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Entrepreneurial Marketing in SME's

Contents
  • Summary.
  • Introduction.
  • Entrepreneurial Marketing in SMEs.
  • Strategic Marketing.
  • Competitive Advantage.
  • Strategic Competence.
  • Risk Assessment.
  • Marketing Tools and Techniques.
  • Innovative Marketing.
  • Marketing by Networking.
  • Conclusion..
  • References.

Summary

Purpose: The purpose of this report is to present an academic review of marketing (entrepreneurial marketing) within SMEs.
Findings: The small business owner/ entrepreneur needs to follow the 6-Fold contingency cycle of entrepreneurial marketing to sustain and succeed in the long-term.
Keywords: Marketing, Entrepreneurial Marketing, Marketing Strategy, SMEs, Entrepreneurship, Strategic Marketing

Introduction

Gilmore (2011) states that new ventures and Small & Medium-Sized Enterprises (SMEs) are very important to the economies, they alone account for 99.9% of the economy in the UK of all the enterprises (Department for Businesses, 2016) a figure exhibited worldwide.
A further research conducted by SBA (2014) suggests that 20% of small businesses fail within 2 years of set-up and 50% in 5 years. It is further found that even though SMEs increase employment opportunities their number is declining, statistically around 500,000 business’s start each year, but less than half survive 5 years or more (SBA, 2014). Chaston and Mangles (2002), add on that one of the main factors leading to the failure of SMEs is the minimal attention given to market research while developing a start-up business plan. On the contrary Carson et al. (1995), suggests that the most common reason for an SMEs failure is inadequate marketing, a general weakness of SMEs.
According to various academicians and professionals the growth and success of a small business is majorly dependant on the small business owner or entrepreneur and their individual characteristics (Stanworth and Gray, 1991), from their innovation and creativity (Mishra et al, 2010; Ly, 2014) to their psychological personality traits (Perry et al, 1988; Chaston and Mangles, 2002) combined with their propensity to take risks.
Chaston (2014), adds that all firms, no matter their size are dependent on the customers purchasing their products or services in volumes for their long-term survival and growth. This can be achieved by recognizing the needs of the customers and make them available with a greater level of customer satisfaction in context to the competitors. Cambridge (2009) contemplates that the activity that adjoins the understanding and customer satisfaction constitute the basic element of managerial function known as “Marketing”.

Entrepreneurial Marketing in SMEs

Palmer (2012) found that the modern concept of marketing comprises of:
· Identification of the market (you are operating in) & customers
· A good understanding of the customers’ needs and wants
· Meet the customer requirements better than the competitors
· Develop the products or services in context to the customer requirements
· And, accomplish these at a profit.
Over the year’s academicians have come up with several definitions of marketing, but CIM (Charted Institute of Marketing) entails all of the pillars of marketing effectively and efficiently:
The management process which identifies,
anticipates, and supplies customer requirements efficiently
and profitably.” (CIM, 2007)
Figure 1: What is marketing? (CIM, 2016)
Entrepreneurship researches for many years focus on firms to understand what makes them notably successful (Scott and Rosa, 1996). With the evolution of marketing the dominant focus is on how firms can satisfy and meet their customer’s needs. Morrish (2011) regards customer orientation as the mantra of successful organisations.
Morrish (2011) further suggests that, even though these analyses are relevant in literature, the business founder/entrepreneur plays a major role in the success of the business. The role of the entrepreneur is widely acknowledged in shaping the marketing landscape. Small businesses don’t have access to resources like large organisations, therefore the small business owner/entrepreneur often relays on creative and innovative ways to sustain in the longer run. Hills and LaForge (1992), contemplate this research and found that there are four ways of effective entrepreneurship – creation of an organisation, uniqueness, innovation, and growth – Morrish et al. (2010) reasons that each factor has a special relevance which affects the dynamics of the market and the marketing management process within an entrepreneurial organisation, thus the concept of Entrepreneurial Marketing (EM).

Strategic Marketing

Chaston (2016), states that the emphasis of an organisation managing the marketing process is on a clearly defined and formalised marketing strategy. The aim of a marketing strategy is to accomplish the organisations aims and objectives through a competitive advantage, it involves the effective utilisation of the marketing mix (Chaston, 2016).
According to Dess et al. (1997), the success of an EM strategy depends on the firm’s understanding of its competitive environment, the organisations structure, the companies positioning on the ProductLife Cycle (PLC) curve and finally the nature/flexibility of the organisation i.e. weather it is dynamic with the technological and environmental changes.

Competitive Advantage

A firm’s primary objective is to maximise profit and at the same time fulfil the needs and wants of the customers (Morrish, 2011; Head, 2014). Profitability is increased when the firm has a competitive advantage over its competitors, therefore the understanding of where the firm’s advantage lies is a crucial element for businesses wanting to differentiate in the marketplace (Morrish, 2011).
Varadarajan (2009, p. 1) found that strategic marketing comprises of an analysis of the organisations interactions within the marketplace, i.e. “the consumers, customers, competitors and other external constituencies”, and achieving sustainable competitive advantage in association with the concept of planning to achieve goals. Strategic marketing is effective solely when the marketing function is successfully implemented across all the areas of the business and marketing activities that display the organisations short and long-term goals combined with their core competencies and obtainable resources (Varadarajan, 2009).
Morrish et al., (2010) suggests that the concept of EM is the proposition that competitive advantage can be achieved by the unique positioning of the products/services sold at cheaper prices and a USP, which can be obtained with the combination of distinguished elements like branding and production methods which enable the business to stand out of the competition. Morrish et al.’s (2009) conceptualisation of EM strategy is defined as a proactive, opportunity-focused process by Cirque du Soleil’s marketing strategy.
Know your Unique Selling Proposition (USP)
Head (2014) suggests that to be successful in a competitive marketplace the business owner/entrepreneur needs to understand and highlight their products or services’ unique benefits/features to their target customers.
Target Customer
Head (2014) states that the primary decision in any marketing strategy is to describe your target market and understand their needs and wants, this question should be answered clearly before executing and marketing tactic effectively. Once the business owner/entrepreneur defines its competitors and its customers, they need to make a list of things/qualities/features that distinguishes them form their competitors (Searson, 2013).

Strategic Competence

To sustain in the longer run the organisation needs to be dynamic, i.e. scan the environment for new market trends and determine how the organisation’s internal capabilities can be utilized to exploit emerging opportunities (Forsman and Temel, 2011). Degarvel (2012) adds that during the analysis/environmental scanning phase, the business comes across several opportunities, it is the role of the business owner/entrepreneur to select the opportunity beneficial in the longer-run.
In the world of e-commerce Ghosh (1998) proposed 4 distinct strategic marketing opportunities that illustrates the issues involved in evaluating a strategic opportunity:
1. Establishment of a direct link with the customers/stakeholders to complete transactions or understand their needs and wants (e.g. the development of a website/webpage to reach more customers);
2. Use of technology to bypass others within value chain;
3. Development and delivery of new products and services; and
4. Become the dominant player with electronic channel of specific industry (e.g. market development in competition with other small suppliers).
- Chaston (2014)
Sustaining Strategy
With the internet having maximum influence on both, the private and the public sector, it is crucial for any organisation to consider the following EM strategies to sustain in the longer run (Eisenmann, 2006):
o Preserve the existing strategy and utilise the internet to improve current operations;
o Use the internet to expand current operations by exploiting online technologies for expansion (of current market) and growth (in customers);
o Introduction of new strategy to launch new products or services; and
o Redefine strategy for enhancing existing operations by exploiting e-technology.

Risk Assessment

In the age of the internet, in context to the Moore’s law, the life of products has dramatically shortened. Organisations need to regularly re-examine their existing strategies to see their effectiveness in this consistent and dynamic environment (Chaston, 2016).
Hamel and Skarzynski (2001) suggested that in the current market environment businesses must be prepared for the following:
§ Uncertainty over forecasting future – this is due to the dynamic environment and technology;
§ Risk of repeating past achievements – firms who have been innovative in the past should not reply upon these capabilities to guarantee future success;
§ Recognition of innovation through new insights – new ways of thinking are implemented with actions and practice;
§ Avoid organisational myopia – seek inputs from external sources instead of relying completely on internal sources; and
§ Sustain commitment to innovation – the organisations culture has a tremendous impact on innovation and spotting new opportunities. The entrepreneur should be open to suggestions and ideas from everyone.

Marketing Tools and Techniques

The understanding of EM is based on how small business owner/entrepreneur initially do business i.e. make decisions, deliver the target market’s needs, and wants within the limited availability of resources and expertise (Gilmore and Carson, 2007). Gilmore and Carson (2007) further suggest that entrepreneurs and SMEs owners need to understand how to effectively market their products and services in a way that is suitable for small and/or growing firms that have limited resources and operational structure in comparison to large organisations.

Innovative Marketing

Gilmore (2011) states that Innovation has various definitions, mostly the emphasis is on change and/or the introduction of something new (Cummins et al., 2000). In practice entrepreneurs mainly focus on trying to come up with innovative and creative solutions, specifically while differentiating or offering something new in the market (Gilmore, 2011).
Figure 2: Innovative Marketing in SMEs (Gilmore et al., 2009)
Gardner (1991, p.18) defines the role of marketing in innovations as the, “concept, tools and infrastructure to close the ‘gap’ b/w innovation and market positioning to achieve sustainable competitive advantage”.
Innovative marketing can be defined as, “coming up with new ideas, products, services, or technology to achieve the market demand by refining these ideas to a market opportunity”, Kliendl et al. (1996, p.214) states that even though innovation involves the introduction of a new-product, it incorporates innovative developments in other aspects of marketing (Cummins et al., 2000).
Gilmore (2011) states that small business owners/entrepreneurs have a limitation of limited resources available which means that they cannot engage in expensive marketing programmes, therefore they are solely dependent on being innovative in terms of ‘marketing’. Gilmore adds on that several integral factors surrounding the organisation have an impact on innovative marketing. The USP of the product and services delivered act as the “added value” to the offering.
To constitute the above statement innovative marketing for SMEs is complementary to the existing activities, it is profit driven and opportunistic, and to sustain and expand in the long-run this process should be continuous and ongoing (Gilmore, 2011).
One of the best existing SME that is successfully implementing Innovative marketing is Raptor Consultancy, in existing environment there are 100’s of consultancy agencies, but Raptor is in partnership with the University of Northampton and employs students to consult for businesses, students tend to think creatively are flexible and have the technical knowledge with resources (researches/industry overview etc.,) which proves to be very beneficial for both the businesses and students.

Marketing by Networking

As per Gilmore et al. (2001) for SMEs networking can me using a variety of networks, in context to the owner/entrepreneur “networks” are built around their interactions and activities like Personal, Business, Industry, and marketing networks, it is crucial for owner/entrepreneur to have a clear understanding of these networks.
Networking is a crucial aspect of decision making for an SMEs owner/entrepreneur, particularly for the decisions relating to marketing (Gilmore et al., 2001). Gilmore et al. found that in such a competitive environment it is crucial for the entrepreneur to go outside the physical confines to do business which is termed as marketing-led activity. In today’s century SMEs owners/entrepreneurs tend to effectively utilise their networking channels for marketing, their normal communication activities can benefit the business, such as participating and interacting in social, business and trade activities and/or fairs (Gilmore et al., 2001). Some crucial characteristics of ‘marketing by networking’ that are beneficial to the organisation include its basis of interactive & people-oriented activities, its informal, often discreet, interchangeable, and can be passive or proactive.
Griffs aprons is an SME that is successfully able to market their products through networking effectively at trade fairs, networking events (through Northamptonshire Enterprise Social Enterprise), award ceremonies (Carlsberg) and many more.
Social Media Marketing
A social marketing campaign is developed to understand what motivates the customers to buy certain products or services (Hoffman and Fodor, 2010). To develop an effective campaign, it is crucial for the entrepreneur to understand why customers engage in blogging, tweeting, or interacting on social media (e.g. Facebook, Instagram, Twitter, etc.,). Hoffman and Fodor (2010) further suggest that, the data collected can be coupled with how the business is planning to interact/reach its target market.
Hensel and Deis (2010) found that to develop an effective social marketing campaign the business owner/entrepreneur should assess:
-> The target market (TM) the business wishes to communicate with;
-> How to locate the target audience;
-> Latest trends in discussion among the TM;
-> How can the organisation utilise the current trend;
-> The knowledge, resources, and expertise the entrepreneur can promote; and
-> How can the organisation gain the trust and attention of the TM?


Conclusion

In context to the theory discussed above it can be concluded that SMEs play a crucial role in our economies and in generating employment opportunities, but it is also apparent that more than 50% of small businesses dissolve within five years of start-up. Hence, the concept of Entrepreneurial Marketing is introduced for SMEs which suggests that to survive and grow in a longer run an organisation needs be competent in the 6-Fold contingency cycle of entrepreneurial marketing suggested above. But, it is the business owner/entrepreneur who also plays a major part in this model, it is his role to prioritise and balance the tasks with effectiveness and efficiency (with the available resources). Also, another important factor is for the organisation to be dynamic i.e. improve along the way and keep the process continuous, because once the enterprise stops innovating and keeping up with the environmental changes it will have a major impact on the business (for e.g. Blackberry).

References

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Carson, D., Cromie, S., McGowan, P., and Hill, J. (1995). Marketing and Entrepreneurship in SMEs: An Innovative Approach. Great Britain: Pearson Education Ltd. pp. 7-11.
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Chaston, I. (2014). Small Business Marketing. 2nd Ed. London: Palgrave Macmillan.
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Chaston, I. and Mangles, T. (2002). Small Business Marketing Management. Hampshire: Palgrave publications Ltd.
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Project Tags

  • Entrepreneurship
  • Marketing
  • Consulting
  • Research
  • Consultant
  • Marketing & Management Consultancy
  • small business
  • Digital Marketing
  • Market Research
  • Marketing strategy

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