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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 medium-
sized 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 decision-
making. 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’ decision-
making.
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 small-
business 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 resource-
richer 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 personal-
contact 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 semi-
conscious.

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 small-
firm 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. Refocus the professional doctrine, not on the customer, but on the HONESTY-OPENNESS-
FRANKNESS of the message.
2. Focus on ‘Marketing for Profit’.
3. Treat the customer as a ‘player’ in the game of exchange and trade.
4. Recognize that the customer has his or her own agenda and objectives.
5. 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 decision-
making 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 long-
standing 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 small-
firm 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 decision-
making 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 decision-
making?
2. What are the characteristics of conventional marketing decision-making and how do these
differ from decision-making in small firms?
3. In what ways are entrepreneurs and marketing practitioners similar?
4. 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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Published in the United States by Oxford University Press, Inc., New York

© Oxford University Press 2000

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