marketing in small firms

8/8/2019 Marketing in Small Firms

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Marketing in Small FirmsContents

1. Objectives2. 1 Introduction3. 2 Differences between small firms and large companies

4. 2.1 Management and marketing decision-making in large companies5. 2.2 Marketing/entrepreneurial decision-making in small firms6. 3 Entrepreneurship and marketing practice in small firms7. 3.1 Entrepreneurs in practice in small firms8. 3.2 Marketing in practice in small firms9. 3.3 Industry norms10. 3.4 Small firm exporting difficulties and barriers11. 3.4.1 Influence of the entrepreneur12. 3.4.2 Motivations13. 3.4.3 Difficulties14. 3.4.4 Stages of internationalization15. 3.4.6 Overall barriers

16. What is an entrepreneur?17. Box 25.2 Small-firm barriers to exporting18. 4 Fundamental aspects of small-firm marketing19. 4.1 Personal-contact networks20. 4.2 Marketing competencies21. 5 Alternative marketing for small firms22. 5.1 Alternative marketing 1: export marketing23. 5.2 Alternative marketing 2: versus profit orientation24. 5.3 Alternative marketing 3: scientific versus natural marketing research25. 5.4 Alternative marketing 4: small-firm selling26. 5.5 Alternative marketing 5: smallfirm distribution27. 5.6 Alternative marketing 6: small-firm pricing

28. 5.7 Alternative marketing 7: the small-firm marketing plan29. Box 25.3 Two contrasting scenarios, one representing a customer focus and theother a sales/profit focus, as an illustration of customer versus sales/profit orientation

30. Scenario Two: A Sales/Profit Focus31. Box 25.4 A new alternative philosophy32. 6 Assessment of the quality of marketing decision-making in small firms33. 6.1 Marketing quality assessment: pricing quality34. 6.2 Marketing quality assessment: delivery quality35. 6.3 Marketing quality assessment: selling quality36. 7 Summary37. Further reading38. Discussion questions

39. Mini Case: Eaton and Caron (EC) Marketing)40. Discussion question

Section: Issues in Implementing Marketing StrategiesObjectivesThe objectives of this chapter are:

1. to identify the differences between small firms and large companies, and to consider howthey impact upon decision-making, particularly with regards to resources, expertise, and marketimpact;
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2. to discuss the characteristics of small-firm marketing decision-making and how they aredifferent to conventional large company marketing;3. to understand the critical role of enterpreneurial behaviour by reviewing closely linkedentrepreneurial and marketing characteristics and assessing their impact on small-firmsmarketing;4. to propose approaches to market research, customer focus, selling, delivery, and pricingthat are appropriate for small firms.

1 Introduction

THIS chapter begins with a consideration of the differences between small firms and largecompanies, such as size (obviously), organization structures, and functional frameworks. Theseissues are considered in terms of how they impact upon decision-making, particularly withregards to resources, expertise, and market impact.

The chapter then discusses the characteristics of small-firm marketing decision-making and howthey are different from conventional largecompany marketing. An entrepreneurial influence isconsidered by reviewing closely linked entrepreneurial and marketing characteristics andassessing their impact on small-firm marketing.

Inherent influences on marketing are discussed, such as costs and budgets, industry

infrastructures, experiential knowledge possessed and used by the small-firm owner manager,and the importance of market knowledge. Further discussion shows how these inherentinfluences impact upon small-firm marketing. Examples of small-firm marketing are presented asillustrations and as contrasts to much of the conventional marketing theories presented in thetextbook literature. These examples consider an export development approach that outflanks theknown barriers to developing international markets. Also included are alternative approachesto market research, customer focus, selling, delivery, and pricing. Finally, some solutions areoffered for improving the efficiency and sufficiency of smallfirm marketing, focusing on theimportance of marketing competencies and networking as the basis of improving marketingefficiency, overcoming deficiencies and outlining quality improvements in small-firm marketingdecision making.

Throughout the chapter, the term small firm will be taken to encompass SME (small to medium-sized enterprise), and thus to mean anything from a self-employed individual to a company with

several hundred employees but that still behaves more like a small enterprise than a largecorporation. Similarly, the terms entrepreneur, entrepreneurial, and owner manager areconsidered as meaning largely the same in the context of marketing decision-making in smallfirms.

The author would like to thank Dr A. Gilmore, D. Cummins, and A. O'Donnell, University of Ulster,for their assistance.

2 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 adecision. There are clear boundaries of responsibility whereby decisions can be taken. In such adecision-making structure there will be close coordination and cooperation between the variousdecision-making domains. In addition, because of the diversity of decision-making and thenumber of decision-makers, time scales for decision- making are likely to be long. This inevitablyintroduces a planning element in large-company decision-making.

These are just a few of the characteristics of large-company decision-making, but they serve tohighlight the context in which decisions are made, and indeed, the essence of suchdecisionmaking. Typical managerial tasks are based upon strong theoretical foundations. For
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example, there are well-founded managerial activities that have been developed and internalizedin line with organizational structures and standard practices in terms of organizing for business. Thus managers work to known and practised procedures, using appropriate and acceptedanalysis and evaluation criteria. Decision-making processes are based on order and form, andcustoms and practice. Leadership is often derived from hierarchical power and authority. Fromthis it can clearly be deduced that management decision-making is a distinct discipline.

Much of the literature surrounding decisionmaking in marketing is derived from the managementliterature in its style and frameworks. Naturally, marketing managementindeed, the function ofmarketingwill adhere to conventional management principles and structures. In general,conventional marketing management decision-making is inherently formal, sequential,structured, and disciplined. It is also systems oriented and considers issues in both short- andlong-term time scales.

When considering the literature in relation to marketing motivations, there is a generalconsensus that the customer is the primary motivator for much of marketing. And, indeed, in justabout every conventional marketing textbook, the literature is clear in stating that marketingshould have a customer focus and that marketers should strive to create customer satisfactionand wellbeing. Marketers are expected to meet customer desires and expectations and todevelop customer relations through good customer service. So marketing decision-making inlarge companies will have the clear focus of customer orientation as a primary motivator and willaddress this focus through established and structured frameworks derived from the managementdiscipline.

2.2 Marketing/entrepreneurial decision-making in small firms

Small-firm decision-making processes are different from those of large companies. Most decisionsoriginate with and flow through the entrepreneur or owner manager, who is likely to be involvedin all aspects of his or her firm's activities. As the direction and control of the enterprise rest withthis one individual, it is this individual's personality and style that shape the nature ofdecisionmaking. The entrepreneurial owner manager does not need structures and frameworks,but instead will intuitively coordinate and perform decisionmaking in a way that is natural tohim or her. Whilst much of what has been stated can be intuitively accepted, is there evidence tocorroborate such a contention?

There is a substantial literature from the last thirty years or so of the twentieth century thatattempted to define entrepreneurs and entrepreneurship in terms of inherent characteristics(Timmons 1978; Meredith et al. 1982). Definitional attempts stemmed from an intuitiveperception that entrepreneurs are different in some way from managers, or at least performtasks in such a way that distinguishes them from managers.

Obviously entrepreneurs must take decisions beyond a functional domain and their decisionsinvolve the firm's survival and well-being as a whole. It is this dimension that dictates elements ofentrepreneurship behaviour as opposed to simply taking decisions within known and definedframeworks and operational tasks.

Therefore, the conventional literature descriptions of entrepreneurs and entrepreneurship can be

characterized by aspects such as follows:

risk-takingin that they must take risks in order to be competitive or to grow the business; opportunisticin terms of seeking and identifying opportunities for future survival andsuccess; innovative/creativebecause they need to do things differently in order to differentiatethemselves from competitors or to develop something new; adaptive and change oriented-because they are small and flexible and must react to andanticipate changes in their environment;


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visionary-because they, more than most, need to see into the future; individualistic-because they are constantly thinking about issues that are inherentlypersonal, especially if it is their own business.

The literature on the motivations for entrepreneurs and entrepreneurship largely agrees thatsuch 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 ofwidely recognized motivations for being in business. For example:

independencesuch individuals prefer to be their own boss and like the freedom of takingtheir own decisions; personal satisfactionderived from the above, such individuals glean satisfaction fromdoing business for themselves and the challenges that this presents; employee well-beingentrepreneurs are concerned with the well-being of their employeesin an almost paternal sense; satisfying customersentrepreneurs are concerned with satisfying customers and devoteconsiderable effort into ensuring that their customers get good service; they might often perceivethis as part of their competitive advantage; integrity, morality, ethicssuch individuals perceive themselves as possessing all of thesecharacteristics when doing business.

There are, of course, many other characteristics and motivations describing entrepreneurs, butthese lists are sufficient to make the point that entrepreneurs and entrepreneurship aredistinguished as being different by these and other characteristics. It must, of course, also beacknowledged that there are significant similarities between entrepreneurs and managers inperforming tasks and it is easy to find a few, such as that both are task oriented, both arejudgemental, both are directive, both are cost control conscious, and so on. However, it is thedifferences that are most striking. Hisrich and Peters (1995) offer a meaningful discussion of thedifferences 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 biastowards 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 ofsmall-firm marketing decisionmaking.

In any organization, but clearly particularly in large ones, there is a difficulty in ensuring that thevarious 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 factthat 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. Theliterature on entrepreneurship generally is characterized by its diversity of findings andarguments. Manifold discussions have inspired much debate and created much confusion and,most writers would agree, have not advanced any specific generic definitions of theentrepreneur. 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, thepsychological, the classical, the management, the leadership, and the intrepreneurial schools ofentrepreneurship. Key characteristics that emerge from this are that the entrepreneur is anagent 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
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associates. In addition to flexibility and creativity, vision is identified as being a keycharacteristic. As Kirzner (1973) states, The Entrepreneur perceives what others have not seenand acts upon that perception. The market is constantly sending signals to those alert enough toperceive 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 onthe 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 berecognized that there are several other immensely strong motivations that will driveentrepreneurs. There is a long-held view, shared by some academics and most practitioners, thatentrepreneurs' primary motivation is profita view supported here. Entrepreneurs are inbusiness to make money; they strive to achieve security through having enough money to dobusiness and to make profit. Allied to this motivation is a constant constraint and thereforeconcern surrounding lack of cash and cash flow.

If such a notion is accepted, then it is interesting to compare this primary in-practice motivationwith some of the literature characteristics and motivations supposedly possessed byentrepreneurs. For example:

Innovative/creative. In practice, entrepreneurs will display these characteristics only if theyhave 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 similarcircumstances to the above, but only until a barrier occurs and risk is involved. Risk-taker. In practice, again, entrepreneurs will display this characteristic in similarcircumstances to the above, but will take risks only until money is threatened. Change oriented. In practice, entrepreneurs display this characteristic only because thebusiness 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 byentrepreneurs, much more sensitivity to the unique characteristics of the entrepreneur isrequired (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 negativeattitudes to marketing; the perception of marketing as a cost; distribution and selling treated asuncontrollable problems; and, possibly more significant, the belief that each case is so specificthat it cannot be treated with general rules.

A definition of small-firm marketing characteristics would typically acknowledge limitedresources, 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 herunique characteristics and circumstances is apparent. Some such alternative approaches thattake cognizance of the unique character of the small firm and of the entrepreneur are presentedlater in this chapter.

3.2 Marketing in practice in small firms

The literature descriptions of marketing decisionmaking, alluded to earlier, may not actuallyhappen in practice. This notion is reinforced by a number of more recent studies. Greenley andcayus (1994; reviewed me results or several studies on the nature of marketing planning andfound that the general tenor of the results was that few companies seem to adopt theprescriptions of marketing planning that are advocated in the literature. Piercy's (1990) studiesalso revealed that managers did not adhere to the textbook descriptions of rational decision-making.


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The views of Greenley and Bayus and of Piercy are reinforced by Carson's (1993) consideration ofthis issue in relation to marketing-decisionmaking in small firms. Various characteristics ofmarketing decision-making in practice can be identified. It is argued that much of marketingdecision-making in practice resembles aspects of entrepreneurship. For example, small firmmarketing 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 differenceswith regard to marketing decision-making characteristics as depicted by the literature and thatwhich happens in practice.

This divergence can be found also in the motivations for doing business. Marketers' primarymotivation in practice is to gain increased sales and to make profit from increasing sales. Thispractical motivation is compounded by a marketer's greatest concernthat of declining sales and

stronger competition. Of course, it can be argued that, by being customer focused, enterprisescan achieve sales and profit even against strong competition. However, in reality, marketers willbe customer focused only if this leads to sales increases and profits. The incompatibility betweenthe 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 willequate quality with profit; customers expect lowest prices, whereas marketers hope for higherprices. Consequently, good customer service and care often championed as having a customerfocus 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 betweenmarketers and entrepreneurs, in that both have a primary focus on sales and money (cash), andthe 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, thecustomer will always be championed as being most important to a company. That is to say, bothentrepreneurs and marketers will extol the virtues of a customer focus and the importance ofcustomer satisfaction when asked the question, What is the most important factor in yourbusiness?, but privately they will raise issues of cash and money, sales and profits, beforeconcerning themselves with customer services and satisfaction.

From the discussion so far, it is clear that smallfirm marketing decision-making is different fromthat which is depicted in conventional marketing literature. It has been argued here that not onlyis the conventional literature unhelpful to small firm owner managers, but also that there is a lackof true understanding of their behaviour and motivations. To underline this view, two briefillustrations are offered: one highlights the influence upon marketing decision-making of theindustry in which a small firm exists; the other focuses on the difficulties and barriers faced bysmall firms in beginning to export and internationalize.

3.3 Industry norms

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


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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 knowwho gets what proportion of the overall price/cost structure. It is only when a new product ornew service that has a high degree of differentiation is introduced that new cost structures canapply 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 particularhave little other choice, simply because they do not have the resources to break away and dothings 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 wholeindustry.

3.4 Small firm exporting difficulties and barriers

Exporting is a crucial component of the well-being of any developed economy. Substantialgovernment resources are devoted to encouraging exporting and much of this effort goestowards stimulating and helping small firms to export. However, it is recognized that it is difficultto get small firms to begin to export. Why should this be so? Box 25.2 considers some of theinherent 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 tointernationalize his or her company's operations, to what extent to do so, and how best to exploitpotential opportunities. The literature suggests that, for many small firms, the adoption andimplementation of marketing are an innovation in themselves and that the decision tointernationalize that marketing effort is no less entrepreneurial. The small-firm owner isencouraged 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 literatureand 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 theone to decide starting, ending, and increasing international activities. He or she lays down thegoals concerning exporting and determines the organizational commitment. A positive attitude toexporting, an aggressive and dynamic personality, flexibility and self-confidence, and clearentrepreneurial characteristics are often cited as being significant psychological factorsdistinguishing the potential exporter. Having broad multicultural horizons, competency inlanguage, and being knowledgeable about export marketing practice come under the objectivefactors 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 thefirm 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 thedecision to export as a particular internationalization strategy, export motives can be classified ina schematic form by distinguishing between internal and external and proactive and reactivedimensions of the process. The schema is reproduced in Fig. 25.1 as a classification of exportdevelopment. Here it is sufficient to say that, from their research amongst over 650 Danishcompanies, Albaum and his colleagues identified a number of key motivating factors under eachcategory, which had an influence on a company's decision to internationalize, amongst the mostcritical being growth and profit goals and risk diversification.


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

3.4.3 Difficulties

There has been a great deal written in the literature about the difficulties that small firms have ininternationalizing their commercial efforts. There is a varied mixture of agreement anddisagreement as to what those difficulties are exactly, the circumstances when they prevail, andthe impact they have on those internationalization efforts. The most frequently mentionedinternal barriers to exporting are seen to be lack of information and problems with respect tocapacity 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 themost serious problems in seeking to internationalize their activities as the level of risk, thecomplexity of procedures involved, and costs. Most significantly, lack of knowledge of exportmarkets is especially important to small enterprises. Gathering knowledge about export marketsis 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, madein circumstances of limited information and against a background of minimal margins for error, isbound 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, wherethe risks and uncertainties are more controllable, and may discourage any longterm commitmentto 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 theexport stage that the enterprise has reached. There is a general agreement in the literature thatinternationalization is best understood as a gradual process of several discernible steps. There isalso 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 managerialexperiences vary accordingly at each stage. Of course, firm size is another important factordifferentiating the nature and magnitude of exporting problems experienced. Internationalizationhas been divided into three phases: phase one suggesting an experimental involvement, phasetwo an active involvement, and phase three a more committed effort, where the company hasbecome proactive in its internationalization activity. Bilkey and Tesar (1979) provide a moredetailed framework for understanding the stages.

Stage one: management is not interested in exporting, not even in filling an unsolicitedorder. Stage two: management would fill an unsolicited export order but is not interested inexploring 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 arepsychologically further away. 3.4.5 Shortcuts

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


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experience places it at a decided disadvantage when negotiating contracts with larger moreexperienced partners. Small firms wanting to internationalize their activities may be unable to doso, because of what can be called a strategy gap, caused by a lack of resources generally butparticularly by a lack of knowledge and networks. Many small-firm owners seek to bridge this gapby forming strategic alliances with larger companies. The risk, particularly in those early stageswhen 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 experiencemay make this avenue too troublesome and risky. The choice to adopt and implement oneapproach as opposed to the other depends on the small-firm owner's perception of the relativebenefits of each, and this in turn will be a function of his or her level of experience ininternational 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 asmall-firm owner manager the barriers to exporting are immense and indeed may be perceivedas far outweighing the reasons and motivations for exporting. Conventional wisdom for

developing export markets is in the main soundthat is, that a newly exporting firm shouldidentify a suitable market and soundly research that market for potential customers. Once afoothold 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, inappropriatefor many more firms, as discussed earlier.

The reason for outlining the difficulties and barriers to export development by small firms isobvious. It is because of the huge importance exporting carries in the successful development ofany economy and the recognition that much of the export development must stem from thesmall-firm sector. The emphasis on these barriers is designed to reinforce the need to ask suchquestions as: ;Is there another way to develop export markets? What can be done to overcomethe many barriers that many firms, particularly entrepreneurial-led firms, experience? Thesequestions are addressed later in this chapter as part of an alternative approach to exporting thatis entirely compatible with small-firm characteristics.

What is an entrepreneur?

Typically, entrepreneurs are people who own and control their own enterprises. They are almostalways focused upon the well-being, survival, and development of their enterprises. Theireveryday 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 reasonthat concerns or impacts upon the enterprise. Thus, most typically, they will be seen withcustomers or potential customers. If they are seen at an event, it is likely that they are there inorder to assess the threat or opportunity presented by the event. Even if they have been invitedas 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 areclever, highly focused, self-centred individuals whose primary concern is the well-being anddevelopment of their own enterprise.

Box 25.2 Small-firm barriers to exporting


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

Exporting is more expensive: small firms have limited resources, therefore exporting costscan be prohibitive. Exporting needs longer-term gestation: small firms are centred on short-term issues, whichcan often take precedence over longer-term export requirements.

Exporting is relatively high risk: small-firm entrepreneurs seek to reduce risk, thereforeother activities will present a lower risk than exporting. Exporting involves many strange circumstances and incertainties: small-firm entrepreneursprefer to know their market and business environment. SME entrepreneurs rely on business contacts and networks: in exporting these are moredifficult to find and establish in the short-term. Engaging new export customers or export markets requires almost the same amount oftime/energy/resources to develop every time: small firms rely on additional sales at reduced costsand/or as a follow-on to existing business. Legal, political and rading regulations require additional or time-consuming resources: smallfirms 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 alack of knowledge about an environment. On this aspect the marketing literature is clear: marketknowledge is crucial to sound marketing decision-making. Of course, market knowledge isimportant, but the ability to interpret this knowledge in making sound marketing decisions is ofequal if not more importance. How does a smallfirm owner manager acquire such ability? Whatare the inherent ingredients for sound marketing decision-making? What aspects are mostimportant for SME marketing? It is argued here that there are two important aspects to soundSME marketing. These are the existence and use of personal-contact networks and thepossession of fundamental marketing competencies. It is not the intention here to enter into adetailed description of either of these aspects, but to provide a brief summary description of eachwith regards to small-firm owner managers.

4.1 Personal-contact networks

With regards to personal-contact networks, it is sufficient to acknowledge that from anentrepreneur's perspective he or she is likely to be the focal person of a network of knownindividuals. These individuals will have a mutual appreciation and understanding of theentrepreneur'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 termsof depth and breadth and most importantly purpose. For example, an entrepreneur's marketingnetwork is likely to be made up of individuals from suppliers and competitors, professional bodiesand business associates, as well as customers, friends, and acquaintances.

The importance of such a network to small-firm entrepreneurs is immense. Given the limitationsof 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-contactnetwork will be used by the entrepreneur owner manager to seek out sales opportunities and toglean actual sales on the back of wider information exchanges. The network will be used, oftenproactively but mainly intuitively, to create and maintain a high profile of the small firm within itsmarket. The network will be expected to provide not just information, but actual sales enquiriesand contacts.

4.2 Marketing competencies


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The importance of marketing competencies is not fully discussed in the literature and thus a littlemore time is taken here to explain this aspect. In management, and indeed business in general, acompetency is both an attribute and a skill. There are many definitions of managementcompetency. In a general sense, competencies can be described as underlying characteristicscombining knowledge, skills, and attributes important for job performance. In the context ofmanagement, skill implies an ability that can be developed, not necessarily inborn, and that ismanifested in performance, not merely in potential (Carson et al. 1995a).

In understanding the term management competency it is useful to review some of thosemanagement tasks and activities that require management characteristics in order to beperformed. So, for example, a manager must be able to analyse and judge a circumstance inorder to take a decision. Therefore, these aspects are indeed management competencies.Similarly, a manager must provide leadership, coordination, and motivationagain allmanagement competencies. The list and range of such attributes (competencies) can beexhaustive. For example, a manager must have intelligence, foresight, and intuition and be apositive thinker; he or she must be able to communicate, possess vision and creativity, and be alateral thinker. Undoubtedly, a manager must have knowledge and experience. These are only afew of the competencies that any manager, or for that matter business person, must possess insome 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 inmanagement, 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 surmisedthat the characteristics and nature of marketing as a concept bring an inherent emphasis andrequirement for certain competencies over others. For example, an SME marketer may requirecompetencies of imagination and flair to add to creativity and vision. Similarly, a marketer mayrequire specific selling skills coupled with resilience to add to communication competency. Amarketer may need to be distinctly entrepreneurial in taking decisions and may also neednumeracy in addition to analytical skills in dealing with sales and profits. What is clear here isthat a marketer/entrepreneur must possess a spectrum of competencies that can be utilized andemployed in a variety of ways. Of course, this spectrum does not consist of a list of unrelatedcomponents.

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 betweenall competencies in a variety of ways. It is important to emphasize that a marketer/entrepreneuracknowledges such interrelationships by viewing competencies as inseparable. For example, thecompetency of knowledge alone will not achieve meaningful marketing performance. Equally,communication competency alone will be of little value without, for example, knowledge. Both ofthese competencies will be enhanced by experience and all will contribute to judgement ability.Together, these competencies, treated inseparably, will more likely achieve effective specificaction.

Given that there are a wide variety of competencies, from a learning and education perspective itwould be unrealistic to try to develop all such competencies. Is it possible to focus on a fewcompetencies that might be deemed to be more appropriate for small-firm marketing? A corefocal competency for marketing is deemed to be experiential knowledge. That is knowledgeacquired through experience and developed as an accumulation of knowledge and experience

built upon and from communication and judgement. Developed proactively, such experientialknowledge will allow effective specification to occur more rapidly than if competencies areviewed as isolated learning acquirements.

So far in this discussion, significant issues have been raised about the appropriateness ofconventional marketing in the context of small firms. The rest of this chapter is devoted tooutlining some alternative approaches to marketing that are deemed to be more appropriate forsmall firms. Inherent to all of the examples outlined below are the importance to small-firmmarketing of personal-contact networks and marketing competencies. First, it is contended thatone area in particular can benefit from the issues raised in this discussionthat is, in the export


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development of small firms. This issue is of particular importance because of the contributionthat small-firm exporting can make to overall regional development in an economy. Followingthis example, further alternative marketing approaches consider market research, customerfocus, selling, distribution, and pricing. Finally, some criteria for analysing small-firm marketingperformance 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 theentrepreneurial instincts of the small owner-managed firm that has never before exported butthat 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 developexport markets by first importing products into their home domestic market and, once havingestablished 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 thefollowing.

Local knowledge. An entrepreneur has an intimate knowledge of the local home market. Theentrepreneur knows the wants and needs of his or her market, the type of products that are mostin demand, and has an intuitive feel for new potential products. Differentiation of established products. Consumers in today's developed economies knowwhat they want, particularly in relation to standard everyday regular purchases such as basic fooditems or similar domestic products. Retailers, of course, pander to this comfort purchasing patternby standardizing products and emphasizing strong brands. Thus, consumers are not overlyreceptive to entirely new products. They are, however, often curiously attracted to new variationsof products they can easily recognizethat is, products that are differentiated through packagingor 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 bothbuying-from and selling-to situations. Big-company-small-firm interfaces. Small firms are just as likely to do business with largecompanies as they do with other small firms. Such relationships can be one of either buying fromor 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 thanexporting. It might be argued that there is still a fundamental barrier in establishing the initialcontact, but it is immeasurably easier to establish a contact when seeking to purchase than whentrying to sell.

Having established a tentative supplier contact, the entrepreneur can use his or her localknowledge to assess the potential of the supplier's products as appropriately differentiated butstill easily recognizable products. The entrepreneur can now use his or her selling skills indeveloping the new products in the local market. During this time the relationship between theentrepreneur and the supplier company personnel is growing and cementing. Both parties maymake visits to each other's establishments as a natural progression of the trading relationship. Itis during these visits that opportunities will arise for introducing the entrepreneur's products tothe supplier. The supplier can be encouraged to introduce the product to some of his or her ownpersonal 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 theentrepreneur has begun to export in the most natural way possibleone that is wholly


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compatible with his or her inherent characteristics. The original supplier company is able towiden the contact network, or the entrepreneur is able to do so, as is the new buyer contact onceexporting has begun.

The benefits for all parties in this alternative export development approach are clear. Theentrepreneur utilizes a new and differentiated source of supply and gains additional sales in thelocal 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, ifdifferent from the original supplier, is assured by the recommendation of a fellow countrymanthat 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 missionarydoctrine. That is, the theoretical emphasis is on the customer as the central focus of allmarketing activity; the zealous emphasis is on meeting customer wants and needs, anticipatingthese wants and needs in order to satisfy and meet customer expectations, and adapting to theflow of customers' changing desires. In adhering to this theory marketing educators haveindoctrinated 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 bemet and views sought before taking any decisions. The literature continues to compound andreinforce this focus by, for example, the new philosophies of relationship marketing based oncustomer services and customer care.

It is contended here that there may be a dichotomy between marketing theory as presented bythe literature and that which is practised by practitioners. This dichotomy has long beenrecognized by educators working with entrepreneurs and small-business owner managers. Thecentral focus of marketing theory (the customer) is incompatible with the central focus of themarketing practitioner, which is, albeit implicit rather explicit, that of profit. Both the customerand the marketing practitioner have different agendas and objectives and more often these areincompatible. For example, the consumer will diligently seek to satisfy his or her ownexpectations and demands when making a purchase, whilst, on the other hand, a company willseek to make profits from the exchange that will serve to satisfy shareholder return oninvestment and employee salary increases. It might be expected that some compromise betweenthese divergent objectives will prevail (see Fig. 25.2). What is the implication of this formarketing theory? An alternative approach to conventional customer orientation marketing mightbe 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 andintegral dimensions of marketingquality and price. Generally, it can be assumed thatconsumers will seek the best quality at a minimum price, whereas companies will optimizequality and try to maximize price. Where the exchange occurs between these two extreme aimswill 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 acompany 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 thecustomer is on finding out, manipulating, assessing, exploiting, outflanking, surprising, andstimulating customers towards a meaningful sale for the company. Would it be better to acceptthis philosophy alongside the missionary doctrine? It would appear to have more real-worldrelevance than current conventional education. (A fuller description of this argument can befound in Carson et al. 1995b.)


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5.3 Alternative marketing 3: scientific versus natural marketingresearch

Much of the foundation philosophy of marketing research stems from the rigour required byscientific social-science research. A basic tenet is that, if research is to be considered valid, itmust 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 uponmethodologies and how they must be performed correctly. Similarly, an emphasis is placedupon the one best method for a particular piece of research, even to the point of underlining thedifficulties and complexities of using more than one method.

Consider for a moment the single aspect of questionnaire construction. Textbooks giveinstructions on devising appropriate questions that occur in a correct sequence and that haveproper 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-endedquestions. Here again there may be a dichotomy between theory and practice. Although not inthe strictest sense, market research as described above can be deemed to derive its origins andphilosophy from scientific social-science research.

However, it is important to recognize that marketing practitioners and particularly entrepreneursand owner managers of small firms do not carry out research in this way. Instead, they take anaturalistic, even artistic approach to gathering market information. Artistic in this sense relatesto the notion that a practitioner's research will be uniquely created by the individual and relatedonly 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 thebeholder, 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 andcompatibility. Typically, a practitioner will gather information from a variety of sources and in avariety of ways. The concepts of rigour and validity seldom enter into the mind frame. Thepractitioner will have a feel for the value and usefulness of information and its source and willintuitively 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 thecharacteristics of scientific social-science research, particularly in relation to its rigour andvalidity? Could textbooks accommodate the ethos of practitioner research? Scientific researchfails to recognize that market information is of a unique value to an individual and his or hercompany. Interpretation of findings is an entirely personal thing for the purpose of understandingand this understanding is precisely personal. Equally, could writers not accept the approach ofusing and or adopting any research methods with which the researcher is comfortable and whichhe 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 andsequential step approach whereby the process begins with prospecting and preparation behind aselling scenario. The sale itself begins with a formal opening followed by presentation anddemonstration. Guidance on how to deal with objections is often included before descriptions ofhow to close the sale and subsequently to follow up after a suitable period. In addition to thisformal selling approach, whole sections of the textbooks are devoted to the organization of thesales statistics and to the efficiencies of managing a sales force.


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Is this of value to small-firm owner managers? To some degree perhaps, particularly for someinexperienced entrepreneurs embarking upon a business venture for the first time. However, forthe experienced entrepreneur it is of little value and help, primarily for two reasons. First, itfollows a rigid, formal, and sequential approach that, as alluded to earlier, is alien toentrepreneurial practice and, secondly, and most significantly, an entrepreneur will sell on thebasis of his or her own experiential knowledge (competency) built up over the everyday runningof 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, andrefined. Often selling approaches will have been copied by observing competitors' successfulactivities and comments, and feedback from customers will be taken into account. The essenceof small-firm selling can be deemed to be simply intuitively assessing the personality and moodof 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 withknowledge of the industry and the individual in question, will all serve to enable the entrepreneurto assess the personality and mood of the individual. He or she will adapt the selling approach tosuit the individual's personality or mood at any particular time. Any selling will be built aroundpersuasion, 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 ofthe befriending that is occurring naturally.

5.5 Alternative marketing 5: smallfirm distribution

Similar to the conventional literature approaches in other aspects of marketing, distribution alsoadheres to a rigour and formality in its frameworks. Typical chapter headings in textbooks coverissues such as the nature and type of channels, behaviour, and function of channelintermediaries, and physical distribution management and systems. In reality, small-firmdistribution is not concerned with elaborate distribution channel variations. Indeed, for mostsmall firms distribution channels are predetermined by industry norms and practices that smallfirms most conform to in order to do business. As mentioned earlier in this chapter, mostdistribution channels will have been established over a lengthy period and a small firm, becauseof its size and position within an industry or market, is often forced to conform to the establishedpractices.

Distribution delivery in small firms, when under control, is largely reactive to customerrequirements. Planned delivery is often founded upon the need to maintain cash flows; thus theaim will often be to deliver immediately when stocks are available. Sometimes such a policy willlead to inefficiencies and lack of coordination. Often delivery is an uncontrolled dimensionwhereby 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 thesmall firm. Generally, a small firm will seek to establish a pattern and routine for delivery that isregular 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 inelaborate 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 distinctivedifferentiation, and, at the other extreme, discount pricing, whereby firms are encouraged toprice below the competitive norms in order to secure more orders. In between lie a plethora ofvariable pricing strategies for all kinds of justifications and scenarios. In addition, the textbookliterature 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, tomention just a few.


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Small-firm pricing does not adhere to any of these elaborate pricing descriptions. Indeed, whereprice is used as a marketing tool, it is often in the form of price reduction as a consequence ofcompetitor pressure. Generally, small firms must again adhere to industry norms, which consistof known and expected margins, established and set over many years within a distributionchannel. A small firm, or any company, for that matter, that prices significantly above or belowan expected industry norm will raise major enquiries from the industry, not least fromcompetitors. 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 literaturein relation to marketing planning advocates that the marketing manager carries out a situationanalysis to arrive at a SWOT (strengths, weaknesses, opportunities, and threats) analysis. On thebasis of this a text will often encourage consideration of radical change through the introductionof new products (immediately), entering new markets (immediately), more investment inpromotion 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 twofactors. First, textbooks often describe a circumstance in extreme black-or-white solutions forthe purposes of illustration; and marginal changes appear dull and unimpressive. Secondly, it isdifficult to incorporate into a situation analysis the invariable company-specific nuances ofinternal 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 ofexisting management in incorporating situation-analysis outcomes. Writers do not recognize thatmanagers generally do not like change, especially radical change. Also, most managers have avested 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 solutionsthat 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, andit 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 existingmanagement team (or an entrepreneur) think when it comes to making decisions? Whatconstraints and pressures are they under that will allow them to take decisions or not? Toincrease relevance to small firms, textbooks might more realistically adhere to the followingaspects when outlining such a study:

Do not advocate radical change, instead recommend that any change should beintroduced gradually in order to allow confidence to emerge. Do not change the product and ways of doing things and recognize that managers do notwant to change immediately and that they are probably more interested in securingsales/customers/profit. Consequently, most emphasis should centre on improving marketingcommunication. 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 creatingsolutions. Promote marketing without advocating heavy promotional expenditure and pricereductions. Emphasize marketing availability, suitability, value perception, and communication.

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


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Consider briefly another issue inherent in this area of marketing. What is the emphasis given in atextbook description of a marketing plan? Attention will focus on the comprehensiveness andsequentiality of the process, so a text will present a comprehensive situation analysis and SWOTanalysis. But this is not what a company's management, especially an entrepreneur, wants toread. Managers with some years' experience will know as much as they need to know about theirenvironment. They will be aware of the broad changes and trends, they will constantly monitorcompetitive 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 thatare viable. As such, textbooks might focus on what to do and show how this will work. Theyneed 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 notsay 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 dealswith issues which he or she already knows about intuitively. In most cases an entrepreneur willseek to glean ideas and solutions to his or her own problems and will want to acquire suchsolutions quickly and without lengthy and elaborate procedure.

In smaller companies Aguilar (1967) found that top management were the main scanners butthe information they generally scanned was somewhat narrow and too focused in nature to beconsidered a true environmental scan. (Chapter 8, p. 167)

Box 25.3 Two contrasting scenarios, one representing a customerfocus and the other a sales/profit focus, as an illustration ofcustomer versus sales/profit orientation

Senario One: A Customer Focus A team talk led by a sales/marketing manager who hastotally accepted the marketing philosophy and advocates that the customer is the central focusof the company's activities.

'Ok, we are here to plan our campaign for the next three months. Our customers have given us aclear 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 areaccustomed to buying it. Let's not offend these people by discontinuing the line. We'll keep itavailable 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 forbeing the best value for money available in this area, so whatever the competition get up to wemust 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 ofsales representation based on aggression and persistence.

Ok, we are coming into a period of heavy competition. We have competition leaning on us. Wehave a dog of an old product that some laggards still think is good. We also have a mainproduct 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 carewhat the competition do with their price, we are already low enough; any lower and we'll begiving it away. So I want some serious agressive selling from you guys, don't give me anyexcuses. Promise these people the earth if you have too, as long as you get in before thecompetition. We will worry about customer reaction next period, but I want results.


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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 TOPERSUADE YOU TO BUY IT.6. Recognize that the customer wants the best for him or herself and that the company wantsthe 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 andintuitive way in which an entrepreneur owner manager will tend to do marketing. This approachto marketing decision-making is unlikely to conform to conventional literature descriptions ofmarketing. An entrepreneur is likely to perceive such descriptions as prescriptive andinappropriate for his or her business. However, small-firm owner managers do have a desire toassess 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 ifwhat they are doing is working efficiently and effectively. It is with these issues in mind that thischapter 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 carryout an assessment in a way that is conducive to his or her own decisionmaking processes. It isprimarily concerned with the use and value of marketing activity and how it is performed. Theframework 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 nichemarketing.

The scope of the factors influencing qualitative marketing decision-making is, of course, broadand complex and may take account of all or as many of the factors of influence as possible inorder to gain a complete picture of the marketing decision-making process. It is also possible tofocus 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. Inthe broad and general sense, marketing decision-making can be deemed to involve decisionsboth that are about, and that are influenced by, factors that are internal to the enterprise andthat are about external dimensions. Whilst it is recognized that external market factors are ofsignificant 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 isnevertheless not taken into consideration in this assessment framework other than toacknowledge its existence and that most small firms will be inherently aware of theirenvironment in order to survive. The rationalization for this is that any small firm that is growingis doing so on the basis of its current marketing activity and, since all marketing activity isinherently market based, the evidence of growth is an indication that such a firm is competingpositively in its market environment. It is also recognized that competition is an inherent part ofthe smallfirm market because all small firms exist in markets where there are other small firmsand some larger competitors. Therefore, this discussion recognizes that growing small firms existin dynamic and competitive market environments. This assumption also serves to underline theimportance of qualitative marketing decision-making factors, since the quality of such decisionsare imperative if the small firm is to maintain growth.

So this discussion is concerned with internal marketing decision-making factors of a qualitativenature that contribute to an enterprise's growth. However, decision-making within a firm is also ahighly complex domain. Strong influences on this decision-making are issues such as the culturebelonging to the firm and the personality traits possessed by the owner manager. Whilst theseare again undoubtedly important in understanding aspects of qualitative decisionmaking, they


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are nevertheless outside the focus of this discussion. Of course, they are inherent within thedomain of the discussion and are recognized as influencers and contributors to decision-makingoutcomes, but it is the managerial context of decision-making that is of primary interest in thiscontext. 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, qualitymarketing, the question is one of whether this marketing activity can be assessed as being goodquality 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 marketingthatis, assessing how marketing is performed. This assessment will determine a placement ofmarketing along a continuum between negative and positive extremes. For example, by usingterms such as poor/excellent; inactive/active; reactive/proactive, and so on, assessing these on acontinuum of extremes (see Fig. 25.4). On the basis of the above, it is possible to address thecomponents of marketing activity and to assess these in terms of their use and how they areperformed. Assessment of such quality dimensions will be from a holistic perception for allmarketing activity. While textbook frameworks will be of help in assessing quality of marketingdecision-making, these will serve as parameters of such dimensions. The strength of thisassessment will come from enr

marketing in small firms

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