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Marketing in Small Firms

Marketing in Small Firms

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Published by: Lagnajit Ayaskant Sahoo on Oct 03, 2010
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10/03/2010

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Marketing in Small Firms
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Section:
Issues in Implementing Marketing Strategies
 
 The objectives of this chapter are:
1.
to identify the differences between small firms and large companies, and to consider howthey impact upon decision-making, particularly with regards to resources, expertise, and marketimpact;
 
 
2.
to discuss the characteristics of small-firm marketing decision-making and how they aredifferent to conventional large company marketing;
 
3.
to understand the critical role of enterpreneurial behaviour by reviewing closely linkedentrepreneurial and marketing characteristics and assessing their impact on small-firmsmarketing;
 
4.
to propose approaches to market research, customer focus, selling, delivery, and pricingthat are appropriate for small firms.
 
 THIS chapter begins with a consideration of the differences between small firms and largecompanies, such as size (obviously), organization structures, and functional frameworks. Theseissues are considered in terms of how they impact upon decision-making, particularly withregards to resources, expertise, and market impact. The chapter then discusses the characteristics of small-firm marketing decision-making and howthey are different from conventional largecompany marketing. An entrepreneurial influence isconsidered by reviewing closely linked entrepreneurial and marketing characteristics andassessing their impact on small-firm marketing.Inherent influences on marketing are discussed, such as costs and budgets, industryinfrastructures, experiential knowledge possessed and used by the small-firm owner manager,and the importance of market knowledge. Further discussion shows how these inherentinfluences impact upon small-firm marketing. Examples of small-firm marketing are presented asillustrations and as contrasts to much of the conventional marketing theories presented in thetextbook literature. These examples consider an export development approach that outflanks theknown ‘barriers’ to developing international markets. Also included are ‘alternative’ approachesto market research, customer focus, selling, delivery, and pricing. Finally, some ‘solutions’ areoffered for improving the efficiency and sufficiency of smallfirm marketing, focusing on theimportance of marketing ‘competencies’ and ‘networking’ as the basis of improving marketingefficiency, overcoming deficiencies and outlining ‘quality’ improvements in small-firm marketingdecision making. Throughout the chapter, the term ‘small firm’ will be taken to encompass SME (small to medium-sized enterprise), and thus to mean anything from a self-employed individual to a company withseveral hundred employees but that still behaves more like a small enterprise than a largecorporation. Similarly, the terms entrepreneur, entrepreneurial, and owner manager areconsidered as meaning largely the same in the context of marketing decision-making in smallfirms. The author would like to thank Dr A. Gilmore, D. Cummins, and A. O'Donnell, University of Ulster,for their assistance.
2.1 Management and marketing decision-making in large companies
In large organizations decision-making is made within a highly structured and orderedframework. Decision-making has a clear hierarchy depending upon the scope and focus of adecision. There are clear boundaries of responsibility whereby decisions can be taken. In such adecision-making structure there will be close coordination and cooperation between the variousdecision-making domains. In addition, because of the diversity of decision-making and thenumber of decision-makers, time scales for decision- making are likely to be long. This inevitablyintroduces a planning element in large-company decision-making. These are just a few of the characteristics of large-company decision-making, but they serve tohighlight the context in which decisions are made, and indeed, the essence of suchdecisionmaking. Typical managerial tasks are based upon strong theoretical foundations. For
 
example, there are well-founded managerial activities that have been developed and internalizedin line with organizational structures and standard practices in terms of organizing for business. Thus managers work to known and practised procedures, using appropriate and acceptedanalysis and evaluation criteria. Decision-making processes are based on order and form, andcustoms and practice. Leadership is often derived from hierarchical power and authority. Fromthis it can clearly be deduced that management decision-making is a distinct discipline.Much of the literature surrounding decisionmaking in marketing is derived from the managementliterature in its style and frameworks. Naturally, marketing management—indeed, the function of marketing—will adhere to conventional management principles and structures. In general,conventional marketing management decision-making is inherently formal, sequential,structured, and disciplined. It is also systems oriented and considers issues in both short- andlong-term time scales.When considering the literature in relation to marketing motivations, there is a generalconsensus that the customer is the primary motivator for much of marketing. And, indeed, in justabout every conventional marketing textbook, the literature is clear in stating that marketingshould have a customer focus and that marketers should strive to create customer satisfactionand wellbeing. Marketers are expected to meet customer desires and expectations and todevelop customer relations through good customer service. So marketing decision-making inlarge companies will have the clear focus of customer orientation as a primary motivator and willaddress this focus through established and structured frameworks derived from the managementdiscipline.
2.2 Marketing/entrepreneurial decision-making in small firms
Small-firm decision-making processes are different from those of large companies. Most decisionsoriginate with and flow through the entrepreneur or owner manager, who is likely to be involvedin all aspects of his or her firm's activities. As the direction and control of the enterprise rest withthis one individual, it is this individual's personality and style that shape the nature of decisionmaking. The entrepreneurial owner manager does not need structures and frameworks,but instead will intuitively coordinate and perform decisionmaking in a way that is ‘natural’ tohim or her. Whilst much of what has been stated can be intuitively accepted, is there evidence tocorroborate such a contention? There is a substantial literature from the last thirty years or so of the twentieth century thatattempted to define entrepreneurs and entrepreneurship in terms of inherent characteristics(Timmons 1978; Meredith et al. 1982). Definitional attempts stemmed from an intuitiveperception that entrepreneurs are different in some way from managers, or at least performtasks in such a way that distinguishes them from managers.Obviously entrepreneurs must take decisions beyond a functional domain and their decisionsinvolve the firm's survival and well-being as a whole. It is this dimension that dictates elements of entrepreneurship behaviour as opposed to simply taking decisions within known and definedframeworks and operational tasks. Therefore, the conventional literature descriptions of entrepreneurs and entrepreneurship can becharacterized by aspects such as follows:
risk-taking—in that they must take risks in order to be competitive or to grow the business;
 
opportunistic—in terms of seeking and identifying opportunities for future survival andsuccess;
 
innovative/creative—because they need to do things differently in order to differentiatethemselves from competitors or to develop something new;
 
adaptive and change oriented-because they are small and flexible and must react to andanticipate changes in their environment;
 

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