Marketing in Small Firms

Contents

1. Objectives 2. 1 Introduction 3. 2 Differences between small firms and large companies 4. 2.1 Management and marketing decision-making in large companies 5. 2.2 Marketing/entrepreneurial decision-making in small firms 6. 3 Entrepreneurship and marketing practice in small firms 7. 3.1 Entrepreneurs in practice in small firms 8. 3.2 Marketing in practice in small firms 9. 3.3 Industry norms 10. 3.4 Small firm exporting difficulties and barriers 11. 3.4.1 Influence of the entrepreneur 12. 3.4.2 Motivations 13. 3.4.3 Difficulties 14. 3.4.4 Stages of internationalization 15. 3.4.6 Overall barriers 16. What is an entrepreneur? 17. Box 25.2 Small-firm barriers to exporting 18. 4 Fundamental aspects of small-firm marketing 19. 4.1 Personal-contact networks 20. 4.2 Marketing competencies 21. 5 ‘Alternative’ marketing for small firms 22. 5.1 Alternative marketing 1: export marketing 23. 5.2 Alternative marketing 2: versus profit orientation 24. 5.3 Alternative marketing 3: scientific versus natural marketing research 25. 5.4 Alternative marketing 4: small-firm selling 26. 5.5 Alternative marketing 5: smallfirm distribution 27. 5.6 Alternative marketing 6: small-firm pricing 28. 5.7 Alternative marketing 7: the small-firm marketing plan 29. Box 25.3 Two contrasting scenarios, one representing a customer focus and the
other a sales/profit focus, as an illustration of customer versus sales/profit orientation 30. Scenario Two: A Sales/Profit Focus 31. Box 25.4 A new ‘alternative philosophy’ 32. 6 Assessment of the ‘quality’ of marketing decision-making in small firms 33. 6.1 Marketing quality assessment: pricing quality 34. 6.2 Marketing quality assessment: delivery quality 35. 6.3 Marketing quality assessment: selling quality 36. 7 Summary 37. Further reading 38. Discussion questions 39. Mini Case: Eaton and Caron (EC) Marketing) 40. Discussion question
Section: Issues in Implementing Marketing Strategies Objectives

The objectives of this chapter are:

1.

to identify the differences between small firms and large companies, and to consider how they impact upon decision-making, particularly with regards to resources, expertise, and market impact;

2.

to discuss the characteristics of small-firm marketing decision-making and how they are different to conventional large company marketing; 3. to understand the critical role of enterpreneurial behaviour by reviewing closely linked entrepreneurial and marketing characteristics and assessing their impact on small-firms marketing; 4. to propose approaches to market research, customer focus, selling, delivery, and pricing that are appropriate for small firms. 1 Introduction

THIS chapter begins with a consideration of the differences between small firms and large companies, such as size (obviously), organization structures, and functional frameworks. These issues are considered in terms of how they impact upon decision-making, particularly with regards to resources, expertise, and market impact. The chapter then discusses the characteristics of small-firm marketing decision-making and how they are different from conventional largecompany marketing. An entrepreneurial influence is considered by reviewing closely linked entrepreneurial and marketing characteristics and assessing their impact on small-firm marketing. Inherent influences on marketing are discussed, such as costs and budgets, industry infrastructures, experiential knowledge possessed and used by the small-firm owner manager, and the importance of market knowledge. Further discussion shows how these inherent influences impact upon small-firm marketing. Examples of small-firm marketing are presented as illustrations and as contrasts to much of the conventional marketing theories presented in the textbook literature. These examples consider an export development approach that outflanks the known ‘barriers’ to developing international markets. Also included are ‘alternative’ approaches to market research, customer focus, selling, delivery, and pricing. Finally, some ‘solutions’ are offered for improving the efficiency and sufficiency of smallfirm marketing, focusing on the importance of marketing ‘competencies’ and ‘networking’ as the basis of improving marketing efficiency, overcoming deficiencies and outlining ‘quality’ improvements in small-firm marketing decision making. Throughout the chapter, the term ‘small firm’ will be taken to encompass SME (small to mediumsized enterprise), and thus to mean anything from a self-employed individual to a company with several hundred employees but that still behaves more like a small enterprise than a large corporation. Similarly, the terms entrepreneur, entrepreneurial, and owner manager are considered as meaning largely the same in the context of marketing decision-making in small firms. The author would like to thank Dr A. Gilmore, D. Cummins, and A. O'Donnell, University of Ulster, for their assistance.
2 Differences between small firms and large companies

2.1 Management and marketing decision-making in large companies
In large organizations decision-making is made within a highly structured and ordered framework. Decision-making has a clear hierarchy depending upon the scope and focus of a decision. There are clear boundaries of responsibility whereby decisions can be taken. In such a decision-making structure there will be close coordination and cooperation between the various decision-making domains. In addition, because of the diversity of decision-making and the number of decision-makers, time scales for decision- making are likely to be long. This inevitably introduces a planning element in large-company decision-making. These are just a few of the characteristics of large-company decision-making, but they serve to highlight the context in which decisions are made, and indeed, the essence of such decisionmaking. Typical managerial tasks are based upon strong theoretical foundations. For

example, there are well-founded managerial activities that have been developed and internalized in line with organizational structures and standard practices in terms of organizing for business. Thus managers work to known and practised procedures, using appropriate and accepted analysis and evaluation criteria. Decision-making processes are based on order and form, and customs and practice. Leadership is often derived from hierarchical power and authority. From this 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 management literature 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- and long-term time scales. When considering the literature in relation to marketing motivations, there is a general consensus that the customer is the primary motivator for much of marketing. And, indeed, in just about every conventional marketing textbook, the literature is clear in stating that marketing should have a customer focus and that marketers should strive to create customer satisfaction and wellbeing. Marketers are expected to meet customer desires and expectations and to develop customer relations through good customer service. So marketing decision-making in large companies will have the clear focus of customer orientation as a primary motivator and will address this focus through established and structured frameworks derived from the management discipline.

2.2 Marketing/entrepreneurial decision-making in small firms
Small-firm decision-making processes are different from those of large companies. Most decisions originate with and flow through the entrepreneur or owner manager, who is likely to be involved in all aspects of his or her firm's activities. As the direction and control of the enterprise rest with this 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’ to him or her. Whilst much of what has been stated can be intuitively accepted, is there evidence to corroborate such a contention? There is a substantial literature from the last thirty years or so of the twentieth century that attempted to define entrepreneurs and entrepreneurship in terms of inherent characteristics (Timmons 1978; Meredith et al. 1982). Definitional attempts stemmed from an intuitive perception that entrepreneurs are different in some way from managers, or at least perform tasks in such a way that distinguishes them from managers. Obviously entrepreneurs must take decisions beyond a functional domain and their decisions involve 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 defined frameworks and operational tasks. Therefore, the conventional literature descriptions of entrepreneurs and entrepreneurship can be characterized 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 and success; • innovative/creative—because they need to do things differently in order to differentiate themselves from competitors or to develop something new; • adaptive and change oriented-because they are small and flexible and must react to and anticipate changes in their environment;

• •

visionary-because they, more than most, need to see into the future;

individualistic-because they are constantly thinking about issues that are inherently personal, especially if it is their own business.

The literature on the motivations for entrepreneurs and entrepreneurship largely agrees that such individuals have strong motivations for being in business (Arens 1990; Osborne 1995). Indeed, such motivations are often founded in a need for growth. However, there are a number of widely recognized motivations for being in business. For example:

independence—such individuals prefer to be their own boss and like the freedom of taking their own decisions; • personal satisfaction—derived from the above, such individuals glean satisfaction from doing business for themselves and the challenges that this presents; • employee well-being—entrepreneurs are concerned with the well-being of their employees in an almost paternal sense; • satisfying customers—entrepreneurs are concerned with satisfying customers and devote considerable effort into ensuring that their customers get good service; they might often perceive this as part of their competitive advantage; • integrity, morality, ethics—such individuals perceive themselves as possessing all of these characteristics when doing business.

There are, of course, many other characteristics and motivations describing entrepreneurs, but these lists are sufficient to make the point that entrepreneurs and entrepreneurship are distinguished as being ‘different’ by these and other characteristics. It must, of course, also be acknowledged that there are significant similarities between entrepreneurs and managers in performing tasks and it is easy to find a few, such as that both are task oriented, both are judgemental, both are directive, both are cost control conscious, and so on. However, it is the differences that are most striking. Hisrich and Peters (1995) offer a meaningful discussion of the differences between entrepreneurs and managers (Box 25.1). In considering, Hisrich and Peters, it is reasonable to deduce that, on a continuum of differences to similarities, there is a bias towards differences in characteristics in terms of a general style and emphasis in decisionmaking. If this is so, then there are significant implications for understanding the essence of small-firm marketing decisionmaking. ‘In any organization, but clearly particularly in large ones, there is a difficulty in ensuring that the various parts of the organization know what the others are doing.’ (Chapter 17, p. 414) ‘… successful entrepreneurs an traders have always accepted as a fundamental truth the fact that creating customer satisfaction is the only way to long-term business success.’ (Chapter 2, p. 27)
3 Entrepreneurship and marketing practice in small firms

3.1 Entrepreneurs in practice in small firms
There is no clear definition of who the entrepreneur is. Indeed, it can be argued that little is known about entrepreneurs, even though interest and publications on the subject abound. The literature on entrepreneurship generally is characterized by its diversity of findings and arguments. Manifold discussions have inspired much debate and created much confusion and, most writers would agree, have not advanced any specific generic definitions of the entrepreneur. Cunningham and Lischevan (1991), in seeking to dispel some of the confusion, present their interpretation of the literature in six schools of thought; the great person, the psychological, the classical, the management, the leadership, and the intrepreneurial schools of entrepreneurship. Key characteristics that emerge from this are that the entrepreneur is an agent for innovation and change, a calculating risk-taker, a ‘goal-setter’ and ‘goal-getter’, who, though domineering in management style, is inspirational in terms of his or her influence on

associates. In addition to flexibility and creativity, vision is identified as being a key characteristic. As Kirzner (1973) states, The Entrepreneur perceives what others have not seen and acts upon that perception. The market is constantly sending signals to those alert enough to perceive them. The Entrepreneur is one who sees the future as no-one sees it.' The entrepreneur values his or her personal networks and business freedom and is constantly on the look-out for opportunities to create wealth. This person has, it is argued, inborn character traits that differentiate him or her from other groups of individuals. Whilst all of the above may indeed be important motivations for entrepreneurs, it must be recognized that there are several other immensely strong motivations that will drive entrepreneurs. There is a long-held view, shared by some academics and most practitioners, that entrepreneurs' primary motivation is ‘profit’—a view supported here. Entrepreneurs are in business to make money; they strive to achieve security through having enough money to do business and to make profit. Allied to this motivation is a constant constraint and therefore concern surrounding lack of cash and cash flow. If such a notion is accepted, then it is interesting to compare this primary ‘in-practice’ motivation with some of the literature characteristics and motivations supposedly possessed by entrepreneurs. For example:

Innovative/creative. In practice, entrepreneurs will display these characteristics only if they have a need for new sources of money. They will often take on new work in the hope of success, and if this is forthcoming, then all is well; if not, then innovation stops. • Opportunistic. In practice, entrepreneurs will display this characteristic in similar circumstances to the above, but only until a barrier occurs and risk is involved. • Risk-taker. In practice, again, entrepreneurs will display this characteristic in similar circumstances to the above, but will take risks only until money is threatened. • Change oriented. In practice, entrepreneurs display this characteristic only because the business is likely to be small, and, as it will always have to grow, change is unavoidable.

It can be argued that, when it comes to understanding good marketing practice by entrepreneurs, much more sensitivity to the unique characteristics of the entrepreneur is required (see Insert). Tried and tested perceptions, refined in a big business environment, will not do. Characteristics in which small firms are uniquely different can be summarized as negative attitudes to marketing; the perception of marketing as a cost; distribution and selling treated as uncontrollable problems; and, possibly more significant, the belief that each case is so specific that it cannot be treated with general rules. A definition of small-firm marketing characteristics would typically acknowledge limited resources, lack of specialist expertise, and limited impact on the market place' (Carson 1990). The need for the small-firm owner to seek a strategy for growth that is sensitive to his or her unique characteristics and circumstances is apparent. Some such ‘alternative’ approaches that take cognizance of the unique character of the small firm and of the entrepreneur are presented later in this chapter.

3.2 Marketing in practice in small firms
The literature descriptions of marketing decisionmaking, alluded to earlier, may not actually happen in practice. This notion is reinforced by a number of more recent studies. Greenley and cayus (1994; reviewed me results or several studies on the nature of marketing planning and found that the general tenor of the results was that few companies seem to adopt the prescriptions of marketing planning that are advocated in the literature. Piercy's (1990) studies also revealed that managers did not adhere to the textbook descriptions of ‘rational’ decisionmaking.

The views of Greenley and Bayus and of Piercy are reinforced by Carson's (1993) consideration of this issue in relation to marketing-decisionmaking in small firms. Various characteristics of marketing decision-making in practice can be identified. It is argued that much of marketing decision-making in practice resembles aspects of entrepreneurship. For example, small firm marketing decision-making in practice is:

• • • • •

simplistic and haphazard-in that it is immediate and reactive to circumstances; undisciplined and spontaneous-perhaps because it is predominately intuitive; unstructured-mainly because of the above; irrational-partly because of the above and also because it is individualistic in nature; short term-because of all of the above (Carson 1993).

As with management and entrepreneurship characteristics, there is a bias towards differences with regard to marketing decision-making characteristics as depicted by the literature and that which happens in practice. This divergence can be found also in the motivations for doing business. Marketers' primary motivation in practice is to gain increased sales and to make profit from increasing sales. This practical motivation is compounded by a marketer's greatest concern—that of declining sales and stronger competition. Of course, it can be argued that, by being customer focused, enterprises can achieve sales and profit even against strong competition. However, in reality, marketers will be customer focused only if this leads to sales increases and profits. The incompatibility between the theoretical literature and marketing in practice can be detected with regard to quality, price, and customer service in particular. Customers expect ‘best’ quality, whereas marketers will equate quality with profit; customers expect lowest prices, whereas marketers hope for higher prices. Consequently, good customer service and care often championed as having a customer focus may in fact provide a clandestine stimulation and exploitation of customers by marketers. These issues are revisited in more detail later in this chapter. In this debate it is easy to appreciate that a significant commonality can be found between marketers and entrepreneurs, in that both have a primary focus on sales and money (cash), and the greatest concern of both is a decline in sales, which will result in a reduction in money, cash, and profits. Secondary to these factors will be a customer focus, although, in a public sense, the customer will always be championed as being most important to a company. That is to say, both entrepreneurs and marketers will extol the virtues of a customer focus and the importance of customer satisfaction when asked the question, ‘What is the most important factor in your business?’, but privately they will raise issues of cash and money, sales and profits, before concerning themselves with customer services and satisfaction. From the discussion so far, it is clear that smallfirm marketing decision-making is different from that which is depicted in conventional marketing literature. It has been argued here that not only is the conventional literature unhelpful to small firm owner managers, but also that there is a lack of true understanding of their behaviour and motivations. To underline this view, two brief illustrations are offered: one highlights the influence upon marketing decision-making of the industry in which a small firm exists; the other focuses on the difficulties and barriers faced by small firms in beginning to export and internationalize.

3.3 Industry norms
All enterprises exist within a market or industry. Such industries have evolved customs and practices over time to the point whereby they have actually established industry ‘norms’. These customs and practices are known by the industry and the industry will expect that all business and trading conform to these customs and practices. Small firms in particular, because of their relative size, must comply with such industry norms, which will impact upon marketing in a variety of ways. For example, in the context of price, these customs and practices will be

manifest as ‘acceptable’ and ‘expected’ mark-ups and margins. Such margins will be known, particularly where products have little differentiation. Each player in the supply chain will know ‘who gets what’ proportion of the overall price/cost structure. It is only when a new product or new service that has a high degree of differentiation is introduced that new cost structures can apply and these will quickly become established and set. Similarly, the channels of distribution and the sequences and flows within these channels are invariably ‘established’. All firms must conform to these set patterns, but small firms in particular have little other choice, simply because they do not have the resources to break away and do things differently. Also, customs and practice are often set, even dictated, by large competitors, whose influence is such that their way of doing business is the established norm for the whole industry.

3.4 Small firm exporting difficulties and barriers
Exporting is a crucial component of the well-being of any developed economy. Substantial government resources are devoted to encouraging exporting and much of this effort goes towards stimulating and helping small firms to export. However, it is recognized that it is difficult to get small firms to begin to export. Why should this be so? Box 25.2 considers some of the inherent issues behind a decision to begin exporting.

3.4.1 Influence of the entrepreneur
The owner manager in the small firm is the key decision-maker, who decides whether or not to internationalize his or her company's operations, to what extent to do so, and how best to exploit potential opportunities. The literature suggests that, for many small firms, the adoption and implementation of marketing are an innovation in themselves and that the decision to internationalize that marketing effort is no less entrepreneurial. The small-firm owner is encouraged by numerous influences to internationalize his or her company's activities, but, equally, the barriers to doing so are substantial and, for many firms, insurmountable. The reasons for any company to consider exporting have been well researched in the literature and the key influences identified and listed. However, it is generally recognized that the key variable in small-business internationalization is the decision-maker of the firm. He or she is the one to decide starting, ending, and increasing international activities. He or she lays down the goals concerning exporting and determines the organizational commitment. A positive attitude to exporting, an aggressive and dynamic personality, flexibility and self-confidence, and clear entrepreneurial characteristics are often cited as being significant psychological factors distinguishing the potential exporter. Having broad multicultural horizons, competency in language, and being knowledgeable about export marketing practice come under the objective factors distinguishing the likely exporting company owner.

3.4.2 Motivations
It is suggested that the driving forces for either starting or exploiting export activities are that the firm wants to utilize and develop its resources in such a way that its short-run and/or long-run economic objectives are served. But to facilitate a fuller understanding of the nature of the decision to export as a particular internationalization strategy, export motives can be classified in a schematic form by distinguishing between internal and external and proactive and reactive dimensions of the process. The schema is reproduced in Fig. 25.1 as a classification of export development. Here it is sufficient to say that, from their research amongst over 650 Danish companies, Albaum and his colleagues identified a number of key motivating factors under each category, which had an influence on a company's decision to internationalize, amongst the most critical being growth and profit goals and risk diversification.

The entrepreneur is the key determinant of whether the operations of the small firm are internationalized and the desire for growth and profits appears to be the strongest prompt for wanting to do so. So what is to stop the small-firm owner from internationalizing his or her enterprise's activities?

3.4.3 Difficulties
There has been a great deal written in the literature about the difficulties that small firms have in internationalizing their commercial efforts. There is a varied mixture of agreement and disagreement as to what those difficulties are exactly, the circumstances when they prevail, and the impact they have on those internationalization efforts. The most frequently mentioned internal barriers to exporting are seen to be lack of information and problems with respect to capacity and distribution. External barriers appear to be perceived lack of demand from abroad, red tape, and the level of costs involved. Similarly, small-firm owner managers have listed the most serious problems in seeking to internationalize their activities as the level of risk, the complexity of procedures involved, and costs. Most significantly, lack of knowledge of export markets is especially important to small enterprises. Gathering knowledge about export markets is perceived by owner managers as costly, particularly in terms of the time required to gather it, interpret it, and make decisions on it. Information overload is quickly reached where the smallbusiness owner will simply stop gathering the information and a decision to export will be either abandoned or confirmed on the basis of what he has got. But the quality of such decisions, made in circumstances of limited information and against a background of minimal margins for error, is bound to be suspect and a source of considerable stress and pressure for the small-firm owner. Such pressure forces the smallfirm owner to focus on the immediate or shortterm issues, where the risks and uncertainties are more controllable, and may discourage any longterm commitment to a planned approach to internationalizing the small firm's activities.

3.4.4 Stages of internationalization
The importance of the various problems facing the small-firm owner manager is a function of the export stage that the enterprise has reached. There is a general agreement in the literature that internationalization is best understood as a gradual process of several discernible steps. There is also a general agreement that exporting problems differ among the various stages of a firm's export development, which is mainly due to the issue that functions, practices, and managerial experiences vary accordingly at each stage. Of course, firm size is another important factor differentiating the nature and magnitude of exporting problems experienced. Internationalization has been divided into three phases: phase one suggesting an experimental involvement, phase two an active involvement, and phase three a more committed effort, where the company has become proactive in its internationalization activity. Bilkey and Tesar (1979) provide a more detailed framework for understanding the stages.

• • • • • •

Stage one: management is not interested in exporting, not even in filling an unsolicited

order. Stage two: management would fill an unsolicited export order but is not interested in exploring the feasibility of exporting. Stage three: management is actively exploring the feasibility of exporting. Stage four: firm exports on an experimental basis to a psychologically close country. Stage five: firm now an experienced exporter to the psychologically close country.

Stage six: management explores feasibility of exporting to additional countries that are psychologically further away. • 3.4.5 Shortcuts

Attempts to leapfrog these internationalization phases through joint ventures or ‘piggy-backing’ with larger, already internationalized, companies are seen by many writers as risky, particularly for the small firm in the very early stages of such activity when its lack of knowledge and

experience places it at a decided disadvantage when negotiating contracts with larger more experienced partners. Small firms wanting to internationalize their activities may be unable to do so, because of what can be called a ‘strategy gap’, caused by a lack of resources generally but particularly by a lack of knowledge and networks. Many small-firm owners seek to bridge this gap by forming strategic alliances with larger companies. The risk, particularly in those early stages when the small-business owner lacks the knowledge and experience of international marketing, is one of losing control of its internationalization effort to larger, more experienced, and resourcericher partners. The alternative approach is to go it alone, though lack of relevant knowledge and experience may make this avenue too troublesome and risky. The choice to adopt and implement one approach as opposed to the other depends on the small-firm owner's perception of the relative benefits of each, and this in turn will be a function of his or her level of experience in international business, knowledge of export marketing, and entrepreneurial character.

3.4.6 Overall barriers
All in all, exporting, particularly in the initial stages, is extremely difficult for small firms. To a small-firm owner manager the barriers to exporting are immense and indeed may be perceived as far outweighing the reasons and motivations for exporting. Conventional wisdom for developing export markets is in the main sound—that is, that a newly exporting firm should identify a suitable market and soundly research that market for potential customers. Once a foothold has been established, that market is potentially ripe for exploitation and development. Such an approach may have many trialists and some will succeed, it is, however, inappropriate for many more firms, as discussed earlier. The reason for outlining the difficulties and barriers to export development by small firms is obvious. It is because of the huge importance exporting carries in the successful development of any economy and the recognition that much of the export development must stem from the small-firm sector. The emphasis on these barriers is designed to reinforce the need to ask such questions as: ‘;Is there another way to develop export markets?’ ‘What can be done to overcome the many barriers that many firms, particularly entrepreneurial-led firms, experience?’ These questions are addressed later in this chapter as part of an alternative approach to exporting that is entirely compatible with small-firm characteristics.

What is an entrepreneur?
Typically, entrepreneurs are people who own and control their own enterprises. They are almost always focused upon the well-being, survival, and development of their enterprises. Their everyday activities are centred around doing business and simply running their enterprise. If entrepreneurs are seen outside the premises of their enterprise, it is likely to be for a reason that concerns or impacts upon the enterprise. Thus, most typically, they will be seen with customers or potential customers. If they are seen at an ‘event’, it is likely that they are there in order to assess the threat or opportunity presented by the event. Even if they have been invited as ‘all-expenses-paid’ guests to an event, they are likely to take up such an invitation only if they see some potenitial gain as a result of attending. Whilst entrepreneurs will display a wide range of traits and characteristics, in essence they are clever, highly focused, self-centred individuals whose primary concern is the well-being and development of their own enterprise.

Box 25.2 Small-firm barriers to exporting

Why do small firms find it difficult to export? Some obvious reasons emerge when taking cognizance of small-firm and entrepreneur characteristics:

Exporting is more expensive: small firms have limited resources, therefore exporting costs can be prohibitive. • Exporting needs longer-term gestation: small firms are centred on short-term issues, which can often take precedence over longer-term export requirements. • Exporting is relatively high risk: small-firm entrepreneurs seek to reduce risk, therefore other activities will present a lower risk than exporting. • Exporting involves many strange circumstances and incertainties: small-firm entrepreneurs prefer to know their market and business environment. • SME entrepreneurs rely on business contacts and networks: in exporting these are more difficult to find and establish in the short-term. • Engaging new export customers or export markets requires almost the same amount of time/energy/resources to develop every time: small firms rely on additional sales at reduced costs and/or as a follow-on to existing business. • Legal, political and rading regulations require additional or time-consuming resources: small firms are unlikely to have these.

These aspects and many others serve as barriers to small-firm exporting.
4 Fundamental aspects of small-firm marketing

As noted above, one of the main barriers to exporting or indeed any market development is a lack of knowledge about an environment. On this aspect the marketing literature is clear: market knowledge is crucial to sound marketing decision-making. Of course, market knowledge is important, but the ability to interpret this knowledge in making sound marketing decisions is of equal if not more importance. How does a smallfirm owner manager acquire such ability? What are the inherent ingredients for sound marketing decision-making? What aspects are most important for SME marketing? It is argued here that there are two important aspects to sound SME marketing. These are the existence and use of personal-contact networks and the possession of fundamental marketing competencies. It is not the intention here to enter into a detailed description of either of these aspects, but to provide a brief summary description of each with regards to small-firm owner managers.

4.1 Personal-contact networks
With regards to personal-contact networks, it is sufficient to acknowledge that from an entrepreneur's perspective he or she is likely to be the focal person of a network of known individuals. These individuals will have a mutual appreciation and understanding of the entrepreneur's business and the relationships will be built on trust and effective communication (Aldrich and Zimmer 1986). The personal-contact network will, of course, have variations in terms of depth and breadth and most importantly purpose. For example, an entrepreneur's marketing network is likely to be made up of individuals from suppliers and competitors, professional bodies and business associates, as well as customers, friends, and acquaintances. The importance of such a network to small-firm entrepreneurs is immense. Given the limitations of marketing resources inherent in small firms, it is the network that both helps to form and guide marketing decisions, but that is also the vehicle for performing marketing. The personal-contact network will be used by the entrepreneur owner manager to seek out sales opportunities and to glean actual sales on the back of wider information exchanges. The network will be used, often proactively but mainly intuitively, to create and maintain a high profile of the small firm within its market. The network will be expected to provide not just information, but actual sales enquiries and contacts.

4.2 Marketing competencies

The importance of marketing competencies is not fully discussed in the literature and thus a little more time is taken here to explain this aspect. In management, and indeed business in general, a competency is both an attribute and a skill. There are many definitions of management competency. In a general sense, competencies can be described as underlying ‘characteristics’ combining knowledge, skills, and attributes important for job performance. In the context of management, skill implies an ability that can be developed, not necessarily inborn, and that is manifested in performance, not merely in potential (Carson et al. 1995a). In understanding the term ‘management competency’ it is useful to review some of those management tasks and activities that require management characteristics in order to be performed. So, for example, a manager must be able to analyse and judge a circumstance in order to take a decision. Therefore, these aspects are indeed management competencies. Similarly, a manager must provide leadership, coordination, and motivation—again all management competencies. The list and range of such attributes (competencies) can be exhaustive. For example, a manager must have intelligence, foresight, and intuition and be a positive thinker; he or she must be able to communicate, possess vision and creativity, and be a lateral thinker. Undoubtedly, a manager must have knowledge and experience. These are only a few of the competencies that any manager, or for that matter business person, must possess in some form or other and that must be utilized in differing ways and with differing emphasis. But if the above competencies are some of those that are required for any performance in management, which if any are more appropriate for marketing decision-making in small firms? The answer, no doubt, lies in the fact that all may be appropriate. However, it can be surmised that the characteristics and nature of marketing as a concept bring an inherent emphasis and requirement for certain competencies over others. For example, an SME marketer may require competencies of imagination and flair to add to creativity and vision. Similarly, a marketer may require specific selling skills coupled with resilience to add to communication competency. A marketer may need to be distinctly entrepreneurial in taking decisions and may also need numeracy in addition to analytical skills in dealing with sales and profits. What is clear here is that a marketer/entrepreneur must possess a spectrum of competencies that can be utilized and employed in a variety of ways. Of course, this spectrum does not consist of a list of unrelated components. It is obvious from this discussion that marketing competencies are not possessed and indeed performed in isolation from other competencies. There is an inherent interrelationship between all competencies in a variety of ways. It is important to emphasize that a marketer/entrepreneur acknowledges such interrelationships by viewing competencies as inseparable. For example, the competency of knowledge alone will not achieve meaningful marketing performance. Equally, communication competency alone will be of little value without, for example, knowledge. Both of these competencies will be enhanced by experience and all will contribute to judgement ability. Together, these competencies, treated inseparably, will more likely achieve effective specific action. Given that there are a wide variety of competencies, from a learning and education perspective it would be unrealistic to try to develop all such competencies. Is it possible to focus on a few competencies that might be deemed to be more appropriate for small-firm marketing? A core focal competency for marketing is deemed to be experiential knowledge. That is knowledge acquired through experience and developed as an accumulation of knowledge and experience built upon and from communication and judgement. Developed proactively, such experiential knowledge will allow effective specification to occur more rapidly than if competencies are viewed as isolated learning acquirements. So far in this discussion, significant issues have been raised about the appropriateness of conventional marketing in the context of small firms. The rest of this chapter is devoted to outlining some alternative approaches to marketing that are deemed to be more appropriate for small firms. Inherent to all of the examples outlined below are the importance to small-firm marketing of personal-contact networks and marketing competencies. First, it is contended that one area in particular can benefit from the issues raised in this discussion—that is, in the export

development of small firms. This issue is of particular importance because of the contribution that small-firm exporting can make to overall regional development in an economy. Following this example, further ‘alternative’ marketing approaches consider market research, customer focus, selling, distribution, and pricing. Finally, some criteria for analysing small-firm marketing performance are offered as an evaluation and assessment of sound marketing for small firms. ‘For example, small, high-technology, service firms seem to emphasize interaction and network marketing.’ (Chapter 22, p. 523)
5 ‘Alternative’ marketing for small firms

5.1 Alternative marketing 1: export marketing
The alternative approach to developing exporting offered here is designed to appeal to the entrepreneurial instincts of the small owner-managed firm that has never before exported but that may have been trading in a small-market niche within its home market. The approach is based on the proposition that entrepreneurally led small firms can best develop export markets by first importing products into their home domestic market and, once having established a relationship with a foreign supplier, then beginning to use this supplier's network for exporting products. The fundamental foundations of this theoretical proposition stem from the following.

Local knowledge. An entrepreneur has an intimate knowledge of the local home market. The entrepreneur knows the wants and needs of his or her market, the type of products that are most in demand, and has an intuitive feel for new potential products. • Differentiation of established products. Consumers in today's developed economies know what they want, particularly in relation to standard everyday regular purchases such as basic food items or similar domestic products. Retailers, of course, pander to this comfort purchasing pattern by standardizing products and emphasizing strong brands. Thus, consumers are not overly receptive to entirely new products. They are, however, often curiously attracted to new variations of products they can easily recognize—that is, products that are differentiated through packaging or origin. • Contact networks. Entrepreneurs will be more comfortable doing business with personal contacts with whom they have developed a good relationship. Such networks are strong in both buying-from and selling-to situations. • Big-company-small-firm interfaces. Small firms are just as likely to do business with large companies as they do with other small firms. Such relationships can be one of either buying from or selling to, or even both, but in the initial stages the former may be preferred.

These fundamental foundations are more strongly biased, initially, towards importing than exporting. It might be argued that there is still a fundamental barrier in establishing the initial contact, but it is immeasurably easier to establish a contact when seeking to purchase than when trying to sell. Having established a ‘tentative’ supplier contact, the entrepreneur can use his or her local knowledge to assess the potential of the supplier's products as appropriately differentiated but still easily recognizable products. The entrepreneur can now use his or her selling skills in developing the ‘new’ products in the local market. During this time the relationship between the entrepreneur and the supplier company personnel is growing and cementing. Both parties may make visits to each other's establishments as a natural progression of the trading relationship. It is during these visits that opportunities will arise for introducing the entrepreneur's products to the supplier. The supplier can be encouraged to ‘introduce’ the product to some of his or her own personal contacts in the ‘foreign’ market on the basis that they might be interested. Thus the network begins to widen and new contacts are made. Most importantly the entrepreneur has begun to export in the most natural way possible—one that is wholly

compatible with his or her inherent characteristics. The original supplier company is able to widen the contact network, or the entrepreneur is able to do so, as is the new buyer contact once exporting has begun. The benefits for all parties in this alternative export development approach are clear. The entrepreneur utilizes a new and differentiated source of supply and gains additional sales in the local home market. The foreign supplier establishes a beachhead in a new market. Eventually the entrepreneur has the opportunity to begin exporting though the mechanism of the personalcontact network established as a result of the importing activities. The new foreign buyer, if different from the original supplier, is assured by the recommendation of a fellow countryman that the entrepreneur is trustworthy.

5.2 Alternative marketing 2: versus profit orientation
Textbook marketing theory in relation to the customer has acquired the status of a missionary doctrine. That is, the theoretical emphasis is on the customer as the central focus of all marketing activity; the zealous emphasis is on meeting customer wants and needs, anticipating these wants and needs in order to satisfy and meet customer expectations, and adapting to the flow of customers' changing desires. In adhering to this theory marketing educators have indoctrinated students with a generation of textbook messages built upon the ‘missionary doctrine’. The literature has presented the customer as an idol: his or her every desire must be met and views sought before taking any decisions. The literature continues to compound and reinforce this focus by, for example, the ‘new’ philosophies of relationship marketing based on customer services and customer care. It is contended here that there may be a dichotomy between marketing theory as presented by the literature and that which is practised by practitioners. This dichotomy has long been recognized by educators working with entrepreneurs and small-business owner managers. The central focus of marketing theory (the customer) is incompatible with the central focus of the marketing practitioner, which is, albeit implicit rather explicit, that of profit. Both the customer and the marketing practitioner have different agendas and objectives and more often these are incompatible. For example, the consumer will diligently seek to satisfy his or her own expectations and demands when making a purchase, whilst, on the other hand, a company will seek to make profits from the exchange that will serve to satisfy shareholder return on investment and employee salary increases. It might be expected that some compromise between these divergent objectives will prevail (see Fig. 25.2). What is the implication of this for marketing theory? An alternative approach to conventional customer orientation marketing might be to accept a new ‘alternative philosophy’, as presented, in Box 25.4. Consider how such an alternative philosophy might appear in relation to two important and integral dimensions of marketing—quality and price. Generally, it can be assumed that consumers will seek the best quality at a minimum price, whereas companies will optimize quality and try to maximize price. Where the exchange occurs between these two extreme aims will depend upon the amount of negotiation, the strength of position, the depth of desire to trade, the alternatives and choice available, and the uniqueness of the product that exist between a company and its potential customers (Fig. 25.3). The above new alternative philosophy is not too different from marketing in practice. Generally, naturally, and often subconsciously and implicitly, the manager/practitioner focus on the customer is on finding out, manipulating, assessing, exploiting, outflanking, surprising, and stimulating customers towards a meaningful sale for the company. Would it be better to accept this philosophy alongside the missionary doctrine? It would appear to have more ‘real-world’ relevance than current conventional education. (A fuller description of this argument can be found in Carson et al. 1995b.)

5.3 Alternative marketing 3: scientific versus natural marketing research
Much of the foundation philosophy of marketing research stems from the rigour required by ‘scientific’ social-science research. A basic tenet is that, if research is to be considered valid, it must be carried out with a discipline and rigour that emphasize objectivity and validity, and show clearly cause and effect. As a consequence, much of the conventional literature focuses upon methodologies and how they must be performed ‘correctly’. Similarly, an emphasis is placed upon the ‘one best method’ for a particular piece of research, even to the point of underlining the difficulties and complexities of using more than one method. Consider for a moment the single aspect of questionnaire construction. Textbooks give instructions on devising appropriate questions that occur in a correct sequence and that have proper lead and follow-on questions. An emphasis is also given to the objectivity, construction, and sequence of ‘forced-choice’ questions and interpretation of answers to open-ended questions. Here again there may be a dichotomy between theory and practice. Although not in the strictest sense, market research as described above can be deemed to derive its origins and philosophy from ‘scientific’ social-science research. However, it is important to recognize that marketing practitioners and particularly entrepreneurs and owner managers of small firms do not carry out research in this way. Instead, they take a naturalistic, even artistic approach to gathering market information. ‘Artistic’ in this sense relates to the notion that a practitioner's research will be uniquely created by the individual and related only to his or her company. Interpretation of findings, gathered haphazardly, spontaneously, opportunistically, and personally, will be perceived, in terms of significance and meaning, uniquely by that individual. Just as in art, interpretation is individualistically in the ‘eye of the beholder’, whether this is the artist who created the piece or the viewer of the piece. Practitioner market research will use any method at its disposal, regardless of correctness and compatibility. Typically, a practitioner will gather information from a variety of sources and in a variety of ways. The concepts of rigour and validity seldom enter into the mind frame. The practitioner will have a feel for the value and usefulness of information and its source and will intuitively accept or reject information as it is gathered. Much of the information gathering (note the use of the term ‘information gathering’ as opposed to market research), may well be semiconscious. How can marketing writers make research more practitioner ‘real’, whilst not rejecting the characteristics of ‘scientific’ social-science research, particularly in relation to its rigour and validity? Could textbooks accommodate the ethos of ‘practitioner’ research? ‘Scientific’ research fails to recognize that market information is of a unique value to an individual and his or her company. Interpretation of findings is an entirely personal thing for the purpose of understanding and this understanding is precisely personal. Equally, could writers not accept the approach of using and or adopting any research methods with which the researcher is comfortable and which he or she chooses to use out of convenience or expediency?

5.4 Alternative marketing 4: small-firm selling
Conventional descriptions of selling in marketing textbooks primarily take a formal and sequential step approach whereby the process begins with prospecting and preparation behind a selling scenario. The sale itself begins with a formal ‘opening’ followed by presentation and demonstration. Guidance on how to deal with objections is often included before descriptions of how to ‘close’ the sale and subsequently to follow up after a suitable period. In addition to this formal selling approach, whole sections of the textbooks are devoted to the organization of the sales statistics and to the ‘efficiencies’ of managing a sales force.

Is this of value to small-firm owner managers? To some degree perhaps, particularly for some inexperienced entrepreneurs embarking upon a business venture for the first time. However, for the experienced entrepreneur it is of little value and help, primarily for two reasons. First, it follows a rigid, formal, and sequential approach that, as alluded to earlier, is alien to entrepreneurial practice and, secondly, and most significantly, an entrepreneur will sell on the basis of his or her own experiential knowledge (competency) built up over the everyday running of the business. Undoubtedly, there will have been much trial and error in building this experience, but mistakes will have been learned from and successes honed, practised, and refined. Often selling approaches will have been copied by observing competitors' successful activities and comments, and feedback from customers will be taken into account. The essence of small-firm selling can be deemed to be simply intuitively assessing the personality and mood of the buyer. This may involve getting to know the buyer and his or her circumstances over time. However, the entrepreneur's experiential knowledge of buying scenarios, coupled with knowledge of the industry and the individual in question, will all serve to enable the entrepreneur to assess the personality and mood of the individual. He or she will adapt the selling approach to suit the individual's personality or mood at any particular time. Any selling will be built around persuasion, and such persuasion is likely to be couched in befriending the individual. Clearly, experiential knowledge in its widest context is a meaningful competency for natural marketing. Also inherent in this natural selling will be networking dimensions, which are often the basis of the ‘befriending’ that is occurring naturally.

5.5 Alternative marketing 5: smallfirm distribution
Similar to the conventional literature approaches in other aspects of marketing, distribution also adheres to a rigour and formality in its frameworks. Typical chapter headings in textbooks cover issues such as the nature and type of channels, behaviour, and function of channel intermediaries, and physical distribution management and systems. In reality, small-firm distribution is not concerned with elaborate distribution channel variations. Indeed, for most small firms distribution channels are predetermined by industry norms and practices that small firms most conform to in order to do business. As mentioned earlier in this chapter, most distribution channels will have been established over a lengthy period and a small firm, because of its size and position within an industry or market, is often forced to conform to the established practices. Distribution delivery in small firms, when under control, is largely reactive to customer requirements. Planned delivery is often founded upon the need to maintain cash flows; thus the aim will often be to deliver immediately when stocks are available. Sometimes such a policy will lead to inefficiencies and lack of coordination. Often delivery is an uncontrolled dimension whereby deliveries are made just in time or involve fulfilling unrealistic promises, etc. Frequently, non-delivery or part delivery is blamed on suppliers' deficiencies rather than on those of the small firm. Generally, a small firm will seek to establish a pattern and routine for delivery that is regular and consistent, as it is in this way that the ‘chaos’ of delivery can be minimized.

5.6 Alternative marketing 6: small-firm pricing
Much of the conventional marketing literature of pricing as a marketing strategy indulges in elaborate positional justifications, ranging from premium pricing at one end of the spectrum, whereby firms are encouraged to charge high prices on the strength of some kind of distinctive differentiation, and, at the other extreme, discount pricing, whereby firms are encouraged to price below the competitive norms in order to secure more orders. In between lie a plethora of variable pricing strategies for all kinds of justifications and scenarios. In addition, the textbook literature counsels readers to take account of a huge variety of factors when determining price, such as value to customers, quality relationships, competitor and intermediary effects, to mention just a few.

Small-firm pricing does not adhere to any of these elaborate pricing descriptions. Indeed, where price is used as a marketing tool, it is often in the form of price reduction as a consequence of competitor pressure. Generally, small firms must again adhere to industry norms, which consist of known and expected margins, established and set over many years within a distribution channel. A small firm, or any company, for that matter, that prices significantly above or below an expected industry norm will raise major enquiries from the industry, not least from competitors. Similarly, consumers within any market are generally aware of price/value ranges, and this awareness often restricts, even dictates, the scope of pricing available to a small firm. The only exception to this is where a high (rare) marketing differentiation exists.

5.7 Alternative marketing 7: the small-firm marketing plan
The theoretical foundation stemming from conventional learning based on the textbook literature in relation to marketing planning advocates that the marketing manager carries out a situation analysis to arrive at a SWOT (strengths, weaknesses, opportunities, and threats) analysis. On the basis of this a text will often encourage consideration of radical change through the introduction of new products (immediately), entering new markets (immediately), more investment in promotion activity, and so on. The problem here arises from ‘encouraging radical change’ out of a situation analysis. Such radical change almost inevitably ensues from such an exercise, principally because of two factors. First, textbooks often describe a circumstance in extreme ‘black-or-white’ solutions for the purposes of illustration; and marginal changes appear dull and unimpressive. Secondly, it is difficult to incorporate into a situation analysis the invariable company-specific nuances of internal cultures and decision-making practices unique to an individual company. Generally, because of these factors, writers fail to explain the importance of accommodating the views of existing management in incorporating situation-analysis outcomes. Writers do not recognize that managers generally do not like change, especially radical change. Also, most managers have a vested interest in the status quo and therefore may be unsettled by extensive change. Similarly, most managers/entrepreneurs cannot finance expensive solutions, and they need/want solutions that are simple and workable and that they understand and can support. What is the issue here? It could be argued that there are many issues and indeed there are, and it may be that these issues are inherent in the understanding of the situation analysis process. However, there are some aspects that are not considered. For example, how does an existing management team (or an entrepreneur) think when it comes to making decisions? What constraints and pressures are they under that will allow them to take decisions or not? To increase relevance to small firms, textbooks might more realistically adhere to the following aspects when outlining such a study:

Do not advocate ‘radical’ change, instead recommend that any change should be introduced gradually in order to allow confidence to emerge. • Do not change the product and ways of doing things and recognize that managers do not want to change immediately and that they are probably more interested in securing sales/customers/profit. Consequently, most emphasis should centre on improving marketing communication. • Look for solutions within the firm's existing systems. Therefore, solutions should encourage the involvement of the company's managers and employees in working out problems and creating solutions. • Promote marketing without advocating heavy promotional expenditure and price reductions.

Emphasize marketing availability, suitability, value perception, and communication.

A marketing text that had to contend with these issues would appear radically different from the existing conventional texts' consideration of the ‘situation analysis’ as a topic.

Consider briefly another issue inherent in this area of marketing. What is the emphasis given in a textbook description of a marketing plan? Attention will focus on the comprehensiveness and sequentiality of the process, so a text will present a comprehensive situation analysis and SWOT analysis. But this is not what a company's management, especially an entrepreneur, wants to read. Managers with some years' experience will know as much as they need to know about their environment. They will be aware of the broad changes and trends, they will constantly monitor competitive activity, they will be aware of the latest marketing innovations, and so on. Therefore, what marketing managers, and owner managers want to learn about is ideas and solutions that are viable. As such, textbooks might focus on ‘what to do’ and show how this will work. They need not devote long tracts on describing the process of a situation analysis and SWOT analysis (unless the text is aimed at a ‘first starter’ market). In offering ideas and solutions they need not say ‘should do’; instead they might say ‘how to …’. This kind of emphasis will interest the smallfirm owner manager much more than having to accept a perfectly correct procedure that deals with issues which he or she already knows about intuitively. In most cases an entrepreneur will seek to glean ideas and solutions to his or her own problems and will want to acquire such solutions quickly and without lengthy and elaborate procedure. ‘In smaller companies Aguilar (1967) found that top management were the main scanners but… the information they generally scanned was somewhat narrow and too focused in nature to be considered a true environmental scan.’ (Chapter 8, p. 167)

Box 25.3 Two contrasting scenarios, one representing a customer focus and the other a sales/profit focus, as an illustration of customer versus sales/profit orientation
Senario One: A Customer Focus A team talk led by a sales/marketing manager who has totally accepted the marketing philosophy and advocates that the customer is the central focus of the company's activities. 'Ok, we are here to plan our campaign for the next three months. Our customers have given us a clear indication as to their preference. So what have we got? 'There is the old-established product, which we know is being superseded by newer products, but we must recognize that ther are still some of our most loyal customers out there who are accustomed to buying it. Let's not offend these people by discontinuing the line. We'll keep it available for those who demand it for as long as they desire it. ‘Our leading product is obviously being well received by the bulk of our market. We are known for being the best value for money available in this area, so whatever the competition get up to we must still beat them on price.’

Scenario Two: A Sales/Profit Focus
A team talk led by a hard-bitten sales/marketing manager who has come up through the ranks of sales representation based on aggression and persistence. ‘Ok, we are coming into a period of heavy competition. We have competition leaning on us. We have a “dog” of an old product that some laggards still think is good. We also have a main product that thinks it's playing follow the leader around the market. So what are we going to do? First, let us kill the “dog” and forget about loyalty. As for the so-called main product, I don't care what the competition do with their price, we are already low enough; any lower and we'll be giving it away. So I want some serious agressive selling from you guys, don't give me any excuses. Promise these people the earth if you have too, as long as you get in before the competition. We will worry about customer reaction next period, but I want results.’

Box 25.4 A new ‘alternative philosophy’
1. 2. 3. 4. 5.
Refocus the professional doctrine, not on the customer, but on the HONESTY-OPENNESSFRANKNESS of the message. Focus on ‘Marketing for Profit’. Treat the customer as a ‘player’ in the game of exchange and trade. Recognize that the customer has his or her own agenda and objectives.

Focus the marketing message on ‘WE WANT TO SELL YOU SOMETHING AND WE AIM TO PERSUADE YOU TO BUY IT’. 6. Recognize that the customer wants the best for him or herself and that the company wants the best for itself. 6 Assessment of the ‘quality’ of marketing decision-making in small firms

THE examples of small-firm marketing described above serve to illustrate the natural and intuitive way in which an entrepreneur owner manager will tend to do marketing. This approach to marketing decision-making is unlikely to conform to conventional literature descriptions of marketing. An entrepreneur is likely to perceive such descriptions as prescriptive and inappropriate for his or her business. However, small-firm owner managers do have a desire to assess the value of their decision-making. Generally, they are cautious about taking ‘big’ decisions for fear of a failure that will threaten their business. They also have a desire to know if what they are doing is working efficiently and effectively. It is with these issues in mind that this chapter concludes with an outline of criteria that will assess the ‘quality’ of marketing decisionmaking in small firms. The criteria offered below are designed to allow the entrepreneur to carry out an assessment in a way that is conducive to his or her own decisionmaking processes. It is primarily concerned with the use and value of marketing activity and how it is performed. The framework offered below assumes some level of awareness of conventional marketing theories. For example, entrepreneurs will be aware of concepts such as target-market segments and niche marketing. The scope of the factors influencing qualitative marketing decision-making is, of course, broad and complex and may take account of all or as many of the factors of influence as possible in order to gain a complete picture of the marketing decision-making process. It is also possible to focus on a few or one specific aspect of influence in order both to gain insight into the degree of influence of this aspect and to understand the nature of the processes inherent in this aspect. In the broad and general sense, marketing decision-making can be deemed to involve decisions both that are about, and that are influenced by, factors that are internal to the enterprise and that are about external dimensions. Whilst it is recognized that external market factors are of significant importance to research in areas of marketing, especially in the context of small firms, which are influenced perhaps to a greater extent by market forces than larger organizations, it is nevertheless not taken into consideration in this assessment framework other than to acknowledge its existence and that most small firms will be inherently aware of their environment in order to survive. The rationalization for this is that any small firm that is growing is doing so on the basis of its current marketing activity and, since all marketing activity is inherently market based, the evidence of growth is an indication that such a firm is competing positively in its market environment. It is also recognized that competition is an inherent part of the smallfirm market because all small firms exist in markets where there are other small firms and some larger competitors. Therefore, this discussion recognizes that growing small firms exist in dynamic and competitive market environments. This assumption also serves to underline the importance of qualitative marketing decision-making factors, since the quality of such decisions are imperative if the small firm is to maintain growth. So this discussion is concerned with internal marketing decision-making factors of a qualitative nature that contribute to an enterprise's growth. However, decision-making within a firm is also a highly complex domain. Strong influences on this decision-making are issues such as the culture belonging to the firm and the personality traits possessed by the owner manager. Whilst these are again undoubtedly important in understanding aspects of qualitative decisionmaking, they

are nevertheless outside the focus of this discussion. Of course, they are inherent within the domain of the discussion and are recognized as influencers and contributors to decision-making outcomes, but it is the managerial context of decision-making that is of primary interest in this context. The quality of external dimensions can be assessed in terms of market knowledge, standing, profile, and image, as well as of the number of customers, whether they are longstanding or new, and the ratio of both. ‘Good’ marketing is manifest in the tangible dimensions of good/increased sales and profits. Whilst it is possible to recognize good examples of marketing activity, or, in other words, quality marketing, the question is one of whether this marketing activity can be assessed as being good quality in terms other than the tangible dimensions of sales and profits. It is judged that quality in marketing can be assessed by evaluating the use of marketing—that is, assessing how marketing is performed. This assessment will determine a placement of marketing along a continuum between negative and positive extremes. For example, by using terms such as poor/excellent; inactive/active; reactive/proactive, and so on, assessing these on a continuum of extremes (see Fig. 25.4). On the basis of the above, it is possible to address the components of marketing activity and to assess these in terms of their use and how they are performed. Assessment of such quality dimensions will be from a ‘holistic’ perception for all marketing activity. While ‘textbook’ frameworks will be of help in assessing quality of marketing decision-making, these will serve as parameters of such dimensions. The strength of this assessment will come from enriching such parameters by actual performance criteria stemming directly from the firm's own marketing performance. As a consequence, analysis should go beyond the narrow decision-making frameworks of the traditional marketing domain of product, pricing, distribution, selling, and customer service. Although these represent the framework for the analysis criteria, they are simply that, a useful framework. Again the enrichment will come from how a small firm uses and performs marketing. In assessing the quality of marketing and, indeed, in assessing how marketing is used and performed, it is useful to return to the underlying aspects of competency and networking. These aspects can be deemed to be the inherent foundations of good small-firm marketing. That is, it is judged that good small-firm marketing will have a foundation based upon the owner managers' ‘competency’ of experiential knowledge that has been acquired through the accumulation of knowledge and experience and the development of communication skills. The combination of these competencies allows entrepreneurs and owner managers to make sound judgemental decisions with regard to a variety of marketing aspects. Allied to experiential knowledge competency is the inherent ability of a small-firm owner manager to utilize effectively the personal and business network of contacts and influence. It is the network that enables the smallfirm owner manager to exploit marketing circumstances that can be deemed to be uniquely small-firm oriented. An entrepreneur owner manager is unlikely to have the resources proactively to carry out a full range of marketing activities; with a comprehensive and vibrant network, however, an entrepreneur will be able to compensate for any lack of resources. The combination of active networking and experiential knowledge provides the underpinnings that will allow an entrepreneur owner manager meaningfully to assess the quality of his or her marketing performance, for example, by recognizing the value and importance of the criteria presented in the examples below. Three aspects that mirror the alternative marketing scenarios are offered as illustration, these are pricing quality, delivery quality, and selling quality. The criteria are based on the integration and coordination of as many aspects of marketing activity that can be deemed necessary to perform good sound marketing in a small firm.

6.1 Marketing quality assessment: pricing quality
Qualitative marketing factors in pricing may be determined by the suitability, viability, and compatibility of price. This can be assessed in relation to price against the competition price, the quality of the product that price belongs to, and the overall image of the company. The extent of manipulation of price to aid marketing will also be important. Therefore, price can be assessed in terms of the product refinement/improvement/ development processes. Assessment of price can

also take account of issues such as the number/range/scope of products and the extent of ‘targeting’ towards a given market niche. ‘Quality’ may be deemed to exist if products and pricing are subjected to refinement, improvement, and so on, and if these adjustments have generated a compatible range of products at a variety of prices. In particular, quality pricing would involve using price and the mechanism for setting it as a tool integrated with other marketing activities.

6.2 Marketing quality assessment: delivery quality
Qualitative marketing factors in delivery may be assessed in terms of how the product/service is delivered and the quality and expertise of the person(s)/systems delivering it. In particular, how the delivery is managed relative to frequency and immediacy in relation to the type of product, customer requirements, and competitors' activity will also be important. Quality can also be assessed in terms of how the reliability of delivery is managed and ensured and how complete the delivery performance is perceived to be (by the owner manager). The interaction and communication between all parties before, during, and after the delivery process will contribute to the overall assessment of quality in delivery.

6.3 Marketing quality assessment: selling quality
Quality in selling may be assessed in terms of the ability to execute the whole sales process. Of particular importance are how salespeople do their selling and how they approach and communicate with customers—that is, the salespeoples' ability to create initial desire and need with the sales message, to stimulate sales, to manage customer contact in terms of frequency, reliability, and efficiency, and to contribute to the development of relationships between salespeople and customers. The completion of a quality assessment of marketing activity would also expect to consider the quality of aspects such as communication, customer service, and any other aspects of marketing activity deemed to be important. In summary, this discussion offers a definition of some important issues that may be expected to be inherent in how entrepreneurs do marketing. Because, the criteria put forward here suggest degrees of ‘quality’, it is possible, therefore, to determine this quality of marketing decisionmaking and, as such, how this ‘quality’ may contribute to growth of the enterprise. There are some meaningful questions that emerge from the above that a small-firm owner manager should ask about his or her marketing. For example:

How much do you know about your market environment? Do you know your market position vis-a-vis competitors in terms of size, product/company standing, price comparison, etc.? How strong/weak is your product(s) vis-a-vis competitor offerings? • Do you satisfy your customers completely? Are there potential customers that you do not reach and why?

• •

Is your price competitive? Is your price compatible with your product quality and range?

Do you deliver on time, consistently, and reliably? Can your delivery systems respond to specific customer requirements? • In selling, how well do you know your customer? In particular what messages and arguments do they most respond to? In addition, other questions might be considered: • How good is your and your staff's communication with customers? How would you assess your overall communication package? • How would you rate your customer service over that of you nearest competitors? If it is poorer, why is this so and what could you do about it? 7 Summary

So what are the issues arising out of this discussion? It is argued in this chapter that there may be a dichotomy between literature theory and actual practice. Essentially, not only do entrepreneurs have different characteristics from managers, but these characteristics can also be found in practising marketing managers' decisionmaking as well as entrepreneurial decisionmaking and this decision-making is carried out in a different manner and is incompatible with the conventional literature descriptions of how marketing decision-making should be performed. In essence, the motivations and decision-making style of small-firm owner managers and marketing managers are in practice similar; and these motivations and decision-making styles are different from conventional literature descriptions pertaining to both. The issues raised by this notion are that a better understanding is needed of how small-firm marketing is performed. It has long been recognized that entrepreneurs and smallfirm owner managers do not ‘manage’ according to the principles and techniques presented by the textbooks, and similarly it is recognized that they take decisions that stem from their unique characteristics rather than any textbook philosophy. Perhaps some of the most innovative learning in marketing is based upon accumulated competencies combined with an inherent ability of the entrepreneur to use personal-contact networks to maximize marketing potentials. As an illustration of the application of these competencies and networks, some time has been taken in this chapter to offer an alternative approach to export marketing development. Following the ‘alternative’ theme, a number of examples of natural, entrepreneurial, small-firm marketing are offered as a contrast to conventional marketing theories stemming from the textbook literature. Finally, some criteria for assessing the quality of marketing in small firms have been outlined both as a means of allowing an entrepreneur owner manager to assess his or her own marketing and also as a further illustration of what is the essence of small-firm marketing. Considerable emphasis has been placed upon the fact that conventional marketing literature is inappropriate for small-firm marketing. How relevant is this assertion? Increasingly, educators are raising the voice of doubt (Baker 1993, 1995; Brownlie et al. 1994; Brown et al. 1996). Key questions need to be addressed. Is marketing being taught correctly, regardless of the learning audience? Are teaching and learning methods appropriate? Is the subject of marketing as conventionally perceived still relevant to the issues and circumstances of today? If the answer is no to each, or any, of these questions, then what are the alternatives? It is incumbent upon educators to find acceptable solutions.
Further reading

Carson, D., Cromie, S., McGowan, P., and Hill, J. (19950), Marketing and Entrepreneurship in SMEs: An Innovative Approach (Hemel Hempsted: Prentice-Hall). Hisrich, R. D., and Peters, M. P. (1995), Entrepreneurship: Starting, Developing and Managing a New Enterprise (yd edn, Chicago: Irwin). Levinson, J. C. (1984), Guerrilla Marketing: Secrets for Making Big Profits from your Small Business (Boston: Houghton Mifflin). Prushan, V. H. (1997), No-Nonsense Marketing: 101 Practical Ways to Win and Keep Customers (New York: Wiley &Sons). Smith, J. (1996), Guide to Integrated Marketing (Entrepreneur Magazine Series, USA; New York: Wiley &Sons). UIC/AMA Marketing/Entrepreneurship Interface Symposium Proceedings 1987–1997 (available from University of Illinois at Chicago, Department of Entrepreneurship Studies).
Discussion questions

1.

How does small-firm marketing decision-making differ from large-company decisionmaking? 2. What are the characteristics of conventional marketing decision-making and how do these differ from decision-making in small firms?

3. 4.

In what ways are entrepreneurs and marketing practitioners similar?

How do small-firm entrepreneurs owner managers utilize competencies and networks to overcome marketing deficiencies? Mini Case: Eaton and Caron (EC) Marketing)

This case study describes the situation of a small agency firm, Eaton and Caron (EC) Marketing, doing business with the food distribution industry in Ireland. The entrepreneur Paul Eaton had established a network of relationships among all the major food buyers in Ireland. He had been selling a wide variety of food and related products to the food distribution industry for several years. He felt it was time to expand the business beyond its established but narrow parameters. He was stimulated by new developments in the European Union markets. Paul's new venture emerged out of a visit to France and the Benelux countries with a friend. He travelled overland and purposefully called into a variety of supermarkets as he came upon them. He purchased a range of products and carefully recorded details of packaging, description, price, and source manufacturer or wholesale supplier. After several days it became obvious to Paul that Holland offered the best potential for sourcing products. His observations led him to a large general distributor that had its base in Holland, near Amsterdam. Paul was able to use his personal-contact network back home in Ireland to identify a name and obtain a letter of introduction to the Dutch company. The Dutch company was happy to supply products to Paul's trading company, subject to normal trading and credit checks. It was agreed to run a trial on ten products that matched the profile of differentiated basic food products. The chosen products comprised a range of Dutch coffee and a selection of Belgium chocolate. Most of the ten products proved highly successful in the Irish market. Buyers were intrigued by the nonconformity of the products and consumers appeared to be attracted to the continental differentiation. The relationship between Paul and the Dutch suppliers flourished, as might have been expected given the mutual benefits experienced by both parties. Within three months the product range had expanded to incorporate four new ranges: pasta, biscuits, savoury snacks, and beverages. The total number of individual products had expanded to sixty-five. Towards the end of the first year of trading Paul was again in Holland—his third visit in eight months. The relationship had developed to a stage where Paul felt comfortable to raise the issue of selling his Irish products to the Dutch market. His Dutch partners were immediately enthusiastic and placed telephone calls to potential buyers extolling the merits of Paul and his company and organizing meetings for Paul, who, simply by extending his visit, was able to follow up immediately. Agreements were made with two Dutch buyers for some of Paul's products. Exporting had begun. Currently, Paul's company continues to expand its export sales simply by servicing the agents in Holland. Sales of Dutch imported products continue to grow. Paul is expanding his activity into other European countries. He has visited major food exhibitions in France and Germany, with a view to buying other European products—that is, by importing first and using his new relationship to develop export sales. Source: Carson, Cromie, McGowan, and Hill (1995a).
Discussion question

What lesson would you draw from Paul's experience if you were the owner of a small firm, with no previous experience of exporting, considering starting to export to another European country?

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Box 25.1 Differences between entrepreneurs' and managers' decision-making ENTREPRENEUR CHARACTERISTICS MANAGER CHARACTERISTICS Perception of opportunity Need to control resources Commitment: revolutionary, Commitment: evolutionary, with with short duration long duration Directive with colleagues Negotiates with colleagues Lacks control over environ-Seeks control over ment—risk-taker environment—risk-reducer Management: flat, with multi-- Management: works to budgeting ple informal networks and formal planning system Challenge to authority Seeks power, status, authority, and responsibility Source: Hisrich and Peters (1995:34–7).

By David Carson Edited by Keith Blois

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