Public relations has been defined as the interaction of a business with its customer base, and or with prospective customers. This interaction can take various forms, which may include events such as trade shows, marketing promotions, customer relations initiatives and other such efforts in which the business and the public interacts. (Are your shoulders wide enough to carry a company's reputation? For more information, read The Marketing Director's Pitch.)

Public Relations: The New Marketing?
Public relations is also a catch-all term that means the dissemination of newsworthy information to the media – niche magazines and trade journals, newspapers, radio, television and the internet – to get publicity. To maximize the sales potential of any business, large or small, a public relations program should be part of the master marketing plan. (Marketing is a vital component of a large sustainable business. To find out more, check out The Lucrative World Of Third-Party Marketing.)

No matter what a company sells – goods, services or both – a smart public and media relations program can have big returns and it may not necessarily require a big budget. Generally - but not always - public relations may be less expensive than advertising, and is best used as a complement to the marketing efforts of a business.

Advertising expenses typically include a creative fee for copywriting, art and or photography, model fees, along with additional costs which accumulate even before the costs of buying media – print, broadcast (television, radio, etc.), internet, billboard or other. By contrast, a public relations program (while perhaps less costly) can create a major impact among both established and potential customers for the goods and or services of a company. The result of effective public relations can be increased sales, a competitive edge over business rivals and eventually, improved profitability.

But there's another aspect of public relations that can be just as important. When things go bad for a company such as the necessity for a product recall, a major product liability law suit, a bankruptcy or some other potentially damaging situation, an effective public relations initiative can minimize or even eliminate the negative fallout. In these cases, public relations is often called "crisis management."

Reflecting the importance of public relations as a marketing tool on a par with traditional advertising is the recent trend of major advertising agencies buying global public relations firms or establishing full-service public relations divisions within their agencies.

What Effective Public Relations Can Accomplish
The following are some of the positive outcomes of a successful public relations department:

  • Attract attention to a company and raise its visibility in a competitive market niche
  • Generate interest in and enthusiasm for a company's goods and or services
  • Create "buzz" when a company introduces new products or services - when people begin to talk about the business, word of mouth can serve as the ideal form of advertising.
  • Enhance the credibility of a company and polish its image.
  • Defuse a crisis if and when it occurs, minimizing its potential damage.

Public Relations and Publicity
Newsworthy public relations events or occurrences may get publicity for a business. But the media must be informed of the event or occurrence. This is usually done by sending a news release or press release (the terms are interchangeable) to the media in which the information is intended to appear.

Newsworthy events may include:

  • The introduction of a new product or service
  • An executive's promotion or retirement
  • The opening or closing of a manufacturing plant or retail outlet
  • The acquisition or sale of subsidiaries or new firms
  • Company-sponsorship – entirely or partially – of a charity event or fund raiser
  • Funding college or university scholarships
  • Demonstrations of new, complex products (for example, phones with new applications)
  • Free services for seniors, children, veterans or any special group of people, to build traffic and introduce potential customers to a business
  • Contests related to a specific business
  • Special events tied to a specific business (for example, a book store may host a public reading by a celebrated author with a new book)

Whatever the business, there may be some way for it to attract media attention to the company through an innovative public relations effort. (For tips on how to create a successful business, read 9 Tips For Growing A Successful Business.)

What Won't Get Publicity
Sales events are not public relations initiatives, and are not likely to get media exposure.

No matter how the sales events are promoted – clearance sales, fire sales, bankruptcy sales, lost-our-lease sales, etc., are best publicized through advertising because editors will not, in most cases, regard these as news stories.

Writing the Press Release and Contacting the Media
The news release describing the planned public relations event may be written in-house by a regular employee of a business, or a public relations consultant or agency may be hired to provide that service.

If the news release is to be written by an outside public relations consultant or agency, competitive price bids may be solicited from several sources. There are several advantages to hiring an outside consultant or agency to handle the news release.

  • The release will be written by a professional writer and will contain all the relevant facts, presented succinctly, with no misspellings, and will be grammatically correct – reflecting well on the business and engaging the attention and interest of the recipient.
  • The professional public relations consultants and agency account executives will also usually have contacts in the media and will know where to send the release.

Once the release is written, determine in advance where it should be sent. Telephone the media outlets targeted and get the name, e-mail address and phone number of the editor to whom the story will be sent. A business related story – an executive promotion, the introduction of a new product, the opening of a new store, or any similar business related occurrence - should be sent to the business editor.

A story unrelated to business, such as sponsorship of charity event or a contest, should be sent to the city editor or feature editor. There are editors with similar functions at all media including internet sites. Releases should be sent, via the United States Postal Service and or via e-mail as a backup, in accordance with the criteria mentioned above.

Crisis Management
Sometimes things go wrong for a firm. Serious problems such as a product recall, a product liability law suit, strikes, government shutdowns or bankruptcies may damage the image of the company affected.

Public relations experts who handle problems such as these – they're also called crisis managers – advise as follows:

  • Address the media and public as soon as possible. Do not stonewall the facts. The longer disclosure is delayed, the more damage is done to the company's image.
  • The company spokesperson must deal with the media and public with complete candor. The media will eventually reveal any distortions or omissions of truth – that's their job.
  • Conceal none of the facts. The media will eventually uncover anything concealed - that's also their job.
  • Retain competent legal counsel if necessary.

Conclusion
Companies that understand the principles of public relations, and employ them regularly, may enjoy a competitive advantage over rivals which are not public relations savvy. Among the beneficial results of strategic public relations are increased sales, increased customer traffic, a continual "buzz" or talk about a company which is frequently mentioned positively in the media, and a brightly shining image in the eyes of their customers and potential customers.

There are many additional aspects, complexities and subtleties of public relations. This article is meant only as an introduction to the art and craft of public relations and much useful additional material is widely available.(For further reading, check out Small Business: It's All About Relationships.)

Related Articles
  1. Retirement

    Retirement Planning for Entrepreneurs and Small Businesses

    If your business has receiveables, here's a smart way to leverage them to build up your retirement fund fast.
  2. Entrepreneurship

    What Does Bootstrap Mean?

    The term bootstrap refers to launching and building a business with little capital and no funding from outside sources.
  3. Professionals

    Small RIAs: How to Level the Playing Field

    In order to compete with larger firms, small RIAs have to get a little creative. Here are a few ways to kickstart growth.
  4. Professionals

    What Kind of Insurance Do RIAs Need?

    Advisors spend a lot of time discussing insurance with clients but they also need to consider their own coverage needs as small-business owners
  5. Entrepreneurship

    Top 5 Startups That Emerged in Boston

    Learn why Boston is a hot market for startups, and familiarize yourself with a few of the top startups that have emerged from the city.
  6. Entrepreneurship

    Top 7 Startups That Emerged in Mexico City

    Learn why Mexico City has the potential to emerge as a major player in the startup scene, and identify several companies leading the way.
  7. Markets

    How TheSkimm Works and Makes Money

    Obtain information on the popular news digest newsletter, theSkimm, and understand how email newsletter publishers generate revenues.
  8. Professionals

    The Plusses of Second Opinions for Clients

    If you are not collaborating with other professionals in your circle, you could be doing your clients a disservice.
  9. Fundamental Analysis

    How WeWork Works and Makes Money

    Find out how WeWork makes money by offering flexible, shared office space to out-of-the-cubicle workers like freelancers and entrepreneurs.
  10. Entrepreneurship

    How to Prep Your Business for a Sale

    Once you have a clean, stand-alone business with solid finances, it's time to put a price on it. Here are the steps needed to prepare for a sale.
RELATED TERMS
  1. Enterprise Investment Scheme (EIS)

    A UK program that helps smaller, riskier companies to raise capital ...
  2. Per Transaction Fees

    An expense a business must pay each time it processes a customer’s ...
  3. Operating Cost

    Expenses associated with administering a business on a day to ...
  4. After-sales Support

    After-sales support, sometimes called after-sales service, is ...
  5. Age Discrimination In Employment ...

    A federal statute protecting "certain applicants and employees" ...
  6. Cottage Industry

    A small-scale industry often operated out of a home, rather than ...
RELATED FAQS
  1. Why did Target's (TGT) expansion into Canada fail so quickly?

    Target (TGT) decided to expand north into Canadian markets in 2011. By 2013, it had built 133 stores across several Canadian ... Read Full Answer >>
  2. Why are the terms 'merger' and 'acquisition' always used together if they describe ...

    The terms "merger" and "acquisition" are used together because they both describe processes by which two companies become ... Read Full Answer >>
  3. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  4. What are the benefits of financial sampling?

    Financial sampling allows auditors to approximate the rate of error within financial statements. For accounting purposes, ... Read Full Answer >>
  5. What are the responsibilities of the principal in a company?

    Principals have different roles depending on the nature of an individual business, but the universal responsibility of a ... Read Full Answer >>
  6. What do hard and soft goods in the retail sector refer to?

    Hard goods and soft goods, also referred to as hardline and softline, designate different types of goods a retailer offers. ... Read Full Answer >>

You May Also Like

Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!