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Public Relations

Public Relations



“American” flavor

The profession

Areas for research


Public relations is the organized effort to communicate information and to modify attitudes and behavior on behalf of a client or a cause. The concept of an organized effort is crucial to this definition, for it points both to the growth in recent decades of a wide assortment of groups seeking to promote some social, political, or economic ideology and to the development of a cadre of specialists whose full-time energies are devoted to winning a greater understanding and acceptance by various publics of an individual, a private business corporation, an agency of government, or other institution.


Such efforts to influence public attitudes are very old indeed, but until the beginning of the twentieth century they were largely carried out in conjunction with other duties and were not defined as constituting a distinct occupation. Politi cians gave speeches, travelers wrote accounts of their journeys, religious leaders evangelized, and generals produced memoirs, all without suspecting that they might in subsequent centuries be labeled public relations men. Yet today there are those in the public relations field who claim certain historical figures as early practitioners of their profession : Caesar writing his account of the wars in Gaul; Christ preaching his gospel; Marco Polo writing of his travels to the East, to name but a few. This disarming willingness to pick and choose one’s intellectual antecedents is significant chiefly because it reveals a chronic preoccupation of many public relations workers—a sense of insecurity regarding the professional status of their field and a need to legitimatize their work.

Today’s public relations practitioner had as one of his earlier ancestors the publicists who made their appearance during the eighteenth century. These writers turned out pamphlets and tracts in support of social, political, and religious causes. But it is important to note that their activities were usually ancillary to other professional interests and almost never provided them with any significant amount of income. More often than not, they donated their services to the group for whom they worked. In England publicists tended to address themselves to the social evils which grew out of the industrial revolution. They inveighed against the shocking conditions of factories employing women and children, or they directed attention to the need for prison reforms or the setting up of mental hospitals and similar institutions to care for the poor and helpless. Similar problems attracted publicists in the United States, but there was, in addition, an overriding concern on the part of many of them during the early decades of the nineteenth century with the abolitionist movement. Following the Civil War some publicists in the United States directed their energies to writing about corruption and abuses of power in the business world and in government. Among these were the muckrakers, who in a sense represented a transitional group from the publicists to the public relations practitioners, for they devoted their full working day to these expesés.

Public relations as a distinct occupation is almost exclusively a development of the twentieth century and the mass society which characterizes it. Big governments, big corporations, and big institutions of all kinds have proliferated since 1900. The managers of these big organizations often feel remote from the groups they serve. Headquarters, whether it be of a government bureau or a business corporation, is often psychologically and physically distant from its publics. In recent years many managements have employed public relations specialists within their organizations (or as outside consultants) in an effort to overcome hostility, misinformation, or just plain apathy toward themselves.

Business corporations in the United States tend to be larger consumers of public relations services than government bureaus, labor unions, or nonprofit social and voluntary groups. Why should this be so? In the case of government agencies, both state and federal, the party out of power is reluctant to permit too much money to be allocated for information and public relations activities which may enhance the opposition’s ability to retain power. Moreover, top elective government officials also rely on their particular political parties to carry out public relations efforts on their behalf. In the case of labor unions and a wide array of nonprofit groups, there is a tradition of voluntary work on the part of members of these organizations at the grass-roots level. The business corporation usually does not command these informal loyalties from its members. Even if it did, there is a question whether management would feel comfortable having its lower echelons initiate public relations actions on its behalf without some kind of strict control of these actions.


Since the practice of public relations is most fully developed in the private industrial sector of the United States, it is useful, for illustrative purposes, to detail some of the activities carried out by the public relations department of any large American corporation. With modifications, these operations are representative of the gamut of public relations techniques and programs employed by other institutions and organizations.

Public relations departments of large private industrial companies are expected to provide certain services to their senior executives. They prepare speeches for these corporate officers, assist in answering particularly important correspondence, and provide counsel and guidance to them on a continuing basis regarding the many demands on them to participate in community activities, fund raising, and cultural and social-welfare programs.

Public relations people also have a number of corporate responsibilities. They maintain relations with the press, television, radio, and other media of communications. Requests from these media for information about the company’s activities are almost always routed through the public relations department. This department helps to prepare statements and white papers when its management takes a public stand on an issue involving a government agency or a community problem.

Frequently the public relations department edits a company magazine, which is sent to opinion leaders, shareholders, employees, retailers, and others who are felt to have a particular importance for the firm. It organizes and coordinates film, television, and radio programs on behalf of the company and is charged with developing institutional advertising programs. Institutional advertisements are messages designed primarily to win acceptance of the company per se, rather than specifically aimed at increasing the purchase of its products. (There is obviously a relationship between the kind of product advertising conducted by a company and the impression the public has of that company. In fact, public opinion surveys have found that many people derive their impression of a company from the products it manufactures and the advertising carried out on behalf of those products.)

The public relations department also issues booklets about the company and its activities, annual financial reports, and a variety of specific documents and pictorial material, with the intent of furthering an understanding of the company and its policies. To this end it may also organize exhibits explaining aspects of the company’s operations, offer a speakers’ program to schools and community groups, and provide tours of manufacturing plants. In the implementation of such programs, public relations departments often single out specific subgroups in the population—educators, clergy, officers of civic and community action groups, and similar elite groups—and develop programs aimed at them.

All the foregoing activities represent the tangible and predictable duties of public relations people. In addition, senior public relations employees and counselors are expected to give continuing advice to their management on present and potential areas of public misunderstanding regarding the company’s operations and policies. This may involve mounting a complex and many-faceted campaign directed at coping with a new and serious public relations problem. This is sometimes referred to as “fire fighting.” On a more recurrent basis, public relations has the responsibility for the early identification of unfavorable attitudes which may subsequently give trouble. Inasmuch as a public relations department represents but one small segment of a large and frequently complex organization, it must develop sound working relations with other departments. It is likely to discover that other departments take the view that their company is not primarily organized to win a popularity contest but rather to earn a reasonable profit for its owners. And indeed, there may be occasions when difficult corporate decisions have to be taken in the field of product pricing and wage and salary administration even though they may incur the displeasure of the public. In all institutions, whether profit-making or not, public relations considerations must be weighed in the light of other organizational interests.

“American” flavor

If, as suggested earlier, public relations is primarily a child of the twentieth century, it is also preponderantly the progeny of the United States of America. A majority of all public relations workers live in the United States, and the field has received much of its impetus and direction from that environment. There is no obvious explanation for the strong American influence in the early growth of public relations. Possibly the extensive saturation by the mass media of communication in the United States facilitated the early development of public relations there. Yet, on a comparative basis, western Europe has always had an intensive spread of those media, especially in the area of the popular press and magazines of opinion; and yet it did not witness a significant growth in public relations until after World War II.

Why does public relations have such a peculiarly American flavor? At least two disparate lines of speculation offer tempting hypotheses. The first sees in the development of public relations an extension of the alleged concern Americans have with being loved and appreciated by others. For example, critics of U.S. foreign policy and information programs have suggested that these efforts are mistakenly directed at winning the affection of other nations rather than their respect. Essayists and journalists who subscribe to the idea that Americans have a pathological need for love might argue that public relations programs on behalf of impersonal institutions merely represent an extension of this need from the individual to the institutional level. Intriguing as this theory might appear, it is based essentially on a facile and tautological assumption regarding the American character which has yet to be documented.

A more plausible theory to account for the early development of public relations in the United States can be based on historical grounds. This would contend that public relations programs are a predictable outgrowth of a very old and respected American tradition —the democratic belief that all segments of the population should have access to the facts underlying public issues. In such an intellectual context, the emergence of public relations as a distinct field can be seen as a response to the need for more information on a wide variety of political, social, economic, religious, and cultural questions. The relatively simple world of the eighteenth and nineteenth centuries permitted the average U.S. citizen to believe that he could inform himself on the issues of the day. But as America moved into the complex world of the twentieth century, the average citizen simply did not have the time or resources for gathering information on the flood of new problems facing him and his society. Information programs on behalf of special interest groups recognized this need and supplied Americans with material—both pro and con—on issues of interest to them. By contrast, in the more status-conscious and rigid societies of Europe, Latin America, and Asia a similar tradition was lacking, or at least was muted, during the first four decades of the twentieth century. While their citizens may have had the theoretical right to express opinions on a wide variety of public issues, there was far less precedence for them to do so and less demand from them for the information services provided by public relations programs.

The profession

As a distinct profession, public relations had its beginnings in the early twentieth century, but until the end of World War i there were few persons in the United States or elsewhere whose full-time jobs involved this work. Best known of these was Ivy Lee, whose clients were several of America’s largest corporations. But the war, and especially the activities of the United States Committee on Public Information, headed by George Creel, focused public attention on the role that propaganda and information programs play in the struggle for the allegiance of men’s minds. The possible commercial application of wartime propaganda techniques was apparent to some executives concerned about public misinformation on business policies. Edward L. Bernays, who had been active in the work of the Committee on Public Information, was a prime mover in the 1920s in developing increased awareness of public relations through a series of successful promotional ventures for important clients. Unhappily, he subsequently identified himself with a phrase, “the engineering of consent,” which has reinforced fears in certain intellectual quarters that public relations is essentially a means by which men’s minds and passions may be manipulated on behalf of the vested interests of any client.

During the 1920s and 1930s there was a continued growth in public relations in the United States. Some of the larger advertising agencies took on public relations assignments for their clients. Newspapers and other publications, however, continued to view with suspicion and distaste the “giveaways” of public relations men, feeling that these press releases were efforts to get free advertising. These misgivings lingered in publishing quarters until very recently and contributed to their tendency to equate public relations with publicity. Indeed, the line between public relations and publicity is a blurred one at best, and such distinctions as do exist probably have to do with the time perspectives of these two activities. Publicity seeks to gain maximum and rapid exposure for a client and his program by this exposure per se, as an end in itself. Public relations may also seek wide exposure for a client and his program, but behind this desire for exposure is a detailed program designed to capitalize on the attention won from the public.

Public relations experienced its truly phenomenal growth in the period following World War n. Precise data on its present size have only recently become available because statistics on the number of public relations workers in the United States were not gathered prior to 1960. Before that time the United States Census Bureau classified all public relations workers in the category “editors and reporters.” In that year, however, a separate classification was set up—“public relations men and publicity writers”—and 31,141 persons were placed in that category in the 1960 census. Of these, 7,271 were women. The actual number of persons earning a living from jobs involving some aspect of public relations work is probably in excess of 100,000. Public relations workers in the United States tend to cluster in the large metropolitan centers where corporations, trade associations, and government agencies have their headquarters and where the home offices of the mass media are located. For example, in the 1960 census, the New York metropolitan area contained 4,033 of all public relations employees in the United States. The professional association of this field, the Public Relations Society of America, had 5,300 members in 1966.

Outside the United States, the field developed almost exclusively after the end of World War n. The International Public Relations Association listed almost 300 members in 1966. The bulk of these are found in North America and western Europe. There are, of course, a number of countries where journalists, government information officers, and publicists perform the essential tasks of public relations people but do not choose to take on this title.

Public relations and the social sciences

A central assumption of public relations is that its practitioners possess special skills in assessing, interpreting, and modifying public opinion. Committed as they are to understanding the process by which attitudes are formed and changed, they necessarily find themselves working in areas that long have been of theoretical interest to students of social psychology and sociology. One might thus expect that a continuing dialogue would take place between public relations and the social sciences. Such is not the case. In fact, when it takes place at all, this dialogue has tended to be sporadic and relatively barren of results. Several explanations may account for this disappointing state of affairs.

Social scientists, for their part, sometimes profess that public relations problems offer limited intellectual challenge and stimulation. They even suggest that, in actual practice, decisions regarding public relations programs are usually based on intuition rather than on any systematic use of social science knowledge. They may also point out that the field of public relations has made no significant contribution to the body of social science theory or research method, even in the theoretical areas of greatest concern to it: the specifying of variables in the communications process; definition of the role that reference groups play in facilitating or impeding the acceptance of a public relations message; provision of a better description of how the several media of communications are perceived and used by their audiences; and the investigation of the sorting-out process by which audiences choose from the many messages directed at them at any given time.

In terms of professional self-interest, the social scientist may therefore complain that the flow of benefits between his discipline and the public relations world has been pretty much a one-way street. Public relations has adapted findings and has utilized and merchandised theories and jargon from the social sciences for its own profit but has given little of intellectual bounty in return. There is, moreover, a belief on the part of certain social scientists that public relations is willing to manipulate information and attitudes on behalf of any client willing to pay for this expertise, regardless of the social and ethical merits of the client’s objectives.

Criticisms of public relations

It would be wrong to give the impression that the critics of public relations are drawn solely from academic circles. Novels, films, and other media have frequently pictured the public relations man as a marginal type of operator, interested only in short-term profits and capable of being all things to all people. When these media have chosen not to treat public relations workers in such invidious terms, they have often elected to portray them as comic and impotent figures. Furthermore, within its own ranks, public relations people themselves often evidence an ambivalence and defensiveness about their work.

Little wonder, indeed, that the public relations fraternity has become worried over charges that it lacks professional standards and ethical norms in the conduct of its business. The Public Relations Society of America has taken several steps to mitigate these criticisms. It has adopted a Code of Professional Standards for the Practice of Public Relations and has set up a procedure by which charges of unethical practice can be brought against members of the society; several members have been suspended from the society for violations of this code. In addition, the society has set up a procedure by which its members might be tested and accredited as to their professional competence, and by 1966, 1,100 members had received this accreditation. This procedure for accreditation has evoked mixed reactions from members, some of whom have argued that the practice of public relations is so indeterminate that it defies the drawing up of any rigorous set of standards by which the ability and performance of members might be judged. Arguments on this issue are reminiscent of past wrangles within the ranks of psychologists and sociologists on the feasibility and desirability of certification of members.

Apart from efforts at internal policing of membership, public relations groups have taken steps to reassure the intellectual community in general and the university world in particular regarding their motives and modes of operation. One part of this endeavor has been the setting up of sessions at annual professional meetings of public relations groups for discussion of the relationship of public relations to the humanities and the social sciences. Frequently, distinguished psychologists, sociologists, and anthropologists address these meetings and discuss ways in which better understanding might be promoted between these two worlds. With similar ends in mind, the Public Relations Society of America has sponsored week-long seminars to provide more intensive exposure for some of its members to the thinking of social scientists and humanists from leading universities. To date, these efforts appear to have served the useful ceremonial function of lessening mutual anxieties and suspicions, but evidence is lacking on whether the day-to-day practices of public relations have been modified because of these interchanges. Certainly a survey of social science journals does not turn up any significant amount of literature reporting on techniques and theories tested in various public relations programs and their possible implications for the study of human behavior.

Training and research

Inasmuch as a substantial body of public relations theory rests on an adaptation of research findings and theories from the social sciences, the lack of close liaison between these two worlds is surprising and regrettable. In part, this may be related to the fact that most public relations people are still members of its first generation. They come with a variegated work experience and educational background. A sizable percentage of them are former journalists and free-lance writers, and still others were specialists in the graphic arts, while the rest are former academicians, civil servants, and members of other professions. Many of these public relations workers find social science theory and language remote and apparently impractical in providing answers for the specific, mundane problems of a client. More often than not, the exposure of public relations workers to social science literature has been on a hit-and-miss basis and confined to occasional leisure-time reading, making it easy for them to dismiss social science as the pompous elaboration of the commonplace and obvious. Not all public relations workers are convinced that closer cooperation between themselves and the behavioral scientists is either practical or desirable. For them, public relations demands largely intuitive and creative skills, which do not lend themselves to rigorous scrutiny and categorizing by the fledgling social sciences.

On the other hand, there remains a militant body of public relations experts who are committed to upgrading the professional status of their field, and they seek help from colleges and universities in this quest. Largely as a result of their efforts, over 250 universities in the United States and abroad have set up formal courses of study in public relations, and several have developed graduate programs in which a student may receive an advanced degree in public relations. These latter programs typically require students to spend considerable time studying sociology and social psychology and the specialized areas of communications and public opinion research. As yet, only a tiny fraction of the public relations world has had this training, and it is impossible to comment on the impact it might have on the ethos, outlook, and practices of public relations in the future.

While the social sciences can no longer afford to ignore the field of public relations, by the same token, public relations practitioners must face up to the fact that the intellectual content and theoretical basis of their field have been singularly lacking in exciting new ideas, research practices, or even impressionistic essays on understanding human behavior and the communications process.

Areas for research


A central problem for public relations is its lack of any convincing yardstick by which to measure its impact and effectiveness. Clients and employers are accustomed to looking for concrete evidence of results for money and effort expended. Product advertising can be related to sales figures and employee relations programs to data on productivity and absenteeism, but public relations efforts are more difficult to evaluate. Countless studies are made each year in which respondents are tested on the degree to which their level of information or attitudes on some issues has been changed as a result of exposure to a public relations program. To date, however, there is a dearth of studies indicating that these professed attitude changes are linked to actual changes in behavior in the marketplace, the polling booth, or in a family or community setting. Lacking such manifest criteria of performance, public relations continues to be defensive about its work.

Relation to power structure

A second area calling for greater study is the manner in which the power structure of a community or society affects the reception given to public relations messages. By its own admission, public relations seeks to locate centers of political, social, economic, and intellectual power and apply effective leverage on them. Yet the literature of public relations is excessively modest in recognizing this fact. Public relations texts contain little or no discussion of the classic theories of power as expounded by political scientists, economists, and sociologists.

On many issues facing society there are a variety of possible points of view that can be defended. Clients with conflicting interests and views call upon public relations to help win acceptance for their positions. A few years ago the public information programs of the trucking industry and the railroads in the United States were in open contention. In the international realm the contest between communist and noncommunist propaganda efforts represents a continuing effort to intellectually disarm and render impotent the competition. On a more mundane level, public relations has been called upon to help product A displace product B from the shelves of stores or to assist in the election of Mr. X over Mr. Y.

Public relations workers are often called upon to take sides in the ordinary as well as in the profoundly important issues of the day. If they do their job well, they may reduce the capacity of other groups in a community to stay alive and sustain their particular economic, social, political, or intellectual positions. Public relations is a force in bringing about social change. Change means that certain ideas, groups, and individuals must move aside and make room for others. Too little recognition has been given in the past to the part public relations plays in modifying the power structure of the society in which it operates.


Related to the lacuna of data on how the power structure of a society influences the effectiveness of a communications program is the allied topic of censorship—formal and informal. Since public relations programs are designed to create a favorable impression of a client and his cause, facts that might be detrimental to his best interests are often played down or left unmentioned. This is usually justified by saying that one must accentuate the positive and eliminate the negative. The controversy over whether cigarette packages should contain a warning pointing out the health hazards incurred in using them is an example of government agencies and tobacco companies placing very different emphasis on “the facts.” In the fields of both domestic and international communications most governments impose some degree of censorship on the information they give out. They frequently come under criticism for being too rigid in the security criteria they use in classifying information. From time to time they must defend themselves against the charge of trying to manage the news. Inasmuch as the word “censorship” has unpleasant connotations, one finds little discussion in the literature on public relations about the ground rules that ought to apply in giving out information on behalf of a client or his cause. Social psychologists have studied the relative effectiveness of presenting one side or both sides of an argument in modifying the attitudes of experimental audiences. Public relations practitioners have been slow in recognizing that the strategic decisions they make about giving out or withholding information are equally deserving of serious thought and study. All public relations programs operate on some heuristic set of beliefs regarding what may or may not be said to various audiences. Here again, however, little research data are available to tell whether these assumptions are valid. Also lacking are any serious studies of the strategy and rationale for deciding not to communicate in certain public relations situations.

The role of opinion leaders

In addition to a study of power in the communications process, there is a need for a more precise definition of the concept of “opinion leader.” This term has gained enormous popularity in public relations circles. Whole programs are predicated on reaching certain priority groups or individuals with the client’s message and largely ignoring less important ones. Again few studies have been undertaken to judge in retrospect the wisdom and success of designating group A as having a higher priority than group B. In fact, there is limited information and speculation in public relations literature on how the opinion leader exercises his power. Is he merely a gatekeeper who gives the communicator access to important persons? Is his job to embellish, translate, or simplify the communicator’s message? Or is the opinion leader’s role primarily to serve as an authority figure whose personal endorsement attests to the legitimacy of a message? Campaigns designed to reach opinion leaders would vary a great deal depending on the answers to these questions.

A broader theoretical question, with considerable implications for the field of public relations, is whether these opinion leaders can absorb all the messages directed at them: What happens when hundreds of professional communicators compete for the limited time, attention, and affect of these relatively few people? Do they learn to set up effective defenses against all kinds of information programs? Do they have the time and energy to distinguish between messages on behalf of trivial and significant causes, or are they disposed instead to tune out all efforts to reach them with special pleading? It would be ironic, indeed, if the inordinate efforts by professional communicators to reach these high priority audiences were to result in their becoming immunized to these messages.

Public opinion research

The most widely used social science research tool employed in public relations work is the public opinion research study. In many instances it has provided necessary bench-mark information for measuring the coverage of a public relations effort. However, there are reasons for suspecting that it sometimes is misused in public relations work and that its findings may be misleading. Survey research is most likely to yield fruitful results when the topic under study has rather broad political, social, cultural, or economic implications. If a client’s problems fall into these areas, survey research studies will probably make a contribution to improving his fund of information. On the other hand, if the client’s prime concern is merely to increase public awareness and acceptance of him, this research method may have limited value. The reason is fairly obvious. Countless business firms, government bureaus, voluntary associations, religious bodies, educational institutions, and community action groups are clamoring for the limited time and interest of the general public. It is totally unrealistic to expect that the average person has more than a most superficial acquaintance or interest in many of these groups. So it happens that a survey that simply asks whether the public knows and approves of certain of these groups is likely to turn up a very high percentage of Don’t Know’s or No Answer’s. Even those who may profess to know these organizations and to hold an opinion about them often turn out, on more intensive investigation, to have only the barest impression of them.

Under these circumstances other social science concepts may offer greater promise for understanding how the public relates to these institutions. For example, it would be useful to know a good deal more about the gratifications and frustrations that people obtain from relating to the impersonal institutions in our society and whether they really expect these institutions to establish an identity and a relationship with them. The literature on personality theory and the socialization of adolescents and adults seems pertinent in such an inquiry.

Implicit in all public relations efforts is the belief that favorable attitudes are desirable and unfavorable attitudes are to be avoided by clients. Why? Do favorable attitudes really get translated into action and how is this done? In some instances, public relations programs seem to supplement marketing and advertising efforts in influencing the sale of a product. In political life, they probably play some role in determining how votes are cast. But the effectiveness of many information and public relations programs is blunted simply because they do not provide the public with guidance as to what steps it should take to effect the desired change. How often do unfavorable attitudes get translated into actions that are damaging? Every public relations man can cite several horrendous examples of how unfavorable publicity and adverse public reactions led to a drop in sales, the passage of unfavorable legislation, or some other specific action against the offending organization. But these represent specific examples of what happens occasionally when the anger of the public is aroused. We know very little about the significance and possible consequences of a low-grade, unfavorable attitude that persists over time but is not related to any single episode. Does the general public have sufficient involvement in the political process, for example, to translate these simmering disapprovals into action?

From the point of view of a client, may there not be penalties associated with encouraging the public to feel that its voice should be heard in the decisions of management? Does it ever happen that a public relations program becomes too successful and generates pressures from outside groups, which intrude needlessly on the decision-making process of an organization? In fact, does the public truly expect the many large and relatively remote organizations that make up our society to establish rapport with them?

As public relations becomes increasingly a world-wide activity, it is desirable that a careful examination be made of the extent to which its practices and concepts, which have been developed in Western cultures, are applicable to other parts of the world. Public relations programs in Europe and America are predicated on the assumption that their audiences have some level of literacy and free access to the media of communication and that means are available for them to distinguish between the primary and secondary institutions of society. These distinctions may be blurred in cultures where the family and the community take on a far more significant role in the communications network and where an etiquette of listening and responding to strangers may hide the true feeling of an audience.

One of the ironies of public relations today is that it continues to draw from the same small reservoir of academic studies for its intellectual rationale, while all the time having within its own files raw data that might make a significant contribution to communications theory. Simply to list a few topics on which public relations people devote considerable research effort will illustrate the wealth of unexploited data that are collected for the specific needs of a client but that may be suitable for secondary analysis and publication: pretest studies of how best to organize messages in order to win the attention of an audience; research on how frequently the same message should be repeated in order to attain optimum impact; and studies of the relationship of the creditability of the communicator and his trade-mark to an audience’s predisposition to listen and believe.

Public relations is a new field. Often its own public relations has been poor, especially in dealing with the intellectual community. But in our fragmented and impersonal society, it is being called upon increasingly by a variety of groups to help them communicate more effectively. Its programs influence the lives of many, and for that reason its methods and philosophy deserve careful scrutiny. It represents an important means of developing consensus on problems facing our society, for it permits specialized groups and interests to articulate their points of view. In addition, public relations may help to serve as one of the consciences of a community. Effective programs on behalf of worthy causes make it difficult for anyone to avoid involvement in serious community and national problems. Still another positive function of public relations is that it has legitimatized the right of any group to speak out in support of an intellectual position, however unpopular it may be. Responsible citizens are forced to ask themselves whether there may not be two or more sides to a public question. Finally, the practice of public relations has made it necessary for those who communicate on behalf of the special interests of a client to stand up and be counted. By readily identifying the sponsors of a particular message, the public is better able to evaluate the message and the context in which it is proffered.

Public relations continues to be viewed in a narrow and stereotyped way in many quarters. This is unfortunate, for only as the status of public relations is enhanced can it hope to recruit into its ranks persons of superior talent and ethical responsibility.

Robert O. Carlson

[Directly related are the entriesAdvertisingand Communication, Mass.Other relevant material may be found inAttitudes; Propaganda; Public Opinion; Survey Analysis].


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Newsom, Earl; Carlson, Robert O.; and Knott, Leonard L. 1959 Feedback: Putting Public Relations in Reverse. Pages 148-162 in Dan J. Fenn, Jr. (editor), Management’s Mission in a New Society. New York: McGraw-Hill.

Nielander, William A. 1948 A Selected and Annotated Bibliography of Literature on Public Relations. University of Texas, Bureau of Business Research, Bibliography, No. 3. Austin: The Bureau.

Pimlott, John A. R. 1951 Public Relations and American Democracy. Princeton Univ. Press.

Public Relations Journal. -” Published since 1945.

Public Relations News. -> Published since 1944.

Public Relations Quarterly. -“Published since 1937.

Public Relations Society Of America, Inc. 1966 An Occupational Guide to Public Relations. New York: The Society.

Ross, Irwin 1959 The Image Merchants: The Fabulous World of Public Relations. Garden City, N.Y.: Double-day.

Safire, William L. 1963 The Relations Explosion: A Diagram of the Coming Boom and Shakeout in Corporate Relations. New York: Macmillan.

Simon, Raymond (editor) 1966 Perspectives in Public Relations. Norman: Univ. of Oklahoma Press.

Steinberg, Charles S. 1958 The Mass Communicators: Public Relations, Public Opinion, and Mass Media. New York: Harper.

Stephenson, Howard (editor) 1960 Handbook of Public Relations. New York: McGraw-Hill.

Wiebe, Gerhart D. 1951 Merchandising Commodities and Citizenship on Television. Public Opinion Quarterly 15:679-691.

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Public Relations Firm

Public Relations Firm



757 N. Main Street
Morgan MI 48104

April 1, 1987

This business plan is for a public relations firm offering both traditional and non-traditional public relations services. It features highly developed goals, strategies for networking, a detailed discussion of the competition in the area, and comments from experts in the field.

  • purpose
  • executive summary
  • comments on the market
  • the opportunity
  • the market
  • definition of the business
  • objectives, goals and strategies
  • comments on the business
  • history
  • management and board of advisors
  • competition
  • comments on competition
  • plan for development
  • potential weaknesses of the business
  • additional resources
  • financial information

SHP and Associates serves the needs of companies for quality business communications. It has the ability to help clients formulate and enunciate their information to important audiences in a controlled and professional manner. Its principals are practiced business professionals and communicators. Its associates are able business analysts, writers, trainers, designers and graphic specialists.


This Business Plan indicates that the principals and those associated with the business have defined the business as well as possible using available information and judgment. Further, that they have thought through the issues and created practical, workable strategies; that they have reasonable, prudent and achievable goals; and that they have a realistic assessment of the probability of success for the business and a sound plan to build it.

This plan is to be a living document that we will revisit regularly, especially in the first year of development.


SHP and Associates (SHP) is a business communications firm. It was formed by two experienced business and public relations executives to work in the areas of corporate, financial, marketing and management communication. It serves the corporate relations needs of emerging and operating technology and industrial businesses in the southeastern Michigan region, particularly Morgan.

The firm has operated on a part-time consulting basis with a few clients since 1984. Its principals are seasoned businessmen who have served in executive marketing, communications and financial management positions for a number of large international concerns.

The firm is similar in concept to other traditional marketing or public relations firms. However, it differs from such firms in several important aspects:

It has sound relationships with executives at many operating businesses in its market area, as well as with senior partners in the region's leading legal and accounting firms and senior executives of financial institutions. These relationships with influences and venture capitalists are important to the business because they can provide SHP with immediate awareness and exposure with a large core of influential peers.

A Board of Advisors composed of industrial, marketing and financial executives of business and financial institutions and universities has been assembled. This Board serves as a consulting and directive body to assist the firm in securing and conducting its basic business.

SHP offers independent professional counsel and expertise that can be used by clients on an "as needed" basis. This means clients can benefit from such expertise when they require it, on a project or continuing basis. Clients need not retain an expensive house staff.

SHP has close working relationships with specialty firms to get the best work for clients. These specialists are in existing and established firms that maintain selected areas of expertise in video, art and design, training, and typography. This permits SHP principals to concentrate on developing clients rather than building staff and facilities.

Its principals, Mr. John Smith and Mr. Mike Johnson, have industrial operating business experience, thereby giving them a very real understanding of the kinds of tough business and marketing issues faced by corporate or divisional operating managers. SHP principals are not mere communications professionals; rather they are experienced and accomplished business executives who bring business acumen to any company's requirement to communicate its product, people, and related messages in a disciplined and planned way to its chosen audiences. Mr. Smith and Mr. Johnson have held the following positions: Director of Communications, Controller, Vice President of Advertising and Public Relations, Vice President of Marketing, Vice President of Sales, and Vice President of Corporate Operations.

SHP is developing complementary marketing relationships with a network of existing communications firms in Boston, New York, Chicago, and San Francisco. These enable SHP to conduct research or implement activities in those areas on a cost-effective basis.


"This area is well into the phase of requiring a sound infrastructure to support all the excellent area entrepreneurial businesses that have moved out of the start-up phase and into the operational phase. Your kind of business, which can help with market positioning and pinpointing these companies communications, is the key to that infrastructure."

Tom Porter
Partner, Enterprise Management Inc.
Chairman, New Enterprise Forum

The Morgan area "is improving for your kind of business because many companies need help but not necessarily on a regular basis. They don't have resources to staff up, but they do have the needs and resources to expend for major projects."

Dr. John Psarouthakis
Founder, Chairman and President
J. P. Industries

"I know several banks and companies that need your kind of service and will use you - assuming you do quality work at reasonable coston an as-needed basis."

George H. Cress
Citizens Trust Co.


"Communications, especially public relations, is growing in every phase of business. An entire redefinition of business communications is taking place and all kinds of companies are looking at how they can communicate most effectively with their audiences, be they investors, customers, communities or employers."

Robert Strayton
President, Advanced Technology Division
Hill and Knowlton

SHP's role is to serve the needs of clients in the newest wayby putting senior executives with broad skills and sound judgment to work on every account.

The Morgan area "is much like the Silicon Valley in California was 12-15 years ago. That is, the infrastructure is now developing here to support the growing number of successful technology businesses as well as the solid operating companies that already exist in the area. That infrastructure includes communications, law and accounting firms. It also includes the general growing awareness the commercial businesses are finding the area a good place to be."

Mike Johnson
SHP & Associates


The geographic marketplace for SHP is primarily southeastern Michigan, with the highest concentration of effort initially aimed at the Morgan area. It has several substantial existing businesses as well as numerous smaller ones and others spawned by University of Michigan work. Also, the Morgan area is best known to SHP principals; Mr. Smith has worked and resided in the area for most of the past 20 years; Mr. Johnson for the past seven.

Two additional target areas for the business are Toledo and Grand Rapids, both excellent industrial sites. These areas will be explored through complementary relationships with existing communications firms, or with legal or accounting firms or printers.

In the primary target market of southeastern Michigan and northern Ohio, there are approximately 600 businesses that are included in the industrial technology areas. Of these, it is estimated that about 100 now use services in the marketing or financial communication areas; another 50-75 could use such services but do not at this time. These estimates are based on the known number of public companies, client lists of the approximate 30 firms now conducting such business, directories of business from chambers of commerce and Crain's Detroit Business and the Michigan's 100 Leading Securities book of First of Michigan Securities.

In terms of market size, SHP's competitive analysis shows that the approximate 30 firms doing business in this region had a combined total of $ 10 to $ 11 million net fee income in 1986, up from about $6 million in 1981. (Figures based on firms' reports published in Crain's Detroit Business and Jack O'Dwyer's newsletter, the leading PR industry trade publication.)

SHP believes it will build its business in two years. First by gaining accounts from businesses that do not now employ outside communications counsel. Second, over time by gaining accounts from businesses now employing competitive firms.

Further, some five of the 30 firms have been started in the past year, thus indicating decent success at opening this type of business. While this has added to the competition, the five new firms have not been directly in the financial and marketing segment served by SHP.

The type of firms SHP has targeted are:

  • Public, with need for financial relations work
  • Private and positioning to go public
  • Public or private with clear need to communicate with customers and prospects in a controlled, direct manner

Annual revenue in range of $2 to $ 150 million, and particularly in the $25 - $75 million range. Larger firms are also targets although most have in-house staffs to conduct such communications work and are not, therefore, deemed primary targets at the early stage of SHP's business.


This is being created in Phase I through use of the business leaders' network, meetings and presentations with principals of targeted accounts and a mailing to targeted and secondary accounts. It will be broadened in June by official announcement of the business.


In the four county area, which is the initial phase focus of SHP, there are the following businesses: 105 public companies, 100 private, 33 service, 36 manufacturing, 15 bank holding, 14 savings and loans, 31 wholesale and retail, 15 large accounting, 25 large advertising agencies, 15 large law firms, 15 engineering firms, 10 health maintenance organizations, 15 general contractors, 25 large hospitals, 24 divisions or subsidiaries of larger corporations, and 1 major governmental research agency.

The focus of SHP for its three business segments will be:

Marketing Positioning

100 private firms, 105 public firms. Especially those in the $1-5 million revenue range whose markets are unclear and that are run by technically-oriented entrepreneurs.

We are directing our marketing efforts toward them through affiliation with the 1600-member Michigan Technology Council, through venture capitalists who have funded such firms, and through our executive network.


36 manufacturing firms, 1 governmental research agency, 33 service firms. Our marketing efforts are being directed through the executive network, mailing to target accounts, affiliation with Human Resource Development Systems and one key start up reference account.


105 public companies, 100 private firms, firms which recently went public. We are directing our marketing effort through affiliation with an existing PR firm which does not do corporate/financial work, and the executive network.


SHP and Associates is a partnership of professional business executives with expertise in specific areas of marketing, financial and management communications and special events.

SHP and Associates offers professional expertise in areas often needed by industrial and technology businesses on a project or interim basis.

This practice means clients can use SHP for its expertise on an as-needed basis, clients do not have to retain internal staff and they gain the benefit of having experienced counsel to meet needs as they arise. Such services are also available under ongoing programs.

SHP offers these communications services and products.


  • Media relations
  • Corporate identity programs
  • Annual and quarterly reports
  • Private and public offerings
  • Annual meetings
  • Company positioning
  • Speeches and presentations
  • Security analyst relations


  • Business and trade articles, news releases
  • Market research - focus groups and surveys
  • Customer newsletters and videos
  • Marketing plans and presentations
  • Product and market segmentation and positioning
  • Sales training/incentive programs
  • Product introductions
  • Seminars and employee training/motivational programs
  • Telemarketing


This section outlines the reasons why SHP and Associates can be built into a successful firm. The section contains the non-changing objectives, 1987 goals and 1987 strategies as to how those goals will be achieved.


The objectives of SHP are:

Be a profitable, recognized, respected and authoritative professional leader in its field and market area, as judged by the amount and quality of business it has.

Provide a range of business communications services that are a positive benefit to clients we serve.

Goals and Strategies for 1987

Goal 1

Be a successful start up, emerging from the year with sufficient business to insure profitable operation in 1988. This net fee income base for 1987 will be $125,000 by year end.


Secure sufficient business to insure that we meet plan. Do this by gaining aminimum of eight accounts by year end.

Goal 2

Establish the firm's reputation and awareness among the entire prospect base, the media, the financial community and in the trade, thus helping to position it in order to be able to secure reasonable growth planned for years two and three. Basis of judgement here to be eight clients by year end.


Successfully complete all work for clients and build awareness and credibility of the firm by marketing these results.

Provide communications products, thus directing the business to the areas for which it desires to become known.

Provide the benefits of the firm's accumulated knowledge and expertise in marketing and communications to counsel and guide where there is apparent client need.

Goal 3

Attract sufficient investment to insure the ability to direct attention to building the business successfully and not diverting attention to fund raising or other ancillary activities.


Work with investors, banks or other appropriate financial institutions. Do not give up any ownership in the business by raising capital via other private investors.

Establish separate corporations which will work together under the joint venture of SHP & Associates.


"98 percent of all businesses that fail do so because of the lack of expertise of management in the business, or management's incompetence."

The Business Plan
Price Waterhouse

"Any consulting business must never try to be all things to all people. You must direct your work and be able to perform better than your competitors in those certain select segments."

Dr. John Psarouthakis
Founder, Chairman and President, J. P. Industries

"Three things are needed for an entrepreneurial business to succeed: the best people, the resources those people need and the environment they need."

John Barfield
Founder, Barfield Companies

"The best things a good businessman has going for him are his integrity and reputation."

John Daly
Vice Chairman, Johnson Controls


The firm began partial operations in 1984 as a consulting business serving different computer and software companies.

It functioned as Michael Johnson Associates and was run on a part-time basis. The firm's primary area of business was the preparation of marketing and communications plans, with some implementation work. Clients of the firm in this period included JM Systems Corporation, Data Logic Systems, Dynagraphic Systems Corporation, and others.

In the summer of 1986, Johnson became associated with John Smith. They produced a 50th anniversary celebration plan for Huge Firm International, a division of Huge Conglomerate Inc., in addition to developing other marketing and public relations activities, projects and programs for industrial and technology companies.

Mr. Smith and Mr. Johnson direct the business. In addition, SHP uses business and technical writers, designers, graphics specialists and other support staff to conduct assignments. Also, the firm has a business relationship with an 11-employee professional design and production firm that has been in business since 1975, and a management and sales training firm, Resource Development Systems. Additional business relationships will be structured in 1987 that are complementary to the nature of SHP's business. That is, with existing established communications and marketing firms that offer services synergistic to SHP's. This will include complementary marketing agreements with existing communications firms in New York, Minneapolis, Chicago and Boston, as well as agreements with an audio-visual firm. Freelance researchers and writers will be employed on an as-needed basis throughout 1987; there are no present plans to employ additional staff.


SHP and Associates is a business partnership with Michael Johnson and John Smith as principals. The goal is to incorporate as separate businesses and form the joint ventures of SHP & Associates. The firm also has Board of Advisors, as follows:

  • T. Randall Macintosh, Group Vice President and Director, Inc., $70 million computer software firm.
  • George Coswell, President, Big Insurance Co.
  • Joseph Gerald, President, Huge Firm International, a Huge Conglomerate Company.
  • Dr. Thomas Kennedy, Associate Dean and Professor of Marketing, Graduate School of Business Administration, University of Minnesota.

The above individuals are available for references, also. Additional references and a current client listing are available upon request.


There are some 30 general and specialized public relations and communications firms already in the marketplace in which SHP operates. These include large, established firms with substantial financial, people and customer resources; smaller general and specialty firms that have unique market niches; and individuals who perform freelance work. In general, many of these firms are run by former newspaper or broadcast people ("communicators") whose business experience, understanding and acumen is not high.

It is estimated that these firms have net fee income of approximately $10-11 million annually, and that this number has increased from $5-6 million annually five years ago. These estimates are based on published figures for firms in the attached competitive analysis. Another relevant factor is the number of start ups that have been successful and have thus added to the total market size.

Competition also includes in-house staffs, although this is primarily confined to the larger companies in the area. Also, such larger firms tend to have larger budgets and therefore use outside resources to augment their own capabilities.

Another element of competition is commonly overlooked, but certainly ever-possible. That is not doing this type of marketing and communications work at all. The reasoning, although believed specious by SHP, is that this type of work is optional to a company, that is does not contribute to the bottom line, to product development, or to sales.

And that may well be for firms that have a unique and solo market niche, ever satisfied customers, no desire to create awareness or generate business leads, or for other reasons.

But for those majority that do not fit such categories, SHP has several differentiators which set it apart from its competition. Those are listed below.

Business Relationship: a network of known industrial, community and academic leaders.

Industrial Operations Experience: first hand knowledge of business operations due to the principals breadth of experience.

Product Specialization: in financial, marketing and management communications areas.

Board of Advisors: of high level business leaders.

Complementary Marketing Agreements: with sound established firms whose skills, geographic range and goals are complementary.

Following is a summary of area firms with which SHP and Associates competes

Frederick Marshall, Detroit

A large firm in the midwest with an annual net fee income in the millions. Specialized in financial and marketing PR and has numerous clients covered by its numerous employees. Has very professional brochures and capabilities book and lists many large companies as clients. Has high fees ($4000 monthly retainer is common at low end). Its market is primarily larger companies with substantial promotional budgets.

DP & Associates, Detroit

DPA has 37 employees and $2.5 million net fee income, double that of four years ago. Much lower visibility than Marshall, but has solid client list in Coopers and Lybrand. Owner is a creative and independent person, known for crisis-type guidance to clients as opposed to the strategy planning and counsel of Marshall. DPA is well regarded for special projects, general publicity and brainstorming ideas with clients. Does much community and charity work and has good ties with the Michigan Commerce Department and area ad firms which do not have PR units.

The Hutchinson Group, Ypsilanti

High competition. Smart people, good work and reputation. Five years old and run by Terrie Hutchinson, a well known promotion woman who created a noted and successful Michigan university fund-raiser. She is well connected and does work for the Chamber of Commerce, accounting firms, Ann Arbor News, Private Industry Council and some 15 other clients. Billings in 19 86 said to be $500K; seven employees, all bright. Not much financial, corporate or marketing work, but deemed to be a primary competitor because of established base and abilities. Primary emphasis is publicity programs; well known capability is staging special events.

Butler Communications, Jackson

Run by Jeff Lehman, who was general manager of the Business Alliance before starting Quorum in 1981. Does advertising, writing, design. Very good growth in hospital promotions-St. Peter's HMO etc. Did 1985 TL Industries' annual report design. Has some lO people. Very well tied to the community to get business leads; has capitalized on these relationships to build the business.

Willis Communications, Southfield

Run by Kelly Willis, an ex-Hamilton PR executive. Aims at high tech companies and does all kinds of brochures, annual reports, articles. Irwin Magnetics, La-Z-Boy Chair, Synthetic Vision and Symplex Corporation are or have been significant clients. Probably $100K net fee income in 1986. Willis knows many people and is well liked.

Gabriel Sapetta, Troy

New and aimed at corporate-financial area. One man band with Detroit, Michigan as an account. Has made self known among target audience since he left Hamilton, where he was Director of Press Relations for one year.


None of the firms mentioned are public. Companies of this kind tend to list clients as if they do all the client's work. In fact many, or even most, do project worknot on-going retainer workexcept with the larger companies.

There are many, many competitorsmostly small. Numerous one and two man bands, as well as consultants in select areas who could be competition on some projects.

Large New York or Chicago headquartered firms have never had much good results in establishing outposts offices in Detroit, Minneapolis, Cleveland, or other mid western cities.

Their costs and fees are high and they offer the New York mentality of "tell them how to do it" which is not often accepted well by the typical midwestern businessman. Therefore, they are not deemed to be a significant current factor in competition.

Primary competition we are running into are Hutchinson, Willis, and Sapetta.

Two Chicago-based firms currently have clients in SHP market area. Public Relations Board serves Great Lakes Federal Bank and Interface Systems for financial and investor relations. The Investor Relations Company serves Medstat.


SHP's plan is to divide the start up year of 1987 into two phases: April 1 - June 30 and July 1 - December 31. These activities are planned in Phase I.

Phase I

  1. Build client base
    • Prospect mailing and meetings with top 5-On going
    • Key influencers list
    • 25 next likely
    • Remainder (100)
  2. Complete Business PlanMarch 31
    • Reviews by selected participants
  3. Complete Corporate StructureApril 30
    • Investment
    • Type of structure
    • Establish of Board of Advisors
    • Financial
    • Get reference approvals
  4. Evaluate Complementary Relationships
    • Opportunities April 30
      • TI Group
      • Other design firms
      • Other PR firms
  5. Evaluate facilities May 31
    • Company offices
    • Offices at client sites
    • Offices in, or with, other firms
  6. Conduct work for those clients we gain Ongoing
  7. Announce the business June 1
  8. Complete plan for development for Phase II June 15
  9. Complete Phase III (1988) Plan


  • Too few people to complete work on time, in budget on a consistent basis.
  • Acceptance of projects that are not within the segment of business SHP desires to build; may be especially true in year 1.
  • Financial issues
    • Cash flow inadequate to meet necessary goals
    • Clients may desire to pay less for services the SHP desires to charge
  • Lack of awareness of the firm could cause lack of chance at existing opportunities, especially in first several months.
  • Could be trying to do too many things
  • Not absolutely certain of what the market will buy
  • Competition could beat us out


  • Freelance writers: Marie Caliski, former Business Week writer; Margaret Dayner, technical writer; Ted Moran, business and technical writer
  • Freelance Artists: Mega Group-design and graphics work
  • Management sales and training firm: Resource Development Systems
  • Law firms
  • Accounting firms
  • Family members
  • Secretary
  • Board of Advisors
  • Business executives and others in network
  • Banks
  • Printing Firms
  • University of Michigan Business School
  • Public Relations firms in other cities, and in local area
  • Venture capital firms


"The central question to any business is: who will buy this service or product?"

John Smith, Partner,
SHP & Associates

"The toughest part of a business plan is the sales forecast. You must do your best to understand the environment, outline assumptions, and list controllables and noncontrollables."

Richard David, Partner
Jefferson, Franklin, and Washington



The plan of SHP is not to spend unless it is absolutely necessary or an opportunity becomes apparent at an earlier time than was planned, thus requiring expenditures earlier. This policy will apply through Phase la, at the end of which the policy will be refined to account for expenditures necessary in Phase Ib.

It is the anticipation of the principals of the business that numerous assumptions made in the Business Plan will prove to be wrong, while other unknowns will prove to be a benefit. This is, some planned areas of developing revenue will not workout, while others will arise.


  • Two phases in year 1
    • April 1 - June 30
    • July 1 - December 31
  • No office space paid for until July 1 at least
    • Use TI office
    • Use TI phone answering and message center
    • Use home offices
    • Use offices at client sites
  • No wages until July 1
    • Exception as client engagements are gained individually, or joint projects with work apportioned.
  • Design and production work gratis by TI
    • SHP pays typeset, print costs
  • Probable purchase of used MVI furniture
    • desks, chairs, conference table
    • files, audio-visual equipment, IBM XI computer, phones easel other sources also available - leasing, etc.
  • No public announcement of the business until it is solidified
    • 8 clients
    • Complementary relationships established

Start up Costs (1 year period)

Used IBM XT with hard disk and printer $1500
3 desks and 2 chairs
1 conference table and 4 chairs
2 wood book shelves
2 file cabinets
1 computer table
2 credenzas $5000
Office supplies $ 500
Secretarial help $2000
$500/month × 4 months
Telephone $ 75
$25/month × 3 months
Professional fees
Attorney $1000
Accountant $1000
Printing and mailing
stationery, brochure, business cards $1000
Copying $250
Travel and entertainment $2000
Auto leases $2100
2 × $350/month × 3 months

Second Phase: Year 1 (Ongoing Costs)

Note : partners may only take expenses from business in this phase; depends on size of revenues.
Office space (6 months) $7500
Lease cars (6 × $700/months) $4200
Professional fees
Attorney $ 200
Accountant $2500
Insurance $1500
Travel and entertainment $5000
Wages $10,000
Secretary (6 months)
Partners (6 months)


1st Year 2nd Year 3rd Year
Partnership Billings 93 144 168
Outside Reps/Contractors Billings 20 40 80
In-house Media/Adv Services
Creative 20 80
Printing Etc. 30 120
Gross Income 113 234 448
Cost/Services Provided
Partnership Draws 73 100 120
Outside Reps/Contractor Billings 15 28 55
1st Year 2nd Year 3rd Year
In-house Media/Adv Services
Creative 10 40
Printing Etc. 25 100
Gross Margin 25 71 133
G&A & Other
Rent (includes clerical services - 1st year) 6 5 8
Clerical Payroll & Costs 12 18
Partnership Insurance 5 6
Auto Expenses 8 12 12
Office supplies/Postage 2 5 8
T&E 3 6 12
Telephone 2 6 10
Professional Services, Dues & Subs 3 6 10
Furniture & Fixtures (Expenses) 4 4 4
Other (included adv. promotion, interest exp. & Loan reimb. 7 15 23
Totals 35 76 111
Net Income (Loss) (10) (5) 22
Employees (including partners) 2 2 3/4 4 1/2

SHP & Associates, Inc. "Samples": Analysis/Draws

I II Total
1987 Partners Individual Billings 45.0 48.0 93.0
Outside Reps/Contractors Billings (less costs) 20.5 2.5 5.0
In-House Media/Adv. (less cost)
Gross Billings/Receipts 47.5 50.5 98.0
Less: Operating Expenses 17.5 17.5 35.0
Net Before Loan 30.0 33.0 63.0
Rates: Loan 5.0 5.0 10.0
Net Draw/Taxable 35.0 38.0 73.0
1988 Partners Individual Billings 80.0 64.0 144.0
Outside Reps etc. 6.0 6.0 12.0
In-House Media etc. 7.5 7.5 15.0
1988 Cont'd I II Total
Gross Billing/Receipts 93.5 77.5 171.0
Less: Operating Expenses 38.0 38.076.0
Net Draw/Taxable 55.5 39.5 95.0
1989 Partners Individual Billings 88.0 80.0 168.0
Outside Reps etc. 12.5 12.52 5.0
30.0 30.0 60.0
In-House Media etc.
130.5 122.5 253.0
Gross Billings/Receipts
55.5 55.5 111.0
Less: Operating Expenses
75.0 67.0 142.0
Net Draw/Taxable

SHP & Associates, Inc. Income Analysis

By Income Element 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
Partner's Billings (Retainer etc.)
1987 9 28 27 29 93
1988 34 36 35 39 144
1989 40 42 41 45 168
Outside Reps/Contractors Billings
1987 5 15 20
1988 10 10 10 10 40
1989 20 20 20 20 80
In-House Media/Adv Services
1988 5 10 15 20 50
1989 30 50 60 60 200
By Year
1987Partner's Billings 9 28 27 29 93
Outside Reps/Contractors 5 15 20
In-House Media/Adv.
9 28 32 44 113
1988-Partner's Billings 34 36 35 39 144
Outside Reps/Contractors 10 10 10 10 40
By Year Cont'd 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Total
In-House Media Adv. 5 10 15 20 50
49 56 60 69 234
1989Partner's Billings 40 42 41 45 168
Outside Reps/Contractors 20 20 20 20 80
In-House Media Adv. 30 50 60 60 200
90 112 121 125 448

Profit & Loss Assumptions

  • Partner's draw equal to individual billings and allocations of outside reps/contractor's services (billings less expenses) less 1/2 operations expenses (in first year of operations - partners will equally share responsibility of $20,000 loan line (by individual investor) and will borrow $ 10,000 ($5,000 each) against this line).
  • Partner's will file corporation papers under sub-chapter "S" and will assume income tax liabilities (Federal and State), FICA, etc. as individual payers.
  • Net Income derived from billings for outside contractors and reps, for in-house media services, printing, etc. less expenses for such services will be divided equally among partners.
  • All expenses associated with operations will likewise be born equally by the partners.

SHP & Associates, Inc. Expense Analysissee following page

SHP & Associates, Inc. Expense Analysis

1987 1988 1989
Rent (includes clerical srvs.1987) .8 .8 .8 1.0 1.0 1.1 5.5 5.0 8.0
Clerical Payroll & Payroll Costs 12.0 18.0
Partnership Insurance 5.0 6.0
Auto Expenses 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 8.0 12.0 12.0
Office Expenses .1 .1 .5 .1 .2 .2 .2 .2 .3 1.9 5.0 8.0
Telephone .1 .1 .1 .2 .2 .2 .2 .2 .2 .3 .3 .3 2.4 6.0 10.0
T&E .1 .1 .1 .2 .2 .3 .3 .3 .3 .4 .4 .4 3.1 6.0 12.0
Professional Service, Dues & Subs .6 .3 .7 .2 .8 .5 3.1 6.0 10.0
Furniture & fixtures (expensed) 2.7 1.3 4.0 4.0 4.0
Interest Exp & Loan Repayment 1.0 1.0 6.0 11.0
Other (includes adv/promotion) .6 .1 .9 .7 .1 .1 .6 1.7 1.2 6.0 9.0 12.0
.2 .2 3.5 1.1 1.9 4.9 3.1 2.8 3.4 3.5 4.6 5.8 35.0
3.9 7.9 9.3 13.9 35.0 76.0 111.0

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Public Relations

Public Relations

Public relations describes the various methods a company uses to disseminate messages about its products, services, or overall image to its customers, employees, stockholders, suppliers, or other interested members of the community. The point of public relations is to make the public think favorably about the company and its offerings. Commonly used tools of public relations include news releases, press conferences, speaking engagements, and community service programs.

Although advertising is closely related to public relationsas it too is concerned with promoting and gaining public acceptance for the company's productsthe goal of advertising is generating sales, while the goal of public relations is generating good will. The effect of good public relations is to lessen the gap between how an organization sees itself and how others outside the organization perceive it.

Public relations involves two-way communication between an organization and its public. It requires listening to the constituencies on which an organization depends as well as analyzing and understanding the attitudes and behaviors of those audiences. Only then can an organization undertake an effective public relations campaign.

Many small business owners elect to handle the public relations activities for their own companies, while others choose to hire a public relations specialist. Managers of somewhat larger firms, on the other hand, frequently contract with external public relations or advertising agencies to enhance their corporate image. But whatever option is chosen, the head of a company is ultimately responsible for its public relations.


Some of the main goals of public relations are to create, maintain, and protect the organization's reputation, enhance its prestige, and present a favorable image. Studies have shown that consumers often base their purchase decisions on a company's reputation, so public relations can have a definite impact on sales and revenue. Public relations can be an effective part of a company's overall marketing strategy. In the case of a for-profit company, public relations and marketing should be coordinated to be sure they are working to achieve the same objectives.

Another major public relations goal is to create good will for the organization. This involves such functions as employee relations, stockholder and investor relations, media relations, and community relations. Public relations may function to educate certain audiences about many things relevant to the organizationincluding the business in general, new legislation, and how to use a particular productas well as to overcome misconceptions and prejudices. For example, a nonprofit organization may attempt to educate the public regarding a certain point of view, while trade associations may undertake educational programs regarding particular industries and their products and practices.


Effective public relations requires a knowledge, based on analysis and understanding, of all the factors that influence public attitudes toward the organization. While a specific public relations project or campaign may be undertaken proactively or reactively (to manage some sort of image crisis), the first basic step in either case involves analysis and research to identify all the relevant factors of the situation. In this first step, the organization gains an understanding of its various constituencies and the key factors that are influencing their perceptions of the organization.

In the second step, the organization establishes an overall policy with respect to the campaign. This involves defining goals and desired outcomes, as well as the constraints under which the campaign will operate. It is necessary to establish such policy guidelines in order to evaluate proposed strategies and tactics as well as the overall success of the campaign.

In step three, the organization outlines its strategies and tactics. Using its knowledge of the target audiences and its own established policies, the organization develops specific programs to achieve the desired objectives. Step four involves actual communication with the targeted public. The organization then employs specific public relations techniques, such as press conferences or special events, to reach the intended audience.

Finally, in step five the organization receives feedback from its public. How have they reacted to the public relations campaign? Are there some unexpected developments? In the final step, the organization assesses the program and makes any necessary adjustments.


Public relations is a multifaceted activity involving different audiences as well as different types of organizations, all with different goals and objectives. As a result, there are several specific areas of public relations.

Product Public Relations

Public relations and marketing work together closely when it comes to promoting a new or existing product or service. Public relations plays an important role in new product introductions by creating awareness, differentiating the product from other similar products, and even changing consumer behavior. Public relations can help introduce new products through staging a variety of special events and handling sensitive situations. For example, when the Prince Matchabelli division of Chesebrough-Pond's USA introduced a new men's cologne, there were twenty-one other men's fragrances being introduced that year. To differentiate its new offering, called Hero, Prince Matchabelli created a National Hero Awards Program honoring authentic male heroes and enlisted the participation of Big Brothers/Big Sisters of America to lend credibility to the program. Similarly, when Coleco introduced its Cabbage Patch Kids dolls, public relations helped increase awareness through licensed tie-in products, trade show exhibits, press parties, and even window displays in Cartier jewelry stores.

Public relations is often called on to give existing products and services a boost by creating or renewing visibility. For example, the California Raisins Advisory Board organized a national tour featuring live performances by the California Dancing Raisins to maintain interest in raisins during a summer-long advertising hiatus. The tour generated national and local publicity through media events, advance publicity, trade promotions, and media interviews with performer Ray Charles. Other public relations programs for existing products involve stimulating secondary demandas when Campbell Soup Co. increased overall demand for soup by publishing a recipe bookletor identifying new uses for the product. Public relations can interest the media in familiar products and services in a number of ways, including holding seminars for journalists, staging a special media day, and supplying the media with printed materials ranging from "backgrounders" (in-depth news releases) to booklets and brochures. Changes in existing products offer additional public relations opportunities to focus consumers' attention. An effective public relations campaign can help to properly position a product and overcome negative perceptions on the part of the general public.

Employee Relations

Employees are one of the more important audiences a company has, and an ongoing public relations program is necessary to maintain employee good will as well as to uphold the company's image and reputation among its employees. The essence of a good employee relations program is keeping employees informed and providing them with channels of communication to upper levels of management. Bechtel Group, a privately held complex of operating companies, published an annual report for its employees to keep them informed about the company's operations. The company used surveys to determine what information employees considered useful. A range of other communication devices were used, including a monthly tabloid and magazine, a quarterly video magazine, local newsletters, bulletin boards, a call-in telephone service, and "brown bag" lunches where live presentations were made about the company. Suggestion systems are another effective way to improve employee-management communications.

Other public relations programs focusing on employees include training them as company public relations representatives; explaining benefits programs to them; offering them educational, volunteer, and citizenship opportunities; and staging special events such as picnics or open houses for them. Other programs can improve performance and increase employee pride and motivation. Public relations can also play a role in recruiting new employees; handling reorganizations, relocations, and mergers; and resolving labor disputes.

Financial Relations

Financial relations involves communicating not only with a company's stockholders, but also with the wider community of financial analysts and potential investors. An effective investor relations plan can increase the value of a company's stock and make it easier to raise additional capital. In some cases special meetings with financial analysts are necessary to overcome adverse publicity, negative perceptions about a company, or investor indifference. Such meetings may take the form of full-day briefings, formal presentations, or luncheon meetings. A tour of a company's facilities may help generate interest among the financial community. Mailings and ongoing communications can help a company achieve visibility among potential investors and financial analysts.

Annual reports and stockholder meetings are the two most important public relations tools for maintaining good investor relations. Some companies hold regional or quarterly meetings in addition to the usual annual meeting. Other companies reach more stockholders by moving the location of their annual meeting from city to city. Annual reports can be complemented by quarterly reports and dividend check inserts. Companies that wish to provide additional communications with stockholders may send them a newsletter or company magazine. Personal letters to new stockholders and a quick response to inquiries insure an additional measure of good will.

Community Relations

A comprehensive, ongoing community relations program can help virtually any organization achieve visibility as a good community citizen and gain the good will of the community in which it operates. Banks, utilities, radio and television stations, and major retailers are some of the types of organizations most likely to have ongoing programs that might include supporting urban renewal, performing arts programs, social and educational programs, children's programs, community organizations, and construction projects. On a more limited scale, small businesses may achieve community visibility by sponsoring local sports teams or other events. Support may be financial or take the form of employee participation.

Organizations have the opportunity to improve good will and demonstrate a commitment to their communities when they open new offices, expand facilities, and open new factories. One company increased community awareness of its presence by converting a vacant building into a permanent meeting place. Another company built its new headquarters in an abandoned high school that it renovated. One of the more sensitive areas of community relations involves plant closings. A well-planned public relations campaign, combined with appropriate actions, can alleviate the tensions that such closings cause. Some elements of such a campaign might include offering special programs to laid-off workers, informing employees directly about proposed closings, and controlling rumors through candid and direct communications to the community and employees.

Organizations conduct a variety of special programs to improve community relations, including providing employee volunteers to work on community projects, sponsoring educational and literacy programs, staging open houses and conducting plant tours, celebrating anniversaries, and mounting special exhibits. Organizations are recognized as good community citizens when they support programs that improve the quality of life in their community, including crime prevention, employment, environmental programs, clean-up and beautification, recycling, and restoration.

Crisis Communications

Public relations practitioners become heavily involved in crisis communications whenever there is a major accident or natural disaster affecting an organization and its community. Other types of crises involve bankruptcy, product failures, and management wrongdoing. In some cases, crises call for an organization to become involved in helping potential victims; in other cases, the crisis may require rebuilding an organization's image. In any case, experts recommend that business owners prepare a plan in advance to deal with potential crises in an honest and forthright manner. The main objective of such a plan is to provide accurate information quickly in order to reduce uncertainty. After the San Francisco earthquake of 1989, for example, the Bank of America utilized its public relations department to quickly establish communications with customers, the financial community, the media, and offices in 45 countries to assure them the bank was still operating.

Government and Political Relations

Public relations in the political arena covers a wide range of activities, including staging debates, holding seminars for government leaders, influencing proposed legislation, and testifying before a congressional committee. Political candidates engage in public relations, as do government agencies at the federal, state, and local levels.

Trade associations and other types of organizations attempt to block unfavorable legislation and support favorable legislation in a number of ways. The liquor industry in California helped defeat a proposed tax increase by taking charge of the debate early, winning endorsements, recruiting spokespersons, and cultivating grassroots support. A speakers bureau trained some 240 industry volunteers, and key messages were communicated to the public through printed materials and radio and television commercials.

Public Relations in the Public Interest

Organizations attempt to generate good will and position themselves as responsible citizens through a variety of programs conducted in the public interest. Some examples are environmental programs (including water and energy conservation) and antipollution programs. Health and medical programs are sponsored by a wide range of nonprofit organizations, healthcare providers, and other businesses and industries. These range from encouraging other companies to develop AIDS-in-the-workplace policies to the American Cancer Society's Great American Smokeout. Other programs offer political education, leadership and self-improvement, recreational activities, contests, and safety instruction.

Consumer Education

Organizations have undertaken a variety of programs to educate consumers, building good will and helping avoid misunderstandings in the process. Opportunities for educating consumers might include sponsoring television and radio programs, producing manuals and other printed materials, producing materials for classroom use, and releasing the results of surveys. In addition to focusing on specific issues or industries, educational programs may seek to inform consumers about economic matters and business in general.

Other Public Relations Programs

Other types of programs that fall under the umbrella of public relations include corporate identity programs, ranging from name changes and new trademarks to changing a company's overall image. Special events may be held to call attention to an organization and focus the public's good will. These include anniversary celebrations, events related to trade shows, special exhibits, or fairs and festivals. Speakers bureaus and celebrity spokespersons are effective public relations tools for communicating an organization's point of view. Speakers bureaus may be organized by a trade association or an individual company. The face-to-face communication that speakers can deliver is often more effective than messages carried by printed materials, especially when the target audience is small and clearly defined.


Like other types of organizations, small businesses can benefit from public relations in terms of their relationships with customers, employees, investors, suppliers, or other interested members of the community. Since small business owners are the most visible representatives of their own companies, they frequently handle many of the public relations functions in person. If the activity is principally associated with public appearances and participation in public events, the owner's natural abilities will be to the fore. But if a campaign needs to be launched, and funds are available, professional help may well be needed.

Effective PR professionals will be, above all, knowledgeable about press relations. For on-going and routine assistance, the small business is well served by engaging the services of an experienced free-lance writer with an extensive journalism background now specializing in helping companies "tell their story." Such individuals, very often one-person operations, have wide contacts and know not only how to prepare but also how to get materials placed with the right media. If a large campaign looms ahead, such consultants are also the ideal contact for selecting the right firm for a major campaign.

While communication is the essence of public relations, an effective public relations campaign is based on action as well as words. Whether it is practiced formally or informally, public relations is an essential function for the survival of any organization. Small business owners cannot afford to neglect public relations. But lavish parties and gifts are not necessaryit is possible to vastly improve a small business's image within its community while also controlling public relations expenditures. Sponsoring a local softball team, speaking at a chamber of commerce meeting, and volunteering at a neighborhood clean-up are among the wide variety of public relations activities readily available to small businesses.

see also Community Relations; Press Kits; Press Releases


Harrison, Sheena. "Spend, Target Ad Dollars Wisely." Crain's Detroit Business. 16 January 2006.

Newsom, Doug, and Jim Haynes. Public Relations Writing. Thomson Wadsworth, 2005.

Nucifora, Alf. "Small Businesses Need Positive PR." Dallas Business Journal. 19 May 2000.

"Opinion: Big firm versus small is not PR's most compelling battle." PR Week. 24 April 2006.

Treadwell, Donald, and Jill B. Treadwell. Public Relations Writing: Principles in Practice. Sage Publications, 2005.

                                   Hillstrom, Northern Lights

                                    updated by Magee, ECDI

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Public Relations


Public relations (PR) is a profession that includes the functions of communication, community relations, crisis management, customer relations, employee relations, government affairs, industry relations, investor relations, media relations, mediation, publicity, speechwriting, and visitor relations. The first World Assembly of Public Relations Associations, held in Mexico City in August 1978, defined the practice of public relations as "the art and social science of analyzing trends, predicting their consequences, counseling organizational leaders, and implementing planned programs of action, which will serve both the organization and the public interest."

With the advancement of the profession, in 1988 the Public Relations Society of America (PRSA) adopted a short definition, "Public relations helps an organization and its publics adapt mutually to each other." In 1994 the British Institute of Public Relations offered its definition: "Public relations practice is the discipline that looks after reputation with the aim of earning understanding and support, and influencing opinion and behavior." Although these definitions vary to some extent, they all imply that the fundamental functions of PR are communicating and improving the behavior of an organization and the perceptions of that behavior by its clientele.


People sometimes confuse public relations with advertising and propaganda. Actually, they are different.


The purpose of advertising is to stimulate consumers' desires for a product or service and to motivate them to buy that product or service. Designing advertisements, preparing verbal and graphical messages, and buying time and space from the mass media for their exposure are the tasks of advertising. When necessary, PR professionals will use advertising as one approach to building goodwill and creating proper public attitudes toward their organizations. Tobacco companies' goodwill ads and television commercials are one example of such a use.


The purpose of propaganda is to generate conditioned reflexes among people in order to replace their reasoned actions with the conditioned reflex. Propaganda is used to brainwash people with a doctrine and then mislead them, and obviously the term carries a negative connotation. Some commonly used propaganda devices are:

  • Name calling, which creates a positive or negative characterization, such as "he is wise and conscientious," "he is a liar," or "she has character!"
  • Emotional stereotyping, which evokes designed images, such as "housewife," "foreigner," or "geek"
  • Bandwagon, which creates a theme of "everyone else is doing it, and so should you"
  • Card stacking, which provides distorted information by telling only one side of the story


To carry out its fundamental functions of communicating and improving the behavior of an organization and the perceptions of that behavior by its constituents, PR professionals practice these major activities: researching the market and public opinion, planning and implementing PR campaigns, and counseling management.

Researching the Market and Public Opinion. The foundation of good PR strategies is conducting research on the market, public opinions, and circumstances on which public opinions are formed. Research enables PR professionals to identify an organization's target market and to discover what they think. Survey questionnaires and structured interviews are useful methods for collecting data from the potential market and analyzing and interpreting public opinions, attitudes, issues, and circumstances that might affect the operations of the organization positively or negatively. In some cases, PR professionals can gather information about their market and public opinion from secondary data, that is, data collected and published by others, such as government agencies, industry groups, professional organizations, research institutions, and universities.

Planning and Implementing PR Campaigns. Based on these research findings, a PR professional is able to plan and implement campaigns for bringing an organization's mission and objectives to the attention of its constituency, enhancing two-way communication and mutual understanding, and influencing or changing public opinions and policies. Planning and implementing a PR campaign involves setting objectives, budgeting, recruiting and training staff, developing persuasive messages, selecting appropriate media, working with the media, monitoring the campaign, coordinating various relations, evaluating outcomes, and managing the resources needed to perform all of these activities.

Counseling Management. Experienced PR professionals also act as advisers or counselors to organizations, which are committed to fulfilling their organizational citizenship and social responsibilities. Such professionals have developed reputations for anticipating potential issues that may affect public opinions and policies, helping organizations prepare for and deal with crisis communication, assisting organizations in establishing and maintaining good government relations, and helping organizations improve labor-management relations.


PR serves a purpose for a variety of organizations, including public and private corporations, trade unions, foundations, hospitals, industry groups, professional associations, schools, and universities, as well as government agencies. PR professionals provide organizations with new opportunities because they interact with more internal and external audiences than anyone else in the organizations. They serve as the eyes and ears of top-level executives to keep them informed of what is really happening "out there," thereby overcoming executive isolation. PR professionals also help organizations manage changes through effective communication internally and externally, thereby reducing resistance and criticism from employees and other constituencies and increasing organizational competitiveness.

In addition, PR helps this complex, pluralistic society reach decisions and consensus more effectively by contributing to mutual understanding among individuals and organizations. It serves to bring private and public policies into harmony.

Finally, efficient public relations campaigns protect organizations when they are in crisis. A classic example is when Johnson & Johnson faced a crisis in late 1982 when an unknown murderer laced Extra-Strength Tylenol capsules with cyanide, causing the deaths of seven people in Chicago. With the counsel of Burson-Marsteller (a PR firm), the company responded to the crisis in a very effective and expeditious manner. As a result, Johnson & Johnson's PR campaign was so successful that not only did its Tylenol products make a successful market comeback, but its public image as a socially responsible company was greatly enhanced.


PR professionals and their organizations have ethical responsibilities to at least these publics: clients, news media, government agencies, educational institutions, consumers, investors, communities, competitors, and critics. As the PRSA Member Code of Ethics 2000 states, PRSA members are committed to ethical practices. The code is designed as a guide for PRSA members to carry out their ethical responsibilities.

see also Communications in Business ; Customer Service ; Publicity


Marconi, Joe (2004). Public relations: The complete guide. Mason, OH: South-Western.

Newsom, Doug, Turk, Judy V., and Kruckeberg, Dean (2004). This is PR: The realities of public relations (8th ed.). Belmont, CA: Wadsworth/Thomson Learning.

Public Relations Society of America. (n.d.). About public relations: Official PRSA definition. Retrieved November 21, 2005, from

Public Relations Society of America. (n.d.). PRSA member code of ethics. Retrieved November 21, 2005, from

Jensen J. Zhao

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public relations

public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most favorable light. Thus, the goal of the public relations consultant is to create, through the organization of news and advertising, an advantageous image for his client, be it a business corporation, cultural institution, or private or public individual; toward this end—the making of favorable public opinion—many research techniques and communications media are used. Although many of the same methods are employed, public relations differs from propaganda, which is generally government supported, international in scope, and political in nature. The earliest form of public relations and still the most widely practiced is publicity. The principal instrument of publicity is the press release, which provides the mass media with the raw material and background for a news story. The growth of modern public relations is generally attributed to the development of the mass media, which accelerated the spread of ideas and increased the importance of public opinion by giving more people access to current events. Public relations as a field can be traced to the early 20th cent., when American businessmen found it necessary to respond to attacks by social reformers. A milestone in the industry was the opening (1904) of Ivy Lee's publicity office in New York City. Soon there were other firms in the field, and by World War I the concept of public relations had gained general acceptance. Public relations techniques have been widely used in politics and political campaigns. By the 1960s the public relations agency had become a fact in American life, numbering among its clients branches of national, state, and local government, industry, labor, professional and religious groups, and some foreign countries.

See B. R. Canfield, Public Relations (5th ed. 1968); E. L. Bernays, The Engineering of Consent (3d ed. 1969) and Public Relations (1970); S. M. Cutlip and A. H. Center, Effective Public Relations (4th ed. 1971); J. F. Awad, The Power of Public Relations (1985); E. W. Brody and G. C. Stone, Public Relations Research (1989).

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public relations

pub·lic re·la·tions • pl. n. [also treated as sing.] the professional maintenance of a favorable public image by a company or other organization or a famous person. ∎  the state of the relationship between the public and a company or other organization or a famous person: companies justify the cost in terms of improved public relations.

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