How Essential Is Marketing For Start Up Management

Add: 22-11-2017, 16:38   /   Views: 136

The essay below presents an explanation of how essential is marketing for start-ups and SMEs.

It consists of relevant examples which will assess the merits and demerits of the core marketing techniques implemented by entrepreneurs.Initially,the essay will emphasize on the meaning of marketing.This will be followed by an analysis of the challenges faced by entrepreneurs in carrying out marketing in SMEs and start-ups.The essay will also stress on the importance of ‘marketing' in start-ups and SMEs.Furthermore,the essay will entail the process of entrepreneurial marketing and outline the main marketing methods exercised by entrepreneurs namely,word of mouth,guerrilla marketing and relationship marketing,in running SMEs and new ventures.Moreover,the essay will use appropriate examples to scrutinize the pros and cons of these key marketing methods adopted by entrepreneurs.

Marketing is that function of an organization which involves a set of processes for the creation, communication and delivery of value to consumers and for managing consumer relations,profitably,for the entire organization and the stakeholders(Kotler and Armstrong,2008).

The use of marketing in SMEs is often regarded as peripheral to their activities because entrepreneurs face many constraints while undertaking marketing activities in start-ups and SMEs(Carson et al.,1995).Start-ups and SMEs are differ from large established organizations (Gruber,2004).Firstly,they are characterized by novelty of organization.This increases the risks of failure as compared to established organizations as being a new entity in the market,they lack strong exchange relationships down the value chain.They lack proper market knowledge and marketing skill and so have to place trust on the views of stranger third parties.Secondly,they are small in size so this results in them possessing scarce financial and human resources thereby hindering their strategic marketing efforts.Also being new in the market they have a small customer base and so the risk factor is quite high initially leading them to carry out low-cost marketing and causing a loss in gaining first mover advantage at times.Thirdly,since they have limited market data,they have to involve themselves in trial and error marketing at times to find out the reactions of customers,which can have fatal outcomes at times(Gruber,2004).

Inspite of these marketing challenges encountered by start-ups and SMEs,it is significant to note that ‘marketing' holds an important place in their functioning.While starting a new business the first thing the entrepreneur does is,develops a proper business plan.In the business plan apart from stressing on financial aspects like income statement,cash-budgeting,breakeven analysis,risks analysis and so on,another very important aspect is the marketing plan.This helps to identify the potential target segment in the market,their demands,likes,dislikes,possible competition,developing strategies that possess a competitive advantage from rivals and so on(http://observer.gm).

Proficient marketing management is the precondition for the booming operations of start-ups and SMEs.It is the heartbeat of the business.Unless the basic marketing decisions fall in place,the production,purchase,budgeting,distribution decisions cannot be planned out in small organizations.Marketing is mainly responsible for the revenue generation in small firms and ensuring a sizeable return on investment;and is hence considered as the prime operation function of the business.One of the ultimate needs of executives of start-ups and SMEs is to comprehend and build up marketing agendas for their products.Their success is dependent on the capability to construct a rising body of contented customers(http://www.sba.gov/idc/groups/public/documents/ ).Marketing helps identifying consumer needs and assists in the creation of goods and services gainfully.It enables the small enterprise to enhance the quality of its products and stresses on continuous improvement.Moreover,it helps develop suitable business goals and gives highest priority to consumers.Also,it works upon making the look of the product attractive and appealing to consumers and pays a lot of heed on the packaging of the product so as to meet consumer tastes.Furthermore,it helps promote the product through the use of eye-catching and innovative advertisements and other selling mechanisms.All these tasks are carried out to enable the product or service to reach the consumers and satisfy them fully by leaving an impression in their minds.If such great care is taken to suit consumers' needs,then sales and profit figures will definitely tend to shoot up,resulting in large growth options for the start-ups and SMEs(http://observer.gm/ africa/gambia/arcle).

Start-ups and SMEs are usually reluctant in spending more on marketing.It is important for them to realize that marketing is similar to any investment which reaps substantial benefits in the long run(McKee,2006).New ventures being new entrants in the market have a dire need to establish a market identity for their products.They should develop low-cost marketing strategies which will have a high impact in the marketplace(Gruber,2004).SMEs should be aware that marketing is not only about media.They need to use vehicles that are relevant to their business such as innovative and cost-effective marketing strategies like use of flyers,logos,emails,websites,SMS,and so on for the promotion of their products and thereby distinguish themselves from their competitors.This will enable them to not only create an identity for their business but also gain a competitive advantage as then they can charge a premium and withstand price competition from rivals(http://beta.profit.ndtv.com/video/show/nn).Today customers' vision has expanded and they prefer branded products.SMEs face tough competition from local,national and international companies.They must therefore accept branding as an essential aspect of marketing and strive to create a brand for their products in their consumers minds.Branding will generate an image and reputation for their product and this will increase their sales volumes and definitely create a strong customer base for their products.Today the market is a global market.Branding will enable small businesses to indulge in diversification and expansion thereby launching new products in new markets under the same brand name.Therefore,for SMEs branding can prove to be a holistic scheme which will place them in a superior position to contend with improved market positioning,a sustainable bottom line presentation,sturdy client base and support from the industrial world.Thus,marketing is absolutely essential for start-ups and SMEs to fight competition and sustain in the market(http://smetimes.tradeindia.com).Alongwith acknowledging the need to concentrate on customers,branding and competition in the market,marketing also pays heed to providing future direction to small businesses.It constantly observes the external business environment and improvements in technology,changes in social and cultural norms,competitors' moves,infrastructural developments and alterations in the economy.Based on this it chalks out a future plan for the business.In SMEs and start-ups this plan is drawn for the short-term future of the business as long-term future planning involves a heavy budget.

Nonetheless,this kind of planning also proves quite useful to the long-run growth of the small businesses(Kenny and Dyson,1989).Apart from this,marketing also helps generate considerable employment opportunities in start-ups and SMEs as performing these multi-marketing tasks requires a lot of skilful people.

Marketing leads to successful entrepreneurship and innovation and hence SMEs have realized the pivotal role played by marketing in granting success.It acts as an interface between the small enterprise and its external atmosphere.Entrepreneurial marketing at times differs from conventional marketing norms.They focus a lot on innovation and less on customer needs.They target consumers through bottom-up,instead of top-down approach(Carter and Jones-Evans,2000).They use informal marketing methods as against formal methods used in conventional marketing(Stokes,2000).These methods are of an interactive nature and the most important technique used is the word-of-mouth technique.This technique involves marketers facilitating and encouraging consumers to provide feedback about using a product they are endorsing.This is a very quick process and bears solid results.Word-of-mouth marketing is the deliberate swaying of communications between consumers by specialized marketing methods(Kozinets et al.,2010).The main benefit of word-of-mouth is that it comes from people whom‘you trust'.They are not strangers and consumers value their opinions as they are aware of the fact that these people do not have any hidden motives in favouring these particular products(http://www.pcguide.com/buy/ven/resMouth-c.html).Another benefit is that it is virtually free as it isconducted by customers themselves.Such a kind of marketing has a deep impact on your brand and its reputation.A single optimistic remark from a renowned individual in the industry leads to raining down of opportunities upon the business.Word-of-mouth is at the centre of all marketing activities and is all inclusive.Marketing does not only imply advertising and promotion but actually involves delusion and invention and this becomes credible when,as incase of word-of-mouth the consumers are the actual marketers and advocates of the brand.For example,the Harley-Davidson motorcycles' owners are in the true sense of the term ‘advocates' for their brand as they buy their own motorcycles,wear the clothing range,participate enthusiastically in their events and so on.They spend very little on advertising and majority of their marketing takes the shape of advocacy and word of mouth method wherein,they depend on their customers for their marketing and success.This strategy has been quite successful and they believe that every company should adopt this policy and make their customers their brand ambassadors(http://crmguru.custhelp.com/cgi-bin/crmguru.cfg/php/enduser/std_adp.php?p_faqid =1727).Furthermore,as customers are the main players in this technique, it is possible for the SME or the start-up to gather essential information about their likes,dislikes and preferences.This helps them to develop innovative ideas for the creation of products and also to target the right segment in the market.Moreover,start-ups prefer word-of-mouth marketing as it leads to a slow and steady growth of the business,as they would be incapable to handle major rises in demand for their products(Stokes and Wilson,2002).

Apart from all these positives of word of mouth marketing,it is essential to note that all word of mouth does not necessarily mean good marketing.To illustrate this,we can cite the example of Bally Fitness,a nationwide series of fitness centers,which infuriated members as initially they were made to sign up for membership on a monthly basis,and later they realized that this contract can never be invalidated and so many ended up paying fees for years on end.One brave client set up a blog where members could protest against this and share their negative experiences with the world online.This resulted in negative publicity for Bally Fitness and seriously hampered growth and reputation of their chain of centres(http://crmguru.custhelp.com/cgi-bin/crmguru.cfg /php/enduser/std_adp.php?p_faqid=1727).In addition to this,it is a fact that people are more prone to criticize than they are to endorse a product positively.One single experience of unsatisfactory customer service and that customer is lost forever and he ends up taking alongwith him twenty other customers as well,by writing bad reviews in blogs,social networking sites,chatting,community gatherings and so on.Also,incase of start-ups conventional marketing techniques would help them get noticed better as for word of mouth to take place they do not hold such a strong existing customer base.Moreover, word of mouth is a non-stop and irrepressible method and leaves entrepreneurs with very little scope to influence and manipulate recommendations and they have to always maintain high degree of customer service(Stokes and Wilson,2002).So,SMEs and start-ups have to be very careful when indulging in word-of-mouth marketing.

Word-of-mouth marketing is also called ‘Buzz marketing'.Inorder to create a buzz about the products in the market,start-ups and SMEs undertake Guerrilla Marketing,which is an unconventional low-cost marketing tactic that employs smarter instead of harder techniques to work.It involves a lot of time rather than money and implies yielding maximum output from minimum input.There is full utilization of time,information,energy,knowledge and most important,imagination.The guerrilla marketer should employ his/her links to network,discover innovative promotion stories,perspectives and outlets,and produce ideas which will get observed and spoken about(http://www.entrepreneur.com/marketing/guerrillamarketing/article193490.htm ).Guerrilla marketing aims at corresponding wits rather than matching budgets.It depends on the usage of creative and unusual methods to acquaint customers with a concept or brand.The aim is to attract attention by being weird,and to capture buzz and conversation along the way and gain free media attention.This marketing styleis well-matched to SMEs and start-ups with restricted marketing budgets(http://www.wisegeek.com/what-is-guerrilla-marketing.htm).Guerrilla

marketing tactics can be put to use in personal selling as well as in advertising.For example,Sony Ericsson Mobile implemented a guerrilla marketing crusade in NewYork City that concerned skilled performers pretending to be travellers and requesting passers-by to click a snap with the company's latest mobile phone-digital camera.Other than this,small firms can also use other guerrilla tactics such as showing promotional clips,street plays,dressing up like different characters based on what the product demands,wall paintings,eye-catching-posters in prime locations and so on(Bygrave and Zacharakis,2004).

Guerrilla marketing proves very useful to entrepreneurs in SMEs.It is dependent on human psychology and the manner in which customers think and react as against judgment and estimates made by assumptions.It emphasizes on profits and not merely on sales.It focuses on certain markets and target segments instead of focussing on mass markets(http://www.entreprene ur.com/marketing/guerillamarketing/article193490.html).Furthermore,guerrilla marketing is less expensive.SMEs have to invest a reasonably small amount initially for promotional stuff and the campaigns can be build around this.Also, it helps build long-lasting networks with clients and other businesses during the campaigning process.This method if executed well yields profitable results.SMEs lack marketing insight and this technique provides them with that insight.Thus, guerrilla marketing has clicked for small businesses around the world because of it being easy to comprehend,simple to execute and reasonably affordable.However, guerrilla marketing has certain drawbacks as well which cannot be overlooked.It is not 100% effective;there are chances of failure at times in obtaining assessable results.This method does not yield results overnight;it needs investment of time to achieve sales goals and a lot of dedication and energy unlike traditional advertising.It is not a good solution if the business needs a quick fix in the market as it is a slow process.Also it is often perceived as a risky business as it sometimes evades the rim of ethical and legal tolerability and the results may be even offensive to some people.For example,in April 2001 IBM initiated a spray-painting operation on city walkways.The company ended up paying a fine to San Francisco,$120,000 for defacement (White,2007).

Another major marketing method employed by entrepreneurs in running start-ups and SMEs is Relationship Marketing.It involves the establishment,maintenance and enhancement of relations with consumers and other stakeholders,profitably,so that the aims of the parties concerned are met.This is accomplished by a reciprocal exchange and achievement of promises(Gronroos, 1997).It involves two things:to attract customers and to build strong long-term focused relationships with them on the grounds of promises and trust.Relationship marketing differs from transactional marketing,which is short-term focused and does not aim at creating long-lasting relations with customers(Gronroos,1997).Most small firms use a relationship marketing approach in running their businesses as it involves low transaction cost(Zontanos and Anderson,2004).Entrepreneurs prefer “conversational” relations through which they can establish contact with the clients,can take note and answer them,rather than carrying out proper market research to comprehend the marketplace(Carter and Jones-Evans,2000).Relationship marketing focuses on offering value to consumers and emphasizes customer retention.Holding clients for long-term tenders many advantages for SMEs undertaking B2C relationship marketing.Loyal consumers will recommend their products to others,thereby increasing the business and they are also willing to buy their new products even if they are priced high,just because they trust the company and are brand loyal.Moreover,they provide valuable feedback about the products thereby enabling the SME to improve the quality of its products.Employees will be happy as a result of happy customers.All this will lead to a sizeable increase in sales of the product,market share and control and will boost profits(http://www.learnmarketing.net/benefi tsofrelationshipsmarketing.htm).Furthermore,if SMEs undertaking B2B marketing maintain good relations with their clients i.e.other businesses,it will prove quite beneficial for the business in the long-run;as the SME will earn a goodwill for itself in the market.This technique is an integrated advance to marketing,quality and service thereby leading to better foundation for earning competitive advantage.

Apart from these there are also certain disadvantages of relationship marketing method.It may entail substantial capital investment without any assurance of return.Also,it may require spending on modern technologies like customer database or other electronic equipments.Finally,it might cause major alterations in the culture of the association before the real execution of relationship marketing(http://ivythesis.typepad.com/ term_paper_top ics/2008/02/is-relationship.html).To explain relationship marketing better we can use an example like in business process outsourcing that is among IBM's main businesses,they engage with outside clientele like banks to assist them create measures that will help them serve their clients better,like having a touch-screen that responds to needs instead of standing in a queue at a bank.This aids the bank save time as well as money.IBM also invests highly in guaranteeing that customers are satisfied and keep returning to them for plans.Another example can be,an individual uses their Southwest Credit Card leaflet miles for a flight.Southwest realizes the flight is delayed,and returns the miles to the client even if the customer has not complained(http://answers.yahoo.com/question/index?qid=20090304171445AAizsea).

To conclude,we can say that,though start-ups and SMEs have dubious interpretations about marketing,but they do and should embrace marketing as it is absolutely essential for their effective and efficient performance and yields excellent results.SMEs and start-ups indulge in marketing according to their own terms and conditions thereby engaging in methods such as word-of-mouth marketing,guerrilla marketing and relationship marketing;each of which have their own merits and demerits but prove useful to the SMEs and start-ups in the long-run.Top of FormBottom of Form

REFERENCES:-

1.

Bygrave, W.

& Zacharakis, A.(2004) The Portable MBA in Entrepreneurship, Third Edition, USA: John Wiley & Sons,Inc.

2.

Carson, D., Cromie, S., McGowan, P.

and Hill, J.(1995) Marketing And Entrepreneurship In SMEs:An Innovative Approach, UK: Prentice Hall International.

3.

Carter, S.

& Jones-Evans, D.(2000) Enterprise and Small Business:Principles, Practice and Policy, UK: Financial Times Prentice Hall.

4.

Gronroos, C.

‘From Marketing Mix to Relationship Marketing -towards a paradigm shift in marketing', Management Decision, 1997, 35/4, pp.

322-339.

5.

Gruber, M.

‘Marketing in New Ventures: Theory and Empirical Evidence', Schmalenbach Business Review, Vol.

56, April 2004, pp.

164-199.

6. Kenny, B.

& Dyson, K.(1989) Marketing in Small Businesses, Great Britain:Routledge.

7. Kotler, P.

& Armstrong, G.(2008) Principles of Marketing, Thirteenth Edition, USA :Pearson Prentice Hall.

8.

Kozinets, R.V., de Valck, K., Wojnicki, A.C.

and Wilner, S.J.S ‘Networked Narratives: Understanding Word-of-Mouth Marketing in Online Communities', Journal of Marketing, Vol.

74/1, 2010, pp.

71-89.

9.

McKee, S.

‘Best Foot Forward from the Start', BusinessWeek Online, 4/17/2006, p1-1, 1p.

10. Stokes, D.‘Entrepreneurial marketing: a conceptualization from qualitative research',

Qualitative MarketResearch:AnInternationalJournal, Vol.3/1, 2000, pp.47-54.

11.Stokes, D., & Wilson, N.(2006) Small Business Management & Entrepreneurship, London : Thompson Learning.

12.

White, S.

‘Air Conditioning Heating & Refrigeration News', 12/10/2007, Journal of marketing communications, Vol.

232 Issue 15, p33-33, 2/3p.

13.

Zontanos, G.

& Anderson, A.R.

‘Relationships, marketing and small business: an exploration of links in theory and practice', Qualitative Market Research: An International Journal(2004), vol.

7/3, pp.

228-236.

INTERNET SOURCES:

http://observer.gm/africa/gambia/article/marketing-and-its-importance-in-setting-up-a-business-in-the-gambia-part-1 Visited:27/02/2010

http://www.sba.gov/idc/groups/public/documents/sba_homepage/pubmt2.pdf Visited:28/02/10

http://beta.profit.ndtv.com/video/show/nn1203545 Visited: 01/03/2010

http://smetimes.tradeindia.com Visited:01/03/2010

http://www.pcguide.com/buy/ven/resMouth-c.html Visited:01/03/2010

http://crmguru.custhelp.com/cgi-bin/crmguru.cfg/php/enduser/std_adp.php?p_faqid=1727 Visited:01/03/2010

http://www.entrepreneur.com/marketing/guerillamarketing/article193490.html Visited:03/03/2010

http://www.wisegeek.com/ what-is-guerrilla-marketing.htm Visited:05/03/2010

http://www.entrepreneur.

com/marketing/guerillamarketing/article193490.html Visited:06/03/2010

http://www.learnmarketing.net/benefitsofrelationshipsmarketing.htm Visited:08/03/2010

http://ivythesis.typepad.com/termpapertopics/2008/02/is-relationship.html Visited:09/03/2010

http://answers.yahoo.com/question/index?qid=20090304171445AAizsea Visited:10/03/2010