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Best Practice Methods and Techniques of SME Marketing
The establishment and growth of new ventures in any country is very important in attaining competitiveness. In particular, small and medium enterprises (SMEs) are responsible for the creation of the majority of the employment vacancies in most economies. In fact, a very large proportion of the businesses found in developed countries fall under this category and is responsible for the creation of the larger share of the jobs in these countries. For instance, Gilmore (2011) reports that out of the 23 million enterprises that are located in the European Union and the US, 99% of them are SMEs. Their significance in the prosperity of these countries can be noted through the fact that they were responsible for the generation of about 64% of all new jobs between 1993 and 2008 (Gilmore, 2011, p. 137). However, since most SMEs are new establishments, they are faced by numerous challenges in their operations and have a very high failure rate. On the other hand, if their operations are well managed, they present a very high chance of growth. One of the areas in which small businesses can harness on in a bid to attain a competitive advantage and thus growth is in entrepreneurial marketing. In this respect, most of the existing literature attributes the success of these ventures to effective marketing practices (Morrish, 2011). This paper will try and evaluate the best methods and techniques in SME marketing by using relevant SME and entrepreneurial theories and relating them to some of the most successful SMEs in the UK as classified by the London Stock Exchange Group.
Best Methods and Techniques in SME Marketing
Ensuring an Appropriate Marketing Mix
A marketing mix refers to a business tool that is used in distinguishing a certain brand from others. In this respect, the marketing mix of a business sets out the different business aspects that should be focused on in order to ensure that the operations of a business are in line with its goal. Although the marketing mix is often associated with the four P’s (product, price, place and promotion), the service industry requires additional P’s. The 8Ps theory was therefore proposed in a bid to address the unique nature of the service industry. According to this marketing theory, the additional four Ps are people, process, physical evidence and productivity/quality. The theory posits that the effective management of each of these key aspects in marketing enhances the success of the brands of a company, and thus its success (Scott, Laws, & Boksberger, 2013, p. 92).
This theory is very relevant while addressing the some of the successful SMEs in the UK. In this respect, since SMEs usually serve a small market, they must appeal to their customers in order to earn their loyalty. For instance, he effective management of the marketing mix of a business can be credited with the huge success of Pieminister in the UK foods and beverages industry. During its establishment in 2003, the company was faced with huge competition from the already established companies. However, Tristan Hogg and Jon Simon, its founders, banked on the effective management of the 8Ps in the marketing mix in order to attain success. While addressing the product, the company changed the pie market landscape by making a move away from the old-fashioned style that was used in the preparation of pies by other companies to establish an inspiring new brand of pie. On the other hand, the “people” aspect of the marketing mix was also addressed effectively. In this respect, other than Trinstan being a chef, the employees in the company and highly valued; the company even company offers a Pieminister pie to every employee on Friday. On the other hand, the “productivity/quality” aspect was addressed in the mission statement of the company as the founders sought to come up with the highest quality pie in the market (London Stock Exchange Group, 2014). By introducing a new technique in making the pies and improving on the quality aspect, the company was able to establish its own brand as different from the rest of the companies in this industry. On the other hand, the company addresses the “people” through its corporate social responsibility activities as was noted through its charity drive dubbed Send a Cow which was intended at raising 40,000 pounds to aid in the development of farms in Africa (Little, 2013, p. 20). The move by the company to address the needs of pubs as a new market segment while offering competitive prices presents the company strategy in addressing the price and place aspects. The choice of the pubs is determined by their atmospherics as they are must demonstrate quality in line with the quality of the pies (Management Today, 2012, p. 15). By acting socially responsible, the company must have appealed to the emotional side of its customers, thus winning their loyalty. The proper management the marketing mix of a company as argued in the 8Ps of marketing theory can therefore be credited to Pieminister’s classification among the top 1000 SMEs in the UK.
Using Innovation to Gain a Competitive Advantage
Innovation presents a core competency to a business if well applied in the marketing field. In the UK, innovative marketing among SMEs is focused on both product development and in the enhancement of the efficiency in running of operations within a company. In this respect, innovation ensures that an SME offers a new product or service in the market, thus assisting in the differentiation of their company from those of competitors (Gilmore, 2011, p. 143). Innovation acts as a major competence in marketing as it assists firms in gaining the first-mover advantage in the market. Since innovation is always aimed at the introduction of a new idea to address a particular opportunity or in the enhancement of efficiency, SMEs benefit from it in a large way as it enables them to compete effectively with other large businesses that enjoy economies of scale (Bala Subrahmanya, 2013, p. 2). According to the theory of innovation, businesses must keep in touch with the changing customer preferences as well as the dynamic business environment with the aim of developing products that address such needs and take advantages of the opportunities that arise (Sundbo, 1998, p. 26).
ADDER is one of the successful SMEs in the UK that have relied on innovation in product development and operations with the aim of maintaining a competitive edge in the exporting business. The company specialises in designing and manufacturing IP solutions, switches and extenders and has been able to grow its operations significantly since its establishment in 1984. In particular, the development of ultra high-definition screens has been a major competency of the company by effectively addressing the needs of its customers. Moreover, since the industry in which the company operates is high-tech and undergoes rapid changes, innovation is the only way that the companies has managed to remain competitive in the industry for the last three decades (London Stock Exchange Group, 2014). Since the UK is one of the technologically advanced countries in the world, SMEs are able to grow faster and outdo those of other countries. This can be used to explain the huge success that ADDER has witnessed in the exporting business.
According to the risk-taking theory of entrepreneurship, the success of any entrepreneurial venture is based on the risk-taking behaviour of the entrepreneur. In this respect, the theory posits that new business establishments are faced with numerous risks as the chances of success are lower when compared to those of existing businesses. The theory identifies four types of risks that an entrepreneur faces when establishing a new business venture. The first risk is the personal risk whereby the entrepreneur risks his career life by venturing into a project with whom the chances of success are slim. On the other hand, financial risks involve the risk of losing the initial investment made on a business. Although the returns in new business ventures may be high, the high uncertainty that is associated with such a business cannot be ignored. Moreover, there exists know-how risks and vested interest risks in a new venture. Know-how risks are concerned with the knowledge gap that may exist as the entrepreneur may not be proficient in the field in which they establish a business. On the other hand, vested interest risks are those risks that are involved with parties which have an interest in the venture, either directly or indirectly (Uddin, 1989, p. 244). As argued by Palich & Bagby (1995), entrepreneurs are people who are able to identify an opportunity and seize it. Risk taking should involve more than just the investment bit of business as it should also touch on the other operations of a business venture (Palich & Bagby, 1995, p. 425).
Successful SMEs in the UK have relied on this technique to ensure that they are successful in their respective industries. In demonstrating risk-taking behaviour among entrepreneurs in the UK, Ilmor stands out from the rest. In this respect, other than the identification of a business opportunity in the motor racing market, Mario Illien and Paul Morgan took the courage to invest in it (London Stock Exchange Group, 2014). What makes the two stand out as risk-takers is the sensitivity of the field in which they set their eyes on, as well as the huge investments that are involved. That is, making engines for Formula 1 requires that only the best technologies are used as failure to do so would lead to business failure. In addition, the automobile industry requires huge capital investments before the establishment of a business and may therefore involve huge sunk costs if the business fails to materialize. Given this, Ilmor was a business venture that resulted from its founders’ risk-taking nature as entrepreneurs.
Responsiveness to Business Opportunities
New marketing opportunities usually arise as a result of a change in the social, economic, cultural and technological factors within the operating environment of a business. As such, in order for a business to remain ahead of competition in the market, the entrepreneur must be in a position to identify new opportunities in the marketing scene and then formulate strategies that best address them. Particularly, the expansion of business in the global markets requires that entrepreneurs identify new marketing opportunities and conducting of a detailed analysis to ascertain their viability. In some cases, a new marketing opportunity may be concealed by other factors, thereby requiring advanced marketing skills in the identification of such opportunities. For instance, the change in the operating environment of a business may render its core operations unprofitable or unviable. However, while some people may view this as the end of their businesses, entrepreneurs are able to identify the new business opportunities that arise as a result (Mittelstädt, 2007, p. 137).
The opportunity –based theory as put forward by Peter Drucker can best be used in explaining this phenomenon. In this respect, the theory posits that the success of an entrepreneur is based on their ability to identify new opportunities in the market that may be brought along by changes in the operating environment (Lussier, Corman, & Kimball, 2014, p. 69). While using this theory to explain the success of new ventures in foreign markets, Oyson & Whittaker (2010) explain that the advancement of the global entrepreneurship is based on the ability of local entrepreneurs to identify business opportunities overseas, and then pursuing such opportunities until they become successful business ventures (Oyson & Whittaker, 2010, p. 1).
Ilmor has exhibited speedy identification of opportunities in the past and then turning them into businesses. In particular, when the business was bought out by Mercedes in 2001, it seemed like the end of company. However, Steve Miller, the managing director, had a vision for the company and waited until 2005 when he bought back part of the business and named it Ilmor Engineering Ltd. The business has managed to get back on its feet, managing to enter into commercial deals with other companies such as Boeing. As opposed to being an end to its life, being acquired by Mercedes presented a new business opportunity in the high level motor racing thus ensuring continuity of the business (London Stock Exchange Group, 2014).
Dedication and Commitment in Attaining Organisational Goals
Success in SME marketing relies mostly on the conduct of the entrepreneur in the business. As explained by Honaman (2008), doing what one loves enables them to advance it as they are able to live it. That is, having passion in a project is likely to lead to its success as one puts all their energy and focus in ensuring its success. In entrepreneurship, some businesses started either as a hobby and eventually led to business success, as the entrepreneurs had the passion in making these businesses a success. This phenomenon can best be explained using the effect of psychological satisfaction on the productivity of an individual. With high levels of job satisfaction, one becomes more devoted to an activity and is likely to be more effective in conducting themselves (Honaman, 2008, p. 8).
This concept is best explained by Julian Lotter’s locus of control theory which posits that a strong internal locus of control among individuals positively influence their belief in the ability of their actions in changing their external world. Entrepreneurs who possess this trait are therefore more likely to show confidence in conducting themselves while at the same time being resilient in pursuing their goals (Lefcourt, 2014, p. 221). The success of Pieminister can therefore be attributed to the passion and internal drive that its cofounders had. In this respect, Jon Simons explains that he had a background in pubs while Tristan was a chef. He asserts, “do something you love, because you are going to be immersed in it” (London Stock Exchange Group, 2014).
Understanding the Target Market
Understanding the business target market is yet another crucial competency that business entrepreneurs should have in ensuring success in their marketing strategies. As argued in the theory of market segmentation, different consumers have different needs. As such, the goods and services that are provided in the market should be aimed at addressing these markets differently. Since most SMEs serve a small market, it is easier to understand their customers unlike the case in large business where multiple consumer segments are addressed. Market segmentation should therefore be done after market research has been conducted to determine the needs of the customers in these segments (Ruzzier, Ruzzier, & Hisrich, 2013, p. 119). This would in turn ensure a more focused approach in addressing the needs of the customers in such markets.
Small and medium enterprises play a very significant role in enhancing economic prosperity within an economy. Among the main economic areas that benefit from SMEs is the creation of new job opportunities within the economy. However, the chances of failure of an SME are higher than those of larger businesses operating in the same market. Given this, entrepreneurs should come up with strategies that ensure their success. Since marketing has been noted as one of the areas where SME competency can be attained, close attention should be given to the area while applying the best techniques. The strategies that can be used in ensuring effective marketing as established in this paper include insistence on innovation, risk-taking behaviours, gaining a clear understanding of the target market, high responsiveness to business opportunities and being passionate about a venture. These techniques have led to the success of among the most popular SMEs in the UK including Pieminister, Ilmor and ADDER. Following this, policy makers should come up with policies that aim at creating an enabling environment for the implementation of these strategies. On the other hand, SMEs should borrow from the findings of this paper in formulating the strategies to be used in running their operations.
List of References
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