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Growing in stature

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As the small-business market continues to grow in size and spending power, more large marketers are targeting this segment with new products, ad campaigns and marketing strategies.

According to the U.S. Census Bureau, there were 5.8 million businesses in the U.S. with fewer than 100 employees in 2004 (the most recent year for which data were available) and 4.6 million businesses with fewer than 10 employees. In 2003, there were 5.7 million businesses in the U.S. with fewer than 100 employees and 4.5 million with fewer than 10 employees.

The spending power of these small businesses also continues to grow. According to a recent study by Visa USA, nonpayroll spending by U.S. small businesses will reach nearly $5.0 trillion this year, up 4% from $4.7 trillion last year.

Spending by small-business owners on Visa business cards topped $100 billion this year, according to Jim Taschetta, senior VP-marketing, strategy and planning at Visa USA.

"The latest data indicate we expect to see healthy growth in the small-business area," Taschetta said. "From a marketing standpoint, we have a tremendous amount of activity aimed at small businesses."

Visa this year launched a rebranding campaign with the tagline "Life takes Visa," developed by TBWA/Chiat/Day, Los Angeles. The campaign includes TV, print, radio, outdoor and online, and shows how Visa products can help consumers and small businesses in their everyday lives.

In addition to brand advertising, Visa has introduced new products and unique marketing promotions aimed at small-business owners. In September, it rolled out Visa Signature Business, a new premium business card designed to address the needs of small-business owners. The card offers higher-value rewards and no preset spending limits.

In August, Visa targeted small-business owners with a promotion called Hired for You. It featured a contest in which small-business owners received an opportunity to win funds to hire an assistant each time they used their Visa card. "It really helped us connect with small-business owners," Taschetta said.

Xerox Corp. made a concentrated push into the small-and-midsize business market (SMB) with printer products it introduced this year.

"Our products are fully featured and have everything you need," said Paul Gleason, VP-marketing of SMB at Xerox. However, he said, "We have learned that the small-business person may be looking for less functionality and more value, and doesn't want to pay for all those extra bells and whistles. So we have come out with products that are more affordable."

This month, Xerox debuted lower-cost printers, including a black-and-white laser printer starting at $179, a single-function color printer starting at $349 and a multifunction color printer starting at $649. "These are all totally new price points for Xerox," Gleason said.

In addition to new products, Xerox has also launched marketing campaigns aimed at small businesses.

Over the past three years, it has conducted an Office Makeover contest for small businesses, featuring new office equipment and an office redo as the grand prize (see story, page 32). Xerox also redesigned its Web site for small and midsize businesses, and uses direct mail and search engine marketing to reach decision-makers in the segment.

IBM Corp. markets heavily to the small-business market through new products, ad campaigns and interactive technologies. In March, it introduced Express Advantage, an offering of more than 150 products and services for SMB customers, including information security services, desktop and server products and access to IBM's business partners.

"Our campaign strategy is to communicate the idea that IBM is simple to deal with and simple to do business with," said Ed Abrams, VP-integrated marketing communications at IBM.

IBM has also been using more interactive tools, such as live video chats with "concierge" team members. IBM promotes the service through traditional banner ads, which link users to a live video or text chat session with a support rep.

"The video chat sessions are really engaging and are helping to drive a different perspective of IBM for small and medium businesses," Abrams said.

The click rate on the video chat banners is more than double the rate for static banner ads, and the average video chat session lasts between 60 and 90 seconds.

IBM is also stepping up its use of demand generation and direct marketing around cost-effective offers for products and services in the SMB space, Abrams said.

For example, it recently launched a direct marketing campaign offering a catalog of products aimed at the SMB market.

Pitney Bowes has also been increasing its use of direct response marketing to the small-business segment.

"We acquire most of our new small-business customers through direct response marketing," said Neil Metviner, exec VP at Pitney Bowes and president of PB Direct, the company's direct response business.

Pitney Bowes uses direct mail, telemarketing, e-mail, search and partner marketing to reach the small-business market. It also produces Priority Magazine, which goes out to 800,000 small-business customers.

"The small-business owner is very busy. You have to make your messages succinct and to the point," Metviner said.

"They are pretty savvy and entrepreneurial, so you need to market to them with a channel of their choice and the time of their choice."

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