factors that contributed to the lack of market...
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 1
Factors That Contributed to the Lack of Market Acceptance
on Small Medium Enterprises Product: A Case Study on Food
and Beverage SMEs, Selangor
Nor Suhaila Tahir*, Nor Salmawati Abdul Karim
** and Norhashimah Mohd Nordin
***
*Commerce Department,
Politeknik Port Dickson, 71050 Port Dickson, Negeri Sembilan, Malaysia.
Email: [email protected]
**Commerce Department,
Politeknik Port Dickson, 71050 Port Dickson, Negeri Sembilan, Malaysia.
Email: [email protected]
***Commerce Department,
Politeknik Sultan Salahuddin Abdul Aziz Shah, Persiaran Usahawan, Seksyen U1,
40150 Shah Alam, Selangor, Malaysia.
Email: [email protected]
Abstract
This study aims to examine the acceptance of product manufactured by Small Medium Enterprises (SMEs).
The study was conducted at Pasar Tani, section 13 Shah Alam, Selangor. A total 230 samples were selected
as the research subjects. Interview was conducted with the manager of NE Company. The main purpose of
this study was to identify the problem which faced by the SMEs in marketing their products. The findings of
this study showed that half of the consumers know about the products produced by the NE company. By
using marketing mix, the study found that promotion by NE was the most significant element that attracted
the consumers to buy their products. Thus, the company should play an important role in their marketing mix
especially on promotion to increase their product sales.
Key words: SMEs, Marketing Mix, Food and Beverage
1. Introduction
Small Medium Enterprises (SMEs) are defined based on the characteristics of the paid up capital and workforces.
For small industries, share capital is less than RM500,000 and has a permanent labour between 5 and 50. While a
medium enterprise has paid-up capital to RM2.5 million and has labour between 51 to 75. SMEs also can be identified
by the division of workers in their operations. Most of the division of SMEs are not clearly justified. It is common in
the SMEs sector; a worker may perform many tasks or duties such as production operator, technicians, clerks, sales
staff, officers and others at the same time.
In Malaysia, SMEs is based on the definition of National SMEs Development Corporation (2005) as follow:
Table 1: SME Definitions in Terms of Annual Sales Turnover
Size Primary Agriculture Manufacturing (including
Agro-Based) and
Manufacturing Related
Services
Services Sector (including
Information
Communications
Technology (ICT) )
Small Between RM200,000 and
less than RM 1 million
Between RM250,000 and
less than RM10 million
Between RM200,000 and
less than RM 1 million
Medium Between RM 1 million and
RM 5 million
Between RM 10 million
and RM 25 million
Between RM 1 million and
RM 5 million
SME Not exceeding RM 5
million
Not exceeding RM 25
million
Not exceeding RM 5
million
mailto:[email protected]:[email protected]:[email protected]
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 2
Table 2: SME Definitions in Terms of Full Time Employees
Size Primary Agriculture Manufacturing (including
Agro-Based) and
Manufacturing Related
Services
Services Sector (including
Information
Communications
Technology (ICT) )
Small Between 5 and 19
employees
Between 5 and 50
employees Between 5 and 19
employees Medium Between 20 and 50
employees Between 51 and 150
employees Between 20 and 50
employees SME Not exceeding 50
employees Not exceeding 150
employees Not exceeding 50
employees
According to Abdullah (1999a), problems faced by SMEs do not differ much from one country to another.
Meanwhile, some of the major problems faced by SMEs are inherited, like the small size. The problems prevent their
full potential to expand. Some SMEs still use the traditional way, which has been practiced by the whole family using
the traditional or old technology to produce the cheap and low quality products for their markets. Many of SMEs face
problems especially in modernizing their production system to fulfil the market needs in global economy. The problem
faced by SMEs is very similar to each other within the industry; such as lack of access to credit, old technology, poor
management, unskilled labour, raw materials, and unsuitable sites for operations of SMEs.
However, the importance of SMEs to Malaysian economies has been widely recognized. Moreover, SMEs have the
resources and could develop more capabilities and take advantages on them. The current study is hoped to contribute to
enhance their potential to the fullest and push their growth to global.
2. Problem Statement
It is undeniable; business is a very challenging field. Various factors are needed for success in business including
management skills, competent staff, strong financial resources, products and services, and most importantly the
customers. Marketing is the most important part in order to attract customers because without customers, the business
will not survive in the market. The focus of the study is on the marketing strategy used by the NE company. The study
was conducted to examine the level of acceptance of the NE products in the market. In this study, the researchers will
study the factors of consumer acceptance based on product, place, promotion and price (4P‟s) at Pasar Tani Seksyen 13,
Shah Alam, Selangor.
3. Research Objective
In general, this study seeks to identify problems and SMEs marketing mix used to increase their product acceptance
in Shah Alam, Selangor. Specifically, this study will focus on the following objectives:
i. To examine the market acceptance based on promotion, places, price and products (4P‟s). ii. To determine which factors that attracts the consumer to buy the products
4. Literature Review
The success of an SME to some extent is influenced by the elements of effective marketing. Marketing and
promotion are the basis of any growth of a business. Marketing activities will be able to speed up the exchange process
of products or services to money or other benefits. It also can strengthen and prolong the life of the business through
modification of products to meet customers' needs. Promotion involves the dissemination of information on the
products, product lines, brands or companies. Promotion is one of the four most important aspects of the mixed
marketing besides product management, pricing and distribution (Che Omar & Tajudin, 2014). In addition, Abdullah
(1999a) said that marketing strategy plays an important role in determining the success or failure of businesses.
Marketing involves a number of activities. To begin with, an organisation may decide on its target group of
customers to be served. Once the target group is decided, the product is to be placed in the market by providing the
appropriate product, price, distribution and promotional efforts. These are to be combined or mixed in an appropriate
proportion so as to achieve the marketing goal. Such mix of product, price, distribution and promotional efforts is
known as marketing mix. According to Kotler and Keller (2007), marketing mix is the set of controllable variables that
the firm can use to influence the buyer‟s response. Each firm strives to build up such a composition of 4„P‟s, which can
create the highest level of consumer satisfaction and at the same time meet its organisational objectives.
Singh (2012) states product refers to a physical product or service which a consumer is ready to pay. It includes
tangible goods like furniture; garments, grocery items etc and intangible products like services are purchased by
consumers. The product is the key element of any marketing mix.
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 3
Price is the amount the consumer must exchange to receive the offering (Borden & Marshall, 1959). It is the second
most important element in the marketing mix. According to Singh (2012), as the price of a product depends on different
elements and hence it changes constantly; thus, the pricing should be dynamic so that it can bear the changes over time
duration. The important factor in pricing decides the cost of the product, strategy for marketing & its expenses related to
distribution, advertisement expenses or any kind of price variation in the market. Nonetheless if there is a change in all
the variables then generally the pricing of the product may vary accordingly (Singh, 2012).
Lusk (2003) said that place refers to the distribution channels used to get the product to the customers. The types of
the product will greatly influence how to distribute it. For example, own a small retail store or offer a service to a local
community, then at the end of the distribution chain, it supplies directly to the customer. Businesses that create or
assemble a product will have two options either selling directly to consumers or selling to a vendor.
In addition, Lusk (2003) states promotion refers to the advertising and selling. It is how to let people know what it
has for sale. The purpose of promotion is to get people to understand what the product is, how they can use, and why
they should want it. The customers, who are looking for a product, know that the product satisfies their needs. To be
effective, the promotional efforts should contain a clear message targeted to a specific audience reached via an
appropriate channel. The target audience will be the people who use or influence the purchase of the product. Business
should focus on the market research to identify their target customers. Promotion may involve advertising, public
relations, personal selling, and sales promotions.
All the four variables of marketing mix are interconnected (Singh, 2012). Fulton et. (2000) states the 4P‟s (product,
price, place, and promotion) should work together in the marketing mix. Often, decisions on one element will influence
the choices available in others. Selecting an effective mix for the market will take time and effort, but these will pay off
as it satisfies customers and create a profitable business. Once business have a good marketing mix, the right product at
the right price, being offered in the right place and promoted in the right way, it will continue to stay at the top of
market changes and survive in the market.
A study on the method of improving SME marketing has also been done by Mohd Nor and Abdullah (1998). Most
of the food products are for domestic market (90%) and only 10% of the surveyed firms export their products abroad.
Most studies done only see problems in all industries in general and touch on methods to increase marketing in general
but there is no detailed study on the carried out marketing method (Che Omar & Tajudin, 2014).
Lastly, there are many factors that affect the acceptance of SMEs products in the market. One of the factors that the
business should take seriously is their marketing mix, to attract more customers to buy their products. With that, it is
hoped that this study will contribute to the increased understanding of the methods to improve the marketing mix by
SMEs.
5. Research Methodology
The data was collected through surveys and interview conducted. The questionnaire was distributed to the
consumers at Pasar Tani Seksyen 13, Shah Alam Selangor. The questionnaire is divided into four sub-topics; Part A
(demographic of consumers), Part B (consumer acceptance on SME products), Part C (SMEs price), Part D (SMEs
product sale) and Part E (SMEs product promotion). The sample size for this study is 230 consumers (Krejcie &
Morgan, 1970). The data was gained from the Majlis Bandaraya Shah Alam (MBSA). Questionnaire was distributed by
the researcher to randomly selected SMEs consumers. Besides that, an interview also was conducted with the manager
of NE Company. A descriptive analysis method was used in this study.
6. Results
6.1 Descriptive Analysis
The following are the results of the findings based on the analysis conducted on the questionnaire.
6.1.1 Respondent Demographic Profile
Table 3: Respondent Demographic Profile
Profile Categories Frequency Percentage
Gender Male 111 48.3
Female 119 51.7
Age 18 - 25 95 41.3
26 - 35 77 33.5
36 - 45 33 14.3
> 56 21 9.1
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 4
Ethnic Group Malay 106 46.1
Chinese 54 23.5
Indian 49 21.3
Other 21 9.1
Monthly Income < RM 1000 60 26.1
RM1001- RM2000 61 26.5
RM2001- RM3000 74 32.2
RM3001- RM4000 32 13.9
> RM4000 2 0.9
From table 3, majority of the respondents were females which were about 51.7% and 41.3% was within the
common age ranged from 18 to 25 years old. From the study, the researcher found that 32.2% from the respondents
have monthly income between RM2001 to RM3000.
6.1.2 Consumer Acceptance on SMEs Products
Table 4: Consumer Acceptance on SMEs Products
Statements Categories Frequency Percentage
The packaging of NE products is
attractive to you
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
10
25
46
116
33
4.3
10.9
20.0
50.4
14.3
NE products that you are using do not
have any side effects
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
5
33
46
103
43
2.2
14.3
20.0
44.8
18.7
Do you believe in NE products in the
market?
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
4
16
82
88
39
1.7
7.0
35.7
38.3
17.0
NE products in the market meet your
needs and requirements
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
3
16
64
107
40
1.3
7.0
27.8
46.5
17.4
I will suggest my friends to try NE
products
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
2
20
65
96
47
0.9
8.7
28.3
41.7
20.4
Based on table 4, the researcher found that most of the respondents, 50.4% agreed that the packaging of NE
products was attractive to them. Besides, 44.8% also agrees that the NE product does not have any side effects on them.
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 5
6.1.3 Consumer Acceptance on the SMEs product price
Table 5: Consumer Acceptance on the SMEs product price
Statements Categories Frequency Percentage
The price of NE products is reasonable
in market
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
3
14
60
112
41
1.3
6.1
26.1
48.7
17.8
I still buy the NE products if the price
has increased
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
11
21
79
82
37
4.8
9.1
34.3
35.7
16.1
The price of NE products is similar to
the other products
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
14
18
49
102
47
6.1
7.8
21.3
44.3
20.4
From table 5, 48.7% of the respondents agreed that the price of NE product was reasonable in market. If the price
of NE product increases, 35.7% agreed to continue buying the product.
6.1.4 Consumer Acceptance on the SMEs Product Sale
Table 6: Consumer Acceptance on the SMEs Product Sale
Statements Categories Frequency Percentage
NE products are easily to find Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
12
31
61
88
38
5.2
13.5
26.5
38.3
16.5
I am willing to go the other places if NE
products are not in the current area
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
11
6
70
114
28
4.8
2.6
30.4
49.6
12.2
I often buy NE products at the same
place
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
1
24
37
135
33
0.4
10.4
16.1
58.7
14.3
According to table 6, most of the respondents, which was 38.3%, agreed that NE products were easy to find.
Besides that, 49.6% respondents agreed with the statement that “ I am willing to go to the other places if NE product is
not in the current area”.
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 6
6.1.5 Consumer Acceptance on the SMEs Product Promotion
Table 7: Consumer Acceptance on the SMEs Product Promotion
Statements Categories Frequency Percentage
Should NE products be expanded
further?
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
16
42
126
46
7.0
18.3
54.8
20.0
I often visit promotion by NE products Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
10
8
67
99
46
4.3
3.5
29.1
43.0
20.0
I am interested in buying NE products Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
38
68
92
32
16.5
29.6
40.0
13.9
Did the promotion carry out by NE was
sufficient?
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
8
44
42
90
46
3.5
19.1
18.3
39.1
20.0
I will follow all the NE promotion
progress
Strongly Disagree
Disagree
Neither Agree or
Disagree
Agree
Strongly Agree
35
15
49
93
38
15.2
6.5
21.3
40.4
16.5
Based on the analysis, 54.8% agreed that promotion of NE product should be expanded further. 39.1% agreed that
the promotion carried out by NE was sufficient.
6.2 Findings from the Interview
The interview was conducted with Manager of the NE Company, to get further explanation of the problem faced
and other information of NE Company.
Based on the interview, the total sales of NE Company from 2007 until 2011, was increased in 2007, it recorded
RM 1.2 million total sales, RM 1.3 million in 2008, RM 1 million in 2009, RM 1.5 million in 2010 and in the middle of
year 2011, it was recorded RM 2.0 million total sales. The sales reduction occurred in 2009 because of the economic
crisis in that year.
From the interview, we discovered that NE products have an advantage on the promotional method against other
SMEs company. The manager said that NE products have been a lot in television programs as sponsors for „Ketuk-
Ketuk Ramadan‟ and get a lot of government sponsors like MARA, MARDI and FAMA. But NE products also have
weakness, for example lack of employees and the company does not do promotion more frequently.
The manager also said that the company has not reached their desired goal. This is because they want to open
branches in China, but due to financial problems they could not fulfil that.
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Vol. 2, Mac 2017 Asian Journal of Technical Vocational Education And Training (AJTVET) 7
7. Discussion
The main objective of this study is to identify the problems faced by NE company. From the findings, majority of
the respondents were females, which was about 51.7% and 41.3% were in the age range of 18 to 25 years old. From the
study, researcher found that 32.2% from the respondents have monthly income between RM2001 to RM3000.
Furthermore, the researcher found that most of the respondents, 50.4% agreed that the packaging of NE products is
attractive to them. Besides that, 44.8% also agreed the NE product does not have any side effects on them. 48.7% of
them also agreed that the price of NE product is reasonable in market. If the price of NE product increases, 35.7%
agreed to continue buying the product. Based on the analysis, 54.8% agreed that promotion of NE product should be
expanding further. From the findings, promotion carried out by NE is sufficient and 39.1% agreed on it.
Lastly, based on our research, there are many factors that affect the acceptance in SME products. One of the factors
is that the NE should focus on marketing strategies to attract more consumers to buy their SME‟s products. By using
marketing mix, the researcher found that promotion by NE was the most significant element that attracts the consumers
to buy their products. Thus, the company should play an important role in their marketing mix especially on promotion
to increase their sales.
8. Conclusion
It is a very complex and difficult task for NE to understand the buying behaviours of their consumers. They need to
develop products and marketing programs that will satisfy their customers' needs and wants in a better way. Different
marketing mix has been utilised by the NE in marketing their products. As a conclusion, the study has fulfilled its
objectives to examine the market acceptance of NE products based on promotion, places, price and products (4P‟s) and
determine which factors that attract the consumers to buy their products.
9. References
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