in search engines, company presence in social media or targeted advertising through text messages to mobile phones.

Online advertising has become an increasingly significant part of the advertising landscape. Consider the popularity of the video sharing platform YouTube. Part of the YouTube business model is to raise revenue through paid-for advertising. Companies can pay for and use different online advertising formats. Display ads are placed next to the video the consumer is trying to watch. In order to watch these videos, the consumer has to click on them. Overlay ads are semi-transparent ads, often in the form of banners, which appear in the lower 20% of the video the consumer is trying to watch. Skippable video ads run before the consumer can watch their chosen video but can be skipped after five seconds. Non-skippable video ads also play before the consumer’s chosen video but cannot be skipped. By placing their advertisement next to or within particular video content, advertisers can target specific consumer groups, e.g. those interested in watching science fiction movies.

4.2 Sales promotions

Figure 14  BOGOF sales approach to increase sales temporarily

View description - Figure 14  BOGOF sales approach to increase sales temporarily

‘Sales promotions’ try to create a temporary increase in sales by offering customers an incentive to buy the product.

Money-based promotions – these are easy to implement and are very common (but therefore don’t generate much excitement). They can give money back to people who would have bought anyway and are expensive:

- cash-back (collect tokens to get refund)

- immediate price reductions at point of sale

- coupons issued online or in printed media.

Product-based promotions are less likely to ‘cheapen’ the product image:

- ‘X % extra free’

- ‘buy one, get one free’

- free samples

- ‘piggy-backing’ with another product: for example, putting a free pack of coffee whitener with a pack of instant coffee.

Gift, prize or merchandise-based promotions:

- gifts in return for proof of purchase (toy received on presentation of a certain number of labels from a product)

- loyalty schemes (the nectar card or stamping card where you get a free item after a set number of visits or purchases)

- competitions or sweepstakes (buying a product entitles you to enter a prize draw).

Sales promotions are often used for lower value items. (If they were used for premium or luxury brands they might ‘cheapen’ the brand image in consumers’ eyes.) They tend to work best as part of a bigger communications campaign, where advertising or public relations activity builds the brand image and sales promotions encourage people to try the product or otherwise boost short-term sales.

4.3 Personal selling

Personal selling can be a very powerful means of marketing, perhaps the most powerful a business has at its disposal. A salesperson who talks personally to a potential customer, finds out about their needs and can explain the benefits of the product, is more likely to be successful in making a sale than any advertising, sales promotion or public relations that the business could use instead. Customers also have the opportunity to ask direct questions about the product. However, a sales force also tends to be the most expensive marketing communications tool for a business. Personal selling is therefore mostly used for expensive or highly technical products that need a lengthy decision-making process.

4.4 Public relations (PR)

Public relations (PR) is about creating a favourable image for the business. It often involves creating and placing favourable news stories. Unlike advertising it is not paid for, but newspapers or other print, television and online media present the story if they think it is of sufficient interest to their audience. This also means that the journalists publicising the story have the freedom to present it in their own way and put their own slant on it. Public relations operate by a number of key routes, including word-of-mouth, press and television news stories, and personal recommendation. Usually PR aims to put a positive image of the business and its products into people’s minds and conversations. Good PR can be more effective than advertising as it is free and thus saves on the promotional budget; it is often more credible in the eyes of consumers and it is more likely to be read or viewed as it is considered news rather than advertising.

One form of word-of-mouth via social media is the consumer ratings facility on hotel booking websites, such as Trip Advisor. Here, consumers can give a particular hotel or restaurant a rating between 1 and 5 stars and can also leave a comment about their impressions of the facilities and the service provided there.

4.5 E-commerce and m-commerce

Figure 15  M-commerce – mobile purchases and payments were approximately 40% of all payments at the end of 2015

View description - Figure 15  M-commerce – mobile purchases and payments were approximately 40% of all ...

Electronic commerce (e-commerce) and mobile commerce (m-commerce) – using the internet and mobile devices or smartphones to do business – are increasingly featured in business today.

Although e-commerce still only represents a relatively small proportion of the world's entire business its importance is growing for many organisations. In 2014 the number of people worldwide who owned a mobile phone for the first time, exceeded the number of people who had access to a desktop computer (ComScore, 2014, cited in Smart Insights, 2015). These channels have enabled the direct distribution of goods and services as companies are able to contact consumers directly via their computers, mobile devices or smartphones.

The ways in which companies conduct their business through e-commerce or m-commerce reflects on their brands; internet-based interactions with consumers are not simply functional transactions, but marketing communications that influence consumers’ perceptions, trust and relationship with companies and their brands. In many cases, internet-based interactions between businesses and consumers replace or supplement the in-store experience.

As well as building long-term relationships with existing customers, businesses need to ensure that potential customers can find them easily online. When consumers use a search engine to seek particular goods or services, where a company appears in the results listing is likely to determine whether or not its website is viewed. How many times have you read to page three or four in the listings on a Google search? Search engine optimisation (SEO) ‘is the process of improving the visibility of a website/web page via unpaid search results’ (Bell Media, 2016). It involves considering how search engines operate and which search engines and search terms target consumers use. Prices can be set by price per click or price per view. This can end up being expensive.

Activity 4

Allow about 10 minutes

Consider the websites of two businesses from which you have purchased something: one you remember as a positive experience and one you remember as a negative experience. Think about the ways in which the site designs affected your experience as a customer and how the companies’ brands are communicated through the websites.

View comment - Activity 4

5 Social media in marketing

Figure 16  The Open University’s social media site

View description - Figure 16  The Open University’s social media site

You are likely to have at least some idea of what social media and social networking websites are and what they do.

Social media has been defined as follows:

‘Websites and applications that enable users to create and share content or to participate in social networking.’ (Oxford Dictionary, 2016).

Some examples of social media you may be familiar with are:

- Facebook

- Instagram

- LinkedIn

- TripAdvisor

- YouTube

- Twitter.

When trying to understand how social media can transform marketing practices, it is useful to start by looking at how consumers use social media. Consumers of different ages, with different social backgrounds and different income levels will use social media in different ways. For a business to be able to target the correct consumers, it will need to understand their behaviour. A small business owner could look for the groups and discussions that are most relevant to the customers most likely to be interested in the product or service (referred to as segmentation in the marketing world) and then focus the effort on these groups (this is commonly referred to as targeting). The idea is to get the most out of the effort used.

You have already learned that marketing can be a two-way process, where consumers play an active part in using products, interpreting and passing on marketing communications, and influencing marketers' actions through their preferences, gathered by marketers through marketing information systems. Digital technology has given consumers an even more active role in certain aspects of marketing.

5.1 Responding to customer use of social media

Social media may be used by both organisations and consumers for listening, gathering information and communicating, and plays an increasingly influential role in consumer decision-making and behaviour.

Figure 17  Surveys provide valuable feedback

View description - Figure 17  Surveys provide valuable feedback

Discussion forums on social media have increased the range of opinions available to consumers about products; rather than just taking account of family and friends’ experiences, consumers are now able to take into account product reviews from large numbers of other consumers online. Such sources of information are particularly powerful when an offering is high involvement, expensive or difficult to assess before purchase, for example, in the case of a holiday or a visit to a restaurant. Consumers vary in their level of engagement with digital technology, according to their personality, demographic characteristics, geographic location and economic status. Even if you do not use social media, you may still have consulted online reviews of books or hotels before purchasing or booking them to reduce the perceived risk involved in buying in situations where it is difficult to evaluate an offering before purchase.

Much of the content on social media is, of course, generated by their users. From the point of view of marketing, social media provides consumers with the opportunity to be creative participants in the marketing process, to varying degrees.

Activity 5

Allow about 15 minutes

Consider a time when a service or product fell short of your expectations.

What was your reaction to this?

Looking at this diagram where does your experience fit?

Now consider the other responses here, think of different examples that could be put in these boxes:

Figure 18  Social media impact of supplier failing to meet customer expectations (adapted from Grégorie et al., 2015)

View description - Figure 18  Social media impact of supplier failing to meet customer expectations ...

This model looks at various responses by a consumer to a service failure. With the level of technology most people have access to, it is rare that when we feel we have received poor service we do nothing.

From a business point of view, the best thing we can do is let them know so that they can take action – ‘direct complaint’.

Businesses value the opportunity to publically correct and error – ‘boasting’.

Obviously they would rather the error was not made public, but that is becoming increasingly rare – ‘do nothing’.

A business is powerless to react to a failure if they do not know about it and it is damaging if consumers complain about the business but do not give them the opportunity to correct the failure – ‘bad-mouthing’.

It is important that a business addresses the failure once it finds out about it. If they do not this leads to a compounded failure.

Consider some of the consumer programmes you may have seen. These programmes exist on the basis of the failure to resolve the complaint. This could be seen as an extreme version of others getting involved and may even contain negative publicity – ‘spite’.

Where a business is in competition with other businesses, then the failures could present the competition with material they can use to further their own ends. Consider some of the political campaigns in the USA and increasingly in the UK.

View comment - Activity 5

5.2 Using social media

There is a variety of online media, but these can be broadly categorised into three types (Corcoran, 2009):

1. owned media (for example, an organisation’s website)

2. paid media (for example, sponsorship and advertising)

3. earned media (for example, word-of-mouth (WOM) and viral)

Table 1  Categories of online media

Media

type

Definition

Examples

The role

Benefits

Challenges

Owned

media

Channel a brand

controls

- Website

- Mobile site

- Blog

- Twitter account

Build for long-term relationships with existing potential customers and earned media

- Control

- Cost efficiency

- Longevity

- Versatility

- Niche audiences

- No guarantees

- Company communication not trusted

- Takes time to scale

- Visibility on search engines

Paid

media

Brand pays to

leverage a

channel

- Display ads

- Paid search

- Sponsorship

Shift from foundation to a catalyst that feeds owned and creates earned media

- In demand

- Immediacy

- Scale

- Control

- Clutter

- Declining

- Poor credibility

Earned

media

When customers

become the

channel.

- Word of mouth

- Buzz

- Viral.

Listen and

respond earned

media is often the

result of well-

coordinated

owned and paid media.

- Most credible

- Key role in most sales

- Transparent and lives on.

- No control

- Can be negative

- Scale

- Hard to measure.

(Corcoran, 2009)

Listen to the first three minutes of this ten-minute audio where A.J. Leon gives examples of businesses successfully using social media to sell.

Video content is not available in this format.

View transcript - Uncaptioned interactive content

Activity 6

Allow about 15 minutes

Now consider the role of social media possibilities for one of the case studies, Bike-a-lot.

Make notes in the following table for each type of media. Then click on ‘save and reveal comment’ to view our thoughts.

Owned media

Provide your answer...

Paid media

Provide your answer...

Earned media

Provide your answer...

View comment - Activity 6

6 Working with customers

Having explored the different ways to attract customers we will now look at how a business tackles the way it wants to approach its customers. We will look at the key questions to ask and use two of the case studies to demonstrate how the choice is made.

The key questions are:

1. Who is the customer?

2. What is the buying behaviour of the customer?

3. What type of marketing should be used?

4. How will the customers be attracted?

5. What forms of social media are appropriate?

6. How can feedback be used to promote the products?

Continuing to look at Bike-a-lot first:

Key question

Answers

Implications

Who is the customer?

The customer may be the trainee or a sponsor of the trainee, possibly a parent.

Bike-a-lot will engage closely with consumers and if the customers are not the consumers, then the relationship between customer and consumer is likely to be very close.

What is the buying behaviour of the customer?

This is likely to be dissonance buying behaviour where customers are buying a relatively low cost service but want to be certain they are getting the best value.

Customers are likely to be swayed significantly by comments and feedback from others.

Personal recommendation is likely to play a big part.

What type of marketing should be used?

This is consumer marketing but may include some social marketing.

Bike-a-lot needs to appeal directly to the consumer, presenting information clearly. The social marketing could be part of national campaigns, raising awareness in general and not directed at the local consumer. Social marketing may result in a degree of ‘earned social media’.

How will the customers be attracted?

Advertising to raise local awareness, some sales promotion and e-commerce.

Customers need to know that the school exists and so the school needs to be visible. Customers are likely to want to gain information and make bookings easily. The business cannot accommodate a full time sales person so e-commerce is essential. PR events such as school and college experiences would raise awareness. Promotions such as discounts for further training or family members could attract loyalty and free taster sessions could remove some of the risk for customers who are undecided on the product or the supplier.

What forms of social media are appropriate?

A Facebook and LinkedIn account to raise the profile of the school. The website is a key point of contact and the social media of consumers is desirable.

The Bike-a-lot website could be used to convey information to future and previous consumers. Information on social events, changes in the law and reviews of equipment could give previous consumers a reason to revisit the site. Encouraging consumers to share information about their experience on the website or their own social media could be helpful.

How can feedback be used to promote the products?

Comments or a ‘stars’ system on the Bike-a-lot website. Registering for a trader rating site.

A feedback section on the website could be included but this carries the possibility of negative feedback.

For consumers to trust the ratings they need to feel the posts are genuine and unedited. Negative feedback should be responded to and not deleted.

Summary

Bike-a-lot provides a service that consumers may use several times but not frequently. A positive experience of training should encourage personal recommendations to family and friends generating a significant amount of business through social media. For potential customers with no direct social links the aim is to raise awareness through PR activities and advertising the name.

Activity 7

Allow about 15 minutes

Having reviewed the questions for Bike-a-lot, you will now answer the same questions for Red Bush Brewery.

Complete the table below and then click ‘save and reveal comment’ for some suggested answers.

Key question

Answers

Implications

Who is the customer?

Provide your answer...

Provide your answer...

What is the buying behaviour of the customer?

Provide your answer...

Provide your answer...

What type of marketing should be used?

Provide your answer...

Provide your answer...

How will the customers be attracted?

Provide your answer...

Provide your answer...

What forms of social media are appropriate?

Provide your answer...

Provide your answer...

How can feedback be used to promote the products?

Provide your answer...

Provide your answer...

Summary

Provide your answer...

View comment - Activity 7

7 Your customers

Figure 19  Applying your learning

View description - Figure 19  Applying your learning

You may now like to take the ideas discussed so far and link them to your own business idea. You can do this through two activities:

- Activity 8: Create your own business case study in a similar format to the example case studies.

- Activity 9: Answer the questions for the case study you created.

Activity 8

Allow about 10 minutes

Creating your own personal case study

Complete the case study information for a business you; have recently started, are thinking of starting or have knowledge of through friends or family.

Name of business

Provide your answer...

Brief description of business and its objectives

Provide your answer...

Staffing of business

Provide your answer...

Business assets

Provide your answer...

Essential skills

Provide your answer...

Mandatory licences or insurance arrangements

Provide your answer...

Expected turnover for year 1, year 2 and year 3

Provide your answer...

To get the most out of this course we encourage you to keep notes on the ideas you have and the activities you complete. These notes could be very useful as you move your business idea.

This particular activity is also used in the other sections of this course and may have already been completed. It is suggested that you use the same ideas for each section, though you may wish to change or develop your ideas as you go through the different sections.

Activity 9

Allow about 20 minutes

Use the personal case study you have developed to answer the questions and suggest how you might approach your customers.

Key question

Answers

Implications

Who is the customer?

Provide your answer...

Provide your answer...

What is the buying behaviour of the customer?

Provide your answer...

Provide your answer...

What type of marketing should be used?

Provide your answer...

Provide your answer...

How will the customers be attracted?

Provide your answer...

Provide your answer...

What forms of social media are appropriate?

Provide your answer...

Provide your answer...

How can feedback be used to promote the products or services?

Provide your answer...

Provide your answer...

Summary

Provide your answer...

8 Personal reflection

Having completed this section we suggest you take a few minutes to reflect on what you have learned so far. You may want to save your answers in this activity (and others in this section) in a separate document for use after the course.

Activity 10

Allow about 10 minutes

Note down your thoughts on the following questions:

What do I now know about starting up a business that I did not know before starting this section?

Provide your answer...

What things did I already know but have been confirmed through this section?

Provide your answer...

What will I now do as a result of studying this section?

Provide your answer...

9 What you have learned in this section

- Customers are the life blood of any business.

- Customers may also be clients and consumers.

- It is important for a business to know who the customers are, where they are and how they decide on what they buy.

- There are different forms of marketing available, some paid and some unpaid. Businesses need to use the most effective form of marketing for their businesses.

- Social media allows customers to give instant feedback, both good and bad. Businesses need to figure out how to use these feedback, even complaints, for the good.

Section 2 quiz

Well done, you have now reached the end of Section 2 of Starting your small business , and it is time to attempt the assessment questions. This is designed to be a fun activity to help consolidate your learning.

There are only five questions, and if you get at least four correct answers you will be able to download your badge for the ‘Small business and marketing’ section (plus you get more than one try!).

- I would like to try the Section 2 quiz to get my badge.

If you are studying this course using one of the alternative formats, please note that you will need to go online to take this quiz.

I’ve finished this section. What next?

You can now choose to move on to Section 3, Small business responsibilities, or to one of the other sections so you can continue collecting your badges.

If you feel that you’ve now got what you need from the course and don’t wish to attempt the quiz or continue collecting your badges, please visit the Taking my learning further section, where you can reflect on what you have learned and find suggestions of further learning opportunities.

We would love to know what you thought of the course and how you plan to use what you have learned. Your feedback is anonymous and will help us to improve our offer.

- Take our Open University end-of-course survey.

References

Assael, H. (1995) Consumer Behaviour and Marketing Action, 5th edn, Cincinnati, South-Western College.

Bell Media (2016) ‘Search engine optimization’, Bell Media. Available at: http://www.gobellmedia.com/services/search-engine-optimization/ (Accessed 19 May 2016).

Clark, A. (2015) Digital Marketing Trends for 2016 [Online]. Available at: http://www.smartinsights.com/internet-marketing-statistics/2015-vs-2016-the-digital-marketing-trends/ (Accessed 19 May 2016).

Corcoran, S. (2009) Defining earned and paid media [Online]. Available at: http://blogs.forrester.com/interactive_marketing/2009/12/defining-earned-owned-and-paid-media.html (Accessed 3 April 2016).

Ellis, N. (2011) Business-to-Business Marketing, Relationships, Networks & Strategies. New York: Oxford University Press.

Foster, J. (2011) Paying Attention to Your Customers [Online Video]. Available at: http://eu01.alma.exlibrisgroup.com/view/action/uresolver.do;jsessionid=98BB0A0630472CB9F2765C302747FEF1.app02.eu01.prod.alma.dc03.hosted.exlibrisgroup.com:1801?operation=resolveService&package_service_id=2643978180002316&institutionId=2316&customerId=2315 (requires library login OU or similar) – then use http://library.books24x7.com.libezproxy.open.ac.uk/VideoViewer.aspx?bkid=42893 (Accessed 3 April 2016).

Grégorie, Y., Salle, A. and Tripp, T.M. (2015) ‘Managing social media crises with your customers: the good, the bad and the ugly’, Business Horizons, vol. 58, no. 2, pp. 178–82.

Harris, F. and Shaefer, A. (2016) B100 Block 4 Marketing, Milton Keynes, The Open University.

Hastings, G. and Domegan, C. (2014) Social Marketing: From Tunes to Symphonies, Abingdon, Routledge.

Levitt, T. (1960) ‘Marketing myopia’, Harvard Business Review, vol. 38, no. 4, pp. 45–56.

Leon, A.J. (2014) How Do I Market My Business and Sell Products, podcast, University of Oxford. Available at https://itunes.apple.com/gb/podcast/how-do-i-market-my-business/id381702699?i=347242833&mt=2 (Accessed 03 April 2016).

Nils de Witte [YouTube user] (2013) ‘Creating customer value’, YouTube, 8 September [Online]. Available at: https://www.youtube.com/watch?v=9I2baWR-rqgs (Accessed 3 June 2016).

Open University (2016) Stakeholders in marketing and finance [Online]. Available at: http://www.open.edu/openlearn/money-management/money/accounting-and-finance/stakeholders-marketing-and-finance/content-section-1.1 (Accessed 3 April 2016)

Oxford Dictionary (2016) ‘Social media’, in Oxford Dictionary. Available at: http://www.oxforddictionaries.com/definition/english/social-media (Accessed 3 April 2016).

Sable, D. (2010) Start With Creating Value Exchanges [Online Video]. Available at: http://eu01.alma.exlibrisgroup.com/view/action/uresolver.do;jsessionid=98BB0A0630472CB9F2765C302747FEF1.app02.eu01.prod.alma.dc03.hosted.exlibrisgroup.com:1801?operation=resolveService&package_service_id=2643978180002316&institutionId=2316&customerId=2315 (requires library login OU or similar) – then use http://library.books24x7.com.libezproxy.open.ac.uk/VideoViewer.aspx?bkid=35019 (Accessed 3 April 2016).

UpsideLearning [YouTube user] (2014) ‘5 steps to improve customer satisfaction’, YouTube, 14 February [Online]. Available at: https://www.youtube.com/watch?v=XK3cNcuvuMs (Accessed 3 June 2016).

Acknowledgements

Except for third party materials and otherwise stated in the acknowledgements section, this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 Licence.

The material acknowledged below is Proprietary and used under licence (not subject to Creative Commons Licence). Grateful acknowledgement is made to the following sources for permission to reproduce material in this unit:

Text

Social media definition from Oxford Dictionary (2016).

Figures

Figures 1, 15 and 19: courtesy Moore Effective Solutions Ltd.

Figure 2: © Nikada/iStockphoto.com.

Figures 3, 4, 6, 8 and 10: adapted from Assael, H. (1995) Consumer Behaviour and Marketing Action, 5th edition, Cincinnati, South-Western College

Figure 5: © FurmanAnna/iStockphoto.com.

Figure 7: © Aquir/iStockphoto.com.

Figure 9: © CR Management GmbH and Co KG/iStockphoto.com.

Figure 11: © emojoez /iStockphoto.com.

Figure 12: © annatodica/iStockphoto.com.

Figure 13: © wdstock/iStockphoto.com.

Figure 14: © Kemalbas/iStockphoto.com.

Figure 16: webpage from The Open University, http://www.open.ac.uk/community/main/.

Figure 17: © hafakot/iStockphoto.com.

Figure 18: adapted from Grégoire, Y., Salle, A. and Tripp, T.M. (2015) ‘Managing social media crises with your customers: the good, the bad, and the ugly’, Business Horizons, vol. 58, no. 2, pp. 173–82.

Tables

Table 1: adapted from Corcoran, S. (2009) ‘Defining earned and paid media’ [Online]. Available at: http://blogs.forrester.com/interactive_marketing/2009/12/defining-earned-owned-and-paid-media.html.

AV maerial

Section 1: John Foster transcript: from Upside Learning, https://www.upsidelearning.com/uk/.

Section 2: ‘Buying behaviour’ transcript from YouTube video, Nils de Witte (2013).

Section 5.2: A.J. Leon, http://podcasts.ox.ac.uk/how-do-i-market-my-business-and-sell-products-chapter-5, and transcript available under https://creativecommons.org/licenses/by-nc-sa/2.5/.

Every effort has been made to contact copyright owners. If any have been inadvertently overlooked, the publishers will be pleased to make the necessary arrangements at the first opportunity.

Glossary

client

A client is a customer who is buying bespoke advice, solutions or a professional service rather than a standard product or service.

consumer

The consumer ultimately uses the product or service.

customer

Customers are the individuals or businesses purchasing products or services from the business. A customer could also be a client and consumer.

Activity 1

Comment

Business

Customer, client, consumer examples

Bike-a-lot

A person booking and paying lessons for themselves is a customer and consumer.

Where a grandparent is booking lessons for a grandchild, the grandparent is the customer and the grandchild a consumer.

An office manager arranging a bespoke ride out for members of staff for a team building event could be considered to be a client, because he/she has more input and control over the service they receive.

JJ Components

A school ordering an off the shelf product for use with students is the customer, with the students using the product being the consumers.

An IT specialist developing a system ordering a product to solve a given problem might work with the business to develop the solution. The IT specialist could be seen as a client.

Mucky Pets

A dog owner ordering a wash and cut for their dog is the customer and consumer, it may be pushing it a little to think of the dog as the consumer.

A dog breeder working with the groomer to develop a new style of cut for their breed of dog that could be used in shows as a new registered breed standard, could be considered a client.

Turn-it-round

A prison education team arranging a standard training session for the prisoners could be seen as the customer with the prisoners being the consumers. The money could come from government or European Social funds sources. So the government or European Union could be seen as the customers as well.

An individual prisoner meeting with Turn-it-round staff and working with them to develop an individualised plan of action might be considered a client.

It is useful for a business to know who their direct customer is and the relationship between the customer and the final consumer. Since a business usually focuses their communication with the customers who buy the products or services, this understanding helps to target the communication.

For example, if the customer is the final consumer, the communication will focus on the value and benefits of the product. If the customer is not closely linked to the consumer, such as in a shop situation, the communication to the customer might be focused on cost, delivery and shelf life.

Back

Activity 2

Comment

Business

Expected consumer buying behaviour

Explanation

Bike-a-lot

Dissonance-reducing buying behaviour

Learning to ride a motorcycle is an involved activity and it can be expected that a learner would look for options and recommendations before booking lessons. Learners travel long distances to attend a school with a good reputation.

JJ Components

Complex buying behaviour

Specialist components are likely to be sourced after a significant number of meetings and possibly a procurement process. Business purchases for products are likely to fall into this category.

Mucky Pets

Habitual buying behaviour

Pet owners may try out a number of groomers, but once they have one they trust, the regular purchase becomes a habit.

Red Bush Brewery

Variety-seeking buying behaviour

The artisan nature of the beer and the fact it is locally produced, makes the beer interesting. Consumers are likely to try it for it’s novelty factor first.

Turn-it-round

Dissonance-reducing buying behaviour

Consumers of this service are likely to have limited choice in the services available but would compare the limited choices and select the one with the best record and reputation. This can be a big decision for a prisoner and the opportunities to correct a wrong choice are limited.

Back

Activity 3

Comment

Type of marketing

Business

Consumer marketing

Bike-a-lot, Mucky Pets, Red Bush Brewery

Business-to-business marketing

JJ Components, Red Bush Brewery, Turn-it-round

Social marketing

Bike-a-lot

Fundraising

Turn-it-round

You may have chosen different boxes and that is fine. There is no correct answer here. We have made a couple of reasonable assumptions. The key points from our boxes are:

- At least two of the businesses are not likely to focus on the consumers in their marketing. JJ Components and Turn-it-round are not likely to gain business by targeting the consumers directly. They would focus on the customers, who are likely to be other businesses.

- We have suggested Bike-a-lot might under take social marketing with respect to safe riding practices as part of a national campaign.

- We have made an assumption that Turn-it-round gets some money through fundraising activities.

Back

Activity 4

Comment

As so often, your answer will depend on the websites you chose to look at. You might have noted whether the website was easy to find, whether the products you were interested in were shown upfront or whether you had to click through several linked pages to find them.

You might also have considered how good the product choice was and how easy it was to compare the different products, and whether the price and the delivery conditions were right for you.

Your impression was perhaps also influenced by how easy it was to use the site. Most consumers greatly prefer websites that: make sense, are easy to use and include search facilities within the website.

Back

Activity 5

Comment

Social media has made giving feedback and comment very easy, this is encouraging people to share thoughts and experiences.

The ‘instant’ nature of feedback through social media can be both a blessing and a curse to businesses. The blessing is that the business has an opportunity to quickly resolve issues and keep customers. The curse is that the unhappy customers are more likely to complain and any failure to resolve the complaint will escalate.

Have you ever seen a variation of this comment in a café or restaurant?

‘If you enjoyed your meal- tell your friends. If you didn’t – tell us’.

This is perhaps the essence of how businesses would like social media to work for them.

Whether or not you have given negative feedback yourself, it is hard to believe that you are not aware of someone you know who has.

Back

Activity 6

Comment

Owned media

Bike-a-lot could have a website giving detailed information on the services provided and take enquiries and bookings over the internet. Endorsements and recommendations from past customers can be included on the site.

Bike-a-lot could run a Facebook page sharing successes and announcing events and keeping riders up to date with news and legislation.

The page could promote good places to ride and recommendations for new products.

Past customers could be encouraged to share photographs of their experiences once they completed their training.

Bike-a-lot should be aware that visitors to their own sites are likely to have a certain level of scepticism regarding the content. Information on the owned media must be easy to navigate, accurate and up to date.

Paid media

Bike-a-lot could pay to be listed on local business websites and for advertising on specific motorcycling websites. Motorcycle selling sites could be a suitable place to be represented.

The objective of using paid media is to allow potential customers searching for motorcycle training to include Bike-a-lot as one of the options. The budget is likely to be quite small and would mainly state the services offered and direct the enquirers to the owned media.

Earned media

There are no guaranteed methods of generating positive earned media. Bike-a-lot could be featured on some of the many trade review sites that exist. Feedback from these sites are used more commonly by customers in their searches.

Exposure to public events where incidental mentions of the business helps to raise awareness is desirable.

Back

Activity 7

Comment

Key question

Answers

Implications

Who is the customer?

The customer is likely to be local shops, cafés or pubs. Customers at farmers’ markets or via the internet are also likely to be the consumers.

Two distinct forms of marketing required to attract businesses and individual consumers.

What is the buying behaviour of the customer?

This is likely to be variety-seeking from both shops and consumers.

Whilst the hope is to get consumers buying the product out of habit, it is more likely that the specialist beer will be purchased for its unusual qualities. So these will need to be emphasised in the marketing.

What type of marketing should be used?

There will be an element of business-to-business and consumer marketing.

For local shops to purchase the beer they will need to have a level of confidence that it will sell. Marketing will be directed at reducing risk and ensuring demand.

For the consumer marketing it is the concept that they are purchasing something special.

How will the customers be attracted?

Personal selling to the local shops.

Farmers markets with distinctive branding.

Use local news to emphasise the benefits of locally produced quality beer.

Online offers through the brewery website.

Because the product is likely to be bought as an alternative experience, there are two tasks. Attract consumers in the first place and then to give them a reason for a repeat purchase.

Emphasising the beer properties can attract the initial purchase through the novelty factor. For repeat purchases the product quality must be correct and consumers may be attracted by multi-purchase offers. Use of farmers markets could raise demand for local shops.

What forms of social media are appropriate?

The brewery website can give information on the brewing process.

Supporting or sponsoring local events or fetes could raise local interest.

Taking part in local real ale events could raise awareness.

As an unusual local business, Red Bush Brewery could generate news stories based on local produce and local producers.

Brewery experiences can attract interest and linked to the website generate sales.

A competition based on how far the beer travels could be run where consumers send photographs showing where they have drank the beer. Prizes could be awarded for the furthest travelled or most extreme location.

How can feedback be used to promote the products?

Comments or a ‘stars’ system on the web site looking at the different beers.

The brewery could use the rating system to help with production plans or to start a social media discussion.

Summary

The Red Bush Brewery product is competing with a broad range of generic and similar products. It needs to build on the whole beer experience and involve the consumer in the experience otherwise alternatives will be purchased from a discount supermarket. The unique aspect of the beer is the local production and local experience, Red Bush Brewery need to bring this clearly into their interactions with the consumer. Selling to local shops will depend on demand, so the personal selling approach will be supported by consumers requesting the product.

Back

Figure 1  Starting your own small business handbook

Description
The graphic shows a representation of a man wearing a tie and looking smart. He is gesturing his left hand to a red sign which says ‘Marketing, how to reach your customers. Starting your own small business’.
Back

Figure 2  Who is the consumer?

Description
The photo shows an image of a father and his daughter. They are both eating ice creams.
Back

Figure 3  Assael’s four types of buying behaviour

Description
In this matrix, Assael uses the difference between brands and the level of involvement of the consumer to give four genarlised buying behaviours. As with most matrices, the lines between boxes is not a firm line and the descriptions should be seen more as tendencies rather than definite behaviours. The closer to the centre lines, the less obvious the behaviour and the further from the centre lines, the more clearly evident the behaviour is likely to be.
Back

Figure 4  Complex buying behaviour

Description
In this matrix, based on Figure 3, Assael uses the difference between brands and the level of involvement of the consumer to give four genarlised buying behaviours. ‘Complex’ is highlighted.
Back

Figure 5  Buying a wedding dress is classed as complex buying

Description
The photo shows two ladies looking over a wedding dress.
Back

Figure 6  Dissonance-reducing buying behaviour

Description
In this matrix, based on Figure 3, Assael uses the difference between brands and the level of involvement of the consumer to give four genarlised buying behaviours. ‘Dissonance-reducing’ is highlighted.
Back

Figure 7  Using recommendations and rankings for services and goods – dissonance-reducing buying

Description
The graphic displays an award stating ‘Best buy’ three times.
Back

Figure 8  Habitual buying behaviour

Description
In this matrix, based on Figure 3, Assael uses the difference between brands and the level of involvement of the consumer to give four genarlised buying behaviours. ‘Habitual’ is highlighted.
Back

Figure 9  The same basket, week-in, week-out – habitual buying

Description
The image shows a supermarket basket containing a number of household items including cat food, biscuits and skin cream.
Back

Figure 10  Variety-seeking buying behaviour

Description
In this matrix, based on Figure 3, Assael uses the difference between brands and the level of involvement of the consumer to give four genarlised buying behaviours. ‘Variety-seeking’ is highlighted.
Back

Figure 11  Trying out a different coffee at the coffee shop – variety-seeking buying

Description
The infographic shows a number of different types of coffee, and their relative calorie intake. Listed are caramel macchiato, breve, americano, ice coffee, latte, caramel frappuccino, espresso, flat white, mocha and cappuccino.
Back

Figure 12  Marketing

Description
A graphic of the word ‘Marketing’, surrounded by other marketing-related words, such as ‘Traffic’, ‘Market’, ‘Placement’, ‘Advertising’, ‘SEM’, ‘Online’, ‘Search’, ‘Optimization’, ‘Direct’, ‘Electronic’, ‘Solution’, ‘Commerce’, ‘SEO’, ‘Strategy’, ‘Rank’, ‘Keyword’, ‘Risk’, ‘Website’ and ‘Technology’.
Back

Figure 13  Local sandwich board advertising a takeaway shop

Description
The image shows a person carrying a sandwich board on their back. The board advertises pizza slices for $2.00, fresh Indian food and Latin food.
Back

Figure 14  BOGOF sales approach to increase sales temporarily

Description
– The image shows a number of different sales approaches that might be found when purchasing items. For example, sale, buy one get one free, money off.
Back

Figure 15  M-commerce – mobile purchases and payments were approximately 40% of all payments at the end of 2015

Description
The image shows a mobile phone with a credit card clipped to the top.
Back

Figure 16  The Open University’s social media site

Description
The image displays a screenshot of a webpage taken from the OU Community website. It discusses Facebook, Twitter, the OU Students Association and YouTube.
Back

Figure 17  Surveys provide valuable feedback

Description
The image shows a person’s hand completing a customer survey. They are about to tick against a negative option for ‘overall satisfaction’.
Back

Figure 18  Social media impact of supplier failing to meet customer expectations (adapted from Grégorie et al., 2015)

Description
This figure shows what is likely to happen if a supplier does not deliver what a customer expects. Social media give customers a significant tool that more and more are using when dissatisfied. Suppliers ignore social media at their peril.
Back

Figure 19  Applying your learning

Description
The image shows a graphic of a person sitting on a bench, and writing on a piece of paper. Their left hand is pointing to the sky, where a flashing lightbulb is floating above.
Back

Uncaptioned interactive content

Transcript

NARRATOR 1

Five steps to improve customer satisfaction. Be genuine. When customers call with complaints or concerns, take the time to treat them like individuals. While calling a customer ma’am or sir is respectful, it doesn’t include a personal touch. Replying, yes, sir, I understand, is polite.

Add the customer’s name. Yes, Mr. Smith, I understand. That is much better. Using a customer’s name helps them see you are truly engaged in listening to what they’re saying and interested in solving the issue. Personalising the conversation helps the realisation that the customer is more important to your company than the money.

NARRATOR 2

Be accountable. Customers face the most aggravation when customer care acts concerned but passes the issue around. Never point a customer to someone else because you don’t know how to handle his problem. Instead, take the time to help fix the problem if possible. If you must refer a customer, find an individual who can resolve their issue amicably. Ensuring your customer achieves a desirable outcome will ensure you create a customer for life.

NARRATOR 1

Empathise. Listen to your customers. Sometimes people really do need to vent. Always remember, a complaint shouldn’t be taken personally. Learn to acknowledge the customer’s issue and train employees to do the same. It is important that your customer knows that someone understands their concerns. Let them know you understand the way they are feeling and apologise, even if you don’t feel you need to. A sincere apology works wonders in creating happy, loyal customers and confirms your willingness to take responsibility for the customer’s problem.

NARRATOR 2

Innovate. If you understand the customer’s problem, offer a solution. Never tell the customer what you can’t do. Focus on what you can do to fix the problem. Offer some options. Working to solve your customer’s problem, even if not to the extent they may have liked, helps them feel you care about their business. Focusing on solutions will keep customers coming back, even after they’ve faced a problem with your company.

NARRATOR 1

Be trustworthy. Sometimes, in an effort to appease a customer, company employees will make promises that are not only impractical, but which can’t be honoured. Don’t make empty promises. It is far better to offer a practical and workable solution which will allow you to rebuild your customer relationship and provide some satisfaction. Meet every situation realistically, and your customer will appreciate the effort. While these tips will help you provide quality care to your customers, there will be times when nothing anyone else does will be enough to keep a customer.

NARRATOR 2

Be genuine. You are accountable. Remember to empathise. Innovate for solutions. Be trustworthy.

Back

Uncaptioned interactive content

Transcript

AJ LEON:

Now, before I conclude, I want to provide a few more examples of people, of small businesses and individuals, that are using the power of community and particularly on social to convert into sales. Because I thought this might be interesting.

We'll go back to Instagram, because Instagram is a particular - a lot of companies use it and small businesses use it for fun, highlighting the office, blah, blah, blah. But there are some brands and some small businesses that are using it in interesting ways. It works best for artistic brands or epicurean brands.

An example of this, three blocks away from my flat in the Lower East Side in New York City is my favourite restaurant in the whole wide world. It's called Sauce, and the head chef and owner of this restaurant is a dude named Frank Prisinzano. Frank is a prolific Instagram user, prolific.

What does he post about? He posts about new recipes that he's trying when he can't go to sleep at 3:00 AM in the morning. He posts about his Italian grandmother and her influence on his life and his cooking and the fact that her chairs and her pots still adorn the halls of Sauce to this day. He talks about his ethos, his trips, his family. He basically tells stories.

And a few months ago, he took his customary annual trip to Italy. And on this trip and on these trips, he takes them about every year, he publishes posts about and photos about inspiration that he's garnering, food that he's tasting, chefs that he's meeting, things that he's going to bring back to us in the Lower East Side at Sauce for us to enjoy, straight from the motherland, his motherland, Italy.

And on this trip, he also posts about bringing back some fresh white truffles back to Sauce for what he called a special menu. And he told stories about going truffle foraging with - that's Rocco right there-- who is the truffle hunter dog. And truffle farmers will go out with Rocco, and he'll go and sniff up a storm and find these truffles.

And Frank went out into the forest and he found truffles in the Alba region. And then he posted about paying 3,200 euros to this farmer to bring back all the truffles that he brought back to the Lower East Side.

And he mentioned on Instagram that the truffles would be served on dishes the following week at Sauce by request only - on a private menu, by request only. In other words, none of the truffle dishes would appear on the menu. You kind of had to be part of the community, part of the in-crowd, to even know about it.

The following week his Instagram community obviously flocked to Sauce and started posting an enormous amount of photos about the secret menu that they were a part of. Now, what happened to Frank and Sauce and his truffles? He sold out in four days. In four days, he sold out of his truffles. And when I spoke to Frank about this at the bar he said, AJ, Instagram ain't just about fun for me. In my world, Instagram converts.

Now, another great example is world renowned street artist Shepard Fairey of Obey fame, who I'm sure most of us know. He uses Instagram to sell out of his prints every two to three days, by publishing every two to three days. And you can see them right there.

Now, Tumblr is also a very interesting social content channel. Four years ago, a friend of mine, Josh Davis, who I used to - when I was in New York City a lot more often, we were sitting there at our favourite coffee shop, The Bean, and then Josh came up to me.

He would always show me on his iPhone 4S, his new iPhone 4S, he's show me all these beautiful photos that he took of the East Village, documenting life in the East Village. You've got to understand, where I come from, it's a crazy place.

Now, you have all these big buildings and money is pouring in and all that. But there's all this weirdness and graffiti go on. It's a lovely - it's a lovely place. And Josh took it upon himself to document this for no other reason than he just loved it. And he used his iPhone. He did all the editing on his iPhone.

We'd sit there at the bar at The Bean, and every day he showed me this. And after a few days I'm like, you know Josh, not that I want you to extend from this audience of one that you have here, but with two extra clicks you can start sharing that with people online. I think people would dig this, man. I think people would really dig the idea of an East Village iphonographer, documentary photographer, for our neighbourhood.

Now today Josh has over 20,000 followers on Tumblr. He's JDX on Tumblr if you want to check him out. His prints - with every shot, every photo that he publishes to Tumblr from his phone - he still, to this day it's all iPhone. All of the edit is on the iPhone. Everything publishes directly to his Tumblog.

He only prints three copies of each photo and sells them at an average of $1,000 per piece. And last week he was even invited for his first international exhibition in Tokyo. And this is all through content that he created which was freely available on one platform.

Then, of course, there's Facebook. Now, I know dozens, dozens of examples of entrepreneurs. I don't have the time to share them all, but I will share one, like my friend Chelsea who is in North Dakota. She's a limited edition jewellery maker in North Dakota. So she makes these beautiful pieces, typically out of cement and other up-cycled goods - wood, things like that. Beautiful stuff, right?

This is just last week. You can see the date right there. Just last week, she posted one photo on her wall of new products that she was trying or that she had produced. And she associated them with letters, and all she did was ask for her community to comment, and the first ones providing the letter of the product that they wanted, she would sell them to them. I mean, they could purchase them, and she would do that until they were sold out.

Less than 24 hours later, she was sold out. As you can see, my wife Melissa was a little bit too late. 24 hours later, she did it again. Now, Chelsea didn't use this, and I don't have the time to go into this in detail. But I did want to share this with you. Remember when I was saying you live and die by your email list?

Now, Facebook provides something additional to us. There's a new marketing effort that they've launched. Any of us can use it. Any small business, large organisation, whatever can use this. It's called a Lookalike marketing, where you basically upload an email list and Facebook finds users who are similar to your community or customer list.

This makes it ridiculously, absurdly easy and inexpensive to market to prospects that are even outside of your community on Facebook. So in other words, Chelsea could have been marketing to her own community, and at the same time she could have uploaded the list of emails that she's collected from her community of customers that she has and marketed to people whom she's never met and got her product in front of them for pennies, for pennies.

Now, the last channel I'll talk about is Kickstarter. I know somebody talked about this last week. So I'm not going to go into a deep dive about what Kickstarter is. However, I will say this. There is a massive, massive misconception about Kickstarter.

Many people around the world still think Kickstarter is a donation platform, some type of donation, like it's a charity platform. Kickstarter founders abhor charity. They don't even allow 501c. They don't allow charities on the platform. It's not at all.

Kickstarter represents the rise of a movement called presumerism, where customers buy into the idea of a product before that product ever exists. It allows you to validate your product before it exists, and it gives these early, early customers a discount for being involved.

My friend Clay Hebert, who is one of the world's leading experts on crowdfunding theory, he says Kickstarter is just a simple shopping cart with an earliest adopter discount baked in.

Now, I've had many, many friends who have launched new businesses on Kickstarter - applications, films, water filtration systems. I have had friends do all to launch real businesses on Kickstarter. And they used it to acquire their presumers or their earliest adopters and to start garnering community.

At Misfit, we launched an entire new line of business, Misfit Press, which I've mentioned before, on Kickstarter. I had a publishing deal for my first book from a large publisher. I was about a quarter of the way into this deal.

About a quarter of the way into the deal, I'm writing, I'm sending back draughts, and then I started to realise, wait a second. I signed up to write somebody else's book. This isn't me. This book that I'm writing is actually not mine.

So I pulled out of the deal and I said, you know what? I can't do this. Why don't we put this on Kickstarter? The publisher offered me a $10,000 advance. If I can get $10,000 from my community, if I have $10,000 worth of business that would want to see me publish this book. And I can do that profitably, I can publish and print profitably as a business, why don't we do it ourselves and see how it goes?

So we put it on Kickstarter with $10,000. We thought we'd just maybe scrape, scrape out enough customers to buy a book before it's even alive, before it's even published, at $10,000.

In four hours - in four hours, we raised $10,000, and by the end of the campaign, I was able to raise $40,000, taking the overage that we could raise, and I leveraged that and decided to invest it into the publishing industry and to invest it into actually becoming an artisan publisher ourselves. So not just one-off book, but why don't we build some more out of this. And now we're on our fifth publication.

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